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I am not an investment professional. I do not engage in stock or currency trading. I am a blogger and investor who believes the failure of credit has created an investment demand for gold, and that gold bullion is the sole means of wealth preservation.
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  • Central Bank Chief Tells Troubled Nations They Are On Their Own …. EU Leaders Call For Structural Reforms And Centralized Fiscal Supervision …. The Seigniorage Of Diktat Has Commenced 0 comments
    Nov 20, 2011 10:03 AM | about stocks: FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU, BLK, AMP, BX, KKR, GBL, EV, BRK.A, PFG, EEM, ACWI, VSS, WHR, CSCO, FFIV, NTGR, XXIA, ELX, VSAT, CMTL, QCOM, RVBD, CTXS, AKAM, USM, AMT, TU, AMX, RCI, DCM, VIP, SKM, TSU, S, TMUS, JKH, XLF, IAI, KCE, EUFN, IXG, FGEM, SLX, XME, EMT, COPX, MXI, REMX, KOL, ALUM
    Financial market report for the week ending November 18, 2011

    Jack Ewing and Niki Kitsantonis of the NYT report Central Bank Chief Tells Troubled Nations They Are On Their Own. In his first speech as president of the European Central Bank, Mario Draghi complained on Friday that Europe’s political leaders had been too slow to carry out their own plans to address the debt crisis. And despite ever louder calls for central bank intervention, Mr. Draghi offered no hope he would come to any country’s rescue by pumping money into the financial markets. Mr. Draghi, who took office at the beginning of the month, implicitly rejected calls for the central bank to use its enormous resources to stop the upward creep of borrowing costs for Spain and Italy, which threatens their solvency and by extension the European and global economies. Mr. Draghi said the bank would not deviate from its focus on price stability and suggested that other measures could undercut the bank’s credibility. “Gaining credibility is a long and laborious process,” Mr. Draghi said at a gathering of bankers here in Frankfurt. “But losing credibility can happen quickly, and history shows that regaining it has huge economic and social costs.” He criticized leaders for taking too long to act on decisions they had made at numerous summit meetings. “Where is the implementation of these longstanding decisions?” he asked. “We should not be waiting any longer.”

    EU leaders call for structural reforms and centralized fiscal supervision. EU observer reports Finland’s Alexander Stubb, said his country favours the Dutch proposal to create a budget ‘tsar’ within the European Commission. Stubb also suggested that he would “combine the functions of the Presidents of the Commission, the European Council and the Euro Area Summits into one high post.” … And Bruno Waterfield of The Daily Telegraph leaks Germany’s foreign ministry’s secret plans for political union A six-page German foreign ministry document sets out a pathway to European Super State. This includes plans for a European Monetary Fund, with the right to usurp sovereignty from member states experiencing financial difficulty. The fund will have the power to take ailing countries into receivership and run their economies. The document, entitled The Future Of The EU, will require integration policy improvements for the creation of a Stability Union. … And Guido Westerwelle, Angela Merkel’s foreign minster, writes in the FT seeks to solve the European Sovereign Debt Crisis through structural reforms and and tougher central budgetary supervision. … And La Stampa reports that Monti will travel to Brussels on Tuesday to meet European Council President Herman Van Rompuy and Commission President José Manuel Barroso. On Wednesday, Monti is due to meet French President Nicolas Sarkozy and German Chancellor Angela Merkel in Strasbourg.

    Ambrose Evans Pritchard writes that Germany is slipping into the morass of the European Sovereign Debt Crisis. Traders say Asians are taking profits on Bunds and pulling out, with signs that even China's central bank is shaving holdings. Mid-east wealth funds have remained firm. Germany's exposure to the crisis is already huge, and the strains can only get worse as the eurozone tips back into recession. The Bundesbank is so far liable for €465bn in "Target2" payments to the central banks of Club Med and Ireland for bank support. Hans Werner Sinn from the IFO Institute said this is a form of back-door eurobonds that leaves German taxpayers on the hook. "The current system is dangerous. It is prone to a gigantic build-up of external debts," he said. The Bundesbank is final guarantor behind €180bn in bond purchases by the European Central Bank, a figure still rising fast as the ECB buys Italian and Spanish debt.

