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World Stocks Top Out As Competitive Currency Devaluation Commences On The Exhaustion Of The World Central Banks' Monetary Authority
Financial Market report for Thursday December 20, 2012
1) … Liberalism has reached its zenith as monetary inflation finally turns toxic, topping off world stock values as debt deflation, that is on currency deflation, gets underway.
Hans-Hermann Hoppe communicates that Hayek and Mises, were each in their own way, proponents of Liberalism. He is an Austrian School economist and anarcho capitalist philosopher, is professor emeritus of economics at UNLV, a distinguished fellow with the Ludwig von Mises Institute, and founder and president of The Property and Freedom Society and wrote Why Mises (and not Hayek)? on the Mises website which was reproduced in Economic Policy Journal.Inflationism is transitioning to Destructionism, and as a result the world is pivoting from Liberalism to Authoritarianism. Liberalism arose with LBJ's Great Society Programs, developed firmly with the advent of the Milton Friedman Free To Choose Floating Currency Regime, then accelerated with the introduction of the Euro Currency, took on a mature form with the repeal of the Glass Steagall Act whereby we all became bankers, then became the global economic and political paradigm with the rise of the price of gold and the quest for energy development worldwide in 2001, which inflated the value of oil companies such as Exxon Mobil, XOM, and energy service companies such as Schlumberger, SLB, higher, and which confirmed Crony Capitalism, European Socialism and Greek Socialism as mankind's economic experience.
Today, Thursday December 20, 2012, World Stocks, VT, World Small Cap Stocks, VSS, US Stocks, VTI, topped out on the exhaustion of the words central bank's monetary authority. And Emerging Markets, EEM, and the Russell 2000, IWM, traded to new market highs as well; the latter coming from seigniorage of US Regional Banks, KRE, rising in value, and from a rising, and culminating Currency Demand Curve, RZV:RZG, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG. Currencies have been in all out demand, forcing the value of the US Dollar, $USD, down to 79.27; and forcing down the price of real assets, such as Gold, GLD, and Silver, SLV. Copper, JJC, is a speculative asset, held in great abundance warehouses as collateral for a shadow banking system in China; and today it plummeted 1.9% in value. Carolyn Cui wrote the September 10, 2012 WSJ article Copper surplus presents puzzle just before copper led the way higher in Liberalism's final debt and currency based risk on momentum rally. The ongoing Yahoo Finance chart of Distressed Investments, like those taken in by the US Fed in QE1, FAGIX, together with Senior Bank Loans, BKLN, Junk Bonds, JNK, Leveraged Buyouts, PSP, and Spin Offs, CSD, communicates that it has been the riskiest of debt that has supported the global currency rally that has driven up stocks. Ben Bernanke took in the worst of debts, at the encouragement of JP Morgan, JPM, and traded out "money good" US Treasuries to spur a recovery. Beginning in December 2012, the US Treasuries, TLT, and EDV, started trading lower, as bond vigilantes have seized control of the Ten Year US Government Note Interest Rate, ^TNX.
The biggest risk humanity face as a result of the Fed's QE4, and the ECB's OMT unprecedented experiment in quantitative easing, that has produced investor confidence and the decline of risk aversion, with World Stocks, VT, rising 12%, and World Small Cap Stocks, VSS, rising 15%, in a risk-on Major World Currency, DBV, and Emerging Market Currency, CEW, momentum rally, over the last seven months, is that monetary easing has crossed the rubicon of debt monetization, and that the world has passed through Peak Credit, with Bonds, BND, trading lower on the exhaustion of the world central banks' monetary authority. It can be said "The Fed's policies ceased to work beginning in December 2012", inasmuch as its monetary policies are now causing debt deflation, specifically deflation in bonds. Through a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TX, seen in the Steepner ETF, STPP, rising, deflation started in Aggregate Credit, AGG, in December 2012 as follows:
Closed End Michigan Bonds, MIW, -10.2
Closed End Pennsylvania Bonds, EIP, -7.4
California Municipal Bonds, CMF, -2.9%
High Yield Municipal Bond, HYMB, -2.2%
Municipal Bonds, MUB, -2.6%
The Zeroes, ZROZ, -4.6%,
30 Year US Government Bonds, EDV, -8.9%, the chart shows a strong fall through channel support
10 Year US Government Notes, TLT, -2.9%, the standard bearer of debt broke down 12-18-2012.
Build America Bonds, BABS, -1.4%
Long Duration Tips, LTPZ, -1.0%
Long Duration Corporate Bonds, BLV, -1.8%
Corporate Bonds, LQD, -0.6%
Total Bonds, BND, -0.4%A see-saw destruction of fiat wealth is underway as the Steepner ETF, STPP, broke out on a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which drove Total Bonds, BND, sharply lower, while Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Spin Offs, CSD, as well as Distressed Investments like those taken in under QE1, and traded by Fidelity Mutual Fund, FAGIX, have risen to new highs. Of note, the WSJ reports, U.S To Sell Bulk of TARP Banks. The Yahoo Finance Industry Center reports Closed End Debt Funds, traded lower for the fifth day, with the Closed End Municipal Debt Funds, such as Michigan Municipal Bonds, MIW, and Pennsylvania Municipal Bonds, EIP, traded strongly lower.
Bespoke Investment Group reports 10-Year Yield Crosses Above 200-Day Moving Average. The rise of the benchmark Ten Year Interest Rate, ^TNX, to 1.80% means that the bond vigilantes have gained a nascent control of the bond market. Ben Bernanke and Mario Draghi's monetary policies have turned the springs of credit toxic, whereby US Treasury Notes are falling lower in value, and stocks are only marginally or selectively increasing in value. Charts show that the highest degree of loss of trust has come in global debt is centered in US Debt as reported above.
US Government Debt began falling in value in December 2012. US Treasuries have now entered their third week of falling, with 10 Year US Government Notes, TLT, -2.9%, and the 30 Year US Government Bonds, EDV, -8.9%, so far this month.
Credit liquidity under Liberalism, has produced Peak Seigniorage, that is peak moneyness, coming to World Stocks, VT. Debt monetization by the world central banks is starting to turn "money bad", as is seen in the trade lower in the World Major Currencies, DBV. With currencies trading lower in value, the fiat money system is dying; it will be replaced by the diktat money system, where diktat serves as credit, money and wealth. Leaders will react to a soon coming global debt crisis, that is a global banking and financial implosion, termed Financial Apocalypse, brought on by competitive currency devaluation, by meeting in summits, and waiving national sovereignty, pooling sovereignty regionally, and announcing regional framework agreements for regional security, stability and sustainability. In this manner, the Milton Friedman Banker Regime will be replaced by the Mario Draghi Beast Regime of Regionalism and Totalitarian Collectivism, which will come to rule in the world's ten regions and in all of mankind's seven institutions. Soon the only "money good" will be diktat, and physical ownership of gold bullion and possession of gold in Internet trading vaults such as Bullion Vault.
Inasmuch as Total Bonds, BND, and Aggregate Credit, AGG, have turned lower, the world has passed through Peak Credit. Peak Wealth was achieved December 20, 2019, when World Stocks, VT, topped out. With the Major World Currencies, DBV, trading lower, Liberalism collapsed December 20, 2012.
Bespoke Investment Group write The world is overbought. While some are expecting the world to end tomorrow, the stock market certainly doesn't seem to think it's going to happen. Of the dozens of country and regional ETFs that we track, nearly all of them are in overbought territory. I relate that I perceive the most overvalued countries to be ARGT, EIRL, EIS, EPHE, EPOL, ECNS, EWO, EWW, EWY, EWG, GREK, SCIN, THD, TUR EWA, EWN, NORW, and EWT, which are seen, in this Finviz Screener. These republics of carry trade investing are a product of the now defunct Milton Friedman Free To Choose Floating Currency Regime, and will be relegated to the dustbin of history, as the Mario Draghi Regionalism And Totalitarian Collectivism Regime, comes to be the economic model in the world's ten regions.
The Business Cycle, that is the Debt Super Cycle, transitioned into Kondratieff Winter, as debt deflation, that is currency deflation commenced today, December 20, 2012, on the exhaustion of the world central banks' monetary authority, with the Major World Currencies, DBV, trading significantly lower from their recent high, and Emerging Market Currencies, CEW, trading up to a new high. The Swiss Franc, FXF, and the Euro, FXE, continued their rally higher. Commodity Currencies, CCX, bounced at their market top, as the Australian Dollar, FXA, and the Canadian Dollar, FXC, traded strongly lower. The competitive currency devaluation loss leaders is the Japanese Yen, FXY, which traded lower again today to close at 116.17. The 200% US Dollar ETF, UUP, traded to a firm base at its September 14, 2012, value of 21.65, and the US Dollar, $USD, closed at 79.27.
Total Bonds, BND, traded slightly higher, but below their from their early December 2012 high. And Commodities, DBC, continued trading below their early December 2012 high.
The Euro, FXE, closed higher at 131.46, as Sky News report S&P lifts Greece's sovereign debt rating, inducing Greece, GREK, Ireland, EIRL, Spain, EWP, Italy, EWI, and Germany, EWG, GERJ, higher, and taking European Shares, VGK, to a new rally high. Poland, EPOL, Austria, EWO, Norway, NORW, Netherlands, EWN, Sweden, EWD, Switzerland, EWL, continued their rally.
The Nikkei, NKY, and Japanese Small Caps, JSC, traded strongly higher. China, FXI, ECNS, CAF, EWH, Egypt, EGPT, Brazil, EWZ, EWZS, The UK, EWU, EWUS, Thailand, THD, Russia, RSX, ERUS, South Korea, EWY, rose slightly to new highs. Taiwan, EWT, and Turkey, TUR, traded lower. Sectors trading higher over the last few days include Solar Energy, TAN, Airlines, FAA, Automobiles, CARZ, Global Real Estate, DRW, Gaming, BJK, Networking, IGN, US Infrastructure, PKB, Consumer Discretionary, IYC, Small Cap Industrials, PSCI, and Small Cap Pure Value, RZV.
World Banks, IXG, seen in this Finviz Screener, continued higher, producing Liberalism's Peak Prosperity. These were led by Japanese Banks, MTU, NMR, SMFG, MFG, Brazil Banks, ITUB, BBD, BSBR, UK Banks, LYG, HBC, BCS, RBS, Argentina Banks, BBVA, GGAL, India Bank, IBN, Canadian Banks, RY, BNS, CM, TD, BMO, Chinese Banks, CHIX, Swiss Banks, UBS, CS, and the Too Big To Fail Banks, RWW, BAC, BK, C. Bank of America has risen 106% YTD.
The Telegraph reports Libor scandal threatens to create a banking crisis to rival 2008. It comes to something when one of the world's major banks admits to fraud, but that's what UBS did On Wednesday in agreeing to pay $1.5bn (£940m) in fines for rigging inter-bank interest rates. Yahoo Finance chart shows that UBS has been one of Liberalism's final risk on momentum rally leaders, for the last seven months, having risen 37%.
European Financials, EUFN, led by NBG, SAN, DB, blasted higher. Emerging Market Banks, EMFN, continued higher led by Peru's BAP, Chile's BCH, and Puerto Rico's FBP.
Liberalism's seigniorage, that is moneyness, is failing on the exhaustion of the world central banks' monetary authority. The Calamos Total Return Fund, a closed end equity fund, CSQ, and the Eaton Vance Tax Advantaged Fund, EXG, a foreign closed end equity fund, both traded lower from their recent highs. Yahoo Finance chart shows that the closed end equity funds are unable to leverage higher on the closed end debt funds, such as Pimco's PFL, communicating a failure of Liberalism's seigniorage.
Liberalism commenced with the abandonment of the gold standard in 1971, when President Nixon, and the financial world decided to go with the Milton Friedman Free To Choose Floating Currency Regime. The sound money commodity money system was abandoned for today's fiat money system, which is failing, as the Major World Currencies, DBV, are now trading lower, and the Emerging Market Currencies, CEW, have topped out, which are now following Bonds, BND, that is Aggregate Credit, AGG, trading lower from their early December 2012 highs. Failing Major World Currencies, DBV, topped out World Stocks, VT, today, December 20, 2012.
The dynamos of global growth and corporate profit, that powered Liberalism, are winding down. The dynamos of regional security, stability and sustainability that power Authoritarianism, are winding up.
Liberalism's fiat money system is dying; and is being replaced with Authoritarianism's diktat money system, where diktat serves as credit, money and wealth.
