1) … Liberalism has reached its zenith as monetary inflation finally turns toxic, topping off world stock values as debt deflation, that is on currency deflation, gets underway.
Hans-Hermann Hoppe communicates that Hayek and Mises, were each in their own way, proponents of Liberalism. He is an Austrian School economist and anarcho capitalist philosopher, is professor emeritus of economics at UNLV, a distinguished fellow with the Ludwig von Mises Institute, and founder and president of The Property and Freedom Society and wrote Why Mises (and not Hayek)? on the Mises website which was reproduced in Economic Policy Journal.

Inflationism is transitioning to Destructionism, and as a result the world is pivoting from Liberalism to Authoritarianism. Liberalism arose with LBJ's Great Society Programs, developed firmly with the advent of the Milton Friedman Free To Choose Floating Currency Regime, then accelerated with the introduction of the Euro Currency, took on a mature form with the repeal of the Glass Steagall Act whereby we all became bankers, then became the global economic and political paradigm with the rise of the price of gold and the quest for energy development worldwide in 2001, which inflated the value of oil companies such as Exxon Mobil, XOM, and energy service companies such as Schlumberger, SLB, higher, and which confirmed Crony Capitalism, European Socialism and Greek Socialism as mankind's economic experience.

Today, Thursday December 20, 2012, World Stocks, VT, World Small Cap Stocks, VSS, US Stocks, VTI, topped out on the exhaustion of the words central bank's monetary authority. And Emerging Markets, EEM, and the Russell 2000, IWM, traded to new market highs as well; the latter coming from seigniorage of US Regional Banks, KRE, rising in value, and from a rising, and culminating Currency Demand Curve, RZV:RZG, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG. Currencies have been in all out demand, forcing the value of the US Dollar, $USD, down to 79.27; and forcing down the price of real assets, such as Gold, GLD, and Silver, SLV. Copper, JJC, is a speculative asset, held in great abundance warehouses as collateral for a shadow banking system in China; and today it plummeted 1.9% in value. Carolyn Cui wrote the September 10, 2012 WSJ article Copper surplus presents puzzle just before copper led the way higher in Liberalism's final debt and currency based risk on momentum rally. The ongoing Yahoo Finance chart of Distressed Investments, like those taken in by the US Fed in QE1, FAGIX, together with Senior Bank Loans, BKLN, Junk Bonds, JNK, Leveraged Buyouts, PSP, and Spin Offs, CSD, communicates that it has been the riskiest of debt that has supported the global currency rally that has driven up stocks. Ben Bernanke took in the worst of debts, at the encouragement of JP Morgan, JPM, and traded out "money good" US Treasuries to spur a recovery. Beginning in December 2012, the US Treasuries, TLT, and EDV, started trading lower, as bond vigilantes have seized control of the Ten Year US Government Note Interest Rate, ^TNX.

The biggest risk humanity face as a result of the Fed's QE4, and the ECB's OMT unprecedented experiment in quantitative easing, that has produced investor confidence and the decline of risk aversion, with World Stocks, VT, rising 12%, and World Small Cap Stocks, VSS, rising 15%, in a risk-on Major World Currency, DBV, and Emerging Market Currency, CEW, momentum rally, over the last seven months, is that monetary easing has crossed the rubicon of debt monetization, and that the world has passed through Peak Credit, with Bonds, BND, trading lower on the exhaustion of the world central banks' monetary authority. It can be said "The Fed's policies ceased to work beginning in December 2012", inasmuch as its monetary policies are now causing debt deflation, specifically deflation in bonds. Through a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TX, seen in the Steepner ETF, STPP, rising, deflation started in Aggregate Credit, AGG, in December 2012 as follows:
Closed End Michigan Bonds, MIW, -10.2
Closed End Pennsylvania Bonds, EIP, -7.4
California Municipal Bonds, CMF, -2.9%
High Yield Municipal Bond, HYMB, -2.2%
Municipal Bonds, MUB, -2.6%
The Zeroes, ZROZ, -4.6%,
30 Year US Government Bonds, EDV, -8.9%, the chart shows a strong fall through channel support
10 Year US Government Notes, TLT, -2.9%, the standard bearer of debt broke down 12-18-2012.
Build America Bonds, BABS, -1.4%
Long Duration Tips, LTPZ, -1.0%
Long Duration Corporate Bonds, BLV, -1.8%
Corporate Bonds, LQD, -0.6%
Total Bonds, BND, -0.4%

A see-saw destruction of fiat wealth is underway as the Steepner ETF, STPP, broke out on a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which drove Total Bonds, BND, sharply lower, while Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Spin Offs, CSD, as well as Distressed Investments like those taken in under QE1, and traded by Fidelity Mutual Fund, FAGIX, have risen to new highs. Of note, the WSJ reports, U.S To Sell Bulk of TARP Banks. The Yahoo Finance Industry Center reports Closed End Debt Funds, traded lower for the fifth day, with the Closed End Municipal Debt Funds, such as Michigan Municipal Bonds, MIW, and Pennsylvania Municipal Bonds, EIP, traded strongly lower.

Bespoke Investment Group reports 10-Year Yield Crosses Above 200-Day Moving Average. The rise of the benchmark Ten Year Interest Rate, ^TNX, to 1.80% means that the bond vigilantes have gained a nascent control of the bond market. Ben Bernanke and Mario Draghi's monetary policies have turned the springs of credit toxic, whereby US Treasury Notes are falling lower in value, and stocks are only marginally or selectively increasing in value. Charts show that the highest degree of loss of trust has come in global debt is centered in US Debt as reported above.

US Government Debt began falling in value in December 2012. US Treasuries have now entered their third week of falling, with 10 Year US Government Notes, TLT, -2.9%, and the 30 Year US Government Bonds, EDV, -8.9%, so far this month.

Credit liquidity under Liberalism, has produced Peak Seigniorage, that is peak moneyness, coming to World Stocks, VT. Debt monetization by the world central banks is starting to turn "money bad", as is seen in the trade lower in the World Major Currencies, DBV. With currencies trading lower in value, the fiat money system is dying; it will be replaced by the diktat money system, where diktat serves as credit, money and wealth. Leaders will react to a soon coming global debt crisis, that is a global banking and financial implosion, termed Financial Apocalypse, brought on by competitive currency devaluation, by meeting in summits, and waiving national sovereignty, pooling sovereignty regionally, and announcing regional framework agreements for regional security, stability and sustainability. In this manner, the Milton Friedman Banker Regime will be replaced by the Mario Draghi Beast Regime of Regionalism and Totalitarian Collectivism, which will come to rule in the world's ten regions and in all of mankind's seven institutions. Soon the only "money good" will be diktat, and physical ownership of gold bullion and possession of gold in Internet trading vaults such as Bullion Vault.

Inasmuch as Total Bonds, BND, and Aggregate Credit, AGG, have turned lower, the world has passed through Peak Credit. Peak Wealth was achieved December 20, 2019, when World Stocks, VT, topped out. With the Major World Currencies, DBV, trading lower, Liberalism collapsed December 20, 2012.

Bespoke Investment Group write The world is overbought. While some are expecting the world to end tomorrow, the stock market certainly doesn't seem to think it's going to happen. Of the dozens of country and regional ETFs that we track, nearly all of them are in overbought territory. I relate that I perceive the most overvalued countries to be ARGT, EIRL, EIS, EPHE, EPOL, ECNS, EWO, EWW, EWY, EWG, GREK, SCIN, THD, TUR EWA, EWN, NORW, and EWT, which are seen, in this Finviz Screener. These republics of carry trade investing are a product of the now defunct Milton Friedman Free To Choose Floating Currency Regime, and will be relegated to the dustbin of history, as the Mario Draghi Regionalism And Totalitarian Collectivism Regime, comes to be the economic model in the world's ten regions.

The Business Cycle, that is the Debt Super Cycle, transitioned into Kondratieff Winter, as debt deflation, that is currency deflation commenced today, December 20, 2012, on the exhaustion of the world central banks' monetary authority, with the Major World Currencies, DBV, trading significantly lower from their recent high, and Emerging Market Currencies, CEW, trading up to a new high. The Swiss Franc, FXF, and the Euro, FXE, continued their rally higher. Commodity Currencies, CCX, bounced at their market top, as the Australian Dollar, FXA, and the Canadian Dollar, FXC, traded strongly lower. The competitive currency devaluation loss leaders is the Japanese Yen, FXY, which traded lower again today to close at 116.17. The 200% US Dollar ETF, UUP, traded to a firm base at its September 14, 2012, value of 21.65, and the US Dollar, $USD, closed at 79.27.

Total Bonds, BND, traded slightly higher, but below their from their early December 2012 high. And Commodities, DBC, continued trading below their early December 2012 high.

The Euro, FXE, closed higher at 131.46, as Sky News report S&P lifts Greece's sovereign debt rating, inducing Greece, GREK, Ireland, EIRL, Spain, EWP, Italy, EWI, and Germany, EWG, GERJ, higher, and taking European Shares, VGK, to a new rally high. Poland, EPOL, Austria, EWO, Norway, NORW, Netherlands, EWN, Sweden, EWD, Switzerland, EWL, continued their rally.

The Nikkei, NKY, and Japanese Small Caps, JSC, traded strongly higher. China, FXI, ECNS, CAF, EWH, Egypt, EGPT, Brazil, EWZ, EWZS, The UK, EWU, EWUS, Thailand, THD, Russia, RSX, ERUS, South Korea, EWY, rose slightly to new highs. Taiwan, EWT, and Turkey, TUR, traded lower. Sectors trading higher over the last few days include Solar Energy, TAN, Airlines, FAA, Automobiles, CARZ, Global Real Estate, DRW, Gaming, BJK, Networking, IGN, US Infrastructure, PKB, Consumer Discretionary, IYC, Small Cap Industrials, PSCI, and Small Cap Pure Value, RZV.

World Banks, IXG, seen in this Finviz Screener, continued higher, producing Liberalism's Peak Prosperity. These were led by Japanese Banks, MTU, NMR, SMFG, MFG, Brazil Banks, ITUB, BBD, BSBR, UK Banks, LYG, HBC, BCS, RBS, Argentina Banks, BBVA, GGAL, India Bank, IBN, Canadian Banks, RY, BNS, CM, TD, BMO, Chinese Banks, CHIX, Swiss Banks, UBS, CS, and the Too Big To Fail Banks, RWW, BAC, BK, C. Bank of America has risen 106% YTD.

The Telegraph reports Libor scandal threatens to create a banking crisis to rival 2008. It comes to something when one of the world's major banks admits to fraud, but that's what UBS did On Wednesday in agreeing to pay $1.5bn (£940m) in fines for rigging inter-bank interest rates. Yahoo Finance chart shows that UBS has been one of Liberalism's final risk on momentum rally leaders, for the last seven months, having risen 37%.

European Financials, EUFN, led by NBG, SAN, DB, blasted higher. Emerging Market Banks, EMFN, continued higher led by Peru's BAP, Chile's BCH, and Puerto Rico's FBP.

Liberalism's seigniorage, that is moneyness, is failing on the exhaustion of the world central banks' monetary authority. The Calamos Total Return Fund, a closed end equity fund, CSQ, and the Eaton Vance Tax Advantaged Fund, EXG, a foreign closed end equity fund, both traded lower from their recent highs. Yahoo Finance chart shows that the closed end equity funds are unable to leverage higher on the closed end debt funds, such as Pimco's PFL, communicating a failure of Liberalism's seigniorage.

Liberalism commenced with the abandonment of the gold standard in 1971, when President Nixon, and the financial world decided to go with the Milton Friedman Free To Choose Floating Currency Regime. The sound money commodity money system was abandoned for today's fiat money system, which is failing, as the Major World Currencies, DBV, are now trading lower, and the Emerging Market Currencies, CEW, have topped out, which are now following Bonds, BND, that is Aggregate Credit, AGG, trading lower from their early December 2012 highs. Failing Major World Currencies, DBV, topped out World Stocks, VT, today, December 20, 2012.

The dynamos of global growth and corporate profit, that powered Liberalism, are winding down. The dynamos of regional security, stability and sustainability that power Authoritarianism, are winding up.

Liberalism's fiat money system is dying; and is being replaced with Authoritarianism's diktat money system, where diktat serves as credit, money and wealth.

Soon an investment demand for gold, will arise, and take gold, GLD, higher. Wealth can only be preserved by investing in and taking possession of physical gold in the form of gold bullion or by possession in Internet trading vaults, such as Bullion Vault. Support for gold is lower at 157.50, which translates into a spot price of gold, $GOLD, of $1,620

Since early June 2012, the Industrials, IYJ, have soared above the Transports, IYT as is seen in this ongoing Yahoo Finance Chart, but in the last month, the Transports, IYT, have exceeded the Industrials, IYJ, as in seen in this ongoing Yahoo Finance Chart.

The ETFs seen in this Finviz Screener will be fast fallers as competitive currency devaluation picks up steam. Investors will be rapidly derisking out of PSP, IGN, CUT, IBB, KBWY, RZV, QQQX, FAA, CARZ, BJK, CSD, TAN, FXR, TAO, DRW, URTY, SPHB, CAF, XRT, and ZIV.