    Nature economist Elaine Meinel Supkis provides the insight that credit evaporation is underway. Sir Mervyn King: Britain on the brink of second credit crunch, Bank of England Governor warns, The Telegraph “There is weakness over the next few quarters. No one can know what precisely the outcome will be,” he said. “In the last three years, we have seen extraordinary events. Who knows what’s going to happen tomorrow, let alone next month?”
    .
    Ms Supkis states The banks can only issue loans to companies and home owners if they can find sufficient funding on the markets. According to the Bank of England’s inflation report, banks’ funding in the three months to September fell to levels not seen since Lehman Brothers, the US investment bank, crashed in September 2008…banks must raise a further £200 billion-£300 billion next year just to maintain their current lending levels. Translation: we ain’t got no capital. Banks are lending, still. But on a very slender base. Much of their ‘asset’ base has been melting away, that is, loans they handed out are not being paid back so the loans have moved from the ‘asset’ side of the equation to the ‘deficit’ side. Ergo: lending collapses, profits vanish.

    And Ms Supkis adds, Here we see how money from Wall Street continues to warp our Congress and destroy our connections with the government: Wall Street Rallies for a Senate Ally - The NYT. Mr. Brown, a freshman who harnessed populist Tea Party anger to win the seat once held by Edward M. Kennedy, has taken more money from the financial industry than almost any other senator: all told, more than $1 million during the last two years, according to data from the Center for Responsive Politics. Of the 20 companies that accounted for the most campaign donations to Mr. Brown, about half were prominent investment or securities firms like Morgan Stanley, Fidelity Investments and Bain Capital. His donors include such blue-chip names as Gary Cohn, the president of Goldman Sachs, and the hedge fund kings John Paulson and Kenneth Griffin. She comments When he won a popular vote, he voted for the citizens. But now, under fire from the left, he is being bankrolled by the bankers who are scared to death of Occupy Wall Street rage. To this, the Big Picture adds, The US is now a corporate monarchy.

    The major story of this week was that Italy has become an insolvent sovereign, as Jeremy Grant of Reuters reports All eyes on Europe's 7 percent yields. Investors became aware that the EU has progressed from being a debt union to a sovereignty union, where there is a pooling of sovereignty, and as Financial Post reports Run from debt to cash sparks sell off. It was a text book case of debt deflation, that is currency deflation at work in the financial markets, as Doug Noland relates With a crisis of confidence impairing the markets for both sovereign and banking finance, it was seemingly yet another “inflection point” week in the marketplace. Increasingly, the markets are viewing the situation as unsustainable. With Italian debt in a downward spiral, the soundness of the entire European banking system is in serious jeopardy. Troublingly, there was heightened focus on counterparty and derivative issues, including U.S. bank exposure to European debt, the sovereign Credit default swap marketplace and other counterparty exposures. Fear that EU governments will be forced to recapitalize their faltering banking systems has weighed heavily on already depleted confidence in the creditworthiness of sovereign Credit.

    Mr Noland continues, I, for one, don’t believe ECB President Jens Weidmann (or other German statesmen) is bluffing or posturing. I thought it might be useful to highlight from an insightful exchange from a November 13, 2011 Financial Times (Ralph Atkins and Martin Sandbu) interview. Mr. Weidmann’s comments are relevant to the unfolding European debt crisis as well as to central banking more generally.

    Financial Times: “Can you explain why the ECB cannot be lender of last resort?” Bundesbank President Jens Weidmann: “The eurosystem is a lender of last resort – for solvent but illiquid banks. It must not be a lender of last resort for sovereigns because this would violate Article 123 of the EU treaty [prohibiting monetary financing – or central bank funding of governments]. I cannot see how you can ensure the stability of a monetary union by violating its legal provisions. I think the prohibition of monetary financing is very important in ensuring the credibility and independence of the central bank, which allow us to deliver on our primary objective of price stability. This is a very fundamental issue. If we now overstep that mandate, we call into question our own independence.”

