Financial market reports for Monday December 19, 2011
1) … World bank stocks turned lower on death of North Korea’s leader.
Emerging Market Small Caps, EWX, led small caps, VSS, Emerging Markets, EEM, the Brics, EEB, and World Stocks, ACWI, ACWX, lower as investors awaited results of a conference call between European Union finance ministers discussing how much money their countries plan to lend to the International Monetary Fund. The decision to lend had been decided at the Leaders summit of about two weeks ago.
World Financials, IXG, China Financials, CHIX, Financials, XLF, Banks KCE, KRE, IAT, Stock Brokers, IAI, Investment Bankers, KCE, Investment Firms, GNW, FII, Emerging Market Financials, FGEM, European Financials, EUFN, and the world banks, seen in this Finviz Screener, traded lower on the death of North Korea’s leader; these included the following:
South Korea Banks, SHG, KB, WF,
India Banks, IBN, HDB,
UK area Banks, LYG, IRE, RBS, BCS,
Argentina Bank BFR, GGAL, BMA,
Japanese Bank, NMR, MTU, MFG,
Too Big To Fail Banks, RWW, C, BAC, BK, Zero Hedge reports Bank of America drops to $5.01
Australia Bank, WBK,
Regions Financial, RF, and Sun Trust Bank, STI, were strong fallers.
South Korea, EWY, SKOR, and Taiwan, EWT, TWON, plummeted. Taiwan Semiconductor fell 4%.
India, INP, INDY, SCIN, EPI, continued trading lower on ongoing inflation destruction.
Puerto Rico Banks, DRL, and BPOP, were smashed loosing 8% each; they will soon be delisted. Delisted banks cannot sustain economic cohesion. Puerto Rico, as a viable country, if it ever was one, has bit the dust. There are no turnaround plans for these financial institutions. The whole purpose in investing in DRL, and BPOP, was purely like investing in Silver Standard Resources Inc, a experience in neoliberal carry trade speculation.
Argentina, ARGT, traded on credit evaporation. Under the credit expansion of Neoliberalism, Argentina was a favored carry trade hot money flow destination. But now, Argentina is the poster nation of credit destruction, as investment capital is rapidly flowing out of its banks BFR, GGAL, and BMA. The liberal government of Cristina Fernández de Kirchner will come under pressure to move right, as funding of social programs cannot continue in a financially capital depleted Argentina. Collateral shortages are destabilizing banking stocks and country stocks globally and Argentina is an epicenter of deleveraging; it is one of thirteen seen in this Finviz Screener. Other hot money flow countries, that is hot carry trade countries, Turkey, TUR, Taiwan, EWT, India, INP, Russia, RSX, Brazil, EWZ, Poland, EPOL, and Israel, EIS, traded lower today. Besides the South Korea Small Caps, SKOR, the Australian Small Caps, KROO, and the Taiwan Small Caps, TWON, it was the Emerging Market Small Caps, EWX, such as the Brazil Small Caps, BRF, and the India Small Caps, SCIF, that traded lower.
Today’s derisking and sell off of risk assets and growth assets is seen in 13% fall of Brazil home builder, GFA. Carla Mozee of MarketWatch reports Brazilian, EWX, and Mexican, EWW, stocks fell lower following a downbeat assessment about the euro-area’s economy and the outlook on taming the debt crisis from the head of the region’s central bank. Meru Networks, MERU, a provider of wireless local area network (LAN) solution in the Americas, Europe, the Middle East, Africa, and the Asia Pacific, fell 5%. Basic materials firm Cemex, CX, fell 6%,
Investment capital is going to be replaced by political capital where technocratic governments enforce strict fiscal rule demanding even more austerity measures in Ireland and Sapin, fiscal tightening to eliminate welfare in Argentina, mandates to eliminate state worker patronage systems in Greece, and structural reforms turning back of national wage contracts throughout Europe. As Berry Grey writes in WSWS article, Banks Demand Deeper Cuts Following EU Summit, European socialism and Argentine socialism are soon going to the guillotine.
Neoliberalism provided inflationism, but the world’s economic, investment and political tectonic plates have shifted, giving rising to Neoauthoritarianism, with its ten toed kingdom of regional global governance, where the seigniorage of diktat, that is the moneyness of diktat, is rising to replace the seigniorage of fiat money.
