Archive for June, 2013

The Mass Extinction Of Investors Commences On the Failure Of Credit And Currencies … People Will Increasingly Come To Trust In The Diktat Of Regional Nannycrats For Regional Security, Stability And Sustainability.

June 26, 2013

Financial market report for the week ending June 21, 2013.

I) … Introduction

Nature economist Elaine Meinel Supkis asks What in hell went wrong?  HAHAHA.  Seeking infinity is what went wrong.  Everyone wanted to have things grow continuously and this always ends very badly which is why Nature frowns on this.  It is very much ‘verboten’.  Ergo: seeking it is suicidal.

Charles Hugh Smith, Of Two Minds, writes The Fed has created a Doomsday Machine. The Fed has nurtured moral hazard in every sector of the economy by unleashing an abundance of cheap credit and low interest mortgages; the implicit promise of “you can’t lose because we have your back” has been extended from stocks to bonds (i.e. the explicit promise the Fed will keep rates near-zero forever) and real estate. An abundance based on the central bank spewing trillions of dollars of cheap credit and free money (quantitative easing) is artificial, and it has generated systemic moral hazard.

This is a Doomsday Machine because the Fed cannot possibly backstop tens of trillions of dollars of bad bets on stocks, bonds and real estate. Its power is as illusory as the abundance it conjured.

Once the losses mount, the punters who believed the Fed had their back will realize it was all a con. They will lose faith in the Fed and its promises of permanent abundance, low rates and rising asset prices.

This loss of faith will trigger what I call the delegitimization of both the markets and the institutions which have essentially promised a permanent upward bias in assets, i.e. the Federal Reserve and the other central banks that have conjured the same illusion.

This loss of faith in key institutions cannot be fixed with more cheap credit or subsidized mortgages; delegitimization triggers a fatal decoherence in the entire Status Quo.

Things are falling apart, that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart.

Bloomberg reports Minsky Moment alarm sounded in China by SocGen. Credit growth in the world’s most populous country has outstripped economic expansion for five quarters, raising the question of where the money has gone, Societe Generale SA economist Yao Wei wrote in two recent reports. In the first quarter, for example, bank loans, shadow banking credit and corporate bonds together accelerated more than 20 percent year-over-year, while gdp grew less than half that much. The gap has been widening since early 2012. Yao says the answer to where the money is going is a growing “debt snowball” which doesn’t contribute to economic activity. The result is both companies and the public sector face burgeoning interest expenses. This fits with the theory first put forward by economist Hyman Minsky of Washington University in St. Louis. His financial instability hypothesis showed how markets create waves of credit expansion and asset inflation, followed by periods of contraction and deflation.

How true, insamuch as the world central bankers have crossed the Rubicon of sound monetary policies, with the interventionism of Global ZIRP and Kuroda Abenomics, “money good” investments, have failed, commencing the mass extinction of investors on the failure of credit and currencies.

Jesus Christ, operating in the administration plan for completeness of every age epoch and time period, Ephesians 1:10, has completed Liberalism’s moral hazard based credit age of investment choice.

Now, with the sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, rising to 2.01% on May 24, 2013, and to 2.42% on June 19, 2013, He is introducing Authoritarianism’s debt servitude based age of regional governance and totalitarian collectivism, where people will increaingly come to trust in diktat of regional nannycrats for regional security, stability, and sustainability, as presented in the Apocalyptic Vision of the Apostle John in Revelation 13:1-4.

II) … The mass extinction of investors commences on the failure of credit and currencies.

II. A) … On Monday, June 17, 2013, Oil, USO, and Natural Gas, UNG, as well as Risk Assets traded higher in hope of further monetary stimulus by US Fed Chairman Ben Bernanke. Stock sectors rising included OIH, KCE, IAI, PSCE, WOOD, ITB, PBD, XOP, SPHB, CARZ, FLM, IGV, FDN, PKB, RXI, SMH, BJK, IXG, and RWW, as well as those seen in this Finviz Screener.  Japanese Banks, NMR, and MTU, led Japan Small Caps, JSC, and Japan, EWJ, higher.  Far East Financials, FEFN, led Asia exluding Japan, EPP, higher. Bank of America, BAC, and Asset Manager, BLK, led the US, VTI, higher. Spain’s Banco Santander, SAN, and EUR/JPY carry trade darlings PHGSNY, LUXSAPSITOT, ACNENL,  BUD, ST, and  EEFT, led Europe, VGK, higher.  Chinese Financials, CHIX, led Hong Kong, EWH, EWHS, Taiwan, EWT, Indonesia, IDX, Australia, EWA, as well as BRIC countries, Russia, RSX, ERUS, India, INP, and China, YAO, TAO, ECNS, CHII, higher.

Doctor Housing Bubble writes The confidence game in housing: Fed could slow Quantitative Easing later this year. Maybe. Federal Reserve expands balance sheet by $500 billion since QE3 began in September.  The recent rise in interest rates is a big deal for the housing market. As the economy appears to be heating up, hot money will flow to any sector with a perception of higher yields. The recent increase is occurring because of this perception. The Fed has put itself in a corner. The stance is that QE3 and all easy monetary policy will continue so long as the economy is sluggish. Well with a record rally in the stock market, jobs being added, and housing values overheating the Fed looks to be bluffing on this call. Of course much of this rise has occurred because of hot money (the same fuel causing the rally). The Fed has expanded its balance sheet by $500 billion since September of 2012 when QE3 began. Does that seem like a slow pace of growth? There is a big confidence game in housing at the moment.

The months of May and mid June, 2013, saw the end of the confidence in Aggregate Credit, AGG, as well as Major World Currencis, DBV, and Emergin Market Currencies, CEW. The sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, which stands today at 2.17%, together with a steepinging of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as seen in the Steepner ETF, STPP, destroyed every financial asset tethered to yield chasing. The pursuit of yield ended in May and June 2013, with Interest Rate Sensitive Stocks, such as Australia Dividends, AUSE, Utilities, XLU, DBU, Energy Partnerships, AMJ, and Real Estate Stocks, IYR, such as those which financialized Mortgage Backed Bonds, MBB, such as REM, like IVR, and specilized Real Estate leverage such as REZ, ROOF, FNIO, KBWY, high yield stocks, such as Telecom, IST, Junk Bonds, JNK, and High Yield Junk Bonds, UJB, trading lower.  Also commodity currency risk assets which saw a crack up boom courtesy of the world central banks’ easy money policies, such as Paper Producers, WOOD, traded lower as well.

The sharp rise in the Interest Rate on the 10 Year US Note, $TNX, decimated Liberalism’s credit scheme of Dollarization, and terminated investment in the Emerging Markets, EEM, with a ruination of Emerging Market Infrastrucuture, EMIF, and obliteration of Emerging Market Banking, EMFN, deleveraging investors out India Banks, EPI, and Brazil Banks, BRAF.  Debt deflation at the hands of the bond vigilantes, cuased the death of Credit, AGG, and enabled currency traders to successfully sell short the Australian Dollar, FXA, and Emerging Market Currenics, CEW, in the beginning of their currency war on the world central bankers.  There was a strong derisking out of the EUR/JPY, which stimulated deleveraging out of the Far East Financials, FEFN, such as WF, KB, WBK, SHG, the Nikkei, NKY, and its banks, MFG, MTU, SMFG, IX, NMR, and Asia Stocks, EPP, such as the Philippines, EPHE, Thailand, THD, and Indonesia, IDX.  Industrial Mining Industry, PICK, nations, and Copper Mining, COPX, nations, such as Chile, ECH, Peru, EPU, and Gold Mining Nation, South Africa, EZA, and their banks such as BCA, BCH, BAP, were destroyed.  Argentina, ARGT, traded lower on the fall lower in its banks, BCA, BFR, GGAL, and BMA.  Bespoke Investment Group writes that Brazil, EWZ, is the most oversold ETF.  

Barron’s reports Tips are the pits as yields rise but inflation doesn’t I comment that the Google Finance  chart of LPTZ shows a fifteen percent loss of value since May 1, 2013, compared to three percent for Aggregate Credit, AGG.

Austrian economist Benton te writes Current markets seem as in crossroads. If political actions will be able to soothe the mercurial bond markets, then current conditions represents an interim bottom. If not, or if the conditions of the bond markets deteriorates further, then the imminence of a bear market on risk assets.

Falling prices and growing risk aversion will reduce collateral values which will spillover to credit activities which subsequently leads to further pressure on prices and vice versa.

With the exception of adjustable rate mortgages which tend to follow Fed Fund Rate, the US Treasury of the 10 year US treasury notes serves as yardstick[ 22] to almost all other interest rates, including long term bonds and fixed mortgage rates [23]. This is why rising 10 year yields are very important.

The BoJ’s actions has not only spiked the yields of Japanese Government Bonds (JGB), but may have also substantially contributed to the surge in UST yields.

Even the European Central Bank’s latest interest rate cut last May 2nd [28] failed to stem the rise in UST yields.

In short, the diminishing returns from central bank easing policies may have reached a critical tipping point. Instead of pushing rates lower as designed, easing policies have begun to compound on the pressure for higher yields. This is known as the law of unintended consequences [29].

Higher yields in a heavily leveraged system have startled the bond markets first, eventually percolating to emerging markets. As pointed out last week, many leveraged trades which depended on low interest rates had to be winded down, thus compounding on the EM crash.

Another significant contributing factor to the current bond turmoil could be the prospects of policy haircuts affecting bank depositors and bondholders during a credit event. In a recent Eurogroup president [31] Jeroen Dijsselbloem said [32] “if the bank can’t [recapitalize itself] then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute” to recapitalizing the bank, “and if necessary the unsecured depositors.” With officials whether from Japan [33] or Europe or elsewhere overtly talking about the seizing deposits and bonds, such “bail-ins” or the prospects of haircuts may also have contributed to the incentives of bond market investors to sell, if not, to reduce the appeal of bonds as “safehaven”. These are aggravating circumstances.

In April, just when the Kuroda’s grandest experiment was launched, Japan accounted for as the biggest seller of UST. According to the Zero Hedge [38] “in April foreign investors, official and private, sold $54.5 billion Why is this number of note? Because it is the biggest monthly sale of Treasurys by foreigners in the history of the data series.”

In short, the Fed cannot afford a “tapering” or an exit, otherwise risks of higher interest rates that could lead to immediate default. So they are likely to hold or even to expand QE.

Of course the biggest or the “king” of all reserve buildup would be China, where from $150 billion in the year 2000, international reserves has skyrocketed to today’s $3.443 trillion that’s 71% higher four years ago.

The point is that the current implied tightening of the monetary environment could expose on the vulnerability of domestic bubbles. Aside from the closure of leveraged trades, the realization of the unsustainability of domestic bubbles may result to even more capital outflows and deleveraging.

And what the mainstream sees as an advantage can from huge reserves can easily permutate into a shortcoming.

The panic reaction by Indonesia’s officials should give us a clue. This week, the Indonesian central bank, Bank Indonesia, raised policy rates via the deposit facility rates or the rate it pays lenders on overnight deposits. But the central bank also promised to buy government debt in the secondary market. So Indonesia will be launching her version of QE. But the most important development has been a dramatic depletion of huge reserves in response to the abrupt exodus by foreign investors where a total of “$1.9 billion from stocks and local-currency bonds” fled in Indonesia during the past two weeks. From Bloomberg [40]: Indonesia is consuming foreign-currency reserves at the fastest pace in Asia as policy makers struggle to contain the rupiah’s plunge. Reserves dropped 5.7 percent in a year to $105 billion in May as the central bank sold dollars to bolster the rupiah. Put differently, Indonesia seems caught between preserving the bubble conditions by draining her reserves or keeping the reserves at the risks of a bubble bust.

And current problems are not just in Japan or Indonesia. China has been exhibiting increasing stress on her monetary system. The Chinese government suffered its first debt auction failure in 23 months supposedly due to a cash squeeze [41]. The result: higher interest rates; the average yield on the debt sales spiked to 3.76% to 3.14% in June 13th. The average yield of Dim sum bonds [42] or Chinese bonds issued in Hong Kong climbed to a 5 month last week [43]. The yuan as measured by forward contracts also traded weaker last week.

Mr. Noland also notes that Chinese CDS has been very volatile having “jumped from 92 to 113 in three sessions, before dropping back down to 98 on Friday”

Bottom line: the current selloff has exposed the world markets to multitudinous flashpoints for a potential crisis.

Emerging market equity and bonds continue to bleed as bond markets of developed economies undergo convulsions.

The week posted “record” foreign outflows in Emerging Market equity and bond markets. Reports the Marketwatch.com [44] According to Lipper, emerging-market debt funds, including exchange traded funds, saw $622.5 million in net outflows in week ended June 12, the largest on record and up from an outflow of $384 million the previous week and around $30 million two weeks earlier. But its ETFs that are bearing the brunt of the outflows, notes Matthew Lemieux, a research analyst for Lipper.

In particular, the iShares JP Morgan dollar denominated Emerging Market Bond ETF, EMB, saw a $268 million outflow in the latest week, bringing the total over the last three weeks to around $528 million. It’s a similar story on the equity side, where total fund outflows in the latest week totaled $2.1 billion, one of the largest on record.

Over the last three weeks, emerging equity funds have seen $4.9 billion in outflows. There, ETFs are even more of a driver, with the iShares MSCI Emerging Markets Index Fund , EME, witnessing around $5.2 billion in outflows alone over the last three weeks. Emerging market corporate bonds, EMB, have grown to a $1 trillion market. Since 2005 annual issuance has doubled to a “record” $200 billion last year which has already been surpassed this year by end-May, according to Reuters [45]. Many of the companies have reportedly taken on dollar based hedges. While it would be easy to dismiss on the risks from EM outflows, the degree and the duration of volatility aside from effects to domestic rates will play a significant factor.

The EM collapse hasn’t been identical. For instance, South Africa suffered more from a bond and currency rout than from a stock market carnage. The South Africa’s FTSE 40 lost only 4.46% in two weeks and still is up 2.38% over the year. But the rand suffered the biggest loss [46] among EM currencies since the EM massacre began   If the mayhem continues, whether ventilated on the currency, stocks and or bonds, the bloodletting in the EM spectrum will highlight the fragile state of Emerging Market assets. And this can be already seen in the recent soaring of CDS.

And such vulnerability applies to Asia, particularly to Asia’s previously booming bond markets. The following article underscores the lessons of the recent meltdown: the potential consequence from a change in environment from easy to tight money and the risks of deleveraging. From Reuters [47]: Low global interest rates have made it easier than ever to sell new bonds denominated in dollars, euros or yen, resulting in a boom in issuance that has made Asia and its companies ever more dependent on debt. But the market for trading those bonds is slowly drying up, leaving it susceptible to a sharper selloff if holders of these so-called G3 bonds decide it is time to head for the exit. Asia’s low market liquidity could create a more explosive selloff in which a lack of trading creates a price vacuum, leading to sharper price declines as investors scramble to sell assets for cash, a scenario similar to the dark days of the Lehman crisis. See, low rates equals boom, high rates increases the default risks. Low liquidity magnifies a panic. Boom bust cycles.

A panic hasn’t been a reality yet. Despite the equity selloffs, ASEAN bonds appear to have resisted any further catastrophic exodus from foreign money similar to other EM contemporaries. But as shown earlier, ASEAN CDS have commenced an upside move. Low liquidity may have prevented a stampede. On the one hand, the seeming tranquillity of ASEAN bonds, and on the other, volatile stock markets, CDS markets and currency movements these dynamics don’t chime. One of the two divergent forces is wrong, either volatility will subside or agitations will eventually engulf ASEAN bonds.

This is why the coming weeks will be very important. Will markets continue to gyrate violently or will they sober down? Remember, the yield of the 10 year Philippine bonds seem to suggest that her credit risk profile has been nearly at par with Malaysia and has (astoundingly) surpassed Thailand, which for me, signifies as a bubble. And as I have earlier pointed out, the interest rate spread between the US and Philippines has substantially narrowed. This reduces the arbitrage opportunities and thus providing incentives for foreign money to depart from local shores to look for opportunities elsewhere or perhaps take on a “home bias” position.

The EM and ASEAN bond markets are highly vulnerable to market shocks as recent events have shown.

The volatility in global bond markets remains a clear and present danger. Until these markets subside either naturally or through political interventions (in the hope that such interventions will have the desired effect), the prospects of further deterioration of markets should not be discounted. On the contrary, this should be expected.

And continued volatility may push many emerging markets including the Phisix into respective bear markets which increases the risks of a global crisis. There are many flashpoints not limited to Japan. They may come from China, ASEAN, Eurozone or elsewhere. Perhaps the US will be the last in the domino chain.

However, I am in deep suspicion that these broadening bouts of volatility previously from commodity markets and then to bond markets and now to EM currencies and equities are symptoms of the periphery to the core dynamics. The accrued losses from these highly volatile markets will eventually be felt by one or more major institution/s (ala Bear Stearns) from any crisis prone nation. Once in the open, the impact will be a contagion. Shades of the EM collapse during the past two weeks.

I hope that I am wrong, but I fear that we have just witnessed the overture to the forthcoming global crisis.

Since every crisis is a process, it will take time. Volatility will go on both direction but with a downside bias, unless again, global bond markets are pacified. Expect governments to intervene too. But whether they will succeed or not in delaying the day of reckoning remains to be seen. And if the balm from social policies takes effect, the question is until when? The FED’s QE 3.0 brought down yields for just 3 months. Abenomics in less than a month. The intended effects of interventions have been narrowing. The law of diminishing returns appear to be flexing her muscles. Markets appear to have risen in rebellion. Will bond vigilantes become the dominant force? We have already seen this in Indonesia’s central bank proposing to conduct QE. How long will these assuage nervous investors? On the other hand, will disorderly markets prompt Indonesia to continually drain her vaunted reserves leaving her exposed or vulnerable to a crisis? How will Thai and Philippine authorities respond if the unravelling intensifies?

In today’s news, we see the fulfillment of bible prophecy. The Tribulation is presented in bible prophecy as mankind’s last seven years, where the Sovereign, Revelation 13:5-10, secures a Middle East Peace Plan and moves out of Europe to establish his world wide headquarters in Jerusalem, Daniel 9:25. Tom Engelhardt of Antiware relates The making of a Global Security State. Chirst’s Final Dispensation, Ephesians, 1:10, will be the age of the global security state, that is a one world govenment pvovides seigniorage, that is moneyness, through the mark of the beast, which is designed for both emperor worship as well as for payment processing of all commercial trade.

The Great Triublation is the last 3 and 1/2 years, where a small number of God’s elect are driven into a refuge, that is a sanctuary, in a wilderness place, where no drone can go, nor any missile penetrate, to live by what ever means Gods provides for 42 months. Revelaton 12:6, while the rest of humanity is called by the Seignior, that is the Sovereign’s banking partner, to emporer worship, Revelation 13:11-17, where one will be commanded to worship-on-demand, through communication devices, such as one’s phone which present holographic projections of and direct communication from the world’s king. The Gateway Pundit reports AT&T to koad iPhones with alerts from Obama, that you can’t switch off.

With currencies and credit having been destroyed via debt deflation, one will be required to take The Mark, which is the basis for the global 666 currency system of the one world government, without which one cannot conduct any commercial activity, Revelation 13:18. Wearable authentication and wearable security is being developed which can be used for payment of goods and or services; with such, one would become branded property of the state.  DigitalTrusting reports Motorola has revealed plans for hi-tech authentication systems that could make accessing data faster and easier, including a “tattoo” with embedded sensors and antenna, and an “authentication pill” which turns the human body into a giant authentication token. Both are designed to replace current systems such as typing in four-digit codes on screen on smartphones. Regina Dugan, who leads special projects for the Google-owned company, showed off a tattoo, made by company MC10, on her own arm at D11, the All Things Digital conference. Motorola said it planned to work with the company on authentication systems for future smartphones, according to AllThingsD. Dugan previously worked for DARPA (Defense Advanced Research Projects Agency). “Authentication is so annoying that only about half the people do it,” says Dugan. “Despite the fact that it is a lot of data on your smartphone that makes you far more prone to identity theft. We are thinking about a whole variety of things to make that better. “ Dugan also showed off a pill, which is powered by a chemical reaction with stomach acid, and produces a machine-readable 18-bit signal which can be used for authentication. “I take a vitamin every day, why can’t I take a vitamin authentication every day?” asked Dugan.”Your entire body becomes an authentication token. It becomes your first superpower. When I touch my phone, my computer, my door, my car I am authenticated.” Slate magazine’s video shows off the size of the pill. “This isn’t stuff that is going to ship anytime soon, but we have demoed it working. We are trying to think big again,” said Motorola CEO Dennis Woodside. The post Motorola predicts passwords could be replaced by arm tattoos and “authentication pills” appeared first on We Live Security.

Daily Bell posts Richard Ebeling on higher interest rates, collectivism and the coming collapse. Wikipedia relates Richard M. Ebeling (born January 30, 1950)[1] is an American libertarian author, and was president of the Foundation for Economic Education (FEE) from 2003 to 2008, and Wikipedia relates that The Freeman is an American libertarian journal published by the FEE [1] .

Jason Ditz of Antiwar writes Egypt’s invitation to Jihad could have long-term effects. The Egyptian government’s announcement that their citizens are free to go join the Syrian civil war, followed up almost immediately by a severing of diplomatic ties with the Syrian government was seen by some as taking a “hard line” on Assad. Yet the context suggests this is set to be a broader Egyptian policy matter than simply the ongoing war in Syria, and that with the precedent already set that the government is willing to host jihadist citizens who go abroad imposing regime change for religious reasons, it certainly won’t end there.

Chris Rossini writes in Economic Policy Journal Think outside of democracy. The job of the libertarian is not to get back to the rotted Republican roots. We want the roots of Liberty! Our job is to explain to others that a life of false choices does not have to be. The game of “pick your chains” is man-made and not a fixture of nature, even though the bird of prey has many people believing that it is.

(I comment that the Apostle Paul communicated in the first century that all things are of God, 2 Corinthians 5:17-18, and that God determines the times and places in which one lives, Acts 17:26, and that He chose some to believe in Christ and placed these in the honey-be of His love, Ephesians 1:5-6, while assigned the others to disbelief.  Furthermore, reality exists only in Christ, Colossians 2:17. And that He is Grace, that is Resource, and He is Truth, that which is reliable for believe, as well as  that which is a trustworthy promise, John 1:17, and that the elect worship God’s will, John 4:23-24, while the fiat worship their own will in philosophy or religion, Colossians 2:23, and in so doing God sets one free indeed John 8:36. Thus choice is an illusion, and for the mature believer in Christ, one comes to see Christ as the his inclusive life experience, Colossians 3:11, the mature in Christ believe that God makes all of one’s decisions. Those who have life in Christ, are ever maturing in the only right there is, and finding genuine freedom 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 more I manifest in Jesus Christ, the more freedom I have, and the more splendid child of God I become. Inasmuch as Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and is pivoting the world from Liberalism’s age of investment choice and terminating it’s moral hazard based prosperity, to bring forth Authoritarianism’s age of nannycrats’ mandates of debt servitude and austerity, I simply go by the motto “Whatever the Lord provides for me is fine”. Through difficulty, through oppression, through loss, through every trial and temptation, I say “His Grace is sufficient for me”.)

On the contrary, as Samuel Rutherford wrote in England back in the 1660′s: “Every man by nature is a freeman born; by nature no man cometh out of the womb under any civil subjection to king, prince, or judge…no man bringeth out of the womb with him a sceptre and a crown upon his head.”

(Please consider that God determines the times and places in which one lives, Acts 17:26, those being born after May 24, 2013, that is after the Interest Rate rose to 2.1%, and destroyed fiat money, are born into the age of regional governance, totalitarian collectivisim, debt servitude and prosperity where all live in the Global Security State and its panopticon of security, stability and sustainability). ETF Daily News reports  How May 22 changed everything for the S&P 500 index.

Those are the roots that we want to take hold. We want to harvest the fruits that come from that tree. The belief that not only are we born free, but that we can (and should) remain free. Such a state of affairs will only come about when Libertarians dump the tyrannical Republicans once and for all and plant the seeds of Liberty instead.

(I comment that I seek to harvest the spiritual life, that comes as I breath in God’s life, in spiritual wisdom and understanding, Colossians 1:8-9,  that is the replacement for the death and sin which comes at birth. If God’s providence intervenes, then one will actuate as the New Person in Christ, 2 Corinthians 5:17, in virtue, that is praise worthy speech and behavior, and in ethics, that is in economic regard for the person and property of another, through spiritual addition of the seven addives of 2 Peter 1:5-7, and not manifest in carnality nor in inequity, which is poneros, that is bad, evil and wicked speech and behavior. The believer purposes to live free from entanglement with the fiat things, that is human philosophy or religion, of this world and thus be a holy vessel, that is one set aside, for God’s purposes.)

(My final thought here is that God’s idea of economy is kindgom, specifically where under Liberalism a Democratic Kingdom of sovereign bankers ruled providing fiat money. Now under Authoritarianism a Ten Toed Kingdom or sovereign nannycrats rule and provide diktat money, which is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity schemes that are experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, and sale of a country’s central bank’s gold reserves, all for the purpose of regional security, stability, and sustainability.)

Mike Mish Shedock provides excerpts from the Michael Pettis China Financial Markets report The explosive growth in Chinese exports at the beginning of this year had very little to do with strong external demand and nearly everything to do with speculative inflows. With borrowing costs in US dollars in the Hong Kong markets roughly two hundred basis points lower than domestic RMB interest rates, large Chinese companies with subsidiaries in Hong Kong were borrowing money in HK and bringing that money illegally into the mainland by over-invoicing exports.

This allowed them to pick up the 200 bp “arbitrage” plus any appreciation in the currency. This, plus the “arbitraging” of credit (borrowing cheaply from banks and lending to businesses that do not have access to credit) is becoming an increasingly important part of the profitability of large businesses, it seems, and that is always a bad sign when “financial engineering” becomes a profit source for businesses. The PBoC has cracked down on this kind of activity, but it should remind us just how porous China’s capital controls really are. Huge amounts of money have been able to enter and leave the country.  Mr Shedlock announces a new Android app (compatible with phones and tablets), is now available on the Google Play store from programmers Stephen Asherson and Rachel Strate at 2Bits.

Stefan Sgeinberg of WSWS reports JPMorgan calls for authoritarian regimes in Europe.  The authors of the JPMorgan report are arguing for governments to adopt dictatorial type powers to complete the process of social counterrevolution that is already well underway across Europe. The 16-page document was produced by the Europe Economic Research group of JP Morgan and titled “The Euro Area Adjustment, About Half-Way There.”  Since the eruption of the global financial crisis in 2008, the ECB has made trillions of euros available to the banks to enable them to wipe out their bad debts and commence a new round of speculation. In the face of mounting pressure from the financial markets, ECB chief Mario Draghi declared last summer that he would do whatever was necessary to shore up the banks. This, however, is not sufficient as far as the analysts at JPMorgan are concerned. They demand a “more dramatic response” to the crisis from the ECB. The harshest criticisms in the document, however, are reserved for national governments that have been much too tardy in implementing the type of authoritarian measures necessary to impose austerity. The process of such “political reform,” the study notes, has “hardly even begun.”

(I comment that the authors of the JPMorgan report are simply actuating on the Revelation of Jesus Christ, that is the Apocalyptic vision given by angels to the Apostle Paul in 90 AD, while he was living in exile on the Isle of Patmos, describing those things which must shortly come to pass, Revelation 1:1, meaning that once they start to occur they fall in place, like lined dominos toppling one upon another, once the first one tumbles. Specifically that a monster of authoritarianism, totalitarian collectivism, debt servitude and austerity comes to rule in the horns, that is in the world’s ten regions, and in the heads, that is in mankind’s seven institutions, as presented in Revelation 13:1-4)  

Towards the end of the document, the authors explain what they mean by “political reform.” They write: “In the early days of the crisis it was thought that these national legacy problems were largely economic,” but “it has become apparent that there are deep-seated political problems in the periphery, which, in our view, need to change if EMU (the European Monetary Union) is to function in the long run.”

(I comment that indeed are legacy problems, these have to do with the Nordic Latin cultural divide, that is Europe’s North South character divide, which is well known and well documented elsewhere. And there are other legacy problems which exist, such as the banker’s drive to push Treasury debt and  creative financing investment opportunities, onto the periphery nations, in a currency union, that the bankers, together with those in NATO, as well the Council of Foreign Realtions and CIA, presented to the Europeans. The political probles have to do with Capitalism, or better said Crony Capitalism, as well as European Socialism and more strongly yet with Greeek Socialism, where there are competitive barriers and national wage laws which provide exorbitant and lucrative terms)

The paper then details problems in the political systems of the peripheral countries of the European Union, Greece, Spain, Portugal and Italy, that have been at the center of the European debt crisis.

The authors write: “The political systems in the periphery were established in the aftermath of dictatorship, and were defined by that experience. Constitutions tend to show a strong socialist influence, reflecting the political strength that left-wing parties gained after the defeat of fascism.

“Political systems around the periphery typically display several of the following features: weak executives; weak central states relative to regions; constitutional protection of labour rights; consensus building systems which foster political clientalism; and the right to protest if unwelcome changes are made to the political status quo. The shortcomings of this political legacy have been revealed by the crisis. “ Whatever the historical inaccuracies in their analysis, there can not be the slightest doubt that the authors of the JPMorgan report are arguing for governments to adopt dictatorial type powers to complete the process of social counterrevolution that is already well underway across Europe.

(I comment that Socialists, that is those who believe in pure socialism, where one foregoes self interest and material satisfaction for the good of all, much like a Buddist foregoes all desire, and a Christian sacrifices in Christian altruism, may present a call that appeals to those with nothing, that is those living in poverty, yet it is simply another human philosophy of will worship, Colossians 2:23, and not of the worship of God’s Will, John 4:23-24.  Furthermore, dictatorial type powers were ordained of God in eternity past, Daniel 2:25-45, and Revelation 13:1-4, where regional governance and totalitarian collectivism, are part of Christ’s dispensation, Ephesians 1:10, that is God’s economic and political plan, as He pivots the world out of Liberalism’s moral hazard based prosperity, and in Authoritarianism’s debt servitude based austerity.   

It was God’s Will to develop leaders such as Phil Gramm to establish Liberalism’s scheme of financial deregulation, and Jimie Dimon, head of JP Morgan, to provide Liberalim’s scheme of QE1, where the Fed would trade out “money good” US Treasury bonds for all kinds of toxic debt owned by his firm.

It is Jesus Christ, working at JP Morgan, as well in the European Finance Ministers’ Cabinet in Brussels, and at the ECB, to develop Authoritarianism’s statist public private partnership schemes to oversee the factors of production as well as all economic and political life in the EU.

A neoliberal agenda masked by EU ‘competitiveness’ is rapidly privatising public services and downgrading the democratic rights of citizens,argues Martin Konecny is a researcher at the Corporate Europe Observatory campaign group, relates in Worthy News, Authoritarian EU’ privatising states and attacking democracy.  The June European council will see further debates on Europe’s competitiveness. Prominent among the different proposals is the idea of a so -called competitiveness pact. The plan of the European Commission, big business and of the German government in particular is to establish a set of ‘contracts’ for member states that will impel them to weaken labour laws, and to implement business-friendly legislation to promote competitiveness.

With support and encouragement from the business world, Merkel recently issued a joint statement together with Hollande where they set the timeframe for the final design of the competitiveness pact for the end of this year. But why is it that political and economic elites are pushing for such a deal? A political programme to undermine democracy in a very serious way, even while the formal institutions stay intact. To force every member state into contracts with the commission in such important policy areas as the labour market, in reality means to extend the kind of rule-by-Troika from the crisis-hit south to the rest of Europe. The undemocratic commission, or more precisely its neoliberal vanguard represented by Oli Rehn and his DG-ECFIN, will decide, together with national executives, on the political and economic course of each country.

National parliaments will be sidelined and reduced to the function of rubber stamp legitimising, not coincidentally, a word used more and more often to depict the future role of national parliaments in debates at the European Council. The European competitiveness agenda has become a key tool to undermine democracy. Competitiveness becomes a value in itself for which we have to sacrifice basic democratic rights if – as is the commission tells us – we ever want to see jobs again.

The question of being able to democratically decide what kind of society we want to live in vanishes while the technocratic – in reality, highly political – rule of competitiveness takes its place. Instead of politicians, citizens are degraded to shareholders who can elect the best management of the competitiveness agenda decided on the European level. It seems that to political and economic elites, the main obstacle to the competitiveness agenda is increasingly seen as democracy itself.

A One Euro Govenment, that is a European Super State, is coming to Europe out of sovereign insolency, credit collapse, and a financial system breakdown, as foretold in Revelation 13:3, and is termed Financial Apocalypse. In the New Europe, Greeks, Italians, Portugese, and Spaniards cannot be one, but will nevertheless be yoked together as debt serfts in a region of economic governance, where diktat serves as credit, money, power and rule.) 

Amazon.com, Movies & TV Movies makes available for purchase Homeless: The Motel Kids of Orange County where Alexandra Pelosi follows children living in motels as their families struggle to make ends meet.

(I comment that for a family, with one or two parents ,usually one not working, and three or four children, living together with pets in a motel room is the psychogenesis of metnal illness, especially psychopathy, and psychpathic behavior.)