    Financial Times: “The impression is that the Bundesbank will stick by principles until the whole house burns down…” Weidmann: “Right now we’re talking about the EU treaty and I don’t see how you can build trust in a system that violates laws.”

    Financial Times: “Are you a pragmatist?” Weidmann: “I am president of an institution which is bound by a legal framework. We should respect the division of labour in a democracy. This has nothing to do with pragmatism or dogmatism.”

    Financial Times: “What if there is a conflict between Article 123 and the risk of a refinancing crisis for Italian debt? Weidmann: “That assumes that you can address the issues in Italy with liquidity and that’s not the case. This whole debate completely blurs responsibilities. Furthermore, monetary financing will set the wrong incentives, neglect the root causes of the problem, violate the legal foundations on which we work, and destroy the cedibility and trust in institutions. You won’t solve the crisis by reducing incentives for the Italian government to act. It’s really an absurd debate in which we are telling institutions: don’t care about the law.”

    And today from a speech given by Mr. Weidmann in Frankfurt: “The lack of success in containing the crisis does not justify overstretching the mandate of the central bank and making it responsible for solving the crisis. The economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilize the current situation in any sustainable way.”

    It would not appear that the Bundesbank is about to succumb to intense political and market pressures - and promote the ECB into the role as open-ended “buyer of last resort.” For the Germans, it is a fundamental issue of core principles. The costs of “monetary financing”, or monetization, outweigh the benefits “so clearly.” And especially here in the U.S., there is a complete lack of appreciation for the myriad costs involved in central bank market interventions.

    Part of my thesis has been that the more the Germans saw of the European and, increasingly, global financial crisis the more determined they would be to safeguard their institutions, economy and credibility. The markets, of course, want the ECB to be more like the Fed, while I suspect the Bundesbank stares across the Atlantic and sees disaster in the making.

    It’s not that sovereign yields are unreasonably high, only that they’ve surged to not unreasonable levels so abruptly. A long-distorted market pricing structure has unraveled rather dramatically, leaving dangerously leveraged financial institutions and over-indebted governments (along with a bloated Credit structure) in a dire predicament. It’s not so much that recent policies have caused the crisis as much as it is a case where an incredibly challenging political and policy backdrop created an opening for The Day of Reckoning to burst right on through.

    It is increasingly apparent that resources are insufficient to sustain everyone. I’ll presume the sophisticated “money” is maneuvering for the exits. There were times this week when I had a really bad feeling about how things were unfolding.

    Lew Spellman of the Spellman Report writes in Zero Hedge how monetization happens, being at the helm when the ship goes down. The consequences of excess debt are now facing the leaders of Europe head on, and a monumental decision must be made whether explicitly or implicitly. Excess debt leads to a long chain of D words: Deleveraging in an attempt to retire debt results in a depressed economy and declining asset prices. The depressed economy breeds private debt defaults that in turn produce distressed banks. The chain then runs through depositor flight from the banks, producing a financial crisis and in turn a devaluation of the currency as capital flees. When foreign goods become more expensive there is a declining standard of living as import prices rise faster than wages. Then in an effort to stop the government debt trap, there is a default on promised entitlements under an austerity program leading to the swift defeat of the political leaders. But ultimately there is a sovereign restructuring or a default of the government debt. Most, if not all, the D words are visiting Europe at the moment and its leaders are falling by the wayside. There is not a precise science that tells us when the debt trap begins the downward spiral that takes the ship down, but there are some rough guidelines. Reinhart and Rogoff (This Time is Different) have found to the extent one can generalize when a country’s debt-to-income ratio reaches the 90 percent level the ship of state begins to list and currently the OECD aggregate of 30-country gross debt-to-income ratio is 105 percent

    The seigniorage of diktat has commenced, as destructionism is replacing inflationism. The former seigniorage of freedom, was characterized by such things as US Federal Reserve credit liquidity, ZIRP, Quantitative Easing I, and II, and carry trade lending. But now credit is exhausting, and competitive currency deflation, that is competitive currency deflation is underway, as is evidenced by the ongoing fall of currencies. Currencies falling this week included FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU, CEW. Currencies rising this week included the US Dollar, $USD, UUP, and the Yen, FXY.

