Financial Market Report for Friday January 20, 2011
1) ... Introduction
The most toxic and overvalued investments rallied the strongest this week, putting an end to the Free To Choose Regime of Neoliberalism that has governed the world ever since Milton Friedman encouraged abandonment of the gold standard in 1971. The topping out of the most rallied of investments heralds the beginning of the rise of the Beast regime of Neoauthoritarianism to replace the Banker Regime of Neoliberalism. Capitalism is being replace by a ten toed kingdom of regional government governance where moneyness will come from diktat not debt. Global growth has failed with the death of fiat currencies. Regional framework agreements will provide the basis for trade, stability and security. In as much as credit is dying, new credit will come from monetary cardinals, that is regional stakeholders, working in public private partnerships overseeing the factors of production and natural resources.
2) … This Week's Trading Activity Was Strongly Up.
The most insolvent financial institutions, IXG, the most insolvent banks, EUFN, and the most speculatively driven banks, EMFN, RWW, C, BAC, rose strongly. The most exemplary of neo liberal finance banks rose dramatically. The pop higher in IBN, HDB, GGAL, BBD, BFR, BMA, ITUB, BSBR, IRE, NBG, LYG, RBS, BCS, marks an end to the Eurozone and global debt trade where financial trading underwritten by a nations' debt gave seigniorage, that is moneyness, to banking debt. With the trade lower in Bonds, BND, the global debt bubble has burst, and confidence in debt has failed. Solar stocks, TAN, finally turned down, as Intel, INTC, and Semiconductors, XSD, rose to what is likely a rally high.
The WSJ reports Sugar rush for euro-zone markets. The most ponzi credit stimulated or insolvent nations, Spain, EWP, Italy, EWI, Austria, EWO, Europe, VGK, Turkey, TUR, Poland, EPOL, Emerging Asia, GMF, South Korea Small Caps, SKOR, India Small Caps, SCIN, China Small Caps, HAO, Brazil Small Caps, BRF, Emerging Europe, CEE, Russia Small Caps, ERUS, Latin American Small Caps, LATM, and Emerging Market Small Caps, EWX, rose.
The most speculative of commodities, timber, CUT, base metals, DBB, lead, LD, nickel, JJN, aluminum, JJU, and copper, JJC, rose. which drove Wood, WOOD, Uranium, URA, Aluminum, ALUM, Copper Mining, CHIM, Rare Earth, REMX, Coal, KOL, China Industrials, CHII, China Materials, CHIM, Steel, SLX, Taiwan, EWT, Global Agriculture, PAGG, Emerging Market Mining, EMMT, rose.
Growth shares Taiwan Semiconductors, TSM, Aluminum Corporation of China, ACH, Sterlite Industries, SLT, CF Industries, CF, Alcoa Aluminum, AA, Southern Peru Copper, SCCO, BHP Billiton, BHP, Vale, VALE, rose strongly.
S&P Materials, MXI, and S&P Financials, IXG, S&P Dividends, SDY, S&P Financial Services, IYF, S&P Technology, IPK, S&P Homebuilders, XHB, S&P Banks, KBE, S&P Financial Services, IYZ, Investment Bankers, KCE, Stockbrokers, IAI, Lender, AXP, took the S&P, SPY, and RSP, higher. S&P Health Care, XLV, remained strong.
Ford Motor, F, General Motors, GM, Tata Motors, TTM, and a number of automobile stocks, gave rise to CARZ and VROM. The rise in M2 Money and replacement of automobiles by the public has driven up auto sales.
Debt laden companies, such as MTW, and IP, rose strongly.The most capital of depleted stocks rose; these included retailer Sears, SHLD, and LED Manufacturer, CREE, rose strongly. US Preferreds, PFF, rose, to their likely finale high. Petsmart, PETM, rose strongly.
The Design Build ETF, PKB, popped higher displaying a likely evening star candlestick. Clean Energy, PBW, rose. Both of these contain US based companies, that is the ones favored by investors seeking a US safe haven investment from debt contagion. Design Build, PKB, has been a death contagion rally leader as it has a sampling of stocks such as large cap US based non oil and mining basic material stocks, MLM, EXP, VMC, LPX, US based small cap value retailer, TSCO, US based agricultural implement manufacturer, CASC, US based debt laden companies, MTW, IP, US based textile manufacturer, MHK, home improvement retail store, LOW, home builder, NVR, US based design build company, FLR, and heavy construction company, DY.