Soon an investment demand for gold, will arise, and take gold, GLD, higher. Wealth can only be preserved by investing in and taking possession of physical gold in the form of gold bullion or by possession in Internet trading vaults, such as Bullion Vault. Support for gold is lower at 157.50, which translates into a spot price of gold, $GOLD, of $1,620
Since early June 2012, the Industrials, IYJ, have soared above the Transports, IYT as is seen in this ongoing Yahoo Finance Chart, but in the last month, the Transports, IYT, have exceeded the Industrials, IYJ, as in seen in this ongoing Yahoo Finance Chart.
The ETFs seen in this Finviz Screener will be fast fallers as competitive currency devaluation picks up steam. Investors will be rapidly derisking out of PSP, IGN, CUT, IBB, KBWY, RZV, QQQX, FAA, CARZ, BJK, CSD, TAN, FXR, TAO, DRW, URTY, SPHB, CAF, XRT, and ZIV.
The Morgan Stanley Cyclical Index, ^CYC, which is traded by FXR, has rallied with, and outperformed World Stocks, VT, for the last seven months, traded higher to 1052, as investors took US Banks, RWW, BAC, BK, C, Miners, PICK, AA, FCX, VALE, BHP, RIO, SCCO, WLT, MCP, HW, BTU, WLB, Steel Manufacturers, SLX, MT, ROCK, NUE, MUSA, HSC, CHOP, Metal Manufacturers, XME, WOR, STLD, SMS, SCHN, HAYN, ATI, CRS, VMI, PCP, RS, GHM, GTLS, Building Materials, BECN, AOS, APOG, OC, MAS, USG, Paper Producers, WOOD, WY, IP, UFS, KS, BLL, MWV, PCL, PKG, SEE, LPX, DEL, Farm and Equipment Manufacturers, BGG, DRC, CAT, DE, TEX, MTX, Industrial Electrical Equipment Manufacturers, ROK, AME, ETN, DAKT, Industrial Gasses, ARG, Appliance Manufacturer, WHR, Global Conglomerates, UTX, GE, MMM, Railroads, UNP, CNI, CSX, Cement Manufacturers, TXI, EXP, Chemical Manufacturers, DD, DOW, EMN, HUN, ASH, FMC, ASH, SHLM, RTK, Communication Providers, S, RIMM, SKM, VIP, IDCC, TU, SKM, RCI, Aerospace Manufactuers, BA, HON, MOG-A, LLL, LMT, GD, RTN, Scientific Instrument Manufacturers, ROP, A, GRMN, TRMB, Medical Device Manufacturers, IHI, MDT, ISRG, RMD, ZMH, WAT, HOLX, Toy Manufacturer, MAT, Entertainment Providers, GCI, NFLX, DISH, DTV, DISCA, VMED, VIAB, TWC, LBTYA, CMCSA, SATS, SIRI, AMCX, SJR, NSR, Rubber Manufacturers, GT, CSL, CTB, ROG, Houseware Manufactuers, NWL, CLX, LBY, Cleaning Products Manufacturer, ECL, Home Builders, ITB, LL, SHW, HD, LOW, PHM, MHO, RYL, SPF, Automobile Manufacturers, CARZ, MGA, F, PCAR, SUP, DORM, TSLA, TRW, DAN, FSS, WBC, TEN, and Tool Manufacturer, ITW, higher.
The Morgan Stanley Cyclical Index, is a measure, that is a metric, of global growth. It's peaking out on December 20, 2012, highlights the zenith of Liberalism and the dawn of Authoritarianism.
The Milton Friedman Free To Choose Floating Currency Regime was established for two purposes. First to provide floating currencies, based upon debt, that is sovereign debt, BWX, Emerging Market Debt, PCQ, Corporate Debt, PICB, Mortgage Backed Bonds, MBB, Municipal Bonds, MUB, Leveraged Buyouts, PSP, and Junk Bonds, JNK. And secondly to establish the US as a global empire, by unshackling it from the restraints of the existing sound money system, where through monetization of debt, it could grow and expand its military world wide. Through US Dollar hegemony, the US became one of two great iron empires, the first being the United Kingdom, and the second the US.
With Peak Seigniorage having been achieved, on December 20, 2012, and with competitive currency devaluation underway with the trade lower in World Major Currencies, CEW, and Emering Market Currencies, CEW, peaking out, the two iron legs of world power, that is the UK and the US, are dissolving into ten toes of iron diktat and clay democracy, forming the ten toed kingdom of regional governance. These ten toes will be the ten regional blocs that the Beast Regime of Totalitarian Collectivism and Regional Governance comes to rule over..
The Milton Friedman Free To Choose Floating Currency Regime was very effective at creating the extractive and manufacturing products to produce global growth. Now excess extractive and building capacity exists as Bloomberg reports Diggers pile up unsold after Caterpillar adds to China capacity. Caterpillar, CAT, Komatsu, 6301, and other construction-equipment makers have built enough capacity in China to satisfy global demand twice over while sales in the country are falling, according to a research company. Manufacturing capacity in China is almost 600,000 excavators a year while the worldwide market is about 300,000, according to London-based Off-Highway Research. Inventories of crawler excavators in China are about 100,000, almost equal to projected 2012 domestic sales, the firm's Managing Director David CA Phillips said. The supply glut is a blow to Peoria, Illinois-based Caterpillar and its competitors who built factories and bought local companies to grab a share of the biggest construction equipment market. Now, with government property controls slowing construction, those companies are cutting output and trying to export unsold equipment. "It's all very scary," Phillips, who visited China in November, said in an interview.
2) … In conclusion, a paradigm shift is underway from Libealism to Authoritarianism.
World Stocks, ACWI, have topped out, on falling World Major Currencies, DBV.Inverse Volatility, ZIV, is trading lower; and Volatility, UVXY, VXX, VIXY, TVIX seen in this Finviz Screener, is rising. Stocks will be falling lower, on falling world currency values.
Bond vigilantes gained control of the Interest Rate on the US Government Ten Year Note, ^TNX, on December 14, 2012, calling the rate higher from 1.7%, and were successful in causing the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, to steepen, as is seen in the Steepner ETF, STPP, steepening. And currency traders were successful at that time in selling the world major currencies, DBV, specifically the Australian Dollar, FXA, and the Canadian Dollar, FXC, causing competitive currency devaluation which caused a topping out of World Stocks, VT, on December 20, 2012.
The world central banks' monetary authority is exhausting and is no longer able to provide stimulus to global growth and corporate profit. Out of soon coming credit, and currency crises, regional governors and regional finance ministers, will be rising to authoritarian power through regional framework agreements to provide regional security, stability, and sustainable economic activity through public private partnerships, as leaders from commerce and industry work with government officials to manage regional economies.
Mike Mish Shedlock communicates that Liberalism has created a Make Believe World. Inasmuch as the world is passing through Peak Credit, Peak Currency, Peak Wealth, and Peak Seigniorage, humanity is experiencing a paradigm shift out of Liberalism and into Authoritarianism.
Full monetary easing has brought moral hazard to the forefront of economic reality. The debts of Liberalism, that is Total Bonds, BND, which is also called Aggregate Credit, AGG, are so massive and so toxic that they cannot be repaid. The debts of Liberalism will be applied to every man, woman and child on planet earth, beginning first in the Eurozone, as out of political and economic chaos, the Beast Regime of Totalitarian Collectivism and Regionalism, rises from the profligacy of the Mediterranean Nation Countries, that is the PIGS, Portugal, Italy, Greece and Spain.
Milton Friedman's Free To Choose Floating Currency Regime, which created credit based prosperity, provided the now dying fiat money system. In its place the Mario Draghi Regionalism and Diktat Regime, and its diktat money system, are rising to provide austerity and debt servitude for all. In the diktat money system, diktat serves as currency, credit and wealth.
3) … In the News
Bespoke Investment Group relates Bullish sentiment rises to highest levels since February.Bloomberg asks Are We Facing a Decade of Financial Repression? Bloomberg
AP reports Obama demands action on gun control. Days after the horror in Newtown, the president creates a task force to reduce gun violence.
Ansuya Harjani of CNBC asks Are India stocks out of whack? I relate that it has been India Bank, IBN, that has been taking India Stocks, INXX, INP, SCIN, higher, as is seen in their ongoing Yahoo Finance chart.Reuters reports Fiscal cliff talks turn sour, Obama threatens veto.
Social Europe reports The Eurozone's delayed reckoning.
Reuters reports Peak farmland is here, food crop area to fall, study reveals.
Reuters reports Intercontinental Exchange in talks to buy NYSE. Shares of ICE rose slightly and shares of NYX rose slightly.
LA Times reports Treasury to sell GM stake over 15 months. More than four years after the U.S. began pouring money into ailing banks and automakers, the Obama administration is moving more quickly to shut down the controversial $700-billion bailout fund; GM, rose strongly taking Automobiles, CARZ, higher.
Talk Digital Network Interviews with John Rubino and David Morgan
Tags: VT, EEM, VSS, IWM, RZV, JJC, JNK, PSP, CSD, JPM, DBV, CEW, BND, TLT, AGG, CCX, GREK, IXG, EUFN, EMFN, GLD, PICK, WOOD, CARZ, FXE, UUP, ACWI, Diktat Money System, Fiat Money System, Morgan Stanley Cyclical Index, Liberalism, Authoritarianism, Moral Hazard, Debt Servitude, Inflationism, Milton Friedman, Mario Draghi, Beast Regime, Seigniorage, Regional Governance, Monetary Authority, Debt Trade -
The Diktat Money System Commences As The Euro Trades Lower On Turmoil Over Italian Technocratic Government And Exhaustion Of The ECB's Monetary Authority
Financial Market Report for the week ending December 7, 2012
1) … Introduction
The world passed through peak currency and peak credit, as the Euro currency and the copper commodity traded lower, introducing the diktat money system, as the Troika's technocratic government in Italy wavered on Berlusconi withdrawing support. A major selloff in stocks and junk bonds is imminent.2) … The world passed through peak currency and peak credit the week ending December 7, 2012, as the Euro Currency, FXE, and the Copper Commodity, JJC, traded lower.
The systemic risk factors of excessive world central bank credit and a technocratic government breakdown in Italy, portends a major selloff in World Stocks, ACWI, and Junk Bonds, JNK.This week, World Stocks, VT, traded higher as Italy, EWI, and Spain, EWP, led European Shares, VGK, lower, while China Infrastructure, CHXX, led Asia Shares, EPP, higher, as Bloomberg reports Monti clings to power as Berlusconi seeks early vote. Italian Prime Minister Mario Monti said he plans to keep his government intact as his biggest parliamentary supporter, billionaire media magnate Silvio Berlusconi, threatens to withdraw his backing.
And this week, World Banks, IXG, rose past its September 14, 2012 high, to make a new high, as Swiss Banks, UBS, and CS, Chinese Financials, CHIX, and India Earnings, EPI, rose parabolically, and Ireland's, IRE, took European Financials, EUFN to a new rally high, and as Bank of America, BAC, and Citigroup, C, rose strongly, taking the Too Big To Fail Banks, RWW, higher.
After a three week rally, the twin spigots of credit liquidity are no longer providing economic health; they are running toxic, on the exhaustion of the world central banks' monetary authority. The first spigot of credit is Bonds, BND, and the second is bank Banks, IXG, which is comprised of European Financial Institutions, EUFN, Investment Bankers, KCE, the Too Big To Fail Banks, RWW, Regional Banks, KRE, and Small Cap Revenue, RWJ; these peaked out the week ending December 7, 2012. Of note, the UK bank, RBS, and India bank, HDB, have risen dramatically this year and have topped out.
The trade lower in closed end stock fund, CSQ, and closed end debt fund, PFL, as is seen in their combined chart, confirms that trust has evaporated from the world financial markets that the global central bankers will be able to provide stimulus to continue global growth and corporate profitability. The word, will and way, of ECB's Mario Draghi has provided seigniorage, that is moneyness, with the exception of US Banks, KRE, as is seen in the combined chart of XLF, EUFN, IXG, KCE, RWW, KRE, RWJ.
Peak Seigniorage, that is peak moneyness, of both the ECB and most likely the Chinese Central Bank, has been achieved. The seigniorage, that is the moneyness, of the US Federal Reserve has failed as Mortgage REITS, REM, have traded significantly lower, on lower Mortgage Backed Bonds, MBB; and the US Federal Reserve is unable to stimulate Regional Banks, KRE, and US Real Estate IYR higher. The failure of the world central banks monetary authority as a whole, is seen in the trade lower in the combined chart of XLF, JKE, IYR, XLE, OIH, MTK, SLX, XSD, GDX, IYZ, and IHE, trading lower since September 14, 2012; it was at this time that the world pivoted through Peak Fiat Wealth.