    Unwinding yen carry trade investing is causing disinvesting out of Austria, EWO, Argentina, ARGT, Netherlands, EWN, Sweden, EWD, Korea, EWY, Taiwan, EWT, Singapore, EWS, South Africa, EZA, Turkey, TUR, Indonesia, IDX, India, INDY, INP, SCIN, SCIF, Australia, EWA, KROO, New Zealand, ENZL, Canada, EWC, Mexico, EWW, The UK, EWU, Brazil, EWZ, BRF and Russia, RSX, RSXJ. Hot money is flowing out of China, YAO, HAO, TAO, HKK, CHIM, CHIX, CHII, CHIM, CAF. Sovereign failure is causing money to flow out of Egypt, EGPT, and Vietnam, VNM. Disinvestment is coming out of former stars of Neoliberalism, Poland, EPOL, Peru, EPU, and Chile, ECH. Emerging Markets, EEM, fell 5.5%, the World Stocks, ACWI, 4.2%, and the World Small Caps, VSS, 4.3%

    Destructionism is marked by recession not growth. The fall of Whirlpool, WHR, to is an ominous omen for growth. Growth cannot be sustained in a world of failed sovereigns, that is a world characterized by sovereign insolvency. The Global Government Finance Bubble has finally burst and Whirlpool, a Morgan Stanley Cyclicals Index component, is leading the way down in a world characterized by disinvestment due to collapsing growth. The Morgan Stanley Cyclicals Index, ^CYC, peaked the week ending April 25, 2011 at 1131, and closed this week at 874 as seen in this Wiki Invest Chart. The Morgan Stanley Cyclicals Index, $CYC, fell 4.5% this week, an is down 16.1% this week. Not only is growth ending because of the failure of government, it is is ending as the consumer is exhausted and manufacturers cannot compete when US wage structure is applied to finished goods. On October 28, 2011 CNNMoney reported Whirlpool cutting jobs and closing a plant, and FT reported Whirlpool warns consumer being squeezed. America is witness Destructionism as CNN Money also reported on October 28, 2011 Arkansas city loses two factories in one day. And on October 31, 2011, Suzi Parker and Scott Malone of Reuters reported U.S. manufacturing jobs at risk as demand slows. When Whirlpool Corp closes its refrigerator factory in Fort Smith, Arkansas next year, the plant's 974 workers will lose their jobs. They will not be the only ones who will feel the pain.

    An inquiring mind asks what role will Asset Management companies have in the Age of Destructionism? An inquiring mind asks what role will Asset Management companies such as Blackrock Inc have in a world of disinvestment, deleveraging and derisking out of the Inflationism that characterized the former Milton Friedman Free To Choose floating currency regime of Neoliberalism. The world is now transitioning into a new regime, the Beast Regime of Neoauthoritarianism, which august leaders such as Angela Merkel, Nicolas Sarkozy and Herman Van Rompuy provide Diktat to cope with falling currency values. The ongoing Yahoo Finance Chart of Asset Managers, BLK, AMP, BX, KKR, GBL, EV, LZ, PFG, shows the stock market performance of these companies roughly approximates the S&P for the last ninety days. Just what service can these Asset Management Companies provide in a world that is rapidly moving away from financial services?

    North American oil pipeline companies and North American oil companies will play a pivotal role to the Continents’ security in the Age of Destructionism. Daniel Gross of Daily Ticker writes Oil Hits $100 Per Barrel. It’s All About the Pipelines. Oil has hit $100 a barrel again. A host of factors play into the price of a West Texas Intermediate crude demand, global market conditions, the activity of speculators. Evan Smith, co-manager of the Global Resources Fund at U.S. Global Investors believes the recent run-up can be ascribed in part to activity (or the lack of activity) surrounding pipelines.