Currency deflation continued today as world major currencies, DBV, and emerging market currencies, CEW, traded lower with the South Korean Won, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Australian Dollar, FXA, falling strongly. The former Milton Friedman Banker Regime of Neoliberalism, featured floating currencies, but the Club of Rome Beast Regime of Neoauthoritarianism features competitive currency devaluation.
The US Dollar, $USD, UUP, traded up unchanged; the USD/JPY, traded up, with its inverse, JYN, trading lower.
A turn lower in commodity currencies, CCX, and derisking turned gold mining shares, GDX, GDXJ, strongly lower. The failure of growth and the sell of risk sent these down 2.9% and 3%, while gold, GLD, fell only 0.2%, reflecting that it is more of a currency that an commodity. Silver miners, SIL, SIL, HL, PAAS, CDE,seen in this Finviz Screener, fell 3%.
Basic Material Shares, MXI, WOOD, CHIM, KOL, SOIL, URA, REMX, ALUM, COPX, seen in this Finviz Screener traded lower. Coal was the loss leader of the day.
Chemical Manufacturers, DD, ALB, ASH, WLK, HUN, CYT, seen in this Finviz Screener, turned lower.
US Steel, X, led Steel stocks, SLX, such as NUE, MT, AKS, PKX, lower. Steel Dynamics, STLD, led metal manufacturing, XME, lower.
Energy Shares, OIH, IEZ, PSCE, XOP, XLE, traded lower.
Mining stocks, SLT, RIO, VALE, POT, SCCO, BHP, AA, BTU, ACH, CLF, seen in this Finviz Screener traded lower. Silver Standard Resources Inc, SSRI, has been one of the most heavily traded, carry trade investments, of all time; it fell 4% today.
Broadcom, BRCM, led Networking, IGN, Semiconductors, XSD, SOXX, Smartfone, FONE, Cloud Computing, SKYY, US Telecom, IYZ, Nanotechnology, PXN, lower. Wireless Communication Companies, S, PCS, PCO, AMT, FTR, traded lower.
Transports, IYT, Shipping, SEA, Airlines, FAA, and Manufacturers, IYJ, traded lower. Shippers turning lower included NMM, TEU, GLF, HOS, BALT, ISH, ALEX, NM, TOO, TOPS, TGP, KEX, seen in this Finviz Screener.
Toy manufacturers, MAT, HAS, LF, KID, seen in this ongoing Yahoo Finance Chart traded lower.
Drug stores, WAG, and RAD, traded lower.
Manufactured Housing, CVCO, traded lower.
Apparel Retailers, PLCE, SSI, ARO, BKE, CHRS, GPS, ANF, ROST, TJX, ZUMZ, seen in this Finviz Screener, traded lower. Automobile Retailers, KMX, SAH, ABG, CRMT, LAD, GPI, seen in this Finviz Screener, turned lower.
Cooper Tire and Rubber, CTB, turned lower.
Automobile stocks TRW, AXL, JCI, DAN, TEN, MGA, TWI, LAD, TSLA, CLC, F,S MP, VC, MTOR, WBC, PCAR, GM, CVGI, ALV, CMCO, GPC, BWA, seen in this Finviz Screener, traded lower.
The chart of the S&P 500 large caps, $SPX, traded by SPY, shows a fall for a second week in a row. Witney Kisling of Bloomberg provides a bearish report on the S&P. The SPX fell 2.8 percent to 1,219.66 last week, the first decline since November. Concern that countries in Europe face defaults pushed the index down 11 percent since it reached an almost three-year high of 1,363.61 on April 29. While the index has lost 3 percent for 2011, it has swung from an 8.4 percent gain in April to a 13 percent loss in October. The S&P 500 slumped 1.2 percent today. DirecTV, DTV, the largest U.S. satellite-television provider, bought back $1.45 billion of shares in the third quarter, part of a $6 billion program announced in February. Reynolds boosted its quarterly dividend payout twice in 2011. The companies rallied 5.4 percent and 25 percent, respectively. The S&P 500 is trading at 12.3 times estimated 2011 earnings, or 30 percent below its 10-year average price-earnings ratio, data compiled by Bloomberg show. More than 1,000 U.S. companies authorized buybacks this year, according to Birinyi Associates Inc. At $520 billion announced through last week, 2011 is on track for the third-biggest year for repurchases on record, the data show. “Companies that are just building cash, they’re looked at as not taking any risk,” Eric Green, a Philadelphia-based fund manager at Penn Capital Management, which oversees about $6 billion, said in a telephone interview.
