Financial market report for the week ending February 24, 2012
1) … 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.