Financial market report for Wednesday November 23, 2011
1) … Stocks fell lower as the Euro zone debt crisis weighs on growth globally.
Bloomberg reports Euro Weakens Amid Signs Debt Crisis Is Weighing on Growth. The euro declined for the sixth time in eight days against the dollar before data that may add to signs that Europe’s debt crisis is damping economic growth. The 17-nation euro dropped versus the yen ahead of reports forecast to show that manufacturing in Germany and France, Europe’s two biggest economies, fell this month. The euro fell to its lowest level in seven weeks against the dollar and traded at $1.3333 in late trading in Europe.
Bespoke Investment Group China PMI Shrinks Most In 32 months. Their chart shows that an Elliott Wave 3 of 3 Down has commenced in the Chinese manufacturing sector.
Weak growth prospects weighed heavily on Shipping Stocks, Copper Miners, Aluminum Miners, and Chinese Small Caps, as is seen in this Google Finance chart of SEA, COPX, ALUM, and HAO, which led World Stocks, ACWI, ACWX, and World Small Caps, VSS, lower today.
Shipping stocks SEA, NMM, TEU, GLF, HOS, BALT, ISH, ALEX, DSX, SSW, DHT, ULTR, DRYS, NM, SB, TOO, as seen in this Finviz Screener, have tumbled in the last five days of trading.
Telecom, IYZ, Industrial Office REITS, FNIO, Automobile Industry VROM, Fishing Industry, FISN, Airlines, FAA, have been strong fallers in the last week. Foreign Utilities, EOC, EBR, SBS, CIG, CPL, TEF, fell strongly today.
Commodity Stocks, such as Rare Earth Miners, REMX, Gold Miners, GDX, GDXJ, Silver Miners, SIL, Copper Miners, COPX, Coal Miners, KOL, Uranium Miners, URA, Aluminum Producers, ALUM, Wildcatters, WCAT, Small Cap Energy, PSCE, Energy Production, XLE, XOP, Energy Service, OIH, IEZ, XES, Steel, SLX, Metal Manufacturing, XME, Wood Producers, WOOD, led Materials, MXI, XLB, IYM, lower.
Semiconductors, XSD, SMH, Smartphone, FONE, and Cloud Computing, SKYY, Networking, IGN, Nanotechnology, PXN, led Technology Stocks, MTK, lower.
Lender Austria, EWO, European Financials, EUFN, Financials, XLF, Global Financials, IXG, Investment Banks, KCE, Stockbrokers, IAI, Banks, KBE, IAT, KRE, QABA, the Too Big To Fail Banks, RWW, Emerging Market Financials, FGEM, EMFN, traded lower.
India banks, HDB, IBN, UK area banks LYG, RBS, BCS, IRE, HBC, Brazil Financials, BRAF, BSBR, BBD, ITUB, South Korea Banks, KB, SHG, WF, Argentina Banks, BBVA, BMA, BFR, Chile Banks, BCH, BCA, SAN, Australia Bank, WBK, led world banks lower,seen in this Finviz Screener. Banks falling to a new 52 week low include Spain’s STD, Japan’s MTU, NMR, MFG, SMFG, India’s IBN, HDB, Great Britain’s HBC, LYG, Ireland’s IRE, Scotland’s, RBS, and Chile, SAN,
Italy, EWI, and Spain, EWP, led Europe, VGK, and FEU, lower. Germany, EWG, and France, EWQ, Ireland, EIRL, traded lower. Borrower and natural gas intensive Poland, EPOL, traded strongly lower.
Australia, EWA, Norway, EWN, Sweden, EWD, Israel, EIS, South Korea, EWY, South Africa, EZA, Taiwan, EWT, Singapore, EWS, Chile, ECH, were major country fallers.
The BRICS, EEB, BIK, BKF, traded lower as Russia, RSX, RSXJ, India, INDY, INP, SCIN, China, YAO, HAO, TAO, FXI, CHIM, CHIE, CHII, Brazil, EWZ, BRF, fell lower on fears of the failure of growth.
Columbia, GXG, Turkey, TUR, and Indonesia, IDX, led the emerging markets, EEM, lower.
Taiwan, TWON, led the Small Cap Stocks, VSS, lower. Latin America Small Caps, LATM, led the Emerging Market Small Caps, EWX, lower.