Nokia, NOK, General Motors, GM, Alcatel-Lucent, ALU, Sun Trust Banks, STI, Icici Bank, IBN, HDB, HDFC Bank, HDB, Radio Shack, RSN, Whirlpool, WHR, traded to a new 52 week low.
Derisking drew leveraged buyouts, PSP, and Junk Bonds, JNK, lower.
The seigniorage, that is the moneyness, of the Russell 2000, IWM, shares is coming to an end as is communicated in the dark cloud covering of these relative to banking shares, IWM:KBE. The Russell 2000, IWM, traded down 1.7% today as banking shares traded down 2.3%.
Today saw a major derisking out of base metals, DBB. led by copper, JJC, and aluminum, JJU. Reuters reports Copper Slips on China Slowdown Fears. Stockpiled copper has been the collateral used in ponzi Wenzhou city lending which has supported a risk trade in China. But now, deleveraging out of commodities, is causing derisking out of China Materials, CHIM, China Small Caps, HAO, and China Industrials, CHII. Natural Gas, UNG, continued strongly lower. Silver, SLV, continuing proving itself to be a risk metal and not an investment metal, as it fell more strongly than gold. The ongoing fall in silver exemplifies derisking out of collateralized base metals, which began in July 2011 when investors became aware that a debt union has formed in th EU, and in September 2011 when investors became aware that a sovereignty union formed in the Eurozone, as is evidenced in the ongoing Yahoo Finance chart of silver, SLV, copper, JJC, aluminum, JJU, and the 200% dollar ETF, UUP.
Had it not been for the joint provisions of dollar liquidity swap lines by the world central banks on November 30, 2011, the world banks would have imploded. Many of the world banks, seen in this Finviz Screener, are illiquid and insolvent.
Today’s sell off in silver was a liquidity event in the commodity market and reflects a selling of valued risk capital. One should look for more liquidity events with continued sell offs in China Materials, CHIM, AWC, India Materials, SLT, Global Materials, FCX, Australian Materials, BHP, US Materials, IYM, CLF, BTU, AA, Brazil Materials, VALE, Peru Materials, SCCO, and UK Materials, RIO.
Liquidity events precede solvency events. Insolvent banks and insolvent sovereigns cannot support growth. The Morgan Stanley Cyclicals Index, CYC, traded 2.5% lower, the Pure Small Cap Growth, RZG, traded 2% lower and the Morningstar Mid Cap Growth, JKH, and the Russell 2000 Growth, IWO, traded 1.5% lower. Pure value small cap communication stocks BRCM, PLCM fell 4%, network stock FIO 6%, semiconductor, MU, 4%, printer, VPRT, semiconductor, NLST, 4%, solid state driver, STEC, 4%, storage drive, SNDK, 2%, LED manufacturer CREE, 7%, display manufacturer, PANL, 4%, copper wire manufacturer, WIRE, 2%, software leaders PMTC, ANSS, CDNS, 3%. The fall in these tech leaders communicates that the growth trade is over. Growth cannot be sustained where investors sell financial and risk trade stocks as heavily as they have. Eastman Kodak, EK, collapsed 20%. General Cable, BGC, and Belden Cable, BDC, traded 3% lower. Investors liquidated out of growth shares today. A rising dollar, since October 28, 2011, has been turning growth stocks lower, as is seen in the chart of UUP rising and sustainable growth mutual funds PSAGX, and WAEGX falling.
Falling currencies do not and cannot sustain growth. Growth is unsustainable when currencies are deflating.
Sovereign Armageddon, that is a credit bust and investment collapse, is coming soon. And new sovereigns, will emerge. Even now, fate is passing the baton of sovereignty from nation states such as Greece and Italy, to sovereign leaders and sovereign bodies, such as the EU ECB IMF Troika. Destiny is granting sovereign authority to new sovereigns, such as the New Europe, where the Sovereign and his banking partner, the Seignior, will rule over a federal Europe, with fiscal sovereignty coming through a fiscal union, and the ECB or the Bundesbank empowered a federal bank.
