World Enters Into Global Bear Stock Market On Cyprus Deposits Levy …. Liberalism In Producing Peak Prosperity Has Produced Peak Moral Hazard and Peak Ethical Hazard … The Diktat Money System Is Rising To Replace The Fiat Money System

Financial market report for the week ending March 22, 2013

1) … This week, World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Global Industrial Producers, FXR, traded lower, reflecting that an inflection point for risk markets was reached, and indicating that the world has entered into a global bear stock market, as last weekend saw Cyprus leaders and EU Finance Ministers agree to a “bail in” whereby bank depositors would be assessed a deposit levy to help pay for the cost of bailing out Cyprus’ troubled banking sector; the EU would contribute 10bn euros to the bailout, with Cypriot depositors on the hook for 5.8bn Euros. The haircut on deposits below the 100,000 threshold unleashed a firestorm of condemnation around the world. Confirmation of a global bear stock market comes from The Morgan Stanley Cyclicals, $CYC, trading 0.9%, lower, Transports, IYT, -1.3%, Industrials, IYJ, -0.7%,global Industrial Producers, FXR, -0.7%, Small Cap Pure Value, RZV,-0.9%, and Small Cap Pure Growth, RZG -0.9%

Major countries, EFA, -0.9%, trading lower this week included

Greece, GREK -4.9

India, INP, -4.9

Russia, RSX, -3.8

Brazil, EWZ, -3.6

Sweden, EWD -2.7

Australia, EWA, -2.1

Norway, NORW, -2.0

South Africa, EZA, -2.0

South Korea, EWY, -1.8

Taiwan, EWT, -1.6

Egypt, EGPT, -1.5

Germany, EWG, -1.3

Small cap countries, IFSM, -0.6, trading lower this week included

Thailand, THD, -6.7

India Small Caps, SCIN, -6.2

Poland, EPOL -5.2

Russia Small Caps, ERUS, -3.5

Brazil Small Cap, EWZS, -3.5

Phillippines, EPHE,  -2.6

Indonesia, EIDO, -2.1

Finland, EFNL, -1.8

The world has entered entered into Great Depression II, with the chart of the S&P 500, $SPX, SPY, trading -0.2%, and the US Small Caps that is the Russell 2000, IWM, -0.6%.

Financial sectors trading lower included the Regional Banks, KRE, -1.6%, the Stock Brokers and Dealers, IAI, -1.8%, the Too Big To Fail Banks, RWW, -1.8%, the Investment Bankers, KCE, -2.8%; the European financials, EUFN, -2.9%, and the World Banks, IXG, -1.9%. The asset managers that literally coined Liberalism’s wealth, BLK, WDR ,EV ,STT, WETF, AMG, as a group, traded lower.

Sectors trading lower included :

Energy Service, IEZ, -4.6; the age of profitable investing in energy development is over.

Industrial Miners, PICK, -4.2; the age of profitable investing in mining stocks is history.

Solar, KWT, -4.0

Energy Service, OIH, -4.1

Coal Mining, KOL, -3.7

Copper Miners, COPX, -3.4

Energy Production, XOP -2.5

Steel, SLX, -2.7

Small Cap Energy, PSCE,-2.5

Networking, IGN, -2.5

Leveraged Buyouts, PSP, -1.9

North Ameican Software, IGV, -1.8

Biotechs, XBI, -1.3; the age of profitable investing in life sciences is over.

Automobiles, CARZ, -1.4

Uranium Mining , URA, -0.9

Semiconductors, XSD, -0.7

Small Cap Industrials, PSCI, -0.5

Sectors still trading higher included, IYC, KXI, XRT, FAA, BJK,

Interest bearing sectors trading lower included

Small Cap Real Estate, ROOF, -1.8

Global Real Estate, DRW, -1.0

Real Estate, IYR, -0.1

Industrial REITS, FNIO, -0.5

Dividend Growth, VIG, -0.3

Super Dividend, SDIV, -0.2

Emerging Market Small Dividend, DSL, -0.2

REITS, VNQ, -0.2

Dividend Excluding Financial, DTN, -0.1

Interest bearing sectors still trading higher included REM, XLU, IST, IYZ, SEA, EMLP, AMJ

Junk Bonds, JNK, -0.1%, and High Yield Corporate bonds, HYG -0.1,

With gold bullion, $GOLD, up $17, that is up 1.1%, the Gold Miners, GDX, recovered 2.2%. .

