Report on capitalism and fiat money for February 7, 2012
Greece has lost its debt sovereignty and thus by default it has lost its fiscal resource and fiscal capability. Greece is in an economic implosion and has a terrifically uncompetitive economy. Greek Crisis relates the Time report Greece's Bad Options. There is now broad agreement among eurozone donors and the IMF that Greece will not be able to squeeze more revenue out of an economy that is in its fourth year of recession," wrote Katinka Barysch, deputy director of the London-based Centre for European Reform in a recent assessment. Added Paul McNamara, investment director at GAM, an asset management firm in London: "Greece is in a horrible position because it was already a terribly uncompetitive economy".
Greece's soon coming default raises a question if it will be utterly rejected as a member of the EU, or if it will exist receiving credit from the EU ECB and IMF Troika, for a subsistence level of government services to keep infrastructure running.
Conservative MP John Redwood writes Greece Should Leave The Euro. And Ashvin Pandurangi writes in The Automatic Earth Crossing the Greek Dead Lines, Greece will default on its loans in March, its economy will continue to shrink dramatically and its public debt situation will never become sustainable. It will be forced to revert to its own national currency, most likely sometime between one month and change from now and the end of the year, at the latest.
Berlin, Brussels and the European bankers have an interest in keeping Europe whole. If one is allowed to exit, all may exit, an undesirable scenario seen from the global banking perspective. The groundwork of a EU debt brake, will soon be followed by the foundation and structure of a European Super State, a Federal Europe encompassing Greece.
Greek Crisis provides the Bloomberg report EU's Barroso Says This Is the Decisive Moment for Greece. EU's Barroso Says This Is the 'Decisive Moment' for Greece European Commission President Jose Barroso said this is the "decisive moment" for Greece and an agreement on a debt swap and second rescue package is close. "We want Greece to remain in the euro," Barroso said in Brussels today, after EU Digital Affairs Commissioner Neelie Kroes told Dutch newspaper De Volkskrant that there would be "absolutely no man overboard" if a country exited the euro.
Greek Crisis relates the FT report Merkel Makes Case For Painful Reform. Angela Merkel spoke Angela Merkel last night swore eurozone partners to a long and painful process of structural reform to restore the economic growth the eurozone needed to overcome its debt crisis. Germany's chancellor also stressed that reforming Greece outside the eurozone was not an option. "I will not participate in pushing Greece out of the eurozone," she said. A eurozone exit was "not an issue". In a speech in Berlin about the future of Europe, Ms Merkel harked back to the labour-market reforms of her predecessor Gerhard Schröder, which cut German unemployment from more than 5m in 2003 to under 3m today. While the reforms were unpopular at the time, this trend showed that "change can bring something good" and make things better even for those initially opposed. With her emphasis on structural reform, the chancellor was trying to counter criticism of her handling of the eurozone crisis.
The definition of a client state is a bankrupt country that once had sovereign authority and debt sovereignty, is assigned technocratic government by regional leaders, and is given diktat, which is used for both money and credit. It accepts currency in exchange for submitting to the sovereignty of regional monetary cardinals, and fiscal commissioners, who work in private public partnerships for regional security and stability. A client state is a subservient country, one that has ceded its sovereignty to regional sovereign leaders and sovereign bodies such as the EU ECB and IMF Troika.
While it is possible that Greece may be forced out of the EU, it is in no way assured that it will be able to secure debt of any type, public or private, at any time in the near future. Therefore, it is possible that it will come to exist as the EU's first client state, within a Euro zone of regional global governance.
Germany rules sovereignly over other Eurozone countries as the lead partner in the EU ECB IMF Troika, and has laid the groundwork for a Federal Europe. The groundwork of a debt brake, will be followed by the foundation and structure of a European Super State. WSWS recently reported EU Summit Agrees To German Plan For Austerity Straitjacket. And now WSWS reports Europe Placed Under The Dictatorship Of The Banks. The EU has already succeeded in imposing two unelected governments in Greece and Italy, whose sole purpose is to loyally implement the demands of the financial oligarchy against the express wishes of the electorate. The summit has now agreed to a fiscal compact further curtailing the ability of national governments to frame economic policy. The pact forces the 25 signatory states to enact a "golden rule" legally requiring a balanced budget. Countries failing to pay their debts on time will be subject to punitive sanctions imposed by the European Court of Justice. Germany, Austria, Italy, Spain, Poland and Estonia have already implemented such balanced budget requirements. The two governments that did not sign, Britain and the Czech Republic, did so out of tactical political considerations, while agreeing fully with the drive for austerity. There is no intention to put such measures, which will impact massively on the lives of millions, to a popular vote. Indeed, these measures are intended precisely to remove critical financial decisions from any oversight or influence by the population. Merkel boasted, "The debt brakes will be binding and valid forever. Never will you be able to change them through a parliamentary majority."