Under leadership of wall street wizards, Neoliberalism’s inflationism benefited European and Argentine democracies. But, the global government finance bubble has burst, and the seigniorage of fiat money is collapsing, reflected in the ratio of world stocks relative to world government bonds, ACWI:BWX, trading lower once again. Deleveraging and derisking is seen in material stocks relative to basic materials, IYM:USCI, and XLB:DBC, turning lower. The failure of growth is seen in today’s strong fall in export leader South Korea, EWY, SKOR, turning lower and in the ratio of Japanese large shares relative to their small cap peers, EWJ:JSC, turning lower, Under Neoauthoritarianism’s destructionism, technocratic governors and emergency financial managers will enforce austerity and debt servitude. Neoliberalism featured wildcat governance, a Doug Noland term, But Neoauthoritarianism features wild cat governance, where leaders bite, rip, and tear one another, and only the most fierce, rises to be top dog.
Investors fled to safety in the longest duration US Treasuries, causing the 10 30 US Sovereign debt curve, $TNX:$TYX, to flatten, and the Flattner ETF, FLAT, to rise higher. The longer out bonds, such as ZROZ, EDV, BLV, LTPZ, rose parabolically higher, drawing bonds, BND, LAG, and AGG to rally highs. The flattening of the yield curve suggests that when the recession resumes in the US, it is going to come on with a vengeance. And California Beach Pundit reports in chart article that investors have been putting money into savings, which is a a reason for the increase in M2 Money. And Ed R comments This suggesst that this stronger growth of M2 (and other forms of liquidity) in a time of stagnant GDP is more evidence of a liquidity trap, as if we hadn't seen enough already.
Graham summers communications deflation is setting in, that’s spelled de-flation. Zero Hedge provides Graham Summers' Weekly Market Forecast (Deflation is Back Edition) The markets have entered a new round of deflation. The only asset class that has yet to realize this is stocks. Here’s the 30-Year Treasury Bond. As you can see, we’ve already surpassed the former all-time established during the nadir of the 2008-2009 Crisis. To say this is deflationary would be an understatement. Indeed, on the shorter end of the bond curve Treasuries are yielding 0% (the 3-month), 0.02% (the six month) and 0.2% (the two year). Put another way, investors are essentially willing to lend to the US for almost NOTHING in return for up to two years … based solely on the notion that by doing so they’re at least “guaranteed” a return OF capital. DE-flation,
2) … Eurozone leaders huddle to purse funding of IMF lending facility, this after last Friday’s warning by Fitch to downgrade all Euro Sovereigns.
Jan Strupczewski of Reuters reports Eurozone To Pursue Crisis Action After Eurozone Wide Fitch Downgrade Threat. The euro zone will tackle its debt crisis this week by offering more cash to the IMF and long-term liquidity to banks, while moving toward tighter fiscal rules, after ratings agency Fitch cast doubt on its capacity to respond decisively. "We all know that Europe has not been able to convince markets that its governance set-up and its measures against the crisis were enough," Italian Deputy Economy Minister Vittorio Grilli said in a newspaper interview published Sunday. "More integration and more effective instruments are needed. We are not yet there," he told Il Sole 24 Ore. Euro zone leaders also agreed to offer 150 billion euros in bilateral loans to the IMF to raise its crisis-fighting capacity. Up to 50 billion euros more might come from non-euro zone European countries and possibly more from outside Europe. Euro zone finance ministers will discuss at a Monday teleconference the draft text of the new euro zone fiscal compact so that it can be finalized by the end of January, EU officials said. There are still doubts about this scheme. Germany's Bundesbank said last week it would only contribute if non-euro zone and non-European countries did too and the level of outside commitment is not clear.
Ministers will also discuss Monday the voting method in the euro zone's permanent bailout fund, the European Stability Mechanism (ESM). Leaders decided on December 9 to abolish unanimity in ESM voting to prevent small countries blocking major decisions. Finland objects to the change, because to accept it the Finnish government would have to have a two thirds majority in parliament, which it does not have.