Doug Noland of PrudentBear reports in Cyprus and Money, that the wealth of the sovereigns increase to an all time new high. Global central bank “international reserve assets” (excluding gold), as tallied by Bloomberg, were up $675bn y-o-y, or 6.6%, to $10.940 TN; over two years, reserves were $1.559 TN higher, for 17% growth.

The chart of U.S. dollar, $USD, UUP, was little changed at 82.37, up 0.5%, (up 3.3% y-t-d). For the week on the upside, the New Zealand dollar increased 1.0%, the Japanese yen, FXY, 0.9%, the British pound, FXB,  0.9%, the Mexican peso 0.7%, and the Australian dollar, FXA,  0.4%  For the week on the downside, the Swedish krona , FXS, declined 1.3%, the Brazilian real, BZF, 1.7%, the South African rand 1.3%, the Emerging Market Currencies, CEW, -0.8%, the Norwegian krone 0.8%, the euro FXE, 0.6%, the Taiwanese dollar 0.6%, the Danish krone 0.6%, the Canadian dollar, FXC, 0.4%, the Swiss franc, FXF, 0.1%, and the Singapore dollar 0.2%.

2) … In the news

World Stocks, VT, were given seigniorage, that is moneyness, by the world central banks monetary policies.  Monetary expansion, specifically money printing by the Fed, the ECB, the PBOC, has been a hallmark of Liberalism which inflated Money Supply metrics such as M2 Money, that is the people’s discretionary wealth, and World Central Bank reserves, that is the sovereign’s wealth, and has stimulated economic production. But the world central bank’s monetary policies have passed the rubicon of sound monetary policy and have made “money good” investments bad, with the result that Liberalism’s dynamos of corporate profit and global trade are winding down, and Authoritarianism’s dynamos of regional security, stability, and sustainability are winding up. Liberalism featured wildcat finance a Doug Noland Term, but Authoritarianism features wildcat governance, where nannycrats bite, rip and tear one another to become top dog. Mike Mish Shedlock provides the truth that the global economy is imploding relating Denial is everywhere … about increasingly important thing.

Mr Shedlock continues Economic illiteracy is nearly everywhere you look. Bruno Moschetto suggests France is not bankrupt because the state is not indebted in a foreign currency. Actually, France does have its debts in a foreign currency, euros. Note that France cannot print euros at will to pay its debts (the very essence of a foreign currency). Moschetto says citizens would be “invited” to help France meet its obligations. Invited? The same way citizens of Cyprus were “invited” to bail out Cypriot banks? The ability to tax citizens to death to bail out the state is hardly a reasonable measure of non-bankruptcy. I suggest having to confiscate the wealth and savings of citizens to bail out the state is proof of bankruptcy. Greece is a nice example. Hollande has tried 75% taxation. He has tried government takeover or threats of takeover of various auto manufacturers. Hollande also seeks financial transaction taxes. Many French citizens have had enough of Hollande and his socialist policies and have fled to Belgium, the UK, and Switzerland. Thought of the day. France is Bankrupt, and it is the policies of socialist fools that put France in that state. The thought of the day comes from reader “PTCruiser” who chimed in with “Aujourd’hui, la France. Demain, le monde entier.”… Today France, tomorrow, the world!

Credit Writedowns asks When do we call it a solvency crisis?

Benton te writes The anatomy of the Cyprus’ bubble cycle.

Pater Tenebrarum writes A deal is close.

Reuters reports JPMorgan Board ‘strongly endorses’ dual role for Dimon. The board of directors of JPMorgan Chase & Co said on Friday it “strongly endorses” keeping Jamie Dimon as both their chairman and as chief executive of the company.

CNBC reports Sprawling and struggling: Poverty hits the suburbs.

AP reports Fitch puts UK on review for downgrade.

Breakout reports Obamacare Is 3 years old: where do things stand now?

Hans Nichols of Bloomberg reports  “Federal Reserve Chairman Ben S. Bernanke said he’s ‘spoken to the president a bit’ about his future and that he feels no personal responsibility to stay at the helm until the Fed winds down its unprecedented policies to stimulate the economy.  ‘I don’t think that I’m the only person in the world who can manage the exit,’ Bernanke said when asked if he’s discussed his plans with President Barack Obama. His term expires at the end of January.  Bernanke’s comments yesterday meshed with the views of some of Obama’s economic and political advisers who said Bernanke, 59, after spending most of his seven years on the job battling a financial crisis and its aftermath, is exhausted and wants to return to private life.”