    It's hard to get excited about the tubes that facilitate the movement of crude oil around the country. But pipelines have been in the news in recent weeks. First, the U.S. government decided November 10 to postpone a decision about the proposed Keystone line, which would allow the movement of a large quantity of oil from Canada to the southern U.S. On Wednesday, Canadian company Enbridge said it would buy a 50% interest in a pipeline that runs from the huge oil terminal in Cushing, Oklahoma, to the Gulf Coast. As Smith tells me and The Daily Ticker's Aaron Task in the accompanying video, both moves have helped push the price of WTI up.

    Here's why. Oil is priced on global markets. But the price can vary depending on where you're buying. WTI, the benchmark commonly used in the U.S., refers to the price of oil at the landlocked Cushing, Oklahoma terminal. Brent crude, the benchmark for oil traded in the U.K., is a much more (excuse the pun) liquid market, and is a better indicator of the global market price. Historically, WTI has traded at a small premium to Brent, in part because Americans guzzled gas as domestic production fell. But for much of the past year, WTI has traded at a huge discount to Brent, of up to $30 per barrel. As Smith explains, that's because demand for oil in the rest of the world is growing far more rapidly in the U.S., while production in the middle of the U.S. has soared, thanks to a boom in oil production in North Dakota. On Wednesday, Enbridge said it would buy a stake in a pipeline that runs from Cushing, Oklahoma to the Texas Gulf Coast. The significance is that the company is going to reverse the flow, and start sending oil from the terminal to refiners operating on the coast. In theory, increasing the supply of crude to refiners on the Gulf Coast should bring down the price of oil. "Right now, there's too much oil production in the mid-continent, and not enough capacity to get it to the Gulf Coast," said Smith. But oil used by refiners on the coast can come from anywhere, and is therefore priced closer to global prices than to regional ones. "Now that there is a prospect that some of the oil will get down to the coast, it raises the price closer to global benchmarks," said Smith. In other words, opening up more of the supply languishing in Cushing to refiners who operate on the coasts has the effect of pushing up prices. That's bad news for consumers, on the one hand. But it also means that refiners will buy less foreign oil going forward. That's a short-term impact. The decision on the Keystone pipeline will have a longer-term impact, and may serve to keep the price of domestic oil and gas high. On Monday, the State Department, responding to environmental concerns raised in Nebraska and elsewhere along the route, said it would defer until 2013 a decision on whether to permit the construction of the pipeline from Canada to the southern U.S. "That's a 700,000-barrel-a-day pipeline that would bring crude down to the Gulf Coast and keep the U.S. well supplied," said Smith. The decision means it is likely that the supply of crude to U.S. refiners won't be as large as previously thought, and that Canadians might look for other routes to export oil production, to Asia, for example. All things considered, the prospect of less supply over the long-term will push prices higher. Smith argues that bringing more crude from Canada is vital to the U.S. market. For even though production is booming in North Dakota and Texas.  I remark that the charts of Enbridge, ENB, and BlackRock Long Term Municipal Closed End Debt Fund, BTA, both show a shooting star candlestick pattern, suggesting that the seigniorage of oil, and the seigniorage of municipal debt investing is ending.

    Networking shares CSCO, FFIV, NTGR, XXIA, ELX, VSAT, CMTL, QCOM, RVBD, CTXS, AKAM, seen in this ongoing Yahoo Finance Chart, and in this Finviz Screener, have had a strong rally in the last 90 days. An inquiring mind asks how well will these stocks continue to perform? What factors support their recent gains? Can their relative market gains be sustained? How much longer will the seigniorage of networking continue?

    Sprint, S, and MetroPCS Communications, PCS, have been wireless communication loss leaders of late as is seen in this on going Yahoo Finance Chart of USM, AMT,TU, AMX, RCI, DCM, VIP, SKM, TSU, S, PCS and as is seen in this Finviz Screener. What factors support the ongoing gains of the better performing wireless communication companies?

    Morningstar Mid Cap Growth, JKH, fell 4.0% this week.

    Financials traded lower strongly lower this week. Financials, XLF, -5.6, the Broker/Dealers, IAI, -6.0, Investment Bankers, KCE, -5.3, European Financials, EUFN, -7.9, the Global Financials, IXG, -6.1, the Emerging Market, FGEM, -7.4. One can follow the leading banks by using a Finviz Screener such as this one.