The Morgan Stanley Cyclical Index, ^CYC, which is traded by FXR, has rallied with, and outperformed World Stocks, VT, for the last seven months, traded higher to 1052, as investors took US Banks, RWW, BAC, BK, C, Miners, PICK, AA, FCX, VALE, BHP, RIO, SCCO, WLT, MCP, HW, BTU, WLB, Steel Manufacturers, SLX, MT, ROCK, NUE, MUSA, HSC, CHOP, Metal Manufacturers, XME, WOR, STLD, SMS, SCHN, HAYN, ATI, CRS, VMI, PCP, RS, GHM, GTLS, Building Materials, BECN, AOS, APOG, OC, MAS, USG, Paper Producers, WOOD, WY, IP, UFS, KS, BLL, MWV, PCL, PKG, SEE, LPX, DEL, Farm and Equipment Manufacturers, BGG, DRC, CAT, DE, TEX, MTX, Industrial Electrical Equipment Manufacturers, ROK, AME, ETN, DAKT, Industrial Gasses, ARG, Appliance Manufacturer, WHR, Global Conglomerates, UTX, GE, MMM, Railroads, UNP, CNI, CSX, Cement Manufacturers, TXI, EXP, Chemical Manufacturers, DD, DOW, EMN, HUN, ASH, FMC, ASH, SHLM, RTK, Communication Providers, S, RIMM, SKM, VIP, IDCC, TU, SKM, RCI, Aerospace Manufactuers, BA, HON, MOG-A, LLL, LMT, GD, RTN, Scientific Instrument Manufacturers, ROP, A, GRMN, TRMB, Medical Device Manufacturers, IHI, MDT, ISRG, RMD, ZMH, WAT, HOLX, Toy Manufacturer, MAT, Entertainment Providers, GCI, NFLX, DISH, DTV, DISCA, VMED, VIAB, TWC, LBTYA, CMCSA, SATS, SIRI, AMCX, SJR, NSR, Rubber Manufacturers, GT, CSL, CTB, ROG, Houseware Manufactuers, NWL, CLX, LBY, Cleaning Products Manufacturer, ECL, Home Builders, ITB, LL, SHW, HD, LOW, PHM, MHO, RYL, SPF, Automobile Manufacturers, CARZ, MGA, F, PCAR, SUP, DORM, TSLA, TRW, DAN, FSS, WBC, TEN, and Tool Manufacturer, ITW, higher.

The Morgan Stanley Cyclical Index, is a measure, that is a metric, of global growth. It's peaking out on December 20, 2012, highlights the zenith of Liberalism and the dawn of Authoritarianism.

The Milton Friedman Free To Choose Floating Currency Regime was established for two purposes. First to provide floating currencies, based upon debt, that is sovereign debt, BWX, Emerging Market Debt, PCQ, Corporate Debt, PICB, Mortgage Backed Bonds, MBB, Municipal Bonds, MUB, Leveraged Buyouts, PSP, and Junk Bonds, JNK. And secondly to establish the US as a global empire, by unshackling it from the restraints of the existing sound money system, where through monetization of debt, it could grow and expand its military world wide. Through US Dollar hegemony, the US became one of two great iron empires, the first being the United Kingdom, and the second the US.

With Peak Seigniorage having been achieved, on December 20, 2012, and with competitive currency devaluation underway with the trade lower in World Major Currencies, CEW, and Emering Market Currencies, CEW, peaking out, the two iron legs of world power, that is the UK and the US, are dissolving into ten toes of iron diktat and clay democracy, forming the ten toed kingdom of regional governance. These ten toes will be the ten regional blocs that the Beast Regime of Totalitarian Collectivism and Regional Governance comes to rule over..

The Milton Friedman Free To Choose Floating Currency Regime was very effective at creating the extractive and manufacturing products to produce global growth. Now excess extractive and building capacity exists as Bloomberg reports Diggers pile up unsold after Caterpillar adds to China capacity. Caterpillar, CAT, Komatsu, 6301, and other construction-equipment makers have built enough capacity in China to satisfy global demand twice over while sales in the country are falling, according to a research company. Manufacturing capacity in China is almost 600,000 excavators a year while the worldwide market is about 300,000, according to London-based Off-Highway Research. Inventories of crawler excavators in China are about 100,000, almost equal to projected 2012 domestic sales, the firm's Managing Director David CA Phillips said. The supply glut is a blow to Peoria, Illinois-based Caterpillar and its competitors who built factories and bought local companies to grab a share of the biggest construction equipment market. Now, with government property controls slowing construction, those companies are cutting output and trying to export unsold equipment. "It's all very scary," Phillips, who visited China in November, said in an interview.

2) … In conclusion, a paradigm shift is underway from Libealism to Authoritarianism.
World Stocks, ACWI, have topped out, on falling World Major Currencies, DBV.

Inverse Volatility, ZIV, is trading lower; and Volatility, UVXY, VXX, VIXY, TVIX seen in this Finviz Screener, is rising. Stocks will be falling lower, on falling world currency values.

Bond vigilantes gained control of the Interest Rate on the US Government Ten Year Note, ^TNX, on December 14, 2012, calling the rate higher from 1.7%, and were successful in causing the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, to steepen, as is seen in the Steepner ETF, STPP, steepening. And currency traders were successful at that time in selling the world major currencies, DBV, specifically the Australian Dollar, FXA, and the Canadian Dollar, FXC, causing competitive currency devaluation which caused a topping out of World Stocks, VT, on December 20, 2012.

The world central banks' monetary authority is exhausting and is no longer able to provide stimulus to global growth and corporate profit. Out of soon coming credit, and currency crises, regional governors and regional finance ministers, will be rising to authoritarian power through regional framework agreements to provide regional security, stability, and sustainable economic activity through public private partnerships, as leaders from commerce and industry work with government officials to manage regional economies.

Mike Mish Shedlock communicates that Liberalism has created a Make Believe World. Inasmuch as the world is passing through Peak Credit, Peak Currency, Peak Wealth, and Peak Seigniorage, humanity is experiencing a paradigm shift out of Liberalism and into Authoritarianism.

Full monetary easing has brought moral hazard to the forefront of economic reality. The debts of Liberalism, that is Total Bonds, BND, which is also called Aggregate Credit, AGG, are so massive and so toxic that they cannot be repaid. The debts of Liberalism will be applied to every man, woman and child on planet earth, beginning first in the Eurozone, as out of political and economic chaos, the Beast Regime of Totalitarian Collectivism and Regionalism, rises from the profligacy of the Mediterranean Nation Countries, that is the PIGS, Portugal, Italy, Greece and Spain.

Milton Friedman's Free To Choose Floating Currency Regime, which created credit based prosperity, provided the now dying fiat money system. In its place the Mario Draghi Regionalism and Diktat Regime, and its diktat money system, are rising to provide austerity and debt servitude for all. In the diktat money system, diktat serves as currency, credit and wealth.

3) … In the News
Bespoke Investment Group relates Bullish sentiment rises to highest levels since February.

Bloomberg asks Are We Facing a Decade of Financial Repression? Bloomberg

AP reports Obama demands action on gun control. Days after the horror in Newtown, the president creates a task force to reduce gun violence.
Ansuya Harjani of CNBC asks Are India stocks out of whack? I relate that it has been India Bank, IBN, that has been taking India Stocks, INXX, INP, SCIN, higher, as is seen in their ongoing Yahoo Finance chart.

Reuters reports Fiscal cliff talks turn sour, Obama threatens veto.

Social Europe reports The Eurozone's delayed reckoning.

Reuters reports Peak farmland is here, food crop area to fall, study reveals.

Reuters reports Intercontinental Exchange in talks to buy NYSE. Shares of ICE rose slightly and shares of NYX rose slightly.

LA Times reports Treasury to sell GM stake over 15 months. More than four years after the U.S. began pouring money into ailing banks and automakers, the Obama administration is moving more quickly to shut down the controversial $700-billion bailout fund; GM, rose strongly taking Automobiles, CARZ, higher.

Talk Digital Network Interviews with John Rubino and David Morgan

1) … Introduction
The world passed through peak currency and peak credit, as the Euro currency and the copper commodity traded lower, introducing the diktat money system, as the Troika's technocratic government in Italy wavered on Berlusconi withdrawing support. A major selloff in stocks and junk bonds is imminent.

2) … The world passed through peak currency and peak credit the week ending December 7, 2012, as the Euro Currency, FXE, and the Copper Commodity, JJC, traded lower.
The systemic risk factors of excessive world central bank credit and a technocratic government breakdown in Italy, portends a major selloff in World Stocks, ACWI, and Junk Bonds, JNK.

This week, World Stocks, VT, traded higher as Italy, EWI, and Spain, EWP, led European Shares, VGK, lower, while China Infrastructure, CHXX, led Asia Shares, EPP, higher, as Bloomberg reports Monti clings to power as Berlusconi seeks early vote. Italian Prime Minister Mario Monti said he plans to keep his government intact as his biggest parliamentary supporter, billionaire media magnate Silvio Berlusconi, threatens to withdraw his backing.

And this week, World Banks, IXG, rose past its September 14, 2012 high, to make a new high, as Swiss Banks, UBS, and CS, Chinese Financials, CHIX, and India Earnings, EPI, rose parabolically, and Ireland's, IRE, took European Financials, EUFN to a new rally high, and as Bank of America, BAC, and Citigroup, C, rose strongly, taking the Too Big To Fail Banks, RWW, higher.

After a three week rally, the twin spigots of credit liquidity are no longer providing economic health; they are running toxic, on the exhaustion of the world central banks' monetary authority. The first spigot of credit is Bonds, BND, and the second is bank Banks, IXG, which is comprised of European Financial Institutions, EUFN, Investment Bankers, KCE, the Too Big To Fail Banks, RWW, Regional Banks, KRE, and Small Cap Revenue, RWJ; these peaked out the week ending December 7, 2012. Of note, the UK bank, RBS, and India bank, HDB, have risen dramatically this year and have topped out.

The trade lower in closed end stock fund, CSQ, and closed end debt fund, PFL, as is seen in their combined chart, confirms that trust has evaporated from the world financial markets that the global central bankers will be able to provide stimulus to continue global growth and corporate profitability. The word, will and way, of ECB's Mario Draghi has provided seigniorage, that is moneyness, with the exception of US Banks, KRE, as is seen in the combined chart of XLF, EUFN, IXG, KCE, RWW, KRE, RWJ.

Peak Seigniorage, that is peak moneyness, of both the ECB and most likely the Chinese Central Bank, has been achieved. The seigniorage, that is the moneyness, of the US Federal Reserve has failed as Mortgage REITS, REM, have traded significantly lower, on lower Mortgage Backed Bonds, MBB; and the US Federal Reserve is unable to stimulate Regional Banks, KRE, and US Real Estate IYR higher. The failure of the world central banks monetary authority as a whole, is seen in the trade lower in the combined chart of XLF, JKE, IYR, XLE, OIH, MTK, SLX, XSD, GDX, IYZ, and IHE, trading lower since September 14, 2012; it was at this time that the world pivoted through Peak Fiat Wealth.

Of note, the Shanghai Shares, $SSEC, traded by CAF, which had been performing very poorly ever since QE1 was introduce, rose 4.1% this week

MarketWatch reports Toll Brothers profits and revenues rise. Homebuilder Toll Brothers, TOL, reported fiscal fourth-quarter profit of $411 million, or $2.35 a share, compared to $15 million, or 9 cents a share a year ago, yet the stock is trading below its September 14, 2012 high, suggesting that the rally in home building stocks, ITB, is over.

This week, Commodities, DBC, and USCI, traded lower, as Precious Metals, JJP, traded lower, as Gold, GLD, fell through a consolidation triangle, and Silver, SLV, traded sharply lower. Spot gold, $GOLD, traded lower to $1,705; support is lower at $1,680 and $1665; support for GLD is 162. Oil, USO, traded lower; and Unleaded Gas, UGA, fell sharply lower. Natural Gas, UNG, fell to support, and its chart looks like it could break sharply lower. Bespoke Investment Group reports Gasoline inventories soar by most in more than 10 years. Base Metals, DBB, traded lower; Copper, JJC, a measure of the Shadow Banking System in China, traded lower. Timber, CUT, traded to a new high.

Total Bonds, BND, traded up to a new high of 84.99, before closing lower this week at 84.81. Peak Debt is being attained. Distressed Investments, FAGIX, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Leverage Buyouts, PSP, traded to new highs International Corporate Bonds, PICB, traded to a new high. Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB, traded lower, with the closed end equity fund Michigan Municipal Bonds, MIW, selling off strongly. The 30 Year US Treasury Bond, EDV, and the US Ten Year Note, TLT, have been rising to strong resistance, yet could trade higher if stocks quickly sell off.

The Steepner ETF, STPP, fell lower, to its lowest value yet at 33.73, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as the 30 Year Rate fell more than the 10 Year Rate on the US Treasury Debt. Soon the 10 30 US Sovereign Debt Yield Curve will rise as bond vigilantes gain control of US Treasury interest rates. The Interest Rate on the 10 Year US Note, $TNX, is forming a bottom at 1.57%; and the Interest Rate on the 30 Year US, $TYX, is forming a bottom at 2.72%. The combined chart of US Treasuries will be soon be showing that both the 10 Year US Note and the 30 Year US Government Bond, will be falling lower, with the latter falling faster than the former.

The ongoing Yahoo finance chart of the Flattner ETF, FLAT, together with Tips, TIP, Long Durations Tips, LTPZ, US Ten Year Notes, TLT, 30 Year US Government Bonds, EDV, Asian Shares, EPP, European Shares, VGK, and World Stocks, VT, TIP, LTPZ, TLT, EDV, EPP, VGK, and VT, communicates the strong seigniorage given to stocks by the combination of the US Fed and the ECB which took the Euro, FXE, up over and then just below 130.

The Dollar, $USD, UUP, has traded lower over the years since its peak in 2002, on US Central Bank credit liquidity and easing, until it recently rose from $79.00 on September 14, 2012, and is now trading at its 50 day moving average, at $80.42, as the Euro, FXE, rose to a new rally high of 129.99, pushing the Swiss Franc, FXF, to a triple top high of 106.24, before the Euro, traded lower to 128.26. The chart of the world major currencies, DBV, shows that they jumped to a new high of 26.02, and the chart of emerging market currencies, CEW, shows they are approaching their September 14, 2012, high.

The world has passed through Peak Monetization. Generally speaking individual currencies globally are failing to rise higher on debt monetization, that is currency debauchery of the world central banks neoliberal finance. The world is passing through Peak Monetization, meaning that the world central banks are unable to stimulate further global growth and corporate profitability. Debt monetization is no longer able to leverage World Stocks, VT, higher.