Boris Cerni of Bloomberg reports: “Slovenia’s dollar-denominated benchmark bonds declined, pushing yields to the highest level this year as bailout risks increase.  The yield on the notes maturing in 2022 advanced 13 basis points to 5.556%,. the highest since Nov. 29. The two-day-old government of Prime Minister Alenka Bratusek may be forced to ask for international aid to prop up the banking system because of increased political risk, economists at Nomura International Plc said.”

El Pais reports Spain mulls cutting 23% of  weekly  train routes. Spain’s public works ministry may cut 779 train routes unless regions are able to finance those that aren’t profitable. 172 train stations with less than avg one passenger a day may be removed, citing a draft submitted to unions. (Hat Tip to Gary of Between The Hedges). I relate that Spain’s, EWP,  economic growth was attributable to it being a channel of carry trade investment flowing to Mexico, EWP, Brazil, EWZ, Chile, ECH, Peru, EPU, and other Latin American, LATM, destinations,  as well as a massive amount of housing development and municipal projects, which saw regional debt bubble to massive levels.

BBC reports On Friday, the Cypriot parliament passed a total of nine bills, covering three of the four elements of a financial rescue plan:

  • Restructuring of the banking sector, starting with the most troubled bank of all – Laiki (Popular) Bank, the country’s second largest

  • The creation of a solidarity fund: nationalising pension funds and other state assets

  • The approval of capital controls to prevent large fund withdrawals out of Cyprus

The bank levy issue may come before parliament later in the weekend. A levy, possibly of around 15%, on all deposits over 100,000 euros, has been suggested. MPs in Cyprus have voted to restructure the island’s banks – one of several measures to ease the crisis, which has hit confidence in the eurozone. They have also approved a “national solidarity fund” and capital controls to prevent a bank run.  The “solidarity fund” would allow the pooling of state assets for an emergency bond issue, reports the Reuters news agency. These include future gas revenues and some pension funds – an idea that German Chancellor Angela Merkel has strongly condemned. Ms Merkel had warned Cyprus not to “exhaust the patience of its eurozone partners”, reports say. Businesses in Cyprus have been insisting on payment in cash, rejecting card and cheque transactions. “We have pressure from our suppliers who want only cash,” Demos Strouthos, manager of a restaurant in central Nicosia, told AFP news agency. Our correspondent says he has never seen this much pressure being applied to a member state by the rest of the eurozone community in recent years. Eurozone finance ministers have called a meeting on Sunday to discuss the Cyprus crisis. The European Central Bank has given Cyprus until Monday to raise the bailout money, or it says it will cut off funds to the banks, meaning they would collapse, possibly pushing the country out of the eurozone. The EU has postponed next week’s summit to discuss free trade with Japan, so European leaders can concentrate on trying to solve the Cyprus crisis.

GATA relates Pension fund seizure, capital controls legislated in Cyprus

Bloomberg reports Merkel’s Cyprus gamble explained as German vote nears

The FT reports Cyprus laments end of way of life. When he was finance minister a decade ago, Takis Klerides helped steer Cyprus into the EU and the single currency, a defining achievement for a once-impoverished island nation that is far closer to Beirut than Brussels. But on Friday, with Cypriots contemplating the steep price of an EU bailout, Mr Klerides sounded like a man with regrets. “We found out the hard way that it’s not a family,” he said of the EU, arguing that the bloc’s biggest members “dictate the terms and everyone else falls in line. It’s becoming a dictatorship.” … “The European project is crashing to earth,” Athanasios Orphanides, who until recently served as central bank governor, said in a separate interview in which he dubbed Cyprus’ treatment by European leaders “the bullying of a people”. Nicos Michaelas, the general manager of an investment company, Demetra Investment, put it even more bluntly: “We expected our European friends to help and they put a gun to our heads.”

3) .. Liberalism in producing peak prosperity has produced peak moral hazard and peak ethical hazard through clientelism and transfer payments.

Moral hazard is defined as the financial risk arising to a third party, that comes from an exchange between two contracting individuals. Ethics is defined as right relations with others that reflects virtues, that is beneficial speech and behavior. Ethical hazard is defined as the hazard to one’s virtues arising through predatory and libertine lifestyle of others.

Wikipedia provides an excellent definition of Clientelism as well as Transfer Payments.