The Apostle Paul relates in Ephesians 1:10, that God has tasked his son Jesus Christ with the oversight of the Economy of God, specifically bringing fullness to every epoch and time period. Having fully completed Liberalism’s age of investment choice with a moral hazard based prosperity, seen in World Stocks, VT, Aggregate Credit, AGG, Major World Currencies, DBV, and Emerging Market Currencies, CEW, and even Gold, $GOLD, trading lower,  the Lord is now at work transitioning the world into the very depths of Authoritarianism’s era of debt servitude based austerity. To this end, Jesus Christ is actively working in the new form of public private partnership consisting of Foundations and Government engaged in the decommissioning of rust belt cities.

Esther Galen in WSWS reports The dismantling of Pontiac, Michigan, a dress rehearsal for Detroit.  Of 21 Michigan cities under emergency managers, none has yet faced as drastic cuts in public services as Pontiac. But no city has yet faced as drastic cuts in public services as Pontiac, the county seat of Oakland County, the wealthiest county in the state.

The city workforce has been slashed from 600 to only 50, while nearly all city assets have been sold off to private companies and nearly all city services have been outsourced, privatized or transferred to other jurisdictions.

The state government claims that emergency financial managers will get a struggling city “in shape.” But the real agenda, the privatization and destruction of public services and living standards, is being revealed in Pontiac.

Pontiac is now on its third state-appointed financial manager. The first and second, Fred Leeb (2009) and Michael Stampfler (2010), were chosen by then Governor Jennifer Granholm, a Democrat. Republican Governor Rick Snyder appointed Louis Schimmel in 2011.

Schimmel is a longtime debt collector for bankers and other investors in municipal bonds. He served on the board of directors and executive committee of the Pontiac State Bank from 1972 to 1988, until the bank was taken over by National Bank of Detroit, which in turn was swallowed by Bank One and then by JPMorgan Chase. An expert on municipal finance, Schimmel served as president of the Bond Club of Detroit, and as executive director of the Municipal Advisory Council of Michigan, a statistical clearinghouse for US investment bankers who underwrite or invest in municipal bond issues. He retired from that position in 2001.  In 1986, Schimmel became the first emergency financial manager of a sizable Michigan city, when a court appointed him to take over the city of Ecorse, an industrial suburb of Detroit laid waste by job cuts at the huge steel mill then operated by National Steel. Schimmel cut ruthlessly, balanced the books in three years, and was hailed for his efforts by the Michigan Chamber of Commerce, which gave him its 1990 award for Outstanding Service and Leadership in the Public Sector.

He went on to a series of appointments in state government. In 1992, he was appointed a member of the Michigan Public-Private Partnership Commission. In 1999, Governor John Engler appointed him to serve on the Michigan Commission on Public Pension and Retiree Health Benefits. From 2000 until 2004, he was the state-appointed emergency financial manager of Hamtramck, another ruined industrial city, an enclave inside the city of Detroit. In 2008, he was appointed a member of the Legislative Commission on Statutory Mandates.

Perhaps his most significant role, however, was as an advocate of the destruction of municipal government at the leading right-wing think tank in Michigan, the Mackinac Center for Public Policy. Schimmel wrote an article in 2005 for the Mackinac Center’s journal, based on his experiences in Ecorse and Hamtramck, outlining the changes Michigan should make to its existing emergency management law so financial managers would have more powers. A second article by Schimmel published on the center’s site in December 2006 was titled provocatively: “The City of Pontiac: A ‘Going’ Concern.” It advocated the appointment of an emergency manager there. As the headline suggested, Schimmel called for the effective elimination of municipal government.

The article promoted privatization of city services, stating: “Only major structural changes in how the city operates will bring a permanent solution to the city’s financial problems.” A second article that same month advocated privatizing the city’s Department of Public Works, which provided services such as wastewater treatment, and maintenance of city parks, recreation fields and community centers and other services.

Schimmel went to work for the Mackinac Center, serving as its director of municipal finance from 2006 to 2009. The think tank developed a wide range of right-wing, anti-working class policies that the Republican Party would implement wholesale once it took control of state government in the 2010 elections. This included the passage of Public Act 4 in 2011, which gave emergency financial managers virtually dictatorial powers. EFMs could assume all powers held by a city’s mayor and city council, could cancel labor contracts and enjoyed immunity from lawsuits. The Democratic Party advocated equally draconian cuts in public services, but sought to use the unions as enforcers of the cuts, while the Republicans wanted to dispense with the unions altogether.

Schimmel was the first emergency manager appointed under Public Act 4, when Snyder named him to run the city of Pontiac. When Public Act 4 was defeated in a referendum in November 2012, the state legislature simply ignored the popular vote and reenacted its provisions, with very slight differences, passing Public Act 436 a month later.

The Mackinac Center for Public Policy has been a driver for the policies of the most right-wing sections of the capitalist class. In additional to promoting privatization of government services, the center advocates right-to-work laws, privatizing schools and school services. On its web site, the Mackinac Center describes its free-market ideology as follows: “Modern economic experience demonstrates overwhelmingly that the free market is a powerful engine of economic prosperity”. This, in the sixth year of the deepest economic slump since the Great Depression! The statement continues: “We look forward to the day when the myths and fears of free-market capitalism are dispelled, along with the misplaced faith in a benevolent, omnipotent state.” The Mackinac Center cites approvingly the work of Milton Friedman (privatizing public education), F.A. Hayek (government plans can’t create economic growth) and James M. Buchanan (critique of state government programs).

The policies advocated by the Mackinac Center have a clear class basis. The organization represents the interests of its ultra-right corporate financial backers. These donors included (2002-2006):

Bradley Foundation (electronic and radio component heirs)

• Daimler Chrysler Corporation Fund (automotive)

• Dow Foundation (widow of the founder of Dow Chemical)

• Idilogic lists Dunn’s Foundation for the Advancement of Right Thinking (investment company founder) Desmonds Blog relates William A. Dunn runs Dunn Capital Management, Inc. in Stuart, Florida. He has been a Director of the Property and Environment Research Center, the Cato Institute, Foundation for Individual Rights in Education, and the Competitive Enterprise Institute

• Wikipedia presents Earhart Foundation (White Star Oil heirs)

• Idilogic lists Herrick Foundation (grandson of the founder of Tecumseh Engines)

• Sourcewatch lists the Peter G Peters Foundation (Proctor and Gamble heirs)

• Sourcewatch lists the Walton Family Foundation (Wal-Mart heirs)

These corporations see government-run public services as a drain on their profits. By contracting out public services to the lowest bidder, the wages, pensions and health benefits of public service workers and the services themselves will be destroyed for large sections of the working class.

As Schimmel explained in one of his published commentaries on municipal restructuring, while financial constraints are cited as the reason for the cuts in public services, there is a broader goal: “I am trying to be an example for all of Michigan, for any municipality anywhere.” He made clear the scope of his project, noting: “I’m trying to show this for rich cities as well as the poor cities.”

The implications of this ideology are detailed in another Mackinac Center article by Michael LaFaive, promoting the use of volunteers for public services.

“Critics might roll their eyes at the very notion of some of these proposals,” LaFaive wrote. “But the fact that such ideas may seem implausible today does not mean that they lack credibility. Indeed, less than a generation ago school choice, Social Security (pension) privatization, and ending welfare as an entitlement were deemed beyond the pale of discussion. Today such ideas are mainstream.”

As LaFaive indicates by the use of the word “mainstream,” all sections of the ruling elite, the Democrats as well as the Republicans, have embraced the right-wing nostrums of privatization and dismantling the public sector. What is at stake is nothing less than the dismantling of more then a century and a half of social progress, however halting, in the development of the public services required by a mass, economically advanced, modern society.

In the course of the industrial revolution of the 18th and 19th centuries, cities grew as people moved from farms to work in factories. Scientific and technical advances created the conditions for public services such as water treatment.

The standardization of piping, for example, meant the water supply system could be vastly expanded. Industry developed steam-powered pumping stations. As more people crowded into cities and science understood disease transmission, sanitation systems were developed to keep waste separate from the water supply for public consumption.

In the period when the American bourgeoisie was a rising class, it threw its weight behind the development of public services, from the postal service, established after the American Revolution, to roads, canals, railways, telegraph. This continued well into the 20th century, as the federal government expanded transportation systems, built airports and air traffic control and funded a broad expansion of public education, as well as art, culture and public broadcasting.

These public services were developed and expanded over a long historical period, yet in the course of one generation they are being destroyed. As the world economic position of the United States has deteriorated, from the 1970s on, public services came under attack, and these attacks have escalated enormously following the Wall Street Crash in 2008.

The use of emergency financial managers in Michigan, municipal dictators sent in as collection agents for the banks and bondholders, is an expression of a profound historical process.

The capitalist state is being stripped of all the reformist bells and whistles, and reduced to its core function as the “armed bodies of men” described by Marx and Engels, suppressing the working class in the interests of the capitalists. As the ruling class destroys public services, they are finding it necessary to change the forms of rule, and eliminate any vestige of democracy and local self-government.

Under these conditions, only a politically independent working class can defend these services. Socialism would put these vital services under public ownership controlled by a workers government.

II. B) …  On Tuesday, June 18, 2013, Oil, USO, and Natural Gas, UNG, as well as Risk Assets traded higher again, in hope of further monetary stimulus by US Fed Chairman Ben Bernanke, this included High Beta ETS, such as SMH, PKB, RXI, IBB, RZV, PDP, CSD, PBS, XLI, XTN, PPA, SPHB, KRE, PSCE, IAI, IYC, IGN, XRT, PJB, PJP, OIH, BJK, IHF, and FDN, and others seen in this Finviz Screener, traded higher. The Russell 2000, IWM, and Ireland, EIRL, rose to a new high having investor’s Euro Yen carry charm with, IR, STX, ICLR, TRIB, and ACN.

Small Cap Pure Value Stocks, RZV, rising included, NWY, WTSL, MCRI, MCHX, EEFT, FHCO, STMP, HGR, CKEC, VSEC, SNX, SCOR, ADUS, FXCM, METR, PAR, OPEN, and on, and on.     

The Euro, FXE, traded higher, and the Yen, FXY, traded lower, causing a trade higher seen in the chart of their currency carry trade, the EUR/JPY, which according to Action Forex closed up at very strong resistance at 126.88, which is seen in the Stockcharts.com chart of FXE:FXY at 129 .  The Indian Rupe, ICN, the Australian Dollar, FXA, the British Pound Sterling, the Brazilian Real, BZF, the Canadian Dollar, and the Emerging market Currencies, CEW, traded lower.

Aggregate Credit, AGG, traded slightly lower. Emerging Market Bonds, EMB, traded lower on lower Emerging Market Currencies, CEW, and the rise in the Interest Rate on the US Ten Year Note, ^TNX, which closed higher at 2.18%.

Nicholas Financial, NICK, traded up 0.07% to all time high at 15.00 as Moody’s reports US subprime auto ABS risk factors are rising. Risk factors such as weakening loan credit, stiff competition among originators, and readily available funding for asset-backed securities (ABS) all portend higher credit losses for subprime auto lending, according to a new report from Moody’s Investors Service. “Risk Factors Still on Rise for US Subprime Auto ABS” follows a June 2012 Moody’s report on increasing risks in the subprime auto lending market, “US Subprime Auto Lending Market Harkens Back to 1990s.” The new report cites a number of factors affecting the rise in subprime auto credit risk, including more private equity money entering the market that will further intensify increasing competition from banks and credit unions. “The increased competition among subprime lenders is resulting in more loans to borrowers of weaker credit quality,” said Peter McNally, a Moody’s Vice President and co-author of the report.

Since the beginning of the failure of credit, AGG, beginning in May of 2013, Nicholas Financial, NICK, has outperformed its peer grous, Small Cap Revenue, RWJ, Russell 2000 Value, IWN, Small Cap Value, RZV, as is seen in its ongoing comparative Yahoo Finance Chart; and it has been outperforming Ford, F, and GM, as well, as is seen in their comparative chart.).

 

Reuters reports Euro zone must agree bank recaps on EU’s Rehn says

Olli Rehn’s requeest is an impossible task, it simply is not going to happen this week. And an inquiring mind asks, just who is going to recapitalize these insolvent financial institutions. It is sovereignty that provides seigniorage. Insolvent sovereigns, that is the PIIGS, and their insolvent banks, such as SAN, cannot provide seigniorage.

Democratic nation states stand as ghost governments on the windswept landscape of Liberalism’s paradigm of nation investment, EFA, and small cap nation investment, IFSM, which provided a moral hazard based prosperity.

Out of a soon coming credit bust, and global financial system breakdown, as foretold in bible prophecy of Revelation 13:3, regional governance and totalitarian collectivism will rise to provide regional security, stability and sustainability in the Eurozone, enforcing a debt servitude based austerity.

The traditional rule of law, that came by national legislation and constitutional provision is being replaced by the rule of sovereign regional nannycrats and sovereign regional bodies such as the ECB, as they meet in work groups and summits to renounce national sovereignty, and estalish pooled sovereignty, as God’s idea of economy, is empire, specifically an empire of a Beast Regime, ruling in all of the world’s ten heads, that is in the world’s ten regions, as well as in all of mankind’s seven horns, that is institutions, this being the Apocalyptic Vision of The Revelation of Jesus Christ, specifically Revelation 13:1-4. This is also the same vision given in the Statue of Empire dream to King Nebuchadnezzar in Daniel 2:25-45.

Silver, SLV, and Gold, GLD, traded lower inducing Silver Miners, SILV, SILJ, SSRI, and Gold Miners, GDX, and GDXJ, lower.

 

Quartz reports 5 signs that China is about to fall off a debt cliff.

Bloomberg reports European car sales fall to 20-year low amid unemployment and Ambrose Evans Pritchard reports EU car sales slide to 20-year low European car sales slumped to a 20-year low in May as record unemployment took its toll and the eurozone’s recession spread to the core.

Gold Seek India declares war on Gold

Economonitor relates Venezuela on the brink of hyperinflation

24/7 Wall Street posts The most dangerous cities in America. The authors state that of the 10 most dangerous cities, the percentage of adults with a high school diploma was below the 86% national average. In five of these metro areas, the percentage of adults with a diploma was below 80%.  I comment that clearly education is failing in these cities; in fact, it appears to me that going to school in these cities actually creates a risk of going on to either commit crime or to becoming a victim of crime.

A rise in the Interest Rate on the US Ten Year Note, ^TNX, beginning in early May 2013, to 2.01%, on May 24, 2013, together with the Steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, caused the death of Credit, AGG, Major World Currencies, DBV, Emerging Market Currencies, and Investment Money, VT, and stimulating protests in Brazil, EWZ, after its currency, the Brazilian Real, BZF, fell strongly on June 17, 2013.

Zero Hedge reports 200,000 take to Brazil’s streets in largest protest in two decades; this as Bloomberg reports Brazilian currency touches four year low; and as 6/20 Business Insider reports Currency war rattles Brazil, wakes up the people.

The death of Liberalism’s credit and currencies is seen in the sharp drop seen in the Google Finance Chart of Aggregate Credit, AGG, together with the Indian Rupe, ICN, the Brazilian Real, BZF, the Australian Dollar, FXA, and the Emerging Market Currencies, CEW, beginning in May 2013.

And the death of Liberalism’s money, soon thereafter, is seen in the ongoing combined Google Finance Chart of World Stocks, VT, and Nation Investment, EFA, in India, INP, Brazil, EWZ, as well as Australia, EWA. Bespoke Investment Group reports that Brazi is the most capital depleted nation.

Debt deflation, that is currency deflation, has finally come of age, through the failure of the world central bank policies of Global ZIRP and ongoing debt monetization, with the result that Liberalism’s Milton Friedman Free To Choose floating currency Banker regime no longer provides seigniorage of investment choice.

Jesus Christ is at the helm of the Economy of God, Ephesians, 1:10, terminating the fiat money system and introducing the Beast regime’s diktat money system, which is first being developed through the mandates of Eurozone regional governance.

The diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin.

The diktat money system was fully unleashed onto the entire world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW, and sending the Emerging Markets, EEM, Emerging market Bonds, EMB, Emerging market Currencies, CEW, such as the Brazilian Real, BZF, and nation investment, EFA, in the country of Brazil, EWZ, tumbling in value, being led lower by its banks BBD, ITUB, BBD, and BSBR. With the failure of Liberalism’s fiat money, there be many Angry Byrds, protesting all over the place, as the diktat of sovereign regional nannycrats, replaces democratic national governance.

In the Eurozone, the sovereign nannycrats include Klaus Regling, Jeroen Dijsselbloem, and Michel Barnier, and sovereign regional bodies such as the ECB, where governance is based upon the word, will and way of whoever rises, biting, ripping and tearing others apart, to become the top dog leader and top dog banker, to provide diktat schemes. The seigniorage of diktat includes such thing as regional framework agreements, bank deposits bailins, new taxes, privatizations, sale of a country’s central bank’s gold reserves, capital controls, statist public private partnership oversight and management of government services, the factors of production, the economy in general, and measures of debt servitude, all with the aim of enforcing austerity.

II. C) …  On Wednesday, June 19, 2013, Aggregate Credit, AGG, Individual Currencies, led by the Brazilian Real, and Stocks, VT, traded strongly lower as Bloomberg reported Fed on course to end asset buying in 2014, which enabled the bond vigilantes to call interest rates higher and currency traders to short sell currencies

The Federal Open Market Committee today left the monthly pace of bond purchases unchanged at $85 billion, while saying that “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised their growth forecasts for next year to a range of 3 percent to 3.5 percent and reduced their outlook for unemployment to as low as 6.5 percent.

“If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year,” Bernanke said in a press conference in Washington. If later reports meet the Fed’s expectations, “we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.” Stocks and Treasuries slid as Bernanke’s comments raised the prospect of an end to the quantitative easing that has fueled a rally in financial markets and helped keep the world’s largest economy expanding in the face of federal budget cuts, a slowdown in China and a recession in the euro area. Connecting the dots.  “The Fed is out of the closet,” said Ward McCarthy, chief financial economist at Jefferies Group LLC in New York and a former Richmond Fed economist. “They expect to end these QE purchases. Bernanke wasn’t more specific than later this year, but connecting all the dots suggests he is thinking in the fourth quarter.”

Jesus Christ completed a large part of the Ron Paul Agenda, He terminated the Fed, he slayed it at the Ben Bernanke news conference today; something much more terrible and terrifying is here now, as the Beast Regime has “the feet of a bear, the mouth of lion, and the coat of a leopard”. With the rise in the Interest Rate on the US Treasury Note to 2.31%, Jesus Christ has birthed the Ultimate Predator. I say “Listen, and understand. That Predator is out there. It 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 all existing economic and political life is no more”.

        

Interest rate sensitive stock sectors, XLU, DBU, such as Brazils’s SBS, PSP, IST, Real Estate, REM, REZ, TAO, KBWY, IYR, DRW, ROOF, FNIO, and sectors having received the greatest Fed Stimulus, ITB, WOOD, IBB, PBD, CARZ, PKB, BJK, as well as the Emerging Market Financials, EMFN, the Interest Rate Sensitive Emerging Market Infrastructure Stocks, EMIF, Emerging Market Dividend, DGS, and the High Yielding Diversified Communication Services, SBAC, CCC, AMT, seen in their combined ongoign Yahoo Finance Chart, also traded strongly lower.

Gold Miners, GDX, GDXJ, Silver Miners, SIL, SILJ, SSRI, traded strongly lower, on the higher US Dollar, $USD, UUP. 

Chinese Financials, CHIX, Brazilian Financials, BRAF, India Earnings, EPI, Mexico Bank, BSMX, Australia Bank, WBK, and European Financials, EUFN, led World Financials, IXG, lower.

Asian countries falling strongly lower included Indonesia, IDX, Philippines, EPHE, Thailand, THD, Australia, EWA, South Korea, EWY, New Zealand, ENZL, Vietnam, VNM, Singapore, EWS, Hong Kong, EWH, and Malayasia, EWM. CNBC reports Asia currency sell-off goes from bad to ugly.

South Africa, EZA, and Poland, EPOL, traded strongly lower. Tthe BRICS, EEB, that is Brazil, EWZ, Russia, RSX, India, INP, and China, YAO, traded strongly lower as well, for the most part on currency carry trade disinvestment and deleveraging out of bank stocks.

Emerging markets trading strongly lower included Turkey, TUR, Egypt, EGPT, and Chile, ECH.

Europe, VGK, was led lower by the European Financials, EUFN, which forced Italy, EWI, Spain, EWP, France, EWQ, Germany, EWG, lower. And The Russell 2000, IWM, led US Stocks, VTI, lower.

 

Commodities, DBC, traded basically unchanged; Agricultural Commodities, RJA, traded higher. Gold, GLD, and Silver, SLV, traded lower on the higher US Dollar.

Zero Hedge It’s a massacre each day 134 retail outlets close in Italy.

Zero Hedge reports A classic minsky trap appears to have developed.

Zero Hedge reports The bloom has fallen off the Brazilian Rose

ValueWalk reports China’s looming crisis hurts hedge funds betting on Abenomics

Greg Robb of Market Watch reports 7 Candidates to Succeed Bernanke at Fed. President Obama gave the clearest indication yet that Fed Chairman Ben Bernanke won’t serve again after his term ends in January. In an interview this week, Obama said Bernanke had already served longer than he wanted, which it least one informed observer, at least initially, called tantamount to a firing. One of the few members of the shortlist who has never held a position at the Fed, Larry Summers, 58, joined the Clinton administration and rose to become Treasury secretary.

Sovereignty begets seigniorage, that is moneyness. Where the moneyness is, there is the sovereignty.

The moneyness of The US Federal Reserve, as well as all the moneyness of all the other world central banks was decimated at the Ben Bernanke News Conference of June 19, 2013, as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.31%. The rise of interest rates globally, as is seen in Aggregate Credit, AGG, plummeting, communicates, that the world central banks have lost their monetary authority. The US Federal Reserve, the ECB, and all the other world central bank leaders and their nation state governments are no longer sovereign.

The Milton Friedman Free To Banker regime perished on May 24, 2013, when the benchmark interest rate rose to 2.01%, and was put in the coffin, and buried on June 19, 2013, when that  rate rose to 2.31%.

New sovereign authority and new seigniorage, was born, yes birthed, out of the rise of the Interest Rate on the US Ten Year Note, ^TNX.

Christ’s Apostle John provides the details of the world’s new sovereign authority, that is the Beast regime, in Revelation Chapter 13 Verses 2, which relates that ”the beast which I saw was like unto a leopard, and his feet were as the feet of a bear, and his mouth as the mouth of a lion: and the dragon gave him his power, and his seat, and great authority.” In other words, this monster is powered by Satan the Devil.

A leopard is camouflaged, and as such blends in with the background so it can not be seen by its prey. It operates furtively and prefers the darkness, and then at dusk, or at night, strikes to ensare, enslave, destroy and consume.

The feet of a bear are padded for comfort to run at great speed and the feet have claws for climbing to reach its victims or alternatively to root them out of what seems to be secure places.

The mouth of a lion makes roars with great preeminence, opens wide to devour its opponents, and then rips them apart, gulping them in delightfully huge segments.

So no more traditional Federal Reserve; its head will not be a namby pamby, generous sort of chap at all.  The New Federal Reserve will have features of the most terrifying predators know to mankind; its mission is to utterly destroy all existing credit, currencies, and wealth; as well as to eliminate the fiat money system; and replace it with the diktat money system, where diktat serves as trust, medium of exchange, wealth and power.

II. D) … On Thursday, June 20, 2013, Aggregate Credit, AGG, Major World Currencies, DBV

Emerging Market Currencies, CEW, Base Metals, DBB, Precious Metals, JPP, Commodities, and Stocks, VT, traded sharply lower reflecting the Fed’s stimulus wind down.                                                                                                                                              World Stocks, VT, were led lower by Asia Excluding Japan, EPP, Japan, EWJ, and Europe, VGK, while US Shares, VTI, traded off less sharply than other regions, as Aggregate Credit, AGG, collapsed, on the seizure in Emerging Market Bonds, EMB, Municipal Bonds, MUB , Build America Bonds, BAB, Junk Bonds, JNK, andUltra Junk Bonds, UJP.   Credit broke fractically lower, the Interest Rate on the US Ten Year Note, ^TNX,  blasting higher to 2.42%, and on a vertical steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, communicating not only the death of credit, but a burial of credit in the grave. 

Michelle Kaske of Bloomberg reports The largest exchange-traded fund tracking the U.S. municipal -bond market fell to the lowest price in almost two years and the week’s two biggest sales were delayed as the Federal Reserve said it may stop buying debt. The $3.6 billion iShares S&P National AMT-Free Municipal Bond Fund, known as MUB, fell to the lowest since August 2011 and the biggest one-day price drop since February 2012 The price decline mirrored changes in the $3.7 trillion municipal market, where tax-exempt yields rose along with those on Treasuries, said David Manges, muni trading manager at BNY Mellon Capital Markets. ‘The muni market is in a free-fall today,’ Manges said. ‘It’s tough to get a sense of value or benchmark spreads because prices are so fluid.”

Kelly Nolan of Dow Jones reports Benchmark municipal bond prices saw their sharpest one-day decline since the financial crisis Thursday. Yields on Thomson Reuters Municipal Market Data’s benchmark scale increased as much as 0.20 percentage point Thursday munis maturing around 10 to 30 years saw the biggest yield increase on MMD’s scale It is rare for the typically sleepy muni market to show such drastic price moves: The last time MMD’s benchmark scale showed a similar one-day yield jump was in October 2008, said strategist Dan Berger. ‘It’s getting disastrous out there,’ said MMD senior market analyst Randy Smolik. ‘Our adjustments yesterday paled to Treasurys, and today, with more [Treasury] selling, it’s giving the green light for guys to unload positions.’ Gary Pollack, managing director at Deutsche Asset & Wealth Management, agreed that several market participants were trying to sell bonds. ‘It’s raining bid wanteds out there,’ said Mr. Pollack. Kathy Bramlage, director at Treasury Partners, a unit of financial-advisory firm HighTower Advisors, which oversees about $9 billion in fixed-income assets, said the market tone was anxious. ‘Traders will not put a number on anything this afternoon,’ she said. ‘Everyone is skittish.’ Thursday’s slide in muni prices adds on to what has already been a brutal month and a half for the asset class.”

The unwinding of the Fed Trade has had the greatest effect in the Emerging Markets, EEM.  As Emerging Market Bonds, EMB, collapsed, Emerging Market Currencies, CEW, plummeted.  The Indian Rupe, ICN, the Brazilian Real, BZF, the Swedish Krona, FXS, the Australian Dollar, the Canadian Dollar, FXC, the Japanese Yen, FXY, and the Euro, FXE, traded sharply lower, boosting the US Dollar, $USD, UUP.  Commodities, DBC, traded lower on lower Gold, GLD, Silver, SLV, Base Metals, DBB,and  Oil, BNO, USO.

Today’s rise in Volatility, ^VIX, reflects the very shattering of fiat money. It was the National Bank of Greece, NBG, Chinese Financials, CHIX, Brazil Banks, BRAF, India’s Banks, EPI, Australia’s Westpac Banking, WBK, Korea’s KB and WF, The UK’s RBS, BCS, Peru’s BAP, Chile’s BCA, BCH, Mexico’s BSMX, Spain’s SAN, Emerging Market Financals, EMIF, European Financials, EUFN, Far East Financials, FEFN, Japan Credit Services, IX, and Financials Group, XLF, lower.

Ambrose Evans Pritchard writes  Short-term borrowing rates in China have soared to record highs as credit seizes up, prompting fears that the country’s liquidity squeeze may be spinning out of control.  And the WSJ reports China cash squeeze gets tighter. China’s cash crunch intensified with short-term interest rates jumping to record highs and forcing banks, CHIX, such as SHG, to sell bonds to meet urgent funding needs. Bloomberg reports China swap jumps most since 2011 as PBOC fails to ease crunch  And Zero Hedge relate China interbank market freezes overnight as repo explodes to 25%. Yves Smith of Naked Capitalism writes Chinese interbank markets having a heart attack, repo and Shibor skyrocket, could trigger bigger unraveling.  Jesse writes SHIBOR signaling stress in China’s Financial System as liquidity crunch depens. In story by Matt Phillips, the inter-bank liquidity crunch is a classic banking problem for which the central bank as lender and regulator was created. It would be nice if the bankers could get in front of these problems as they develop, and not merely throw the public’s money at them after the fact when bad bank management, official corruption, and excessive greed have made the system vulnerable. The chart of the Shaghai Interbank Offered Rate, SHIBOR,  has spiked from 3% to 7%. What does the spike in rates mean? Large banks are increasingly leery of tapping into their pools of cash to lend to each other. Recent reports that China Everbright Bank failed to repay a short-term loan to Industrial Bank Co. aren’t helping. Industrial Bank says that report is “untrue and exaggerated.” But short-term lending markets suggest other bankers are skeptical. So what’s the solution? Chinese authorities tamed short-term interest rate spikes before. They could create new cash to lubricate lending, or lower reserve requirements for banks, which would boost liquidity. According to the Wall Street Journal, that’s what bankers are hoping for.  James Booth posted the first article on the Shibor issue relating. China 1-Day Shibor rises most in 5 Months as redemptions drop.  China’s one-day Shanghai interbank offered rate, or Shibor, surged the most in five months on speculation cash supplies will become tighter as redemptions of central bank bills decline this week.

Doug Noland reports in China Bubble Watch. Kathrin Hille of Financial Times reports China’s Communist party has unleashed a rectification campaign of a scale and tone not seen in more than a decade as the leadership seeks to address frustration over corrupt officials while avoiding bold political reforms. As investors wait for party chief Xi Jinping to initiate long-delayed economic reforms and liberals in China push for political change, Mr Xi is taking a page out of the playbook of Mao Zedong, the charismatic but dictatorial politician who led China through a sequence of mass campaigns. Mr Xi, in a speech on Tuesday, exhorted the party that it must embrace the ‘mass line’ to avoid its extinction. Every cadre, demanded Mr Xi, must ‘look in the mirror, tidy your attire, take a bath and seek remedies’ to clean the party from formalism, bureaucratism, hedonism and extravagance. All cadres from county level upwards have to attend study and criticism sessions during the year-long campaign.”

Simon Rabinovitch of Financial Times writes China’s cash crunch deepened on Wednesday after the central bank withheld funding from the financial system, putting pressure on overextended lenders. Short-term interbank rates jumped more than 200 basis points, setting a record high at nearly 8% for loans of one month or less, the latest indication of how credit has suddenly become very tight in China. The main reason for the tightness has been the central bank’s reluctance to pump liquidity in to the money market, wrongfooting banks that had expected Beijing would support them with large cash injections, as it had regularly done before. Signalling that the cash crunch could persist for a while, the China Securities Journal, a major state-run newspaper, ran a front-page commentary saying China was at a turning point in monetary policy. ‘We cannot use as fast money supply growth as in the past, or even faster, to promote economic growth,’ the newspaper said. ‘This means that authorities must control the pace of money supply growth. ‘The only explanation is that the central bank wants to send a warning signal to commercial banks and other credit issuers that unchecked credit expansion, particularly through the shadow banking system, will not be accommodated,’ said Na Liu with CNC Asset Management. Overall credit growth in China has reached about 22-23% this year, up from 20% in 2012, after surge in ‘shadow’ lending by trust companies and banks through off-balance-sheet vehicles.”

Bloomberg reports China’s government said the nation’s financial system must ‘better’ serve economic growth under a prudent monetary-policy framework as the cost of borrowing on the interbank market surged. Authorities will boost credit support for industries the government has defined as strategic and those that are labor intensive, the State Council, or Cabinet, said… The nation must more firmly guard against financial risks.The comments follow a jump in the seven-day repurchase rate, a gauge of interbank funding availability, to the highest level since June 2011. Slowing economic growth combined with a crackdown on illegal capital inflows, efforts to rein in shadow banking and a campaign to control home prices have contributed to increased borrowing costs.  ‘Beijing’s new approach is to focus on reform, rather than stimulus,’ said Qu Hongbin, HSBC Holdings Plc’s  chief China economist. ‘In the last three months, we have seen enough evidence that the current generation of leadership is really determined to push forward reform.’ Bank lending for projects in industries with overcapacity must be banned, the State Council said. The financing system must ‘support economic transformation and upgrading in a more forceful way, serve real economy development in a better way, promote domestic demand in a more targeted way and prevent financial risks in a more concrete way,’ the government said… China must also uphold prudent monetary policy and ‘use it well,’ and keep a reasonable scale of monetary aggregates, the State Council said.”

Bloomberg reports “China’s worst cash crunch in at least seven years is an indicator of shadow lending gone awry and a banking crisis may appear earlier than expected if liquidity remains tight, according to Fitch Ratings. ‘We are starting to see some issues emerging’ in liquidity, Charlene Chu, Fitch’s head of China financial institutions, said. ‘It will be very important over the next month or so to see how that plays out. If that doesn’t go away, some of this may be moving ahead faster and earlier than we thought.’ Chinese finance companies are calling for the central bank to resume capital injections as the nation’s slowing growth. The tightening is ‘emblematic of some of the shadow banking issues coming to the fore as well as some of the tight liquidity associated with wealth management product issuance, and the crackdown on some shadow channels,’ Chu said. She earlier estimated China’s total credit, including off- balance-sheet loans, swelled to 198% of gross domestic product in 2012 from 125% four years earlier, exceeding increases in the ratio before banking crises in Japan and South Korea. In Japan, the measure surged 45 percentage points from 1985 to 1990, and in South Korea, it gained 47 percentage points from 1994 to 1998. Triggers and timing is the biggest question related to China,’ Chu said. ‘We are going to have banking sector problems. Those can manifest either in a crisis or they can manifest in slow growth.