    Steel, Metal Manufacturing, and Materials traded strongly lower this week, with silver and junior gold miners leading the way down: SLX, -6.4%, XME, -6.9%,, EMT, -6.7% COPX, -8.7%, MXI, REMX, KOL, ALUM, IYM, XLB, URA, PSCM, all significantly lower. The strong down turn in silver miners, SIL, -8.9%, gold miners, GDX, -8.4%, the junior gold miners, GDXJ, -9.6%, and the Morgan Stanly Cyclicals material component, Freeport McMoran, FCX, -7.3%, reflects, that the risk trade in basic materials stocks is now over. Investors are avoiding risking their capital and are unable to get risk capital at banks. The moneyness of growth, that is, the seigniorage of growth, is over. The seigniorage of freedom, that came with the growth potential of the former Milton Friedman Free To Choose floating currency regime is exhausted. The seigniorage of diktat is unfolding.

    Other notable fallers of the week included, Solar, TAN, Alternative Energy, GEX, Energy Service, OIH, IEZ, Oil Production, XOP, Agribusiness, PAGG, Automobiles, VROM, CARZ, Internet Retailers, HHH, Airlines, FAA,

    Commodities falling lower this week included, DBC, USCI, CUT, RJA, BAL, SGG, CORN, GRU, UNG, UGA, SLV, GLD, JJP, JJA, CUT,

    In news of India, V. Ramakrishnan and Jeanette Rodrigues of Bloomberg report, “India’s central bank will buy government bonds this month for the first time since January to boost cash in the banking system. The move comes after four of the last five debt sales this quarter failed to attract adequate investor demand.” And Anurag Joshi of Bloomberg reports: “Indian companies’ international bond sales have dried up this quarter, after the European debt crisis pushed borrowing costs to the most in more than two years. Sales dropped to their lowest since the second quarter of 2009”. And I report that the India Rupe, ICN, suffered a terrific drop this week, falling 3.4%.

    Argentina is another country that is experiencing rapid destructionism. Drew Benson and Camila Russo of Bloomberg report: “Argentine reserves are falling at the fastest pace since 2008 this month after President Cristina Fernandez de Kirchner’s moves to stem capital flight prompted savers to withdraw dollars from their bank accounts. As inflation estimated by some economists at 24% helped fuel capital flight of $3 billion per month, Fernandez last month ordered energy and mining companies to repatriate export revenue and tightened oversight of the foreign exchange market.”

    Bull Market Thinking relates we are witnessing a Complete paper asset collapse. A case in point in the silver ETF, SLV, and the silver mining stocks SIL, HL, PAAS, CDE, SSRI, MVG, seen in this Finviz Screener. Whole websites have been devoted to the silver bulls who claimed that silver was more valuable than gold; and that it was the upcoming global currency. Silver has proven to be nothing more than a glorified base metal, loved by speculators who are employed by the mining industry or who have had access to 1% carry trade loans from the Bank of Japan. Silver Standard Resources Inc, SSRI, has been the most carry traded company of all time; it got leveraged to fantastic levels via yen carry trade investors.

    Kathleen Madigan of The WSJ reports The Index of Leading Economic Indicators rose 0.9% last month. I comment that I believe that this is simply a one month jump due to a rise in the US Dollar beginning in September, and do not expect any ongoing economic activity as the world has passed from Inflationism into Destructionism.

    Sovereignty is of appointment. You Tube Video presents Nigel Farage, in well tailored fashion, asking What gives you the right to dictate to the Italian people? I have neither suit nor tie, but I do know that sovereignty is of appointment. Leadership has more to do with fate than it does with meritocracy. This was true of the former age, where destiny provided Milton Friedman, Alan Greenspan, and Ben Bernanke. It is true of this age as well, as leaders, such as Nicolas Sarkozy, Angela Merkel and Herman van Rompuy, have risen to power through destiny. There is no human action; rather all things are of fate. A Trilateral Commission and Bilderberg Euracracy is effecting a bloodless coup in Europe. Nicolas Sarkozy and Angela Merkel are the forerunners and ambassadors of the Ten Toed Kingdom of regional economic government called for by the 300 elite of the Club of Rome in 1974. Their Clarion Call comes with authoritarian imperative, that is both compelling and irresistible.