Of note, the Shanghai Shares, $SSEC, traded by CAF, which had been performing very poorly ever since QE1 was introduce, rose 4.1% this week
MarketWatch reports Toll Brothers profits and revenues rise. Homebuilder Toll Brothers, TOL, reported fiscal fourth-quarter profit of $411 million, or $2.35 a share, compared to $15 million, or 9 cents a share a year ago, yet the stock is trading below its September 14, 2012 high, suggesting that the rally in home building stocks, ITB, is over.
This week, Commodities, DBC, and USCI, traded lower, as Precious Metals, JJP, traded lower, as Gold, GLD, fell through a consolidation triangle, and Silver, SLV, traded sharply lower. Spot gold, $GOLD, traded lower to $1,705; support is lower at $1,680 and $1665; support for GLD is 162. Oil, USO, traded lower; and Unleaded Gas, UGA, fell sharply lower. Natural Gas, UNG, fell to support, and its chart looks like it could break sharply lower. Bespoke Investment Group reports Gasoline inventories soar by most in more than 10 years. Base Metals, DBB, traded lower; Copper, JJC, a measure of the Shadow Banking System in China, traded lower. Timber, CUT, traded to a new high.
Total Bonds, BND, traded up to a new high of 84.99, before closing lower this week at 84.81. Peak Debt is being attained. Distressed Investments, FAGIX, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Leverage Buyouts, PSP, traded to new highs International Corporate Bonds, PICB, traded to a new high. Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB, traded lower, with the closed end equity fund Michigan Municipal Bonds, MIW, selling off strongly. The 30 Year US Treasury Bond, EDV, and the US Ten Year Note, TLT, have been rising to strong resistance, yet could trade higher if stocks quickly sell off.
The Steepner ETF, STPP, fell lower, to its lowest value yet at 33.73, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as the 30 Year Rate fell more than the 10 Year Rate on the US Treasury Debt. Soon the 10 30 US Sovereign Debt Yield Curve will rise as bond vigilantes gain control of US Treasury interest rates. The Interest Rate on the 10 Year US Note, $TNX, is forming a bottom at 1.57%; and the Interest Rate on the 30 Year US, $TYX, is forming a bottom at 2.72%. The combined chart of US Treasuries will be soon be showing that both the 10 Year US Note and the 30 Year US Government Bond, will be falling lower, with the latter falling faster than the former.
The ongoing Yahoo finance chart of the Flattner ETF, FLAT, together with Tips, TIP, Long Durations Tips, LTPZ, US Ten Year Notes, TLT, 30 Year US Government Bonds, EDV, Asian Shares, EPP, European Shares, VGK, and World Stocks, VT, TIP, LTPZ, TLT, EDV, EPP, VGK, and VT, communicates the strong seigniorage given to stocks by the combination of the US Fed and the ECB which took the Euro, FXE, up over and then just below 130.
The Dollar, $USD, UUP, has traded lower over the years since its peak in 2002, on US Central Bank credit liquidity and easing, until it recently rose from $79.00 on September 14, 2012, and is now trading at its 50 day moving average, at $80.42, as the Euro, FXE, rose to a new rally high of 129.99, pushing the Swiss Franc, FXF, to a triple top high of 106.24, before the Euro, traded lower to 128.26. The chart of the world major currencies, DBV, shows that they jumped to a new high of 26.02, and the chart of emerging market currencies, CEW, shows they are approaching their September 14, 2012, high.
The world has passed through Peak Monetization. Generally speaking individual currencies globally are failing to rise higher on debt monetization, that is currency debauchery of the world central banks neoliberal finance. The world is passing through Peak Monetization, meaning that the world central banks are unable to stimulate further global growth and corporate profitability. Debt monetization is no longer able to leverage World Stocks, VT, higher.
The Euro currency, FXE, has peaked out. Monetizing of debt is one of two factors that caused the Euro, FXE, to peak out and trade lower this week; and as result Italy, EWI, and Spain, EWP, traded lower from their rally high and both the European Financials, EUFN, and the European Shares, VGK, manifested bearish harami candlesticks, at the top of ascending wedges, suggesting that the rally in these shares is now complete. The other factor for that caused the Euro to peak out and trade lower, is an ongoing political leadership crisis in both Italy, and in Europe as a whole.
The ongoing Yahoo Finance combined chart of DBC, CEW, VT, VSS, and DBC, communicates that the Age of Deleveraging commenced on September 14, 2012, with World Stocks, VT, and Commodities, DBC, trading lower on the exhaustion of the world central bank's monetary authority.
The global bear market that commenced September 14, 2012, is definitely underway again as Transports Weekly, ITY, are making lower highs, while the Industrials Weekly IYJ, are pushing up to strong resistance. Chemical Giants, DOW, and DD, as well as by Industrial Gases, PX, and APD, manifest very weak trading patterns. Bespoke Investment Group relates Apple, AAPL, suffered its biggest decline since December 17th, 2008 with a fall of 6.43%, establishing it as a technology, MTK, loss leader. The bearish trading pattern in technology, MTK, and Steel, SLX, evidences the inability of the inability of the world central banks to stimulate global growth and ongoing corporate profit.
This week's rally and fall in the Euro, FXE, stimulated Peak Currency and Peak Credit. Of note, Peak Stock Wealth, occurred September 14, 2012 as world stocks, VT, topped out. The Pure Small Cap Value Shares, RZV, have outperformed the Small Cap Growth Shares, RZG, as is seen in their combined chart, that is the currency demand curve, that is RZV:RZG, rising to a new rally high. And the Pure Small Cap Value Shares, RZV, have outperformed the Pure Large Cap Value Shares, RPV, as is seen in their combine chart, that is the credit demand curve, that is RZV:RPG, on the rise in the Euro, FXE, to its rally high of 129.99, before it turned parabolically lower to close at 128.36.
Although the Small Cap Pure Value Shares, RZV, have been given strong currency seigniorage, the Small Cap Pure Growth Shares, RZG, have risen strongly as well; these include Aircraft Rehabilitator, BEAV, Electrical Equipment Manufacturer, AIMC, AME, Irrigation Equipment Manufacturer, VMI, Specialty Chemical Manufacturers, ODC, RPM, Chemical Manufacturer, SHLM, Business Services, TISI, VVI, FLT, MMS, Synthetics, MTX, CSGP, Dig And Dirt Moving, MTW, Networking, JDSU, FNSR, ARUN, EPIQ, Diversified Electronics, GLW, MOLX, Technical Software, MENT, ACIW, Cloud Computing, CRM, N, RAX, Application Software, CVLT, PDFS, NTWK, CEDR, PLUS, Business Software, PERI, SLH, Biotechnology, CLSN, CRMD, INFI, DYAX, AFFY, NPSP, Diversified Communication Services, NSR, Building Products, TREX, Diversified Machinery, NDSN, LII, FLS, MIDD, CFX, ITW, BGG, IEX, Diversified Electronics, SPA, Consumer Services, ZIP, and Information Technology, CTXG, CSC.
Restaurants, DIN, BKW, DPZ, BK, and Entertainment Stocks, TIVO, DISH, VMED, SJR, LMCA, DISCA, TWX have likely topped out. Manufactured Housing Manufacturer, CVCO, is the weather vane of market direction and it traded strongly lower this week from its November 30, 2012 high of 51.50 as is seen in its Yahoo Finance Chart, which is provided with comparison to the Small Cap Pure Value Shares.
The major world currencies, DBV, the emerging market currencies, CEW, are peaking out as is seen in their combined chart, producing Peak Currency. And Peak Credit is seen in both Total Bonds, BND, and Aggregate Credit, AGG, topping out, as well as the Credit Providers seen in this Finviz Screener, such as AXP, COF, MA, V, and DFS, trading lower in December 2012. Debt deflation is underway on falling currency values. Federal Reserve data shows that Peak M2 Money occurred in early November 2012, specifically on 11-05-12 with a value of 10292T; current M2 Money stands at 10264T. And Zero Hedge provides this troubling credit report Margin debt rises to 18 month high as net free credit plunges to -44 billion.
Investment trading is starting to heat up. On both Monday and Tuesday, Volatility, VIX, traded higher and Inverse Volatility, XIV, is trading lower from its recent high; and 200% Volatility, VIIX, is trading higher from its recent low, suggesting that a change in market direction is at hand.
The Milton Friedman Free to Choose Floating Currency Regime, that has supported global economics since 1971, was based upon investment opportunities in sovereign nation states, is now failing as investors are derisking and deleveraging out of fiat financial instruments. The Beast Regime of Totalitarian Collectivism and Regional Governance is rising out of the Mediterranean Sea countries of Greece, Italy and Spain to rule in all of the world's ten regions and all of mankind's seven institutions, and will be based upon regional sovereign bodies, such as the ECB, and regional sovereign leaders, such as Herman Van Rompuy, as current country leaders will meet in summits to waive national sovereignty and pool sovereignty regionally; and to announce regional framework agreements which will replace national constitutions as the basis for power and authority. Public private partnerships between corporations and governing officials will direct the factors of production regionally. The announcement on Azom by Alcoa that it has signed a long-term power contract with Bonneville Power Administration, BPA, for its Ferndale, Wa, based Intalco Works aluminum smelter, exemplifies the type of process that will manage economies regionally.
Regional sovereignty is rising to replace national sovereignty. Ten regional zones, that is ten regional blocs of power, are developing to replace the global hegemony of the UK and the US that has ruled the world since 1776. Dr Worden writes in China or USA: Which Will Rule Trade? As the twenty-first century was coming into its own, two major economic powers in the world were contending not only for economic dominance, but political hegemony as well. Would it be another American century, or would power follow economic growth over to Asia? The "control battle" itself ostensibly about ordering trade alliances could be an indication that power was about to shift on a massive scale in terms of which economic power would become the definitive superpower. The Association of Southeast Asian Nations (ASEAN) announced at its meeting in November 2012 that it would host negotiations among its members on "a sweeping trade pact that," according to the New York Times, "would include China." The trade agreement would include not only the ten countries that are in the association, but also six other countries that have free-trade agreements with the association. In addition to China, those countries include Australia, India, Japan, New Zealand and South Korea. Half of the world's population would be included in the pact. Notably absent is the United States. This is no accident, as the Obama administration's own proposal for an eleven-nation Trans-Pacific Partnership excludes China. In other words, the contending proposals may be more about a "control battle" between two contending empires-the United States and China-than anything else. Moreover, which proposal succeeds could say something about whether China succeeds the United States as the hegemonic superpower of the twenty-first century.
Regionalism is rising to replace Crony Capitalism European Socialism and Greek Socialism as The Express UK quotes Steen Jakobsen, chief economist at investment bank Saxo, "The magnitude of this debt crisis is far larger than the market realizes, so big there is no real solution as imagined by either side of the north-south divide." … "There is only one solution: the system must fail and both the Euro and the Eurozone need to be redefined."
The EU faces political crisis on a country, by country level; and it faces a political crisis on an EU wide basis. Guy Dinmore of Financial Times reports Berlusconi's show of power piles pressure on Monti. Silvio Berlusconi's centre-right party has abruptly withdrawn its support from Mario Monti's technocrat government in parliament for the first time in over a year, plunging Italian politics deeper into confusion and raising the possibility of snap elections. And the Wall Street Journal reports EU Officials set cautious vision of integration. In a long-awaited report that aims to map out future efforts to bind euro-zone economies more closely, Herman Van Rompuy, the president of the European Council, proposed some important piecemeal steps toward integration but seemed to bow to pressure from Berlin to limit initiatives that would force German taxpayers to stand behind their European counterparts. There was no proposal to adopt a common euro-zone bank-deposit guarantee, and an initiative to create a centralized fund to help countries absorb economic shocks was pushed off until after 2014. Mr. Van Rompuy called for immediate action in setting up a single bank supervisor, to be fully operational by the start of 2014, and said the euro-zone bailout fund should develop the ability to directly recapitalize member-state banks by 2013. The pooling of funds and sharing risk on debt issuance among eurozone members, as diverse as robust Germany and debt-stricken Greece, is possibly the single most politically controversial issue in the currency bloc.
Soon, the most capable of leaders will step into the limelight of Europe's political stage, to establish order out of chaos. He will rise to power, not through traditional political means, but rather through regional framework agreements. He will establish a type of revived Roman Empire, that is a powerful authoritarian government. The Sovereign will be accompanied in power by the Seignior, that is the top dog banker who takes a cut; their word, will and way will rule the EU.