Egypt, EGPT, has plummeted in the last five days of trading. Japan, EWJ, was pummeled to a new 52 week low today. Reuters reports Nokia Siemens Networks To Cut 17,000 Jobs; NOK -1.6% today.
Boeing, BA, a company with a lot of debt, and a global growth leader, traded lower. BE Aerospace, airline rehabilitation company traded lower.
Industrial electrical equipment manufacturers, ETN, ROK, AME, TNB, BDC, ENS, FELE, and metal manufacturing companies, CMC, NUE, STLD, and networking shares FFIV, NTGR, XXIA, ELX, VSAT, CMTL, CSCO, QCOM, RVBD, CTXS, AKAM, and computer peripherals PANL, AUO, RDCM, and automotive parts manufacturers, JCI, DAN, TEN, LAD, CLC, F, TTM, SMP, MTOR, WBC, WPRT, PCAR, GM, CVGI, ALV, fell strongly on prospects of diminished growth.
Defense companies, ORB, HON, HEI, GD, LLL, TDG, traded lower.
Manufactured Housing Firm, CVCO, traded strongly lower.
Morgan Stanley Cyclicals Index, $CYC, fell strongly. And its consumer durables component, Whirlpool, WHR, fell to a new 52 week low.
PLCM and FIO were pure small cap growth, RZG, loss leaders. Mid Cap Growth, JKH, and Russell, 2000, IWM, both fell lower.
Homebuilders, XHB, and ITB, fell lower, as did Real Estate, IYR, and Retail, XRT,
Leveraged Buyouts, PSP, and Junk Bonds, JNK, traded lower.
Silver, SLV, Timber, CUT, Copper, JJC, and Aluminum, JJA, led base metals, DBB, and Commodities, DBC, Oil, USO, and Grains, JJG, GRU, lower.
The US Dollar, $USD, UUP, rose strongly as competitive currency devaluation drove World Major Currencies, DBV, Emerging Market Currencies, CEW, and the individual currencies, FXA, FXE, FXM, FXC, FXB, FXS, SZR, FXF, BZF, FXRU, ICN, lower.
A flight to safety in US Government Debt continued as ZROZ, EDV, TLT, rose parabolically in value, with the Zeroes, +1.9%, the 30 Year Bonds, +1.6%, and the 10 Year Notes, +1.0%. A similar strong demand for the longer out corporate bonds over the shorter duration ones, is seen in the chart of BLV:LQD, as BLV rose 0.5% and LQD fell 0.5%. Build America Bonds, BAB, rose to an all time high. World Government Bonds, BWX, and Emerging Market Bonds, EMB, International Corporate Bonds, PICB, traded lower.
Tony at MacroStory writes Regardless of how horrible the US fiscal house is USTs are deemed “risk free assets” and thus the flight to the USD and the UST. At some point the US will have to defend their own bond market but for now the risk off trade is long US Treasuries. Think of what I just said. Global bond markets are selling off yet the US is setting bullish records. If people are buying treasuries don’t they also need to buy US dollars? If the USD is strong doesn’t that mean equities are weak?
MacroAnalyst writes the yield curve flattening continues unabated. This is seen in the Flattner ETF, FLAT, rising in value, and the 10:30 US Government Bond Yield, $TNX:$TYX, falling in value.
Greek Crisis relates the WSJ reports A German government debt auction drew some of the weakest demand since the introduction of the euro, signaling diminishing investor appetite for even the safest euro-zone assets amid Europe's worsening debt crisis. The auction sent waves through markets as investors, battered by a spate bad news out of Europe over the last few months, initially interpreted it as a sign of the crisis reaching the core of the euro zone.
2) … In today’s news
MarketWatch reports Belgian And French Yields Jump On Dexia Bailout Worries And ZeroHedge reports Dexia Bailout On Verge Of Collapse, Threatens To Take France AAA Rating Down With It
And Reuters reports Dexia Using Emergency Liquidity Facilities.