The Euro currency, FXE, has peaked out. Monetizing of debt is one of two factors that caused the Euro, FXE, to peak out and trade lower this week; and as result Italy, EWI, and Spain, EWP, traded lower from their rally high and both the European Financials, EUFN, and the European Shares, VGK, manifested bearish harami candlesticks, at the top of ascending wedges, suggesting that the rally in these shares is now complete. The other factor for that caused the Euro to peak out and trade lower, is an ongoing political leadership crisis in both Italy, and in Europe as a whole.

The ongoing Yahoo Finance combined chart of DBC, CEW, VT, VSS, and DBC, communicates that the Age of Deleveraging commenced on September 14, 2012, with World Stocks, VT, and Commodities, DBC, trading lower on the exhaustion of the world central bank's monetary authority.

The global bear market that commenced September 14, 2012, is definitely underway again as Transports Weekly, ITY, are making lower highs, while the Industrials Weekly IYJ, are pushing up to strong resistance. Chemical Giants, DOW, and DD, as well as by Industrial Gases, PX, and APD, manifest very weak trading patterns. Bespoke Investment Group relates Apple, AAPL, suffered its biggest decline since December 17th, 2008 with a fall of 6.43%, establishing it as a technology, MTK, loss leader. The bearish trading pattern in technology, MTK, and Steel, SLX, evidences the inability of the inability of the world central banks to stimulate global growth and ongoing corporate profit.

This week's rally and fall in the Euro, FXE, stimulated Peak Currency and Peak Credit. Of note, Peak Stock Wealth, occurred September 14, 2012 as world stocks, VT, topped out. The Pure Small Cap Value Shares, RZV, have outperformed the Small Cap Growth Shares, RZG, as is seen in their combined chart, that is the currency demand curve, that is RZV:RZG, rising to a new rally high. And the Pure Small Cap Value Shares, RZV, have outperformed the Pure Large Cap Value Shares, RPV, as is seen in their combine chart, that is the credit demand curve, that is RZV:RPG, on the rise in the Euro, FXE, to its rally high of 129.99, before it turned parabolically lower to close at 128.36.

Although the Small Cap Pure Value Shares, RZV, have been given strong currency seigniorage, the Small Cap Pure Growth Shares, RZG, have risen strongly as well; these include Aircraft Rehabilitator, BEAV, Electrical Equipment Manufacturer, AIMC, AME, Irrigation Equipment Manufacturer, VMI, Specialty Chemical Manufacturers, ODC, RPM, Chemical Manufacturer, SHLM, Business Services, TISI, VVI, FLT, MMS, Synthetics, MTX, CSGP, Dig And Dirt Moving, MTW, Networking, JDSU, FNSR, ARUN, EPIQ, Diversified Electronics, GLW, MOLX, Technical Software, MENT, ACIW, Cloud Computing, CRM, N, RAX, Application Software, CVLT, PDFS, NTWK, CEDR, PLUS, Business Software, PERI, SLH, Biotechnology, CLSN, CRMD, INFI, DYAX, AFFY, NPSP, Diversified Communication Services, NSR, Building Products, TREX, Diversified Machinery, NDSN, LII, FLS, MIDD, CFX, ITW, BGG, IEX, Diversified Electronics, SPA, Consumer Services, ZIP, and Information Technology, CTXG, CSC.

Restaurants, DIN, BKW, DPZ, BK, and Entertainment Stocks, TIVO, DISH, VMED, SJR, LMCA, DISCA, TWX have likely topped out. Manufactured Housing Manufacturer, CVCO, is the weather vane of market direction and it traded strongly lower this week from its November 30, 2012 high of 51.50 as is seen in its Yahoo Finance Chart, which is provided with comparison to the Small Cap Pure Value Shares.

The major world currencies, DBV, the emerging market currencies, CEW, are peaking out as is seen in their combined chart, producing Peak Currency. And Peak Credit is seen in both Total Bonds, BND, and Aggregate Credit, AGG, topping out, as well as the Credit Providers seen in this Finviz Screener, such as AXP, COF, MA, V, and DFS, trading lower in December 2012. Debt deflation is underway on falling currency values. Federal Reserve data shows that Peak M2 Money occurred in early November 2012, specifically on 11-05-12 with a value of 10292T; current M2 Money stands at 10264T. And Zero Hedge provides this troubling credit report Margin debt rises to 18 month high as net free credit plunges to -44 billion.

Investment trading is starting to heat up. On both Monday and Tuesday, Volatility, VIX, traded higher and Inverse Volatility, XIV, is trading lower from its recent high; and 200% Volatility, VIIX, is trading higher from its recent low, suggesting that a change in market direction is at hand.

The Milton Friedman Free to Choose Floating Currency Regime, that has supported global economics since 1971, was based upon investment opportunities in sovereign nation states, is now failing as investors are derisking and deleveraging out of fiat financial instruments. The Beast Regime of Totalitarian Collectivism and Regional Governance is rising out of the Mediterranean Sea countries of Greece, Italy and Spain to rule in all of the world's ten regions and all of mankind's seven institutions, and will be based upon regional sovereign bodies, such as the ECB, and regional sovereign leaders, such as Herman Van Rompuy, as current country leaders will meet in summits to waive national sovereignty and pool sovereignty regionally; and to announce regional framework agreements which will replace national constitutions as the basis for power and authority. Public private partnerships between corporations and governing officials will direct the factors of production regionally. The announcement on Azom by Alcoa that it has signed a long-term power contract with Bonneville Power Administration, BPA, for its Ferndale, Wa, based Intalco Works aluminum smelter, exemplifies the type of process that will manage economies regionally.

Regional sovereignty is rising to replace national sovereignty. Ten regional zones, that is ten regional blocs of power, are developing to replace the global hegemony of the UK and the US that has ruled the world since 1776. Dr Worden writes in China or USA: Which Will Rule Trade? As the twenty-first century was coming into its own, two major economic powers in the world were contending not only for economic dominance, but political hegemony as well. Would it be another American century, or would power follow economic growth over to Asia? The "control battle" itself ostensibly about ordering trade alliances could be an indication that power was about to shift on a massive scale in terms of which economic power would become the definitive superpower. The Association of Southeast Asian Nations (ASEAN) announced at its meeting in November 2012 that it would host negotiations among its members on "a sweeping trade pact that," according to the New York Times, "would include China." The trade agreement would include not only the ten countries that are in the association, but also six other countries that have free-trade agreements with the association. In addition to China, those countries include Australia, India, Japan, New Zealand and South Korea. Half of the world's population would be included in the pact. Notably absent is the United States. This is no accident, as the Obama administration's own proposal for an eleven-nation Trans-Pacific Partnership excludes China. In other words, the contending proposals may be more about a "control battle" between two contending empires-the United States and China-than anything else. Moreover, which proposal succeeds could say something about whether China succeeds the United States as the hegemonic superpower of the twenty-first century.

Regionalism is rising to replace Crony Capitalism European Socialism and Greek Socialism as The Express UK quotes Steen Jakobsen, chief economist at investment bank Saxo, "The magnitude of this debt crisis is far larger than the market realizes, so big there is no real solution as imagined by either side of the north-south divide." … "There is only one solution: the system must fail and both the Euro and the Eurozone need to be redefined."

The EU faces political crisis on a country, by country level; and it faces a political crisis on an EU wide basis. Guy Dinmore of Financial Times reports Berlusconi's show of power piles pressure on Monti. Silvio Berlusconi's centre-right party has abruptly withdrawn its support from Mario Monti's technocrat government in parliament for the first time in over a year, plunging Italian politics deeper into confusion and raising the possibility of snap elections. And the Wall Street Journal reports EU Officials set cautious vision of integration. In a long-awaited report that aims to map out future efforts to bind euro-zone economies more closely, Herman Van Rompuy, the president of the European Council, proposed some important piecemeal steps toward integration but seemed to bow to pressure from Berlin to limit initiatives that would force German taxpayers to stand behind their European counterparts. There was no proposal to adopt a common euro-zone bank-deposit guarantee, and an initiative to create a centralized fund to help countries absorb economic shocks was pushed off until after 2014. Mr. Van Rompuy called for immediate action in setting up a single bank supervisor, to be fully operational by the start of 2014, and said the euro-zone bailout fund should develop the ability to directly recapitalize member-state banks by 2013. The pooling of funds and sharing risk on debt issuance among eurozone members, as diverse as robust Germany and debt-stricken Greece, is possibly the single most politically controversial issue in the currency bloc.

Soon, the most capable of leaders will step into the limelight of Europe's political stage, to establish order out of chaos. He will rise to power, not through traditional political means, but rather through regional framework agreements. He will establish a type of revived Roman Empire, that is a powerful authoritarian government. The Sovereign will be accompanied in power by the Seignior, that is the top dog banker who takes a cut; their word, will and way will rule the EU.

3) … In financial news
Bloomberg reports Republicans counter Obama olan with entitlement cuts. U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lack what President Barack Obama calls essential for a fiscal agreement: higher tax rates for top-earning Americans. The leaders delivered the offer to the White House on Monday with a three-page letter signed by Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), and four other senior Republicans, including Rep. Paul Ryan (R-Wis.). According to the Speaker of the House, in PDF document, the Republicans propose to increase tax revenue through pro-growth tax reform that closes special interest loopholes and deductions while lowering rates.

AP reports Obama: No deal without higher rates. AP President Barack Obama says there will be no deal to avert the "fiscal cliff" unless Republicans drop their opposition to raising tax rates on the wealthiest Americans.

Bespoke Investment Group reports ISM Manufacturing surprises to the downside. The ISM Manufacturing report for the month of November came in lower than expected (49.5 vs. 51.4), and it was the indicator's worst monthly reading since July 2009. While readings below 50 are indicative of economic contraction, the weak report may be due in part to some residual impact from Sandy.

Ambrose Evans Pritchard writes Pritchard French economy buckles as car sales collapse. Industrial woes deepened last month as car sales crashed 19pc.

Reuters reports Top US firms are cash rich abroad but poor at home The WSJ reports At a time when American companies hold near record amounts of cash, many are surprisingly cash poor at home.

Reuters reports Spain makes formal request for EU bank aid

Reuters reports that Transparency.Org reports Greece has scored the worst ranking of all 27 European Union nations in a global league table of perceived official corruption, falling below ex-communist Bulgaria as public anger about graft soars during the country's crisis.

Markus Salzmann of WSWS reports Austrian billionaire Stronach launches new right-wing party. Given the increasing economic and social tensions in Austria, Frank Stronach stridently represents the interests of the financial elite and receives the support of business circles.

Vicky Short, and Alejandro Lopez of WSWS report Spanish government prepares repressive measures against social opposition. Mariano Rajoy's Popular Party government is preparing to impose €90 billion in budget cuts over the next two years.

Marianne Arens of WSWS reports Italian steel workers fight for jobs. Employees of the Ilva steel group carried out demonstrations throughout Italy last week to protest against the closure of the company's main plant in Taranto.

Reuters reports Military halts clashes as political crisis grips Egypt.

Alex Lanier of WSWS reports Spanish bank bailout paves way for new attacks on working class. Euro zone finance ministers approved a bailout requested for Spain's banking sector.

Patrick Jenkins of the Financial Times reports "The risk facing Japanese banks from their vast holdings of government bonds has been underlined by the chief executive of the country's largest bank who said it would struggle to reduce its exposure. Nobuyuki Hirano, chief executive of Bank of Tokyo-Mitsubishi, admitted that the bank's Y40tn ($485bn) holdings of Japanese government bonds were a major risk but said he was powerless to do much about it. 'This is analysts' main concern… A default of Japanese government bonds would have a severe impact on us. But we need to be responsible to keep that market in order.' According… the Bank for International Settlements… the holdings of JGBs by Japan's banks equate to 900% of their tier one capital, compared with about 25% for UK banks' exposure to gilts and 100% for US banks' exposure to US Treasuries."

4) … Summary … The fiat money system has broken down on the failure of the monetary authority of the world central banks; it has been replaced by the diktat money system, where mandates from regional leaders serves as currency, credit and wealth.

Neoliberalism's final global debt rally, seen in World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, topping out, is bringing about a topping to the global debt trade, BND, that has provided prosperity under Crony Capitalism, European Socialism, and Greek Socialism.

The ongoing Yahoo Finance chart of Distressed Investments FAGIX, with ETFs, JKE, RZV, MTK,VGK, BJK, SLX, XSD, with a close December 7, 2012 for FAGIX of 9.47, having risen from its September 14, 2012 value of 9.37, reflects the seigniorage, that has come from rising commodity currencies, CCX, such as the Euro, FXE, the Canadian Dollar, FXD, the Australian Dollar, FXA, as well as the British Pound Sterling, FXB, Emerging Market Currencies, CEW, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Chinese Yuan, CYB, giving rally to Small Cap Pure Value Shares, RZV, Technology Stocks, MTK, European Stocks, VGK, Vice Socks, BJK, Steel Stocks, SLX, and Semiconductors, XSD.

Yet, Large Cap Growth Stocks, JKE, such as Exxon Mobil, XOM, on the trade lower in Oil, USO, did not participate in the what amounts to the final risk on momentum rally of world central bank monetary authority. Large US Telecom, IYX, shares such as AT&T, T, did not participate in the recent currency driven rally. Uranium Stocks, URA, Junior Gold Mining Stocks, GDXJ, Gold Mining Stocks, GDX, and Silver Mining Stocks, SIL, were completely abandoned beginning September 14, 2012.

Neoliberalism's final risk on currency based carry trade rally gave strong seigniorage to the World's Banks, IXG, in particular to Ireland's Bank, IRE, Netherlands Insurer, ING, India's Banks, IBN, HDB, Brazil Banks, ITUB, BBD, Argentina Banks, BBVA, GGAL, BFR, BMA, Swiss Banks, CS, UBS, Chinese Financials, CHIX, German Bank, DB, UK Banks, RBS, HBS, LYG, Korea Banks, WF, KB, SHG, Japanese Banks, NMR, SMFG, MFG, MTU, Canadian Banks, RY, BMO, Spain's Bank, SAN, Australia Bank, WBK; but failed to give seigniorage to Regional Banks, KRE.