    Sovereign leaders of this age are from the EU’s core, not its periphery. Continuing from the NYT article Central Bank Chief Tells Troubled Nations They Are On Their Own, Jens Weidmann, president of the Bundesbank, the German central bank, was more blunt than Mr. Draghi in rejecting use of the European Central Bank to bail out troubled governments, reflecting the hard line that German policy makers have taken. “The economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilize the current situation in any sustainable way,” Mr. Weidmann said at the same event, the Frankfurt European Banking Congress. He put the onus on governments to address deficiencies in their national economies. “These deficiencies include a lack of competitiveness, rigid labor markets and the failure to seize opportunities for growth,” he said.

    In as much as Italy has lost its debt sovereignty when its interest rate surpassed seven percent, Italy lost its national sovereignty. Italy will have to look to EU ECB and IMF leadership, that is EU ECB and IMF diktat, and their sovereign authority for seigniorage, that is moneyness, as well as a resource for their fiscal spending. Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

    In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. Austerity measures, structural reforms, pension overhauls, bank nationalizations, and debt servitude will be de rigueur. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism is the EU’s future.

    An inquiring mind, concludes with four questions. What is a leader, what does a leader carry, what agenda does the leader carry, and what is that leader’s reward? Urban dictionary provides a number of definitions for leader. I am not a libertarian, but do relate that many Libertarians hold forth Ron Paul as their leader. Do you know what Ron Paul carries, and what his agenda is? He is very much an anachronism in this age of diktat. I believe He and his followers are likely to feel marginalized very soon, as they pursue Freedom and Free Enterprise; these are simply mirages on the Neoauthoritarian Desert of the Real. Freedom and choice are epitaphs on tombstones of the bygone era of Neoliberalism.

    Angela Merkel, Nicolas Sarkozy and Herman van Rompuy are leaders of this age. They are those who are first to serve. They carry the beacon of more Europe and more reform. Their agenda is a European Federal Union, where sovereignty is ceded to Brussels, Berlin and Paris. Their reward is sovereignty and the seigniorage of diktat.

    Political power is coalescing in Germany. Johannes Stern writes in WSWS Germany’s Christian Democrats Head Toward A Grand Coalition. And Bloomberg reports Angela Merkel saying The EU must move toward closer union. And, the NYT quotes her saying, It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union.

    The New Europe that Angela Merkel envisions will be one of ten regional powers, as called for by the Club of Rome. Thus, the New Europe, will be one of the ten toes, of the ten toed kingdom of regional economic government. This global regime will be a monster of state corporatism manifesting as the Beast regime of Neoauthoritarianism,

    Soon out of Sovereign Armageddon, that is a credit bust and global financial collapse, a New Charlemagne, that is a Sovereign, will rise to power in Europe and establish it as a type of powerful and authoritarian revived Roman Empire. The Sovereign will be accompanied by a Seignior, meaning top dog banker who takes a cut, who will have both sovereign authority and fiscal sovereignty, and will provide seigniorage dole to those living in the Eurozone, and the people will be amazed by this, and place their trust in it.

    Freedom and human action characterized the Milton Friedman floating currency free to choose regime, where wildcat finance, a Doug Noland term, and the seigniorage of freedom, provided prosperity. But now, constraint and fate characterize the Beast sinking currency diktat regime, where wildcat governance, and the seigniorage of diktat, will overhaul pension system, and enforce austerity measure, structural reforms, as well as mandate debt servitude.

    I have consistently recommended that one buy and take possession of gold bullion, as it being sovereign wealth, will be the only “money good.” The Wall Street Journal reports Purgatory for MF Global Customers. About 33,000 Account-Holders Can’t Get to Their Cash: ‘My Entire Business Has Come to a Halt. The Examiner reports Investment Advisor Gerald Calente Loses Gold Futures Account In MF Global Debacle
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