Bloomberg reports Hungary May Have to Bow to IMF Conditions to Access Financial Assistance. Hungary’s government may have to reverse its position on ruling out International Monetary Fund conditions in exchange for financial aid, according to Barclays Plc, Goldman Sachs Group Inc. and Capital Economics. Prime Minister Viktor Orban last week abandoned his policy of shunning the Washington-based lender, seeking help after a Standard & Poor’s threat to downgrade Hungary’s debt to junk sent the forint to a record low. He may have to do another reversal and scrap emergency taxes on some industries and ease the burden of a mortgage-repayment plan on banks, said Neil Shearing, an emerging-markets analyst at Capital Economics Ltd. The government has scrapped two debt sales and reduced the size of another eight auctions in the last three months as the euro region’s debt crisis deepened. The threat of market turmoil may force Orban to back down from insisting on an IMF agreement that won’t infringe on the country’s “economic sovereignty,” Barclays Capital economist Christian Keller said.
Zero Hedge reports HSBC Reports China PMI Contracts, Tumbles To 32 Month Low Of 48, From 51 Previously.
Bloomberg reports China Shunning Ships Shows $2.3 Billion Vale Mistake. The Vale Brazil, the biggest commodity ship ever built, was designed to carry iron ore to China from South America. After six months in operation, it hasn’t done that once. China’s refusal to accept the Brasil has derailed Vale SA’s push to control shipments to its biggest customer by building up a fleet of 35 ships, each almost as large as the Bank of America Tower in New York. Rio de Janeiro-based Vale, the world’s biggest iron ore miner, ships about 45 percent of sales to China, the largest consumer of the steel making ingredient. Vale’s plan, which includes buying 19 vessels for $2.3 billion, has spurred opposition from Chinese shipowners who say it will worsen overcapacity, slumping cargo rates and industry wide losses.
Bloomberg reports India's Rupee Slide Spurs Fastest BRIC Inflation. The Indian rupee’s slump to its weakest level since the era of floating exchange rates began four decades ago risks boosting the fastest inflation among BRIC nations and adds pressure to raise interest rates. The rupee slid to close at 52.32 per dollar in Mumbai yesterday, bringing its decline in the past four months to 15 percent, the biggest drop among 10 Asian currencies tracked by Bloomberg. The decline will have an “immediate impact” on inflation, Reserve Bank of India Deputy Governor Subir Gokarn said in Mumbai yesterday. A weaker exchange rate raises the cost of imported energy and other commodities, adding to price pressures in a nation already beset by transportation bottlenecks and power shortages. A sustained slide in the rupee may buck the RBI’s plan to keep borrowing costs unchanged in coming months, limiting its scope to respond to growth threats posed by Europe’s debt crisis. “The more the rupee drops, the more difficult it would be for the central bank to stay pat on rates,” said Arun Singh, Mumbai-based senior economist at Dun & Bradstreet Information Services India Pvt. “There will be pressure on the RBI to abandon its stance and do another hike.” India’s benchmark wholesale-price inflation was 9.73 percent in October. By comparison, consumer prices rose 7 percent in Brazil, 5.5 percent in China and 7.2 percent in Russia in the same month.
Bloomberg reports EU’s Rehn Says Stressed Nations Must Step Up Austerity Measures.
Bloomberg reports Spain Pays More to Borrow Than Greece as Rajoy Appeals to Europe. While Rajoy won’t take office until the second half of next month and hasn’t announced his Cabinet, Europe’s other new leaders are rushing to bring order to their nation’s finances and obtain political support in Europe. Greek Prime Minister Lucas Papademos today meets with Jean-Claude Juncker, who chairs meetings of euro-area finance ministers. Italian Prime Minister Mario Monti meets with EU President Herman Van Rompuy in Brussels. Fitch Ratings said today that Spain’s new government will need to take "additional measures" beyond those announced by the Socialists to meet its deficit targets, and the People’s Party’s election victory provides a "window of opportunity." Rajoy inherits a stalled economy with a 23 percent jobless rate, a banking system that’s facing a funding squeeze and a deficit of more than twice EU’s limit of 3 percent of gross domestic product. Spain has pledged to reduce the shortfall to 4.4 percent next year from more than 6 percent this year. Spaniards have "voted for austerity," Rajoy told senior party members yesterday. It is the country’s "national duty to strengthen the euro," he said. The Spanish Treasury today also sold six-month bills at 5.227 percent, up from 3.302 percent last month. The last time Spain sold bonds on Nov. 17 it paid almost 7 percent for securities maturing in January 2022, the most since it joined the euro in 1999.