Fate is working through creative destruction to pass the baton of sovereignty to new sovereigns. Angela Merkel and the EU ECB and IMF Troika now have sovereign authority in the EU.
Euroland will become a type of revived Roman Empire. A New Charlemagne, a seemingly Little Authority, will rise to power through the scheme of regional framework agreements. This one is known as the Sovereign. He will be accompanied by the Seignior, the top dog banker who takes a cut.
The dynamos of profit and growth that empowered capitalism have been exhausted through US Central Bank and ECB monetary policy. Creative destruction is powering up the dynamos of regional security and stability. Public private partnerships led by monetary cardinals will provide credit, and oversee natural resources and production, under the authority of the monetary pope, Mario Draghi. Also, budget commissioners will oversee government budgets implementing strategic reforms and austerity measures. These new sovereign authorities will work together to mature regional global governance; their efforts will described as regionalization.
The old economy of capitalism was based upon the Milton Friedman Free To Choose script of floating currencies for growth, jobs, and profit. Fears of debt contagion, from a Greek default will resurface soon, causing derisking out of stocks, VT, VSS, and deleveraging out of commodities, DBC, USCI. Through creative destruction, leaders' framework agreements will provide diktat for regional security and stability.
Through creative destruction, the new economy, is emerging where diktat will replace both fiat money and credit. Choice is an epitaph on the tombstone of a bygone era. Freedom, free enterprise, and a free monetary system, are Libertarian principles seen in the Ron Paul agenda; yet they are mirages on the Neoauthoritarian Desert of the Real. The sovereign, junk, personal, and corporate credit boom that produced the debt economy, is history; the debt servitude experience will commence soon
We are passing through peak credit. Banks seeking yield in a ZIRP banks are desperate for profit yielding investments. FT reports Banks Snap Up Bundled Mortgage Products. Banks have been responding to low interest rates by snapping up billions of dollars of bundled mortgage products that resemble the sliced-and-diced debt some blame for the financial crisis. The products, known as "collateralised mortgage obligations," or CMOs, group together securities backed by mortgage loans. These securities are then sliced into various tranches, with each portion being paid out to investors at a different time. Peak credit can be seen in the rounded weekly top of bonds BND.
The collapse of Greece, GREK, and the National Bank of Greece, NBG, together with the bursting of the global government fiance bubble bubble, BWX, will be the genesis event that transforms democracy into diktat. There is an issue that runs deeper that the soon coming default of Greece on its treasury debt, that being most all of the EU nations and their banks are insolvent. Out or Eurozone sovereign insolvency and banking insolvency, regional global governance, will emerge replacing capitalism.
Capitalism, also known as the Banker regime of Neoliberalism, which came via the Free To Choose script of Milton Friedman, is history. Fate is working through the 1974 Clarion Call of the Club of Rome is rising up the Beast Regime, out of the profligate Mediterranean Sea countries of Italy, EWI, and Greece,GREK, to occupy in mankind's seven institutions, and rule in the world's ten regions, thus forming the ten toed kingdom of regional global government, as Neoauthoritarianism replaces Neoliberalism.
In the days of the Beast Regime, all of mankind's seven institutions will be fully integrated into regional panopticons. Wikipedia relates Jeremy Bentham in the late eighteenth century used the term panopticon to communicate an institutional edifice. The concept of the design is to allow an observer to observe (-opticon) all (pan-) inmates of an institution without them being able to tell whether or not they are being watched. The design consists of a circular structure with an "inspection house" at its centre, from which the managers or staff of the institution are able to watch the inmates, who are stationed around the perimeter. Bentham conceived the basic plan as being equally applicable to hospitals, schools, poorhouses, and madhouses, but he devoted most of his efforts to developing a design for a Panopticon prison, and it is his prison which is most widely understood by the term. Bentham himself described the Panopticon as "a new mode of obtaining power of mind over mind, in a quantity hitherto without example."
With the fiat money and neo liberal credit of the Banker regime gone, people will place the trust in the diktat of sovereign leaders, which serves both as currency and credit in the new economy of regional global governance, that replaces the old economy of capitalism. People will give allegiance to the word, will and way of the new sovereigns.
Regional global governance will emerge in each of the world's ten regions, thus forming a ten toed kingdom of regional global governance, as called for by the Club of Rome in 1974. A global empire of regional global government is coming to rule all of mankind, where regional statism rules, and the people labor in debt servitude. Totalitarian collectivism is the EU's future.
Fears of Greece default will start the great deleveraging. I anticipate that beginning in the second week in February 2012, debt contagion will spread from the EU, globally infecting world government bonds, BWX, Emerging Market Bonds, EMB, and International Corporate Bonds, PICB, as bond vigilantes call the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, higher, after the February 3, 2012 massive bullish engulfing candlestick seen in its chart. This will be seen in the Steepner ETF, STPP, rising in value, as is seen in Google Finance Chart of STPP, BWX, PICB, EMB and in this MSN Finance Chart of STPP, BWX, PICB, EMB.