Bloomberg reports China’s interbank rates, which rose to a record yesterday, will be under upward pressure as more than 1.5 trillion yuan ($245bn) of wealth management products mature this month, according to Fitch Ratings. Mid-tier banks, with an average of 20% to 30% of their deposits in such products, face the most difficulty as tight liquidity constrains their ability to meet repayment obligations, Fitch said… Issuance of new products and borrowing from the interbank market are among the most common sources of repayment for maturing products, according to the ratings company.

Benton te writes In a world addicted to easy money, tightening of the money environment will bring into light the credit risks from heavily leveraged financial system and debt burdened governments. Boom will become a bust. Caveat emptor

I relate that the BRICS, and the Emerging Markets fell the most in 20 months, on the rise of the Interest Rate on the 10 Year Interest Note, ^TNX, and the failure of growth in China, and the rise of inflation in Brazil, EWZ.

Asia excluding Japan trading sharply lower included, China, YAO, the Philippines, EPHE, Indonesia IDX, Thailand, THD, Singapore, EWS, Hong Kong, EWH, Australia, EWA, South Korea, EWY, and Taiwan. EWT.

All of the BRICS, EEB, Brazil, EWZ, Russia, RSX, India, INP, and China, YAO, and CHII, fell sharply lower. Marketwatch reports Brazill stocks, currency plunge in ‘crisis’ day

Emerging Market Countries, EEM, trading shaply lower included the South Africa, EZA, Turkey, TUR, Greece, GREK, Chile, ECH, Peru, EPU, Poland, EPOL, and Mexico, EWW. Greek Crisis presents the FT report  IMF to suspend aid payments to Greece unless bailout hole plugged

Developed Nations, such as Sweden, EWD, Canada, EWC, Sweden, EWD, Norway, NORW, The UK, EWU, Swizerland, EWL, and Japan, EWJ, traded sharply lower. In Europe, VGK, Greece, GREK,Germany, EWG, Italy, EWI, Spain, EWP, France, EWQ, and  Netherlands, EWN, traded lower.

Breakout reports Bond Rate Rally Crushes Equities; sectors trading lower included ITB, COPX, PBD, FPX, FLM, BJK, PSCE, XOP, CARZ, PICK, RZV, and CSD. Yield bearing equities trading lower included FNIO, DRW, IYR, ROOF, REM, TAO, EPI, AUSE, BRAF, KBWY, EDIV, DGS, and XLU. It was Higher Interes rates and falling currencies, stimulated strong debt deflation in highly debt financed and thus interest rate sensitive, Global Utilities, DBU, such as Brazil’s, SBS.

China Infrastucture, CHXX, India Infrastructure, INXX, and Brazil Infrastructure, BRXX, led Emerging Market Infrastracture, EMIF, lower.  US Infrastructure, PKB, and Construction Service Company, PRIM, traded off less than these others. With the rise in Interest Rates globally, governments will no longer be able to fund publicwork projects such as ports, highways, airports, electrical grid improvements, water and solar projects. 

Silver, SIL, and Gold, GLD, traded lower on a jump higher in the US Dollar, $USD.

Bloomberg reports Egypt violence builds after Mursi names Islamist Governors. Employees of an Egyptian tourism trade group threatened to resign in protest amid renewed clashes in parts of the country today over President Mohamed Mursi’s latest appointment of Islamists to key positions. Discontent with Mursi, who marks a year in power at the end of the month, is building up as critics plan protests on June 30 to call for early elections. They accuse him of failing to revive the economy while putting the interests of his Muslim Brotherhood allies ahead of the nation’s good.

II. E) … On Friday, June 21, 2013, Global Stocks. VT, held steady, but Bonds, BND, and a number of currencies collapsed further in an ongoing Fed driven selloff.                                                                                                                                         World shares, VT, recovered some lost ground on Friday, after a sharp sell-off triggered by the U.S. Federal Reserve’s plan to roll back the asset-buying program which had carried stocks higher. Yet Aggregate, AGG, continued collapsing on the rise of the Interest Rate on the US 10 Year Note, ^TNX,  to 2.51%, as well as another steeping of the 10 30 US Sovereign Debt Yield Curve, as seen in the Steepner ETF, STPP, steepening.  Junk Bonds, JNK, High Yield Junk Bonds, UJP, International Treasury Bonds, BWX, Emerging Market Bonds, EMB, Municipal Bonds, MUB, as well as US Government Debt, GOVT, that is the Zeroes, ZROZ, the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, the 7 to 10 Year Treasuries, IEF, and the 3 to7 Year Treasuries, IEI, completely broke down seen in Yahoo Finance Chart of ZROZ, EDF, TLT, IEF, and IEI.

The sharp rise in yields, such as that on the 10 Year US Government Note, $TNX, and that on the 30 Year US Government Bond, $TYX, seen in their ongoing combined Yahoo Finance Chart, represents the cardiac arrest, death, and burial of credit.  The global government finance bubble has burst, and comes from the death of sovereign nation states’ monetary authority, through the credit excesses of credit lords, Ben Bernanke, and all the other world central bank leaders.  Their monetary policies no longer provide seigniorage.  Fiat money died, May 24, 2013, and was literally buried on June 22, 2013, at the hands of the bond vigilantes who inverted yield curves, steepening them as is seen in the Steepner ETF, STPP, steepening, and who called interest rates higher.  A new money, that is diktat money is being roled out, or better said called out by EU nannycrats, specifically, European Economic and Monetary Affairs Commissioner Olli Rehn, Austria’s Finance Minister Maria Fekter, and the President of the Eurogroup Jeroen Dijsselbloem, who Mail.com reports have agreed upon a regional framework agreement on June 21, 2013, to provide for regional stabilization of the EMU.   Liberalism was characterized by the financialization of equities and credit; its peak prosperity has been achieved via the full development of moral hazard. With Jesus Christ is at the helm of the Economy of God, Ephesians 1:10, the world is rapidly moving into regionalization which is characterized by the mutualizaton of debt.

The Swedish Krona, FXS, the Canadian Dollar, FXC, the Swiss France, FXF, the Euro, FXE, and the British Pound Sterling, FXB.

The chart of the S&P 500, $SPX, shows a fall of 2.1% for the week. Sectors trading lower included PSP, FLM, BJK, ITB, PKB, and IGV. The National Bank of Greece, NBG, continued strongly lower, taking Greece, GREK, strongly lower,  as Zero Hedge reporgts Greek bonds plunge as ruling coalition partner pulls out, withdrawing ministers. Commodities, DBC, trading lower included Oil, USO,.

Peter Schiff in Economic Policy Journal writes of this week’s financial market trading Bukcle Up. Investors will realize that yeas of QE have only exacerbated the problems it was meant to solve. When the grim reality of QE infinity sets in, the dollar will tank, gold will soar, and the real crash will finally be upon us. Buckle up

Mike Mish Shedlock writes Inflation, corruption, as Brazil’s boom comes to an end. What’s the protest really about? Inflation and corruption is the answer. Fare hikes are a symptom. Brazil complained for years about the strength of its currency, the Brazilian Real. Now it intervenes regularly to prop it up. Inflation is a reported 6.5%, but no doubt much higher in practice. Problems are easy to overlook in a seemingly good economy when jobs are plentiful. It’s much different when the boom ends and the corruption becomes obvious.

I’ve had an increasing interest in economic things since 2007 to 2008, that is since thing started booming here in Bellingham with the recovery from the Financial, Housing and Commodities Bust. And in looking back it was in 1999 to 2000 that the Euro, traded by the ETF, FXE, came on line; and have with increasingly comprehension, come to understand that the Debt Devil is coming.

The Euro is partly a commodity currency, that increased the price of everything, including gold. That is to say it was part of Inflationism. The Euro developed European Socialism, and the more extreme Greek Socialism, and developed the ECB, and the European Finance Ministers, that is to say the EU Nannycrats, The Euro was a funding currency for the greatest currency carry trade of all time that is the EUR/JPY, seen in the Stockcharts.com chart of FXE:FXY.

  

And European Countries have participated in US Dollar Hegemony throughout the world, such as Iraq, Libya, Mali, and now in Jordan. Dr Worden in article EU and US Counterpartes Meet, asks, Which of these pictures do you think best depicts the motif of equivalence? I have to say none of the pictures illustrates any form of equivalence, all illustrate the United States as being the preeminent leader. In the first picture, the US Flag stands out as brighter, and Obama’s podium is clearly larger, and even shows him elevated in height above all the other leaders. In the second photo Obama is clearly the expressive leader and is the one taking on centerstage with the others deferring to him. And in the third photo, the US Flag is given more space than the EU Flag.  So the conclusion here in the European Pressphoto Agency, AFP, and Atlantic Council photos is one of allies committed together in hegemonic power.   Such coordination of power between the EU and the US, has been the fateful working of Bible Prophecy of Daniel 2:25-45.

The Euro defined and amplified the Nordic Latin Divide, that is the European North South Divide, and within the Euro common currency, the Netherlands, and Finland, have consistently scored highly in prosperity against the Dutch who have the Krone.

 

The slog since 2000 has been one of ever increasing moral hazard based prosperity that has come thourgh currency carry trade funding and credit of all type.

Now Jesus Christ in dispensation, that is in administration of all things economic and political, Ephesians 1:10,  having completed Liberalism’s credit nation state based prosperity through Inflationism, is introducing Authoritarianism’s regional governance based debt servitude based austerity through Destructionism.

Out of a soon coming Financial Apocalypse, that is a global credit bust and financial system breakdown, foretold in Revelation 13:3-4, will come Europe’s Sovereign, Revelation 13:5-10, who will be accompanied by the Seignior, that is the top dog banker who takes a cut, Revelation 13:11-17.  Euroland’s Leader will be one familiar with Authoritarianism’s schemes, such as regional framework agreements which renounce national sovereignty and provide for pooled sovereignty, as seen in Prophetic Dream by the Prophet Daniel, Daniel 8:23-26, who fainted and was sick for days, Daniel 8:27.

Robin Emmott and Ingrid Melander of Reuters report, EU to decide who pays when banks fail. The European Union sought on Friday to forge rules to force losses on large savers when banks fail, a

divisive reform that will shape how the euro zone deals with its sickly lenders.

Finance ministers in Luxembourg are trying to resolve one of the most difficult questions posed by Europe’s banking crisis – how to shut failed banks without sowing panic or burdening taxpayers.  “We are in for a very tough negotiation,” Sweden’s Finance Minister Anders Borg told reporters as he arrived for the meeting, saying a one-size-fits-all rule for all EU countries was “dangerous”.  The European Union spent the equivalent of a third of its economic output on saving its banks between 2008 and 2011, plundering taxpayer cash but struggling to contain the crisis and – in the case of Ireland – almost bankrupting the country.

But countries are divided over how strict the new rules should be, with some worried that imposing losses on depositors could prompt a bank run while others argue the rules of the game must be made clear from the start.

While there is no immediate deadline for a deal, dithering could undermine confidence in the ability of Europe’s politicians to repair the financial system, encourage banks to lend again and help the continent emerge from its economic stagnation.

“Midsummer is the longest day of the year so we have plenty of time,” said Olli Rehn, the European Commission’s top economics official, referring to the northern hemisphere’s June 21 summer solstice.

A 300-page draft EU law that forms the basis of discussions recommends a pecking order in which first bank shareholders would take losses, then bondholders and finally depositors with more than 100,000 euros ($132,000) in their account.

That would make the harsh treatment of savers (known as the Cyprus Bank Bailin) that was part of Cyprus’s bailout in March a permanent feature of Europe’s response to future banking crises. EU countries would be required to follow these rules when closing banks. The rules to impose losses on savers, whether wealthy individuals or companies, could be made stricter within the euro zone, in particular for banks seeking help from the single currency’s rescue fund. A central element to ensure the euro zone’s long-term survival is a system to supervise, control and support its banks, known as banking union.  Although not part of the same project, common rules in the wider European Union are considered a stepping stone towards the euro zone’s banking union.

And Bloomberg reports on seigniorage aide: Germany said to seek Cyprus style wipeouts in ESM Bank aid rules. Germany is leading a push for all bank creditors except insured depositors to take losses before the euro area’s firewall fund could provide direct aid to troubled financial institutions, according to two European officials.

Doug Noland writes Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $718bn y-o-y, or 6.9%, to $11.130 TN. Over two years, reserves were $1.271 TN higher, for 13% growth …. M2 (narrow) “money” supply gained $11.1bn to a record $10.590 TN. “Narrow money” expanded 6.4% ($639bn) over the past year. For the week, Currency increased $1.2bn. Demand and Checkable Deposits sank $110.5bn, while Savings Deposits jumped $117.8bn. Small Denominated Deposits declined $3.8bn. Retail Money Funds jumped $6.3bn.

III) … People will come to trust in the diktat of regional nannycrats for regional security, stability and sustainability.

God’s will for mankind is to experience Empire. God promised a succession of empires which is seen in the Statue of Empire dream given to King Nebuchadnezzar in Daniel 2:25-45, where a ten toed kingdom of regional governance forms to rule mankind, with toes of iron diktat and clay democracy.

This global system of regionalism replaces the interventionism of the two iron legs seen in the Statue, where the first iron leg was the British Empire, and the second iron leg is/was the US Dollar Hegemonic Empire, that commenced with the establishment of the US Fed in 1910 to 1913.

The very linchpin in the Economy of God, Ephesians, 1:10, is the nation of Greece, GREK, as the sovereign Lord God, has designed it and a collection of Mediterranean Sea states, known as the PIGS, for their profligacy, to be the beachhead for the rise of the Beast Regime of Revelation 13:1-4. The National Bank of Greece, NBG, continued strongly lower, taking Greece, GREK, strongly lower as Zero Hedge reporgts Greek bonds plunge as ruling coalition partner pulls out, withdrawing ministers. A FT reports IMF to suspend aid payments to Greece unless bailout hole plugged. And as Ambrose Evans Pritchard Communicates that the EU has become a diktat union imprisoning the periphery PIIGS in a debt union by mandaiting bailins and by bearing the onerous burden of bank recapitalization.   Another shameful day for Europe as EMU creditor states betray South; the Cyprus “template” for banking crises is to be eurozone policy for other countries after all.

It is clearly evident that during the week ending June 22, 2013, God’s word of prophecy has been fulfilled as the political governance and economic viability of Greece has collapsed. Under Liberalism, Jesus Christ, throught Dispensation, Ephesians, 1:10, gave the Greeks, the most toxic form of governance ever to have been conceived, one of clientelism and anticpmpetitivism, for all practical puposes Communism. Now under Authoritarianism, Greece is a failed democratic nation state and has no national sovereignty to obtain seigniorage for its fiscal needs; it is a beggar nation receiving seigniorage aid from northern EU lords. It is a client state of Eurozone regional governance headed by nannycrats in the Brussels and Berlin. Those living in Greece are debt serfs, living in Euro debt land. Under Authoritarianism, there be no free land anywhere. Credit was a way of life under Liberalism; now debt servitude, is the way of life under Authoritarianism.   According to God’s Providence, Greece is rapidly leading the way forward in regionalization, where a EU Federal Superstate will be the example and standard for regional governance, totalitarian collectivism, and debt servitude.

The Beast will be manifesting in China, YAO, as well, as the PROC Central Bank morphs from being a provider of credit to being monster of debt servitude, turning what once was credit on its head, as the shadow banking system, comes out of concealment and is utterly smashed causing misery and great suffering to all of China’s inhabitants.

 

And in the US, the US Federal Reserve, having been slain at the Ben Bernanke News Conference of June 19, 2013, the ten toed kingdom is coming forth as a behemoth that is going to be a statist public private partnership, where a monetary pope rules over monetary cardinals, that is a council of so called wise men, from industry, banking, and commerce, to manage the factors of production and oversee the economy.

Cleary God presents regionalism, specifically regional empires, in both Daniel 2:25-45, as well as in Revelation 13:1-4, as the economic and political driver of mankind’s experience.  God’s Son, Jesus Christ, is in dispensation, that is in the administrative oversight of all things economic and political, Ephesians 1:10.

Under Liberalism, Jesus promoted bankers in democratic nation states waiving magic wands of credit creation, in what Doug Noland termed wildcat finance.  But now under Authoritarianism, He is installing nannycrats in each of the world ten regions, yielding wands of debt servitude, in what I term wildcat finance, where only the most fierce and wily rise to be the top dog ruler and top dog banker.

 

So it’s out with the old two empires, and in with the ten new empires.  In the North American continent, it will be called the North American Union, that is the NAU, or what I call CanMexAmerica, that being the amalgamation of Canada, Mexico, and the United States of America. In Europe, it will be what some call the EU Superstate, or what Angela Merkel has called the New Europe, or what Robert Wenzel of Economic Policy Journal once termed a One Euro Government. Here’s the climax clincher, that is the grand economic promise of God. The Apostle John presents in Revelation 17:12, that there will be ten kingdoms: “The ten horns of the beast are ten kings who have not yet risen to power. They will be appointed to their kingdoms for one brief moment to reign with the beast.”

Credit and currencies are both based upon inflationism and trust in the ability of the debtor to repay the lender. Libealism’s fiat money has been based upon confidence in the Banker regime of central banks, such as the US Federal Reserve, and the Bank of Japan, Investment Banks, such as JPM, Regional Banks, such as RF, the Too Big To Fail Banks, such as BAC, Asset Managers, such as BLK, and Stock Brokers, such as TROW, of democratic nation states.

Jesus Christ, working in the Economy of God, that is dispensation for the completion of every age, epoch, era, and time period, has completed the trust in fiat investments.

Now, under destructionism, and the inability of the debtor to repay the creditor, people will come to trust in regional nannycrats and place confidence in statist public private partnerships of Authortarianism’s diktat money system, for regional security, stability, and sustainability.

Mike Mish Shedlock writes Rehn requests, In return for granting Spain an extension on meeting 3% deficit threshold of the stability act, Vice President of the Commission responsible for Economic Affairs, Olli Rehn, said Wednesday it is “crucial” that Spain and other countries that will benefit from an extension to correct its excessive deficit in return accelerate reforms to improve competitiveness. Specifically Rehn requests, 1) Pension reform, 2) Labor reform review, 3) Increase in the VAT on certain products and fuels, and 4 Elimination of income tax deductions on individuals and corporations. The above via google translate from La Vanguardia. I can certainly agree with point number one. But what’s with a “review” on labor reform rather than action? Points three and four are inane. Demanding tax hikes in the middle of a depression is economic suicide. Yet, Rehn wants a hike in the VAT and tax hikes on individuals and corporations. Spain (the world in general) needs lower taxes and less government, not the opposite.

Ambrose Evans Pritchard communicates that the EU has become a diktat union imprisoning the periphery PIIGS in a debt union by mandaiting bailins and by bearing the onerous burden of bank recapitalization.   Another shameful day for Europe as EMU creditor states betray South; the Cyprus “template” for banking crises is to be eurozone policy for other countries after all. Anybody with serious banking exposure to any EMU state on the front line of Europe’s macro economic crisis now knows what to expect. The deal reached by EMU finance ministers on the use of the bail-out fund (ESM) to recapitalise distressed banks makes clear who will in fact suffer the real losses: first shareholders, then bondholders and then deposit holders above €100,000. They stand to lose almost everything, as we saw with Laiki in Cyprus.

The states that are already in trouble will have to carry most of the burden of recapitalising banks, pushing them over the edge into actual insolvency. They will have to come up with the money needed to raise capital ratios to 4.5pc of assets. Then come the private haircuts, which of course risk devastation for the host country, and the collapse of investor confidence. Only then does Europe step in to share part – not all – of any further recap needs. The original promise of an ESM blanket to cover “legacy assets” has come to almost nothing. The vassal states may possibly get some relief later on the past losses from the EMU credit bubble, but only as a reward for good behaviour and on a case by case basis.

“Legacy losses will be used as a disciplinary device: Greece, Spain and Ireland will now have to tussle, beg and plead for debt relief regarding the funds already borrowed from the EFSF-ESM for their banks,” said Dr Varoufakis. “As the grand total for all bank recapitalisations, past and future, is to be limited to the puny sum of €60bn, Europe’s peripheral nations can only at best receive a tiny amount of debt relief; enough to ensure that Ireland, Greece and Spain are competing against one another as to which proud nation will be a better ‘model prisoner’ than the rest.” Indeed, it is an abject spectacle. Dr Varoufakis rightly calls it a “a truly shameful day for Europe”. The creditor states of the North are still calling all the shots, and presumption remains that the countries in trouble are victims of their owns failures, fecklessness and folly.

There is no recognition that this disaster was a joint venture, caused by the dysfunctional structure of monetary union; nor that Northern creditors and their banks share half the blame for flooding the South with cheap credit; nor that the ECB played a huge part in stoking unstable credit bubbles in Club Med and Ireland by gunning M3 money supply at double-digit rates to help nurse Germany through its slump. Nor is there even a sensible analysis of what is needed to solve the crisis.

One can understand why Germany, Holland, Finland and Austria do not wish to accept any mutualisation of debt, or admit to their own taxpayers that the euro project costs real money. But what sticks in the craw is the relentless propaganda by EU leaders that they will stand shoulder to shoulder in solidarity with fellow members of EMU, and that they will do whatever it takes to uphold a project upon which the peace of Europe allegedly depends. Quite obviously they will do no such thing.

What sticks, too, is the oft-repeated claim that Anglo-Saxon outsiders failed to understand the degree of pan-European political will behind the EMU project. This cliche is the opposite of the truth. Anglo-Saxon investors believed so gullibly in the total sanctity of EMU that they were willing to buy Greek 10-year bonds for a wafer-thin margin of just 26 basis points (bps) over Bunds (and Spanish debt for just extra 4bps). They believed the dream, too. The reason why the EMU crisis metastasized – when debt levels were lower than in the US or Japan – was the horrible discovery that Germany might not stand behind the project after all, and certainly would not stand behind Greece. Those who stayed to the end lost 75pc (de facto) in Greek haircuts.

(Mr Pritchard goes on to relate the causes of the breakdown of governance in Greece. These include the inability to come up with a free market business plan for the Greek TV Broadcaster ERT as well as the inability to provide a reasonable level of funding for the health care system, and the inability to dismiss enough state govenment workers to bring the Greek fiscal budget in line with the ongoing seigniorage aid from the IMF.  It is clearly evident that Greece is politically unable to make the transition from what amounts to a communist state to a modern capitalist government. Even if it could do so, the capital for fiscal spending simply is not there, and will not be there, as credit liquidity and credit funding of Treasury Debt is not present, as the credit cycle is now going downhill, meaning that there is no funding available with interest rates jumping higher every day and yield curves inverting; the inversion of yield curves is at the heart of the death of credit. Yes credit, currencies and wealth actually died, May 24, 2013, as the Interest Rate on the US Government Note, ^TNX, rose to 2.01%, and the 10 30 US Soveign Debt Yield Curve, inverted and steepened, as is seen in the Steepner ETF, STPP, steepening.  And Jesus Christ operating in Dispensation, Ephesians 1:10, put the nails in the money’s coffin and literally thrust it into the Pit of Financial Abandon on June 22, 2013, when the bond vigilantes called the rate higher to 2.51%, and the currency traders successfully sold Major World Currencies, DBV, and Emerging Market Currencies, CEW, short, in their ongoing currency war on the world central bankers, with the result being that the US Dollar, $USD, rose to close at its 50 day moving average of 82.60.

Doug Noland writes The U.S. dollar index gained 2.0% to 82.32 (up 3.2% y-t-d). For the week on the downside, the Norwegian krone dropped 5.6%, the Mexican peso 4.5%, the Brazilian real 4.0%, the New Zealand dollar 3.7%, the Australian dollar 3.7%, the Japanese yen 3.7%, the Swedish krona 3.5%, the Canadian dollar 2.7%, the South Korean won 2.4%, the South African rand 2.1%, the Singapore dollar 1.9%, the British pound 1.8%, the Danish krone 1.7%, the euro 1.7% the Swiss franc 1.4% and the Taiwanese dollar 0.9%.

Milton Friedman’s and the Bretton Woods’ fiat money system is dead; it is a relic of the former paradigm of Liberalism; and has been replaced by the diktat money system of Authoritarianism. Evidence of diktat money, and thus the diktat money system is the EU Finance Ministers deal on bank bailouts of June 21, 2013, as reported by Ambrose Evans Pritchard).         

(The outcome of the politica convulsions and collapse of Greek government, as well as any reasonable means of providing for fiscal spending will be anarchy. Such might please anarcho capitalists who would love to provide a free market economy, as described by Wikipedia in its coverage of Anarcho Capitalism; but, Jesus Christ, operating in the political and economic plan of God for the completion and fullness of every age, epoch, era and time period, Ephesians 1:10, has by both His Universal Sovereignty and fate, precluded any libertarian model anywhere in the world, as God’s design and purpose for the completion of the current times is the paradigm of Authoritarianism to replace Liberalism.

The mass extinction of investors commenced on the failure of credit and currencies.  And to assure that mankind be ruled by the Beast Regime of Revelation 13:1-4, and not anything else that praxeological “human action”, that is by any voluntary way, Jesus Christ has unleased the Four Horsemen of the Apocalypse presented in Revelation 6:1-8.  The White Horse signifies the transfer of sovereignty from democratic nation states to regional governance. The Red Horse signifies violence. The Black Horse signifies increasing famine and economic death. The Pale Green Horse signifies chaos.

The greatest economist of all time was the Apostle Paul, who through his epistles communicated that in God’s Economy, that is in God’s Dispensation, there is no choice; rather all things are by fate, 2 Corinthians 5:17-18,. Under Dispensationalism, that is in Dispensationalist idelogy, there is only fate, that is destiny working in all things.  Choice is simply an illusion, or better said delusion sent to the fiat philosophical or religious mind, which works in self will worship, Colossians 2:23. Way Truth Life Ministry asks, What is will worship? It is the constant effort of man to accomplish his own will, whether for good or for bad.).

As for Greece, it is getting uglier by the day as Open Europe puts it Greek Coalition row over public broadcaster gets nastier by the day in Greece. The Democratic Left has pulled out of the coalition in protest over the shutdown of the ERT public broadcaster, reducing the Samaras majority to three seats. The privatisation programme is ruins. The National Healthcare Provision has a funding gap of €1bn. Not nearly enough public employees have been sacked to meet the Troika demands. And now the IMF is threatening to pull out altogether unless the eurozone comes up with the €3bn to €4bn needed by next month needed to comply with bail-out terms. It may not really matter that Greek bond yields are back above 11pc.  Peter Schaffrik from the Royal Bank of Canada says “The yield increase in the peripherals is becoming alarming,” Indeed so. Nothing has been solved. The eurozone’s creditor powers are playing a cruel game, doing just enough to keep this wretched entreprise alive and to protect their own commercial interests, but not enough to solve the crisis. The torture is endless. The cynicism plain to see. And the willingness of victim states to accept their plight so lamely is simply staggering.

(The level of trust in the power of the Authoritarianism’s Beast regime will be so great that the Apostle John in Revelation 13:3-4 foretells, “All the world marveled and followed the beast. So they worshiped the Dragon, who gave authority to the beast; and they worshiped the Beast, saying, “Who is like the Beast? Who is able to make war with him?”  … yes, sad, but true, people’s trust in regional governance will be so great, that it will actually constitute worship).

IV) … News of the Global Security State.

Andres P. Napolitarno Fidelity to the Constitution when we need it   … Steven Greenhut NSA scandal separates liberty lovers from poseurs  … John Pilger Understanding the latest leaks is understanding the rise of a new fascism … Zero Hedge  NSA secret warrantless spying rules revealed.            

V) …  God has appointed a harlot to be sovereign over mankind for the entire duration of its economic and political experience: the whore of Revelation 17:-5 is the seven spiritual kingdoms that God has appointed to prostitute mankind.

Biblical prophecy teaches that regionalism is an inevitability.  Political and economic regional groups will emerge to create the ten toes in King Nebuchadnezzar‘s dream, which is detailed in the 2nd and 7th chapter of the Book of Daniel, which also highlights that throughout history there has been a  merging of national powers for world dominance all the way up to our present time.  Nebuchadnezzar’s dream prophecies a revived Roman Empire.

Following up on Daniel, the Apostle John wrote from prison, on The Isle of Patmos about 90 AD, the Revelation Of Jesus Christ, which foretells those things which must shortly come to pass: meaning a series of events that once they begin, fall quickly into place one right after the other.

Bible prophecy of Revelation 13:1-4 tells of a sovereign system which directs all of mankind’s activities through seven institutions and ten regions of global governance; the regions replace sovereign nations and their constitutions; and institute principles of global governance.

The sevenheads symbolize mankind’s seven institutions: 1) Education, 2) Finance, Commerce and Trade, 3) Body Politic, 4) Military, 5) Religion, 6) Media, 7) Science and Technology. The ten horns symbolize ten regions of global governance called for by the The Club of Rome in 1974.

The Apostle John writes of a woman in Revelation 17:1-5:  “And he carried me away in spirit to a desert; and I saw a woman sitting upon a scarlet beast, full of names of blasphemy, having seven heads and ten horns …and upon her forehead a name written, Mystery, great Babylon, the mother of the harlots, and of the abominations of the earth.”

The seven heads are seven mountains and the ten horns are ten regions of governance.

Seven hills is a designation for Rome, as it is built upon seven hills. The woman flows out of Rome; it emerges today as a revived Roman Empire, that is a United States of Europe, and morphs into a one world government System, Revelation 13:1-4, led by the Sovereign, Revelation 13:5-10, and a one world economy, as well as a one world religion, directed by the Seignior, Revelation 13:11-18, overseeing ten regions of global governance. It will emerge as a Babylonia system to enslave the entire world

Seven heads = seven mountains = seven kings = seven kingdoms

The woman adorned in scarlet of Revelation 17:3 is the seven kingdoms that God has appointed to rule mankind; the first five are found in Daniel 2:30-44, the sixth is found in Daniel 7:7 and also Revelation 13:1-4, the seventh is found in Revelation 11:8 and Revelation 17:18.

1) First, Babylonian, Gold

2  Second, Medo-Persian, Silver

3) Third Greek, Bronze

4) Fourth, Roman, Iron

5) Fifth, Revived Roman, European: Iron And Clay; this morphs into the next kingdom

6) Sixth, Fully formed World Government, Daniel 7:7 and Revelation 13:1-4. This beast is an alliance of global corporatism and global governance.

7) Seventh, Jerusalem, Revelation 11:8, and Revelation 17:18, will be the great city or capital city. The Sovereign will set up his palace tents or home in the holy mountain, Mount Zion, which is located in Jerusalem as Daniel relates: “But news from the east and the north shall trouble him; therefore he shall go out with great fury to destroy and annihilate many. And he shall plant the tents of his palace between the seas and the glorious holy mountain; yet he shall come to his end, and no one will help him.” Daniel 11:44-45.

The Temple in Jerusalem will be where the Sovereign declares himself to be God as Paul relates: “Let no man deceive you by any means: Let no one deceive you by any means; for that Day will not come unless the falling away comes first, and the man of sin is revealed, the son of perdition, who opposes and exalts himself above all that is called God or that is worshiped, so that he sits as God in the temple of God, showing himself that he is God.” 2 Thes 2:3-4.

The Apostle John relates that Jerusalem will be destroyed by a nuclear holocaust, as the nations of the world, out of hatred for global corporatism, global governance and the rule of the Sovereign, turn their weapons on it; this event which will be seen by sailors for hundreds of miles: “For in one hour such great riches came to nothing. Every shipmaster, all who travel by ship, sailors, and as many as trade on the sea, stood at a distance and cried out when they saw the smoke of her burning, saying, ‘What is like this great city?” Revelation 18:17-18

In related reading, Bible teacher Michael G. Mickey in The Prophecy Blog article The Fatherland of Peace, relates: “the groundwork is being laid, arguments being presented, for a more powerful, united European superstate (The United States Of Europe) to take shape before our very eyes. When it arrives – and I believe we will see it in the not-too-distant future – it will not be the kind of entity one views as a so-called ‘Fatherland of peace, (as Herman Van Rompuy describes it).

I have to agree as the evolving European superstate will morph into in  brutal world-wide governance described by Daniel: After this I saw in the night visions, and behold, a fourth beast, dreadful and terrible, exceedingly strong. It had huge iron teeth; it was devouring, breaking in pieces, and trampling the residue with its feet. It was different from all the beasts that were before it, and it had ten horns. Daniel 7:7.

The Apostle Paul communicated in Ephesians 1:10, that Jeus Christ, the Son of God, is The Dispensary of all things, giving faith to the appointed and disbelief to the reprobate. In God’s Economy, He terminated the realm of Liberalism on May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%.  Now, Jesus Christ has pivoted the world’s economy and political experience into the real of Authoritarianism. Through Dispensational Economics, it is jugdement for the fiat, but mercy for the elect who keep Christ’s word of endurance, and do not shrink from His Name, that is His presence and authority, Revelation 3:8-10.   

VI)  … News of The Ezekiel 38 War                                                                                             Recently I wrote, Turkey is at the crossroads, economically, politically and biblically, communicating that the global confligration foretold in prophecy as the Ezekiel 38 War, where many nations come against Israel, and they triumph with miraculous help from God. is imminent. Now, the Ron Paul Institute reports Obama signals start of US War in Syria.  And Economic Policy Journal Posts Don’t arm Syrian rebels; they are cannibals, Putin warns. The Syrian rebels are “cannibals” and should not be given arms, Russian President Vladimir Putin said on Sunday. “I think you will not deny that one does not really need to support the people who not only kill their enemies, but open up their bodies, eat their intestines, in front of the public and cameras,” Putin said at a joint press conference in London with British Prime Minister David Cameron. Putin was referring to video footage posted on the Internet last month of a rebel fighter eating the heart of a government soldier. “Is it them who you want to supply with weapons?” he said, adding that this behavior does not correspond with international humanitarian norms. And AFP reports Saudi Arabia wants missiles for Syrian rebels. And Washington Post reports Obama and Putin fail to resolve differences over Syria. And Erica Ritz writes in The Blaze No one is prepared for what’s coming. And Prophecy News Alerts Syria will be armed with weapons that have never been seen before in the Middle East, Russia says. And Scott of Prophecy Update Blog writes The continuing rise of MaGog and Russian warships, marines, head to Syria.  