Bloomberg reports Europe Finance Ministers Seek Crisis IMF Funding Deal As Confidence Wanes
European finance ministers today will seek to meet a self-imposed deadline for drawing additional aid to the debt crisis and to form new budget rules as investor confidence that a comprehensive solution is achievable wanes. Euro-area finance ministers will hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros ($261 billion) in additional funding through the International Monetary Fund and the mechanics of a so-called fiscal compact that was negotiated at a Dec. 9 European Union summit, according to two people familiar with the planning. Euro-area officials aim to meet their deadline for today to arrange the IMF loans. The package entails about 150 billion euros pledged by euro-area central banks and another 50 billion euros to be contributed by non-euro EU states.
The euro-area ministers will be joined in the call by their EU counterparts to thrash out measures including the decision-making process of the bloc’s permanent bailout fund, the European Stability Mechanism, one of the people said.
The Automatic Earth relates 2012 may not bring the end of the world, but it will bring the end of the Eurozone and the European Union as we've known them. There are now too many things that can potentially go wrong, and some of them will. The fact that the European Union counts 27 different constitutions, and the Eurozone 17, makes it either excruciatingly hard or downright impossible to swiftly adopt or change treaties or laws. Treaties such as the last one, agreed on December 9, can therefore far too easily be dragged down into various legal quagmires, and almost certainly will be.
Moreover, in all those European nations there are people willing to fight for their rights. And they will all fight their own fights. Which will not only tear at the seams of the Union, it will destabilize governments, overthrow governments, and not all of these can or will be replaced with technocrats. At the same time, any country that doesn't move in lock step with Brussels can derail the process of changes for all others. Even if the richer countries try very hard to get rid of the process of unanimous decision making. The entire EU institution has never been an overly democratic one, but the big boys will undoubtedly try to do themselves one better in this regard. Hardly anybody even complains about the unelected governments of Greece and Italy anymore. So they go for the next step in their doomed effort at dismantling representative democracy in Europe. Stephen Castle of the New York Times reports Only 9 Nations Will Be Needed To Ratify Europe’s Fiscal Treaty A new treaty to impose tighter discipline among the 17 nations in the European Union that use the euro will come into force once nine countries approve it, according to a draft released Friday. That potentially reduces the threat that disapproval by one nation could scuttle the pact. The treaty is intended to help improve confidence in the euro by tightening the coordination of the 17 euro zone economies, requiring nations to balance their budgets and cut debt. The outline of the plan was agreed to by most European leaders a week ago, with the exception of Britain. European officials hope to reach agreement on the eight-page draft of the treaty within weeks, with Britain being offered observer status in discussions. The treaty will enter into force "on the first day of the month following the deposit of the ninth instrument of ratification by a contracting party whose currency is the euro," the draft states. That means that if one country held a referendum on the treaty and did not approve it, the decision would not block others from putting it in place once nine other nations ratified it. The terms of the treaty will, however, apply to each country only when the country ratifies it. If a euro nation fails to ratify the treaty, it would be in an uncomfortable position politically, said one European official who spoke on condition of anonymity.
Ilargi: I'd say all Europeans need to think hard about this. The big boys are changing laws on the fly. It goes something like this: Only 9 nations are required to agree to the fact that only 9 nations are required to agree to ... anything at all. And anyone who doesn't follow suit, well, they "would be in an "uncomfortable position" politically. In this fashion, the politics, especially with regards to the economy, of 17 different nations can be dictated by just a handful (some countries will blindly follow Germany and/or France).
Luckily for the rest of them, this clever scheme won't go anywhere. Louise Armitstead and Philip Aldrick of the Telegraph report Brussels Accord On The Verge Of collapse. Germany's cherished European fiscal compact was unravelling as Hungary and the Czech Republic said it would be damaging, and protesters in Warsaw demanded Poland stands firm against Angela Merkel. Amid fresh warnings that Europe is triggering a 1930s global depression, the German Chancellor faced open rebellion against the key plank of her Brussels accord. The leaders of Hungary and the Czech Republic told a joint conference in Budapest they were ready to reject the planned treaty changes and implied plans for a centralised tax system. Czech Prime Minister Petr Necas said he was “convinced that tax harmonisation would not mean anything good for us.”
Ilargi: Add to that the resistance in Finland, Britain, Sweden, Ireland, and you have a recipe for, if not outright disaster, certainly long delays.