Global debt deflation, means competitive currency devaluation, will be taking the world major currencies, DBV, and emerging market currencies CEW, lower, and the US Dollar, $USD, UUP, higher, this being seen in the chart currencies FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXA, FXRU, CEW, turning lower. The down draft of currencies will be so strong that the USD/JPY will rise from this years low of 76.20 as even the Japanese FXY, will be turning lower from its January 31, 2012 high of 129.13. Accordingly the chart of JYN, the inverse of USDJPY, will be turning lower from its February 2, 2012 high of 77.27.
The stocks that have gained the most during recent US Infrastructure Rally, what I call Neoliberalism's Death Rattle Rally, are likely to be the fastest falling as fears of EU debt contagion arise; these are FAA, PSCI, PSCT, RZV, PKB, CVCO, SLX, TAN, XBI as seen in this MSN Finance chart. Other fast fallers are likely to be the countries that rose the most with recent ECB LTRO financing, these include SCIF, EWZS, ERUS, EPOL, ARGT, as seen in this MSN Finance Chart. Infrastructure stocks that receive recent neoliberal finance, that is carry trade financing, will be fast fallers; these include CPL, SBS, UGP, BAK, SID, MTL, TTM.
Fast fallers will be include the small cap industrials stocks seen in this Finviz Screener; the value shares seen in this Finviz Screener; the small cap technology stocks seen in this Finviz Screener; and the design, construct and build, that is US infrastructure, shares seen in this Finviz Screener, which includes wholesale building materials, home furnishing stores, and business service providers. Debt laden MTW will soon be a fast faller; its charts shows a lollipop hanging man candlestick at the top of an ascending wedge.
When fears of debt contagion the European Financials, EUFN, Global Financials, IXG, Emerging Market Financials, EMFN, will fall quickly in value.
Greece fiscal spending cannot be sustained at the current level. Greece's fiscal resources will not come from any capitalist market, but rather through the diktat market. Budget commissioners will oversee Greek pending and monetary cardinals will rule its resources and provide credit to organizations relevant to the EU's security and stability. Diktat will be both currency and credit in the New Europe.
Excessive sovereign credit killed capitalism in July 2011; stock and currency investors took flight from the financial market when fears arose that a debt union had formed in the EU. The recent rally is simply zombification coming from the ECB's LTRO money printing and ponzi credit scheme.
Angela Merkel is the preeminent global leader at this time; she is one who has heard and heeded the 1974 Clarion Call for regional global governance; and is acting with its authoritarian imperative. A global authoritarian tsunami is on the way as the political, investment and economic tectonic plates have shifted with the failure of the debt trade as seen in Greece's soon coming default. The world is passing through peak credit where inflationism is giving way to destructionism, with the result that capitalism and fiat money are collapsing, and regional global goverance and diktat are rising in their place.
Soon all capital will become political capital; and through capital controls, one's wealth is likely to be overseen; wealth can only be preserved by dollar cost averaging into and taking possession of gold bullion.
Today's news reflects the state of trust and money market funds
Tyler Durden writes As the entire country strikes, the UK's Guardian notes that protesters in Athens are once again clashing with police as violence erupts outside the Greek parliament. After 30 years of Keynesian imbalance, is it any surprise that social unrest would once again erupt as austerity impositions are force-fed to a nation who recognizes the almost entire lack of benefits accruing to them from another Troika bailout.
Euro Intelligence provides the best of reporting; I recommend that one subscribe to the for fee newsletter which relates Merkel and Sarkozy criticise Francois Hollande's threat not to respect the fiscal treaty of debt brakes, insisting on the necessity to respect European treaties. In their joint TV interview after yesterday's Franco-German summit in Paris Nicolas Sarkozy and Angela Merkel last night put pressure on Francois Hollande not to put into question the fiscal pact by insisting on the respect for European treaties, Lemonde.fr reports. "When I was elected chancellor I did not wish to start accession negotiations with Turkey but my predecessor (Gerhard Schröder) had made that promise so naturally I had to respect that", the chancellor said. Europe is all about confidence."The president went along the same line. Mr. Chirac assumed the promises made by Mr. Mitterrand, I assumed the promises made by Mr. Chirac. You can also call that the behavior of a statesman", Sarkozy said.
NYT reports Europe's Banks Reluctant to Lend to Companies in Need of Cash
Smart Money asks The End of Money Market Funds?
Reuters reports SEC Weighs Two Money Market Fund Proposals
Reuters reports Fidelity Money Fund Clients Sour On SEC Proposals