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With Credit, Stocks, Commodities, And Currencies, Having Failed … People Will Increasingly Trust In The Diktat Of Regional Governance And The Diktat Money System To Provide For Economic Security, Stability, And Sustainability

June 17, 2013

Financial Market report for the week ending June 14, 2013

 

I … Introduction

The only number that matters is the Interest Rate on the US Government  Note, $TNX, its jump higher in May 2013, constituted a hard frost, that is a quick freezing, causing the death of fiat money.

 

Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies.

 

The death of fiat money came with a parabolic steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the weekly chart of the Steepner ETF, STPP, rising parabolically in value, May 2013. The death of money means the decline of nation state GDP and global economic trading.

 

This weeks financial market action evidences that Jesus Christ acting in dispensation, that is in administrative management of the household of God, Ephesians 1:10, fully completing Liberalism’s democratic nation state, banker regime, and the age of investment choice, and introducing Authoritarianism’s regional governance, totalitarian collectivism, beast regime and age of diktat, as foretold in bible prophecy of Revelation 13:1-4.  

 

II … The failure of Liberalism’s money is seen in this week’s financial market trading.    

 

II A) … On Monday June 10, 2013, the money of Liberalism is seen failing, as global debt deflation gained traction.

Bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, jumped higher yet to 2.21%, turning Aggregate Credit, AGG, lower once again. Emerging Market Bonds, EMB, fell strongly lower on falling Emerging Market Currencies, CEW.  Credit Investments traded lower across the board, with the longer duration trading lower than their shorter maturity peers, as yield curves steepend acros the whole range of debt. Municipal Bonds, MUB, traded sharply lower.      

 

World Real Estate, DRW, and Yield Bearing Instruments based in the Emerging Markets, EEM, such as Brazil Financials, BRAF, India Earnings, EPI, and Emerging Market Dividend, DGS, traded lower.

 

Currency traders sold currencies short once again, continuedtheir successful currency war against the world central banks, with the India Rupe, ICN, the Japanese Yen, FXY, Emerging market Currencies, CEW, the Brazilian Real, BZF, and the Australian Dollar, FXA, traded lower.

 

Competitive currency devaluation is seen in China, YAO, and the Emerging Markets, EEM, trading lower, on a lower Chinese Yuan, CYB, and lower Emerging Market Currencies, CEW.  Emerging Market Infrastructure, EMIF, traded lower. China Industrials, CHII, China Financials, CHIX, China Minerals, CHIM, and China Real Estate, TAO, traded lower.  India, INP, India Infrastruacture, INXX, and India Earnings, EPI, fell strongly lower on a falling India Rupe, ICN.  Brazil, EWZ, Brazil Infrastructure, BRXX, and Brazil Financials, BRAF, traded lower on a falling, Brazilian Real, BZF.  

 

Asia nations, EPP, trading lower included Indonesia, IDX, Malayasia, EWM,  Singapore, EWS, South Korea, EWY, Thailand, THD, the Philippines, EPHE, and Australia, EWZ.  Egypt, EGPT, Greece, GREK, and Russia, RSX, traded lower.  Liberalism’s frailest of nations, Indonesia, IDX, and Egypt, EGPT, are suffering the greatest deflation and investment destruction.    

 

The trade lower in Australia, EWA, KROO, and its yield bearing ETF, AUSE, defines the failure of the monetary policies of world central banks, such as the US Fed, the Bank of Japan, and the Peoples Republic of China, to provide stimulus for ongoing world economic growth and trade.

 

The economic and political paradigam of Liberalism featured Inflationism, but Authorianism features Destructionism. With the Interest Rate on the US Treasury Bond, ^TNX, being called higher by the bond vigilantes, the former construct is now seen as an age of fiat asset inflation, but today’s reality is one of fiat asset deflation.  

 

The Milton Friedman Free To Choose Floating Currency died with the rise of the US Dollar, $USD, UUP, beginning in 2013, causing derisking and deleveraging out of currency carry trade investments world wide, but especially in the Emerging Markets, EEM, and now in Asia, EPP,  on a sinking Australian Dollar, FXA.  

 

Investors are no longer trusting in the monetary policies of Global ZIRP, and as a result Liberalism’s  currencies are no longer a trustworth means of facilitating and sustaining economic activity.  People will increasingly trust in diktat and the diktat money system as the world central bank monetary policies and nation state currencies fail.

 

The diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW.

 

With the failure of Liberalism’s fiat money, there be many Angry Byrds. The consolation is that the money of Authoritarianism, that is diktat money, is beginning to win people’s faith and trust, a case in point being that those in Cyprus are now trusting in the ECB’s mandates for regional security, stability, and sustainability.     

 

II B) … On Tuesday, June 11, 2013, commodities and stocks gapped down at market open on the failure of Kuroda Abenomics.  

The market turned Risk OFF, OFF, and Volatility, ^VIX, TVIX, rose in the beginning of an Elliott Wave 3 up pattern, as currency traders blasted the Japanese Yen, FXY, higher to strong resistance at 102.99, and the Euro, FXE, higher as well to close at strong resistance at 131.92; which pushed the world’s leading commodity currency, the Australian Dollar, FXA, and the US Dollar, $USD, UUP, lower. MSN Finance charts shows that since May 3, 2013, the Australian Dollar, FXA, has lost 8%, causing disinvestment a 15% disinvestment out of Australia, EWA, as well as out of high yielding Australia Dividends, AUSE, and a 25% disinvestment out of Australia Bank, WBK.  

 

Reuters reports Stocks slump after Bank of Japan disappoints, stoking stimulus jitters. Japan, EWJ, and Japan Small Caps, JSC, both traded strongly lower, on the higher Yen. FXY.  Not only did the Nikkei, NKY, trade lower; but bond vigilantes called the Interest Rate on the Japanese 10 Year Government Debt higher, causing its inverse, JGBS, to rise in value.

 

Global debt deflation is underway, as the monetary policies of Liberalism’s Bankers, Ben Bernanke, Mario Draghi, and Haruhiko Kuroda are failing, and in fact caused the death of the fiat money system on May 24, 2013, when carry trade investment, ICI, and Junk bonds, JNK, trade sharply lower.  Global  ZIRP, has failed, and out of today’s rising interest rates, there is a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3.  Authoritarianism’s new leaders, specifically statist nannycrats, will provide regional governance economic policies, to establish regional security, stability and sustainability, and in so doing establish the diktat money system for one’s trust.  

 

Action Forex mid-day chart shows the EUR/JPY at 128.507, this is seen in the Stockcharts.com chart of FXE:FXY, closing strongly lower, forcing delveraging and derisking out of currency carry-trade investment world wide, especially the S&P High Beta Stocks, SPHB, Semicondutors, SMH, and Global Industrial producers, FXR.   

 

Briefing.com reports Global interest rates continued rising overnight with peripheral European yields coming into focus. In particular, Greece saw its 10-yr yield spike over 100 basis points following the country’s inability to privatize natural gas producer DEPA, which sent Greece, GREK, Ireland, EIRL, Italy, EWI, Spain, EWP, Finland, EFNL, and the Netherlands, EWN, trading lower.  Investment death is seen in the ongoing Yahoo Finance Chart of EWN,EFNL,EWD,NORW, and EIRL. Peru, EPU, fell strongly lower on today’s lower Copper, JJC, price, leading the Emerging Markets, EEM, and Emerging Market Leaders, PIE, lower. Russia, RSX, ERUS, fell strongly lower on lower Commodity, DBC, prices, which sent Emerging Market Infrastructure, EMIF, tumbling lower.

 

Asia excluding Japan, EPP, specifically Thailand, THD, Philippines, EPHE, Indonesia, IDX, IDXJ, Vietnman, VNM, Australia, EWA, KROO, Singapore, EWS, EWSS, Europe, VGK, led the US, VTI, and World Stocks, VTI, lower.   

 

Nation Investment, EFA, and Small Cap Nation Investment, IFSM, traded lower as the Australian Dollar, FXA, and as the US Dollar, USD, UUP, traded lower, and as both the Euro, FXE, and the Yen, FXY, rallied higher.  Major World Currencies, DBV, traded lower largely on the lower US Dollar.  

 

Falling Chinese Financials, CHIX, turned China, YAO, China Infrastructure, CHXX, and China Industrials, CHII, China Small Caps, ECNS, and Hong Kong, EWH, EWHS, lower.

 

Competitive currency devaluation coming from higher interest rates has decimated the banking infrastructure of the nations of Argentina, ARGT, on lower banks, BMA, BFR, BBVZ, and Brazil, EWZ, EWZS, on lower banks, ITUB, BBDO, SBR, BBD, and India, INP, SCIN, on lower banks, IBN, HDB. With hollowed out banks, these countries stand as tomstones on Liberalism increasingly desolate landscape. Under Authoritarianism, diktat will establish new banking, economic, and political infrastructure; this infrastrucutre will consist of statist public private partnerships between regional government superstructures and corporations.

 

I do not call this particularly good news, unless one believes that the purpose of this is to direct one’s hopes out of fiat economic life, and into spiritual economic life in Christ, where one perceives that Christ is dispensing Himself into the believer, completing and fulfilling his life, Ephesians 1:10, so he can experience the divine nature of godliness, that being peace and joy, 2 Peter 1:1-11.

 

Liberalism’s Banker Regime provided the freedom of investment choice establishing a moral hazard based prosperity. Authoritarianism’s Beast Regime provides the diktat of capital controls, new taxes, and debt servitude, establishing austerity as a way of life.  Bible prophecy of Revelation 13:3, foretells that out of Euoprean sovereign insolvency and banking system collapse, regionalism will replace globalism, crony capitalism, as well as socialism.  The Eurozone will be the defining model of totalitarian collectivism, where countries will exist as hollow moons revolving around both Berlin and Brussels, where sovereign nannycrats rule all.  While Greeks cannot be Finns or Germans, all will be one living in a ditkat union, with centralized fiscal, banking, manufacturing, and economic policies.  Given Greek Bailout I, II, and III, as well as the Cyprus Bailin, those living in the EU are no longer citizens of sovereing nation states, but rather residents living in a region of economic governance; welcome to the New Europe.     

 

Financial Investments, IXG, traded lower, as is seen in the ongoing Yahoo Finance chart of IXG, KCE, KIE, IAI, RWW, KRE, EUFN, CHIX, EMFN, FEFN, these include Investment Bankers, KCE, such as JPM, Banks, Insurance Companies, KIE, Stock Brokers, IAI, such as SCHW, ETFC,  the Too Big To Fail Banks, RWW, such as BAC, C, Regional Banks, KRE, such as RF, STI, PBCT, HBAN, European Financials, EUFN, such as IRE, DB, Chinese Financials, CHIX, Emerging Market Financials, EMFN, and Far East Financials, FEFN, Asset Managers, ASMA, such as BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN and BEN. The trade lower in Financials, in particular, Regional Banks, KRE, drove the credit sensitive US Small Cap Stocks, the Russell 2000, IWM, lower.  

 

Most every equity sector traded lower; these included

Uranium Miners, URA, Rare Earth Miners, REMX, and Copper Miners, COPX, which turned Industrial Miners, PICK, lower, which turned Coal, KOL, and Steel, SLX, lower.  

Solar Energy, TAN, SCTY, CSIQ, JASO, YGE, FSLR, HSOL, TSL, SPWR, ASTI, which tuned Semiconductors, SMH, BRCM, TXN, AMAT, ONNN, TSM, lower.

Gold Mining, GDX, GDXJ and Silver Mining, SIL, SILJ, SSRI

Energy, XOP, PSCE and Energy Service, OIH, IEZ

Small Cap Pure Value, RZV

Gaming, BJK

US Infrastructure, PKB

Homebuilding, ITB. The sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, is now turning home builders and home improvement retailers lower; the business cycle in home sales is being completed, meaning fewer home sales, fewer home improvements, and fewer new home construction starts. Bespoke Investment Group writes At just over 4%, mortgage rates are obviously low compared to historical levels, but they’re a lot higher than they were just a month ago! To grasp just how much of a shock to the system the rise in mortgage rates has been, we’ve just seen the biggest month over month spike on a percentage basis since at least 1998.  Below is a chart showing the rolling month-over-month percentage change of the 30-year fixed mortgage rate.  Last Tuesday, the rate had jumped more than 21% (3.42% to 4.16%) over the past month.  This took out the prior high of 20% seen back in mid-2003.

 

Jesus Christ operating in the economic and political plan of God, Ephesians 1:10, has brought Libealism’s age of clean energy evelopment to its fulfillment and completion. With today’s trade lower in Clean Energy, PBD, and the Agence France Presse repors Siemens to scrap 1,000 energy jobs, the age of investment and development and use of alterntive energy is over.  News Track India reports India can follow Japan’s solar energy harnessing model to end power shortage. But I comment that it does not have nor will it have the money for solar energy infrastrucutre development given its high rate of inflation and banking system collapse with higher interest rates and falling India Rupe currency.    

 

Yield bearing investments are the hardest hit by higher interest rates; today these incluced EMFN, BRAF, EPI, EUFN, DRW, TAO, DGS, DLS, EDIV, SEA, PSP, DBU, AUSE, also, FNIO, KBWD, REM, REZ, turned IYR, and ROOF, lower.  Higher interest rates mean lay offs and diminishing capital improvements at bond intensive infrastructure employers such as Utilities,  DBU.

 

Aggregate Credit, AGG, traded unchanged. Credit investments trading lower included EMB, BABS, PICB, BLV, LQD, JNK. Business Insider reports This is increasingly looking like an Emerging Market Bond meltdown. Dollarization of Emerging Market bonds, is a failed Liberalism credit scheme; emerging market countries will no longer be able to fund fiscal needs, provide for infrastructure development; means of government financing will have to come from inside the country and come from new taxes and integration of government, industry and commerce.

 

Commodities, DBB, USO, BNO, SLV, and GLD, traded lower, turning Commodities, DBC, lower. Silver is proving not, repeat, not to be an investment metal, rather, its nature as an industrial metal and risk investment is being revealed, as Silver Miners, SIL, SILV, and SSRI, traded, along with Gold Miners, GDX, GDXJ, lower.  

 

With the US Dollar, $USD, UUP, trading lower to close at $81.70, the currency which has served as the International Reserve Currency, that is as the backbonme of globalism, has been broken.  The debt monetization policies of the world central banks has finally soured investment trust in both credit and equity investments, as well as currencies.  There be no “money good” investment anywhere; not in Commodities, DBC, nor in Credit, AGG, nor in Stocks, VT.

 

Business Insider reports Government bonds around the world are getting destroyed today.  The monetary sovereignty of liberalism’s democracies and the international banking system no longer provides seigniorage, that is moneynes; and most significantly, the basis of power for ongoing US Dollar Hegemony has been compromised.   

 

Some might call for a new Bretton Woods to stablize investments; but Jesus Christ is at the helm of the economy of God, Ephesians 1:10 introducing regionalism. He has released the four horsemen of the apocalypse, Revelation 6:1-8, to termniate the domination of the US as a global super power, and to assure that authoritarianism rule in ten zones of regional governance and totalitarian collectivism, as presented in bible prophecy of Daniel 2:25-45 and Revelation 13:1-4.

 

IIC) … On Wednesday June 12, 2013, the Interest Rate on the US Ten Year Note, ^TNX, traded higher to 2.23%, pushing the 10 Year US Govenment Bond, TLT, down below support. Both Junk Bonds, JNK, and Aggregate Credit, AGG, traded strongly lower again today.

 

Bloomberg reports Individuals pull most money from bond mutual funds since 2008. Investors pulled $10.9 billion from U.S. bond mutual funds in the past week, the biggest redemption since October 2008. The Google Finance Chart of Aggregate Credit, AGG, and Emerging Market Bonds, EMB, shows that since May 1, 2013, Aggregate Credit has fallen strongly losing 3%, and that the Emerging Market Bonds have fallen even more strongly losing 9%. Taken together, the Bloomberg report and the Google Finance Chart communicate the failure of credit, specifically the loss of trust in the monetary policies of the world central banks to stimulate global growth and trade, as well as trust in the debtor to repay the lender.  Humanity is passing through an epic economic and political point in time.  

 

The death of Liberalism’s credit and currencies is seen in the Google Finance Chart of Aggregate Credit, AGG, together with the Indian Rupe, ICN, the Brazilian Real, BZF, the Australian Dollar, FXA, and the Emerging Market Currencies, CEW.  The death of Liberalism’s money, that is wealth, is seen in the Google Finance Chart chart of World Stocks, VT, India, INP, Brazil, EWZ, and Australia, EWA.  Debt deflation, that is currency deflation, has finally come of age, through the failure of the world central bank policies of Global ZIRP and ongoing debt monetization, with the result that Liberalism’s Milton Friedman Free To Choose floating currency banker regime no longer provides seigniorage, that is moneyness, of investment choice.  Now, Authoritarianism’s diktat beast regime is starting to provide seigniorage of diktat. Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, terminating the fiat money system and introducing the diktat money system.

          

Tyler Durden of Zero Hedge writes “Tapering” From Currency-Wars To Interest-Rate-Wars and relates that Citi’s Steve Englander posts EM and DM bond yields have relatively exploded in recent weeks. The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So, Englander adds, it is fear, not optimism that is driving bond markets.

 

In Figure1, since May 1 the median increase in 10year local bond yields in 47 major EM and developed markets (DM)  is 39bps. Among major EM economies (light blue) it  is 83bps; among major DM (dark blue) economies it is 29bps. The US 10year Treasury yield increase (red)is only at the median of developed economies and well below the overall median. In both EM and developed economies, the fat tail of rate increases is to the upside, so average increases are even higher. The paradox is that the run-up in US interest rates, which is arguably the primary driver of these global rate increases, is well below  the average and median globally.  

 

Even if we assume that the GDP-weighted average increase in yields is about 30bps, it represents a significant tightening in global economic conditions. The inflation picture has not changed materially in the last six weeks; if anything, it may be more benign than earlier thought. On a global level, exchange rates cancel out and do not affect the effective stance of monetary conditions to a good first order approximation. We may argue that the US rates increase is justified by the improved US economic outlook, and some will debate even that.

 

However, the US represents about 20% of global GDP, and outside the US there have been very few calls for monetary policy tightening. As a consequence roughly 80% of the world has experienced a monetary policy tightening that was neither expected nor desired.

 

There is a rule of thumb  that 100bps of tightening at the short end translated into 20-30bps of tightening at the long end. If we invert that rule and use 30bps as the global average monetary tightening at the long end, then we have experienced the equivalent of 90-150bps of monetary tightening at the short end. If, given the skew, the effective increase at the long is closer to 40bps, we are looking at the equivalent of 120-200bps of short-end tightening. That is a lot, given that EM has been underperforming all year, and euro zone, japan and UK growth on the whole are not registering major upward surprises.

 

The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So it is fear, not optimism that is driving bond markets.

 

This backing up of yields is spilling over into exchange rates, although the correspondence is less than 1-1. In Figure 2 countries are ordered by the magnitude of their depreciation. By and large countries with bigger depreciations have experienced bigger increased in bond yields, although India and Australia stand out as exceptions on one end, and Hungary on the other. The backing up of yields in the euro zone periphery at some point may become a problem, as this adds to growth headwinds. The fact that this backing up is driven by global forces, not sovereign risk concerns does not make it less negative.

 

It is tempting to say that DM and EM countries facing bond market pressure should just ease monetary policy further and take the hit on the exchange rate, so that effective monetary conditions are eased. Easing in response to the US-bond-market-induced monetary tightening is not feasible for many central banks. The ECB sees itself as having limited policy room now. The impact of BoJ’s easing has been undermined tremendously by the backing up of risk premia and implied volatility, and consequent softening of asset markets. EM is constrained in easing 1) because inflation may respond much quicker than output growth to a significant depreciation, and 2) there is some evidence that depreciations are now translating into further pressure on bond markets, undermining the effectiveness of ease. So bond wars may not be any more pleasant than currency wars.

 

The upshot is that we may continue to see pressure on commodity and EM currencies until asset market conditions stabilize. We continue to distinguish between higher levels of rates and higher levels of rate and asset market volatility. If US bond markets were to stabilize at current or even higher levels, but be accompanied by lower volatility, then other countries may be able to introduce offsetting macro policies. However, as long as the backing up of bond yields is accompanied by the higher volatility in asset markets, they are likely to find their policy options very constrained, and their asset markets under continuing pressure.

 

The chart of the EUR/JPY, seen in FXE:FXY, showed a tiny trade higher, on the Euro, FXE, trading  slightly higher, and the Yen, FXY, trading slighly lower. The Acton Forex EURJPY chart pattern with close at 129.243 suggests a massive unwinding of this currency carry trade is imminent.

 

World Stocks, VT, and most all stocks gapped open higher and fell all day producing a red filled candlestick, sometimes called Red Filled Elder Bar Chart Pattern. World Stocks, VT, and US Stocks, VTI, traded lower to the very edge, that is the precipice of support.  Not a single equity ETF traded higher today, And the only credit ETF trading higher was Emerging Market Bonds, EMB, which have been selling massively lower lately.   

 

Paper Producers, WOOD, traded lower on a lower price of Timber, CUT, with Biotechnology, IBB, Semiconductors, SMH, Clean Energy, PBD, US Infrastructure, PKB, Retail, XRT, Internet Retail, FDN, Global Industrial Producers, FXR, Dynamic Media, PBS, and Small Cap Pure Value RZV, trading lower as well.

 

Investment Bankers, KCE, such as JP Morgan, JPM, Asset Managers, ASMA, such as Blackrock, BLK, the Too Big To Fail Banks, RWW, such as Cititgroup, C, traded lower.  Regional Banks, KRE, traded lower, taking the US Small Caps, the Russell 2000, IWM, lower.  Countries trading lower included Thailand, THD,  and China, YAO, on lower China Real Estate, TAO, and China Industrials, CHII.  Spain, EWP, traded higher, but Greece, GREK, and Italy, EWI, traded lower.  This as Ambrose Evans Pritchard writes Italian showdown with Germany over euro looms closer.  Mexico, EWW, Brazil, EWZ, EWZS, Singapore, EWS, EWSS, traded lower.  And Egypt, EGPT, literally collapsed, falling 4.0%

 

All of the Yield Bearing ETFs, traded lower today. Preferred Financials, PGF, fell strongly lower.  And Small Cap Real Estate, ROOF, Mortgage REITS, REM, Industrial Office REITS, FNIO, Residential REITS, REZ, and Premium REITS, KBWY, traded lower on today’s higher Interest Rate on the 10 Year US Government Note, $TNX.   

 

The chart pattern of Oil, USO, traded higher, in a downward sloping channel, to strong resistance at 34.03, like that of World Stocks, VT, and US Stocks, VTI, portending a likely strong drop tomorrow or later this week; this as Bespoke Investment Group writes Crude oil and gasoline inventories rise more than expected

 

Volatility, ^VIX, TVIX, rose in an Elliott Wave 3 breakout. The market Risk Off ETN, OFF, reads positive, warning investors to be out of long positions.     

 

The Yahoo Finance ongoing one month chart of Utilities, XLU, Real Estate, IYR, and Closed End Equity and Closed End Credit Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, shows that the Interest Rate Sensitive Investments have taken a massive trade lower; and stand as a precursor for a soon coming traded lower in their peers.  

 

Trading today in Closed End Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, was decisively lower.  Closed End Debt, PFL, traded very strongly lower, and Closed End Equity, CSQ, traded strongly lower, showing that the way is now lower for both credit and equities.

 

I am left with a feeling that a massive turn lower in the stock market is imminent. All I can say is “lookout below!”   

 

The Finviz chart of the Gold ETF, GLD, shows a 0.75% rise from a double bottom; Stockharts.com shows that Spot Gold,  $GOLD, traded higher to $1,387.  Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault.                                  

Matias Vernengo of Naked Keynesianism writes O sacred hunger of pernicious gold! What bands of faith can impious lucre hold? Sociologist Geoffrey Ingham has written a review of David Graeber’s “Debt: The First 5,000 Years”, which can be viewed here (subscription required). According to Ingham, while Graeber’s monumental inquiry is much to be admired, there is quite a bit of room for critical refutation, specifically with respect to the exact nature of money, and its essence as a moral base for economic life.

Money serves as a basis for both economic life and for ethics; as ethics is defined as economic regard for the person and property of another that comes from New Testament doctrine of speech and behavior established by the Apostles.  The elect have both morals, that is virtue which is defined as the praiseworthy attributes of God, and ethics. These come from the life of Christ, Colossians 3:4, where Christ becomes one’s all inclusive life experience, Colossians 3:11, as one grows in experience of God’s will in all wisdom and spiritual understanding. The word spiritual applies to wisdom as well as to understanding, and is more than a collection and mastery of principles, yes more than just letters written in a book, it is a daily experience of receiving God’s breath in one’s life and being renewed, revitalized, and refreshed thereby so one comes to partake of God’s divine nature, and adds to the like precious faith of the Apostles, the seven additives of 2 Peter 1:5-10, so as to make one’s calling and election a genuine thing, and thus not stumble, and have a broad entrance into God’s kingdom.  God is wrapping up not 5,000, but 6,000 years of human governance, as seen in the Statue of Empires prophecy, presented in Daniel 2:25-45, with the US as a global super power, and its Dollar Hegemony, coming to and end on the death of fiat money; and the rise of the ten toed kingdom of regional governance coming out of Eurozone sovereign insolvency and global credit collapse and financial system breakdown.

 

Leonor Coutinho a PHD Economist, and member of the Euro-Mediterranean Economists Association, in asking How soon can the capital controls on Cyrpus be lifted and whether the recapitalisation plans will be sufficiently convincing to allow the Cypriot banking sector to regain the trust of the public, is just one of many of Liberalism’s economists who fails to comprehend the nature of economy, and that the fiat money system died, and the diktat money system is now in force globally, and will involve a growing use of capital controls.

Please consider that God’s idea of economy is one of empire, specifically a territory where a sovereign or sovereigns rule in dominion providing seigniorage, that is moneyness, as well as ethics, that is regard for the person or property of another, or alternatively, iniquity, where poneros, that is bad, evil, and wicked influence is exercised over people. Economy comes via and is based upon the promises of God, such as the one of Genesis 35:11, where God said to Jacob, that is Israel, “I am God Almighty. Be fruitful and multiply; a nation and a company of nations shall proceed from you, and kings shall come from your body”.  The promised nation is the United States, the company of nations was the British Empire, and the kings are the saints, ruling in heavenly places with Christ.

America’s reign of Empire ended on May 24, 2013, with the rise of the Interest Rate on the Ten Year, Note, ^TNX, to 2.01, and the steepening of the Steepner ETF, STPP.  Tyler Durder of Zero Hedge relates In Chapter 12 of David Stockman’s new book The Great Deformation, the outspoken truth-sayer discusses the realities of the end of the gold standard (in 1971 via) Nixon and Bretton Woods. The combination of free markets and freely printed money gave rise to a toxic financial deformation; namely, the vast financialization of the world economy and the rise of endless carry trades, massive arrangements of speculative hedging, and monumental daisy chains of debts, owned by debts, owned by still more debts.  I comment that the US Federal Reserve Monetary Policy of QE1 as well as the BoJ Kuroda Abenomics monetary policies, were the most significant deformations of money amongst all the world central banks monetary expansion policies; these literally debased money, and warped money so badly, that money finally became untrustworth, as bond vigilantes called interest rates higher, terminating Global ZIRP, and deleveging investors out of currency carry trade positons and derisikng others out of stock investments. Financialization of the world economy as well as equity and credit investments of all types engendered investor trust creating Empire United States. And Aljazerra communicates a Dollar Hegemonic Military Empire with a globe spanning American archipelago of bases surrounding the Middle East. Bill Van Auken writes It is estimated that the US “liberation” of Iraq cost a million lives, turned millions more into refugees and lay waste to the country’s infrastructure and social institutions. Voice Americ relates American Empire, rest in peace. And David Kaiser writes The fall of the American Empire.

The Apostle Paul relates in Ephesians 1:10, that Jesus Christ, God’s Son, has been appointed to rule over God’s economy bringing every age, epoch, era and time period to completion producing fullness therein.  

God’s paradigm for the past age was Liberalism; it was based upon the fiat money system, which governed from the creation of the Creature from Jekyll Island, that is the US Federal Reserve in 1913, to May 24, 2013, when fiat money died, on the failure of carry trade investing and credit, on the rise of the Interest Rate on the US Government Note, ^TNX, to 2.01%, providing an age of investment choice, as well as clientelism and dependency, where people trusted in central bank intervention, based upon the rule of law of democratic nation states, to provide credit liquidity, for carry trade based wealth making opportunities, such as nation investment, ie the Philippines, EPHE, Thailand, THD, the Russell 2000, IWM, or leveraged buyouts, PSP, IEP, DLPH, or regulatory capture, PJP, JNJ, or housing development, ITB, DHR, or retail sales, XRT, COST, KIRK, the list of these goes on, and on.   Predators, that is those with animal spirits of a bear, lion or leopard, preyed on people; examples include Jimmy Baker, who served five years in prison for his crimes; my mother loved him, and invited him into our home, saying “its time to watch our show”, and sent him a donation monthly.

Under Liberalism, Crony Capitalism, Socialism, and Greek Socialism, provided economic and political governance, which was based upon sovereign democratic nation states, where sovereign bankers held preeminence, and waived wands of credit, producing a moral hazard based prosperity, where inflationism was in effect through interventionist schemes of the Banker Regime which provided free trade, financial deregulation, Federal Reserve POMO, lowering of central bank interest rates, Quantitative Easing, and Global ZIRP.  Political parties had movements and worked their agendas.  Liberalism’s dynamo was profit from banking, investment banking, corporate global growth and trade.

Thought leaders establishing Liberalism’s knowledge set have been left leaning journalists such as Paul Krugman, and left leaning economicsts such as Donald Markwell, who Wikipedia relates maintains that the absence of an effective international approach in the spirit of Keynes, would risk allowing the return to play of the economic causes of international conflict which Keynes had identified back in the 1930[52].  And Brad DeLong, who Wikipedia relates that along with Joseph Stiglitz and Aaron Edlin, is co-editor of The Economists’ Voice[2].  As well as Lawrence Summers, who Wikipedia relates that upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator” arguing that “any honest Democrat will admit that we are now all Friedmanites.”

Yet Jesus Christ, operating at the helm of the economy of God, as presented in Ephesians 1:10, in one fell swoop, killed all existing economic and political life by destroying fiat money, on May 24, 2013, by stirring the bond vigilantes to call the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, and the currency traders to start a currency war of competitive currency devaluation against the world central banks, forcing investors to deleverage out of currency carry trade investments.

God’s paradigm for the current age is Authoritarianism; it is based upon the diktat money system, which has been governing ever since the collapse of Aggregate Credit, AGG, specifically Junk Bonds, JNK, and Carry Trade Investing, ICI, on May 24, 2013 when fiat money died, introducing the age of diktak, where people trust in the diktat of sovereign regional nannycrats, such as, Klaus Regling, Jeroen Dijsselbloem, and Michel Barnier, and sovereign regional bodies such as the ECB, based upon the word, will and way of whoever rises, biting, ripping and tearing others apart, to become the top dog leader and top dog banker, to provide diktat schemes, such as bank deposits bailins, additional taxes, privatizations, sale of a country’s central bank’s gold reserves, capital controls, and measures of debt servitude, all with the aim of enforcing austerity. Mike Mish Shedlock reports Infighting is everywhere in Italy now.  

Under Authoritarianism, regional governance provides both economic and political governance, and is based upon the rule of sovereign regional nannycrats and regional bodies such as the ECB, as presented in Daniel 2:25-45.  The Banker Regime has been replaced by the Beast Regime, which has characteristics of a bear, lion and leopard and preys on people, overseeing totalitarian collectivism in each of humanity’s seven institutions, and rules in each of the world’s ten regions, as foretold in Revelation 13:1-4.  There are no citizens of nation states, rather there are only residents of regional panopticons. Political parties have been replaced by statist public partnerships, where economic cardinals oversee the factors of production and regional economies.   Thought leaders providing Authoritarianism’s knowledege cage include Olli Rehn, Wolfgang Schäuble, Jens Weidmann, Jörg Asmussen, and Werner Hoyer. Authoritarianism’s dynamos are regional security, stability, and sustainability.

Jesus Christ, acting in dispensation, Ephesians 1:10, has completed Liberalism by terminating floating currencies of democratic nation states. With the introduction of Authoritaranism, and after the soon coming financial apocalypse, that is a global credit bust and world wide financial system collapse,  diktat will be the currency of regional governance and its totalitarian collectivism.  Diktat will produce Authoritarianism’s wealth of debt servitude.    

To effect the complete transfer out of Liberalism and into Authoritarianism, Jesus Christ has unleashed the Four Horsemen of the Apocalypse. The First, is the Rider on the White Horse, who has a bow without any arrows, whose mission commenced in May of 2010 with Greek Bailout I, to pass the baton of sovereignty from nation states to regional governance; something called for by the 300 elite of the Club of Rome, organized in 1968 by the Morgenthau Group, and presented in prophetic writing with publications, World Dynamics, Limits to Growth, and Mankind at the Turning Point.        

