Report on European Financials For Tuesday December 13, 2011
1) … Many Relate The EU Leaders’ Fiscal Compact Lacks Legal Standing And Cannot Be Enforced Though Eurozone Legal Resources
Neoliberalism featured wildcat finance, a Doug Nolan term, where investment bankers and banks securitized and financialized all kinds of leveraged investments and ponzi credit. Neoliberalism’s inflationism has failed and destructionism is rising as investors delever out of carry trade investments and sell risk. Not only are the European financial institutions collapsing, but Bespoke Investment Group reports US banks, investment bankers and stock brokers are failing as well. Banks, KRE, IAT, KBE, QABA, include HCBK, STI, C BAC, RF, CMA, ZION, BK, FHN, HBAN, KEY, MTB. Investment bankers, KCE, include MS, GS, JPM. Stock Brokers, IAI, include TROW, ETFC, SCHW, LM, IVZ.
We are witnessing the death of the fiat money system. The diktat money system is rising in its place as evidenced by technocratic government being installed in Italy and Greece.
Out of sovereign armageddon, perhaps better said, Eurogeddon, a banking and financial system collapse, the most credible sovereign and his banking partner will rise to power to provide the seigniorage of diktat, where their word, will and way will provide a new moneyness. The people will be amazed by this and place their trust and faith in it, giving it their full allegiance. The road to serfdom will come as EU leaders meet yet again in summits and announce regional framework agreements which pass the baton of sovereignty from nation states to the Sovereign and the Seignior. These two sovereigns, the EU ECB and IMF Troika, along with stakeholder groups from industry and government, as well as the ECB empowered as a bank, will have sovereign authority, yield fiscal sovereignty, and provide credit to infrastructure and businesses that are key to Eurozone’s security.
Infrastructure companies, electric utilities, energy companies such as Enbridge, ENB, and pipeline companies, DPM, KMP, EEP, EPD, MWE, RGP, TLLP, EEP, NGLS, OKS, WMB, MMP, E, PAA, TCLP, APL, seen in this Finviz Screener, will be overseen by stakeholders, as political capital manages the factors of production . Canadian energy shares, ENY, and CNDA, are going to be strong fallers.
Banks will be nationalized and integrated into the goverment and be known as the government banks or gov banks for short. Totalitarian collectivism, and state corporatism, that is statism, are the EU’s future. Repayment of carry trade loans and and other loans will be make debt servitude de rigueur. Julie Hyland of WSWS reports European Workers Face Austerity And Dictatorship. And Ante Dotto of WSWS reports New Croatian Government To Implement Big Business Measures. The newly elected Social Democratic led coalition in Croatia will step up the austerity measures. Libertarian concepts, such as Freedom and Free Enterprise, are dead on arrival in the New Europe that is forming. And Choice, a concept promoted by crony capitalists under the Milton Friedman Banker regime, will be relegated to the dustbin of history.
In the Neoauthoritarian world, there are no sovereign individuals, there are only sovereign leaders. Austrian Economist Robert Wenzel relates The State Of The PIIGS Here's the one chart that explains the eurozone crisis. Market participants are requiring higher and higher interest rates to hold debt issued by the PIIGS. The higher interest rates make it more and more difficult for the PIIGS governments to bring their budgets under control. (The chart communicates that the profligate countries have lost their debt sovereignty, and are bankrupt, that is insolvent) The only sound solution is for the PIIGS to go bankrupt and stick the hurt on those who were willing to hold the PIIGS paper in the first place---mostly the banksters. Instead, the PIIGS, with the banksters in the shadows, are imposing austerity, read: higher taxes, which smothers the PIIGS economies even more. Thus, the European Central Bank will eventually step in to prop up the sovereign debt by money printing, which will result in huge price inflation in the EZ. I comment, who is to say that the ECB will step in and print money; they may not; they may issue script or some limited dole for the fiscal spending needs of the Latin nations. As I have written many times, as countries loose their debt sovereignty, fate is passing the baton of sovereignty from former sovereign nations to sovereign leaders who yield fiscal sovereignty, a case in point is the EU ECB IMF providing seigniorage dole to Greece. The global monetary, credit, investment, banking, and political tectonic plates have shifted, and the 1974 Clarion Call of the Club for regional economic governance is being heard and heeded more and more.