Currency carry trade leverage came to carry trade darlings have carried country stocks higher, as seen in the Finviz Screener of the following stocks.
EWI … LUX,
EWU … DLPH, RUK, DEO, UL, ARMH,
EWN ... PHG, LYB, ENL, UN,
EWA … BHP, AWC,
EWG … SI, SAP,
EWD … ALV,
EIRL ... ACN, JHX, CX, IR, ICLR,
EPU … SCCO
EWL … SYT, ABB, MTD, TEL
EIS … PERI,
EWZ … ABB, FBR, rose vertically
EWQ … SNY,
TUR … TKC,
YAO … NTE, NED, HNP, ACH, LIWA
EWT … HIMX, TSM, ASX, AUO,
EWY ... LPL, MX
EZA … SPP, rose vertically
EWW … IBA, ASR, KOF, PAC rose parabolically
EWJ … KYO, KUB, MKTAY,
VGK … BUD, TX
ACWI … YHOO

The Euro, FXE, traded parabolically lower on Thursday December 6, 2012 and closed at 128.36 on Friday December 7, 2012. Of note the South African Rand, SZR, and the Japanese Yen, FXY, are the loss leaders in global competitive currency devaluation, the first on the failure of gold mining stocks, GDX, and the latter on the huge amounts of Japanese Government Bonds held in Japanese Banks.

The world has reached Peak Prosperity coming from maximum beneficial debt monetization by the world central banks. As world stocks, VT, traded lower on September 14, 2012, they pivoted through Peak Stock Wealth, and today December 7, 2012, they have reached yet another tipping point, as the world is attaining Peak Currency, with the World Major Currencies, DBV, Commodity Currencies, CCX, and Emerging Market Currencies popping higher to produce Peak Credit, with Aggregate Credit, AGG, and Total Bonds, BND, rising to new highs.

Ambrose Evans Pritchard relates the aggressive monetary policy of the ECB. The ECB mulls negative rates as Europe's economic crisis deepens. The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar. And Bloomberg reports Draghi leaves rate-cut door ajar as ECB reduces forecasts. The European Central Bank cut its growth and inflation forecasts and President Mario Draghi said the euro area won't start to shake off its slump until the second half of 2013, leaving the door ajar for further interest rate reductions. "Weak activity is expected to extend into next year," Draghi said at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. "By the second part of the next year, we should see the beginning of a recovery" as global demand strengthens and the ECB's low rates feed through to the economy.

Fidelity Investments Distressed Investments, FAGIX, reflects the topping out of toxic investments taken in by the US Federal Reserve under QE 1, and which are held by Investment Banker JPMorgan, JPM, and the Too Big To Fail Bank, RWW, in particular Bank of America, BAC. These banks, because of their debt holdings have been given strong seigniorage, that has accompanied the rise in value of the worst of debt such as Junk Bonds, JNK, Leverage Buyouts, PSP, and Senior Bank Loans, BKLN, which has risen strongly since mid November 2012. The three week currency rally, that began in mid November 2012, has given strong seigniorage to International Corporate Bonds, PICB, which have risen to a new high, as well as to High Yield Municipal Bonds, HYB. S&P High Beta, SPHB, rose, taking the S&P, SPY, higher. World Stocks Monthly, ACWI, appear to be at the point of entering an Elliott Wave 3 of 3 Down from 2008 high, with November 2012 likely being the actual turn lower, should stocks fall lower in December 2012.

The speculative global debt trade, BND, is coming to an end, and with that a pivot from investment choice to ruler diktat. The dynamos of global growth and trade, together with corporate profit are winding down. The dynamos of regional security, stability, and sustainability, are powering up. The Milton Friedman Free To Choose Floating Currency Regime, that has provided a basis for global economics since in 1971, when the US abandoned the gold standard, is giving way to the Beat Regime of Totalitarian Collectivism and Regionalism.

The fiat money system is starting to collapse, as is seen in the value of Mortgage Backed Bonds, MBB, trading lower in value, resulting in Real Estate, IYR, falling in value, and Mortgage REITS, REM, turning lower, as World Real Estate, DRW, is topping out on Chinese Real Estate, TAO, and World Water Resources, CGW, is topping out on American States Water, AWK. Peak Money is seen in the topping out of the Major World Currencies, DBV, Commodity Currencies, CCX, and the Chinese Yuan, CYB; and Peak Credit seen in the topping out of the World's Major Bank, IXG, seen in this Finviz Screener, whether they be European Financials, EUFN, Brazil Financials, BRAF, India Financials, EPI, the Too Big To Fail Banks, RWW, Chinese Financials, CHIX, or Japanese Banks. There are no more speculative adventures or stock safe haven investments.

The risk on global currency carry trade that began in mid November 2012, has rallied European Stocks, VGK, and Asian Stocks, EPP, to the very apex of Systemic Risk on December 6, 2012. All that awaits is a sharp or sustained sell off with impetus coming from a number of sources, such as political conflict in Italy, investor awareness of the excesses of neoliberal credit stimulus, that is world central bank credit liquidity and monetary easing, investor margin calls, or a correction in the price of copper commodity which is used as collateral in the Chinese shadow banking system.

Fiat Money is based upon trust and speculation. Now trust in the world central banks has reached the breaking point; the global credit bubble, BND, is about to burst, and stock values, VT, are going to fall off quickly. Deleveraging out commodities and derisking out of stocks is the process which precedes Financial Armageddon, a global credit bust and worldwide financial system breakdown.

The chart of Consumer Goods, such as Cleaning Products, Ecolab, ECL, Packaging and Containers, TUP, and BMS, Appliance Manufacturer, WHR, Soft Drink Producer, FIZZ, Toy Manufacturer, MAT, Recreational Vehicle Manufacturer, WGO, Personal Products, IPAR, Rubber And Plastics Manufacturer, CSL, and CTB, Housewares, NWL, Home Furnishings And Fixture, BEST, and FBHS, and ETH, and LEG, Sporting Goods, POOL, Business Equipment, SCS, Auto Parts Manufacturer, DORM, Food Producer, HRL, Textile Manufacturer, PVH, and HBI, Paper Producer, IP, and COLM, and GILD, Steel Manufacturing, MUSA, and ROCK, Diversified Electronics Manufacturer, RVLT, Solar Manufacturer, FSLR, Semiconductors, MPWR, SLAB, LSI, Gaming Stocks, MCRI, VAC, ASCA, PNK, communicates Peak Fiat Wealth, and the end of the Age of Prosperity and Credit Creation.

The Fiat Money System was replaced by The Diktat Money System on December 7, 2012, as the Euro, FXE, traded below 1.30.

The failure of neoliberalism's seigniorage, that is moneyness, has introducing the Age of Austerity and the Age of Debt Servitude, where people will come to trust in the Diktat Money System, where diktat serves as currency, credit, and wealth, as exemplified in Egypt, EGPT, and Argentina, ARGT.

The failure of neoliberalism's seigniorage, that is moneyness, has introduced the new global economic paradigm of neoauthoritarianism. Crony Capitalism, European Socialism, and Greek Socialism are being replaced by Regionalism and Diktat.

Milton Friedman suggested the Free To Choose Floating Currency Regime, and it was adopted by President Nixon who used it to fund the Vietnam war. Now Mario Draghi and the Troika are providing the Beast Regime of Regional Governance And Totalitarian Collectivism to establish debt servitude.

Previously seigniorage, that is moneyness, came from a combination of sovereign nation states and central banks. For example, from November 15 through December 7, 2012, a combination of the US Fed Reserves' and ECB's monetary authority gave strong seigniorage to Small Cap Pure Value Stocks, RZV, and Small Cap Pure Growth Stocks, RZG, as the Euro, FXE, rose to over 130.

From December 7, 2012, forward, seigniorage will come from a combination of regional sovereign leaders and central banks. In Europe, a Regional President will be appointed by country Presidents and country Finance Ministers who will work with Mario Draghi and Public Private Partnerships to oversee the Eurozone's economy. As moneyness comes more and more from regional governance, investors will be deleveraging ever increasingly out of stocks world wide. Small Cap Pure Value Stocks, RZV, will fall more precipitously than Small Cap Pure Growth Stocks, RZG, as World Currencies such as the Euro, FXE, the Yen, FXY, the South African Rand, SZR, the Brazilian Real, BZF, the Swedish Krona, FXS, the Swiss Franc, FXF, the British Pound Sterling, FXB, the Indian Rupe, ICN, the Canadian Dollar, FXC, the Australian Dollar, FXA, the Chinese Yuan, CYB, and a whole host of Emerging Market Currencies, CEW, trade competitively lower, while the US Dollar, $USD, UUP, has relative stability.

Beginning the week of December 10 2012, global trade dependent South Korea, EWY, will be falling more rapidly than most other country stocks; yes it will be falling like a rock, reflecting the unwinding of global economic trade. India Infrastructure, INXX, and India Small Caps, SCIF, which have seen speculative investment will also be fast fallers. The country stocks KWY, INXX and SCIF are high beta ETFs which will be losing value very quickly.

The chart of both oil, USO, and Gold, GLD, show a bottoming out; the chart of Silver, SLV, shows a massive consolidation triangle, from which its price will either rise or fall. The investment demand for gold will soon rising taking gold, $GOLD, higher from its current price of $1,700. Commodities, DBC, traded lower today December 6, 2012, falling through a consolidation triangle, to the edge of a massive head and shoulders pattern, suggesting a fall lower is coming soon. In the Age of Deleveraging and the Age of Competitive Currency Devaluation, both diktat and physical ownership of gold, either in gold coins, or in Internet trading vaults, such as Bullion Vault, will be the sole forms of sustained and sovereign wealth.

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.

The Yen, FXY, plummeted further as currency vigilantes punish the Bank of Japan for its recent monetization of debt which announced a monetary policy of asset purchases.

A trade lower in the British Pound Sterling, FXB, coming again from currency vigilantes effecting punishment for Bank of England monetary policy, forced UK area banks IRE, RBS, LYG, BCS, HBC lower. This is the beginning of the end for the City of London, one of the premier financial trading centers in the world.

Greek shares, GREK, and the National Bank Of Greece, NBG, fell lower on a likely soon coming default, turning European Financials, EUFN, World Financials, IXG, India Banks, HDB, IBN, EPI, South Korea Banks, WF, KB, Argentina Banks, GGAL, BMA, BBVA, BFR, US Banks, KRE, and US Community Banks, QABA, lower.

US Home Construction, ITB, traded lower on exhaustion of the safe haven rally in US Stocks.

Likewise US Infrastructure, PKB, traded lower as well on the exhaustion of the safe haven rally in US Stocks such as MHK, USG, FLR, JEC, MTW, TEX, SPX, NCS, BECN, TREX, NX, APOG, FBN, LOW, ETH, FBHS, PRIM, GLDD, SNX, CX, EXP, MLM,

Value stocks trading lower on the exhaustion of the safe haven rally in US Stocks include airlines, FAA, and RCL, MGM, SHFL.

Growth shares Steel, SLX, and Biotechnology, XBI, as well as Integrated Circuits, DIOD, Printed Circuit Board Manufacturers, BHE, Semiconductor Manufacturer, INTC, MU, trading lower on the failure of global growth due to the exhaustion of neo liberal finance.

India INP, INDY, India Infrastructure, INXX, India Small Caps, SCIF, Copper Producer, SLT on the failure of neo liberal finance, as did REITS, RWR.

Open Europe reports The scheme for private sector involvement will be launched today, with significant uncertainty surrounding the level of participation it will achieve. The Greek parliament is preparing to retroactively introduce collective action clauses to Greek bond over the next few days, which will allow Greece to force all bondholders into a restructuring if 66% agree to the deal.

Open Europe's Director Mats Persson wrote in the Telegraph on the second Greek bailout stating "New debt issued by the Greek government in 2014/2015 will essentially be junior to existing debt. This raises the question why private creditors would want to purchase Greek debt at all in three years' time, given that they would be first in line for any losses if Greece's economy goes down the tubes. Taken together with the tough austerity targets which could choke of any chance of recovery, as the [debt sustainability analysis] admitted, this may force Greece to seek another €50bn bailout after 2014," as investors will have little incentive to hold Greek bonds.

Fate is passing the baton of sovereignty from nation states to European leaders, such as Angela Merkel, and the EU ECB and IMF Troika. Nation states such as Greece are losing their fiscal sovereignty as sovereign leaders and sovereign bodies dictate monetary policy and fiscal policy. Bloomberg reports German Chancellor Angela Merkel indicated she will maintain pressure on Greece to meet debt- cutting pledges required for its second financial rescue, saying fiscal discipline is needed to hold the euro area together. "If you have a single currency you naturally have to be able to trust each other," she told members of her Christian Democratic Union party in Demmin, Germany, today. While "it is right" to bail out Greece, Portugal and Ireland, "we have to say again and again that everyone must do their homework because otherwise this Europe can't hold together." And FT reports EU Beefs Up Powers Over State Budgets. European Union finance ministers on Tuesday agreed on rules that will give the EU more powers to scrutinise eurozone countries' budgets, even before they are approved by national parliaments. The European Commission will be able to deploy its experts unilaterally to countries in need of bail-outs to give technical assistance, along the lines of the "task force" assisting the Greek government by overseeing the implementation of its EU-imposed reforms. The legislation comes on top of measures agreed last year that sought to enforce long-flouted debt and deficit rules put in place at the creation of the euro. They are intended to move the EU closer to a "fiscal union".

Open Europe relates Il Sole 24 Ore notes that with the second Greek bailout, "Europe enters into the heart of the state's supreme authority, showing that monetary and fiscal policies are now detached from the sphere of the nation's exclusive prerogatives." In Spanish business daily Expansión, Juan Castañeda wrote, "This European way out of the crisis in which national institutions democratically elected by citizens are gradually losing the effective ability to rule their countries …to the advantage of European institutions chosen by states will do nothing but distance even more the citizens from the so-called European project."

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.