Reuters report Spanish Yields Spike As Crisis Exits Blocked. Credit ratings agency Fitch said Spain's new government would need to enact additional savings measures to meet its existing fiscal targets and had a window of opportunity to do so with a fresh mandate. "If it is to improve market expectations of its capacity to grow and reduce debt within the confines of the eurozone, it must positively surprise investors with an ambitious and radical fiscal and structural reform programme," a Fitch statement said. The ECB has been sporadically buying Spanish and Italian government bonds to prevent prices spiking to unaffordable levels, but the limited, stop-go purchases have failed to provide durable relief. "The yields are a reflection of where their paper trades in the secondary market but if it wasn't for the European Central Bank, there wouldn't be a Spanish or Italian bond market," said Gary Jenkins, head of fixed income at Evolution Securities.
The Guardian reports Spain's Debt Crisis Worsens As Country Begins Month Of Post Election Limbo. A landslide victory by Mariano Rajoy's People's party (PP) in Sunday's general election did nothing to stop Spain's debt problems worsening on Monday as the prime minister elect remained powerless to calm the markets. Spaniards were proud of having avoided an Italian-style government of unelected technocrats after they gave conservative Rajoy the go-ahead to introduce reform and impose further austerity. Rajoy is hampered by the country's system for handing over power, which takes a month, and the impatience of markets that sent the cost of Spanish debt higher on Monday morning. He must also obey the dictates of an EU, dominated by German chancellor Angela Merkel, which has imposed severe austerity programmes on member countries with debt problems. "A large part of his most immediate programme is already set out in the fiscal consolidation plan demanded by Europe," Ceberio said. Rajoy will, for example, be unable to choose Spain's deficit levels over the next three years, as strict targets have already been set by the EU. The PP leader has warned that he does not carry a magic wand and will not be able to perform instant miracles, even though yields on Spanish bonds are floating dangerously towards the 7% level that economists consider unsustainable. Rajoy's main message to investors is that Spain will be "compliant", meaning it will meet the deficit target of 4.4% set by the EU for next year. In a country where growth is zero and austerity already threatens a double-dip recession, that is likely to require further massive spending cuts or tax hikes, or a mixture of both. On Sunday night he pledged to make Spain respected in, among other places, Frankfurt. That was recognition that the country now depends heavily on the Frankfurt-based European Central Bank, which has been buying Spanish bonds to keep yields down. Rajoy is, however, in tune with Merkel, with whom he spoke by phone on Monday. Merkel's spokesman, Steffen Seibert, said they discussed "Spain's great problems". Reforms that bring no cost to Spain's cash-strapped treasury, such as to the labour market, may come first. Jaime García, an economist at a PP thinktank, said he expected Rajoy to announce "shock measures" soon. PP leaders have urged the outgoing socialist government of prime minister José Luis Rodríguez Zapatero to speed up the transfer of powers, even though the law requires parliament to meet on 13 December before Rajoy can take over. "There are extraordinary problems which demand that a holiday period between governments should not exist," said PP spokeswoman Soraya Sáenz de Santamaría. Economist Nicholas Spiro, of Spiro Sovereign Strategy, said: "The fact that investors have to wait another month for Mr Rajoy's cabinet to take the reins only adds to the uncertainty." The outgoing socialists have set into motion the process of calling a party conference to transfer power to a new leadership. The conference is likely to take place in February.
Phillip Lane of Irish Economy will speak before the Royal Irish Academy, on The Dynamics of Ireland’s Net External Position. Ireland’s net external liability position expanded in dramatic fashion during 2008- 2010, despite relatively small net financial flow during this period. Understanding the the source and persistence of this negative shock is critically important in as- sessing the future path for the Irish economy but data analysis is made difficult by the confounding impact of Ireland’s major role as an international financial centre, such that the “core” international balance sheet remains obscure. However, there is considerable indirect evidence to believe that a substantial component of this decline is genuine and relates to the internationally-leveraged structure of the financial port- folios of domestic Irish residents.
Ambrose Evans Pritchard writes Ireland Demands Debt Relief, Warns On EU Treaties Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain.The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.
"We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan. "We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland's "internal devaluation" policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget."We have to face reality. There is no painless way, no soft option: we're going to cut spending drastically, but with social cohesion. We don't want situation we see in Greece with people on streets and the foundations of state under threat. We're not going that route."