Neoauthoritarianism, the Beast regime of regional global governance, features wildcat governance, where leaders rip bite and tear one another as they impose austerity measures, debt servitude and fiscal sovereignty to deal with destructionism of falling currencies and budget deficits. The European Commission is taking the view that the EU Leaders’ Fiscal Compact is legally inferior to existing treaty law and cannot be enforced through existing EU resources. Euro Intelligence reports Crumbling of Comprehensive Solution No. 4 . “It is surprising how long it took the markets to see through last week’s agreement to set up a separate treaty to reinforce the current one. As Frankfurter Allgemeine reports, the European Commission believes the whole thing is legally doubtful, and mostly irrelevant. In the Commission’s view there is hardly anything really new in the euro agreement and what is new is legally very doubtful, Frankfurter Allgemeine Zeitung reports, the main problem according to the Commission is that the agreement for quasi automatic sanctions would be part of an intergovernmental treaty and in international law that is of lesser legal value than a European treaty. As a consequence any country’s request to proceed according to the weaker deficit rules of the European treaty would mean that the stricter rules according to the intergovernmental treaty cannot be applied. Also the Commission points out that is doubtful that it and the European Court of Justice can legally be asked to perform surveillance duties on behalf of a subgroup of the EU.” And WSJ reports Wall Street Journal Legal Uncertainty Imperils EU Intergovernmental Agreement. Senior European officials said on Tuesday that it could be difficult to convert last week's summit accord for tougher budget discipline among euro-zone governments into a watertight legal pact, emphasizing the agreement's path to fruition could be tough. Also FT reports EU Treaty Hopes Come Under Strain. Franco-German hopes for a sweeping new treaty to bind the region’s economies more closely came under strain on Tuesday as several European Union leaders warned of difficulties pushing a far-reaching pact through their national parliaments. The pressure was particularly acute in non-eurozone countries, where at least four governments warned that the precise legal text would determine whether they could sign up to the treaty or otherwise join the UK on the sidelines.
Open Europe reports Sarkozy: Europe must move towards more regulation. EU Economic and Monetary Affairs Commissioner Olli Rehn yesterday warned that if Cameron’s veto “was intended to prevent bankers and financial corporations of the City from being regulated, that’s not going to happen.” In an interview with Le Monde, French President Nicolas Sarkozy said, “The [UK’s] repeated affirmation of its opposition of any prospect of joining the euro cannot be without consequences. I would add that the demands on financial services were not acceptable. The crisis broke out because of financial deregulation. Europe must move towards more regulation.”
Open Europe’s Research Director Stephen Booth is quoted in the Express, saying “The threat of EU regulation on the City of London remains. The British Government must continue to push to prevent any further unnecessary and unwanted regulation from Brussels.” Open Europe’s Pieter Cleppe appeared on Belgian Radio 1 commenting on the outcome of last week’s EU summit. He argued, “What Cameron ultimately demanded was that the internal market wouldn’t be the victim of political fallout due the euro crisis.”
Open Europe’s report showing that the UK’s financial sector as a whole accounted for 11.2% of the Government’s total tax receipts for the 2009/10 tax year, is quoted by the WSJ and Spanish business daily Cinco Días. Open Europe’s Director Mats Persson is quoted in FAZ arguing that the British government will try to look for “a third way” in terms of its relationship with the EU, “a position between full membership and exit.” The paper also reproduced a Open Europe graph illustrating the contribution of the financial services sector to the UK economy. Mats is also quoted in Le Figaro and appeared on RTE’s Drivetime programme yesterday, discussing Cameron’s veto.
2) … National Bank of Greece leads European Financials, Europe, and World Financials Lower.
National Bank of Greece, NBG, fell strongly, leading European Financials, EUFN, Europe, VGK, World Financials, IXG, to traded lower. The world banks seen in this Finviz Screener are insolvent; and Italy joins the insolvent nation club as Italy Bond Costs Mark New Record at Auction. Italy's five-year borrowing costs are expected to rise further above 6 percent on Wednesday, to mark a new euro lifetime high. Being insolvent, the PIGS have lost their debt sovereignty, and are causing global debt deflation, that is currency deflation, to manifest globally.
The currency demand curve, RZV:RZG, manifested bearish engulfing as world major currencies, DBV, and emerging market currencies, CEW, traded lower. Bespoke Investment Group relates that the US Dollar, $USD, UUP, has broken out. The currencies FXA, FXE, FXM, FXC, ICN, FXB, FXS, FXF, CYB, BZF, FXRU seen in this Finviz Screener traded lower. The WSJ reports Euro at 11-Month Low. I expect the USD/JPY to move above 77.9 this week. The breakout of the USDJPY and the fall lower in its inverse ETF, JYN, documents the failure of fiat money and the end to the Milton Friedman Friedman Free To Choose floating currency regime. Moneyness will no longer based upon debt and currencies. Moneyness will of necessity be based upon diktat.
Base metals, DBB, including copper, JJC, traded lower, causing copper miners, COPX, to trade lower. The risk asset silver, SLV, traded lower, turning silver miners, SIL, lower. The currency gold, GLD, traded lower with other falling currencies, turning Gold Miners, GDX, and Junior Gold Miners, GDXJ, lower. Bespoke Investment Group reports that gold failed to breakout and remains in downtrend.