3) … In financial news
Bloomberg reports Republicans counter Obama olan with entitlement cuts. U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lack what President Barack Obama calls essential for a fiscal agreement: higher tax rates for top-earning Americans. The leaders delivered the offer to the White House on Monday with a three-page letter signed by Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), and four other senior Republicans, including Rep. Paul Ryan (R-Wis.). According to the Speaker of the House, in PDF document, the Republicans propose to increase tax revenue through pro-growth tax reform that closes special interest loopholes and deductions while lowering rates.AP reports Obama: No deal without higher rates. AP President Barack Obama says there will be no deal to avert the "fiscal cliff" unless Republicans drop their opposition to raising tax rates on the wealthiest Americans.
Bespoke Investment Group reports ISM Manufacturing surprises to the downside. The ISM Manufacturing report for the month of November came in lower than expected (49.5 vs. 51.4), and it was the indicator's worst monthly reading since July 2009. While readings below 50 are indicative of economic contraction, the weak report may be due in part to some residual impact from Sandy.
Ambrose Evans Pritchard writes Pritchard French economy buckles as car sales collapse. Industrial woes deepened last month as car sales crashed 19pc.
Reuters reports Top US firms are cash rich abroad but poor at home The WSJ reports At a time when American companies hold near record amounts of cash, many are surprisingly cash poor at home.
Reuters reports Spain makes formal request for EU bank aid
Reuters reports that Transparency.Org reports Greece has scored the worst ranking of all 27 European Union nations in a global league table of perceived official corruption, falling below ex-communist Bulgaria as public anger about graft soars during the country's crisis.
Markus Salzmann of WSWS reports Austrian billionaire Stronach launches new right-wing party. Given the increasing economic and social tensions in Austria, Frank Stronach stridently represents the interests of the financial elite and receives the support of business circles.
Vicky Short, and Alejandro Lopez of WSWS report Spanish government prepares repressive measures against social opposition. Mariano Rajoy's Popular Party government is preparing to impose €90 billion in budget cuts over the next two years.
Marianne Arens of WSWS reports Italian steel workers fight for jobs. Employees of the Ilva steel group carried out demonstrations throughout Italy last week to protest against the closure of the company's main plant in Taranto.
Reuters reports Military halts clashes as political crisis grips Egypt.
Alex Lanier of WSWS reports Spanish bank bailout paves way for new attacks on working class. Euro zone finance ministers approved a bailout requested for Spain's banking sector.
Patrick Jenkins of the Financial Times reports "The risk facing Japanese banks from their vast holdings of government bonds has been underlined by the chief executive of the country's largest bank who said it would struggle to reduce its exposure. Nobuyuki Hirano, chief executive of Bank of Tokyo-Mitsubishi, admitted that the bank's Y40tn ($485bn) holdings of Japanese government bonds were a major risk but said he was powerless to do much about it. 'This is analysts' main concern… A default of Japanese government bonds would have a severe impact on us. But we need to be responsible to keep that market in order.' According… the Bank for International Settlements… the holdings of JGBs by Japan's banks equate to 900% of their tier one capital, compared with about 25% for UK banks' exposure to gilts and 100% for US banks' exposure to US Treasuries."
4) … Summary … The fiat money system has broken down on the failure of the monetary authority of the world central banks; it has been replaced by the diktat money system, where mandates from regional leaders serves as currency, credit and wealth.
Neoliberalism's final global debt rally, seen in World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, topping out, is bringing about a topping to the global debt trade, BND, that has provided prosperity under Crony Capitalism, European Socialism, and Greek Socialism.
The ongoing Yahoo Finance chart of Distressed Investments FAGIX, with ETFs, JKE, RZV, MTK,VGK, BJK, SLX, XSD, with a close December 7, 2012 for FAGIX of 9.47, having risen from its September 14, 2012 value of 9.37, reflects the seigniorage, that has come from rising commodity currencies, CCX, such as the Euro, FXE, the Canadian Dollar, FXD, the Australian Dollar, FXA, as well as the British Pound Sterling, FXB, Emerging Market Currencies, CEW, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Chinese Yuan, CYB, giving rally to Small Cap Pure Value Shares, RZV, Technology Stocks, MTK, European Stocks, VGK, Vice Socks, BJK, Steel Stocks, SLX, and Semiconductors, XSD.
Yet, Large Cap Growth Stocks, JKE, such as Exxon Mobil, XOM, on the trade lower in Oil, USO, did not participate in the what amounts to the final risk on momentum rally of world central bank monetary authority. Large US Telecom, IYX, shares such as AT&T, T, did not participate in the recent currency driven rally. Uranium Stocks, URA, Junior Gold Mining Stocks, GDXJ, Gold Mining Stocks, GDX, and Silver Mining Stocks, SIL, were completely abandoned beginning September 14, 2012.
Neoliberalism's final risk on currency based carry trade rally gave strong seigniorage to the World's Banks, IXG, in particular to Ireland's Bank, IRE, Netherlands Insurer, ING, India's Banks, IBN, HDB, Brazil Banks, ITUB, BBD, Argentina Banks, BBVA, GGAL, BFR, BMA, Swiss Banks, CS, UBS, Chinese Financials, CHIX, German Bank, DB, UK Banks, RBS, HBS, LYG, Korea Banks, WF, KB, SHG, Japanese Banks, NMR, SMFG, MFG, MTU, Canadian Banks, RY, BMO, Spain's Bank, SAN, Australia Bank, WBK; but failed to give seigniorage to Regional Banks, KRE.
Currency carry trade leverage came to carry trade darlings have carried country stocks higher, as seen in the Finviz Screener of the following stocks.
EWZ … ABB, FBR, rose vertically
EZA … SPP, rose vertically
EWW … IBA, ASR, KOF, PAC rose parabolically
ACWI … YHOOThe Euro, FXE, traded parabolically lower on Thursday December 6, 2012 and closed at 128.36 on Friday December 7, 2012. Of note the South African Rand, SZR, and the Japanese Yen, FXY, are the loss leaders in global competitive currency devaluation, the first on the failure of gold mining stocks, GDX, and the latter on the huge amounts of Japanese Government Bonds held in Japanese Banks.
The world has reached Peak Prosperity coming from maximum beneficial debt monetization by the world central banks. As world stocks, VT, traded lower on September 14, 2012, they pivoted through Peak Stock Wealth, and today December 7, 2012, they have reached yet another tipping point, as the world is attaining Peak Currency, with the World Major Currencies, DBV, Commodity Currencies, CCX, and Emerging Market Currencies popping higher to produce Peak Credit, with Aggregate Credit, AGG, and Total Bonds, BND, rising to new highs.
Ambrose Evans Pritchard relates the aggressive monetary policy of the ECB. The ECB mulls negative rates as Europe's economic crisis deepens. The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar. And Bloomberg reports Draghi leaves rate-cut door ajar as ECB reduces forecasts. The European Central Bank cut its growth and inflation forecasts and President Mario Draghi said the euro area won't start to shake off its slump until the second half of 2013, leaving the door ajar for further interest rate reductions. "Weak activity is expected to extend into next year," Draghi said at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. "By the second part of the next year, we should see the beginning of a recovery" as global demand strengthens and the ECB's low rates feed through to the economy.
Fidelity Investments Distressed Investments, FAGIX, reflects the topping out of toxic investments taken in by the US Federal Reserve under QE 1, and which are held by Investment Banker JPMorgan, JPM, and the Too Big To Fail Bank, RWW, in particular Bank of America, BAC. These banks, because of their debt holdings have been given strong seigniorage, that has accompanied the rise in value of the worst of debt such as Junk Bonds, JNK, Leverage Buyouts, PSP, and Senior Bank Loans, BKLN, which has risen strongly since mid November 2012. The three week currency rally, that began in mid November 2012, has given strong seigniorage to International Corporate Bonds, PICB, which have risen to a new high, as well as to High Yield Municipal Bonds, HYB. S&P High Beta, SPHB, rose, taking the S&P, SPY, higher. World Stocks Monthly, ACWI, appear to be at the point of entering an Elliott Wave 3 of 3 Down from 2008 high, with November 2012 likely being the actual turn lower, should stocks fall lower in December 2012.
The speculative global debt trade, BND, is coming to an end, and with that a pivot from investment choice to ruler diktat. The dynamos of global growth and trade, together with corporate profit are winding down. The dynamos of regional security, stability, and sustainability, are powering up. The Milton Friedman Free To Choose Floating Currency Regime, that has provided a basis for global economics since in 1971, when the US abandoned the gold standard, is giving way to the Beat Regime of Totalitarian Collectivism and Regionalism.
The fiat money system is starting to collapse, as is seen in the value of Mortgage Backed Bonds, MBB, trading lower in value, resulting in Real Estate, IYR, falling in value, and Mortgage REITS, REM, turning lower, as World Real Estate, DRW, is topping out on Chinese Real Estate, TAO, and World Water Resources, CGW, is topping out on American States Water, AWK. Peak Money is seen in the topping out of the Major World Currencies, DBV, Commodity Currencies, CCX, and the Chinese Yuan, CYB; and Peak Credit seen in the topping out of the World's Major Bank, IXG, seen in this Finviz Screener, whether they be European Financials, EUFN, Brazil Financials, BRAF, India Financials, EPI, the Too Big To Fail Banks, RWW, Chinese Financials, CHIX, or Japanese Banks. There are no more speculative adventures or stock safe haven investments.
The risk on global currency carry trade that began in mid November 2012, has rallied European Stocks, VGK, and Asian Stocks, EPP, to the very apex of Systemic Risk on December 6, 2012. All that awaits is a sharp or sustained sell off with impetus coming from a number of sources, such as political conflict in Italy, investor awareness of the excesses of neoliberal credit stimulus, that is world central bank credit liquidity and monetary easing, investor margin calls, or a correction in the price of copper commodity which is used as collateral in the Chinese shadow banking system.
Fiat Money is based upon trust and speculation. Now trust in the world central banks has reached the breaking point; the global credit bubble, BND, is about to burst, and stock values, VT, are going to fall off quickly. Deleveraging out commodities and derisking out of stocks is the process which precedes Financial Armageddon, a global credit bust and worldwide financial system breakdown.
The chart of Consumer Goods, such as Cleaning Products, Ecolab, ECL, Packaging and Containers, TUP, and BMS, Appliance Manufacturer, WHR, Soft Drink Producer, FIZZ, Toy Manufacturer, MAT, Recreational Vehicle Manufacturer, WGO, Personal Products, IPAR, Rubber And Plastics Manufacturer, CSL, and CTB, Housewares, NWL, Home Furnishings And Fixture, BEST, and FBHS, and ETH, and LEG, Sporting Goods, POOL, Business Equipment, SCS, Auto Parts Manufacturer, DORM, Food Producer, HRL, Textile Manufacturer, PVH, and HBI, Paper Producer, IP, and COLM, and GILD, Steel Manufacturing, MUSA, and ROCK, Diversified Electronics Manufacturer, RVLT, Solar Manufacturer, FSLR, Semiconductors, MPWR, SLAB, LSI, Gaming Stocks, MCRI, VAC, ASCA, PNK, communicates Peak Fiat Wealth, and the end of the Age of Prosperity and Credit Creation.
The Fiat Money System was replaced by The Diktat Money System on December 7, 2012, as the Euro, FXE, traded below 1.30.
The failure of neoliberalism's seigniorage, that is moneyness, has introducing the Age of Austerity and the Age of Debt Servitude, where people will come to trust in the Diktat Money System, where diktat serves as currency, credit, and wealth, as exemplified in Egypt, EGPT, and Argentina, ARGT.
The failure of neoliberalism's seigniorage, that is moneyness, has introduced the new global economic paradigm of neoauthoritarianism. Crony Capitalism, European Socialism, and Greek Socialism are being replaced by Regionalism and Diktat.
Milton Friedman suggested the Free To Choose Floating Currency Regime, and it was adopted by President Nixon who used it to fund the Vietnam war. Now Mario Draghi and the Troika are providing the Beast Regime of Regional Governance And Totalitarian Collectivism to establish debt servitude.
Previously seigniorage, that is moneyness, came from a combination of sovereign nation states and central banks. For example, from November 15 through December 7, 2012, a combination of the US Fed Reserves' and ECB's monetary authority gave strong seigniorage to Small Cap Pure Value Stocks, RZV, and Small Cap Pure Growth Stocks, RZG, as the Euro, FXE, rose to over 130.