2) ...Through soon coming competitive currency devaluation, as well as current oversupply and down trending demand, most commodity prices will be turning lower.
Commodities, DBC, USCI, blasted strongly yesterday, on news of the second Greek Bailout, Base Metals, DBB, rose with Aluminum, JJU, Nickel, JJN, Tin, JJT, Aluminum, JJU, and Copper, JJC, rising strongly. The always volatile Silver, SLV, rose, as did Gold, GLD. Oil, USO, broke out, and caused Gasoline, UGA, to rise. Timber, CUT, rose, which moved paper manufactuers, WOOD, higher.

The Great Deflation is imminent. As currencies begin to trade lower in competitive currency devaluation, Commodities, DBC, with the exception of gold, GLD, unleaded gas, UGA, and oil, USO, will trade lower again, led so by JJA, DBB, CUT, and SLV. This will be seen in the chart of DBC, JJA, DBB, CUT, SLV, GLD, USO

Bloomberg reports Record Nickel Supply Expanding Glut Thwarts Bull Market Rally. Commodities. Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year's rally. Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That's equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 8 percent to $20,230 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows. With new supply expected from Australia to Madagascar to Brazil, consumption still won't expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain "depressed," Deutsche Bank AG said in a report Feb. 15. "We'll get more and more supply over the course of the year," said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. "We expect huge surpluses for nickel not only this year, but next year, and probably in 2014. It's mainly due to an increase in supply, but on the other side the stainless steel industry is facing a tough time

Currencies trading lower today include, The Japanese Yen, FXY, the British Pound Sterling, FXB, the South Korean Won, and the Argentine Peso. The currency demand curve, RZV:RZG, is turning over suggesting that competitive currency devaluation is going to commence soon, and this will delever commodity prices.

4) … The 10 30 US Sovereign Yield Curve is steepening suggesting that interest rates are headed higher and that a recession is coming.
Th Steepner ETF, STPP, has been rising and the Flattner ETF, FLAT, falling, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has been rising since February 1, 2012. The interest rate on the US 10 Year Note, ^TNX, closed above 2% today, as The US 10 Year Notes, TLT, have fallen 2% over the last week, as is seen in this ongoing Yahoo Finance Chart of TLT, EDV, ZROZ and ^TNX

5) … Eventually there will come a time ...
There is no human action, rather fate is bringing forth all things. In a future credit devalued and financially broken world, there will come a time when the most credible leader will step onto Europe's stage and win the affirmation of Europe's leaders. This person will be the Sovereign, and he will be accompanied by Europe's Banker, The Seigniora, and together their word will and way will govern Europe, and the people will place their trust and confidence in them. One leading candidate for the Sovereign is Herman Van Rompuy and one leading candidate for the Seignior is Mario Draghi.

6) … In today's news
CNBC reports UK and Japan Warn Volcker Rule Poses Threat to Recovery. The UK and Japan have urged the U.S. to rewrite its so-called "Volcker rule", claiming that trading restrictions on U.S. banks could hit the international sovereign debt market at a delicate moment in the global recovery. George Osborne, the British chancellor, has joined forces with Jun Azumi, his Japanese counterpart, in warning in a column in today's Financial Times that the U.S. banking reforms could make it "more difficult, costlier and riskier for countries to issue and distribute debt", at a time when many eurozone countries are already under strain. The article is the highest profile expression of international concern about the impact of the U.S. reforms, coming from the finance ministers of two countries regarded as among Washington's greatest economic allies. (Hat Tip to Between The Hedges)

CNBC reports Huge Private Debts Pose Another Hurdle for Euro Zone. Away from the markets' fixation with the debts of Greece and other governments, concern is growing at the painfully slow progress Europe is making in tackling a much bigger mountain of corporate and household debt .(Hat Tip to Between The Hedges)

Greece lost its debt sovereignty with the first bailout. Now Greece has traded its fiscal sovereignty for a second bailout. Guardian writes of Greece's sovereign restructuring, European monitors will move into Athens ministries. Regionalization is the new direction in globalism, as today's regional framework agreements have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy in the EU. Given the recent framework agreement for country debt brakes, as well as today's bailout, and ECB sovereign bond action, a EU fiscal union, to be overseen by budget commissioners, now complements the Euro currency.

Statism will likely be the next step forward in the New Europe, where regional stockholders 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 ushers in the age of regional global governance to replace capitalism, where major world currencies and emerging market currencies will soon be turning lower as details of today's agreement unravel, 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. The EU Leader's framework agreements 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.

CNN Money reports Greece will avoid an outright default in the short run now that eurozone finance officials have signed off on a second bailout for the debt-stricken nation. But the rescue package worth €130 billion is contingent on a historic debt reduction agreement with private sector investors that must be approved before any bailout money can be released. If private sector investors sign off, Greece should be able to secure the funds it needs to make a €14.5 billion bond payment in March.

The terms of the private sector agreement include a write down of 53% on the face value of Greek government bonds, steeper than the previous 50% reduction agreed to in October. The proposal will now be presented to members of the Institute of International Finance, which represents the private sector. The IIF's full committee will review the details and make a decision "in accordance with their own individual processes," according to a statement. IIF director Charles Dallara said in an interview with CNN's Richard Quest that he expects a high participation rate, but he acknowledged that each investor has the right to make their own decision.

Under the terms of the agreement, Greece's debt load will be cut by about €107 billion, equal to 50% of the nation's estimated economic output for the year. It will also reduce the amount of debt Greece needs to refinance over the coming years by roughly €150 billion, according to the IIF. In addition to the write down, investors would exchange existing bonds for securities with lower interest rates. At the same time, investors would receive securities that could increase in value as the Greek economy improves, and EU officials would kick in a €30 billion "sweetener." According to the IIF, the agreement represents the largest sovereign debt restructuring in history. Overall, the deal will result in losses of 74% for the private sector, according to Marc Chandler, head of global currency strategy at Brown Brothers Harriman.

The concern is that a large number of investors will balk at the deal, forcing the terms to be renegotiated. That could delay the just-approved bailout and put Greece back at risk of a disorderly default. The Greek government is expected to pass legislation this week that would force investors who reject the agreement to take losses on Greek bonds issued under domestic law, which make up the majority of the nation's debt load. The presence of so-called collective action clauses would not qualify as a "credit event," according to the International Swaps and Derivatives Association. But the association suggested that activating the clauses could trigger credit default swaps, a form of insurance that investors use to protect against a default.

Bloomberg reports Greek rescue leaves Europe default risk alive. OfTwoMinds writes Do We Really Know Greece's Default Will Be Orderly

Tyler Durden writes IIF's Dallara Warns Holdout Greek Bondholders Could Kill "Successful" Greek Deal. And Tyler Durden also relates that Open Europe writes Many questions around the second Greek bailout remain unanswered. We're still trawling through the responses, analysis and documents to come out of the meeting, meaning there are likely to be plenty more questions and uncertainties to come. The one thing that is clear is that even if this bailout is 'successful', it will set Greece up for a decade of painful austerity and low growth leading to social unrest, while the eurozone will have to provide on-going transfers to help it keep its head above water. Sorry to be killjoys but as Dutch Finance Minister Jan Kees de Jager put it, the deal isn't "something to cheer about". And Tyler Durden writes As Greece Deems 66% CAC Bondholder Acceptance Sufficient, Has It Threatened To Scuttle Its Bailout All Over Again? And Tyler Durden writes Goldman's Greek deal summary: increased likelihood of CDS trigger and CAC use will lead to volatility. And Tyler Durden writes Second Greek Re-Bailout: terms, conditions and next steps. And Tyler Durden write A European, US, Japanese and increasingly global debt crisis will not be solved by creating more debt and making taxpayers pay odious debts incurred through massively irresponsible lending practices of international banks.

Soon a New Charlemagne will rise to rule the Euro zone, where Germany will be preeminent, as a type of revived Roman Empire that governs the European continent.

The EU ECB IMF Troika is conquering and establishing nations, establishing leadership, and exercising direct control over the profligate periphery nations, particularly Greece. The ECB's and Angela Merkel's iron will, is rising supreme over clay democratic processes. Bloomberg reports Merkel as Debt Crisis Iron Lady Bucks German Street on Greek Aid. Angela Merkel is having a Margaret Thatcher moment. Having spent six years in office defying comparison with Britain's first woman prime minister, Merkel is being likened to Thatcher as she steers Europe's response to the financial crisis with demands for debt reduction and tighter economic controls. Media including the Frankfurter Allgemeine Zeitung, the newspaper of record in Germany's financial hub, dub her "Europe's Iron Lady." Strengthened by record-low joblessness at home, Merkel has rejected calls to either cut Greece loose from the euro area or ease her conditions for aid. By bucking the German street and steering the middle course, she is gambling that policy makers will continue to prevent a euro meltdown, helping her win re- election next year and match Thatcher's third term. "If Merkel were to go into elections with a collapsed euro zone she'd have a lot of difficulty winning," Giles Merritt, head of Friends of Europe, a Brussels-based research group that promotes debate on the European Union, said in an interview. "Finally her statesman side is kicking in

2) ,.. The ECB By Changing The Rule Of Law, Asserts Itself As The Euro's Sovereign Authority … A Region Of Global Governance Arises Out Of The Eurozone Sovereign Debt Crisis
Ongoing political conflicts in Europe may mean that Angela Merkel and Nicolas Sarkozy will not be able to stay in office, but this does not mean the destruction of the Euro zone, as fate is effecting a global coup d etat, through the destruction of fiat money.

The death of fiat money commenced in July 2011 with world currencies, DBV, and emerging market currencies, CEW, trading lower. This has caused the investment, economic and political tectonic plates to shift, with the result that a Euro zone authoritarian economic and political structure is rising, to govern those nations that use the Euro currency.

Greece has lost its monetary sovereignty, and Portugal, Italy and Spain have as well, this being acknowledged by ongoing sovereign debt ratings downgrades by rating agencies and increasing oversight by the EU ECB IMF Troika. Investment capital is being destroyed by debt deflation, that is currency deflation; and now, political capital is rising in its place.

The dynamo of choice provided by the Milton Friedman Free To Choose Script, that governed for the last forty years is history. Now the dynamo of diktat, implied in the 1974 Clarion Call by the Club of Rome for regional global governance, is rising to govern human economic and political activities.

Fate is the order of the day, which through creative destruction is terminating Neoliberalism and producing Neoauthoritarianism. There is no human action, there is only destiny destroying choice and democracy, as neo liberal credit fails. Libertarianism will not see the light of day; there will not be any Freedom, Free Enterprise and a Free Monetary System, as envisioned by Hayek, Rothbard and Mises; such things are simply mirages on the Neoauthoritarian Desert of the Real.

Those who taken the Red Pill, know that the debt economy of capitalism is coming to an end, with the result that the dynamos of growth and profit are failing. The recent driver of investment reality has been the European Central Bank's LTRO, facility which has provided cheap three-year liquidity to banks, which in turn has fueled fiat asset purchases across the board including Portugal, Italy and Spain Sovereign Debt.

The race to debase will soon have its logical conclusion: competitive currency devaluation will recommence. Tyler Durden writes The Marginal Utility Of Central Bank Intervention Is Rapidly Diminishing. Yes, the power of neo liberal finance will soon be exhausted, this will be seen in the chart of ITLY, EMFN, EMMT, EMIF, KRE, PKB, RZV, where the debt of ITLY will likely be sustained by the ECB's LTRO 1 and LTRO 2, yet, the rally in the current safe haven stocks fizzles. The reach of ECB credit liquidity will soon fail to continue supporting S&P Materials, MXI, and S&P Global Financials, IXG, as is seen in the chart of SPY, MXI, IXG.

Political capital will soon command economic transactions, as the dynamos of regional security and stability gain traction, providing order out of chaos. Investment capital that fueled growth and profit will literally be washed away into the pit of financial abandon as regional global governance replaces capitalism.

The loss of debt sovereignty is a catalyst for the formation of a European Super State based upon unified fiscal rules in the Leaders Fiscal Pact, which provides for a debt brake in each EU country, and now the New Greek Bailout, and the rise of the ECB as sovereign authority over countries that use the Euro currency, with its ECB Debt Swap Initiative of which Open Europe writes Decoding the ECB bond swap

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.

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 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.
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.

Financial armageddon, that is a world wide credit bust and global financial collapse is coming. This 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 directing that regional global governance be established.

Fate has directed that kings have ruled mankind throughout history; these 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.

At the appropriate time fate 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 diktak.

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 today's massive bailout agreement.

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.

3) … Stocks and currencies traded volatily today.
European Shares, VGK, the National Bank of Greece, NBG, Greece, GREK, traded lower, as European Financials, EUFN, world financial institutions, IXG, traded higher on the Eurozone bailout news. Energy shares, PSCE, WCAT, XLE, and IEZ, traded higher on higher oil, USO, which caused airline shares, FAA, to tumble.

A number of Asian Banks, such as KB, WF, MFG, SMFG, MTU, as well as UK Bank, BCS, traded lower.

Asia shares, EPP, traded higher on today's higher Euro, FXE, led by Australia Small Caps, KROO, Australia, EWA, and Vietnam, VNM. China Financials, CHIX, China Industrials, CHII. Phillippines, EPHE; but Emerging Asia, GMF, traded lower.

Argentina banks led Argentina, ARGT, higher.

India Small Caps, SCIF, led World Small Caps, VSS, and Emerging Market Small Caps, EWX, higher.

The Dow Jones industrial average, DIA. briefly touched 13,000 for the first time since May 2008, powered higher by the Greece bailout and strong corporate earnings reports from Home Depot, HD.

Uranium Miners, URA, Copper Miners, COPX, Rare Earth Miners, REMX, Aluminum Producers, ALUM, Metal Manufacturing, XME, Steel, SLX, S&P Mining, MXI, and Automobiles, CARZ, and VROM, traded higher.

The chart of the Morgan Stanley Cyclicals Index, $CYC, shows a topping out.

The ratio of shipping stocks, SEA, largely comprised of Greek companies, relative to the Baltic Dry Index, $BDI, SEA:$BDI, reflects the leverage and speculation of neo liberal finance.