Risk to financial moral functioning and ethical living comes by Francois Hollande’s proposal for European Socialism economic stimulation, as Mike Mish Shedlock writes Hollande announces 20 “confidence shock” measures to support home building  Francois Hollande is a career politician; the very epitome of European Socialism, yes the poster adult of European Socialism. He is one disconnected, just like those who elected him, from economic reality, specifically that government debt, whether it be national treasury debt or municipal debt, is a minotaur of destruction. He ran on the platform of economic stimulus and won the election; unfortunately economic stimulus at this point will not help, as Mike Mish Shedlock describes that the economy of France is imploding.

Living in the inner city, and being low income, I testify that risk to one’s ethics comes by Social Security Disability payments to those who could work but choose a life of dependency who usually conduct themselves negatively in the lives of others by being being predatory manifesting in sociopathic and psychopathic behavior, or by being libertine and living in abandon.  Such individuals often include returning veterans, those released from prison for violent crimes, and silly young women, who have gotten themselves pregnant by men who can’t hold, or do not hold jobs, that support a family; these women often go on TANF, and from there often find they cannot take the pressure of a full time time and go on to give up their children to adoption; I continually see these loose dogs, as Urban Dictionary puts it, roaming the downtown area.

Some are motivated by preeminence, others by confrontation, others by being busy bodies, others by being gossips, and other by being dependent upon dole even though they could work. A culture of sycophantic codependency surrounding Social Security Disability Payments has risen to facilitate these financial morally injurious and ethically harmful carnal dispositions. Today’s cultural toady’s include Social Security Disability Lawyers and Public Housing Authorities. Obtaining social security disability payments becomes a pivotal point in one’s life, where many became involved in a culture of dependency, with an ensuing psychopathic predatory lifestyle, or alcohol dependent lifestyle. A second generation and even third generation of LBJ’s grandchildren develop who fail to receive moral and virtue education at home, and go on to expect social support and even riot in the streets.

Jesus Christ desires that one be motivated by Him as one’s life, Colossians 3:2-4, and by Him being one’s all inclusive live experience, Colossians 3:11, whereby one keeps Christ’s Word and does not deny His Name, Revelation 3:9.

And it is Christ’s desire that one’s conscience, that is one’s discernment of what is genuinely right or wrong, come from the price He paid for sin, that being his very life.  Unfortunately, some have seared their conscience and are unable to sort out right from wrong; these manifest as poneros, which is Strong’s Word # 4190, defined as defined as bad, evil, or wicked, depending on literary or life context, and carries the meaning of diseased, calamitous, morally culpable, derelict, mischievous and malicious. The only conscience such have is that which satisfies their own carnal desires to be preeminent, confrontational, nosy, or dependent on the public at large.

It is Jesus Christ who provides the spiritual wisdom, that is the heartfelt capability, as well as the understanding, that is the insight, to live in virtue, that is in a beneficial way, both of which come from knowing, being established, and living in the Present Truth, 2 Peter 1:1-12.

The foundation of financial morality and the foundation of ethics comes from the comprehension of what constitutes liberty.

I am not a Libertarian, I am a Christian, and I have financial moral experience as well as virtuous living with others, to the extent that I live in, and manifest Christ.

Jesus Christ alone provides freedom; and only His Word provides liberty. He requires that believers in Him have respect for the personal property of another, and live in a non-aggressive way, and desires that his believers manifest His virtuous characteristics in their speech and behavior.

One is only free to the extent he knows and experiences genuine sovereignty. Christians belong to the All Sovereign Jesus Christ.  Knowing His sovereignty, they experience the freedom He provides. Jesus said in John 8:36, “If therefore the Son shall make you free, ye shall be free indeed”. John Gill’s Exposition of the Bible relates, “Men are home born slaves; the chosen people of God are such by nature; they are born in sin, and are the servants of it; Christ the Son makes them free; and then they are no more foreigners and strangers, but fellow citizens with the saints, and of the household of God. This suggests, that true freedom is by Jesus Christ, the Son of God; see Galatians 5:1. He it is that makes the saints free from sin; not from the being of it in this life, but from the bondage and servitude of it, from its power and dominion, and from its guilt and liableness to punishment for it, by procuring the pardon of their sins through his blood, and justifying their persons by his righteousness.”

Those who have life in Christ, should be ever maturing in the only right there is, and finding genuine liberty therein, as put forth in John 1:12, “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

The objective reality is defined as Christ, Ephesians 4:21. Motivation comes largely out of values (the things that one is committed to), virtue (beneficial characteristics), and ethics (right way with others). For the Christian these are found in the Present Truth, which enables one to be the divine person, 2 Peter 2:1-12.