Industrial Office REITS, FNIO, and Small Cap Real Estate, ROOF, took real estate, IYR, higher; the seigniorage, that is the moneyness of Residential REITS is likely at its end, IYR, FNIO, ROOF, REZ.
Metal Manufacturing, XME, NUE, STLD, RS have likely finished their rally.
Networking shares, IGN, FFIV, NTGR, AKAM, have likely completed their rally.
Homebuilders, ITB, and associated retailers, LOW, HD, have likely completed their rally.
The small cap value shares, RZV, RPV, IJS, IJR, IWN, IWD, RWJ, have likely completed their rally now that the European Financials have been stabilized temporarily by credit liquidity from the ECB's LTRO facility, RZV, RPV, IJS, IJR, IWN, IWD, RWJ. The small cap revenue shares, RWJ, rose, led higher by Nicholas Financial, NICK, and Global Payments, GPN.
It's a likely end to the rise in Brazil Shares, EWZ, TSU, TAM, CIG, ABV, ERJ, FBR, SBS, GBB, UGP, VIV, VALE, SID. As well as a likely end to the other BRICS, EEB, that is Russia, RSX, India, INP, EPI, China, YAO, FXI, and CAF. And as well as to the rise in Argentina, ARGT, and Philippine, EPHE, shares.
The charts of DVY, EWX, RZV, PKB, and IXG shows the topping out of Neoliberalism's death rattle rally; these always make market turns together.
Since October 11, 2011, dividend payer Exxon Mobil, XOM, has steadily attracted investment and moved higher this week in a three white soldier advance to close at 87.50 In the last ninety days it has gained almost as strongly as the small cap energy shares, PSCE, and has outperformed Chevron, CVX, and Energy, XLE, as is seen in the chart of XOM, PSCE, CVX and XLE. Its rise was responsible for the rise of S&P dividend SDY, and dividend payers, DVY.
The chart of the S&P, $SPX, presented in MBETrader articleA Possible Pivot Level , shows an Elliott Wave 2 of 2 of 2 high, suggesting an inflection is about to commence into an Elliot Wave 3 of 3 of 3 down. And Springhill Jack presents SPY chart relating This is a good place to expect at least a short term reversal. And PretzelLogic presents SPY chart relatingThe first chart shows that there are enough squiggles to count this as a complete 5-wave move. And Goldie presents SPY chart relatingThe most important trendline in the universe. Associated Press reports US, Europe weigh on SPX 2012 profit guidance.
The most toxic of debt, Michigan Municipal Bonds, MIW, rose as did Junk Bonds, JNK, and Leveraged Buyouts, PSP. It was a carry trade day with the Yen, FXY, falling and the world currencies, DBV, and emerging market currencies, CEW, rising, making the US Dollar, $USD, UUP trade lower. The chart of the USD/JPY shows trading around 76.70. The ratio of RZV to RZG, RZV:RZG, rose; the safe haven in US small caps where seigniorage comes from rental income and consumer spending and finance is coming to an end.
3) … Capitalism Has Died As The US Federal Reserve's And ECB' Monetary Policies Have Destroyed The World's Currencies …. Regional Global Governance And Diktat Will Provide Security And Stability.
Neoliberalism featured neo liberal finance where bankers profited from credit liberality. Gary of Between The Hedges relates Tages-Anzeiger reports Harvard University Professor Kenneth Rogoff said he sees a risk of more than 80% that at least one or two countries will leave the 17-member euro region in the coming years. "Greece, Portugal, Ireland and possibly also Spain are insolvent and need a restructuring of their debt." Rogoff also said it's "problematic" to think that the ECB "could create money with a magic act, purchase bonds of problem nations and hide them in a dark corner of its balance sheet." That's "a Ponzi scheme, which eventually collapses." He said European banks need "hundreds of billions of euros" of fresh capital.