Antid Oto, of WSWS relates European Debt Crisis Threatens Balkan Economies. The deepening European financial crisis and the ever-growing possibility of bankruptcy for countries like Greece and Italy pose huge dangers for the economies of the Balkan countries. The report continues by noting that the non-EU Balkan countries are “susceptible to the effects of a further global slowdown and a deepening euro area crisis through several channels: trade, FDI, foreign banks, and remittances. The EU countries … are the largest trade partners of all the SEE6: trade with the EU is equivalent to between 30 percent and almost half of the SEE6 GDPs.” Serbia, for example, would be most directly affected by the deepening crisis in Italy, because Italian companies, most notably the automobile company Fiat and the clothing manufacturer Benetton, are among the biggest investors in Serbia. Italy is the top export partner for Serbian products, with proceeds amounting to just over $1 billion in 2011, according to Goran Nikolic, economist from the New Policy Centre, reported by Balkan Insight. The EU is also the largest FDI provider to the region, with net FDI inflows worth over 2 percent of the SEE6 GDP, and a significant source of remittances in the region.
Another major financial danger is the domination of foreign-owned banks in the region. (I relate that these provided significant amounts of carry trade investing). The International Monetary Fund (NYSE:IMF) has also noted the danger of a contagion effect of the EZ debt crises on Albania. Its October report candidly explains that the country “has large trade, labour-market, and banking-system links with Greece and Italy, which could result in substantial spillovers with banking-system contagion potentially the most severe near-term risk, while sharply lower remittances could result in a significant GDP shock”. The capital flight from the region is already evident in currency exchanges. Last week’s Financial Times article “Eastern Europe’s currencies take a Eurozone beating” states that “[f]ar from benefiting from being outside the Eurozone, eastern European countries are feeling the strain of exclusion from the club” with “the value of their currencies plummeting. (I relate that this evidences, a massive unwinding of hot money carry trade loans). A renewed credit crunch in the Balkan region would be much more severe than in 2008-2009. The extent of social cuts and privatisation of state assets already carried out means that this time round there would be no room for softening the blow with further public spending cuts.
Bruce Krasting writes in Zero Hedge on how wealthy shipping magnates have transferred their wealth out of Euros and into Swiss Francs. Capital Flight and Forced Repatriation. Put yourself in the mind of a Greek who had some savings in a local bank. What would you do? You would do whatever you could to get your money to high ground. It would be perfectly reasonable for you to do that. And that is exactly what the Greeks have done. They’ve moved billions of Euros to Swiss banks in an effort to preserve their wealth. In the process they have crippled the Greek banks and have added to the downward spiral in Greece and the rest of the EU. There was (IMHO) a very significant development on this front last week. A move is being made in Brussels to “force” the Swiss government/banks to transfer all of the assets of Greek citizens back to the Greek banks. For a Greek this means that your money is hostage. It has been functionally expropriated. It will be transferred into a banking system that is fraught with risk. Some portion of the money that goes back to Greece will certainly be lost.
I have talked with some who I know in Athens. They are out of their minds with this development.
BRUSSELS — The European Commission is helping Greece negotiate an agreement with Switzerland to repatriate as much as $81 billion believed to be hidden in Swiss bank accounts, a high level European Union executive body official said Nov. 17. $81 billion? That’s massive. This is not the shopkeeper or pensioner. This is big bucks and that means the Greek shippers. It is a fact that the Greek government doesn’t tax the foreign earnings of the shippers. Call that a mistake, but that is the law. As a result, the shippers have held huge bucks in Switzerland. It’s not dirty money. Right or wrong, there was no legal tax on this. The European Commission is working with Switzerland and Greece stop what it believes is an ongoing exodus of money from Greek bank accounts into Swiss and other offshore banking centers, the EU official said. The only way to stop capital flight is to address the underlying causes of the flight. That can’t happen in Greece for years. The alternative is to trap the money, force it to go where it is at most risk. The owner of the money will have no choice. Any rights they might have to preserve their assets will be abrogated. I’m amazed at this development. The Swiss government/banks are obligated to cooperate with EU tax authorities when there is evidence of tax fraud. But that is not what this is about. The people in Brussels and Bern know that. The fact is that the Greek tax system is so screwed up that there simply are no taxes levied on certain types of income capital (the shippers). No doubt, some of the Greek cash that is in Switzerland is there because of tax avoidance. But the vast majority is simply safe haven money. The word “Repatriation” sounds nice enough but really it means “Theft and expropriation”. There will be nothing voluntary about this. There will be little (if any) due process.