Shares trading lower included PSP, FAA, PSCI, ITB, XBI, XRT, RZV, XSD, IYR, QABA, KRE, REM, FNIO, ROOF, REZ, IYT, EMIF, CVCO, XPH, IHE, XLP. PXN, Annaly, Capital Management, NLY, a leading Mortgage REIT, traded lower.

Bespoke Investment Blog writes Dow Transports Diverge From Industrials The ongoing trade lower in Transportation,IYT, as well as Utilities, XLU, provide non confirming Dow Theory logic that the market and Industrials, IYJ, will be headed lower.

Emerging Markets, EEM, and the Brics, EEB traded lower.

Growth stocks from this Finviz Screener of 50 Growth Stocks turning lower today included GPC, MU, TSm, NKE, AMGN, NTGR, LPL, INTC.

All of these automobile dealers seen in this Finviz Screener of Automobile Dealers turned lower including KMX, SAH, ABG, RMT, LAD, GPI.

Chemical stocks from this Finviz Screener of 20 Chemical Manufacturers turning lower included IPAS, WLK, KRA, LYB, HUN, OM, ASH.

Almost all of the stocks seen in this Finviz Screener of Small Cap Technology Stocks turned lower.

Value stocks seen in this Finviz Screener of 50 Value Stocks turning lower included BC, THO, CCO, MGM, RCL, WGO, URI, DUF, CUGW.

Commodities, DBC, USCI, blasted strongly higher. Base Metals, DBB, rose with Aluminum, JJU, and Copper, JJC, rising strongly.. The always volatile Silver, SLV, rose, as did Gold, GLD. A rise in Oil, USO, caused Gasoline, UGA, to rise. Timber, CUT, rose, which moved paper manufactuers, WOOD, higher.

As currencies begin to trade lower, Commodities, DBC, with the exception of gold, GLD, unleaded gas, UGA, and oil, USO, will trade lower again, led so by JJA, DBB, CUT, and SLV. This will be seen in the chart of DBC, JJA, DBB, CUT, SLV, GLD, USO

The US Dollar, $USD, UUP, traded lower, as the Russian Ruble, FXRU, the Swiss Franc, FXF, the Swedish Krona, FXS, and the Euro, FXE, rose, taking emerging market currencies, CEW, higher. World Major Currencies, DBV, traded lower. The USD/JPY continued higher, and it inverse, the JYN, traded lower.

Junk bonds, JNK, International Corporate Bonds, PICB, Emerging Market Bonds, EMB, World Government Bonds, BWX, traded higher on world central bank liquidity and carry trade investing.

4) … As debt contagion spreads an competitive currency devaluation picks up steam, Canada, Mexico and the US will be regionalized into a North American Union, and be known as CanMexAmerica.
Greg Quinn of Bloomberg writes Credit And Commodities Drive Canada "In the land of the blind, the one-eyed man is king, and that is Canada right now," said Eric Lascelles, chief economist at Royal Bank of Canada Global Asset Management, which oversees about C$250 billion ($252 billion). "The two big things driving Canada are credit and commodities," and "we have avoided some of the real headaches that the heavily indebted countries have encountered."

Canada's currency will trade close to parity with the U.S. dollar into next year, based on the median estimate of 24 responses to a Bloomberg News survey. Two-year bond yields will remain below 2 percent, according to a separate Bloomberg survey, as inflation slows and the government reduces its C$31 billion deficit, which officials are projecting will be eliminated by the 2015-2016 fiscal year.

Record Debt Purchases. Foreign purchases of Canadian debt have set records in the past three years, including a tenfold jump in money-market investment last year to C$32 billion and C$96 billion of bonds in 2010, according to Statistics Canada. Pacific Investment Management Co., the world's largest bond-fund manager, is betting on the country's longer-term debt because of Canada's stability and its "strong resource sector," which makes it "less sensitive to shocks," Ed Devlin, who manages Pimco's $11 billion Canadian portfolio, said in a Feb. 10 interview. The world's 10th largest economy, Canada has the third-largest pool of oil reserves, and, according to a 2010 speech by Finance Minister Jim Flaherty, is the biggest producer of potash, second largest supplier of nickel and third largest provider of aluminum.

World's Soundest Banks. Canada's banks were named the soundest in the world for the fourth consecutive year in 2011 by the World Economic Forum, and Bank of Canada Governor Mark Carney was chosen in November by leaders of the Group of 20 nations to head the Financial Stability Board. The board is charged with overseeing efforts to write new rules for international finance to help avoid another global credit crunch. The International Monetary Fund projects Canada will lead the G-7 with a gross debt-to-output ratio of 73 percent at the end of 2016, lower than 75 percent for Germany (IGS%DEU), 115 percent for the U.S. (IGS%USA) and 253 percent for Japan (IGS%JPN).

Canada's central bank dropped a "conditional commitment"to keep its benchmark overnight lending rate at a record low 0.25 percent in 2010, and Carney, 46, has held it at 1 percen tsince September of that year, the longest pause since the 1950s. In the same period, eleven of the 20 biggest economies have cut rates, and the U.S., Japan, U.K., Switzerland and European Central Bank adopted or extended emergency stimulus or lending in the last year.

All this has supported Canada's dollar, which has appreciated 5.7 percent against the U.S. currency since Sept. 1, 2010. Canadian government bonds have returned 8.5 percent in the same period through Feb. 17, compared with 6.6 percent for U.S. Treasuries.

Financial armageddon will be the genesis for regionalization of North American resources into a collective hive for the security and stability of the North American Continent. The Canadian Energy Income Companies, ENY, and all Canadian Energy Production Companies, will be regionalized and overseen by public private partnerships, where stakeholders from government and industry meet to oversee the production and provide for credit needs of companies such as BTE, CVE, NXY, PVX, SU, TLM, ENB, TRP

Bloomberg reports "Japan's central bank unexpectedly added 10 trillion yen ($128bn) to an asset-purchase program and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen… The BOJ also said that it will target 1% inflation 'for the time being.' Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3% last quarter."

Bloomberg reports "Bank of Japan Governor Masaaki Shirakawa said that setting an inflation objective was a better policy option for Japan than following the Federal Reserve in crafting a time-frame for the end of policy stimulus. While the Fed pledged to keep exceptionally low rates through late 2014, it 'holds significant reservations with regard to such anticipation being subject to change depending on economic and price outlooks,' Shirakawa said… 'We judged it's more effective and credible to set an inflation goal rather than specifying the timing of an exit as Japan faces high uncertainties for the outlook of the economy and prices,' he said…"

The chart of the USD/JPY shows its trade higher; its inverse, JYN, traded lower. Kubota, KUB, traded vertically higher, with Japan, EWJ, rising parabolically higher, as the Bank of Japan announced a liquidity operation.

Bloomberg reports on terrific credit expansion "Brazilian state-controlled banks are boosting credit four times faster than non-government lenders, making it harder for policy makers to lower interest rates while meeting the country's inflation target. Government-run banks including Banco do Brasil SA and Caixa Economica Federal, which accounted for almost half of all lending in December, boosted credit by 4% that month, compared with 1% for non-state lenders."

The Finviz ETF report communicates energy and emerging market infrastructure rose on LTRO neo liberal finance
EGPT 8.4
SCIF 8.0
GREK 7.0
INXX 6.6, led by SLT, TTM,
EPI 6.0
TAO 5.8
XOP 5.4
INP 5.4
PSCE 5.2
BRF 5.5
EWZS 4.8 led by GFA
IEO 4.7
CARZ 4.5
BRAF 4.4
FXI 4.3
BRXX 4.2, led by FBR, SBS, CPL
SEA 4.3
EWN 4.2
EMIF 3.4
TUR 4.1
RSX 3.8, led bySNX
ERUS 3.2 led by MBT
EWD 3.2 led by VIP
CHII 3.1
CHIX 3.0
THD 3.0
IHF 3.0
IXG 2.7
XSD 2.6
PSCD 2.5
RZV 2.3 led by SNX
EWX 2.3
PKB 2.0
ITB 0.4

Loss leaders for the week included
CVCO
SLX
FAA
COPX

2) … Credit for airline deals is currently guaranteed by the US Government; this stimulates sales at Boeing.
Reuters reports U.S. Loan Guarantees Part Of Lion Air Deal For Boeing Jets

How do you stump up the money for a $22 billion aircraft deal? The case of Indonesia's Lion Air, which signed a record order with Boeing this week, is typical of many mega-aircraft deals: with a little help from the taxpayer.

The U.S. government is offering loan guarantees to help the low-cost carrier buy 230 jets, under a system operating on both sides of the Atlantic to promote exports of strategic goods such as the jetliners built by Boeing or rival Airbus. In theory, it means U.S. taxpayers could pick up part of the tab if the deal falls through.

Bankers and officials involved in such transactions say experience suggests this is unlikely to happen, or any losses could be recouped by recovering assets.

Indonesian entrepreneur and Lion Air co-founder Rusdi Kirana blazed a trail at the Singapore Air Show, signing deals for 259 aircraft worth $23 billion this week, including Boeing and Hawker Beechcraft jets and European ATR turboprops.

The three-day splurge left some wondering how an airline little known internationally, and banned in Europe over safety concerns, could afford to pay for the planes.

Similar questions swirled in 2005 when Lion Air placed what was then considered a huge order for 60 aircraft. This has since propelled it to become Indonesia's top domestic airline.

A senior U.S. official familiar with the deal dismissed concerns about the airline's ability to pay.

"We believe Lion Air has a good business model and a management team that is successfully implementing it," Robert Morin, vice-president of the transportation division at the Ex-Im Bank, told Reuters.

"Rusdi Kirana won't have trouble financing Lion Air's new big order because the deliveries are stretched over several years and he will probably tap a variety of sources of financing."

The methods cannot be verified in detail, because Lion Air has declined to open up its finances. U.S. airlines says deals involving U.S. backing should be more transparent.

"We are the custodians of U.S. taxpayers' money and we take that role very seriously," Morin said. "Rest assured, Ex-Im Bank does its homework."

In practice, industry sources say only a fraction of the $22 billion touted for the Boeing deal will be paid any time soon.

So how does it work?

Price Discounts

It is no secret that airlines often get discounts. But Boeing and Airbus never comment on them and buyers are sworn to secrecy over their deals, so their size is hard to determine.

Classified documents released by WikiLeaks gave glimpses of aircraft deals as seen by U.S. diplomats, and spoke of discounts as high as 50 percent, though industry sources dismiss this.

Lion Air can expect a hefty discount for two reasons: it has placed the largest commercial order ever received by Boeing and it is a launch customer for the revamped Boeing 737 MAX 9.

On the other hand, airline industry sources say, launch pricing can mean airlines get a less generous support package.

One person familiar with industry practices speculated the discount for part of the Lion Air order could reach 40 percent, but acknowledged the real amount was anyone's guess.

Buy Now Pay Later

Airlines mainly pay for aircraft when they take delivery, not when they order them. Deliveries won't start until 2017.

By the time the later planes are delivered, some of the previously ordered ones may be coming up for retirement, which means they can be parked, scrapped or sold, potentially releasing equity to go back into the purchase of later planes.

Kirana said he would take delivery of 30-40 planes a year.

Deposit

Initially, all Lion Air is likely to have to pay is a deposit to secure slots on the production line in Renton, Wash.

Deposits are typically 5 percent or more, experts say.

Pre Payment Deliveries

Airlines have to make further down payments as the clock ticks down to delivery, especially from about 24 months out.

However, some banks offer financing products even for these "pre-delivery payments" (PDPs).

By delivery day, an airline has typically paid 20 percent of the aircraft's net value but this can be as high as 50 percent.

Since they eat into cash flow, PDPs are an important item for the health of an airline. "More than one airline has gone bankrupt just because of PDPs," an industry banker said.

D-Day

Each aircraft is fully paid for on delivery.

Usually airlines have financing in place for some 80 percent of the price. Some sell the aircraft simultaneously to a leasing company and rent it back, a process called sale-and-leaseback.

Others take a commercial loan or go to the capital markets, but the latter option is little used outside the U.S.

Export Import Credit Financing

Many commercial loans are backed by guarantees given by Ex-Im bank, France's Coface and others. Ex-Im Bank covered about half the fleet already ordered by Lion Air, and is expected to step up for a similar proportion of the new deal.

The agency rarely loans from its own balance sheet. It issues a guarantee against which commercial banks lend funds. It charges for the guarantee and says it has only lost on one deal.

The cost of such finance is rising after a pact between Organisation for Economic Co-operation Development (OECD) member countries last year. The agency typically guarantees up to 85 percent of the value of the U.S. content of the aircraft

Helen Cooper of the NYT reports On Boeing's Stage Obama Pushes Exports, President Obama, wrapping himself in one of the country's most glamorous exports, Boeing's new 787 Dreamliner, vowed on Friday to boost government help for American companies seeking to sell their goods overseas.

I want us to sell stuff," Mr. Obama said as he finished a trip to the West Coast, calling on Congress to continue supporting export financing agencies and announcing an array of plans aimed at helping manufacturers.

As this is an election year, Mr. Obama went for the ultimate photo op, using the spectacle of a new United Airlines Dreamliner as his backdrop to ask Congress not to cut financing for the Export-Import Bank, the American export credit agency.

The event exceeded the standards of the usual presidential factory tour. Boeing's plant here, Mr. Obama said, is the biggest building in the world, and the president seemed to delight in his tour of the new plane, marveling at windows that tint turquoise at the touch of a button.

Mr. Obama even struck a nostalgic chord, telling workers that the plane he arrived on - Air Force One - was made at this Boeing plant 25 years ago. "One of the guys I met on the tour worked on the plane," Mr. Obama said. "I told him he did a pretty good job. It's flying smooth."

For Mr. Obama, export growth is one area where he can point to success. Two years ago, he said in his State of the Union speech that he would work to double United States exports in five years, an announcement that sparked incredulity among trade economists. At the time, Mr. Obama had yet to articulate a trade policy.