Fiat money died in July of 2011 when investors feared that a debt union had formed in the EU and fled world currencies, DBV, emerging market currencies, CEW, causing debt deflation in world government bonds, BWX, in September 2011, and emering market bonds, EMB, in January 2012. The debt of the insolvent sovereigns, the PIGS, will not be restructured in the traditional sense, nor can any fresh capital be raised. The Euro, FXE, is a dead currency. It lives a zombie existence through lending support from the ECB. The death of currencies and the Euro in particular, means the regime known as Neoliberalism is dead. Inflation is fiat assets has stopped. Deflation in fiat assets will commence.
Insolvent sovereigns and insolvent banks cannot support growth. The law of diminishing returns is at work. US Central Bank monetary policy of quantitative easing and credit liquidity is failing to stimulate. Neo liberal finance is exhausted. Capitalism has died, as fiat money has died.
Fate is operating to pass the baton of sovereignty from nation states to sovereign leaders and sovereign bodies so as to create New Credit. Nations such as Greece, Portugal, Italy and Spain have lost their debt sovereignty. Investment capital is giving way to political capital, particularly economic diktat and political diktat. Out of a soon coming sovereign armageddon, that is a credit bust and global financial collapse, EU leaders are going to waive national sovereignty and create a One Euro Government, where the economy will be directed bymonetary cardinals who work as fiscal, credit, manufacturing and resource stakeholders in private public partnerships, for the security and stability of the Eurozone. Public private partnership manager Macquarie Infrastructure Company, MIC, will provide leadership in the New Economy. These new sovereigns will provide diktat as a currency, and the people will be amazed by this and place their trust and faith in it; they will give their full allegiance to it. People will place their confidence in diktat. This New Credit of diktat will grease Neoauthoritarianism's wheels. Banks will be nationalized, better said regionalized and integrated regionally in the push for regional global governance. The banks will be known as the government banks or gov banks for short. Neoliberalism's sovereign debt and banking debt will be applied to every man, woman and child in the Eurozone. The EU is going to be come a totalitarian collective where residents live in debt servitude. Totalitarian Collectivism is Europe's Future. Choice is an epitaph on Neoliberalism's tombstone. Freedom is a mirage on the Neoauthoritarian Desert Of The Real.
In the North American Continent,monetary cardinals will manage regional energy infrastructure. Canadian energy companies, specifically oil sands, ENY, and oil and gas companies, ENB, and, TRP, will be regionalized and fenced in by a regional security and stability perimeter.
Infrastructure investments, being capital intensive and inherently costly, will be abandoned. Emerging Market Infrastructure and Smart Grid Infrastructure, EMIF, INXX, CHXX, GRID, BRAF, will see a strong loss of investment value.
US Infrastructure,PKB, which has been a beneficiary of the debt contagion rally, that is neoliberalism's death rattle rally, will see a rapid decline. US Infrastructure stocks seeing a rapid decline in value will include railroad car manufacturer, GBX, basic material stocksMLM,EXP,VMC,LPX, tractor retailer,TSCO, agricultural implement manufacturer,CASC, debt laden companies,MTW,IP, textile manufacturer,MHK, home improvement retail store,LOW, home builder,NVR, US based design build company,FLR, heavy construction company,DY, labor service provider, TBI, and metal manufacturer, RS.
The banks and economies of Canada, Mexico and the US will be regionalized. The North American Continent will become a region of global governance and will be known as the North American Union, or perhaps CanMexAmerica. John Fonte writes in timely manner Sovereignty or Submission: Will Americans Rule Themselves or be Ruled by Others? Other regions of global governance are CELAC in South and Central America and SCO in Asia.
Free Market Capitalism, as envisioned by Austrian economists will never, ever see the light of day, as Fate is bringing forth the ten toes of regional global governance rise to be sovereign. Three hundred of the world's elite met in the Club of Rome in 1974, and as part of institutional economics, provided the Clarion Call for regional global governance. It is clear, ringing and distinctive, and carries an authoritarian imperative that is currently being heeded by Angela Merkel and Nicolas Sarkozy as well as the the EU ECB IMF Troika which has installed technocratic government.