From December 7, 2012, forward, seigniorage will come from a combination of regional sovereign leaders and central banks. In Europe, a Regional President will be appointed by country Presidents and country Finance Ministers who will work with Mario Draghi and Public Private Partnerships to oversee the Eurozone's economy. As moneyness comes more and more from regional governance, investors will be deleveraging ever increasingly out of stocks world wide. Small Cap Pure Value Stocks, RZV, will fall more precipitously than Small Cap Pure Growth Stocks, RZG, as World Currencies such as the Euro, FXE, the Yen, FXY, the South African Rand, SZR, the Brazilian Real, BZF, the Swedish Krona, FXS, the Swiss Franc, FXF, the British Pound Sterling, FXB, the Indian Rupe, ICN, the Canadian Dollar, FXC, the Australian Dollar, FXA, the Chinese Yuan, CYB, and a whole host of Emerging Market Currencies, CEW, trade competitively lower, while the US Dollar, $USD, UUP, has relative stability.
Beginning the week of December 10 2012, global trade dependent South Korea, EWY, will be falling more rapidly than most other country stocks; yes it will be falling like a rock, reflecting the unwinding of global economic trade. India Infrastructure, INXX, and India Small Caps, SCIF, which have seen speculative investment will also be fast fallers. The country stocks KWY, INXX and SCIF are high beta ETFs which will be losing value very quickly.
The chart of both oil, USO, and Gold, GLD, show a bottoming out; the chart of Silver, SLV, shows a massive consolidation triangle, from which its price will either rise or fall. The investment demand for gold will soon rising taking gold, $GOLD, higher from its current price of $1,700. Commodities, DBC, traded lower today December 6, 2012, falling through a consolidation triangle, to the edge of a massive head and shoulders pattern, suggesting a fall lower is coming soon. In the Age of Deleveraging and the Age of Competitive Currency Devaluation, both diktat and physical ownership of gold, either in gold coins, or in Internet trading vaults, such as Bullion Vault, will be the sole forms of sustained and sovereign wealth.
Tags: UUP, FXY, FXE, FXC, FXB, FXS, SZR, FXF, CYB, BZF, FXA, ICN, CEW, DBV, RZV, RZG, EWI, EWP, VGK, VT, GLD, DBC, BND, EPP, IXG, EUFN, STPP, FLAT, TIP, LTPZ, EWY, REM, DRW, MTK, SLX, ACWI, Diktat, Choice, Diktat Money System, Fiat Money, Fiat Money System, Monetary Authority, Neoliberal Finance, Seigniorage, The Sovereign, The Seignior, Debt Monetization, Competitive Currency Devaluation, Debt Deflation, Beast Regime, Regional Governance -
The Second Greek Bailout Introduces The Diktat Monetary System To Replace The Fiat Money System
Financial market report for the week ending February 24, 20121) … World shares, excluding the US, and bonds, rose slightly this week; yet the divergence between transports and industrials suggests that the stock market is peaking.
WSJ reports that the S&P, SPY, inched up to reach its highest close since June 2008,The chart of Junk Bonds, JNK, Bonds, BND, World Shares, ACWX, and US Shares, VTI, shows that World Shares excluding the US and Bonds rose slightly this week. Bloomberg reports Junk ETFs Draw Most Cash on Record as High-Yield Hunt Speeds Up.
Retailer, BODY, Mid Cap, HOG, Small Cap Value, LTM, SNX, Consumer Good, ECL, Paper Manufacturer, NP, and US Infrasturcture, CBI, rose to new highs, while, homebuilders, ITB, and traded lower this week, suggesting that the safe have rally in US Stocks, is coming to an end, as AP reports New-home sales dip after 4 straight monthly gains.
Long term care provider, KNH, fell strongly as Marketwatch reports the health-care services company reported it swung to a fourth-quarter loss of $1.40 a share from a profit of 52 cents a year earlier
Vietnam, VNM, Thailand, THD, Russia, RSX, Russia Small Caps, ERUS, Egypt, EGPT, South Africa, EZA, Sweden, EWD, Canada, EWC, Europe, VGK, Switzerland, EWL, rose this week.
Greece, GREK, Indonesia, IDX, India Small Caps, SCIF, India Infrastructure, INXX, India Earnings, EPI, Brazil Financials, BRAF, Homebuilders, ITB, Banks, KRE, Airliners, FAA, REITS, RWR, FNIO, REZ, Small Cap Consumer Discretionary, PSCD, Small Cap Industrial, PSCI, Small Cap Material, PSCM, and Semiconductors, XSD, traded lower this week. North America Infrastructure Stocks already falling lower include, CX, MHK, USG, ARII, NAS, NX, DCI, EXP, MTW, and automobile stocks falling lower include GPI, AXL, TRW, JCI, GM, F.
The divergence between transports, IYT, down 3.4%, this month, and industrials, IYJ, up 3.6% this month, seen in this Yahoo Finance Chart, suggests that the stock market is peaking.
While basic materials, MXI, URA, ALUM, COPX, traded up on higher world currencies, DBV, and Emerging Market Currencies, CEW, global debt deflation, that is global currency deflation has commenced with the trade lower in the Japanese Yen, FXY.
The failure of fiat money has started to turn a number or world financial institutions IXG, lower. The death of capitalism has commenced with the exhaustion of neo liberal finance, turning National Bank of Greece, NBG, Ireland Bank, IRE, India Bank IBN, HDB, Argentina Banks, GGAL, BMA, BFR, BBVA, South Korea Banks, WF, KB, Nasdaq Community Banks, QABA, US Regional Banks, KRE, such as Regions Financial, RF, and these seen in this Finviz Screener, lower this week.
International Corporate Bonds, PICB, rose on rising Major World Currencies, DBV; and Emerging Market Bonds, EMB, rose on Emerging Market Currencies, CEW.
The announcement of the Second Greek Bailout stimulated the Euro, FXE, higher, it was a carry trade week with, the Swiss franc increased 2.7%, the Swedish krona 2.6%, the Norwegian krone 2.5%, the euro 2.3%, the South African rand 1.9%, the Russian ruble, 1.6%, the New Zealand dollar 0.4%, the British pound 0.3%, the Singapore dollar 0.3%, and the Brazilian real 0.2%. On the downside, the Japanese yen declined 2.0%, the Mexican peso 1.1%, the Canadian dollar 0.3%, the Indian rupe 0.2%, the Australian dollar 0.1%, and the Taiwanese dollar 0.1%; the US Dollar, $USD, UUP, declined 1.2% this week. Matthew Bristow of Bloomberg reports Brazil's current account deficit in January was the widest on record after the real appreciated the most of any major currency this year. The deficit in the current account rose to $7.1 billion from $6 billion in December." (Hat tip to Doug Noland) One can follow currencies using with this Finviz Screener.
Elmwood Data reports Traders remain short the Euro. Short term traders remain extremely short the Euro,FXE, and this leaves them vulnerable to further short covering the the coming weeks. We would be cautious on becoming too negative toward the Euro at this point, until we have seen traders cover more of their shorts.
It's reasonable to believe that the 200% of volatility, TVIX, Volatility, VIXY, and Volatility, VIXM, will rise the week beginning February 27, 2012, which can be seen in this combined chart.
2) … When the stock market trades lower, these ETFs are likely to be the fastest fallers.
When the stock market trades lower, these ten ETFs seen in this Finviz Screener, are likely to be the fastest fallers, GREK, EUFN, EPI, RZV, PKB, SLX, ITB, SCIF, BRF, EWZS, In other words, Greek Debt contagion will spread most quickly from Greece to the European Financials, India Banks, Small Cap Value, North America Infrastructure, Steel, Homebuilding, India Small Caps, and Brazil Small Caps.Competitive currency devaluation has commenced with the Yen, FXY, down 5.9% this month. The currency demand curve, RZV:RZG, is turning over confirming that competitive currency devaluation has commenced; the collapse of fiat money will delever commodity prices.
3) … Doug Noland presents the Contemporary Theory of Money and Credit.
Doug Noland writes in Prudent Bear articleContemporary Monetary Analysis. "The Washington Post ran a long and well-wrought article on Modern Monetary Theory over the weekend. The piece, by Dylan Matthews, starts with Jamie Galbraith's experience trying to explain to a large audience of economists in the Clinton White House that the budget surpluses the federal government was running was immensely destructive. Or, rather, it starts with those economists laughing at Galbraith's attempt to explain this. It was obvious to me way back before I had ever heard of MMT that governments should probably never run a budget surplus-or should do so only in dire emergencies. When the government runs a surplus, that means it is taking more money out of the economy than it is spending back into the economy. It is making us poorer." … In my initial CBB back in 1999, I trumpeted the need for a Contemporary Theory of Money and Credit. Some thirteen years later, I lament that the void remains as large as ever. Mr. Matthews' Washington Post article highlighted "Modern Monetary Theory," an alternative economic framework with Keynesian roots that is receiving heightened attention in our age of unrelenting government stimulus. I will not be jumping on board.From Mr. Matthews' article: "'Modern Monetary Theory' was coined by Bill Mitchell, an Australian economist and prominent proponent, but its roots are much older. The term is a reference to John Maynard Keynes, the founder of modern macroeconomics. In 'A Treatise on Money,' Keynes asserted that 'all modern States' have had the ability to decide what is money and what is not for at least 4,000 years. This claim, that money is a 'creature of the state,' is central to the theory. In a 'fiat money' system like the one in place in the United States, all money is ultimately created by the government, which prints it and puts it into circulation. Consequently, the thinking goes, the government can never run out of money. It can always make more."
And from Wikipedia: "Chartalism is a descriptive economic theory that details the procedures and consequences of using government-issued tokens as the unit of money, i.e. fiat money… The modern theoretical body of work on chartalism is known as Modern Monetary Theory (MMT). MMT aims to describe and analyze modern economies in which the national currency is fiat money, established and created exclusively by the government. In MMT, money enters circulation through government spending; Taxation is employed to establish the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation… Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities per se."
My "contemporary theory…" takes an altogether different approach. "Money" is not foremost a creature "ultimately created by the government," but is instead primarily an issue of market perceptions. "Money" is as money does ("economic functionality"). The reality is that we today operate in an age of globalized electronic Credit - a comprehensive virtual web of computerized general ledger debit and Credit entries linking creditors and debtors round the globe. This "system" of electronic IOUs comprises myriad types of financial obligations of diverse structure, maturity, Creditworthiness and currency units of accounts. Importantly, if the marketplace perceives that a Credit instrument will act as a highly liquid and stable store of nominal value, this Credit enjoys "moneyness." It is the nature and nuances of contemporary marketable debt - especially with respect to the prominence of governmental and central bank support - that should be the analytical focal point. A static view of government-based "fiat money" is anachronistic
The lack of respect for "money" and moneyness is a primary issue I have with most monetary analysis. They don't get it. From the perspective of my analytical framework, money is both powerful and precious. Historically, sound money has been as rare as government-induced monetary inflation has been commonplace. The biggest risk coming out of the 2008 crisis was that runaway Washington fiscal and monetary stimulus would destroy Creditworthiness at the heart of our monetary system. We're well on our way. Throughout history, mistakes in monetary management have tended to beget only bigger mistakes.
Somehow, many "monetary" economists seem to believe that money is like Doritos chips: don't fret, quite easy for us to make a lot more. After witnessing the consequences of a collapse in confidence in Wall Street Credit and, more recently, the Credit obligations of Greece and Portugal, there is no excuse for such complacency. Yet conventional wisdom holds that Washington will always enjoy the capacity to "print" its way out of trouble. Default risk is a myth, it is believed. It is similar thinking that ensured the spectacular mortgage Credit boom and bust. It is one thing to issue fiat currency; it is quite another to sustain market confidence when Credit is expanding uncontrollably.
The GSE/mortgage monetary inflation was not as conspicuous. Today, we are witnessing in broad daylight the dangerous side of "money." The Treasury is issuing Trillions of debt - in an environment of virtually insatiable demand. Over the years, I've noted how a boom fueled by risky junk bonds wouldn't be that dangerous from a systemic point of view. Limited demand for junk would create self-imposed market constraints. A Bubble in "money," on the other hand, would tend to last longer, go to greater excess and, as such, have much greater deleterious impacts on financial and economic structures. And severe structural impairment can require multi-decade workouts and restructuring periods (think Great Depression and Japan). Money, even in its modern form, remains precious and, potentially, extremely dangerous - and this is the bedrock of my Contemporary Theory of Money and Credit.
Fine, economists can sit around and debate deficit spending and the role of fiscal stimulus in recessions and recoveries. Meantime, there is scant discussion of the extraordinary monetary backdrop and untested experimental nature of monetary management. Governments have assumed unprecedented roles in the marketplace, much to the advantage of a multi-Trillion global leveraged speculating community. Government market backstops have been instrumental in the mushrooming of global derivative positions to the hundreds of Trillions. A financial insurance marketplace of unfathomable scope has been operating on the flimsy premise of liquid and continuous securities markets. Meanwhile, most economists, "monetary" and otherwise, argue that tame inflation ensures that there is little risk associated with ongoing massive government stimulus and market intervention.