Since then, the president's goal seems less pie-in-the-sky, thanks in part to, of all countries, China. While China still serves as a foil for American politicians who want to talk about unfair trade practices and to score points with labor unions and manufacturing companies simultaneously, the reality is that China's economic growth - and the ascendance of its middle class - have enlarged the market there for American goods. United States exports last year hit record levels, buoyed by export growth to China, the Commerce Department reported.

The Obama administration has had some success in its efforts to pressure the Chinese government to allow its currency to appreciate; administration officials took up the issue again this week, when China's presumed next leader, Vice President Xi Jinping, was in Washington.

The president lavished praise on Boeing during his visit for helping to lead American export growth. But the White House also carefully calibrated the optics of the trip, choosing to visit a unionized Boeing plant in Washington State just a few months after the National Labor Relations Board dropped a lawsuit against Boeing over complaints that it built a nonunion plant in South Carolina to retaliate against the union in Washington State for strikes.

The case was dropped after the machinists' union approved a contract extension with Boeing, but the issue has been trumpeted on the Republican presidential campaign trail as an example of the government - and Mr. Obama - trying to beat up Boeing. A spokesman for Boeing said there was no connection between the dropped labor complaint and Friday's visit by the president.

Labor leaders were buoyed by Mr. Obama's visit, interpreting it as a sign of presidential support. During his remarks, the president steered clear of the labor-management fight, filling his visit with oratory about Boeing, and its new 787, as the perfect example of American ingenuity. But he also managed to entwine his remarks with homages to American workers.

"In December 2009, the first Dreamliner took off on its maiden flight right here in Everett," Mr. Obama said. "It was a cold and windy day, but that didn't stop more than 13,000 employees from coming out to see the product of all their hard work finally take to the skies."

He spoke of one Boeing worker, Sharon O'Hara, who was there, and who was in the audience on Friday, and quoted her as saying: "I had goose bumps and tears. We said we would do it and we did."
Mr. Obama concluded: "You said you would do it, and you did. That's what we do as Americans."

3) … In the soon coming currency depleted and credit evaporated world, regional global governance will change the nature of credit; credit will come through diktat as regional stakeholders work with monetary cardinals and the monetary pope, to finance industry critical to the region's security and stability.
Mike Mish Shedlock reports a Germany draws up plans for Greece to leave the Euro. What's likely early next week is a debt swap in which the ECB gets new bonds guaranteed in Euros, then immediately transferred to the EFSF making the ECB whole. Some relatively short time later, the Troika will refuse to lend more money to Greece forcing Greece to go back on the Drachma

Ambrose Evans Pritchard writes just as Greece complies at last, Europe pulls the plug.

Nick Beams writes Euro zone ministers tighten screws on Greece

Christopher Brooker writes The European project is splitting apart at the very core. A gulf is growing between France and Germany over the future of the eurozone. What makes this moment so significant is not just that the disintegration of the eurozone will be by far the most serious check to the hitherto seemingly irresistible drive for "ever closer union", but that it marks the rending apart of that Franco-German alliance which has been seen, ever since the Elysee Treaty of 1963, as the central "motor" of European integration. As the slow-motion crisis inches towards breaking point, France and the European institutions are on one side of an unbridgeable divide, and Germany and its increasingly restive people on the other. The latter see that the gamble of the euro has failed just as dismally as the Bundesbank had warned it would back in the 1980s, before being ruthlessly outmanoeuvred by Jacques Delors and Helmut Kohl.

Anna White of The Telegraph reports Greek rescue threatens eurozone structure. European leaders are working through the weekend to finalise the details of a second €130bn (£108bn) bail-out package for Greece, ahead of a key meeting on Monday. A conference call is expected to be held on Sunday by finance ministry officials from the 17 eurozone countries. If the package is adopted, Greece's finances will be placed under stringent watch to ensure it delivers deep cuts and meets loan requirements. The respected Ernst & Young ITEM Club said: "This could be the template for a future European fiscal union." Marie Diron, economic advisor to the ITEM Club, said: "In practice countries will watch closely over the finances of others, ensure laws are passed and implemented, and corrective measures can be taken to avoid future debt contagion between member states."

Ms White continues, Chancellor Merkel's government indicated its determination to avoid separating the timetable of the aid from the writedown of Greek debt to private bondholders, and agree to the deal as one package. Greece's cabinet approved a final set of austerity measures yesterday ahead of a key deadline on March 20 when the debt-laden country must pay €14.5bn or trigger sovereign insolvency. A government official said the cabinet had agreed to launch a debt swap for private creditors by March 8 with the aim of completing it by March 11. The swap is intended to accompany the rescue deal and will mean creditors take a 70pc cut in the real value of their holdings. The sands of time run out on March 20 when debt-laden Greece must pay €14.5bn or trigger sovereign insolvency - the first of its kind in the 13-year history of the single European currency.

The NY Times writes Europe's failed course. Struggling euro-zone economies like Greece, Portugal, Spain and Italy cannot cut their way back to growth. Demanding rigid austerity from them as the price of European support has lengthened and deepened their recessions. It has made their debts harder, not easier, to pay off. This is not an issue of philosophical debate. The numbers are in. As The Times's Landon Thomas Jr. reported this week, Portugal has met every demand from the European Union and the International Monetary Fund. It has cut wages and pensions, slashed public spending and raised taxes. Those steps have deepened its recession, making it even less able to repay its debts. When it received a bailout last May, Portugal's ratio of debt to gross domestic product was 107 percent. By next year, it is expected to rise to 118 percent. That ratio will continue to rise so long as the economy shrinks. That is, indeed, the very definition of a vicious circle. Meanwhile, shrinking demand and fears of a contagious collapse keep pushing more European countries toward the danger zone of unsustainable debt.

Bloomberg reports ECB said to negotiate with Greece on investment portfolio bond exemptionn. The European Central Bank is negotiating with Greece on behalf of its member central banks to exempt the Greek bonds in their investment portfolios from a debt restructuring, two euro-area officials said. The ECB wants to swap the investment portfolio bonds for debt that's exempt from collective action clauses, or CACs, to avoid losses in a private-sector debt restructuring, the officials said late yesterday. The central bank has already swapped Greek bonds it bought as part of its asset-purchase program for such securities, a third official with knowledge of the situation said. Greece wants the bonds in the central banks' portfolios to be included in a private-sector deal aimed at slicing 100 billion euros ($132 billion) off its debt, the officials said. The central banks are arguing they would have dumped the bonds if they were normal investors and that they shouldn't be forced to take losses on them, the officials said. An ECB spokesman declined to comment. Greek government spokesman Pantelis Kapsis wasn't immediately available to comment. The tussle comes as euro-area finance ministers gather in Brussels on Feb. 20 to decide on a second bailout for the embattled nation and sanction the private-sector bond swap.

Soon fears of debt contagion will arise again as they did in July 2011 where investors feared that a debt union had formed. And new fears that the world central banks credit will no longer stimulate and liquefy financial assets will cause investors to derisk out of stocks and delever out of commodities and sell the currencies globally; the fastest fallers will likely be the Swedish Krona, FXS, the South African Rand, SZR, the Brazilian Real, BZF, and the Indian Rupe, SZR. In as much as hot money has recently flowed once again into the BRICS, especially Brazil, Russia, and India, overheating their exports relative to their imports, the Brazil Small Caps, EWZS, the Russian Small Caps, ERUS, and especially the India Small Caps, SCIF, are likely to be the fastest stock fallers.

With trust fleeting credit will turn bad, and interest rates on all types debt will rise. Soon there will be money good, and no sustainable level of debt.

Out of financial armageddon, that is a credit bust and financial system collapse, sovereign leaders will arise from regional framework agreements to replace sovereign nations. Lacking any money good, people will place their trust and faith in the word, will and way of these leaders. The people will give their allegiance to the diktat of the new sovereigns, who will meet in summits, waive national sovereignty, and establish a Federal Europe, with the ECB or the Bundesbank empowered as the EU's bank, appoint monetary cardinals as stakeholders to manage the factors of production and provide credit as necessary; and appoint a EU wide technocratic government featuring fiscal commissioners who oversee structural reforms and manage government spending, as well as impose austerity measures for regional security and stability.

Angela Merkel has heard and heeded the 1974 Club of Rome's Clarion Call for regional global governance and will act with its authoritarian imperative to establish a fiscal and federal Europe.

Fate is working through Angela Merkel to bring forth the rise of the Beast Regime of Neoauthoritarianism, aka, the ten toed kingdom of regional global governance, to replace the Bank Regime of Neoliberalism, aka, capitalism.

Fiat money and credit will soon die, putting capitalism in the grave. Diktat will serve as both credit and currency in the new economy of regional global governance.

The debt economy of capitalism is coming to an end, with the result that the dynamos of growth and profit are failing. The driver of investment reality is that the European Central Bank's long-term refinancing operations has provided cheap three-year liquidity to banks, which has fueled fiat asset purchases across the board including Portugal, Italy and Spain Sovereign Debt.

The power of neo liberal finance will soon be exhausted, this will be seen in the chart of ITLY, EMFN, EMMT, EMIF, KRE, PKB, RZV, where the debt of ITLY will likely be sustained by the ECB's LTRO 1 and LTRO 2, yet, the rally in the current safe haven stocks fizzles. The reach of ECB credit liquidity will soon fail to continue supporting S&P Materials, MXI, and S&P Global Financials, IXG, as is seen in the chart of SPY, MXI, IXG.

Political capital will soon command economic transactions, as the dynamos of regional security and stability gain traction, providing order out of chaos. Investment capital that fueled growth and profit will literally be washed away into the pit of financial abandon as regional global governanc replaces capitalism.

Instaforex writes Ralf Nelson Elliott And His Wave Analysis. Ralf Nelson Elliott was an American accountant. In 1938 appeared the book "The Wave Principle" where he detailed the results of his studies and described his method. His next book entitled "Nature`s Law - The Secret of the Universe" was published in 1946.

The monthly chart of S&P, $SPX, traded by SPY, communicates that we are at the crest of an Elliott Wave 2 high, and are going to enter an Elliott Wave 3 Down, as is seen in Daneric's Elliott Wave article 15 February 2012. These are the most destructive of all economic waves as they destroy practically all of the wealth accumulated on the way up. The Great Deleveraging, that is Great Depression 2, is about to commence.

Tim Price in Sovereign Man relates Warren Buffett's most irritating thing ever said: stocks beat gold and bonds. For value investors of a certain age (e.g. mine), discovering that Warren Buffett could be wrong is like suddenly not believing in Father Christmas.

Buffett's latest advertorial (for himself and for Wall Street), "Why stocks beat gold and bonds," adapted from an upcoming version of one of his legendary shareholder letters and published in Fortune, may be the most irritating thing he's ever written. As an investor, he rightly draws attention to the critical requirement to maintain one's purchasing power in the face of rampant state inflationism. He accurately highlights the staggering reduction of real value in the US dollar since 1965 (some 86%). He fairly declares a dislike for currency-based investments in a world of rapidly inflating, unbacked fiat. And he then goes on to rubbish gold using the tired and specious argument that purchasers are simply displaying "greater fool" theory, eagerly awaiting new rises in price that will suck in new purchasers ad infinitum. It looks suspiciously as if Warren Buffett, for all his undoubted investment success, has never actually studied any monetary history.

The reason why Buffett's views of gold should be ignored can be seen in the following charts, all courtesy of James Bianco at Bianco Research. The first shows the extent to which the eight largest central banks (China, the ECB, the US, Japan, Bank of England, Banque de France, Swiss National Bank, and Germany's Bundesbank) have allowed their balance sheets to explode, in a desperate attempt to compensate for banking and private sector deleveraging since the debt crisis began. As Bianco points out, "If the basic definition of quantitative easing (QE) is a significant increase in a central bank's balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE." What's particularly shocking about the data is that while every major central bank is busily printing money like it's going out of fashion (which it is), one of the biggest culprits is the one most widely associated with sound monetary policy, namely the Bundesbank, which has been one of the biggest inflationists of all. Buffett's preference for equity investment may have nothing to do with expectations regarding things like economic growth or profits, just money printing. This is not founded on sound economic reasoning, rather simply shifting capital into an ever-rising bath. What happens when central banks stop filling the bath? Or worse, take the plug out? Or worse yet, find that they are no longer in control of the water? The investment world does not come down to an all-or-nothing decision between debt (mostly rubbish, now, admittedly) and equity. While the bigger picture is fraught with monetary mismanagement in response to a grave crisis, there are plenty of other investment choices out there, and a growing argument underpinning the ownership of real assets.

In a destabilizing world, regionalization will be the key to security and stability. Soon banks will be nationalized, better said regionalized, and integrated into the government, and become known as the government bank, or gov banks for short. Moody's Investors Service announced that it was placing more than 100 European banks under review for possible downgrades. The credit rating agency also said that it was putting more than a dozen banks with significant global capital markets operations under review for possible downgrades. Those banks included Barclays, BCS, HSBC Holdings, HBC, and Royal Bank of Scotland, RBS. These banks as well as Lloyds Banking Group, LYG, will be regionalized into a single UK bank, most likely the latter, as they are under the authority of the UK government, which has the British Pound Sterling, FXB, as a currency.

In Europe, leaders will meet in summits and waive national sovereignty, and announce that the European Financial Institutions, such as Ireland's IRE, will be integrated into the Bundesbank or the ECB, which will become known as the Euro's bank.

In Switzerland UBS and CS will be integrated into the Swiss Central Bank

In Japan, MFG, MTU and SMFG will be merged into the Bank of Japan. In each of the world's ten regions, diktat will serve as both money and credit

In India, IBN, HDB, will be integrated into the India Central Bank

In Brazil, BSBR, ITUB, BBD, will be integrated into the Brazil Central Bank

In Argentina, BBVA, BMA, BFR, GGAL, will be integrated into the Argentina Central Bank.

In Chile, BCH, and BCA, will be integrated into the Chile Central Bank.