Regional global governance will attempt to produce true socialism; this is not a people's socialism. Wikipedia relates true socialism is an economic system based on direct production of utility rather than on the capitalist laws of accumulation and value. Wikipedia also relates Immanuel Wallerstein, writing in 1979, maintained that "There are today no socialist systems in the world-economy any more than there are feudal systems because there is only one world-system. It is a world-economy and it is by definition capitalist in form. Socialism involves the creation of a new kind of world-system, neither a redistributive world-empire nor a capitalist world-economy but a socialist world-government. I don't see this projection as being in the least utopian but I also don't feel its institution is imminent. It will be the outcome of a long social struggle in forms that may be familiar and perhaps in very few forms, that will take place in all the areas of the world-economy."
AFT reports German Foreign Minister Guido Westerwelle spoke before Brookings Institute saying The Debt Economy Itself Has Reached Its Limits. And Doug Noland provides Thoughts On The Crisis Of Capitalism I am convinced that a capitalistic system must have a monetary anchor to be sustainable. Stable money and credit is a prerequisite. we live in period unique in financial history: There is globally no limits placed on the quantity or quality of credit creation. There is no gold standard; no Bretton Woods monetary regime; nor even an ad-hoc "dollar standard" working to regulate global Credit expansion. Markets for pricing finance and risk have turned progressively distorted and, in the end, dysfunctional. This was a predictable outcome for a global "system" bereft of a monetary anchor. Policymakers have repeatedly responded to dysfunction and inevitable booms-turned-bust with unprecedented market intervention. This continues to only exacerbate financial market pricing distortions and attendant imbalances. What began as tinkering has regressed to the point of policymakers attempting to take virtual command over the pricing of finance. Capitalism now hangs in the balance.
Massive fiscal and monetary stimulus, along with unprecedented market interventions, has completely overwhelmed the capacity of the markets to effectively price risk. Instead of learning from past mistakes, policymakers are more determined than ever to dictate market pricing. Rather than recognizing the prevailing role "activist" central banking has played in fomenting dysfunctional markets, policymakers believe market outcomes beckon for only greater activism. Until governments can begin to extricate themselves from the manipulation of interest rates and risk market pricing more generally, this long cycle of destructive booms and busts will run unabated.
Regionalization will ever intensify, with an on going push to a one world economy. The position of president of the World Bank is currently open. Robert Wenzel of EconomicPolicy Journal writes, The latest rumor is the Summers may be named head of the World Bank, that colossal organization that acts as enforcer for elitist banksters and drives countries into poverty ---- poverty which Summers will likely claim is the result of "weaknesses" in Capitalism. On this point, Wikipediarelates According to Gregory Mankiw, a New Keynesian economist, governmental intervention can improve on market outcomes under conditions of "market failure", or situations in which the market on its own does not allocate resources efficiently. The goal of globalization is to eliminate national sovereignty, and create a global economic system, managed regionally bymonetary cardinals. Globalist thought leaders such as the Council on Foreign Relations, that is the CFR, are showing the way forward suggesting regional integration.l
Fate is bringing forth the Beast regime of Neoauthoritarianism to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast's seven heads are rising to occupy in all mankind's institutions, and its ten horns are rising to govern in all of the world's ten regions. The Beast regime is coming like a terminator that can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.
Out of sovereign armageddon, that is a credit bust and global financial collapse, Neoauthoritarianism's ten toed kingdom of regional global governance is coming to rule govern the world
The two iron legs seen in the statue of the progression of kingdoms, UK rule and US hegemony, are giving way to the ten toes of iron and clay regional global governance. The building materials of iron diktat and clay democracy are incompatible, and the attempt to form true socialism will fail. A seeming Little Authority, will rise to ever increasing global power. The Sovereign, and his banking partner, the Seignior, will eventually ain the upper hand over the ten kings ruling the ten world regions, and these two will institute a one world government, and a one world currency which provides global seigniorage,
At the appointed time, Fate will open the curtains, and out onto the world's stage will step the most credible leader. The Little Authority will work behind the scenes in regional framework agreements to change our times and laws to provide order out of the chaos from a soon coming credit breakdown and financial system collapse. He will mandate sweeping economic and political changes, and he will substitute his word, will and way for the rule of law. Even now, Fate iseffecting a coup d etat in the Eurozone by transferring sovereign authority from nation states to sovereign leaders and bodies. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. Europe's Sovereign will have have EU wide sovereign authority.