3) … A New Europe and global regional economic government, is rising out of the European sovereign debt and banking crisis, as well as out of a global recession.
Sovereign insolvency, falling currency values, and a failure of growth are the issues of the day.
Insolvent sovereigns and illiquid banks cannot sustain economic stability. And capital depleted industrial electrical equipment manufacturers, networking companies, computer peripheral manufacturers, automotive parts manufacturers, companies such as those in the Morgan Stanley Cyclicals Index, and the Chinese industrials, cannot sustain growth.
News reports communicate that Portugal and Spain have now joined Greece and Italy in the insolvent nation club. Bloomberg reports Portugal's Credit Rating Cut To Junk By Fitch. Tyler Durden reports Spanish Yield Curve Inverts Most Since 1994. Mike Mish Shedlock reports Two Year Italian Bond Yield Hits 7.27%. CNBC reports Bond Market Closing To Sovereign Countries. Ashoka Mody and Damiano Sandri of Economic Policy Org summarize their research in VOXEU article Sovereign Risk and Banking Fragility. Reuters reports Disastrous Bond Sale Shakes Confidence In Germany. And Mike Mish Shedlock in German Failed Bond Auction writes It's actually about solvency, not liquidity, not confidence. Solvency issues in Greece, Spain, and Portugal have now affected the core.
Banks that have fallen precipitously and are now illiquid include the European Financials, EUFN, Investment Banks, KCE, Regional Banks, KBE, IAT, KRE, Nasdaq Banks, QABA, Too Big To Fail Banks, RWW, Emerging Market Financials, FGEM, EMFN, India banks, HDB, IBN, UK area banks LYG, RBS, BCS, IRE, HBC, Brazil Financials, BSBR, BBD, ITUB, South Korea Banks, KB, SHG, WF, Argentina Banks, GGAL, BBVA, BMA, BFR, Chile Banks, BCH, BCA, SAN, Australia Bank, WBK, Japan’s MTU, NMR, MFG, as seen in this Finviz Screener.
Regional pooling of sovereignty will establish regional economic government, both in the EU, as well as globally, to provide for resource capability, financial security and economic stability.
Having experienced sovereign insolvency, all of the periphery nations, Portugal, Italy, Ireland, Greece and Spain, the PIGS, well the PIIGS, are no longer sovereign nation states. These countries will have to look to EU ECB and IMF leadership, that is EU ECB and IMF Troika and its diktat, and their sovereign authority for seigniorage, that is moneyness. Although one or more of the EU periphery countries may depart the common currency, there will be no breakup of the common currency zone. Economic libertarians, who foresee sovereign nation states such as Germany emerging out of the current crisis are going to be very disappointed. Their thinking is based upon the logic of Austrian School of Economics leaders, Hayek, Mises and Rothbard, and championed by Ron Paul.
The political dynasties of European Socialism in the periphery countries of Portugal, Italy, Greece, and Spain, that provided pork via patronage, are history. A new paradigm, that being, regional economic government is emerging in the EU.
An entirely new economic, political, and investment landscape is at hand. Its as EUobserver reports that, at a business congress in Istanbul on Friday, Turkey’s former Ambassador to the EU Volkan Bozkir said, “The EU dream has come to an end for the world. There is a paradigm shift. The EU is no longer the same Union that provided comfort, prosperity and wealth to its citizens as in the past.”
Financial Post writes Europe Can Say Goodbye To La Dolce Vita. Christoph Dreier in WSWS writes The Threat Of Dictatorship In Greece.
Stephen Foley in the Independent What Price The New Democracy? Goldman Sachs Conquers Europe communicates that the Euro currency union, is the Goldman Sachs investment bankers project, and that it is continually striving for consensus that the creditors be paid in full. This is the basis of the mandate for expansionary fiscal contraction being demanded by the Euracracy.
Fate is acting sovereignly to effect a bloodless coup d eta, to bring a Sovereign and a Seignior to power in the EU. These will provide Euro zone wide seigniorage, that is moneyness, for a New Europe. The former Eurozone had its political capital from the people across Europe. The political capital of the New Europe will come from federalist leaders in Brussels, Berlin, France, Goldman Sachs, and the technocratic governors of the periphery countries.