4) … Doug Noland relates there has been a crack in the global growth of money, that is wealth.

Doug Noland of PrudentBear reports in Cyprus and Money, (Cyprus) didn’t become part of the euro until 2008.  It’s a nice tourist spot, but mainly it’s distinguished by its bloated banking sector.  Regrettably, bank assets doubled over the past five years, ballooning to a precarious eight times GDP.  Its low corporate tax rate, loose banking regulations and euro zone membership propelled Cyprus into a major hub for tax evasion and money laundering.  As money came flooding in, much of it from Russia, too much of it found its way to high-yield Greek corporate lending and government bonds.  By week’s end, however, the Cypriots were left empty-handed by the Russians.  With tails between legs, the Cyprus Parliament was desperately passing legislation hoping to avert financial and economic collapse while remaining in the euro zone.  Tuesday’s deposit levy legislation had been supplanted with bills providing the Central Bank of Cyprus authority to wind down at least one of its major banks.  Instead of a 9.9% tax, many large depositors now face major losses and even the loss of access to their funds for an extended period.  Capital controls will be necessary, as well as strict limitations on bank accounts and fund transfers.  Cyprus may very well do enough to remain a euro member on Tuesday (banks are to reopen).  But their banking and business model has been destroyed, with unknown consequences for Cyprus and their financial relationships.  Thursday’s Russian tough talk had turned strangely quiet by Friday.

It has been part of my thesis that the Germans would over time adopt a harder line.  Market participants never seem to tire repeating the mantra that the Merkel government will talk tough and predictably cave when market turmoil puts a gun to its head.  Emboldened markets have been confident that, at the end of the day, Germany will have no option but to use their wealth to backstop the entire euro zone.  This week’s Cyprus eruption may have market players rethinking a few things.

I’ve assumed that the further along the “European” crisis evolves the more the German point of view shifts from backstopping the euro project to protecting German interests.  It is worth noting that while the Cyprus bailout structure was being lambasted (“stupid” and “incompetent”) Merkel and Schaeuble were winning plaudits at home.  German public opinion against bailouts has notably hardened over recent months.  The days of railroading big euro member bailouts through the Bundestag appear over.

From my perspective, the Cyprus crisis arrives with global markets in a somewhat vulnerable position.  In particular, the emerging equity and debt markets have begun to struggle.  India’s stocks were hit for 3.6% this week – and are down 3.6% y-t-d.  South Korea’s Kospi declined 1.9%, pushing 2013 losses to 2.4%.  Eastern European stocks and currencies have been under pressure.  This week saw equities fall in Russia (down 2.2% y-t-d), Poland (down 5.1% y-t-d) and the Czech Republic (down 5.6% y-t-d).  Latin America stocks also remained on the defensive, with Brazil’s 2.9% drop this week pushing y-t-d losses to 9.4%.   And while U.S. investment grade and junk bond CDS have been grinding to multiple-year lows, emerging market CDS have curiously diverged and moved higher.  On the more bullish side, Chinese stocks did muster a 2.2% recovery this week.

U.S. stocks ended the week having sustained only minimal damage.  Bernanke confirmed that the Fed’s printing press will be running 24/7 for the foreseeable future.  Between the Fed, Draghi’s backstop, the Bank of Japan and basically concerted global central bank printing, most market participants see no end to the bullish backdrop.  The Financial Times ran a story Friday, “Hedge Funds Storm Back into Form.”  Like most, the hedge funds have rediscovered the secret to success:  throw caution to the wind and jump aboard the raging global bull.  It’s late-night and the raucous crowd has gathered contently on one side of the party boat.

Inflated and highly speculative global risk markets remain enamored by central banker resolve – and perhaps not all that focused on fundamental developments.  And, ironically, Bubbling risk markets were this week conducive to resolve elsewhere.  Strong markets provided the Germans, Finns, Dutch and the EU more generally a favorable backdrop for demonstrating some backbone.  For one, they didn’t appreciate little Cyprus copping a big attitude.  The Germans were incensed – and they weren’t going to let Cypriot politicians get away with any nonsense.  You either want to remain in the euro zone or you don’t.  If so, we dictate the terms.  If not, we’re confident we can manage the consequences.  Cyprus follies must not set a precedent.  EU and “troika” credibility was on the line, credibility that’s been taking some hits of late.

Actually, it was probably time for a new approach in dealing with the troubled debtors.  I think the Germans and the “northern” countries come out of this experience with new resolve.  And this could set the stage for trying times in the markets when bailouts are required for Spain and Italy – Draghi, Bernanke, Kuroda and friends, notwithstanding.