3) … Today’s news items
Rainer Buergin and Jeff Black of Bloomberg report Draghi Says There's No 'Savior' for Countries That Won't Act. European Central Bank President Mario Draghi said there is no “external savior” for countries that don’t implement structural reforms to restore confidence to debt markets. “There is no external savior for a country that doesn’t want to save itself,” Draghi said in a speech in Berlin today. “I will never tire of saying the first response should come from the countries.” The ECB is buying the bonds of debt-strapped nations such as Italy and Spain after they agreed to implement austerity measures to improve their finances.
Ambrose Evans Pritchard reports Spain's new premier Mariano Rajoy has launched a fresh blast of fiscal austerity at his inauguration, describing the national outlook as "desolate" and his task like that of a father feeding four hungry mouths with bread for two.
Bloomberg reports Foreign Banks Stressed in U.S. as Funds Dry Up. U.S. branches of foreign banks, struggling to tap American markets for short-term funding amid the European debt crisis, are using up their cash at the fastest pace since at least 2006 and seeking infusions of dollars from their home countries. Non-U.S. banks' cash plunged almost 40 percent, or $420 billion, in the five months ended Nov. 30, leading to an 18 percent decline in assets, according to Federal Reserve data tracked by Barclays Plc. The Fed's swap lines to foreign central banks, used to make dollars available abroad, surged last week after six central banks lowered the cost of obtaining greenbacks on Nov. 30. U.S. commercial paper issued by foreign banks fell to the lowest level since August 2009. "There has been a dramatic melting away since the end of June of non-U.S. banks cash holdings," said Joseph Abate, a strategist at Barclays Capital in New York. "As financing conditions have tightened and come under stress, foreign banks' U.S. branches have switched from exporting dollars back to their headquarters to effectively importing them." Banks are losing access to U.S. funding as European leaders fail to convince investors they can contain a crisis that led to bailouts of Greece, Ireland and Portugal and now threatens Italy and Spain. French banks lost almost 50 percent of their financing from money-market funds in the five-month period ended Nov. 30
Portugal gets seigniorage aid from the International Monetary Fund. Bloomberg reports IMF Board Approves 2.9 Billion-Euro Payment To Portugal Portugal told it must persevere with reforms.
Reuters reports Japan To Buy F-35 Jet Fighters Japan's defense ministry said it would pay 8.9 billion yen ($114 million) for each of Lockheed Martin's F-35 jet fighters in the initial stage of procurement. The per-unit cost will come to 9.9 billion yen if backup parts are included, the ministry said. The ministry plans to buy 42 of the radar-evading jets.
4) … Investment deleveraging, derisking, disinvesting, and deflation means that political devolution into despotism will start soon … A European sovereign and a seignior will rise to power out of the failure of fiat money to establish regional global governance in the EU.
The failure of fiat money, that is the failure of currencies, specifically the failure of the seigniorage, of currencies began in July 2011 when investors became aware that a debt union formed in the EU and heavily sold out of stocks.
This is seen in the chart of the flight to safety in the longer duration US Treasuries, EDV, rising, and the Emerging Markets, EEM, Europe, VGK, Morning Mid Cap Growth, JKH, and the risk asset Coal, KOL, falling … EDV, VGK, JKH, KOL,
Out of the investment chaos, Angela Merkel and Nicolas Sarkozy called for a sovereignty union, in the form of a true European economic government in August 2011. It’s reasonable to expect that the EU will break apart or that a diktat union will emerge. Fate is inexorably working a progression from Neoliberalism into Neoauthoritarianism, where the July debt union, has progressed to an August 2011 sovereignty union, and will develop in late December or early January to a diktat union.
The Banker Regime of Neoliberalism, 1971 to 2011, was characterized by inflationism and democracy. But the Beast Regime of Neoauthoritarianism, 2011 and onward, is characterized by destructionism (deleveraging, derisking, disinvesting, and deflation) and despotism.
In 1974, Milton Friedman provided the Free To Choose floating currency script for Neoliberalism. But also in 1974, the 300 elite of the Club of Rome, provided the Clarion Call for regional global governance for Neoauthoritarianism.
The Banker Regime featured wildcat finance, a Doug Noland term, and the seigniorage of fiat money. But the Beast Regime features wildcat governance, where leaders bite, rip, and tear, one another, where only the most fierce and cunning survive, and the seigniorage of diktat.