A new dynamic and a new dynamo will produce a New Europe as part of a ten toed kingdom of regional global governance. The dynamic of security and stability is replacing growth and prosperity, as destructionism is now operating to replace inflationism. Out of the failure of credit, destructionism will produce a region of global governance, where the dynamo of diktat will provide both moneyness and political rule. Catalysts of the loss of debt sovereignty and regional trade imbalances will cause EU leaders to meet in summits and waive sovereignty, what is euphemistically termed pooling of sovereignty. to establish a Federal Europe with a fiscal union and empower the ECB or the Bundesbank, that is BuBa, as the Euro's Bank. Out of a global credit bust, fate will establish regional global governance in all of the world's ten regions. The age of democracy is being replaced by the age of the ten toed kingdom of regional global governance.
Brookings Institute The Next President Must Solve the U.S. Deficit Crisis America is on the edge of a cliff. Sue Chang and Deborah Levine of MarketWatch report Treasuries Fall. Daniel Kruger of Bloomberg writes Dealer US Bond Holdings Top Corporates for First Time For the first time, Wall Street's biggest bond-trading firms hold more U.S. Treasuries than corporate securities, signaling concern the economy's rebound will be too slow to sustain record demand for riskier assets. The 21 primary dealers that trade directly with the Federal Reserve held a total of $74.7 billion of Treasuries as of Dec. 28, compared with $61.1 billion of company debt. The aggregate position in U.S. government bonds has increased from a $38.6 billion bet against the securities in May, while corporate holdings have tumbled 50 percent from $121.8 billion.
Three black crows appeared in the chart of the Flattner ETF, FLAT, and the Steepner ETF, STPP, rose from a spiked bottom as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, rose in an Elliott Wave 3 Up. This steepening yield curve suggests that a US Treasuries are now longer a safe haven investment and that a global recession is on the way, as bond vigilantes are calling US Sovereign Debt interest rates higher and thus turning off the spigot of investment liquidity. The other spigot of investment liquidity, carry trade investing from Austrian banks, EWO, and the bank of Japan, especially through banks MFG, MTU, NMR, and SMFG, was turned off in July 2011, when investors fled the currency and stock markets when they feared that a debt union had formed in the EU. The chart of ZROZ, EDV and TLT shows this week's flight out of US Government Debt. The monetization of debt, that is the debt debauchery, practiced the US Central bank, has finally produced debt deflation in US Treasuries. The benchmark ten year interest rate, $TNX, rose to close above 2% at 2.028%. Arthur Hill reports Treasury Yields surge ahead of Fed Meeting. The chart of bonds, BND, is bearish suggesting that peak credit has been achieved. The chart of gold, GLD, shows that gold broke out in January 2012.
There is no more safe haven in US stocks either as is seen in the chart of VTI , PKB, RZV, PBW, IPK, XLV, KBE, SDY, DVY topping out. Neo liberal finance, that is the seigniorage of the the US Federal Reserve, is failing, and as a result the Eurozone debt contagion rally is ending seen in the chart of VTI compared to ACWX, EWX,VSS, PKB, RZV; the latter two generally rise prior to market turns.
The seigniorage, that is the moneyness, of capitalism is dying. Capitalism is being replaced by regional global governance, and with it comes a new seigniorage, that is a new moneyness, the seigniorage of diktat. Under regionalization lengthy global supply chains will be shortened. Regionalization will be the new focus of economic activity, as regional stakeholders focus on regional trade with regional currencies and barter providing seigniorage.
James Puplava, Financial Sense writes that it is financial repression that will lead to a bursting of the global sovereign credit bubble in article The Debt Supercycle Reaches Its Final Chapter We are now at a state where the sovereign bond market has grown to become the largest financial bubble in history; a bubble that could succumb to three potential market shocks.