I also wouldn’t be surprised if history looks back at this week’s developments and finds some significance.  There was some real money lost this week.  And I mean “money” as in perceived safe and liquid nominal stores of value – like euro-denominated bank deposits (in contrast to non-money-like Greek sovereign bonds or subordinated bank debt).  Cypriot deposits (small and large) had retained their “moneyness” based on what is now clearly a misperception that Germany and the EU would backstop their value.  And there’s literally Trillions of suspect Credit and “money” throughout Europe whose value is today inflated based upon similar (mis)perceptions.

While we’re on the subject, there are tens of Trillions of securities and “money” that retain full and inflated market values based on the perception of the wealth-creating capacity of the Fed’s printing press.  And there are as well monetary partners in crime in Japan, China, the developing economies and the rest-of-world.   For going on five years now, since the 2008 Credit crisis, the global “system” has been grossly over-issuing “money.”  I have referred to the Greek collapse and “European” crisis as the initial crack in the “global government finance Bubble.”  It is tempting to see Cyprus as the first crack in “money.”

5) … Jesus Christ, is God’s economic and plan administrator for every dispensation, that is for every age, as presented in Ephesians 1:10.  He has shifted the tectonic plates of sovereignty that produce seigniorage, that is moneyness, has broken the bedrock of prosperous financial experience, and has terminated the experience of the US Dollar, as being the international reserve currency, with the result that the diktat money system is rising to provide diktat as currency, money, wealth and power.

More specifically ,we are witnessing the fulfillment of bible prophecy in the news, as the Beast Regime of Revelation 13:1-4, which is destined to have sovereignty in all of the world’s ten regions, as regional governance ….. and have headship in all of mankind’s seven institutions, as totalitarian collectivism, and debt servitude ….. is rising not only from the Mediterranean nation of Greece, but now also from the Eastern Mediterranean Sea island of Cyprus; this monster will replace the Banker Regime that came into existence in 1931 with the Federal Reserve Act.

For the week ending March 22, 20123, World Stocks, VT, traded 0.6% lower, Nation Investment, EFA, -0.8%, Small Cap Nation Investment, IFSM, -0.6%, and Global Industrial Producers, FXR, -0.7%, reflecting that an inflection point for risk markets was reached, and indicating that the world has entered into a global bear stock market, as Cyprus leaders and EU Finance Ministers wrangled for a solution to prevent a sovereign default in Cyprus.

Confirmation of a global bear stock market comes from The Morgan Stanley Cyclicals, $CYC, trading 0.9%, lower, Transports, IYT, -1.3%, Industrials, IYJ, -0.7%,global Industrial Producers, FXR, -0.7%, Small Cap Pure Value, RZV,-0.9%, and Small Cap Pure Growth, RZG -0.9%; as well as closed end debt, PFL, to leverage higher over closed end equity, CSQ, since the beginning of March 2013 as is seen in their ongoing Yahoo Finance Chart.

The EUR/JPY traded lower this week and Action Forex, which surprisingly is long term bullish this carry trade, reports a close at 124.91. Carry trade investing has coming to an end, as reflected in the consolidation triangle seen in the chart of the Optimized Carry Traded ETN, ICI.

Monetization of debt by the world central banks has commenced debt deflation globally. With the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, competitive currency devaluation is underway. Inasmuch as the US Dollar, $USD, is trading higher and currencies trading lower, the Milton Friedman Free To Choose Floating Currency System, also known as the Fiat Money System, is an epitaph on the tombstone of Liberalism. The diktat money system, where diktat serves as currency, money, and power is being established as Authoritarianism’s Banner.

Risk aversion has commenced, as is seen in the Risk On ETN, ONN, falling, and the Risk Off ETN,  OFF, rising. Volatility, ^VIX, is rising with VIXY and VIXM trading higher. Investors will be massively disinvesting out of stocks, and deleveraging out of carry trade investments. A see saw destruction of fiat wealth is underway, as bonds, BND, have traded lower and now stock, VT, are trading lower on falling currency values. The age of fiat asset deflation is underway. The Proshares 200% ETFs seen in this Finviz Screener are trading higher; and the Direxion 300% ETFs seen in this Finviz Screener are trading higher as well. As Liberalism’s Inflationism is giving way to Authoritarianism’s Destructionism, the world is pivoting from credit based prosperity to debt servitude based austerity.


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