Got Questions.org relates that God’s end time economy will be enforcd through judgements upon mankind with the seven seals (Revelation 6:1-17, 8:1-5), seven trumpets (Revelation 8:6-13; 11:15-19), and seven bowls/vials (Revelation 16:1-21) being three succeeding series of end-times judgments from God. The judgments get progressively worse and more devastating as the end times progress. The seven seals, trumpets, and bowls are connected to one another. The seventh seal introduces the seven trumpets (Revelation 8:1-5), and the seventh trumpet introduces the seven bowls (Revelation 11:15-19, 15:1-8).

IID) … On Thursday, June 12, 2013, the Plunge Protection Team, PPT, bought S&P High Beta Stocks, reversing the failure of the Bank of Japan’s Kuroda Abenomics that came on Tuesday. The Reuters report Japan machine orders down suggests that the world central banks’ monetary policies have failed to provide stimulus to global growth and trade. Japan’s core machinery orders fell in April from the previous month, down for the first time in three months as companies remain hesitant to boost capital spending despite Prime Minister Shinzo Abe’s sweeping stimulus policies. Cabinet Office data showed core machinery orders, a highly volatile series regarded as a leading indicator of capital spending, fell 8.8 percent, compared with a 8.5 percent decline in a Reuters poll of analysts.

 

The failure of Bank of Japan’s Kuroda Abenomics monetary policies sent World Stocks, VT,  plummenting on Tuesday, June 11, 2013.  But today, June 12, 2013, the Plunge Protection entered the markets buying the S&P High Beta Stocks, SPHB, despite a strong rally by the currency traders in the Japanes Yen, FXY, this being seen in the ongoing Yahoo Finance Chart of the Nikkei, NKY, together with the Japanese Yen, FXY, the Euro, FXE, S&P High Beta, SPHB, US Stocks, VTI, European Stocks, VGK, and Asia Excluding Japan, EPP. Turkey, TUR, Chine, ECH, Peru, EPU, traded higher. Poland, EPOL, rose to a new rally high; while Argentina, ARGT, traded lower.

 

High Beta ETFs, seen in this Finviz Screener, soared; these included SPHB, XRT, SMH, PKB, RZV,  PSP, IXG, PSCE, RWW, KRE, RXI, KCE, IAI, PBS, IYC, IGN, XLI, XTN, OIH, WOOD, ITB, and PJP.  And yield bearing ETFs rising strongly included REM, TAO, IYR, KBWD, ROOF, AUSE, REZ, FNIO, DRW, and KBWY. Major Airlines, seen in this Finviz Screener, rose strongly.  

 

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.17. Aggregate Credit, AGG, rose strongly.  The US Dollar, $USD, UUP, traded lower.

 

Today’s news reflects the growth and pursuit of the Broadcasting Industry, PBS, STRZA, the Retail Sector, XRT, PLCE, and the Shopping Mall, GGP, SPG, in the US, defining corporate interest in media control, as well as the total absence of Broadcasting, Retail, and Shopping Sectors in Greece.

 

The only reason why Greece was allowed into the Euro Comm Currency Group, was that it was simply an investment play by bankers. As the days of the introduction of the Euro approached, Greek Treasury Interest rates consistenly decreased, providing a windfall for bondholdres. God designed Greece and its Greek Socialism, as the very definition of clientelism, dependency, and anti-competitiveness, to be the  far left economic and political experience under Liberalism. There is not a speck of capitalism, or meritocracy in Greece. There was only a pipeline of money flowing from Greek Treasury Bond sales to those who had a constitutionally guaranteed right to employment as state workers.  In fact just about the only workers in Greece have been Government workers.  Fom the pharmacy technician to the hospital gardner, all have been participants in a system described by the Economist Magazine as pork and patronage.  As a result the Greek economy is not an innovative consumer society, IYC, and PBJ, such as the United States.  As presented in Revelation 13:1-4, God purposed from eternity past to bring the Beast Regime of regional governance and totalitarian collectivism out of sovereign and baking insolvency of the Mediterranean nation states of Portugal, Italy, Greece, and Spain, that is out of the collapse of the profligate PIGS.  Needless to say there will be many Angry Byrds.  Of note, Jack Duffy of MarketNews International reports France and Germany are on a collision-course with the European Commission as EU leaders approach a crucial summit that could decide key questions about the future of the Eurozone. With leaders scheduled to meet in Brussels on June 27-28 to decide details of the EU’s proposed banking union, the Eurozone’s two largest economies are determined to ensure that final decisions over when and how insolvent banks are shut down remains with national governments. The Commission is putting forth its own plan to consolidate such power in Brussels. ‘There is a real confrontation here,’ said Zsolt Darvas, research fellow at think tank Bruegel. ‘While it may make sense to do this at the European level, nothing is going to happen without the participation of France and Germany,’ he said.”    And Tom Stoukas and Sherine El Madany of Bloomberg report Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. after the local stock index plunged 83% since 2007. Greece failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, said MSCI.

 

Jeremy Bowman reports Why Gannett and Belo Shares jumped.  And Reuters report Greeks strike over state TV closure as backlash grows. Greek workers stage a nation wide strike on Thursday, forcing hospitals to work on emergency staff and disrupting transport, in protest against the “sudden death” of state broadcaster ERT, switched off in the middle of the night by the government. Screens went black on state broadcaster ERT, cutting newscasters off mid-sentence only hours after the decision was announced, in what the government said was a temporary measure to staunch a waste of taxpayers’ money. The 75-year-old Hellenic Broadcasting Corporation ERT has shed viewers since the rise of commercial television and radio, and its three statewide stations had just a 13 percent combined audience share when it was switched off. Its 2,600-strong staff include 600 journalists. Many Greeks cite the broadcaster as an example of inefficiency, overspending and jobs given in return for political favors. Nevertheless, in a country where nearly two thirds of young people are now unemployed after years of relentless cuts and tax hikes, there is a visceral public belief that the government should not slash jobs. Greeks were stunned by the speed with which the closure was executed. “It had to happen. ERT was a big fat feast for the political parties,” said Maria Panagiotou, a 65-year-old retiree. “But the way they did it is unacceptable. How can this happen in Europe?” A senior government official said Athens was under pressure to show visiting EU and IMF inspectors that it had a plan to fire 2,000 state workers as required under its bailout, and the ERT shutdown was the only option available to meet the target. The ERT crisis overshadowed MSCI’s reclassification of the country as an emerging market. The chart of Greece, GREK, shows a 7.6% fall in value so far this week.  

 

IIE) … On Friday, June 12, 2013, World Stock, VT, traded slighly lower from Thursday’s rally, on lower Global Financials, IXG, Investment Bankers, KCE, such as JPM, The Too Big To Fail Banks, RWW, such as C, STI, KEY, BK, Stock Brokers, IAI, such as EFTC, Regional Banks, KRE, such as RF, HBAN,  and Asset Managers, ASMA, such as BLK, and on a slide in the EUR/JPY, seen in the Stockcharts.com chart of FXE:FXY, with Action Forex reporting a close of the EURJPY lower at 125.527, as well as another strong trade lower in the Far East Financials, FEFN, at support, on a rally Yen, FXY, to close at103.75, reflecting the failure of Kuroda Abenomics. The chart of the S&P 500, $SPX, SPY, shows a 0.6% trade lower on the day, and a 1.0% trade lower for the week; and that of the Dow, $DJW, DIA, shows a 0.1% trade higher on the day and 0.6% trade lowe for the week.

 

The Interest Rate on the US Ten Year Note, ^TNX, closed the week at 2.13%, and Aggregate Credit, AGG, rose slighly for the week, up from its significant breakout on May 24, at 2.01%.  

 

Volatility, ^VIX, TVIX, VIXY, rose for the day and the week.

 

Both Brent North Sea Oil, BNO, and Oil, USO, popped higher in what are likely to turn out to be evening star chart patterns.

 

Sectors trading lower included, Automobiles, CARZ, Clean Energy, PBD, Energy Service, OIH, Energy Production, XOP, and Small Cap Energy, PSCE, on a glut of oil, despite the rise in theprice of oil, USO, S&P High Beta, SPHB, Semiconductors, SMH, Paper Producers, WOOD, Softare, IGV.

 

Credit Services, seen in this Finviz Screener, traded lower … Automobile Dealerships, seen in this Finviz Screener, traded lower … Chemical Manufacturers, seen in this Finviz Screener, traded lower.

 

Doug Noland reports The U.S. dollar index declined 1.2% to 80.67. (up 1.1% y-t-d). For the week on the upside, the Japanese yen increased 3.5%, the New Zealand dollar 2.0%, the Swedish krona 1.9%, Swiss franc 1.6%, the euro 1.0%, the British pound 1.0%, the Danish krone 0.9%, the Norwegian krone 0.9%, the Australian dollar 0.8%, the Mexican peso 0.4%, the Canadian dollar 0.3% and the South African rand 0.2%. For the week on the downside, the Brazilian real declined 0.9%, the South Korean won 0.8%, the Taiwanese dollar 0.3% and the Singapore dollar 0.2%.

 

Nation Inestment, EFA, and Small Cap Nation Investment, IFSM, traded lower, on Friday June 14, 2013, as well as for the week, as the Emerging Markets, EEM, and their Infrastructure, EMIF, their Financials, EMFN, such as CIB, BCH, BAP, BSMX, and their Bonds, EMB, have traded lower. Mike Mish Shedlock writes Fierce selloff in emerging market currencies The economies of the emerging countries, such as Vietnam, VNM, Malayasia, EWM, Philippines, EPHE, Indonesia, IDX, Chile, ECH, Peru, EPU, and developing countries, such as Thailand, THD, Mexico, EWW, Brazil, EWZ, Russia, RSX, India, INP, and China, YAO, have abruptly disintegrated on debt deflation, that is on falling currency values associated with higher interest rates, on the collapse of credit, AGG, as the debt monetization policies of the World Central Banks have failed to stimulate global growth and trade and have turned “money good” investments bad.  The Milton Friedman Free To Choose scheme of floating currencies, has failed.  God, through Jesus Christ, Ephesians 1:10, is sending a new scheme of diktat and diktat money to establish regional security, stability, and sustainability, through regional governance and totalitarian collectivisim, enforcing debt servitude.      

 

Doug Noland of Prudent Bear writes in Safehaven.com The King of EM, It is not easy to explain exactly why the subprime Bubble began to lose air when it did. Today, it’s not easy to pinpoint exactly why the “developing” Bubble has begun to falter. But in both Bubbles, leverage and speculation played integral roles. From my perspective, there reaches a point of acute excess where the most sophisticated market operators recognize trouble on the horizon and begin to reverse their leveraged positions (and/or begin building speculative bearish bets) and exit the Bubble. This move by the sophisticated speculators works to change the market liquidity backdrop at the margin, leading to higher financing costs and waning Credit Availability.  

 

Importantly, it is the nature of major Bubbles to become acutely dependent upon ongoing cheap finance and rapid Credit expansion. As such, the marginally higher costs and tightened finance engendered by the reversal of speculative activities begins to weigh on asset prices, financial flows and general Credit Availability.

 

Few in the spring of 2007 appreciated the ramifications for the market reversal in subprime finance. Very few recognized the significance of this initial crack in the mortgage finance Bubble. I believe the more sophisticated hedge fund and global market operators are beginning to appreciate the importance of what is unfolding in the global marketplace. On the margin, de-risking and de-leveraging dynamics have commenced with an immediate impact on marketplace liquidity.

 

Meanwhile, the “developing” market Bubble continues to unwind. And leverage comes out the commodities, currency “carry trades” and developing stocks and bonds. And as capital flight becomes a more serious issue, the marketplace must ponder the consequences not only of what a faltering Bubble means for scores of markets and economies, there is as well the issue of developing central banks having to sell from their trove of Treasuries and bunds and such to finance a surge in outflows (“hot” and otherwise).

 

I suspect that the global jump in yields (and CDS and risk premiums) has more to do with de-leveraging than it does with tapering worries. This dynamic has caught many by surprise. The speculators anticipated cleverly exiting their leveraged MBS and other trades based on their expectations for Fed policy. Now, there’s a tremendous amount of unanticipated market uncertainty.

 

The yen “carry trade” (sell yen and use proceeds to buy higher-yielding instruments globally) is doling out painful losses – forcing the unwind of leveraged trades across many markets. I wouldn’t be surprised if the yen short is the largest short position in modern history. The yen bears are now running for cover – causing all kinds of havoc in the currencies and securities markets.

 

China, the King of Emerging Markets. I have posited that China is in the midst of an historic Credit Bubble. I have over the years tried to explain how interrelated their Bubble is to ours. Our mismanagement of the world’s Reserve Currency led to 20 years of huge Current Account Deficits. A large portion of the Trillions of associated IOU’s have made it onto the balance sheet of the People’s Bank of China. And no Credit system and economic system has gone to greater excess during the post-2008 global reflation. It was the “fledgling” Credit Bubble spurred to “terminal phase” excess over the past five years.

 

Over the coming weeks and months, China will be an analytical focal point. If the “developing” Bubble has passed an important inflection point, then China is vulnerable. If “hot money” is leaving EM, then China should be susceptible. And, let there be no doubt, when China finally succumbs global economic prospects really dim – and prospects for some fellow EM economies turn downright dismal. Recall how the tightening of subprime finance gravitated to “Alt-A” and then worked its way to “conventional.” And when housing in general began to falter the bottom fell out of subprime.

 

This week provided a bevy of notable China-related headlines: From the Financial Times: “China Debt Auction Failure Raises Liquidity Fears;” From Bloomberg: “China Debt Sale Fails for First Time in 23 Months on Cash Crunch;” “China Local Debt Audit ‘Credit Negative,’  ”China State Auditor Warns Over Local Government Debt Levels.” The price of Chinese sovereign Credit default swap (CDS) “insurance” jumped from 92 to 113 in three sessions, before dropping back down to 98 on Friday. Chinese interbank lending rates have recently spiked higher – and there were even reports of several borrowers forced to pay up for increasingly scarce liquidity. There were debt auctions that did not go smoothly. The currency forwards market is showing some atypical downward pressure on the renminbi.

 

Ambrose Evand Pritchard writes China braces for capital flight and debt stress as Fed tightens. A front-page editorial on Friday in China Securities Journal – an arm of the regulatory authorities – warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote.

 

The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.

It also warned that total credit in Chinese financial system may have reached 221pc of GDP, jumping almost eightfold over the last decade. Companies will have to fork out $1 trillion in interest payments alone this year. “Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output,” it said.

 

There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Bank Everbright missed an interbank payment last week in a technical default.

 

“Liquidity conditions have tightened severely due to the crackdown on shadow banking activities,” said Zhiwei Zhang from Nomura. “We believe the series of policy tightening measures in the past three months have reached critical mass, such that deleveraging in the banking sector is happening. Liquidity tightening can be very damaging to a highly leveraged economy,” he said, warning that local government finance vehicles may have trouble rolling over debts.

 

Also, International Debt Statistics, from the World Bank, World Development Indicators reveal that China has the largest domestic debt as a percent of GDP of any developing and emerging market at 160%.

 

Ambrse Evans Pritchard writes Fitch says China credit bubble unprecedented in modern world history. And Reuters reports Fitch warns on shadwo banking in China.  And Benton te writes China’s debt markets suffers from cash squeeze

 

And John Rubino asks in commenting on the Doug Noland article, So can the US stay placid when the rest of the world turns chaotic?  Highly doubtful. There’s a market phenomenon in which one investment play blows up and forces those on the wrong side of the trade to dump their liquid assets to raise cash, which causes the high-quality assets to fall as much or more than the junk. As Noland notes, the world’s premier liquid asset is the Treasury bond. If the developing world’s need to raise cash is a factor in the recent spike in US interest rates, this implies a feedback loop in which rising US rates further destabilize emerging markets, forcing the sale of more Treasuries, and so on. Can the Fed stop this? Not unless it wants to buy up not just all the newly-issued Treasuries as it does now, but the trillions of dollars of bonds that might be dumped once things really get going.

 

It’s important to understand that we’re here because for years the developed world in general and the US in particular have been exporting their problems to the developing world via monetary policy. We fund our overspending by creating a bunch of new dollars,  many of which flow beyond our borders looking for higher yields. They land in, say, Brazil, pushing up both local asset prices and the exchange rate of the real. So individual Brazilians see their cost of living rise while Brazilian exporters are priced out of global markets. This is the currency war that Brazil’s government has been complaining about.

 

Then the hot money flows back out, causing a different set of problems for a country that has spent the past decade trying to adjust to excessive capital inflows. The result: some seriously fragile banks and over-leveraged companies and investors, any of which could trigger a nationwide crisis.

 

The same general process is at work in other major emerging markets, with each in its own way now posing a threat to the global financial system — at the pinnacle of which sit the S&P 500 and the Treasury market, looking an awful lot like Southern California real estate circa 2007

 

China Financials, CHIX, traded lower, forcing China, YAO, Chin Industrials, CHII, China Small Caps, ECNS, alllower on the week.

The Nikkei, NKY, traded lower on the week. The Philippines, EPHE, Thailand, THD, Hong Kong, EWH, EWHS, South Korea, EWY, Taiwan, EWT, and Vietnam, VNM, Malayasia, EWM, Singapore, EWS, EWSS, all traded lower lower on the week.  

India, INP, SCIN, and Brazil, EWZ, EWZS, both traded lower on the week.

Poland, EPOL, traded lower from its rally high; and Mexico, EWW, and Egypt, EGPT, traded lower on the week. Spain, EWP, Germany, EWG, Ireland, EIRL, and Italy, EWI, traded lower.

 

Indonesia, IDX, rose this week as Lilian Karunungan and Kyoungwha Kim of Bloomberg report Indonesia is consuming foreign currency reserves at the fastest pace in Asia as policy makers struggle to contain the rupiah’s plunge, a sign to PT Mandiri Sekuritas that the central bank will pare intervention. Reserves dropped 5.7% in a year to $105 billion in May as Bank Indonesia sold dollars to bolster the rupiah. The rupiah fell to 5.6% below the local spot rate in the offshore non-deliverable forward market yesterday. Defending the currency helped reduce reserves to the equivalent of 6.6 months of imports, the worst ratio in Asia after India.

 

III) … The Surveillance State with its surveillance infrastructure comes of age as Obama recognizes the NSA Programs.  

The Apostle Paul reveals that Jesus Christ heads up the economic and political plan of God for the completion and fulfillment of every age, epoch, era and time period, Ephesians, 1:10.

With the Edward Snowden revelations through Glenn Grenwall of The Guardian, and confrimation of NSA Programs by President Obama, its is clearly evident that Jesus Christ has terminated Liberalism’s democracy, and is introducing Authoritarianism’s Surveillance State.

Zero Hedge reports AT&T, Verizon & others have been providing NSA with phone records since 2001. NSA Intelligence public private partnerships are an integral part of the creeping emergence of Authoritariansism. It is Edward Snowden who has revealed some of the details of Authoritarianism’s new form of governance, which is termed the Surveillance State, which terminates Liberalism’s traditional democratic governance.

Under the Obama administration there has been a proliferation of private government contractors who store, sift and manage information on people. Siobhan Gorman of The Wall Street Journal writes thousands of workers employed by government contractors sit side by side with federal workers and hold security clearances that provide access to intelligence databases. The result is a system so enmeshed that government and contract workers are often indistinguishable. Agency Edward Snowden has said he worked for consulting giant Booz Allen Hamilton as an ‘infrastructure analyst.’  

Mr. Snowden, an employee of the consulting behemoth Booz Allen Hamilton, has said he leaked highly classified information because he felt Americans should know more about NSA surveillance programs. Director of National Intelligence James Clapper said a “crimes report” was filed with the Justice Department and government officials are pursuing an investigation. Mr. Snowden, a former Central Intelligence Agency employee, apparently checked out of a Hong Kong hotel and his whereabouts weren’t known Monday.

The size and scale of private contracting for intelligence goes “well beyond the scope of anything the public is aware of or even imagines,” said Peter Singer, director of the Center for 21st Century Security and Intelligence at the Brookings Institution. About 1.2 million Americans hold top-secret clearances, the Director of National Intelligence reported this year. More than a third of those, 38%, are private contractors.

Such companies as Booz Allen Hamilton had the most ample supply. Mr. Snowden has said he worked for Booz Allen as an “infrastructure analyst” at an NSA facility in Hawaii. His security clearance for the job would have been approved by the NSA, which also would have determined the systems he could access from his desktop, said contractors familiar with the process. Government contracts have been lucrative for Booz Allen. In a government filing last month, Booz Allen said that nearly a quarter of its most recent annual revenue, about $1.3 billion, came from its work with the intelligence community and that another 55%, about $3.2 billion, came from its defense business. More than two-thirds of Booz Allen’s 25,000 workers hold government security clearances, and more than a quarter of those hold the highest security clearance. In 2008, Booz Allen separated its commercial business from its government consulting work and sold the latter to Carlyle Group—another politically connected firm, for $2.54 billion. The Carlyle-owned government business, Booz Allen Hamilton Holding, sold shares to the public in a November 2010 IPO. On Sunday, Booz Allen moved quickly to tamp down news of Mr. Snowden’s breach. The firm’s chairman, Ralph Shrader, sent a memo to Booz Allen employees just hours after the revelation, advising them to keep quiet. The public statement “will be our only external communication on this issue for the time being,” he wrote.

Facing congressional criticism in 2007, intelligence agencies promised to cut back on private contractors but few have made substantial headway, former officials said. “Yes, there were initiatives to reduce contractors, but at the end of the day, the budget goes up another billion dollars, and what do you do?” said a former U.S. official. Mr. Snowden had specialized technical skills that are frequently outsourced because the U.S. government doesn’t have enough employees with such training. Contractors defended the government’s reliance on private companies, arguing there often are few distinctions between a federal worker and a contractor. They cited Pfc. Bradley Manning as a counterargument to the idea that contractors pose more of a security risk than government workers.The Army private is currently on trial and facing life in prison after admitting to providing WikiLeaks with a trove of classified documents.

Kenneth Cukier and Viktor Mayer-Schoenberger relate in Foreign Affairs, The rise of Big Data. Acxiom and Experian are amassing vast amounts of information on everyone and everything. Big Data is poised to reshape the way we live, work and think.

MaddMedic in Freedom Is Just Another Word Blog provides 27 quotes from Edward Snowden which presents the powers of the NSA Surveillance State.

America Blog writes Edward Snowden explains his actions. Via the Washington Post, which he was also in contact with, in addition to the Guardian: I asked him, at the risk of estrangement, how he could justify exposing intelligence methods that might benefit U.S. adversaries. “Perhaps I am naive,” he replied, “but I believe that at this point in history, the greatest danger to our freedom and way of life comes from the reasonable fear of omniscient State powers kept in check by nothing more than policy documents.” The steady expansion of surveillance powers, he wrote, is “such a direct threat to democratic governance that I have risked my life and family for it.”

FLL comments Snowden’s basic premise is sound: Policy, rather than law, controls the surveillance state, which means that any change in leadership could trigger tyranny. The scope of domestic government surveillance really should be defined by law, and those laws, like any laws, should be subject to the constitutional oversight of the federal judiciary. The NSA, as part of the Department of Defense, is answerable only to the president, rather than being bound by any set of laws. One of the definitions of being civilized is the rule of law. The scope of domestic surveillance should be determined by the people through their legislators and federal judges, rather than a president (United States) or a warlord (Somalia), depending on the individual country.

Matthew Weidner writes The American Surveillance State surrounds and imprisons us all. The NYT wrote A 29-year-old former CIA computer technician went public on Sunday as the source behind the daily drumbeat of disclosures about the nation’s surveillance programs, saying he took the extraordinary step because “the public needs to decide whether these programs and policies are right or wrong.”

From MyBlogDammitNet Excerpts from the Greenwald Snowden interview. Greenwald: “Talk a little bit about how the American surveillance state actually functions. Does it target the actions of Americans?” Snowden responds: “NSA and intelligence community in general is focused on getting intelligence wherever it can by any means possible. It believes, on the grounds of sort of a self-certification, that they serve the national interest. Originally we saw that focus very narrowly tailored as foreign intelligence gathered overseas.”

“Now increasingly we see that it’s happening domestically and to do that they, the NSA specifically, targets the communications of everyone. It ingests them by default. It collects them in its system and it filters them and it analyses them and it measures them and it stores them for periods of time simply because that’s the easiest, most efficient, and most valuable way to achieve these ends. So while they may be intending to target someone associated with a foreign government or someone they suspect of terrorism, they’re collecting you’re communications to do so.”

“Any analyst at any time can target anyone, any selector, anywhere. Where those communications will be picked up depends on the range of the sensor networks and the authorities that analyst is empowered with. Not all analysts have the ability to target everything. But I sitting at my desk certainly had the authorities to wiretap anyone from you or your accountant to a Federal judge to even the President if I had a personal e-mail.”

The Liberty Crier presents Ron Paul NSA’s PRISM is an awakening call  Ron Paul speaks with Anderson Cooper in video interview about the NSA’s PRISM spy program and the value of privacy.

Rutherford Institute writes America’s new normal: mass surveillance, secret courts.

Elaine Meinel Supkis writes Zionist neocons demand more spying and punishment of US citizens blowing the whistle on this spying and communictaes that the US is no longer a representative democracy in the traditional sense of the word, but is an authoritaran state, molded by Zionism, and dominated by the Zionist State of Israel and its leaders.

In audio broadcast The Scott Horton show relates Truth is treason in the Empire of Lies, as Ron Paul comments on the Snowden revelations.

Amy Goodman write in Truthdig Edward Snowden and the Architecture of Oppression

Thomas Drake of The Guardian Snowden saw what I saw: Surveillance criminally subverting the Constitution  

Rasmussen reports 57% fear Government will use NSA data to harass political opponents

The Guardian reports Utah: The NSA’s desert home for eavesdropping on America

IV) … The Government Entitlement Complex will soon be coming to a screaching halt.    

Jason Hartman writes Enter the Government-Entitlement Complex. During the time in which defense spending has been contracting as a percentage of GDP, it is impossible to ignore the extent to which non-defense government spending has expanded. This perpetual increase in transfer payments from entitlement programs and interest on the debt that has compounded from perpetual deficits driven by this binge of entitlement spending has created a new paradigm. The “Military Industrial Complex” has been effectively dead for nearly 40 years, and was replaced with a “Government Entitlement Complex” that is continuing to grow and expand.                                                                                                     

Analysis of total transfer payments and interest payments as a percentage of GDP paints an undeniable picture of the extent to which this pervasive phenomenon has come to dominate American life. In total, 18% of US GDP is driven by either entitlement payments or owed by the government as interest on debt from past entitlement spending. The importance of this Government-Entitlement-Complex™ is that it controls so much money and hold so much political influence that it dwarfs the supposed “Military Industrial Complex” in size, scope, and impact. The staggering amount of money controlled by the Government-Entitlement-Complex™ makes it the single most dominant force in American electoral politics. As more people become dependent on the government for their livelihood either from subsidies or subsistence, the more resistance there will be against reforms that are necessary to develop a healthy economy. As individual investors, we do not have the power to reverse this destructive trend, but we do have the capacity to structure our income and investments in such a way that the likely actions of a Government-Entitlement-Complex™ will help us become wealthy instead of sending us into destitute poverty.

The economic paradigm known as Liberalism was one of investment choice, as well as clientelism, and was centered around the US Federal Reserve monetary policy of credit liquidity, which created a historic credit bubble, AGG, which provided a moral hazard based prosperity, and was facilitated by financial system intervention in QE, the pursuit of ZIRP,  the securitization of credit such US Treasury Notes, TLT, which funded entitlements of all types, such as social security disability.

Increasingly many qualified for Social Security Disability, and either ceased to work or never did work, and starting living as clients of the state. The development and use of the Euro, FXE, established Greek Clientelism, where many in Greece have state employment as a constitutional guarantee, which the Economist Magazine described as a system of pork and patronage.                                                      

I differ from Mr. Hartman, as individual investors now have no power as fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to either shape the destiny of the Government-Entitlement-Complex™  or to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault of Gold Is Money.                                                                                                               

Out of a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3, there will be no money to fund any Government-Entitlement-Complex™

V) … Saturday night proved to be gaudy just as the Lord prophecied.                         While out walking on Saturday night, I encountered two groups from the leading Oneness Pentacostalism church here in Bellingham, both of which told me that their church was going to be in revival at Depot Market Square, seen in this photo.

The words of the Lord came to mind, who said, “As it was in the days of Noah, so it will be in the days of the coming of the Son Of Man” Matthew 24:37.

How was it then in Noah’s time? Well, it was gaudy; that is, outrageously festive.  Wikipedia relates that the word gaudy comes from latin. The origin of the term may be connected to the traditional student anthem, Gaudeamus. Gaudies generally involve a celebratory formal dinner, generally in black tie and academic gowns (scarlet festal robes for doctors), and may include events such as chapel services, lectures or concerts beforehand.

When in ministry, and when in public revival, this church group, dresses gaudy and acts gaudy.   I asked for one of their pamphlets, and engaged a young man in conversation, asking if any at their church had someone interested in bible prophecy; he didn’t want to discuss that at all; he communicated that the church was in revival, and then proceeded to communicate his church doctrine to me. Well for me it was a dead end. The gaudies have a church agenda of preeminence which I do not want any part of, and I have a prophetic ministry and seek another to discuss bible prophecy.     

VI) … The Ezekiel 38 War beigns as Putin warns the US against arming Syrian rebels. 

Please consider that Turkey will serve as the gateway for NATO troops, particularly from Germany, entering into Syria for a global war, foretold in Bible Prophecy, as the Ezekiel 38 war.  Jack Kelley provides the details here

Jason Ditz of Antiwar reports Lets not arm those organ eating Syrian rebels, Putin says.

Bill Van Auken writes The White House spokesman Jay Carney writes After making it clear that Obama would make no statement nor would he speak to Erdogan about the repression, the spokesman concluded: “Turkey is a very important ally. And look, all democracies have issues that they need to work through,  I think that we continue to work with Turkey on a range of issues—as a NATO ally and as a key player in the region, and we look forward to doing that.”

In calling Turkey a “key player in the region,” Carney was obviously referring to its role as a safe haven and forward base for the Islamist militias that Washington has unleashed on Syria. Foreign fighters from as far away as Chechnya, the Balkans and Western Europe are funneled across the Turkish border; Turkey also hosts a CIA station that coordinates the flow of billions of dollars in money and arms provided by Qatar and Saudi Arabia to fuel the slaughter across the border.

Washington thus hypocritically claims that its war for regime change in Syria is driven by its horror at Assad’s repression of armed Islamist opposition groups, but supports Erdogan’s repression of peaceful protests that could interfere with US war plans.

The events in Turkey and Syria, however, are intimately connected. Erdogan’s participation in the US-led war against Syrian President Bashar al-Assad is immensely unpopular with the Turkish people. Polls indicate that between 70 and 80 percent of Turkish citizens oppose this intervention.

There is widespread concern that the war being promoted by Erdogan in Syria will engulf Turkey itself. Twin car bombs killed 50 people in the town of Reyhanli on the Turkish border last month, followed by the arrest in the same region of 12 members of the Al-Qaeda-affiliated Al-Nusra Front, who initial reports said had a quantity of deadly sarin gas.

The Turkish government’s war policy is particularly unpopular among Turkey’s major religious and ethnic minorities, such as the Alevis. Erdogan’s backing for Al Qaeda-linked Sunni Islamist fanatics in Syria is an extension of his domestic policy of imposing Islamist social policies in Turkey. His decision to name a new bridge over the Bosporus Strait after a 16th century Ottoman sultan who slaughtered tens of thousands of Alevis heightened these concerns.

In a more fundamental sense, the Turkish developments mirror those within the United States itself, with the turn towards militarism and intervention abroad feeding the growth of attacks on democratic rights and police state measures at home. In both countries, both foreign and domestic policies are pursued in the interest of ruling corporate and financial cliques at the expense of the broad masses of working people.

The moral charades performed by the Obama administration and its pseudo-left assets about “human rights” and “democracy” in Syria are, as the case of Turkey makes clear, completely hypocritical. They are designed to deceive the public about the criminal nature of Washington’s escalating campaign of military aggression to secure US hegemony over the oil-rich regions of the Middle East and Central Asia—a campaign that threatens to drag the people of Turkey, the entire region and beyond into a bloody conflagration.

The struggle for the democratic and social rights of working people in Syria, Turkey and throughout the planet can be conducted only on the basis of the independent political mobilization of the working class in struggle against imperialism and the capitalist profit system.

VII) … In the news                                                                                                                                       The Economist reports Action Women: President Obama appoints two interventionsists; these being Susan Rice and Susan Power, described as one with enthusiasm for UN led invterventionism  The departure of Tom Donlin removes a voice of caution from White House Debate on Syria.

The Australian reports Jordan key to Pentagon plan for no-fly zone

The Economist in Scratching a living in the Missippi River Delta, highlights the depopulation of the rural south, in particular Lake Village, Chicot Country, AR, and Greenville, MS, that has come as agricultural laborers have been replaced by mechanization, leaving the hubris of a liquor store and pawnshop economy.   