Collapsing world currencies and emerging market currencies cannot sustain banking and and economic growth. Collapsing currencies evidences the failure of sovereign authority. Fate is now passing the baton of sovereign authority from nation states to regional sovereign leaders and sovereign bodies such as the EU ECB and IMF Troika. A EU Federal Union, with a Fiscal Union, and a Federal Treasury, and a Federal Bank, led by a triumvirate of Berlin, Brussels and Berlin, will soon come forth to establish regional global governance as called for by the Club of Rome in 1974. This will be followed by other regional global governance authorities such as the Shanghai Cooperative.
Regional global governance is synonymous characterised by statism. Stakeholder groups will manage economic life and provide credit for companies that are essential to the security and prosperity of the region. Banks will be nationalized and key natural resource companies, such as Keystone Pipeline, TRP, and infrastructure and military companies will essentially become public private partnerships, and receive liquidity funding. Floating currencies underwrote the Banker Regime of Neoliberalism, which prevailed from 1971 to June of 2011, and democracy prevailed. But now with collapsing currencies, the Beast Regime of Neoauthoritarianism, is rising out of the failure of growth, and it will survive and endure through diktat.
Despotism will prevail universally and Public Act 4 in Michigan is showing the way forward with the installation of an emergency city manager in Benton Harbor. Janel Flechsig, wrote in WSWS, on May 2, 2011, Michigan’s Anti Democratic Emergency Financial Manager Law Takes Effect. On March 16, Michigan Governor Rick Snyder signed Public Act 4 of 2011 into law. The bill, also called the Local Government and School District Financial Accountability Act, extends the powers of appointed Emergency Financial Managers, EFMs, to institute fiscal reform of local and municipal government. Less than a month after the passage of the new law, on April 14, Benton Harbor’s EFM, Joseph Harris, issued an order suspending the decision-making powers of the city commission, effectively barring them from taking any action without his permission.
Bloomberg reports US Deeply Concerned Hungary Democracy Weakening, Website Hvg.hu Says. The US is deeply concerned that Hungary’s democracy is weakening as the government “eliminates” checks and balances on its power, news website hvg.hu reported late yesterday, citing Thomas O. Melia, Deputy Assistant Secretary at the Department of State. A draft law which would curb the power of the central bank is the latest in a series of measures that add to the worries the U.S. government has over Hungary, hvg.hu said, citing an interview with Melia. Hungary’s ruling party’s action of filling the judiciary with its own people also threatens the independence of that branch of the state, Melia told the website. The proposed changes on the governance of the central bank are even more problematic because they may undermine an institution central to the working of the free market, he added.
The collapse of the Hungarian Forint and the drafting of a law by the ruling party to take over the central bank illustrates the failure of fiat money.
Fiat money, which has been the bedrock of economic and political life, will be replaced by political diktat, where the seigniorage of diktat, that is the moneyness of diktat, in the EU, will be established by the soon coming rise to power of a creditable sovereign and his banking partner. The appointment of technocratic government in Italy and Greece, and the rise of the power of the EU ECB Troika, is laying the foundation for a Federal Europe. The Sovereign’s rise to power will mark a major inflection point in human history where political capital increasingly becomes more important than economic capital or investment capital. The Sovereign will have political capital to enforce fiscal rule. The word, will, and way of the Sovereign and the his banking partner, the Seignior, will be the sovereign authority underlying a fiscal union, that will enforce totalitarian collectivism in the Euro zone. There is one who is a conciliator, he currently works to gain consensus and guide leaders. Perhaps Herman van Rompuy will be the leader to provide order out of chaos. The EU President recently promoted actions that would quickly bypass national governments as a means of addressing the EU’s crisis, as reported in Le Figaro, December 6, 2011, Towards a Stronger Economic Union: Interim Report. There will be no escaping or leaving for Germany. Between Angela Merkel, the Goldman Sachs Bankers, and the rising star Sovereign, Germany will be pulled hook, line and sinker into a Federal Europe.
The free market system was designed by Milton Friedman, who provided the Free To Choose script for Neoliberalism. The free market system has featured floating currencies which have based upon on stable sovereigns, which have securitized sovereign debt, and have been based upon expanding carry trade lending from banks especially in Austria and Japan.