Most today fail to appreciate the potential catastrophic consequences of a crisis of confidence in "money" - a crisis of confidence in the moneyness of government debt and associated obligations.I sense little appreciation for the momentous role played by "money" as the core foundation of overall global Credit - or for Credit as the fuel for global economic activity. We saw again in 2011 how abruptly things can begin to unravel when the marketplace perceives that policymakers don't have the situation under control. We've witnessed, as well, how quickly aggressive concerted global policy responses can transform de-risking/de-leveraging back to re-risking/re-leveraging. In a span of a few weeks, problematically illiquid markets morphed right back into liquidity abundance and speculative excess.
From a monetary and market perspective, we've returned to the precarious stage. Risk embracement and leveraging create market liquidity abundance. Strong markets then emboldened the perception that policymakers have everything under control, which stokes even more speculation and stronger risk market inflation. And global risk asset prices - from stocks, to junk bonds to sovereign debt to emerging market debt and equities - enjoy inflated prices based on the view that policymakers can ensure a low-risk macro backdrop. Market players impute moneyness upon Trillions of debt instruments of suspect quality - Credit that will be vulnerable in the next bout of risk aversion and attendant de-leveraging.
I just don't believe that policymakers have the situation under control. Sure, they can incite a reversal of short positions and risk hedges. They so far retain the capacity to foment "risk on" and speculative excess. Yet, in reality, this is more destabilizing than it is a source of system stability. The amount of mercurial speculative finance has become so enormous as to be unmanageable. When this massive pool embraces risk things can quickly get out of hand (how about $150 crude?). But when this pool inevitably turns risk averse, illiquidity and market disruption once again become immediate problems. And it all hinges on the perception of the efficacy of policymaking and the moneyness of sovereign debt - and, in the end, the sustainability of the massive issuance of non-productive government Credit. The analysis of Bubbles and Bubble dynamics is integral to a Contemporary Theory of Money and Credit.
This afternoon, former Bundesbank Vice President and ECB Executive Board member Juergen Stark warned that public finances in advanced economies were in "dire straits" and that fiscal deficits were "unsustainable." He was also critical of the ECB bond purchase program, warning that "intervention in the sovereign bond markets postponed adjustment requirements." I'm with Mr. Stark on this - and I'm with the German economic viewpoint more generally. Indeed, my analytical framework draws heavily from the "Austrian"/German perspective of the overriding importance of stable money and Credit. The Germans well appreciate the danger of monetary inflation, flawed policymaking doctrine, economic maladjustment and Bubbles. And most American economists believe the Germans remain hopelessly fixated on the Weimar hyperinflation experience. I fear our economic community remains hopelessly fixated on flawed economics.
4) … The Diktat Theory of Money and Credit is being used to establish regional global governance.
An inquiring mind asks will the Euro zone break apart, or will a political, monetary, and fiscal union form, where diktat serves both as mney and credit?Ambrose Evans Pritchard relates Graeme Leach, the Institute of Directors' chief economist, said Berlin's "fiscal compact" to police the budgets of EU deficit states is in no sense a fiscal union. "Germany has not agreed to eurobonds or North-South fiscal transfers. Europe can't find a solution because there isn't one. "There is zero chance that the eurozone will survive in current form this year, and Greece will be out by the summer, just in time for cheap holidays," he said.
Yet, nation states such as Greece are losing their fiscal sovereignty as sovereign leaders and sovereign bodies dictate monetary policy, fiscal policy, and economic policy. The fiat monetary system is being replaced by the diktat money system which will rule in each of the world's ten regions.
The FT reports Harsher terms leave a 'bitter taste in mouth' for bondholders. About 20-25% of Greek bonds are now in the hands of hedge funds, which may complicate the deal. It quoted a bond experts as saying that he expected to see an execution risk. The article said that even some banks may not participate given the rise in the net present value loss to 75%. The Greek CDS will now almost certainly be triggered by this deal. The attempt to avoid a CDS trigger was the original motivation to engage in a voluntary debt exchange deal.
Regionalization is the new direction in globalism, as the ECB's Sovereign Bond Action, and two regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy, and budget commissioners nd economic commissioners will proceed with fiscal austerity and structural reforms. A monetary union, a fiscal union, and a structural union is forming to complement the Euro currency.
The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and soon LTRO facility, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, with the result that capitalism has died and regional global governance is rising to replace it.
Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind's seven institutions and in all of the world's ten regions. The Beast regime is rising out of the most proliferate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece is a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves.
Regional statism will likely be the next step forward in the New Europe, where monetary cardinals, that is regional stakeholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will be de rigueur, and used for both money and credit.
This second massive Greece Bailout Agreement ushers in the age of regional global governance to replace capitalism. Major world currencies, DBV, and emerging market currencies, CEW, will soon be turning lower, when it becomes apparent that Greece is an insolvent nation and that its sovereign debt is unsustainable, as Open Europe writes Take III: Don't bore me with the details. Felix Salmon writes The Improbable Greece Plan. Greece's debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back. The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.
King World News relates Fears of debt contagion. These as well as fears of decreased growth, will cause disinvestment out of stocks and delveraging out of commodities, as fiat money dies globally.
Future EU Leader's framework agreements will serve as the constitution for the New Europe, and usher in the ten toed kingdom of regional global governance, where the Beast Regime of Neoauthoritarianism, will be replacing the Banker Regime of Neoliberalism.
Soon a New Charlemagne will rise to rule the Euro zone, where Germany will be preeminent, as a type oof revived Roman Empire that governs the European continent
Bob Janjuah writes in Zero Hedge, Monetary Anarchy. The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt, that is not subject to any collective action clause, is as Mark Grant writes, Opens Pandora's Box. Ambrose Evans Pritchard describes the ECB's actions as legerdemain, saying the European Central Bank has taken action to insure that it suffers no loss on its Greek holdings, automatically reducing other creditors to junior status; this sets a precedent for Ireland, Portugal. Spain, and Italy.
Out of the debt travails of the profligate Mediterranean Sea country of Greece, new sovereigns are rising to rule the Eurozone. Creative destruction is working to pass the baton of sovereignty from nation states to the EU ECB IMF Troika.
Reuters reports The ECB Greek Bond swap piles pressure on the EU. The European Central Bank's decision to exempt itself from taking losses on its Greek bonds gives its senior status in the bond market and may push up borrowing costs of other debt-strained euro zone countries, Standard & Poor's said on Friday. The ECB and the 17 euro zone central banks made cosmetic changes to the 62 billion euros worth of bonds they own this week to avoid being pulled into Greece's debt reduction deal, which will see private investors lose well over half their money. S&P, which carried out a mass downgrade of nine euro zone states last month, said the ECB's move was another blow for the bloc's weaker countries, changing the ECB's status at least in this instance "from implicit super-senior creditor to an explicit one."
"We believe that this development (seniority of ECB) could further weaken the prospects of peripheral euro zone sovereigns currently receiving official funding to regain the ability to access the capital markets and could raise borrowing rates of those sovereigns still accessing the primary markets," it said in a statement.
The ECB in announcing that it is swapping out their Greek debt for new Greek debt that is not subject to any collective action clause, establishes a Euro zone monetary union, to complement the debt union, that was established when EU leaders announced the first Greek bailout agreement in May 2010.
Regional trade imbalances is another catalyst for a EU Political Union, that is a Federal Europe. Germany exports products to the peripheral European countries, which run trade deficits. Greece has a trade deficit of about 10% of GDP. Greece must have a trade surplus if public debt as well as business credit and stock leverage is to be reduced. Until Greece runs a trade surplus, Greece cannot get their government and private budgets under control. Greece must cut its fiscal expenditures and/or raise taxes. As Greece does this, the Greek economy will continue to shrink, making it more difficult buy foreign goods. This leads to a deflationary spiral. And that same deflationary spiral will spin up to take in all of Europe.
These two catalysts, the loss of debt sovereignty and regional trade imbalances, will cause political leaders to meet in even more summits, waive even more national sovereignty, and establish a European federal political union, and establish the ECB, or the Bundesbank, as the Euro's Bank, and a fiscal union, which by diktat will provide moneyness, that is seigniorage, and thus by defacto reasoning, establish a debt union, where debt servitude will establish the EU as a totalitarian collective.
The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt that is not subject to any collective action clause, establishes Greece as a client state within a Euro zone region of global governance. Julia Amalia Heyer in Der Spiegel A Political Establishment In Freefall, Greece Lurches to Left Amid Radical Austerity, communicates that Greece is the Eurozone's first colony.
Mark Grant of Out Of The Box writes in Zero Hedge For Greece Tomorrow Has Arrived. Greece will shortly be placed into "Default" by S&P and Fitch which will trigger default language in all kinds of securitizations including Greece's $90Bn in derivatives and may cause disgorgement from accounts that are forbidden to hold defaulted bonds.
After the country has been placed into "Default" the banks will soon follow and once again there will be all kinds of consequences in interbank lending, collateral agreements, securitizations, et al from all of this. The CDS contracts for Greece may or may not function as they stand but, as I am quite certain will happen, not enough bond holders tender their bonds for the new debt so that Greece will pass the "Collective Action Clause" which will certainly trigger CDS in my opinion and if not will show the fallacy of that market. The structure of the deal puts the IMF/EU/ECB clearly in control of the finances of Greece so they have replaced some sort of Czar with the bureaucrats of the Troika and the country no longer will control its own finances as they traded away their sovereignty for cash. In fact, an escrow account will be set up for Greece which will be controlled by the Troika and Greece is being forced to change their Constitution pledging to pay their creditors before providing any money for the country. A quick study of the math reveals that Greece will get about 19 cents on the Dollar and the rest of the money is the sovereign nations of Europe paying back their banks with the money they have supposedly lent to Greece. Greece is now nothing more than a conduit for the nations of Europe to pay back their own financial institutions. Now we will see if the Parliaments in Europe will go along with this plan as many still have to approve it and a careful reading of the math involved here may be troubling for some governments especially Finland and the Netherlands. We will also see, with Greek elections looming, how the citizens react to all of this either in the polling booths or in the streets as an additional $4Bn of spending cuts have been mandated by the Troika and they state that the money will not be paid to Greece until they are implemented which must be by the end of February.
The total outstanding debt for Greece will now rise to $1.270Tn as new debt pays off old debt in a country with substantial negative growth so that the real situation, regardless of what we are told, worsens. In early May Greece faces its next bond payments so there may be a re-do for all of this in several months' time. If Greece is actually going to get the next round of the bailout then the other side of the coin is the increased debt being taken on by the other countries in Europe which could cause more downgrades as the new debt to GDP numbers are assessed.
WSWS writes The purpose of the so-called "aid packages" for which the Greek population must sacrifice is not to help the people, but to enrich the banks, hedge funds and speculators. For many experts and officials, the bankruptcy of Greece is a foregone conclusion. According to Spiegel Online, they admit off the record: "Of course, the 130 billion [euros] will not solve the problem. It is only a question of buying time. Time until the financial markets have stabilized to the extent that they can handle the bankruptcy of Greece without a chain reaction." Of the €130 billion agreed by European finance ministers on Monday, €30 billion will flow directly to the accounts of creditor banks, which are guaranteed repayment (with interest) of a portion of their loans to Greece already written off. The remaining money goes into an escrow account to ensure that it is used to pay off debts and not to finance essential government functions.
And WSWS writes The €130 billion plus package of loans agreed by euro zone finance ministers does nothing to protect Greece from bankruptcy. It merely postpones the inevitable, while European and international finance capital use Greece as a testing ground for their scorched-earth policy of savage austerity being rolled out across the continent. Nothing is guaranteed as yet.
Under the plan, holders of privately-held Greek bonds are to be asked to participate in their voluntay restructuring, accepting losses of up to 53 percent. It will not be clear until March whether this has been accepted. Moreover, Monday's package is entirely dependent on further spending cuts of €3 billion: only if this is achieved in a timely and effective manner will aid be forthcoming from the EU.
Yet an additional €20 billion is expected to be needed to recapitalise Greek bank, making a total of €50 billion, due to the flight of capital from the country. There is also to be a massive extension of privatisation projects, up from five to 35, meaning the wholesale sell-off of state land and buildings.