The WSJ reports Skyscraper prices head north

 

Reuters reports Obama to name Jason Furman as Chief Economist    

 

Bespoke Investment Group reports Most short sellers dan’t catch a break. Given the new downward trend in stocks, things should finally be looking up for the short-sellers.  Unfortunately, though, they cannot seem to catch a break.  The table below lists the most heavily shorted stocks in the Russell 1000 (as a percent of float) as of the end of May.  For each stock, we also calculated its performance so far in June.  As shown, the average stock in the table is down 0.93%, which is worse than the average return of all Russell 1000 stocks so far in June (-0.59%).  However, were it not for one stock in the list (Walter Energy – WLT), the average return would be a gain of 0.62%!  Granted, you can’t pick and choose which stocks to use when looking at performance, but one would have thought that these stocks would be performing a lot more poorly given the overall market environment. I comment that it seems to me that the following are good short selling prospects at this time include Specialty Retailer, GME, Movie Production Theater, DWA, Footwear Manufacturer, DECK, and the world leader in high power Fiber Lasers and Amplifiers for material processing, IPGP.

 

Other short selling opportunities abound such as Florida Real Estate Developer, JOE, of which Interactive Buyside in Seeking Alpha reports  JOE’s overhyped asset base consists of secluded rural land in Northwest FL, undeveloped residential lots in vacant communities, and primarily empty commercial acreage that is dependent on the success of a relocated Panama City airport. 

Only The Elect Believe And Experience Very Best Things Of The Mystery Of The Economy Of God … Obama Relates Mass Surveillance Protects Civil Liberties … The Conflict In And About Syria Escalates And Commences To Become The Prelude To The Ezekiel 38 War

June 10, 2013

Financial Market report for the week ending June 10, 2013

 

I … Introduction: Only the elect have basis in reality and from it have the possibility to receive grace, truth, and mercy.  

The apostle Paul reveals that reality is found in Jesus Christ, Ephesians 4:21, which according to the Apostle John has facets of truth and grace, John 1:17. This beloved of the Lord, reveals that mercy is available to those who keep Christ’s word of endurance and shrink not from his name, Revelation 3:8-10.    

 

II … In this week’s financial market trading

II A) … Dispensationalism presents the concept that Liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing Authoritarianism, as the age of statist regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

 

II B) … On Monday, June 3, 2013, Turkey, TUR, plummeted, Japan, EWJ, and Japan Small Caps, JSC, and the Philippines, EPHE, traded lower, as the intraday chart of the S&P 500, SPY, manifested a parabolic rise, as Risk Assets, in particular the Small Cap Pure Value Stocks, RZV, such as the Junior Gold Miners, GDXJ, the Junior Gold Miners, GDXJ, Apparel Retailers DEST, CTRN, NWY, BEBE, BODY, BKE, PSUN, MW, WTSL, EXPR, GES, CBK, the Automobile Retailers, LAD, SAH, KMX, Recreational Vehicles, DW, WGO, and the Financial Services, such as WRLD, EEFT, ENV, GFIG, FXCM, rose, on higher Major World Currencies, DBV, and higher Emerging Market Currencies, CEW, as the US Dollar, $USD, UUP, traded lower, to close at 82.68, down from its recent high of $84.40, ignoring the WSJ report Weak signs for US output:  Factories suffer worst slump since end of recession. US factories in May posted their worst month since the end of the recession, as weakness overseas overwhelmed a still-shaky manufacturing recovery at home.  

 

Three signs of a stock market top.

1) Risk Assets peaking out. The rise in the Small Cap Pure Value Stocks, RZV, relative to the Small Cap Pure Value Stocks, RZV:RZG, has risen to a two year and six month high    

2) Screencast reports that the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years meaning that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.

3) Market Oracle reports Margin debt on the New York Stock Exchange has set a new all-time high. Margin debt is the amount of money borrowed to purchase stocks reached its all-time high in April 2013. Margin debt registered at $384.3 billion as the key stock indices hit new record highs. The highest margin debt ever reached prior to this was in July of 2007, when it stood at  $381.0 billion.

 

The chart of the 200% Dollar ETF, UUP, shows that the price objective of the US Dollar is being achieved; that is the topping out of the US Dollar is coming in around 82.95 to 84.40, as it will be pushed a little higher as Major World Currencies, DBV, and Emerging Market Currencies, trade lower in ongoing competitive currency devaluation, at the hands of currency traders exiting Yen based currency carry-trades, such as the EUR/JPY, and as bond vigilantes call interest rates higher and go short the most toxix of debt, such as Junk Bonds, JNK, on a steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, rising in value.  Soon even the US Dollar, $USD, will be falling lower into the pit of financial abandon, as all forms of fiat wealth, Major World Currencies, DBV, Emerging Market Currencies, CEW, Stocks, VT, and Credit, AGG, trade lower on the exhaustion of the world central banks’s monetary authority.

 

Christopher Quigley writes in Financial Sense,  Get ready to be “Cyprused” at a bank near you.  From an investors perspective it is time to exit both equity and credit investments and start to dollar cost average into the physical possession of gold, both in bullion form and in Internet trading vaults such as Bullion Vault, and for Institutional Investors to do likewise as well as to start short selling.

 

Bloomberg reports American International Group AIG, Prudential Financial, PRU, and a unit of General Electric, GE, were named systemically important by a panel of US Regulators. The companies were  identified by US regulators as potential risks to the financial system in a step toward putting the firms under tighter government scrutiny.

 

Bloomberg reports Assad’s Hezbollah ally prepares northern attack, opposition says. Thousands of troops loyal to Syrian President Bashar al-Assad and allied Hezbollah militiamen are preparing to enter the province of Aleppo, a rebel stronghold close to the Turkish border, activists said. Assad’s forces will seek to enter the province’s northern region, Al-Jazeera television said, citing unidentified rebels

 

CNBC reports Two-thirds of Americans don’t know if they will insure under Obamacare. There’s no assurance folks will be buying insurance under Obamacare, and that could spell trouble for the Affordable Care Act

 

Pater Tenebrarum of Acting-Man blog writes in Zero Hedge, Merkel to Brussels on Fiscal Union: “Nein”. A German election is drawing close and it is evident in many small things that are happening lately. The latest is that Mrs. Merkel is now apparently distancing herself from her erstwhile demands to create a ‘fiscal union’ and give the eurocracy in Brussels more powers. Incidentally, her change of heart comes shortly after her summit with France’s president Hollande, which indicates that the latter has probably let her know that France is none too happy with the idea either. Since this means that the drive toward more centralization will be slowed down, we take it as good news.  “German Chancellor Angela Merkel has come out against handing the European Commission more powers, in the clearest sign yet that she is reining in her ambitions to create a “fiscal union” in which euro members cede control of their budgets to Brussels.

 

The comments, made in an interview with weekly Der Spiegel, come days after Merkel held talks with President Francois Hollande in Paris and the two unveiled joint proposals for the future shape of the euro area, including the creation of a permanent president of the Eurogroup forum of finance ministers.

 

Merkel spoke out strongly in favour of closer fiscal integration last year, but France and some other euro members have deep doubts about ceding sovereignty, a step which would require politically sensitive changes to the EU treaty, and Berlin appears to have realized that this resistance is too great to overcome for now.

 

With a German election looming in September and a new anti-euro party threatening to eat into support for her conservative bloc, Merkel may also be adjusting her message for voters at home, many of whom are leery about ceding national powers.

 

“I see no need in the next few years to give up more powers to the Commission in Brussels,” Merkel said in the interview, adding that she agreed with Hollande on EU member states cooperating more on economic issues.

 

“We are thinking for example of the labour and pension markets but also of tax and social policy. Economic policy coordination in Europe is far too weak, it must be strengthened and this is rather different to giving more competences to Brussels,” she said.”

 

Bloomberg reports EU seeks role in bank shutdowns that goes against German Plan. The European Commission is seeking to give itself the power to shut down failing euro-area banks as part of a draft crisis blueprint that defies German calls for a more decentralized approach. The Brussels-based authority is set to propose that decisions to force losses on crisis-hit lenders’ creditors, as well as other steps to prevent a disorderly collapse, should be taken largely out of national hands, according to a document obtained by Bloomberg News. While the system would include a “newly-created central resolution body,” final decisions would be taken by the commission itself

 

II B) … On Tuesday June 4, 2013, World Stocks, VT, Emerging Markets, EEM, and Aggregate Credit, AGG, both traded lower, as Reuters reports Wall Street ends down on fears Fed may scale back stimulus.    

 

Volatility, ^VIX, rose, as is seen in the charts of TVIX and VIXY.

 

The Steepner ETF, STPP, rose, as the Interest Rate on The US Ten Year Note, ^TNX, traded at 2.14%, as Zeroes, ZROS, and the 30 Year US Governemnt Bonds, EDV, fell more than the US Ten Year Note, TLT. Long Term Corporate Debt, BLV, fell more than Corporate Debt, CSQ, inducing Aggregate Credit, AGG, lower.  

 

Gary Dorsch writes of the rise in the Interest Rate on the 10 Year Government Bond, ^TNX, relating  Dangerous divergences betweens Bonds and Stocks, James Carville, a former political adviser to President Clinton famously remarked at the time that “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody,” he remarked. However, the so-called T-bond vigilantes appeared to be dead and buried over the past few years, as the US-Treasury was able to borrow trillions of dollars, largely financed by the Fed at the lowest interest rates in history. Keeping the T-bond vigilantes on ice, is a key linchpin of the Fed’s Ponzi scheme, that’s used to inflate the value of the US-stock market and keep it perched in the stratosphere.

 

However, last month, (May ’13), something very strange began to happen. It looked as though the long dormant T-bond vigilantes were suddenly beginning to awaken from their slumber. Indeed, – the long-end of the US Treasury bond market suffered its worst monthly decline in 2-½-years, as yields jumped to their highest levels in 13-months. Ticker symbol TLT.N, – the iShares Barclays 20+ Year Treasury Bond fund lost -7% of its market value. It looked as though Wall Street’s bond dealers were whittling down their holdings of T-bonds, – acting upon insider information from the New York Fed, – that the biggest buyer in the T-bond market could soon reduce the size of its monthly purchases and thereby cause T-bond prices to fall

 

The Bernanke Fed is coming under increasing criticism. On May 29th, the 85-year old icon of central banking, – the greatest warrior against inflation in US-history, – former Fed chief Paul Volcker waded into the debate over when the Fed should start unwinding its radical QE operation, arguing that the “benefits of bond-buying are limited and is like pushing on a string.” Volcker launched a scathing critique of the Bernanke Fed, inferring the central bank had become a serial bubble blower. “The Fed is effectively acting as the world’s largest financial inter-mediator. The risks of encouraging speculative distortions and the inflationary potential of the current approach plainly deserve attention,” he warned.

 

Volcker reminded the new breed of Fed lackeys that the central bank’s basic responsibility is to maintain a “stable currency,” and that it should unwind its reckless scheme of massively increasing the US-money supply and blowing bubbles in the stock market. “Credibility is an enormous asset. Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment. The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse,” Volcker warned. Last week, the Treasury’s 10-year yield climbed above the 2%-level, following Volcker’s remarks.

 

Yields on 10-year T-Notes increased by a half-percent in the month of May, including a jump of +16-bps on May 28th, – seen as a signal that the Fed’s would scale back its QE-injections.“A slowing in the pace of purchases could be viewed as applying less pressure to the gas pedal, rather than stepping on the brake,” said Kansas City Fed chief Esther George on June 4th. “It would importantly begin to lay the groundwork for a period when markets can prepare to function in a way that is far less dependent on central bank actions and allow them to resume their most essential roles of price discovery and resource allocation. I support slowing the pace of asset purchases as an appropriate next step for monetary policy. Waiting too long to prepare markets for more-normal policy settings carries no less risk than tightening too soon,” Ms George added.The Kansas City Fed chief cited signs of overheating markets, including margin loans at broker-dealers at a record $384-billion in April.

 

Minor Earthquake in Tokyo Bond market. The recent sharp slide in US T-Notes was preceded by a tremor in the world’s second largest bond market in Tokyo. On April 4th, the Bank of Japan’s (BoJ) new governor, Haruhiko Kuroda, unveiled the most radical scheme ever, – designed to “shock and awe” Japanese bond traders into complete submission. The BoJ said it would double the amount of yen in circulation over the next two years, in order to whip-up inflation in the world’s third largest economy. The BoJ said it would trump the Fed, by printing ¥7-trillion each month, to be used to buy Japanese government bonds (JGB’s).

 

The BoJ was certain that it could continue to arm-wrestle Japanese banks and persuade its loyal citizens into buying 10-year JGB’s at yields of less than 1%, even as the BoJ says its aim is weaken the value of the Japanese yen, increase the costs of imports, and increase the consumer inflation rate to +2%. In other words, the BoJ expects investors to lock in negative yields for the next ten years. However, the gambit began to backfire, when yields on 10-year JGB’s rebounded from a historic low of 0.315% and surged to as high as 1% on May 23rd, – triggering a -7.3% crash in the Nikkei stock index. It was the Nikkei’s biggest one-day fall in 2-years, and kicked off an extended -17.5% slide to 13,050 by June 3rd.

 

It was later revealed on May 30th, that Japan’s biggest banks decided to slash their holdings of JGB’s to ¥96.3-Trillion, in the month of April, – a sign that their selling played a major role in pushing up yields to 1%. Japanese banks were unusually rebellious, – they dumped 11% of their JGB’s holding onto the BoJ’s balance sheet, fearing a major rout in the future. For the BoJ, trying to force JGB yields lower, when its trying to weaken the value of the yen and whip-up inflation, – is like trying to submerge a helium balloon under water.

 

If this exodus from the JGB market continues, it could blow apart the BoJ’s Ponzi scheme. Japan’s outstanding debt is equivalent to 245% of its annual economic output, and 92% of the debt has been financed by domestic savings. But this may not continue. A government panel’s draft report has reportedly warned that there is “absolutely no guarantee” that domestic investors will keep financing government debt. The BoJ has calculated that a rise in JGB yields of just 1% would lead to market losses equivalent to 10% of the core capital for the top Japanese banks, and 20% losses for the smaller regional banks.

 

Stock markets are under the spell of QE. In fact, both the BoJ and the Fed are in the crosshairs of the Bank for International Settlements (BIS), which warned on June 2nd, about the dangers of their ultra-cheap money policies that are driving up stock prices, despite worsening economic news. “Investors have ignored poor economic news as stocks have risen, leaving markets vulnerable to unsettling volatility and potential losses. Excessive monetary easing helped market participants to tune out signs of a global growth slowdown. But the rapid gains left equity valuations vulnerable to changes in sentiment, as witnessed in the recent bout of volatility in Japan,” the BIS warned.

 

Today, US Fed stimulated Homebuilding, ITB, led Risk Assets, Clean Energy, PBD, Wind FAN, Solar Energy, TAN, Biotechnology, IBB, Pharmaceuticals, PSP, Small Cap Pure Value, RZV, US Infrastructure, PKB, Leveraged Buyouts, PSP, and Mobile Home Construction, CVCO, lower. Of note Industrial Miners, PICK, Interent Retail, FDN, and Global ZIRP Induced Paper Products, WOOD, traded lower. Gold Mines, GDX, GDXJ, traded lower Bullion Vault reports Gold price falls as India blocks gold imports.

 

Premium REITS, KBWY, Water Resources, PHO, and Real Estate, IYR, led Yield Bearing Investments, lower.  

 

Semiconductors manifested a blow off top as High Beta, STM, Netherlands based, NXPI, France Based, ALU, and US based, MPWR, ONNN, INTC, TXN, AMAT, XLNX, TQNT, AMBA, SMI, IMOS, INTT, CYMI, DIOD, PLAB led Semiconductors, SMH, seen in Finviz Screener, higher; while Netherlands based ASML, traded lower.   

 

Countries trading lower included Greece, GREK, Egypt, EGPT, the Philippines, EPHE, Emerging Market Technical Leaders, PIE, India, INP, Veitnam, VNM, Sweden, EWD, Australia, EWA, Asia Excluding Japan, EPP, Indonesia, IDX, the Russell 2000, IWM, and China, YAO, China Small Caps, ECNS, China Financials, CHIX.

 

The failure of Credit, AGG, in particular Junk Bonds, JNK, and the derisking and deleverging out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM, on currency carry-trade disinvestment, seen in the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, trading lower, and the Japanese Yen, FXY, trading higher, is a defining characteristic, of Jesus Christ, working in the Economy of God, Ephesians, 1:10, to pivot the world out of the economic and political and economic paradigm of Liberalism and into that of Authoritarianism. The fiat money system introduced by Milton Friedman in 1971, based upon floating currencies died in May 2013; it is being replaced by the diktat money system, where diktat serves as credit, money, power and wealth.    

 

The failure of nation investment is seen in Turkey, TUR, the Philippines, EPHE, Australia, EWA, New Zealand, ENZL, Thailand, THD, Greece, GREK, South Africa, EZA, Peru, EPU, and Chile, ECH.      

 

Japan, EWJ, and Japan Small Caps, JSC, closed higher by as traders gobbled up shares ahead of tomorrow’s speech by Prime Minister Abe, in which he discusses Part III of Abenomics, with financial stocks such as MFG, SMFG, NMR, MTU, and IX, being strong gainers.

 

Tyler Durden reports in Zero Hedge The Debt Of Nations. Following on from our annual update on the wealth (re)distribution of nations, we thought it important to look at the other side of the household balance sheet – that of ‘debt’ to see just how much ‘progress’ has been made in the world. In the aftermath of the credit crisis (and the ongoing crisis in Europe), government debt levels continue to rise but combining trends in household debt highlights countries that have sustainable (and unsustainable) overall debt levels  – and thus the greatest sovereign debt problems. Whether the ‘number’ is from Reinhart & Rogoff or not, the reality is that moar debt is not better and the nations with the highest debt-per-capita may surprise many. Critically, despite the rise in ‘wealth’ from 2000-2008, the ratio of debt-to-net-worth rose on average by about 50% (and in many nations

continues to rise). With the regular occurrence of sovereign debt crises, relatively little attention has been given to the parallel issue of personal debt. Yet household debt has transformed over the past 30 years from low level borrowing mostly securitized on housing assets into wholesale credit seemingly available to anyone for any purpose

 

II C) … On Wednesday, June 5, 2013, the economic supercycle that began in the late 1940s came to an end, as the mother of all bear markets began on the Abenomics crash in Japan, EWJ, JSC, which hit Asia Excluding Japan, EPP, and the Emerging Markets, EEM, quite badly, and turned US stocks, VTI, lower.

Japan’s Nikkei 225, NKY, fell 4% bringing the benchmark index’s losses to ten percent in the last ten trading days since its market peak and adding to pressure on Emerging Market Stocks, EEM, US Stocks, and World Stocks, VT, from both economic data and fears of Fed tapering, commencing the mother of all bear markets.

 

It was the Far East Financials FEFN, Asset Managers, ASMA, such as WETF, BLK, BEN, EV, AMP, WDR, LM, AMG, CNS, IVZ, Investment Bankers, KCE, such as JPM, European Financials, EUFN, such as IRE, Financials, IXG, the Too Big To Fail Banks, RWW, such as BK, C, BAC, Chinese Financials, CHIX, such as SHG, Emerging Market Financials, EMFN, such as BBD, BCH, Regional Banks, KRE, such as RF, ZION, CATY, CPE, SIV, HBAN, GBCI, PACW, SNV, FITB, OSBC, FULT, TRMK, ORIT, BOH, and Stock Brokers, IAI, ETFC, SCHW, TRO, AMTD, ITG, that led the markets lower.    

 

The twin spigots of Liberalism’s Finance, these being trust in the most toxic of debt, as well as currency carry-trade financing failed, on May 24, 2013, transitioning the world from the Liberalism’s Banker Regime into Authoritarianism’s Beast Regime, thus terminating the fiat money system, and birthing the diktat money system.

 

The nation of Greece, traded by the ETF, GREK, is the very linchpin in the Economy of God, Ephesians, 1:10, as the sovereign Lord God, has designed it as a part of a collection of Mediterranean Sea states, known as the PIGS, for their profligacy, to be the beachhead for the rise of the Beast Regime of Revelation 13:1-4, to rise to rule the world in ten regions of totalitarian regional governance, and occupy in all of mankind’s seven institutions, to replace the Banker Regime that has governed the world since the introduction of the Milton Friedman Free To Choose Floating Currency System in 1971.  

 

Fiat money died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies. The monetary stimulus, credit liquidity, and monetization of debt initiatives of the US Federal Reserve and other central banks,  have crossed the Rubicon of sound monetary policy, turning “money good” investments bad.  

 

While the diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW, and Premium REITS, KBWY, and then this week, inducing investors out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM, as well as risk assets such as Biotechnology, IBB, and Small Cap Pure Value Stocks, RZV, which were the loss leader style of the day.

 

Yield bearing stocks trading lower included, DRW, TAO, KBWY, ROOF, AMJ,  AUSE, BRAF, PHO, DBU, and SEA. Dividend Growth, VIG, leader McDonalds, MCD, fell 2.0%.

 

All most all of Asia, Exluding Japan, EPP, traded strongly lower; this included CAF, THD, EWA, KROO, EWH, EWHS, EPHE, IDX, IDXJ, ENZL, EWS, EWSS, EWY, and VNM.

 

Other nations trading lower included, EGPT, EWW, EZA, RSX, ERUS, EWD, EFNL, EWN, EWZ, RSX, ERUS, EFNL and EWN.

 

Sectors trading lower included, IBB, CARZ, PKB, BJK, FXR, IHF, RXI, PSP, PBS, ITB, PJP, SMH, and WOOD.

 

Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, seen in Finviz Screener, traded lower … Industrial Equipment, ROK, AB, ETN, LFUS, traded lower … Regional Airlines, RJET, JBLU, ALK, LUV, SKYW, seen in Finviz Screener, traded lower … Foreign Airlines, ASR, PAC, CPA, RYAAY, seen in Finviz Screener, traded lower … Advertising Agencies, IPG, WPPGY, OMC, and LAMR, seen in Finviz Screener, traded lower.

 

Aggregate Credit, AGG, traded somewhat higher but Junk Bonds, JNK, UJP, and the Euro Yen currency carry-trade, EUR/JPY, continued lower, a trend that developed Friday May 24, 2013.

 

The Australian Dollar, FXA, plummeted, turning Major World Currencies, DBV, lower, and Emerging Market Currencies, CEW, traded lower, as the Japanese Yen, FXY, traded strongly higher, unwinding carry-trade investments worldwide.    

 

Jesus Christ is carring out the economic plan of God, Ephesians 1:10, and is unraveling the Four Apocalyptic Seals, Revelation 6:1-8, to destroy all economic and political life, as well as to take peace from the world, introduce scarcity, and unleash death by all types of bad actors.

 

Turkey, TUR, traded lower again as Bloomberg reportys Lira weakens as Turkish yields climb on sixth day of protests. The lira weakened and bond yields rose as anti-government demonstrations in Turkey continued for a sixthday. Shares slid, with Akbank TAS among the decliners as Bank of America Merrill Lynch cut the lender to underperform. Markets swung to negative after a record rally in two-year bonds yesterday followed the biggest plunge a day earlier. Protesters accusing Prime Minister Recep Tayyip Erdogan of autocratic governance and citing grievances, including alleged police brutality and curbs on alcohol sales, clashed overnight with police, who responded with tear gas and water cannons in about 10 cities.

 

Dow Jones reports IMF to publish paper admitting lapses in Greece bailout. IMF says own projections on Greece too optimistic. Says EU commission weak in crisis management.

 

Dow Jones reports Rehn hits back at IMF over Greece. European Union Economics Chief Olli Rehn had harsh words for the International Monetary Fund Friday as he responded to a report by the IMF criticizing the European Commission over the Greek bailout. “I don’t think it’s fair and just that the IMF is trying to wash its hands and throwing the dirty water on European shoulders,” Mr. Rehn said using unusually tough language.

 

Zero Hedge reports ECB To launch EU-wide audit of Bank’s balance sheets. Under Liberalism, wealth was generated by the world central banks, and was coined by the Too Big To Fail Banks, such as JP Morgan, JPM, via programs such as POMO, as well as by Asset Managers, such as Blackrock, BLK,  via securitization of ETFs, such as RZV, PSP and PJP, for one’s investment gain.  Under Authoritarianism, wealth is generated by the word, will and way regional sovereign bodies, such as the ECB, and is coined by the diktat of sovereign regional nannycrats and statist public private partnerships, such as Macquarie Infrastructure Company, MIC.  

 

II D) … On Thursday, June 6, 2013, World Stocks, VT,  US Stocks, VTI, and Emerging Market Stocks, EEM, bounced higher, as the US Dollar, $USD, UUP, traded strongly lower, to 81.52, taking Major World Currencies, DBV lower, as the Japanese Yen, continued strongly higher. The Swiss Franc, FXR, the British Pound Sterling, FXB, and the Euro, FXE, rose parbolically higher to new rally highs. Today was a risk on currency carry trade day driving a number of sectors higher; these included, ITB, IBB, IGN, PKB, and PJP. Aggregate Credit, AGG, rose, on higher Junk Bonds, JNK.

 

Chris Nichols of The Exchange reports Smucker slumps 4.3% as sales growth comes to a  halt. Smucker, SJM, joins other big name staple producers such as CMP, HRL, GIS, and K, seen in combined Yahoo Finance chart, in a sell off as world cental bank monetary authority has failed to stimulate global growth and trade    

 

Despite  today’s stock market rally, the chart of the EUR/JPY, seen in ratio of FXE:FXY, communicates that the direction of the stock market is inexorable down. The significance of today’s stock rally action is that the plunge protection team and currency traders joined in a rally of the Euro, FXE, despite the WSJ report In Europe, angst fills sovereign bond gap. The cost of insuring some European government debt against default hit a record after regulators issued proposed rules on bank bailouts that would hurt bondholders. The move higher reflects a widening gap between what the market is saying and how the major ratings companies judge these countries. “Further downgrades are certain, and we have not seen the last screen shot of this movie yet,” said Lena Komileva, head of G-7 market economics at Tullett Prebon, a brokerage firm in London. The costs of insuring against a default by Western European sovereign borrowers in the credit default swap market surged, briefly touching a record on Thursday, according to data provider Markit. Swaps prices for Spain, Belgium and Ireland closed at records, according to Markit. The gap between yields on most European sovereign bonds and relatively safe German debt also widened. The angst among investors seemed inspired by a European Union proposal that bondholders should share the future cost of bailing out European banks.  

 

A day is coming soon, when the currency traders will gain the upper hand and call the Euro, FXE, significantly lower, and the Yen, FXY, higher, resulting in deleveraging investors out of currency carry trade risk investment and junk bonds.   

 

Bloomberg reports Draghi acts to expand credit to banks, Doesn’t signal more ECB bond buying. European Central Bank President Mario Draghi cut interest rates and offered banks unlimited cash for three years while damping speculation the ECB will buy more government bonds to stem the region’s debt crisis. Policy makers meeting in Frankfurt today reduced the benchmark rate by a quarter percentage point to 1 percent, matching a record low. They also loosened collateral rules so that banks can borrow more from the ECB and announced two unlimited three-year loans. The measures “should ensure enhanced access of the banking sector to liquidity,” Draghi said at a press conference. Hours before European leaders meet in Brussels, Draghi kept the onus on them to solve the two-year debt crisis by repeating his call for a “fiscal compact” and denying he had hinted the ECB would automatically support such an initiative with more bond purchases. Draghi’s comments roiled markets, with stocks and the euro rising on the bank-lending measures before falling after he damped expectations of more ECB bond buying. The euro sank more than 1 percent and traded at $1.3310 at 6:30 p.m. in Frankfurt. “All euro-area governments urgently need to do their utmost” to deliver fiscal sustainability, Draghi said.

 

Bloomberg reports Weidmann says ECB bond plan tantamount to state financing. Bundesbank President Jens Weidmann criticized the European Central Bank’s bond-buying plan, saying it is “tantamount to financing governments by printing banknotes.” “Monetary policy risks being subjugated to fiscal policy,” Weidmann said in a statement issued by the Frankfurt based Bundesbank today. “The intervention purchases must not be permitted to jeopardize the capability of monetary policy to safeguard price stability in the euro area.” While Weidmann represents Germany, the euro area’s largest economy, he was the only objector on the ECB’s 23-member council, where each national central bank governor has one vote. The Bundesbank, which is required to carry out ECB policy decisions, didn’t say it would stand in the way of bond purchases. “If the adopted bond-purchasing program leads to member states postponing the necessary reforms, this will further undermine confidence in the political leaders’ crisis-resolution capability,” Weidmann said. “The announced interventions in the government bond market carry the additional danger that the central bank may ultimately redistribute considerable risks among various countries’ taxpayers,” Weidmann said. “Such risk-sharing, however, can be legitimately authorized solely by democratically elected parliaments and governments.

 

Alex Barker of FT Brussels Blog reports Arise the Brussels Bank Resolution Authority. After months of deliberation and some not-so-private sparring with Berlin, the European Commission has pretty much anointed who it wants to be the all-powerful bank bailout and clean-up authority for Europe’s banking union: the European Commission. There is no sign of Brussels bowing to pressure from Berlin. At the heart of the Commission’s proposed system is a powerful central authority, which has access to a single bailout fund and the clout to shut down a bank even against the wishes of its home state’s government. Brussels wants it operating by 2015.

What about those German concerns that this would breach the EU treaties? Michel Barnier, the EU commissioner responsible for financial issues, concedes in the paper that “only an EU institution” has the legal authority to take important decisions with European effect. Given there is no legal basis to give the European Central Bank this role, the Commission concludes that the only option is to anoint itself as the top resolution authority.

This goes well beyond the network of resolution authorities — or “board” — that Berlin prefers until the treaties can be changed. The Commission blueprint would create a separate resolution body to prepare decisions for the Commission to take, which is steered by a powerful executive board, dominated by Commission and ECB appointees. Member states could appoint a “limited” number of board members:

In each specific case, an executive board would take all operative decisions regarding what resolution action to propose to the Commission for its adoption. It would also decide autonomously on less discretionary actions involving for instance information gathering from banks and on-site inspections. The executive board would include permanent members appointed by the Commission (as final decision-making authority) and the ECB (as bank supervisor), as well as a limited number of members appointed by directly affected Member States.

To spell it out: the Commission is empowered to independently decide when to close down a bank. It can pull the trigger even when the bank’s parent state thinks it is solvent or disagrees with the form of resolution. Indeed Brussels has the power to shut down the bank even when the ECB as bank supervisor has not said it is in trouble. The only concession to member states seems to be that national authorities would be responsible for discharging the resolution and allocating losses among creditors  but only under the “oversight” of the resolution body. Alongside this legal authority, the resolution body needs access to money. Berlin thinks this should be provided through building up national funds and perhaps knitting them together over time. Barnier goes for a more ambitious option: a single fund for the banking union, built up through private sector contributions: This would provide substantial synergies and enhance financial stability, compared to a mere network of national resolution funds, by pooling resources from and for all participating banks. Furthermore, this would prevent coordination problems arising in the deployment of national funds. Finally, it would be instrumental in breaking the link between sovereigns and banks. It is also the preference of the ECB, as it would strengthen the credibility of the whole mechanism. Banks would contribute “according to their risk” and those countries with existing resolution funds would gradually transfer those to the single pot. Even so it would take time to build up a serious fund. The Commission’s thinks that if the pot proves too small in a crisis, extra money could be raised after the event. The fund could also be empowered to “borrow from the market or for third parties”. “The backstop and the guarantee of the fund would thus be the assets of the euro area banks,” it says.

One interesting omission in this section is any mention of the European Stability Mechanism, the eurozone’s €500bn permanent bailout fund. In their joint letter France’s François Hollande and Germany’s Angela Merkel agreed that the ESM should provide a credit line to the resolution fund. But before any loans are extended the ESM would need Bundestag approval, of course, which is perhaps why the Commission gives the resolution body a wider range of borrowing options. The Commission blueprint, taken as a whole, far outstrips what Merkel and Hollande were able to agree in their letter. The Franco-German plan left a lot of blank spaces in key areas, not least in the exact balance of power between the centre and member states. The Commission’s response is to assume that silence meant centralisation. It’s vision much closer to the pure French (and ECB) view of resolution and pays little more than lip service to Berlin’s legal and political concerns.

There are details still to be settled and of course this is only a discussion paper to the college of EU commissioners — in theory there could be enough objections to overhaul the plan before it is published later this month. But that is unlikely. It looks like Brussels will set a high bar for the talks, which realistically need to be concluded between member states by December

 

Irish Times reports ECB wants changes to bill tackling banking crisis. The ECB wants the Government to change legislation that gives the Minister for Finance broad powers to intervene in the banking sector. The ECB, one of the three institutions backing the €85 billion bailout agreed with the Government last month, has criticised the Credit Institutions (Stabilisation) Bill, which is designed to give the Government the powers it needs to tackle the two year old banking crisis. The ECB has published a legal opinion which states that it fears the law as it stands could usurp its rights over collateral given as security for liquidity it has provided to Irish banks, which owe it €136 billion.

 

Ambrose Evans Pritchard writes Hard-line ECB washes hands of jobless crsis; sees no Japanese deflation. The European Central Bank has refused to take any further measures to lift the eurozone out of recession and curb rising unemployment, counting on spontaneous recovery later this year to do the job. Mario Draghi, the ECB’s president, said the wild moves in currencies and global stock markets over the past two weeks do not change the fundamental picture, though the bank has downgraded its economic forecasts and expects a deeper contraction of 0.6pc this year. “It is not enough to justify immediate action,” he said.

“The ECB seems to have given up. It is as if they have decided that there is not much more they can do and will simply allow events to run their course,” said David Owen from Jefferies Fixed Income.