The first type of shock would come from a spike in commodity prices triggered by additional rounds of quantitative easing. It could be as simple as an "act of God" such as an earthquake, tsunami, or the failure of an important agricultural crop. The bond market would react in fear that higher commodity prices would be absorbed in the price of goods and services via loose monetary policy.
A second shock could be triggered as a result of political instability and loss of confidence in government policy. An example is what is occurring right now in Europe regarding an attempt toward a fiscal union or the debt ceiling debate in the U.S. The bond market would view negatively a failure by governments to rein in spending and control their deficits.
The third shock would emanate from a potential default or restructuring of a sovereign debt that would lead to a domino effect in the banking system. A large international bank or group of banks might not be able to meet their obligations which would lead to a rise in fear of uninsurable losses among the banks or their counterparties.
As the bond market continues to expand through sovereign debt expansion and central bank monetization, it is moving further away from reality as a result of speculative activity. This makes sovereign debt extremely sensitive to any unanticipated event. The probability of another black swan or rogue wave is beginning to multiply; from a failed bond auction, to larger than expected deficits, to political rancor over spending cuts. Sovereign debt can no longer be looked upon as a risk free asset. For the reasons cited above I continue to avoid U.S. treasury debt as the rates of return bear no resemblance to reality or are commensurate with the risk they entail. Caveat emptor!
Martin Armstrong of Armstrong Economics writes of The Evolution Of The US Dollar The term "Greenback" became the name of notes that neither were backed by gold nor paid interest as a hybrid bond. Thus, the term "Greenback" referred purely to the lack of anything on the reverse but green ink. Here we also see a $5 Louisiana note that also paid interest and note the coupons attached to the right side. In 1863, to encourage the sale of government bonds, the government created the National Banking Act. Individual banks could issue their own currency according to standardized federal designs up to 90% of their holdings of federal bonds. Thus, they were monetizing the debt in a very clever manner as illustrated here.
The Federal Reserve Act of December 23, 1913 also authorized the first issue of Federal Reserve Bank Notes.
After the enactment of the Gold Reserve Act of 1933,the obligation was changed to read: "This note is legal tender foe all debts, public and private, and is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank." Of course gold was no longer lawful money domestically, so exactly what could the notes be redeemed for was at best coins.
Here we have the interest rates between 1800 and 1991 showing the spikes during the Civil War and World War I. This was neutralized during World War II but the political usurpation of the Fed. Our problem is NOT the Fed, it is the role it keeps being forced into.
Now the Fed is in charge of the economy and it can bailout anything, not just banks. So you can see that we have gone from the plain and simple role of J.P. Morgan into a complex entity that keeps being changed and reshaped by people who have no clue what they are doing.
There have been many attempts to create a monetary system within the United States which have plagued politicians resulting in a highly tortured past. The US dollar currently is the established de facto World Reserve Currency ever since 1944 and Bretton Woods. However, it has been our misconception of money that has driven these failed attempts at creating some sort of superpower within the economy, and then we yell and scream that the Fed is own by bankers. It was not created for the purpose it is being used today. Because the US dollar is the Reserve Currency, our domestic policy objectives in the USA are exported via the currency to the entire world making this entire system completely nuts. We are far beyond any rational design here. This is because politicians keep tinkering with the role of the Fed for political objectives, not sound economics.
The establishment of the US dollar as the reserve currency at Bretton Woods in 1944 illustrates the inability of government to honestly create a stable monetary system. When politicians are an elite separate class and not mere citizens who represent the people, Democracy crumbles into a Public v Private confrontation. While some see the gold standard as a symbol of stability, they have failed to
realize is that the professional political class does not function in the same manner as directors of a private corporation. Government devolves always into a confrontation over power between the people and the government. They have the tanks, the guns and the courts to enforce their decrees and see themselves as law givers-not public stewards of our Liberty. The gold standard of Bretton Woods collapsed because this professional political class continued to spend money without any link to the convertibility of paper dollars into gold. Once we allow a professional political class to emerge that becomes the elite, our lives change forever. Their survival depends on our subjugation.