Roy Schwarcz writes that Germany and a powerful leader will rise to empower a European Super State in a type of Roman Empire. “The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.” This man will be the Sovereign.
This New Charlemagne, will be accompanied by the Seignior, the top dog banker who takes a cut. Together they will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, giving it their full allegiance. The faith based Milton Friedman Free To Choose Neoliberalism is ending. The faith based Beast Regime of Neoauthoritarianism is commencing, yes rising out of the Mediterranean Sea profligates. This monster of state corporatism, has seven heads, symbolic of its occupation in mankind’s seven insitutions, and ten horns, symbolic of domination in the world’s ten regions.
A leading candidate for the Sovereign is Herman van Rompuy, President of the European Council. Consillium provides a video of Mr. Van Rompuy, during a debate on European economic government at the European Parliament. Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank, “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”
A leading candidate for the Seignior is Mario Draghi, a Goldman Sachs banker who is now heading up the ECB.
Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.
In 1974, 300 of world’s elite met and made a call for strong regional economic governments in all of the world’s ten regions. This ten toed kingdom was purposed as a means of coping with the deleveraging, disinvesting, and derisking out of the Milton Friedman Free To Choose floating regime. The 1974 Call of the Club of Rome is clarion, that is clear, distinctive and ringing, and it comes with the authoritarian imperative. The 1974 Club of Rome’s Call for regional economic government is the basis for the sovereign authority of the EU ECB IMF Troika’s New Europe.
The Clarion Call is underlying the vision for regional economic government and expansionary fiscal contraction, which is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts and centralized fiscal supervision favored by German economic and expansionary fiscal contraction. political leaders, such as Wolfgang Schauble, Olli Rehn, and Guido Westerwelle, which eliminate labor privileges such as inflation inked wage rises, that eat away at intra Euro zone competitiveness.
In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism will be the way of life for all in the Euro zone. The road to serfdom is seen in a number of news reports; I provide three samples below.
Gillian Grannum of Shift Frequency provides the Bob Alderman New American report Germany’s Merkel Yields More Sovereignty to the EU. At a joint briefing on Wednesday with Irish Prime Minister Enda Kenny, German Chancellor Angela Merkel announced the next step towards the creation of the supra-national European state: “Germany sees the need…to show the markets and the world public that the euro will remain together, that the euro must be defended, but also that we are prepared to give up a little bit of national sovereignty…” It must be done, she said, so that the euro is “strong and inspires confidence on international markets.”
Tyler Durden reports ECB executive board member José Manuel González-Páramo calls for a significant transfer of sovereignty to the EMU level,: "We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies."
Roddy Thomson AFP report EU demands Right To Dictate National Budgets. The European Union called Wednesday for sweeping new powers to override national budgets and decide when governments should be placed under the wardenship of Brussels technocrats. "Without stronger governance, it will be difficult if not impossible to sustain the common currency," Jose Manuel Barroso, head of the executive EU Commission, said of plans presented as a pre-condition for pooled eurozone government borrowings, seen as a way of helping resolve the debt crisis. The Netherlands meanwhile warned that plans for fiscal convergence also face an "uphill struggle," Finance Minister Jan Kees De Jager adding without naming the objectors: "There are those who resist further discipline."
The proposals, which concern the eurozone, now journey through the EU's 27 member states and the European Parliament. Barroso argued that to complement democracy at the level of national parliaments, for instance in the setting of annual budgets, a "democracy of the EU" also had to be given its say. Otherwise, he said, Europe would "hand sovereignty to markets."
The EU has rules on annual deficits and cumulative debts but these have been trampled over for years by its governments. This time, the Commission wants the power to send inspectors in to finance ministries around Europe, and demand changes it believes better meet the needs of the common good before funds are legally allocated. Barroso echoed the Dutch when he cited past "coalitions" of states determined not to respect pacts on deficits and growth. Now the Commission wants states to set up independent councils using external forecasting to agree on spending, taxation and other budget shaping reforms.
Euro Commissioner Olli Rehn said the right to intervene in a eurozone state's public finances would be awarded when the Commission and the European Central Bank, ECB, determine that financial stability is at risk. Pressed to detail the criteria envisaged for making that judgment, he insisted that the EU can't predict "ex ante all the situations where we might need" such surveillance. Berlin actually wants to go further on surveillance, indeed Germany wants the European Court of Justice to be empowered to pursue the worst offenders. "Madame Merkel and I will soon make proposals for treaty modifications in order to prevent states from diverging in budgetary, economic or fiscal policy," said French President Nicolas Sarkozy late on Tuesday.