The Governing Council held interest rates steady at 0.5pc, and discussed a range of measures to alleviate the credit crunch across Southern Europe and boost lending to small business, without reaching any conclusion. “People don’t have definitive ideas yet,” said Mr Draghi.  “What worries us is that the eurozone is moving ever closer to a Japanese deflation trap where animal spirits die and trend growth falls. It is something that a central bank should avoid at all costs,” said Mr Owen.  “Greece, Spain and Cyprus are already in deflation if you strip out tax rises, and Portugal will be soon, and that makes it even harder to stop the debt burden rising. The ECB should have launched quantitative easing a long time ago,” he added.

 

Eurozone core inflation has fallen to a post-EMU low of 0.6pc once adjusted for austerity levies, one shock away from outright deflation that could prove hard to reverse.

“The eurozone is already in a Japan-trap,” said Lars Christensen from Danske Bank. “What we are seeing in the money supply data and falling monetary velocity is exactly what happened in Japan in the 1990s, yet the ECB seems to think everything is fine.”

Mr Draghi said there is no sign of systemic deflation across a wide range of commodities and all sectors. “We don’t see it,” he said.

The German bank Berenberg said Mr Draghi is constrained from taking any action before a crucial decision next week by Germany’s constitutional court on the legality of the ECB’s rescue policies, including its pledge to back-stop the Italian and Spanish debt markets, known as Outright Monetary Transactions (OMT).

“This is now the most important risk to watch in the eurozone,” said Holger Schmeiding, the bank’s Europe economist. “We cannot fully rule out an awkward verdict in which the court may, for instance, attach conditions to any Bundesbank/German participation in ECB actions.”

While the court does not have jurisdiction over the ECB, the OMT would die instantly if judges ruled that Germany may not take part. This would knock away the central prop of EMU crisis strategy over the past year, leaving Italy and Spain once again at the mercy of skittish markets.

Bundesbank chief Jens Weidmann told the court last December that the debt pledge entails huge risks, breaches ECB independence, and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” he wrote, adding that the ECB has no mandate to uphold the “current composition of monetary union”.

Mr Draghi said yesterday that the OMT had been the “most successful monetary policy in recent times”, citing equity rallies and a reversal of capital flight from southern Europe. German exposure to crisis countries through the ECB’s internal Target2 payments system has fallen by €160bn. “It brought stability to markets worldwide,” he said.

Marc Ostwald from Monument Securities said Mr Draghi’s hands are tied. He is being forced to bluff because he cannot secure backing for further stimulus from the Bundesbank or a bloc of northern hawks. “There is complete disagreement on the ECB council. Draghi’s policy of ‘jawboning’ markets with platitudes is dead in the water,” he said.

 

Gary of Between the Hedges posts Handelsblatt reports ECB acting outside mandate, ZEW’s Fuest says. ECB has signaled to financial markets that it will guarantee govt debt without limits, and that’s not within the bank’s mandate, Clemens Fuest, head of Germany’s ZEW Center for European Economic Research, says in an interview. ECB is operating in “grey zone”, he said. Reasoning of ECB is faulted, while bank hasn’t proven wrong the assertion that all it does is ensure cheap credit for countries in crisis. The ECB should step aside and let governments prevent a potential collapse of the euro zone, he said

 

The WWJ reports Austerity Isn’t Europe’s Only Burden. Arguments continue in Europe over whether governments should relax budgets to encourage growth. But some analysts argue this debate is drawing attention from something more important that is generating serious headwinds for the region’s economies: Europe’s broken financial sector. António Borges, a former European director of the International Monetary Fund who is now at the Católica Lisbon School of Business and Economics, says arguing about austerity misses the point. In most of Europe, he says, governments have no scope for expansionary budgets because there is no market appetite for more of their debt.

 

MarketWatch reports Euro zone periphery bond yields spike on ECB comments

 

Business Insider reports Draghi sell off worsens:Peripheral Eurozone sovereign bonds are getting destroyed.

 

The above news reports communicate that the European nations, such as Portugal, Italy, Greece, and Spain, and the European Financial Institutions, EUFN, are insolvent sovereigns and insolvent banking institutions, sustained solely by the monetary authority of the ECB providing seringiorage, that is moneyness, for the fiscal spending of the EU.

 

The Apostle Paul writes that Jesus Christ at the helm of the economy of God, Ephesians 1:10, that is He operating in dispensation for the fullness and completion of every age, era, epoch and time period. The seigniorage, that is the moneyness, of fiat money system in supporting and financing Credit, AGG, Major World Currencies, DBV, Emerging Market Currencies, CEW, is for all practical purposes  exhausted. The seigniorage of the fiat money system, has come to an end. Noow, the seigniorage of its replacement, the diktat money system, is rising to rule mankind’s economic and political economic activity.

 

II E) … On Friday, June 7, 2013, The Plunge Potection Team, PPT, took World Stocks, VT, US Stocks, VTI, and European Stocks, VGK, up strongly as the Euro, FXE, firmed, rising to strong resistance, and the Japanese Yen, FXY, traded lower, after hitting strong resistance. The Action Forex chart of the Euro Yen currency carry-trade, EUR/JPY, seen, in FXE:FXY, shows a trade lower to 50 day support at 97.54 after having fallen from its May 22, 2013 peak. The chart of the S&P 500, $SPX, SPY, shows a trade 1.3% higher on the day, and 0.8%, on the week.  The Australian Dollar, FXA,  lower, and the Indian Rupe, ICN, traded lower, driving Major World Currencies, DBV lower.

 

Emerging Market Stocks, EEM, and Asian Stocks Excluding Japan, EPP, traded lower, as China Stocks, YAO, slid in front of the Monday June 9th, China economic report.  

 

Volatility, ^VIX, traded by TVIX, and VIXY, traded lower, as high beta ETFs traded higher, recovering from the Abenomics Crash. These included SPHB, XRT, FPX, SMH, PKB, RZV, IBB, CSD, PPA, FDN, PSP, IXG, PSCE, RWW, KRE, RXI, KCE, IAI, PBS, IYC, FDN, IGN, IGV, XLI, XTN, and OIH, presented in Finviz Screener.

 

Asset Managers, such as BLK, seen in this Finviz Screener traded higher.

 

Semiconductors, SMH, which have received ongoing currency carry trade seigniorage through a rising EURJPY, and include those seen in this Finviz Screener, traded higher.

 

The chart of US Infrastructure, PKB, shows a rise to the middle of a multiweek and mulitmonth broadening top pattern; and as Street Authority relates when you see the broadenin top, the market will eventually drop.     

 

Aggregate Credit, AGG, traded lower as the Zeroes, ZROZ, the 30 Year US Government Bond, EDV, the US Ten Year Note, TLT, traded lower.

 

In commodities, Gold, GLD, and silver, SLV, traded lower, as Oil, USO, traded higher to strong resistance on the higher Euro, FXE, and the lower Yen, FXY. Silver Mining Stocks, SIL, and Gold Mining Stocks, GDS, traded lower, on their lower commodity counterparts.  

 

IIF) .. Summary of this week’s financial trading   

Friday’s strong rally was simply a short selling opportuntiy, as in a bear marekt one sells into pips, just as in a bull market, one buys into dips. This week Small Cap Pure Value, RZV, rose 1.1%, US Stocks, 0.7%, with the chart of the S&P 500, $SPX, SPY, up 0.8%, Europe,VGK, 0.6, with EIRL, 1.7%, and EWG, 1.2%, World Stocks, 0.3%, China, YAO, -1.2%, while Emerging Markets, EEM, -1.2%, with EMFN, -2.4%, and Asia Excluding Japan, EPP, -2.1%, with FEFN, -1.8, EPHE, -3.2, IDX -3.1, EWH, -2.5, EWA -2., 1 EWY, -2.0, EWS -1.1, THD, -1.1 and ENZL, -1.0.  And EWJ, +1.5, and JSC, -1.2. on the rising Yen, FXY. Countries trading lower included, EGPT, -5.4, EWZ, -2.2,  ARGT, -2.1, INP, -1.6, EZA, -1.5. Yield bearing sectors trading lower included, BRAF,- 4.0, AUSE -2.2, and EPI -1.1.

 

Despite this week’s rally, Stocks, VT, seen for example in the chart of  the S&P 500, $SPX, SPY, have turned lower on the failure of credit, AGG, during May 2013. Fiat money died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies. Yes, a hard killing frost, has come to the credit market, with a parabolic  steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the weekly chart of the Steepner ETF, STPP, rising parabolically in value.

 

Gabrielle Coppolaof Bloomberg reports Foreign investors are dumping Brazilian real-denominated bonds sold overseas after the currency posted the second-biggest plunge in emerging markets. Yields on the country’s real-linked debt due in 2028 have jumped 1.12 percentage points in the past month, touching a record 8.73% on June 3. The bonds lost 13.4% in dollars in the period, the worst among local-currency government notes issued abroad after Peruvian debt. That exceeds the 12.3% loss in real-denominated bonds issued locally.

 

India Earnings, EPI, and Brazil Financials, BRAF, have been leading the Emerging Market Financials, EMIF, lower since early 2013, as is seen in ongoing Yahoo Finance chart.  Nation Investment in India INP, SCIN, failed in January, and Nation Investment in Brazil, EWZ, EWZS, failed in March, and Nation Investment, failed in Asia, EPP, and Japan, NKY, failed in May, leaving Euorpe, VGK, supported by a higher Euro, fXE, and US, VTI, supported by safe haven investment. Yet World Stocks, VT, tradedlower, on the failure of Credit, AGG, -1.8%, in the last month, and Junk Bonds, JNK, -3.5%, in the last month, with Major World Currencies, DBV, and Emerging Market Currencies, CEW, both now trading strongly lower, reflecting that bond vigilantes have control of interest rates, and that the sovereignty and seigniroage of democratic nation states has failed.

 

Blake Schmidt and Josue Leone of Bloomberg report Brazil’s real fell to a four-year low after Standard & Poor’s cut the government’s credit-rating outlook to negative amid an economic slump that’s threatening to drive up the country’s debt levels. The currency depreciated 0.3% to 2.1351 per U.S. dollar. The benchmark Ibovespa stock index, EWZ, tumbled 2.2% to  the lowest level on a closing basis since October 2011. Prices on the nation’s dollar bonds due in 2023 fell, driving yields up 0.07 percentage point to 3.62%.

 

Liberalism’s credit is being replace by Authoritarianism’s debt servitude and austerity. And Liberalism’s currencies are being replaced by the diktat of regional governance.

 

Wealth can no longer be preserved by investing in stocks, but can only be preserved by taking physical possession of gold bullion or by owning and trading it on Internet trading vaults such as BullionVault or Gold Is Money.                 

 

The Risk On Trade, ONN, leaders of the week were the Small Cap Pure Value Stocks, RZV, rising 1.1%, such as those in this Finviz Screener, as  well as the Automobile Dealerships seen in this Finviz Screener, the Restaurants seen in this Finviz Screener, and the Apparel Retailers seen in this Finviz Screener.  Sectors trading lower included, CARZ, -2.7%, US Infrastraucture, PKB, -2.5%, Home Building, ITB, -2.1%,  and Coal, KOL, -2.0%.    

 

Doug Noland in Safehaven.com article Twenty year anniversary of market backstops reports The U.S. dollar index dropped 2.0% to 81.67 (up 2.4% y-t-d). Seen in Stockcharts.com chart, $USD, which closed at $81.69, and Finziz Chart, UUP. For the week on the upside, the yen increased 3.0%, the British pound 2.4%, the Swiss franc 2.0%, the Canadian dollar 1.8%, the Norwegian krone 1.7%, the euro 1.7%, the Danish krone 1.7%, the South African rand 1.3%, the Singapore dollar 1.2%, the South Korean won 1.2%, the Swedish krona 0.9%, the Taiwanese dollar 0.6%, the Brazilian real 0.4% and the Mexican peso 0.3%. For the week on the downside, the Australian dollar declined 0.8% and the New Zealand dollar fell 0.7%   

 

Mr. Noland relates the massive credit swell that began with US Federal Reserve Stimulus of QE1: The Fed’s balance sheet surpassed $1 Trillion for the first time back in 2008. Fed assets are now on track to reach $4.0 TN near year-end.  The dominance of Washington finance has similarly long overstayed its welcome. When the Fed was aggressively expanding its balance sheet in 2008/09, its purchases were essentially accommodating financial sector de-leveraging (i.e. the Fed providing a liquidity backstop for troubled banks, leveraged hedge funds, securities firms, REITs and such). Federal Reserve buying (monetization) over the past six months has been of an altogether different kind. Instead of accommodating de-risking/de-leveraging, the Fed purchases have instead incited risk-taking and leveraged speculation. There’s a heck of a dilemma developing. The Fed has been using its balance sheet to stoke the asset markets, in the process incentivizing risk-taking and leveraging. If the Fed does at some point decide to restrict asset purchases, where will the markets look to for their coveted “liquidity backstop?”

 

“Flow of Funds” data tell the story pretty well. GSE assets surged an unprecedented $148bn in 1994, or 23%, to $782bn. With little fanfare, Fannie and Freddie had morphed from insuring mortgage securities to highly leveraged holders of mortgages and debt that were more than happy to buy huge quantities of securities (at top dollar) in the midst of acute market turbulence. And the GSEs were anything but finished in 1994. GSE assets increased $115bn in 1995, $92bn in 1996 and another $112bn in 1997. When markets were rocked by the collapse of LTCM and attendant speculative deleveraging, the GSE’s expanded holdings an unprecedented $305bn in 1998 – followed by another $317bn in Bubble year 1999. The GSEs added another $822bn during the tumultuous 2000-2002 period. By the end of 2003, GSE assets had inflated to $2.4 Trillion, in the process having transformed the marketplace for mortgage finance, market-based Credit and speculative finance more generally.

 

In the late-nineties, I was explaining to anyone that would listen (basically no one) that the GSEs had evolved into quasi central banks. With the revelation of accounting fraud and malfeasance at Fannie and Freddie, the leveraged speculating community had lost their liquidity backstop. By then, however, the mortgage finance Bubble had gained such powerful momentum that a euphoric marketplace saw no reason to fret. But as mortgage Credit came to so dominate the financial and economic systems, with each quarterly analysis of the Z.1 in the 2006/07 period I would contemplate how the system might function during the next period of market de-risking/de-leveraging. There was no doubt in my mind that the backstop function would rest exclusively with the Federal Reserve.

 

I look at 2013 as nearing the “Twenty-year Anniversary of the Liquidity Backstop”. Well, this is year five of the “global government finance Bubble.” This Bubble encompasses the world’s securities markets. Having played such a profound role in fueling this Bubble. (One can visualize this with the ongoing Yahoo Finance chart of credit investments of MBB, FAGIX, JNK, and equity investmentts of  TLT, KRE, PSP, IAI, KCE, RWW, and BLK)

 

It’s not easy for me to conceptualize how central bank balance sheets will now be looked upon to backstop global markets in the next major de-risking/de-leveraging episode. A serious global de-leveraging would require multi-trillions of liquidity support, which I fear at this point might unleash currency and market chaos.

 

The liquidity backstop issue becomes especially pertinent to the MBS marketplace. Pressure is (again) mounting for Fannie and Freddie to further shrink their holdings. It would appear they’re out of the market backstop business for good. Moreover, pressure mounts for the Fed to wind down its foray into mortgage support (“Credit allocation”). Meanwhile, as the Fed apparently prepares to back away from its historic experiment in suppressing market yields, the situation becomes only more intriguing. MBS are a particularly problematic security in a rising yield and extraordinarily uncertain market environment. Perhaps this helps explain why MBS yields are up 74 bps since May 1st and mortgage borrowing costs this week jumped to a 14-month high.

 

U.S. homebuyers are not alone in confronting rising borrowing costs, while MBS investors have plenty of global company when it comes to contemplating prospective market liquidity backstops. Bloomberg’s William Pesek titled his most recent article “Specter of Another Bond Crash Is Spooking Asia.” “Developing” markets were this week showing heightened instability – bonds, currencies and equities. The thesis of problematic underlying financial and economic fragility is coming to fruition.

(One can visualize this via the ongoing Yahoo Finance chart of JGGS, NKY, EPP, VGK, VTI, DBV, and CEW)

 

Nowhere did the perception of boundless Japanese buying power boost market sentiment more than in peripheral Europe. Notably, when the yen launched its Thursday melt-up, Spanish, Italian and Portuguese bonds were taken out to the woodshed (yields up 25, 23 and 27 bps, respectively). For the week, Portuguese 10-year yields jumped 54 bps to a six-week high (6.14%) – having now reversed the entire “BOJ” rally. Italian and Spanish yields ended the week slightly higher, while their equities markets came under pressure. Notably, Italian stocks were hit for 3.0%. It is worth noting that European financial Credit default swap (CDS) prices jumped higher again this week – and it appears this important risk market has turned increasingly unstable.

 

I have posited that the Greek/European debt crisis was the first crack in the “global government finance Bubble”. Well, we are now witnessing the next important crack unfold in the “developing” markets and economies. And I don’t think it’s a stretch to suggest that another very important crack is emerging in the U.S. bond market (MBS, Treasuries and corporates). U.S. equities markets have shown resilience, not a shocking occurrence with sentiment so bullish and QE effects so powerful.

 

The surge in market yields (and widening spreads) in the face of the Fed’s $85bn portends future liquidity issues.

 

I noted above the “Twenty-year Anniversary of Market Backstops.” I wonder if historians will look back at this period as a strange aberration in financial history. If the Fed really plans on reining in its bloated balance sheet, then the markets will at some point have to contemplate a world without liquidity backstops. From my perspective, that would ensure higher global yields, wider Credit spreads and larger risk premiums generally. In such a world, I would expect corporate profits, inflated by enormous deficits and further inflated by Fed monetization and financial engineering, would deserve higher discount rates and significantly lower equities market valuations. But for now, the focus will be on how the emerging markets dislocation and the unfolding global “risk off” play out

 

Lyubov Pronina of Bloomberg reports The worst month in a year for emerging market currencies, CEW, with South Africa’s Rand leading declines. This was accompanied by a strong sell in Emerging Market Bonds, EMB, and Emerging Market Financials, EMFN; all taking Emerging Markets, EEM, lower, which included the Philippines, EPHE, Thailand, THD, New Zealand, ENZL, Indonesia, IDX, Egypt, EGPT, Mexico, EWW, South Africa, EZA, Chile, ECH, Peru, EPU.

 

EcPiFi reports The M2 Money Supply declined 0.35% on two weeks ago, was up 6.95% on the same period last year and remains largely unchanged from the end of last year (up 0.14%). Perhaps the most interesting development during the previous two weeks is the climb in the 10-year treasury yield which closed the week on 2.01%, up a not insignificant 17 basis points on two weeks ago. The spread between the 10- and the 1-year treasury yield widened by 16 basis points as the latter only increased by 1 basis point. The spread is currently 189 basis points, substantially higher than the long term average of 147 basis points (series starts in 1984), 36 basis points higher than the same period last year and 26 basis points higher than the end of last year. The yield curve, as measured by this spread, has therefore steepened. (This is seen in the weekly chart of Steepner ETF, STPP, steepening for six weeks.) Two weeks ago in this bi-weekly report we wrote: The declines in the growth rates for both M2 and bank credit are, as stated before, important to the extent that money supply and credit help drive stock prices (e.g. see here and here). Paying close attention to the growth rates in the two is perhaps especially important now as we believe the U.S. stock market is expensive in a historical perspective. Readers who are stock market investors can take a look at the following reports (more reports are available at both this website and the economicsnexus.com, just search for “stock market”):

 

Debt monetization on steroids has finally caused the death of credit, money and wealth. Bond vigilantes have called the Interest Rate on the US Ten Year Government Note, ^TNX, higher to 2.16%. And currency traders have successfully sold Major World Currencies, DBV, and Emerging Market Currencies, CEW, driving them lower. The Milton Friedman Free To Choose Floating Currency System has failed, as currencies are no longer floating, they are sinking. Debt deflation, that is currency deflation, currency volatility, unwinding currency carry-trades, and the sale of Junk Bonds, JNK, have turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower.

 

Lisa Abramowicz of Bloomberg reports Losses on junk-bond exchange-traded funds are outpacing the broader U.S. speculative-grade market by the most in three years, signaling a deepening slump for debt that traded at record-high prices less than a month ago. After reaping returns of 127% since 2008, junk-bond buyers are demonstrating concern that rising interest rates will erode future gains as Federal Reserve policy makers consider a pullback from stimulus measures. While ETFs hold less than $40 billion of the $1.15 trillion U.S. high-yield bond market, they act as a quicker gauge of market sentiment because their shares trade more frequently than most corporate bonds.

 

Bloomberg reports on liquidity evaporation, that is liquidity squeeze The rate China’s lenders charge one another on overnight loans jumped the most in almost two years as shrinking capital inflows led to a cash squeeze before a three-day holiday. Yuan positions at local financial institutions, an indication of money pouring into Asia’s largest economy, rose 294 billion yuan ($48bn) in April and China International Capital Corp. estimates the gain slowed to around 100 billion yuan last month.

 

Liberalism’s credit schemes, such as the ponzi scheme of securitization of Mortgage Backed Bonds, MBB, by Mortgage REITS, REM, such as IVR, and the acquisition of Distressed Investments, by the US Federal Reserve, under QE1, like those traded by Fidelity Mutual Fund FAGIX, for US Treasuries, and Japan’s Kuroda Abenomics, have run their course and have resulted in making “money good” investments, in Japan, EWJ, JSC, and Australia, EWA, KROO, “bad”.

 

Charles Stein of Bloomberg reports U.S. bond funds suffered their second-worst withdrawals last week in more than two decades after speculation about an eventual end to the Federal Reserve’s bond purchases sent fixed-income markets lower. Investors pulled $9.1 billion from fixed-income mutual funds and exchange-traded funds in the week ended June 5, Lipper said. That’s the second-biggest redemptions for a week since the company started tracking the data in 1992. Corporate high-yield funds saw redemptions of $3.2 billion, the largest weekly withdrawal on record. Global bond markets posted their biggest monthly losses in nine years in May, as the more than $40 trillion of bonds in the Bank of America Merrill Lynch Global Broad Market Index fell 1.5% on average.

 

Sridhar Natarajan and Mary Childs of Bloomberg report US high-yield funds recorded their biggest outflow on record this week, according to Bank of America. Investors pulled an unprecedented $4.8 billion from funds that purchase notes sold by companies rated below investment grade. That was accompanied by outflows from high-grade funds, the first weekly decline this year, even as leveraged loans attracted about $1 billion, bringing this year’s gains to $28.5 billion, a 38% increase in assets since the start of the year.

 

The banking system, IXG, RWW, EMFN, FEFN, EUFN, KRE, seen in combined ongoing Yahoo Finance Chart, as it is has been known, is starting to collapse, on the bursting of the bubble of Aggregate Credit, AGG. The money of Liberalism is no longer a trustworthy thing. The money of Authoritarianism, that is diktat money, is beginning to win people’s faith and trust, a case in point being that those in Cyprus are now trusting in the ECB’s mandates for regional security, stability, and sustainability.     

 

Liberalism was an age of prosperity and credit that came by trust in the monetary schemes of World Central Bankers such as Ben Bernanke and Hiroki Kuroda with their monetary policies of ZIRP, and Wall Street Bankers with their credit underwriting policies of Dollarization.

 

Under Liberalism, Dollarization facilitated securitization of emerging market bonds, EMB, as the debt monetization of the US Federal Reserve, continually caused a decline of the US Dollar, $USD, UUP; but with the rise of the US Dollar, $USD, beginning in January 2013, the Dollarization scheme, literally blew up, causing deleveraging out of Emerging Market Currencies, CEW, and derisking out of Emerging Market Bonds, EMB, Emerging Market Financials, EMFN, and Emerging Market Stocks, EEM, driving investors into safe haven investment in the most risk of stocks, the Small Cap Pure Value Stocks, RZV.

 

Some might call for a new Britton Woods Agreement, and others such as Robert Wenzel are calling for gold backed currencies, such as a gold backed Chinese Yuan. With Jesus Christ at the helm of the economy of God, Ephesians 1:10, there are three chances of such happening: slim, none, and no way. God from eternity past has purposed that there be five empires to rule mankind, Daniel 2:25-45, before the final one world government, Daniel 7:7; these five are Babylonian, Greek, Roman, then the British Empire and the United States, and then Regional Governance in the world’s ten regions.

 

Authoritarianism is an age of austerity and debt servitude where one complies with and trusts in the schemes of new taxes, bank deposit bailins, and capital controls of regional statist sovereign nannycrats such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, all for regional security, stability and sustainability. Market Oracle reports France imposes cash and gold capital controls

 

III) …  The Conflict In And About Syria Escalates And Constitutes The Prelude To The Ezekiel 38 War.

Battles to move into Lebanon, Syrian rebel leader says

 

Patriot missiles, warplanes sent at Jordan’s request, US says

 

Fall of Qusayr big blow to US and Israel, Hezbollah says

 

In Syrian victory, Hezbollah risks broader fight

 

Unacceptable for Syria to retake Qusayr from rebels, White House says

 

Israel prepares as Syria war nears border

 

Golan Heights seen as becoming dangerous hotspot in escalation of Syrian war

 

Israeli tanks move to Golan Heights’ border

 

EU commits another 400 million euros of aid to Syria

 

Arab League condemns Hezbollah’s role in Syria

 

Putin orders crackdown on Islamists, police detain 300 people

 

Foreign Islamists head to Syria to face Hebollah

 

Hezbollah unites clans to raise border force

 

The Lebanon Daily Star reports Fighting renews in norrthern Lebanon Two rival families, one supporting the Hezbollah-led March 8 coalition and the other pro-Salafists,  fought fierce clashes once more Friday in Tripoli, Lebanon’s second largest city which has been rocked by daily violence linked to the crisis in Syria. Evening rocket attacks between the Salafist Heijar clan and the pro-March 8 Nashar family in Talat Ar-Rifaia wounded at least two people, including Omar Nashar, prompting the Army to intervene to end the fighting, security sources said. The two sides had fought in Tripoli’s Old Souk area Thursday into Friday, the sources said, leading to the wounding of three people. Machine gunfire and rocket-propelled grenades had been used in the fighting between the two families and Army efforts to end the clashes were hampered by the narrow alleyways leading to the clash point. The renewed fighting between the two sides came after the military cautioned citizens of plots against Lebanon and warned them against being dragged into the Syria war. “The Lebanese Army, as much as it’s going to be resolute in its security measures, urges citizens to be aware of the plots aimed at taking Lebanon back and dragging it into a futile war,” the military said in a statement. It called on Lebanese to express political views regarding the Syria conflict “democratically and peacefully and without provoking anyone.”

 

IV)  … What underlies the failure of the economy in Turkey?

Aljazeera asks What inspires Turkey’s protest movement which resulted in unprecedented country wide demonstrations and riots against the Turkish government and its Prime Minster Recep Tayyip Erdogan commencing on May 30, 2013, two days after one hundred activists started a sit-in protest in Gezi Park. Turkish youth, who have often been regarded as apolitical since a military coup in 1980 and its subsequent restoration in 1983, have flowed into the streets, clashing with police across the country.

 

“It is the first time I join a demonstration and I am not affiliated to any political group,” Kerem Gencay, a 28-year-old marketing employee, told Al Jazeera. Like many demonstrators, he stressed that he joined the protests in an individual capacity. “I came here on Friday after the police crackdown on people who were passively resisting to demolition of Gezi Park. I am happy with what it has evolved into because it is right; the government seeks to interfere with people’s lifestyles.”

 

Another protester, 26-year-old publicist Nihan Dinc, said she is worried about the direction of the country under the governing AK Party. “We are here for our freedom, for a space to breath. We are here to be able to kiss in public, consume alcohol, read without any censorship. We are here for a life without any pressure from the state,” Dinc said. Others say the prime minister, who was democratically elected with a large mandate, is acting like an authoritarian. “Prime Minister Erdogan thinks that he is a sultan, he does not listen to anybody, consult with anybody,” said Yesim Polat, a 22-year-old student. “He thinks he can do whatever he wants.” Those views are shared by most protesters. A recent poll by Istanbul Bilgi University researchers who talked to 3,000 activists revealed that the demonstrators’ anger is directed strictly towards Erdogan, not his aides nor his political party; 92.4 percent of the participants said that they have taken to the streets because of Erdogan’s “authoritarian” attitude. Fuat Keyman, a professor of political science at Sabanci University in Istanbul, told Al Jazeera that the recent social backlash was specifically directed at the prime minister. “Five or six years ago there was social reaction against the AK Party. Today Erdogan is the only target,” he said, adding the riots have broken out because there was no response to democratic action. Before the protests erupted, recent developments had worried and frustrated many secular Turks.

 

Erdogan has publicly criticised the content of some TV shows, made frequent statements opposing alcohol consumption, and spoken out against public displays of affection. He recently called all people who consumed alcohol “alcoholics” but then changed his definition to “the ones who drink on a regular basis”. The prime minister also supported an announcement calling on young couples to act “in line with moral values” and not to kiss at a subway station in Ankara. And Erdogan responded to the unrest saying “No one has the right to increase tensions with the excuse that trees are being demolished.” In his references to the issue, he often referred to the economic and environmental success of the government, calling himself “the servant of the nation”. In its almost 11 years of AKP governance, Turkey has achieved unprecedented economic success, transforming a crisis-hit economy into a quickly growing one fuelled by trade and foreign investment.

 

Other voices respond. Meanwhile, other voices in the government as well as Turkish President Abdullah Gul tried to ease tensions. Gul asked the protesters to go home, saying: “The message has been taken. Democracy is not only about [the] ballot box.” Deputy Prime Minister Bulent Arinc apologised for the police’s actions against the initial protests in Gezi Park, though he added the government did not “owe anything to those causing harm”.

 

Liberalism has failed in Turkey, that is investment choice no longer provides reward to those invested in Turkey  Not only has nation state investment, failed in Turkey, but its economy has failed as well, as Turkish government Treasury bonds, its currency, the Lira, and the Istanbul stock market, traded strongly lower. The Turkey ETF, TUR, lost 9.7% this week, taking its value back to the beginning of the year, with a week of social protests by Liberalism’s nonparticipants, who lack a forum for their agenda, a place of gathering to exercise their movement, and an opportunity to exercise personal freedom in kissing and consuming alcohol. CNN reported that Gezi Park, the last green space in central Istanbul, had been scheduled to be replaced with a replica of 19th century Ottoman Empire barracks, which would include a shopping mall. Turkey, like Egypt, EGPT,  is now a failed nation state; both of which document the transition out of Liberalism and into Authoritarianism.   

 

Please consider the idea of the Apostle Paul, writing in Ephesians 1:10, that Jesus Christ is at the helm of the economy of God, and as such, He completed Liberalism in Turkey with the implosion of its economy, terminating all investment choice, and is now introducing diktat.  There is no human action as conceived by the Austrian economists, rather the economic and political events in Turkey are Christ’s handiwork.  He is pivoting the economy 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, 3) from the banker regime of US Dollar hegemony to the beast regime of statist regional governance, totalitarian collectivism, debt servitude and austerity, Revelation 13:1-4, also known as the ten toed kingdom of regional governance, Daniel 2:25-45, where eventually ten kings will come to rule in each of the world’s ten regions, Revelation 17:12.

 

V) … Some be psychopaths.

There be antisocial people; these are three types of beastly people, bears, lions, and leopards. These psychopaths are people who are driven by the need to confront, to be preeminent, or to be busybodies ruling in the lives of other people with rude, preeminent, and even derogatory speech and behavior. Perhaps as much as fifty percent of the population is psychopathic at times, with the other fifty percent in denial of the others psychopathy. Many psychopaths are intermittent, yet some are continual practicioners either in speech and behavior, and become distant from responsible and regardful relations with others, and exist in total denial of reality.  I know some here in the inner city where I live, who have consistently crossed the rubicon of economic regard for others and trespassed so frequently and so aggressively into the personal life of others, that they have become criminally insane resulting in them making death threats upon others; all very chilling really; it’s all part of God’s end time termination of human economic and political experience, as presented in Revelation 6:1-8, where God, beginning with Greek Bailout 1, has released the Four Horsemen of the Apocalypse; and power was given to them over a fourth of the earth, to kill with sword, with hunger, with death, and by the beasts of the earth.   

 

VI) …  Obama relates mass surveillance protects civil liberties.

Jason Ditz of Antiwar reports Obama relates mass surveillance protects civil liberties.  

 

Jason Dits of Antiwar reports US Spy Chief slams reprehensible leak of NSA surveillance

 

Forbes reports Top US intelligence officials repeatedly denied NSA spying on Americans

 

Politico reports NSA targets credit card transactions

 

CNet asks Exactly what is Prism. Billions of calls mined by the USG.

 

The Exchange reports Behind surveillance flap, plunging trust in government

 

Glenn Greenwald of The Guardian reports Boundless Informant: NSA’s secret tool to track surveillance data

 

Lawrence Hurley and Joseph Menn of The Guardian report Few options for companies to defy US intelligence demands

 

Bloomberg reports  Obama surveillance defies campaign civil liberty pledge.

 

Jay Stanley & Ben Wizner of Reuters Blogs Why the Government wants your metadata

 

Conor Friedersdorf of The Atlantic All the Infrastructure a tyrant would need, courtesy of Bush and Obama  

 

Glenn Grewwall of The Guardian writes Boundless Informant: NSA’s secret tool to track surveillance data.