While it is true that the gold standard aspect of Bretton Woods collapsed, it is NOT true that the entire structure created in 1944 collapsed. To the contrary, everything else remains in place from the World Bank and IMF to the fact that the dollar remains as the Reserve Currency of the world. However, this monetary system of 1944 remains as the chicken that is still running even though the head (gold standard) was cut off.
This gave birth to the Floating Exchange Rate System we have today that was not designed and is simply ad hoc. This is also why it has not been taught in any university because nobody designed it. The dollar is no longer an IOU for gold representing some Tangible Asset.
Money has transcended beyond that Western tradition of being a receipt for something tangible and has thus undergone a metamorphosis evolving into a completely new medium of exchange that nobody has quite fully understood, Virtual Money That Pays Interest.
The dollar has become precisely as illustrated here-an 1864 Compound Interest Note with the schedule of payment on the reverse. Therefore, this whole idea that we can live the high-life, be whatever we dream and never have to pay the consequences is simply dead wrong.
The confusion that the Gold Standard advocates have created is this misconception that we print money and that is "fiat" that results in inflation. The debt is on automatic pilot. It will grow at the expense of everything else until it defaults. The US Dollars still remains the best of the three ugly sisters. Japan and Europe are in far worse shape than the United States. We will see both Europe and Japan collapse before the United States, so prepare for the worst, yet hope for the best.
NYT writes Egypt's Economic Crisis. The collapsing economy is a serious threat to democratic institutions. The country's foreign currency reserves fell from a peak of $36 Billion to about $10 Billion.
Floyd Norris of the NYT writes In Debt-Laden Europe, New Cars Stay in Showroom. Romania, Hungary, Latvia, Greece, and Bulgaria led the decline in new car registrations between 2007 to 2011. Signs of a recovery in automobile vanished in late 2009 as the sovereign debt crisis emerged in Greece and spread to other countries.
The CFR relates The Robina Foundation has awarded the Council on Foreign Relations (NYSE:CFR) a five-year, $10.3 million grant to expand its activities on international cooperation. This award is one of the largest operating grants in CFR's history and will support its International Institutions and Global Governance (IIGG) Program.. In its first three years, the IIGG Program has tracked and mapped the landscape of international organizations through its multimedia interactive, the Global Governance Monitor. IIGG has also produced over twenty reports on priorities for institutional reform, and provided policymakers with concrete recommendations for more effective management of the world's most pressing problems. CFR Senior Fellow Stewart M. Patrick leads the IIGG Program. Previously, Patrick was a member of the U.S. Department of State's policy planning staff, where he helped formulate U.S. policy on Afghanistan and worked on a range of other global issues.
4) … Conclusion
Capitalism and the moneyness that came through sovereign debt and carry trade investing is history. Credit is exhausted. Regional Global Governance will provide diktat as both credit and as currency. The new money of diktat is coming soon to replace fiat money. Public private partnerships will manage the factors of production and natural resources. Economic activity will no longer focus on growth and return on investment; but rather it will focus on regional security and stability. Political capital will replace investment capital. The democratic nation-state is dead and gone. I recently wrote the only way one can live free, is in Jesus Christ and in Him alone.
Destructionism is the natural result of inflationism, with the result that the new dynamic of security and stability together with the new dynamo of diktat will establish regional global governance to replace capitalism. Ten regional blocks will replace sovereign nation states wheremonetary cardinals, provide diktat as both credit and money.
We are witnessing the death of capitalism. A credit bust is going to cause Capitalism's stock stars, seen in this Finviz Screener, to go supernova; these include KMP, NICK, ORLY, APOL, NEU, FTI, DY, FAST, ROLL, NTGR, KMB, RS, FLR, LECO, MTH, LII, CCO, IP, LPX, MON, AMGN, AXL, AME, ROP, SBUX, RLJ, DXPE, CRMT, AGP, AMT, AGCO, GBX, MHK, RAI, MTX, BLK, MIC, MTW, EXP, TBI, INTC, ALK, HIBB, GPC, CTAS, AAPL, RCII, GCA, ESRX, FUN.
The death of fiat money and capitalism has created an investment demand for gold. The chart of gold,GLD, shows that gold broke out in January 2012. Wealth can only be grown and preserved by investing in and taking possession of gold bullion.