Alan Greenspan was the world’s purveyor of credit liquidity. His ongoing policy of credit liquidity and the Freddie Mac and Fannie Mae securitization GSE loans by mortgage REITS, such as Annaly Capital Management, were forms of ponzi credit that debased the US dollar and created inflationism. Ben Bernanke actively monetized the US debt via ZIRP and POMO activities favorable to the primary dealers. Then he went beyond the Rubicon of sound fiscal and monetary policy to rescue the world’s banks like Dexia with QE 1; and then he inflated commodities and stocks with QE2; this strongly drove the US Dollar lower; it has been experiencing strong debt deflation up until November 1, 2011. Tyler Durden reports that the US Fed is now pursing a global debt monetization of debt in his article Did The Fed Quietly Bail Out A Bank On Tuesday?
In July 2011, investors became aware that a debt union had formed in the EU, and sold out of stocks and commodities. Then in August 2011, when Angela Merkel and Nicolas Sarkozy called for a true European economic government, concern arose that a sovereignty union was forming, and investors exited the global risk trade. Risk avoidance precipitated increasing of margin requirements and margin calls, together with collateral shortages, fear of lending, and a flight of capital to safe havens such as German Treasuries, the ECB and the US Fed, started deflationism, that is global derisking and disinvesting from carry trade loans, resulting in a massive sell off and the creation of support by the world banks of joint dollar swap operations, which in turn only serves to debase the US currency even more, and will serve as a spring board to boost gold prices to levels previously thought impossible. Tyler Durden reports that The Fed’s role in the joint dollar swap operations, when combined with ongoing provision of the discount window, may constitute a liquidity injection topping one trillion dollars.
The Euro is a currency with a country, but soon it will have a master and lord, in the Sovereign. Libertarians are zealous for freedom, free enterprise, and monetary freedom. Yet these are mirages on the neoauthoritarian desert of the real. The growing power of the beast regime of Neoauthoritarianism,
subjects libertarianism to being just a broken artifact of human philosophy. As for choice, it is a relic of the bygone the era of Milton Friedman’s neoliberalism. The Free To Choose script reigned for the last 40 years, but the diktat script implied in the 1974 Clarion Call of the Club of Rome, is going to rule from here on out; and it will be successful in establishing regional global governance in all of the world’s ten regions, which will be known as the Ten Toed Kingdom, and eventually ten kings will rise to rule, one governing in each region. The Age of Deleveraging is bringing forth The Age of Diktat.
The Economist reports Gasping for breath, short of authority and direction, India’s rulers flail in the face of growing problems ….. (Hat Tip to Between The Hedges)
5) … Love grows cold in the age of deleveraging
The Bellingham Herald reports Charitable Donations Fall. Whatcom County charities are coping with the challenge of helping needy people during the holidays at the same time that good-paying jobs remain scarce, so donations aren't as bountiful. The Salvation Army in Bellingham hoped to raise $170,000 through direct mailings and its traditional bell-ringing campaign, up from $151,000 last year. As of late last week, donations weren't on pace to meet that goal, but Maj. James Lloyd, who heads the local Salvation Army, hopes a flood of volunteer bell-ringers from local service clubs will turn the tide. “People are still giving," he said. "We're not seeing the big checks from the corporations. They're giving, just not as much." The campaign did receive an unexpected boost recently when someone dropped a gold maple leaf coin, valued at $1,600, into a Salvation Army red kettle in Lynden. Also, someone is placing $100 bills in a kettle. At Bellingham Food Bank, more than 800 people are expected to pick up "holiday themed groceries" during the days leading up to Christmas, said Mike Cohen, executive director. Food donations are going fine; it's after the holidays that Cohen worries about. "Donations are reduced as soon as holiday season ends," he said. "We need to work to help folks remember that hunger in Bellingham is a year-round challenge." Earlier this month, on Dec. 2, the food bank broke its record for most people served in a year. The previous mark was 102,000 clients in 2009. At Lighthouse Mission Ministries, staff and volunteers will serve more than 400 hot meals at Assumption Church gymnasium, and more than 100 "meals on wheels," on Christmas Day. New clothing, blankets, candy and toys also will be distributed, despite a crimp in fundraising. "We are running $50,000 behind for the year," said Ron Buchinski, executive director. "We are not altering our approach to the holidays, but will assess future spending after the holidays.”