To enforce this, control over Greece's economy has been placed entirely in the hands of the troika, in what the BBC's Gavin Hewitt described as a "humiliating and unprecedented intrusion into Greece's sovereignty." European Commissioner for Economic and Financial Affairs Olli Rehn confirmed that a separate account is to be created for the latest bailout package. This is to ensure that debt and interest payments to the banks take priority over government funding of public services and wages.A leaked confidential report prepared by analysts for the troika admitted that its targets were unachievable and that, even under the most optimistic forecast, the cuts and demands being imposed can only produce greater indebtedness and economic crisis.Everyone knows this to be the case. The latest bail-out package is broadly acknowledged to be a "suicide pact", by which the Greek population is subject to ever greater penury while the troika prepare contingency plans for a supposedly "orderly default." Many are forecasting that D-Day will be around March 20, when Greece is due to repay €14.5 billion of debt.
And WSWS writes of Dickensian social inequality as it relates the marking of the 200th anniversary of the birth of Victorian age English novelist Charles Dickens.
Tyler Durden relates The FT reportsThe Second Greek Bailout includes three memoranda of reforms, in addition to initial memorandum of February 9 2012, that are assigned for completion by the end of February. The reforms, spelt out in three separate memoranda of a combined 90 pages, are the price that Greece has agreed to pay to obtain a €130bn second bail-out and avoid a sovereign default.
The 38 measures, (that are assigned for completion by the end of February), are a mix of laws that must be passed by parliament, ministerial decisions and presidential decrees and focus on spending cuts, bank regulations, and economic reforms. Among the measures that must be completed in the next seven days are reducing state spending on pharmaceuticals by €1.1bn; completing 75 full-scale audits and 225 value added tax audits of large taxpayers; and liberalising professions such as beauty salons, tour guides and diet centres. Even the longer-term reforms must be completed quickly. A draft 49-page "memorandum of understanding on specific economic policy conditionality", dated February 9, includes dozens of measures that must be completed in the first half of the year.
Landon Thomas of the NYT writes As Greek restructuring looms, bondholders think twice about other sovereign debt. The hard line approach Athens has taken to force steep losses on creditors has prompted fears that other weak countries in Europe may do the same.
GlobalResearch.ca writes Euro currency crisis: trapped inside an economic prison.
The Automatic Earth writes Our depraved future of debt slavery (Part II)
Tyler Durden relates The colonization begins: Germany may send 160 tax collectors to Greece
Shaun Richards writes The latest Greek bailout has Euro zone leaders acting like the March Hare from Alice in Wonderland. It would appear that there is to be no halt to the economic vandalism that is currently being inflicted on Greece. Another 3.3 billion Euros of public-spending cuts will be piled on an economy which is spiralling downwards in 2012. So we can expect more of the vicious circle of austerity leading to economic decline meaning more austerity is needed and repeat. It will not be too long before bailout number three is required and as the amounts spiral it is quite plain that not starting the process with a debt haircut was a fatal error in methodology.
Bloomberg reports European services and manufacturing output unexpectedly shrank in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January." And Reuters reports Euro zone economy set to shrink in 2012, deficits in focus.
5) … Financial armageddon, that is a world wide credit bust and global financial collapse is imminent.
Santiago Zabala writes in the NYT The European Union must reconsider the existential nature not only of citizens but also of philosophy. When we speak of being from the existential-hermeneutic point of view, as those interested in philosophy well know, we are not referring to the factual existence of things but rather to the force of the people, thinkers and artists who generated our history. Thus, each epoch can be alluded to in the name that great philosophers have given to being in their work - "act" in Aquinas Middle Ages, "absolute spirit" in Hegel's modernity, or "trace" in Derrida's postmodernity. It is between being and nothing. But being also denotes how our existence is hermeneutic, in other words, a distinctive interpretative project in search of autonomous life. We exist first and foremost as creatures who manage to question our own being and in this way project our lives. Without this distinctiveness we would not exist; that is, our lives would be reduced to a predetermined subordination to the dominant philosophical or political system. The problem in 2012 is that E.U. policies are presented as if we have reached the end of history: after decades of war, Europe is finally united culturally, economically and soon also militarily. This, in the E.U. conception, is the best possible governance we could hope for. But as the ongoing protests throughout Europe point out, history has not ended: as citizens we continue to project our lives in ways that diverge from the Union's neoliberal game plan. The fact that they are promoting technocratic governance does not imply that the nations of Europe are incapable of governing themselves but rather that they are being trammeled into compliance with the E.U. measures, classifications and rankings.People's lives are being reduced to a predetermined subordination to the dominant philosophical or political system, that being emerging regional global government. A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, fate is working through creative destruction, directing that regional global governance be established.
There has been a progressions of kingdoms throughout history. Kings governing mankind throughout history have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. Most recently two iron kingdoms, the combine of the UK and European rule, and the US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance.
Fate not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. Fate at the appropriate time will open the curtains, and onto the world's stage will step the most credible of Europe's political leaders, the Sovereign, He will be accompanied by Europe's banker, the Seignior,. These will have have EU wide sovereign authority. The Little Authority, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat.
Steve Barnes provides the Andrew Garvin Marshall, Research Associate with the Centre for Research on Globalization, article, The High Priests of Globalization. Foundations had been central in promoting the ideology of globalism that laid the groundwork for organizations. Foundations effectively blur boundaries between the public and private sectors, while simultaneously effecting the separation of such areas in the study of social sciences. This boundary erosion between public and private spheres "adds feudal elements to our purported democracy, yet it has not been resisted, protested, or even noted much by political elites or social scientists." Zbigniew Brzezinski, foreign policy strategist, Joan Roelofs, "Foundations and Collaboration," Critical Sociology, Vol. 33, 2007, page 480.
As the imitation of American ways gradually pervades the world, it creates a more congenial setting for the exercise of the indirect and seemingly consensual American hegemony. And as in the case of the domestic American system, that hegemony involves a complex structure of interlocking institutions and procedures, designed to generate consensus and obscure asymmetries in power and influence. Ibid, page 481.
In 1957, two years later, the Treaty of Rome was signed, which created the European Economic Community (EEC), also known as the European Community. Over the decades, various other treaties were signed, and more countries joined the European Community. In 1992, the Maastricht Treaty was signed, which created the European Union and led to the creation of the Euro. The European Monetary Institute was created in 1994, the European Central Bank was founded in 1998, and the Euro was launched in 1999. Andrew Rettman 'Jury's out' on future of Europe, EU doyen says, EUobserver: March 16, 2009
The European Constitution (renamed the Lisbon Treaty) was a move towards creating a European superstate, creating an EU foreign minister, and with it, coordinated foreign policy, with the EU taking over the seat of Britain on the UN Security Council, representing all EU member states, forcing the nations to "actively and unreservedly" follow an EU foreign policy; set out the framework to create an EU defence policy, as an appendage to or separate from NATO; the creation of a European Justice system, with the EU defining "minimum standards in defining offences and setting sentences," and creates common asylum and immigration policy; and it would also hand over to the EU the power to "ensure co-ordination of economic and employment policies"; and EU law would supercede all law of the member states, thus making the member nations relative to mere provinces within a centralized federal government system. EU Constitution - the main points. Daily Mail , June 19, 2004.
The Constitution was largely written up by Valéry Giscard d'Estaing, former President of the French Republic from 1974 to 1981. The Treaty, passed in 2009, created the position of President of the European Council, who represents the EU on the world stage and leads the Council, which determines the political direction of the EU. The first President of the European Council is Herman Van Rompuy, former Prime Minister of Belgium. On November 12, 2009, a small Bilderberg meeting took place, hosted by Viscount Etienne Davignon and including "international policymakers and industrialists," among them, Henry Kissinger. Herman Von Rompuy "attended the Bilderberg session to audition for the European job, calling for a new system of levies to fund the EU and replace the perennial EU budget battles." Ian Traynor, Who speaks for Europe? Criticism of 'shambolic' process to fill key jobs. The Guardian, 17 November 2009:
Following his selection as President, Van Rompuy gave a speech in which he stated, "We are going through exceptionally difficult times: the financial crisis and its dramatic impact on employment and budgets, the climate crisis which threatens our very survival; a period of anxiety, uncertainty, and lack of confidence. Yet, these problems can be overcome by a joint effort in and between our countries. 2009 is also the first year of global governance with the establishment of the G20 in the middle of the financial crisis; the climate conference in Copenhagen is another step towards the global management of our planet." Herman Van Rompuy, Speech Upon Accepting the EU Presidency, BBC News, 22 November 2009:
Among the EU power players attending this years meeting was the first President of the European Council, Herman van Rompuy, who was appointed as President following an invitation to a private Bilderberg meeting in November of 2009, at which he gave a speech advocating for EU-wide taxes, allowing the EU to not rely exclusively upon its member nations, but have its "own resources." Bruno Waterfield, EU Presidency candidate Herman Van Rompuy calls for new taxes, The Telegraph, 16 November 2009:
European Central Bank President, Jean-Claude Trichet, "said governments should consider setting up a finance ministry for the 17-nation currency region as the bloc struggles to contain a region-wide sovereign debt crisis." Trichet asked: "Would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the union?" Further in line with this thought, and with the ideas laid out in the Bilderberg meeting in favour of a 'power grab', Trichet said he supports "giving the European Union powers to veto the budget measures of countries that go 'harmfully astray,' though that would require a change to EU Treaties." Such a finance ministry would, according to Trichet, "exert direct responsibilities in at least three domains".
They would include "first, the surveillance of both fiscal policies and competitiveness policies" and "direct responsibilities" for countries in fiscal distress, he said. It would also carry out "all the typical responsibilities of the executive branches as regards the union's integrated financial sector, so as to accompany the full integration of financial services, and third, the representation of the union confederation in international financial institutions." Bloomberg, European Central Bank President Jean-Claude Trichet calls for Euro Finance Ministry, The Economic Times, 3 June 2011.Last year, Belgian Prime Minister Yves Leterme endorsed such an idea of a 'European Economic Government' when he stated: The idea of strengthened economic government has been put on the table and will make progress. In the end, the European Debt Agency or something like it will become a reality. I'm convinced of this. It's about Europe's financial stability and it's not an ideological debate about federalism. I myself am a federalist. But more integration and deeper integration are simply logical consequences of having a single currency. Daniel Hannan, European economic government is inevitable, Telegraph Blogs, 17 March 2010.
The plans for an 'economic government' require the strong commitment of both France and Germany, which may explain Merkel's reported appearance at Bilderberg. In March of 2010, the German and French governments released a draft outline that would "strengthen financial policy coordination in the EU." The plan, seen by German publication Der Spiegel, "calls for increased monitoring of individual member states' competitiveness so that action can be taken early on should problems emerge." Luxembourg Prime Minister Jean-Claude Juncker stated in response to the plan, "We need a European economic government in the sense of strengthened coordination of economic policy within the euro zone." Spiegel, Plans for European Economic Government Gain Steam, Der Spiegel, 1 March 2011.
In December of 2010, German Finance Minister Wolfgang Schaeuble stated that, "In 10 years we will have a structure that corresponds much stronger to what one describes as political union." Andrew Willis, Germany predicts EU 'political union' in 10 years, EU Observer, 13 December 2010.
Mario Draghi is the current President of the Bank of Italy, as well as a board member of the Bank for International Settlements - the BIS (the central bank to the world's central banks). In an interview posted on the website of the BIS in March of 2010, Mario Draghi stated that in response to the Greek crisis, "In the euro area we need a stronger economic governance providing for more coordinated structural reforms and more discipline." Mario Draghi: "We need a European economic government" interview in PDF Handelsblatt, The Bank for International Settlements, March 2010.
Certainly, the objective of a 'European economic government' will continue throughout the coming years, especially as the economic crisis continues.
Life in Europe can now be characterized as a totalitarian collective. Totalitarian collectivism is the EU's future. European Socialism will die in 2012. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.
The seigniorage of fiat money is failing, and the seigniorage of diktat is rising in its place, as is seen in the rise of power of the EU ECB IMF Troika to appoint technocratic government in Greece and Italy as well as in the massive Second Greek Bailout Agreement. The fiat monetary system is being replaced by the diktat money system which will rule in each of the world's ten regions.
Corieriser publishes the Robin Niblett, Chatham House, Elcano Royal Institute, article Economic Crisis And Emerging Powers: Towards A New International Order? which presents the case for regionalization for security, stability, and sustainability. For the next 10 to 20 years at least, as the emerging powers acquire greater political power and autonomy, they are likely to repeat what the Western powers have done, promoting their interests within institutions rather than handing any more power than absolutely necessary to them. In other words, the world's most powerful states will seek to manage their interdependence through international political negotiation, rather than through new forms of global governance.