In South Korea, KB, WF, SHG, will be integrated into the South Korea Central Bank.

A Eurozone guarantee will backup national bank deposit insurance schemes, to reduce retail bank runs. And in Japan, a national bank deposit scheme will act as capitol controls on retail bank accounts.

Soon a rising US Dollar, $USD, UUP, and competitive currency devaluation, as is seen in the chart of UUP, FXE, FXM, FXC, ICN, FXB, SZR, BZF, FXA, FXRU, CEW, will turn world stocks, ACWX, VSS, EWX, lower. Gasoline Futures, UGA, have risen strongly through LTRO Financing. These are likely to have an ongoing upward wave structure, while commodities, DBC, and USCI, trade lower.

4) … In today's news and commentary
AP reports German president quits in scandal over favors … WSWS reports German President Wulff resigns

You Tube Greece 'first domino' in end of financial sovereignty?

Gonzola Lira The deflationary undertow before the inflationary wave

Business Week Czech inflation rate reaches 3-year high as economy shrinks

Open Europe Blog The Greek crisis: Five key developments

Open Europe reports Die Welt reported that the ECB is planning to swap its holdings of Greek debt for new bonds, which would allow Greece to introduce collective action clauses into its bonds, while protecting the ECB from potential losses. The FT reports that the Bundesbank objected to the move, wary of the precedent it would set for special treatment of ECB bond holdings.

Open Europe reports German Chancellor Angela Merkel has been forced to postpone her meeting with Italian Prime Minister Mario Monti due to the resignation this morning of the German President, Christain Wulff, following a long-running scandal involving a low interest euro loan from the wife of a wealthy businessman, which he tried to conceal. BBC Times Welt FAZ FTD Les Echos Le Point Corriere della Sera Il Sole 24 Ore Liberation

MSN Philippines News EU's Van Rompuy calls special euro summit March 2 Eurozone leaders will hold a special meeting on March 2 to discuss the currency's debt firewall and elect a new eurozone boss, with EU president Herman Van Rompuy favoured to win the job. European Union leaders stage their next summit on March 1-2, 2012.

There will be a eurozone summit over lunch dedicated to the European Stability Mechanism (ESM) and the selection of the president of the euro summit," Van Rompuy's office told the 27 EU governments on Wednesday, internal EU papers seen by AFP on Thursday showed.

EU and governmental sources confirmed Van Rompuy's plans, and his likely dual appointment as chairman of bi-annual summits of the 17-nation eurozone agreed under a new cross-border economic governance drive. He would work in tandem with Luxembourg's head of the finance ministerial Eurogroup, Jean-Claude Juncker.

Despite Slovakia reiterating its opposition during this week's talks, the ESM debate will focus on boosting the effective lending capacity of a new rescue fund that enters service in July, paving the way for governments to increase its 500-billion-euro effective lending capacity.

One way leaders are considering doing this is by adding in monies left over in the 440-billion European Financial Stability Facility (EFSF) that was due to be phased out in the summer of 2013.

The discussion comes amid efforts to raise the resources available to the International Monetary Fund via extra loans mainly from the Group of 20 major and emerging economies.

This debate follows fears that the eurozone might not have enough firepower at its disposal should debt-crisis contagion spread once again to Italy or Spain.

The summit, which will also focus on whether to grant Serbia EU accession candidate status, will see the bloc's new inter-governmental Treaty on Stability, Coordination and Governance presented for signing on March 2. Twenty-five of the 27 governments, minus Britain and the Czech Republic, have said they will implement a "golden rule" (a debt brake) enshrined in the treaty to move quickly towards balanced budgets.

The treaty negotiations have closed, with an EU source adding that two contentious questions have been resolved by a "special agreement" among leaders behind the scenes.

The first, concerning the right for an unhappy government to take another state to the European Court of Justice if pledges are not carried through, has been resolved "so you don't see the smoking gun", or the country calling the shots, he said.

The second, which may cause ructions in Ireland, whose highest legal officer has yet to declare whether the treaty will need endorsement by a referendum, would see, this official said, the treaty regarded as "non-referendum compatible" under a "gentleman's agreement".

Nature Economist Elaine Meinel Supkis writes on the soon coming debt servitude for the masses. Here is an EU report about the crisis that tries desperately to explain the housing and government credit collapse but can't figure out any solution except to crush the workers and savers and then make them all pay dearly for this mess, Alert Mechanism Report 2012. This Alert Mechanism Report (AMR) marks the first step in implementing the newsurveillance procedure for the prevention and correction of macroeconomic imbalances (hereafter called the Macroeconomic Imbalance Procedure - MIP). This report also contains the final design of the scoreboard of indicators (presented in Table 1 and Section 2). Surveillance to prevent and correct macroeconomic imbalances under the MIP is a new instrument of the strengthened framework for economic governance in the EU. It was adopted as part of the so-called 'six-pack' governance package which also provides for asignificant reinforcement of surveillance on fiscal policies. Surveillance on macroeconomic imbalances under the MIP forms part of the "European semester" which takes an integrated and forward looking approach to the economic policy challenges facing the Union in ensuring fiscal sustainability, competitiveness, financial market stability and economic growth. So, the world's top elites want to have macroeconomic controls! More and bigger and presumably, better! The gross failure of all the dominant imperial systems was due to it not being a big enough imperial system with some kindly emperor at the helm, no? HAHAHA. We live and never learn.

Simon Black writes in Sovereign Man, Friedrich Hayek On Our "Dictatorship of the Proletariat".

John Embry, Chief Investment Strategist, Sprott Asset Management writes debt saturation will make for higher levels of gold and silver. Trade The relentless growth in debt throughout the world. In the wake of Global Financial Crisis 1 in 2008 (and I can assure you that the next one is coming very soon) there has been much talk of debt deleveraging. To be fair, in the private sector, there has been some evidence of that in the U.S. and Europe, although most of it has related to outright default rather than the old-fashioned practice of saving current income to pay down existing debt.

This minor event, however, has been totally overwhelmed by an explosion in sovereign debt as governments worldwide have been forced to step in to save their essentially insolvent banking systems and prop up their foundering economies.

I regret to say that it doesn't take more than a cursory examination of the facts to conclude that the problem is endemic throughout the industrialized world and is even affecting some of the key emerging economies. More importantly, I am afraid it will be terminal for the financial system we have known since the end of World War 2.

The poster child for this development has been the good old U.S.A., and in case you think I am anti-American, I must hasten to tell you that I was born in the U.S.A. exactly nine months before Pearl Harbor and spent the first eight years of my life in the environs of Washington, D.C. Since then I have lived in Canada, always within 100 miles of the U.S. border, and I have always viewed the country at close quarters with great fondness. Having said that, the dramatic financial deterioration that I have witnessed in this country over the past several decades has been truly astonishing and most discouraging.

There is always some arcane statistic that really makes a point and I think the one that resonates with me is that when Ronald Reagan assumed the presidency 31 years ago, the gross federal funded debt was $907 billion. This amount had been accumulated in a little less than 200 years, a period that encompassed two major world wars, a civil war, numerous other skirmishes, several financial panics, and a horrific depression in the 1930s. Now, a mere 31 years later, the U.S. is chalking up more than that amount in a six-month period.

It was just mid-summer last year that the agonizing debt limit debate was resolved and the limit initially rose by $900 billion in two tranches. Well, that has already been exhausted and now the hope is that another $1.2 trillion increase will get us through the November election. I think that is unlikely.

What I find amazing is that remarkably few people seem to find this unusual, although I must admit that I think very few people even actually think about it. However, I believe in the immutable law of mathematics and when you reach the point of no return, there is obviously, by definition, no going back. In my estimation, the U.S. debt situation is so far beyond the point of no return that you can't even catch a glimpse of it in the rear-view mirror.

The actual funded federal debt of over $15 trillion is just a small part of the problem. The state and local governments are in various states of disarray. As an example we are currently in the epicenter of dysfunctional finance, the otherwise wonderful state of California. Then there are the off-balance sheet items of the federal government such as government-sponsored entities like Fannie and Freddy which have many trillions of debt supported by very dubious assets. But the true elephant in the room is the unfunded liabilities for social security, Medicare, etc., which, using the most conservative estimates, easily exceed $50 trillion.

Thus, without even stretching, the total federal government debt liabilities in the U.S. are, at a bare minimum, more than five times the current nominal GDP. One of the few reasons that this remarkable debt edifice is still standing is the Fed's Z.I.R.P. undertaking (I love that acronym), the zero interest rate policy, which Fed Chairman Ben Bernanke recently announced, would be extended until 2014, in conjunction with massive Fed monetization of Treasury debt, has kept the interest rates on government debt ridiculously low, and thus the charade has been allowed to continue.

Mark my words, if the interest rates on U.S. government debt truly reflected both the real level of inflation in this country and the rising risk of some form of default, rates would already by sky-high and the U.S. would resemble a massive Greece.

I do believe that this whole process has a very limited shelf life at this point, which is neatly encapsulated in the economist Herbert Stein's timeless comment in 1986: "If something can't go on forever, it will stop." I think that we are very close to that unhappy moment and the implications for the U.S. dollar and economy are simply horrific.

To me, it all seems crystal clear at this point. To avert a near-term economic and financial implosion the authorities throughout the developed world will have to hold their noses and stimulate to whatever degree necessary. No politician today wants to see the system collapse on his watch, so the world will risk eventual hyperinflation and a collapse of the present currency regime rather than voluntarily accept a debt deflation.

Ironically this was all foretold many years ago by Ludwig Von Mises, the founder of the Austrian School of Economics, which, incidentally, is the only economics I have discovered in my lengthy search for reason that makes eminent sense to me.

Von Mises, in his epic book "Human Action," published in 1949, stated succinctly: "There is no means of avoiding the final collapse brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system."

Given that this credit cycle has dwarfed anything seen in the history of mankind, its resolution is going to be something to behold. Global Financial Crisis No. 1 in 2008 was merely the hors d'oeuvre and we are now awaiting the main course.

I envision something along the lines of a hyperinflationary depression accompanied by the final denouement of the latest experiment with pure fiat currency -- that is, the worst of all worlds.
In the event that I am right, I can assure you that the demand for physical gold and silver is going to overrun all possible sources of supply and even the most outrageously bullish price projections for gold and silver may be exceeded.

To conclude, I would like to quickly mention two other subjects.

The first is cognitive dissonance. When I try to convey the seriousness of this whole issue of monetary debasement and its disastrous impact on society, most people are resistant or, more often than not, seem indifferent to the whole subject. I attribute this to a state of cognitive dissonance, which unfortunately appears to affect the vast majority of society. Basically, most individuals when confronted with an unpleasant issue that is at odds with what they choose to believe go to great pains and extreme lengths to deny it. They are hugely biased to think of their choices as correct, irrespective of any concrete contrary evidence which is provided. My younger brother, who it pains me to say is a whole lot smarter than I am, has done a fair amount of research on this subject and has concluded that there is essentially some sort of blocking mechanism in most human minds which permits people to stick their heads in the sand rather than confront a difficult issue before it is too late.

I think a fascinating example of this phenomenon appeared in Michael Lewis' latest book, "Boomerang," which I highly recommend. The hedge fund manager Kyle Bass, who is rapidly becoming legendary, had arrived some time ago at the same malign conclusions about sovereign debt that I have just described to you. He took his findings to the Harvard professor Kenneth Rogoff, who along with Carmen Reinhard, was just preparing to release a new book, "This Time It's Different," about national financial collapse. When Bass revealed his numbers on the subject to Rogoff, the professor responded, "I can hardly believe it is this bad." Bass' reaction was: If this guy is the world's foremost expert on sovereign balance sheets and he isn't prepared to deal with reality, what hope is there? Bass was astounded.

Finally, I can't make a speech about our terminal financial state without a couple of points on derivatives, which continue to proliferate. The justly reviled ex-Fed Chairman Alan Greenspan used to extol derivatives as vehicles for spreading risk and making the system more resilient while he strenuously opposed any attempts to regulate OTC derivatives. This was just one of his many damaging initiatives and history has completely refuted him. In fact, derivatives have tended to concentrate risk as a large majority of them has ended up in a few hands, creating too-big-to-fail financial entities that are imperiling the whole system.

The idea that they net out and thus it is really a zero-sum game is equally ridiculous. Since every derivative has a counterparty, to suggest that an investor is satisfactorily hedged because derivatives offset a long with a short is simply wrong. If the counterparty fails on either the long or the short, the entire notional value is at risk. Given that the notional value of all outstanding derivatives would easily exceed a quadrillion dollars had not the Bank of International Settlements changed definitions to intentionally understate the true amount, the toxicity of this garbage is obvious.

It wasn't without reason that Warren Buffett many years ago termed them "Financial Weapons of Mass Destruction." If sufficient liquidity is not continuously made available in the entire global system, a potential implosion of derivatives would be activated and rapidly annihilate the entire global banking system.

Just another reason why quantitative easing to infinity is virtually assured.

I believe that investors can't own enough gold and silver

Simon Black writes in Sovereign Man Introducing the next best place in the world to store gold. It's official. Starting October 1, 2012, Singapore will be the best place in the world to store gold. As a major international financial center, Singapore is rapidly becoming THE place to invest and do business in Asia. Why? Because it's just so easy. Regulation is minimal, corruption is among the lowest in the world, and the tax structure is very friendly to businesses and investors. With one exception. Traditionally, physical gold and silver purchases in Singapore have been taxed at a 7% GST rate (like VAT, or a national sales tax). The only legitimate exception was purchasing (and subsequently storing) at the Freeport facility, adjacent to the main airport.

In just-released budget documents, however, the government of Singapore announced that it will begin waiving GST on purchases of investment grade gold, silver, and other precious metals effective October 1st. This is huge… and it should really make Singapore the best place in the world to buy and store gold. Prices are already incredibly competitive, with ultra-low premiums and very reasonable storage costs. The Cisco Certis secure storage facility, for example, is incredibly safe, insured, and open up to 14-hours per day. Annual charges for a box are as little as S$99 (roughly $75 USD).