In July 2011, investors became aware that a debt union had formed in the EU, and sold out of their investments, causing a global investment, political, and economic regime shift out of Neoliberalism and into Neoauthoritarianism. The fiscal debauchery of the PIIGS has debased the world financial system resulting in a change of governance.
The Milton Friedman Free To Choose script provided for personal gain … The Club of Rome vision provides for regional stability and security.
Sovereign nations issued debt giving rise to inflationism … Insolvent sovereigns are unable to issue debt giving rise to destructionism. Mike Mish Shedlock writes “Steen is correct regarding the only true role of central banks. It is precisely why they they should be eliminated. Far from being "inflation fighters" they are the very source of inflation. More correctly: Fractional Reserve Lending and Central Bank Printing do not "cause" inflation, they "are" inflation. Deflation is the destruction of credit and debt from the preceding boom. And he also writes The cause of the great depression was the runup in credit that preceded it. Central banks, governments, fiat currencies, and fractional reserve lending are responsible for every major economic bust in history and fools come back begging for more. Enough! Eurobonds are not going to happen (nor should they happen).
Currencies floated … Currencies sink in competitive currency devaluation.
Human action guided Neoliberalism… Fate, that is Destiny guides Neoauthoritarianism.
Social institutions were the result of human action, but not of human design. Many of the most important institutions and practices were not the result of direct design but were the by-product of actions taken to achieve other goals … Mankind’s seven institutions are occupied by the Beast Regime with the goal to subject mankind to debt servitude.
The seigniorage of freedom provided credit liquidity and supported economic growth … The seigniorage of diktat enforces expansionary fiscal contraction producing ongoing economic recession.
Sovereign bankers engaged in wildcat finance, a Doug Noland term, and waved wands of wealth stirring up ponzi finance, mortgage equity withdrawal, and mark to fantasy valuations … Sovereign leaders are involved in wildcat governance, tearing and riping one another, and yield authoritarian clubs beating people into submission. …..... Neoliberalism featured carry trade investing in countries such as Chile and Latvia. Now Reuters reports Russian Financier Said Detained On Lithuania Bank Crash Lithuania To Make Fifth-Largest Bank Bankrupt. The Russian businessman whose banks in Lithuania and Latvia were seized by regulators was detained in London on Thursday under a European arrest warrant, Lithuania's interior minister was quoted as saying. Finance Minister Ingrida Simonyte said the state would have to lend to the country's deposit insurance fund to pay back Snoras clients who had deposits up to 100,000 euros.But she said the country would not need outside assistance from the International Monetary Fund, as Latvia did during its 2008 bank crisis, as the government would use the proceeds from a recent $750 million debt issue. However, that leaves Lithuania needing to raise $1 billion next year to refinance a bond due for maturity in 2012. Latvia, which has been running Krajbanka since Monday, had hinted that it wanted Lithuania to bail out Snoras, as Latvia did for its second-largest bank, Parex, in 2008. However, that intervention forced Latvia to take a bailout from the International Monetary Fund and European Union. Lithuania wants to avoid that fate
Leaders met in national legislatures and the rule of law was observed and maintained in democratic republics to encourage capitalism in Australia, Canada, America, Mexico and promoted socialism in a whole host of European nations. Leaders meet in summits and waive national sovereignty, and announce regional framework agreements, work groups, and stakeholder bodies to promote state corporatism on a regional basis.
For all practical purposes, the UK and the US dominated the world through US Dollar Hegemony … Out of sovereign crisis, ten regional governments form, and ten kings eventually rise to rule in each region.
4) ...A Global Eurasia War is coming.
CBS News reports The U.S. Embassy in Damascus urged its citizens in Syria to depart immediately, and Turkey's foreign ministry urged Turkish pilgrims to opt for flights to return home from Saudi Arabia to avoid traveling through Syria.Tyler Durden reports Russia Retaliates Against US: Puts Radar Station On Combat Alert, Prepares To Take Out European Missile Defense Systems. And Scott relates that the hook in the jaw of Russia is natural resources in Syria and the Middle East.