Bespoke Investment Group reports that Amazon has gone from leader to goat, this has turned Internet Retailers, HHH, 3% lower. Other fallers of the day included, Manufactured housing, CVCO, -6%, Housing, XHB, ITB, -4%, Metal Manufacturing, XME, -3.5%, Retail, XRT, -3%, Rare Earth, REMX, -3%, Uranium Miners, URA, -2.5%, Semiconductors, XSD, -2.5%, Copper Miners, COPX, -3%, Steel, SLX, -3%, Airlines, FAA, -3%, Coal Miners, KOL, -2.5%.
3) ...In today’s news
The WSJ reports GE Braces for European Chill. General Electric Co. is gearing up for a tougher 2012 in Europe, a weak spot in a year when the company expects to see double-digit profit growth on the strength of sales to emerging markets. The conglomerate plans to restructure some of its industrial operations to prepare for a European recession that could hit a number of its business lines, like health care and lighting. (Hat Tip to Between The Hedges)
We are witnessing the beginning of the end of credit as it has been known. MarketWatch reports on credit evaporation Westpac Says Credit Availability May Reduce. Westpac Banking Corp. warned Wednesday that Europe's debt woes will continue to impact the price and possibly even the availability of credit to Australia's banking sector. (Hat Tip to Between The Hedges)
Financial Times reports Study Finds Fund Managers See EU Company Profits Worsening. Seventy two percent of fund managers expect euro-area corporate profitability to worsen, cites study by Bank of America Merrill Lynch. "Key indicators of market sentiment" measured in the poll show "parallels with the credit crunch months of early 2009," (Hat Tip to Between The Hedges)
David Gallagher of the Bellingham Herald reports Thousands Of Whatcom County Residents Could Lose Privileged Unemployment Benefits Many will soon be without unemployment benefits as two federal programs are phased out in Washington. Long-term unemployed workers are being notified this week that their unemployment benefits will be phased out in the coming weeks. As of Saturday, Dec. 24, no one will be admitted to the Emergency Unemployment Compensation program. After Saturday, Dec. 31, existing recipients will not be able to advance beyond their current tier of benefits, according to a news release from the Washington State Employment Security Department. A second program, called Extended Benefits, is expected to end in mid-January.
David Talbot writing in Thunderbolts article Electric Sun Answers Longstanding Puzzles reports that our sun is electric in nature and that it a transistor; this supports the concept of an electric universe, and that the universe is a digital computer. Wikipedia relates that the digital physics theory suggests that the universe is a digital computer and was pioneered by Konrad Zuse in his book Rechnender Raum (translated into English as Calculating Space). The term digital physics was first employed by Edward Fredkin, who later came to prefer the term digital philosophy.. In 1979, the celebrated physicist John Wheeler, having coined the phrase “black hole”, put it to good philosophical use in the title of an exploratory paper, Beyond the Black Hole, in which he describes the universe as a self-excited circuit.
Others who have modeled the universe as a giant computer include Stephen Wolfram, Juergen Schmidhuber, and Nobel laureate Gerard 't Hooft. These authors hold that the apparently probabilistic nature of quantum physics is not necessarily incompatible with the notion of computability. Quantum versions of digital physics have recently been proposed by Seth Lloyd, David Deutsch, and Paola Zizzi. Related ideas include Carl Friedrich von Weizsäcker's binary theory of ur-alternatives, pancomputationalism, computational universe theory, John Archibald Wheeler's "It from bit", and Max Tegmark's ultimate ensemble.
Nature Economist Elaine Meinel Supkis reports Ice Cold Canada Leaves Kyoto Accords For Sensible Reasons The north is seeing a catastrophic drop in birth rates. Southern refugees from the overpopulation mess down there move to the north looking for jobs and public benefits. But the natives are cutting back on births and already are well ahead of planetary population drops. Since humans impact nature so severely, cutting back on births is the least violent, most sensible way of dealing with global warming. Taxing cold countries with falling populations is utterly backwards.
I relate that Milton Friedman was the “great liberator of women” as well as the “great liberator of investors”; but, the Beast Regime of Neoauthoritarianism is going to claw back many of the advances of the former regime of Neoliberalism. And Lauren Streib in the same September 26, 2011, issue of Newsweek Magazine, in article entitled, Where Women Are Winning, documents that women living in the northern Europe nations of Iceland, Sweden, Denmark, Finland, Norway and Netherlands, are in the top ten best places to be a woman. It was Milton Friedman, who provided the Free To Choose script of floating currencies that has underwritten the northern european socialist regimes’ capability to provide better justice, health, education, government, and political gains than anywhere else in the world. The Free To Choose script provided Liberty, but now the Clarion Call of the Club of Rome is providing Diktat, and a Ten Toed Kingdom of regional global governance.