The real challenges to the existing international order will come not from the established or emerging powers, but from global forces that are beyond their control and also from those non-state entities and groups which seek to undermine the process of globalisation that links all states and societies ever closer together. Ensuring the continuation and deepening of international order in the next decades of the 21st century will require governments in both the West and among the emerging powers to improve their domestic resilience to internal and external shocks and, as suggested below, to use deeper regional cooperation as a testing ground for higher levels of international cooperation.
Two priorities stand out in this context. First, all states need to professionalise and improve their delivery of key services that promote security and enable sustainable growth and prosperity. For countries in the West, this will involve major reforms to welfare systems that remain industrial in their scale and approach and have not yet adapted to the West's changed demographic profile and reduced future rates of economic growth. it will also mean finding more affordable ways of maintaining their internal and external security, both in terms of lessening the appeal and impact of extremist or criminal attacks on their societies, and in terms of contributing to enhanced levels of security beyond their borders. In this regard, military deterrence will be as important as incentives to reduce the disparities in wealth and human security between them and their poorer neighbours.
For the emerging powers themselves and for most countries in the developing world, the priority will be to build the political institutions and processes, including functioning judicial systems and vibrant civil societies, that will embed a culture of greater transparency and accountability. otherwise, rising levels of economic growth could lead to social upheaval or to unsustainable economic bubbles, either of which could bring to a jarring halt the process of global economic and political rebalancing that is currently under way.
Finally, deeper forms of regional integration may serve as a useful bridge to a future in which the term 'global governance' starts to have a real meaning. Although few groups of states are likely to emulate the EU in terms of building supranational institutions and methods of political governance, the deepening of consultation and cooperation of groupings in Asia (such as ASEAN and ASEAN plus 3), in Latin America (UNASUL) and sub-Saharan Africa (the African Union and ECOWAS) is serving two useful purposes. First, it is bringing pressure to bear on the emerging powers themselves to adhere to norms and processes that they do not control. and secondly, it is enabling the development of best practices in economic cooperation, market opening and political consultation at a regional level which could gradually be elevated to an international or global level, as and when a consensus begins to emerge on the validity of those best practices across regions.
Hedley Bull, the renowned British international-relations theorist, wrote that international order would at best resemble the notion of an 'international society', where states chose to adhere to certain rules and norms as a way of avoiding falling into anarchy and war. The rebalancing of economic and political power from the West and North to the East and South, and the deepening interdependence that is accompanying this process, now offers an opportunity for the world to test out Hedley Bull's vision. The birth of an international society is by no means foreordained, but governments, companies, civil society and individual citizens now have the opportunity to see if they can put his theory of international order into practice.
The Beast regime of Neoauthoritarianism is rising to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast's seven heads are rising to occupy in all mankind's institutions, and its ten horns are rising to govern in all of the world's ten regions. The Beast regime is to replace the Banker regime of Neoliberalism, The Beast regime is coming like a terminator that can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.
6) … The Fed continued buying 30 Year Treasuries to prevent bond vigilantes from calling US Interest rates higher.
The WSJ reports Fed Buying Lifts Fed Buying Lifts 30-Year Treasury Bond. Boosted by a supportive Federal Reserve, the 30-year Treasury bond pocketed some gains Friday in a listless session. The lackluster move, with the benchmark 10-year note trading flat, came amid a dearth of fresh news on the euro zone's sovereign debt crisis. A round of mixed U.S. data on consumer sentiment and new home sales also failed to energize bond investors. Instead, it was the Fed's busy buying schedule that drew some attention. The 30-year bond was the best performer as the central bank bought $1.926 billion in Treasurys maturing between Feb. 15, 2036, and ...US Federal Reserve purchases of longer out America's sovereign debt helps sustain the value of the debt. The practice prevents bond vigilantes from calling US Interest rates higher across the board. The Interest Rate on the US 10 Year Note ^TNX hit a triple bottom on December 19, 2011, and January 17 and January 30, 2012, and is now trying to come up above 2.0%.
The chart of the 10 Year US Note, TLT, shows a rise of 0.65% while the chart of the 30 Year US 30 Year Bond, EDV, shows a 0.95%. And the chart of the Flattner ETF, FLAT, shows a rise to a triple top high; and the chart of the Steepner ETF, STPP, shows a fall to a triple top bottom, a descending triangle bottom, from which it will soon explode from.
The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is coming up from an Elliott Wave 2 bottom, rising up in an Elliott Wave 3, meaning that the interest rate on the longer duration bonds is going to rise much faster than the interest rate on the shorter duration bonds. Thus the 30 Year US Treasuries,EDV, and the Zeroes, ZROZ, and are going to fall like a rock, and investors are going to flee US Sovereign Debt. Gold, GLD, as well as oil, USO, will explode substantially higher. Silver, SLV, might explode higher as well.
As competitive currency devaluation commences and grows in intensity all mining stocks ,MXI, EMMT, even GDX, GDXJ, and SIL, are going to fall lower as will be seen in MXI, EMMT, GDX, GDXJ, SIL, and SSRI. Silver Standard Resources Inc, SSRI, was the most favored carry trade investments of all time; its chart reflects the death of fiat money in May through July of 2011.
RYANMBURKE19 writes Our economy has increasingly moved from borrowing via bank loans and bonds to secured funding. With available returns so low, most investors do not want to lend on an unsecured basis at low rates. Hence, they demand collateral. Given near-zero rates going out several years, there is little incentive to take additional risk. Thus my decision to move from a money market to a treasury only fund. Similarly, many large institutions are no longer letting their cash be used by financial institutions for repos and re-hypothecation ….. By not terming out US government debt, the Treasury is virtually guaranteeing that rates can NEVER be raised, as doing so would drive up interest expense and overwhelm tax revenues. As long as the Treasury maintains its current term structure, the US will continue running high deficits without the ability to raise rates. At some point in the future (3-5yrs in my estimation), the markets will likely force up rates and the US will be forced to refinance at rates high enough to destroy our budget even more. What will we do then? … My reply to RYANMBURKE19 is to buy and take possession of gold now; put it in a gun safe and store both in your home.
7) … In today's news
WSWS reports Highland Park Michigan school district faces closure threat. Michigan Governor Rick Snyder is threatening to force the closure of the entire Highland Park, Michigan school district in response to a cash shortage that has left the district unable to make payroll this week.The announcement follows the suspension of the emergency manager (EM) appointed by Snyder to run the district. A judge suspended Jack Martin after a lawsuit filed by a Highland Park school board member who said his appointment violated the state's open meeting law. The school district is reportedly $150,000 short of the cash needed to make payroll this Friday. The district ended the 2011 school year with a cumulative $11.3 million deficit. Enrollment has dropped sharply following wave after wave of school closings and budget cuts, falling from 3,179 in 2006 to less than one thousand currently.
Snyder says the state will likely not make further emergency loans to keep Highland Park schools open. Instead, the governor raised the possibility of contracting with another district to operate the schools for the rest of the year, or contracting with a charter school operator. The governor indicated he would quickly reappoint Martin as EM as soon as the review panel that recommended him for the post holds another meeting in compliance with state open meeting requirements.
In late January Martin ordered the closure of Barber Focus School for grades K-12, one of three schools remaining in Highland Park, and its merger with Henry Ford Academy. The announcement came within hours of Martin's appointment as emergency manager and provoked widespread outrage among parents and staff.'
The attack on public education in Highland Park is part of an effort by both Democrats and Republicans to force the economic crisis onto the backs of working people by slashing jobs, wages and social services. The threat to close the Highland Park Schools follows within days the announcement of Detroit Public Schools Emergency Manager Roy Roberts that 16 school buildings will be closed this fall. A succession of state appointed emergency managers at the Detroit Public Schools have shuttered scores of buildings and imposed massive concessions on teachers, including a 10 percent pay cut last fall.
Jack Martin is himself on the financial review team appointed by Governor Snyder to consider a possible state takeover of the finances of the city of Detroit. Martin, an African American, is part of Detroit's business elite and a proponent of for-profit charter schools. In 2002 President Bush named him chief financial officer of the US Department of Education (DOE). He later left the DOE to become the CFO of White Hat management, an operator of charter schools noted for its unscrupulous practices. Currently Martin serves on the board of directors of Knowledge Investment Partners, a hedge fund management company that specializes in the education sector. (see: "Who Is Jack Martin?")
Michigan's Public Act 4 law, giving expanded powers to emergency managers, is thoroughly undemocratic. It gives EMs the right to void union contracts, impose budget cuts and sell city assets. At the same time, the Democratic Party establishment and the trade union bureaucracy in Michigan are posing as opponents of the EM law to make it appear that they are defending the interests of working people. However, their main argument is that drastic cuts on the working class can be imposed through the existing city political establishment.
Typical of this posturing was a panel discussion on the emergency manager law Tuesday in Highland Park, convened by Michigan Democratic Congressman John Conyers. The meeting, which drew few working class residents of the city, brought together leading figures in the Democratic Party establishment in the Detroit area. This included Congressmen Gary Peters and Hansen Clarke, Detroit City Council member JoAnne Watson, Detroit Federation of Teachers President Keith Johnson and American Federation of State, County and Municipal Employees (AFSCME) Council 25 president Al Garrettt.
Several legal experts testified that the Michigan emergency manager law was unconstitutional because it violated the commerce clause of the US constitution in relation to contracts. Jocelyn Benson, a professor at the Wayne State Law School, testified that the EM law might also be in violation of the voting rights act because it was disproportionately affecting minority voters in Michigan.
Whatever the merits of the legal arguments advanced, Conyers and other Democrats are covering for the fact that the emergency manager law in its initial form was enacted under Democratic Party administrations. In fact, Democratic Governor Jennifer Granholm appointed the majority of emergency managers currently operating in Michigan.
Meanwhile, union officials like Johnson and Garrettt, while denouncing the emergency manager law, are themselves involved in imposing concessions on their members. Johnson in fact boasted that he oversaw givebacks by teachers in 2009 amounting to $120 million. For his part, Garrett is overseeing concession talks with the city of Detroit aimed at extracting more than $100 million from city workers.
In his remarks, Congressman Gary Peters articulated the real content of the Democrats' opposition to the emergency manager law, which is to work instead through the trade union bureaucracy to impose cuts. "The labor unions are willing to make sacrifices," Peters said, referring to the massive concessions handed over by the United Auto Workers in 2009 as part of the Obama administration's forced bankruptcy and restructuring of General Motors and Chrysler. "The auto workers stepped forward, now GM is making record profits," he continued.
A number of the panelists, such as Reverend Anthony Bullock of the Rainbow PUSH Coalition in Detroit, attempted to present the emergency manager law in racial terms in order to obscure the class issues. "We will not be consigned to second class citizenship," said Bullock. However, Bullock and other black Democrats are part of an affluent minority who have benefited from programs like affirmative action, while the vast majority of African American residents in Detroit and Highland Park struggle in poverty or near poverty.
The only proposal advanced at the panel discussion was to support the petition drive, backed by the unions, seeking a referendum to repeal the law. The campaign is in its final stages, currently totaling more than 200,000 signatures that will be delivered to the secretary of state's office in Lansing on February 29 for certification. However, even if signatures are validated and the EM law is suspended, Governor Snyder has indicated he will rely on the previous emergency manager act, which is nearly as onerous.
8) … Conclusion
The Second Greek Bailout terminates the fiat monetary system of capitalism and commences the diktat monetary system where regional global governance rules the Euro zone.Regionalization is the new direction in globalism, as the ECB's Sovereign Bond Action, and two regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone. Mere monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy, and budget commissioners will proceed with fiscal austerity and structural reforms. A monetary union, a fiscal union, and a structural union is forming to complements the Euro currency.
The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and soon LTRO facility, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, with the result that capitalism has died and regional global governance is rising to replace it.
Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind's seven institutions and in all of the world's ten regions. The Beast regime is rising out of the most proliferate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece is a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves.
Regional statism will likely be the next step forward in the New Europe, where monetary cardinals, that is regional stakeholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will bede rigueur, and used for both money and credit.
A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, Fate is working through creative destruction, directing that regional global governance be established.
The dynamos of growth and profit that governed capitalism are losing their power through failure of the debt trade, specifically the failure of fiat money and the failure of neo liberal credit. The dynamos of regional security, stability, and sustainability are powering up regional global governance. The free monetary system as envisioned by Hayek, Rothbard, and Mises is simply a mirage on the Neoauthoritarian Desert of the Real. The diktat monetary system will provide diktat for both the money and credit needs for each of the world's ten regions.
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