 

Joel Mathis of Philly Mag President Obama’s etrayal of vivil liberties is vomplete

 

Liberty Crier Ron Paul: NSA’s PRISM is an awakening call

 

National Journal reports NSA spying appears to stem from 550 word section of PATRIOT Act

 

Slate writes The foundation of the surveillance state

 

The Washinton Post Intelligence leaders push back against leakers, media

 

Glenn Grenwall of the Guardian reports Edward Snowden: the whistleblower behind the NSA surveillance revelations. The individual responsible for one of the most significant leaks in US political history is Edward Snowden, a 29-year-old former technical assistant for the CIA and current employee of the defence contractor Booz Allen Hamilton. Snowden has been working at the National Security Agency for the last four years as an employee of various outside contractors, including Booz Allen and Dell.

 

Washington Post reporter Barton Gellman writes Code name ‘Verax’: Snowden, in exchanges with Post reporter, made clear he knew risks. Edward Joseph Snowden disclosed some of the most sensitive secrets of a surveillance apparatus he had grown to detest. I asked him, at the risk of estrangement, how he could justify exposing intelligence methods that might benefit U.S. adversaries. “Perhaps I am naive,” he replied, “but I believe that at this point in history, the greatest danger to our freedom and way of life comes from the reasonable fear of omniscient State powers kept in check by nothing more than policy documents.” The steady expansion of surveillance powers, he wrote, is “such a direct threat to democratic governance that I have risked my life and family for it.”

 

Robert Wenzel of Economic Policy Journal reports Ari’s Freedom Switch reports on a Bilderberg attendee and his direct connection to the surveillance state. Bilderberg attendee Alex Karp’s Palentir Technologies works on the integration and analysis of large quantities of data, or as Palantir likes to say, helping to solve the world’s biggest problems. According to the NewYorker, Palentir’s software “helps government agencies track down terrorists, fraudsters, and other criminals, by detecting subtle patterns in torrents of information.” .Palentir Technologies was co-founded by another Bilderberger Peter Thiel. Palentir means “seeing stone” and its niche is cyber security, offense and defense. It’s likely on the case for this Bilderberg meeting.

 

In apocalyptic vision, referencing bible prophecy of Revelation 13:1-4, I relate that under authoritarianism, many of Liberalism’s leaders and their corporations will merge into government to form a cohesive statist panopticon of economic and political experience where all live in totalitairan collectivism under the mandate of soveign regional leaders and regional bodies which govern the use of natural resoures and manage the factors of production for regional security, stability, and sustainability.

 

VII) … The Ethopia Dam

Reuters reports ‘No Nile, No Egypt,’ Cairo warns Over Ethiopia Dam

 

VIII) … Summary: The elect comprehend and have resource, experience, life, virtues and ethics within the economic and political  plan of God.

Only the elect of God believe, know and experience the very best things of God, as his Son, Jesus Christ, reveals the administrative plan of God for the fullness and completion of every age, epoch, age and time period, Ephesians 1:10. This unknown known, is a complete mystery to the fiat.  Liberalism was the age of investment choice. Authortarianism is the age of dikat, an era in which the elect are called to have full knowledge of God’s Will, which provides all spiritual wisdom and understanding, Colossians 1:8-9, in the kingdom of the Son of God’s love, Colossians 1:13; leaving the fiat in the kingdom of darkness, as they flounder in the worship of their own will, in human philosophy and religion, Colossians 2:23.

 

God’s spiritual wisdom goes far beyond heartfelt emotion or a coordinated insight of bible doctrine to be the experience of the very breath of God, reproducing His nature and likeness in the believer.  In other words, spiritual wisdom is not of letters of comprehension, but an immersion in God’s divine nature, providing peace and joy, in a world of hurt and suffering.   

 

Thus motivation comes from the indwelling spirit of God and a mind renewed by the Spirt, so one can understand and interpret what one receives in one’s soul, Colossians 1:9, and thus speak and conduct onself in a manner pleasing to God in all things, bearing fruit in every good work, and growing by the full knowlege of God.  The result of this is that one lives a life of ascendency and becomes a self transcendent individual and lives in the divine nature, adding to ones faith the seven addivites of 2 Peter 1:5-7, so as to make one’s calling and election a genuine thing, so as not to stumble, and to have broad entrance into the kingom off Gods Son, 2 Peter 1:10; such be the economy of God, Ephesians 1:10.   

 

Liberalism’s thought leaders have largely been left leaning economists; these have included Donald Markwell, who Wikipedia relates maintains that the absence of an effective international approach in the spirit of Keynes, would risk allowing the return to play of the economic causes of international conflict which Keynes had identified back in the 1930s.[52] And Brad DeLong, who Wikipedia relates that along with Joseph Stiglitz and Aaron Edlin, is co-editor of The Economists’ Voice[2] And Lawrence Summers, who Wikipedia relates that upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator” arguing that “any honest Democrat will admit that we are now all Friedmanites.”

 

And Liberalism’s greatest, that is most influential, president was Lyndon Banes Johnson, father of the LBJ Great Society Programs, featuring the War On Poverty and an escalation of the Vietnam War. He was succeeded by Richard Nixon who accepted the recommendation by Milton Friedman that the US go off the gold standard, which enabled even greater expansion of the Vietnam War, and development of the Industrial Military Complex. Wikpedia relates that Johnson signed the Immigration Act of 1965. Since the liberalization of immigration policy in 1965,[72] the number of first-generation immigrants living in the United States has quadrupled,[73] from 9.6 million in 1970, to about 38 million in 2007.[74]  Johnson had a lifelong commitment to the belief that education was the cure for both ignorance and poverty, and was an essential component of the American Dream, especially for minorities who endured poor facilities and tight-fisted budgets from local taxes.[77] He made education a top priority of the Great Society, with an emphasis on helping poor children. After the 1964 landslide brought in many new liberal Congressmen, he had the votes for the Elementary and Secondary Education Act (ESEA) of 1965. In 1964, upon Johnson’s request, Congress passed the Revenue Act of 1964 and the Economic Opportunity Act, which was in association with the war on poverty. Johnson set in motion bills and acts,[80] creating programs such as Head Start, food stamps, Work Study, Medicare and Medicaid. During Johnson’s administration, NASA conducted the Gemini manned space program, developed the Saturn V rocket and its launch facility, and prepared to make the first manned Apollo program flights. His legacy includes Interstate 635 in Dallas is named the Lyndon B. Johnson Freeway.

 

Benton te posts 10 things economists won’t tell you (why you shouldn’t listen to them). The above can be restated as “10 reasons why you shouldn’t trust economists”. From Marketwatch.com (hat tip Professor Mark Thornton); I highlight numbers #7 and #8.

 

#7. “We lean to the left.”

As of 2008, nearly half of members of the American Economic Association said they were registered Democrats, while only 17% said they were Republicans. Furthermore, in the same survey (commissioned by Scott Adams, the “Dilbert” cartoonist), 60% of the economists said that among the presidential candidates at the time, they thought Barack Obama would make the most progress on important economic issues if elected. (The survey was managed by The OSR Group, a national public opinion and marketing research company.) A similar survey of members carried out that same year of the NBERfound that 46% identified themselves as Democrats and 10% as Republicans.

Those surveys, the most recent on the topic, suggest that economists skew further Democratic than most of the population—even compared to people with advanced degrees, who have long been skewered as “the liberal elite.” Among people with education beyond a bachelor’s degree, self-described Democrats had a 14 percentage point lead over Republicans among college graduates — with 39% identifying themselves as Democrats and 25% as Republicans, according to a 2012 study by Pew Research Center.Left-leaning political views can even be seen in economists’ reports, some experts say. A 2008 article in the journal American Economist argued that economists over the past half-century have helped sell voters on bigger government. “We find that the increased role of economists in society and in policymaking has led to an increase in favorable attitudes toward government intervention,” wrote the authors, economists Scott Beaulier, William J. Boyes and William S. Mounts. (Boyes describes himself as more libertarian than right or left wing and Beaulier describes himself as a “free enterprise” economist.) Mounts did not reply to requests for comment.)

#8. “We might have an agenda.”

 

The economic paradigm known as Liberalism was one of investment choice, as well as clientelism, and was centered around the US Federal Reserve monetary policy of credit liquidity, which created a historic credit bubble, AGG, which provided a moral hazard based prosperity, and was facilitated by financial system intervention in QE, the pursuit of ZIRP,  the securitization of credit such as Build America Bonds, BAB, and Municipal Bonds, MUB, as well as equities, such as Nation Investment, EFA, in countries, such as Japan, EWJ, and the US, IWM, in the Emerging Markets, EEM, such as Egypt, EGPT, Indonesia, IDX, Chile, ECH, Peru, EPU, and Brazil, EWZ, Leveraged Buyouts, PSP, Mortgage REITS, REM, Residential REITS, REZ, Homebuilding, ITB, Biotechnology, ITB, and Small Cap Pure Value, RZV, by Asset Managers, such as Blackrock, BLK, the issuance of Junk Bonds, JNK, by corporations, the support of housing agencies with mortgage backed bonds, MBB, the encouragement of floating currencies by Milton Friedman, the establishment of a liberal economic knowlege cage by liberal economists, and the stirring of the public mind in Liberalism by liberal journalist Paul Krugman. Those living in the rust belt cities such as Detroit, Chicago, Cleveland, St. Louis and Cincinnati, were participants in Liberalism only to the extent that took out and defaulted on subprime loans. And many young people today are participants in Liberalism to the extent that they took out and/or take out student loans. Many qualified for Social Security Disability, and either ceased to work or never did work, and lived as clients of the state. The development and use of the Euro, FXE, established Greek Clientelism, where many in Greece have state employment as a constitutional guarantee, which the Economist Magazine described as a system of pork and patronage.   

 

Now debt deflation, that is currency and credit deflation, is stalking the globe, devouring who ever it may, destroying both the investment value of credit investments, such as US Government Bonds, GOVT,  and also stocks investments, such as Electric Utilities, XLU, as well, and most importantly nation investment, EFA, especially in the Emerging Markets, EEM, such as South Africa, EZA, Peru, EPU, and Chile, ECH.  

 

It’s only a matter of time before the national sovereignty of democratic states totally gives way, and regional alliances form, fully establishing Authoritarianism, as foreseen by the 300 illuminaries of the Club of Rome in 1968, as organized by the Morgenthau Group, for the purpose of establishing ten regional zones for mutual security, stability, and sustainability.  Such a development is presented in the bible prophecy of the Statue of Empires, Daniel 2:25-45, where a ten toed kingdom of regional governance forms to rule mankind, with toes of iron diktat and clay democracy, where the paradigm is  one of debt servitude and austerity.     

 

Governance and moneyness will no longer be exercised rewarding investment choice as it was under Liberalism. Now, under authoritarianism, rule will come from regional statist leaders exercising diktat.

 

During May 2013, Jesus Christ pivoted the world from the old economy to the new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of statist regional governance, totalitarian collectivism, debt servitude and austerity, as foretold in Bible Prophecy of Revelation 13:1-4, also known as the ten toed kingdom of regional governance, as presented in Daniel 2:25-45. The world is passing into Authoritarianism’s wildcat governance, where leaders will bite, rip and tear one another apart, to become top dog leader, Revelation 13:5-10, and top dog banker, Revelation, 13:11-18.

A See Saw Destruction Of Fiat Wealth Begins With Credit, Currencies, Nation Investment, And Yield Bearing Stocks Falling Strongly Lower On The Exhaustion Of The World Central Banks’ Monetary Authority … The Age Of Investment Choice Has Ended And The Age Of Diktat Has Commenced

June 4, 2013

Milton Friedman’s seigniorage failed the week ending May 31, 2013; the seigniorage of dikat is coming to govern mankind’s economic affairs.

An Introduction

On Friday May 31, 2013, the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.16%, and as a result, credit died in May of 2013, causing the death of fiat wealth.  Debt deflation, that is currency deflation, currency volatility, and unwinding currency carry-trades, turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower.

FT Alphaville chart article relates Suddenly, a bad last day of May for the stock market.  I comment that the great reflation trade, that is the EUR/JPY, seen in Action Forex EURJPY Weekly Report, as of June 1, 2013, and seen in the chart of FXE:FXY, is history, as the mother of all bears markets has started. Imagine the global economic chaos that is coming as this carry-trade unwinds.

Of great significance, the chart of Aggregate Credit, AGG, shows a strong trade lower, being led so by the toxic credit that gave seigniroage to Liberalism’s grand finale rally; this included High Yield Junk Bonds, UJB, Junk Bonds, JNK, Emerging Market Bond, EMB, and Distressed Investments, FAGIX, such as those taken in by the US Federal Reserve under QE 1 to restart the global economy after the 2008 Financial System Crash. The ongoing steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, together with the rise in the Interest Rate on the USTen Year Note, ^TNX, to 2.16%, communicates that the bond vigilantes have gained control of interest rates.

With Aggregate Credit, AGG, trading lower, credit as a political and economic experience, is history. Credit was a pleasant economic experience of the age of Liberalism. With Aggregate Credit’s pivot lower in value, Authoritarianism’s unpleasant experience of debt servitude commenced. In May 2013, the Interest Rate on the US Ten Year Note, ^TNX, entered an Elliot Wave 3 Up, which will utterly serve to destroy credit forever. Not only have Stocks, VT, and Credit, AGG, traded lower, but,  Oil, USO, BNO, Gold, GLD, Silver, SLV, Cotton, BAL, Timber, CUT, Natural Gas, UNG, led Commodities, DBC, lower. All forms of fiat wealth traded lower at the end of May.

Dispensationalism presents the concept that liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing authoritarianism, which is the age of regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

Wealth can only be preserved by dollar cost averaging into the physical possession of gold in the form of gold bullion and in tradeable form on Internet trading vaults such as Bullion Vault and Gold Is Money.

1) … Debt deflation, that is currency deflation, came to nation investment and dividend bearing stocks as the seignorage of the world central banks failed during May 2013; a new seigniorage of regional lords and their economic popes is coming to rule the world’s ten regions.

1A) … On Tuesday, May 28, 2013, a see saw destruction of fiat wealth got strongly underway as Aggregate Credit, AGG, literally collapsed, falling 0.6%, as US Stocks VTI, surged, topping out in value.

Aggregate Credit, AGG, traded lower to levels seen in September 2012, on a steepening ot the 10 30 US sovereign debt yield curve, $TNX:$TYX, as is seen the chart of the Steepner ETF, STPP, steepening, as the Interest Rate on the US Ten Year Note, ^TNX, closed higher at 2.13%.

Ultra High Yield Bonds, UBJ, traded sharply lower, and Junk Bonds, JNK, continued lower.

The longer out US Government Debt, GOV, fell the most, with ZROZ, EDV, TLT, suffered strong declines; Municipal Bonds, MUB, and Mortgage Backed Bonds, MBB, fell sharply.

Longer maturity Corporate Debt, BLV, fell more than Corporate Debt, LQD.

International Corporate Bonds, PICB, World Treasury Debt, BWX, and Emerging Market Bonds, EMB, traded strongly lower.

The collapse of credit means that the monetary policies of the world central banks have crossed the Rubicon of sound monetary policy and have soured investment trust, specifically the trust in the ability of debtors to repay creditors, as well as the ability of the world central banks to stimulate global growth and trade, FXR, and corporate profitability, as well as the ability of Ben Bernanke, Mario Draghi, and Haruhiko Kuroda, to stimulate nation investment, EFA, and small cap nation investment, IFSM.

Richard Hubbard of Reuters reports Pledges from the BoJ and ECB for support boosted stocks world wide, and strengthened the US dollar as well. Investors seized on clear signs of policy support from Japanese and European central banks on Tuesday to drive world shares higher, denting appetite for safe-haven German bonds. The better sentiment also put Wall Street on course for a higher open when trading resumes after Monday’s holidays in the major centers. All three major stock indexes ended last week in negative territory for the first time since mid-April.  Heightened expectations the U.S. central bank could soon taper its stimulus program unleashed turbulence across the markets last week, leaving it to central banks in Japan and Europe to reassure investors their liquidity taps remain open.

Peak Fiat Wealth was attained Tuesday May 28, 2013, as World Stocks, VT, surged 0.7%, but stands below its recent high.  US Stocks, VTI, rose 0.7%, to a new high. Euorpean Stocks, VGK, rose 0.6%, and Asia Stocks, EPP, rose 0.3%.  Indonesia Small Caps, IDXJ, rose 3.3%, Vietnam, VNM, 2.9%, Chinese Small Caps, ECNS, 2.7%, Poland, EPOL, 2.4%, EWHS, 2.3%, Germany Small Caps, GERJ, 1.8%, UK Small Caps, EWUS, 1.3%, Finland, EFNL, 1.2%, Netherlands, EWN, 1.0%, and Ireland, EIRL, 0.9% , all ten to new rally highs. Today was Liberalism’s last stock rally to new highs.

Small Cap Pure Value Stocks, RZV, rose a stunning 2.1% to a new high, which includes Rental and Leasing Services, CAR, HTZ, Casinos, PNK, Specialized Health Care, HLS, ACHC, Personnel Services, TBI, TMH,  Financial Services, CATM, Automobile Dealerships, LAD, Jewelry Stores, TIF,  Consumer Discretionary, POOL, Business Services, EEFT, MDSO, SSTK, POWR, VSEC, WNS, ENV, REIS; and Small Cap Growth Stocks, RZG, rose a strong 1.8%, near their previous high.

The ongoing one month Yahoo Finance of Small Cap Pure Value, RZV, (showing a rally of 10%) World Stocks, VT, Nation Investment, EFA, Us Stocks, VTI, Japan, EWJ, and US Infrastructure, PKB, communicates the surge in wealth coming to the Small Cap Pure Value Stocks as  a blow off market top from speculative investing and short sell covering coming at the end of Liberalism’s world central banks’ credit financed “age of investment”. Authoritarianism’s new era, that being the “age of diktat” is commencing on the failure of the fiat money system.

Stock Brokers, IAI, rose 2.2%, Investment Bankers, KCE, 2.1%, Chinese Financials, CHIX, 2.1 AssetManagers, seen in this Finviz Screener, such as BLK, 1.7%, The Too Big To Fail Banks, RWW, such as JPM, BAC, and C, 1.6%, the European Financials, EUFN, 1.2%, Regional Banks, KRE, 1.2%, and World Financials, IXG, 1.0%.  Nick Barrickman of WSWS writes US banks post record profits in first quarter. US banks posted a record $40.3 billion in the first quarter of 2013, according to a report by the Federal Deposit Insurance Corporation. The surge in bank profits is due to accumulated stimulus coming from ongoing Federal Reserve monetary stimulus, and credit liquidity coming from Global ZIRP.

Other sectors rising strongly included, Clean Energy, PBD, Health Care Providers, IHF, Dynamic Media, PBS, US Infrastructure, PKB, Automobiles, CARZ, IPOs, FPX, Small Cap Energy, PSCE, SpinOffs, CSD, Biotechnology, IBB, Gaming, BJK, Aerospace, PPA, Software, IGV, Networking, IGN, Small Cap Industrials, PSCI, Leveraged Buyouts, PSP, and Pharmaceuticals, PJP.

The Russell 2000, IWM, rose 1.3%, to a new high, with the US Small Cap Growth Stocks, IWO, rising more than the the US Small Cap Value Shares, IWN, on a strong 1.2% rise in Regional Banks, KRE. Automobile Dealers, PAG, SAH, ABG, KAR, AN, KMX,and LAD seen in this Finviz Screener rose strongly.   The Dow, DIA, rose 0.7% to a new high.  The S&P 500, SPY, rose 0.8%.

Monday’s May 28, 2013, collapse lower in Aggregate Credit, AGG, coupled with the surge higher in US HomeBuilding, ITB, US Infrastructure, PKB, and Small Cap Pure Value Stocks, RZV, evidences the grand finale stock market blow off top that has come from the termination of Global ZIRP, that is the final fiat asset inflationary monetary policies of the world central banks, which produced an epic cresting of leverged speculative investing coming from the monetization of debt, carry-trade investing, and the securitization of the most toxic of debt. The multi-generational risk-on hedging of moral hazard is finally coming to an end. David Stockman writes in timely reminder in Economic Policy Journal Fannie Mae: The Deforming Monster.

The pursuit of yield bearing investments is definitely history, it was part of the bygone era of investment choice; this being seen in the turn lower of Electric Utilities, XLU, Global Utilities, DBU, Mortgage REITS, REM, IVR, Residential REITS, REZ, ACAS, AVB, Premium REITS, KBWD, Small Cap Real Estate, ROOF, Global Real Estate, DRW, and Dividends Excluding Financials, DTN, all trading lower on higher interest rates globally and the start of competitive currency devaluation, on the excesses of Global ZIRP.

The daily chart of the 200% US Dollar ETF, UUP, shows the US Dollar, $USD, rising in an ascending wedge pattern, that is a topping out pattern, suggesting that its price objective either has been achieved or will be achieved soon; it has been rising since September 2012, and February 2013, and May 2013 as well.

The rise of the US Dollar, $USD, and the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with the trade lower in Aggregate Credit, AGG, marks the end of the Milton Friedman Free To Choose Floating Currency Banker Regime, and the beginning of the Diktat Beast Regime of Revelation 13:1-4, as Jesus Christ is in dispensation, Ephesians 1:10, pivoting Liberalism to Authoritarianism.

This comes as bond vigilantes are now successful in calling interest rates higher, and currency traders are successful in calling currency values lower in competitive currency devaluation. World Stocks, VT, are now trading lower, as debt deflation is now underway, destroying fiat wealth. All forms of fiat money, that is, major world currencies, DBV, emerging market currencies, CEW, credit, AGG, and stocks, VT, are trading lower on the exhaustion of the world central bank’s monetary authority.

With Jesus Christ at the helm of the economy of God, Ephesians 1:10, the seigniorage, that is the moneyness, of fiat money system has failed; the seigniorage of its replacement, the diktat money system, is rising to rule mankind’s economic and political economic activity.

1B) … Wednesday May 29, 2013, was an epic day in economic and political life, with Stocks, VT, Commodities, DBC, Major Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, as Reuters reporting marketplace fears that the US Fed may start to ease up on its economy boosting stimulus program.

Volaltility , ^VIX, traded by TVIX, VIXY, rose, continuing its rise since May 17, 2013, as the World Stocks, VT, traded 0.9%, lower, Global Producers, FXR, -0.9 ,US Stocks, VTI, -.07, Asia Excluding Japan, EPP, -0.7.  The Russell 2000, IWM, -0.9 and the S&P 500, SPY, -.7. And more significantly, Nation Investment, EFA, -1.0, Emerging Markets, EEM, -1.5, Emerging Market Infrastructure, EMIF, -1.0, and the Emerging Market Financials, EMFN, -1.5.

Countries trading lower included Turkey, TUR, -3.1, Thailand, THD, -2.4, Brazil, EWZ -3.5, Brazil Small Caps, -3.4, on a collapsing Brazilian Real, BZF, which fell 2.7%, South Africa, EZA, -2.6, Hong Kong, EWH, -2.0, EWHS, -1.3, Singapore, EWS, -1.6, EWSS, -1.1, Russia, RSX, 1.6, ERUS, -1.6, Greece, GREK -1.6, Vietnam, VNM -1.6, Indonesia Small Caps, IDXJ, -1.1, Japan, EWJ -1.7, JSC -05. and China, YAO, -0.9

Sectors trading lower today included, Home Building, ITB -3.1, Paper Products, WOOD -1.8, US Infrastructure,  PKB -1.8,  Consumer Discretionary, IYC -1.4, IPOs, FPX -1.2, Small Cap Energy,  PSCE -1.2, Spin Offs, CSD -1.2, and Small Cap Industrials, PSCI -1.1

Home Builder DHI, fell 4.5%; and US Infrastructure Stocks, PKB, trading lower include, Drywall Manufacturer, USG, -4.2%, Wood Trim Manufacturer, AMWD, -3.5%, Building Supply, MAS, -3.4%, Flooring Manufacturer, MHK, -2.6%, Home Interior Supplier, FBHS, -2.5%, Concrete Manufacturer, EXP, -2.5%, Housewares Producer, NWL, -1.9%, Frame Manufacturer, TREX -1.6%, Appliance Manufacturer, WHR, -1.5%, Water Equipment Manufacturer, MWA, -1.2%, Roofing Supplier, BECN -0.9%,

Yield bearing sectors trading lower included Industrial Office REITS, FNIO -3.0, Premium REITS, KBWY -2.9, Chinese Real Estate, TAO -2.8, Residential REITS, REZ -2.5, Energy Partnerships, AMJ -2.4, EMLP, -2.1, Small Cap Real Estate, ROOF, -2.1, Emerging Market Dividend,  EDIV -1.7, Emerging Market Financials, EMFN, -1.6,  European Financials, EUFN -1.6,  Chines Financials, CHIX -1.1, Real Estate, IYR -1.1, Global Real Estte, DRW -1.2, Utilities, XLU-1.5, Telecom, IST, -1.1, and Dividend Excluding Financials, DTN -1.0.

Junior Gold Mines, GDXJ, rose 5.4%, TRX, 11.5%, Gold Miners, GDX, 4.0%, Silver Miners, SIL, 3.4%,  SSRI, 9.2%, as Gold, GLD, rose 1.0%, and Siler, SLV, 0.8%.

Commodities, DBC, traded 0.7% lower

Of profound significance, Major World Currencies, DBV, traded 0.7%, lower, and Emerging Market Currencies, CEW, traded 0.5%, lower, being led so by a sharp decline in the Brazilian Real, BZF; this as Bloomberg reports Brazil raises rates more than estimates as inflation saps GDP.

Mike Mish Shedlock writes Book supporting euro exit becomes instant bestseller in Portugal.The book, “Why We Should Leave the Euro” by João Ferreira do Amaral, has helped ignite a public debate in Portugal about the real cause of the country’s economic pain: Is it only the hated austerity needed to secure European bailout loans, or is the euro? Public lectures, TV debates, newspaper columns and some politicians are starting to explore a question that until recently was confined to university seminars: whether the country has a realistic path to recovery inside the euro.

Along this line of analysis, Libertarian Dr. Richard Ebeling at the Northwood University Blog, writes Mises and Rand, especially, emphasized the importance of man’s use of his reasoning ability to understand and master the world in which he lived, and the importance of reasoned reflection for conceiving rational rules and institutions for a peaceful and prosperous society of free men.  Mises and Rand considered the entire political trend of the 20thcentury to be in the direction of a “revolt against reason.”

Even Hayek, who is sometimes classified as an “anti-rationalist” due to his emphasis on the limits of human reason for designing or intentionally constructing the institutions of society, should also be classified as an advocate of man’s proper use of his reasoning powers when reflecting on man and society. While the phrasing of his arguments sometimes created this confusion, in various places Hayek went out of his way to insist that he was never challenging the centrality of man’s reasoning and rational faculty. Rather, he was reminding central planners and social engineers that one of the important uses of man’s reasoning ability is to understand the limits of what man can and cannot know or hope to do in terms of trying to remake society according to some preconceived design.

Thirdly, all three firmly believed that there was no societal arrangement conceivable for free men and human betterment other than free market capitalism. Only a private property order that respects and protects the right of the individual to his life, liberty, and honestly acquired possessions give people control over their own lives. Only the voluntary associative arrangements of the marketplace minimize the use of force in human relationships. Only the market economy allows each individual the institutional means of being free from the power of the government and its historical patterns of plunder and abuse. And only the market economy gives each individual the latitude to live for himself and use his knowledge and abilities to further his own ends as he best sees fit.

I respond, please consider bible revelation as being both relevant and authoritative, and that thus that faith and sound bible doctrine should be used as a starting point for conversation of economics.

The Apostle Paul wrote that reality is in Jesus Christ, Ephesians 4:24, and that He is sovereign over all things, Colossians 1:15-17, and that He is in charge of the economic and political plan of God, for the fulfillment and completion of every age, epoch, era and time period, Ephesians 1:10. It is on this scriptural reference, that the Dispensationalist Manifest  … http://tinyurl.com/lt8jjgg … serves as the basis of Dispensationalist Economics and establishes the best prism and outline for economic and political thinking as well as virtuous character and ethical relationships.

European economic collectivism came through the adoption of the Euro as a currency on January 1, 1999.  Now fourteen years later, Eurozone nations are insolvent sovereigns. Portugal News reports Public debt soars 250% in just over 2 years. And Reuters reports Italy places 50-year bond, eases refinancing pressure.  Mike Mish Shedlock writes Spain records largest first quarter deficit in history. Insolvent sovereigns cannot provide governance or seigniorage.

The bible is very specific regarding Europe’s future.  The Apostle John, in Apocalyptic Vision, given to him by angels while in exile on the Isle of Patmos, in roughly 90 AD, foretells that statist regional governance will be established in each of the world’s ten regions, as well as totalitarian collectivism, debt servitude, and austerity, in all of mankind’s seven institutions, commencing from the sovereign default and banking system crash of the profligate Mediterranean nation states of Portugal, Italy, Greece and Spain, Revelation 13:1-4.

There will be no escaping for Portugal, or for Germany, as that manner. The periphery indebted nations will soon be revolving as hollow moons about planet Germany. While the Portuguese cannot be Germans, both will be one, living in a diktat union of economic, political, and banking governance. This being confirmed in the bible prophecy of the Statue of Empires, seen in King Nebuchadnezzar’s dream, where ten toes of iron diktat and clay democracy, form as ten regional empires, out of the iron hegemony of the former British Empire and today’s US Dollar Hegemonic Empire, the Unites States of America, Daniel 2:25-45 as Scott Horton relates in audio post America’s World Empire.

The introduction and use of the Euro brought tremendous wealth and a significant increase the standard of living to certain countries and to certain econmic segments within countries, both to those using the Euro, and to those nations using their own national currencies.

The Euro generated wealth was a sugar-high, grand finale blow-off topping and completion, that is fulfillment, coming at the end of a sixty year business cycle, that originated with the creation of Liberalism, beginning with the US Federal Reserve between 1910 to 1913, and which was very much the fulllfillment of bible prophecy of Genesis 35:9-11:  “And God appeared unto Jacob again, when he came out of Padan-aram, and blessed him. And God said unto him, Thy name is Jacob: thy name shall not be called any more Jacob, but Israel shall be thy name: and he called his name Israel. And God said unto him, I am God Almighty: be fruitful and multiply; a nation and a company of nations shall be of thee, and kings shall come out of thy loins”.  God’s promised nation is the United States of America, and the company of nations was the British Empire, and the kings are those ruling and reigning spiritually today with Jesus Christ. The economic segments benefiting from the development and use of the Euro included:

1) Dexia, the French Belgium financial institution active in public finance, specifically the securitization of municipal bonds.

2) French metropolitan governments, and their career politicians such as Francois Hollande, which sold municipal bonds to interest rate hungry US money market funds

3) French vineyands and agricultural businesses.

4) Greece public employees. In a stunning socialist achievement, most all Greeks became “public servants” and had high paying unionized jobs, from which until recently, were protected by the Greek constitution from being terminated.  The Economist Magazine characterized the Greek economy as clientelism, using the words pork and patronage to describe its operation. Ad the United Nations characterizes it as one of the most anticompetitive in the world.  And it is a very closed and highly politicized far left wing society, having only fascist, communist and socialist political parties; there are no centric or right wing parties in Greece; countervailing parties do not exist.

5) Spanish construction companies and home builders.

6) Norway energy development and fish harvesting companies; the list could go on, and on, and on.

A collectivized Europe is the grand design of God, a working of destiny, to produce the failed economic structure, out of which will come Authoritarianism’s Beast Regime to replace Liberalism’s Banker Regime.

New sovereignty and new seigniorage is coming. Out of a soon coming global credit bust and financial system collapse, Revelation 13:3, EU leaders will meet in summits and workgroups to waive national sovereignty and pool sovereignty regionally for regional security, stability and sustainability.  Pooled sovereignty is the EU’s future. Democratic nation states, and traditional banking, along with globalization is history. Through regionalization, regional nannycrats will act in public private partnerships, that is in statist combines of banking, commerce, and trade, will provide the seigniorage, that is the moneyness of diktat.  Diktat will serve as credit, currency, money and wealth.

Jack Ewing of the New York Times reports The European Central Bank warned on Wednesday that the euro zone’s slumping economy and a surge in problem loans were raising the risk of a renewed banking crisis, even as overall stress in the region’s financial markets had receded. In a sober assessment of the state of the zone’s financial system, the E.C.B. said that a prolonged recession had made it harder for many borrowers to repay their loans, burdening banks that had still not finished repairing the damage caused by the 2008 financial crisis. Last year ‘was not a good year for banks at all,’ Vítor Constâncio, the vice president of the E.C.B., said. A similar snapshot of the state of the euro zone economy was issued. by the Organization for Economic Cooperation and Development in Paris. It warned of the dangers posed by weakly capitalized banks, a problem it said underlined the need for European Union leaders to push through with a so-called banking union that would include centralized supervision of lenders. The limited ability of European banks to absorb losses and the lack of a full banking union are potential threats to achieving a lasting stability.

Robert Wenzel of Economic Policy Journal writes President Obama to name Jason Furman as next Chairman of the Council of Economic Advisers.  Jason Furman is a Robert Rubin insider. Wikipedia points out. In 1996, while he was a graduate student at Harvard, Furman was hired by economist Joseph Stiglitz to serve a one-year stint as Special Assistant to the President for Economic Policy in the Clinton Administration and on staff of the Council of Economic Advisers. He later worked with Stiglitz at the World Bank. In 2004, he took a position as Director of Economic Policy for the John Kerry Presidential campaign in 2004. Furman received an MSc from the London School of Economics and a Ph.D. in economics from Harvard University. Also at Harvard, Furman earned a bachelor’s in social studies and a master’s in government. He has worked with former Clinton Treasury Secretary Robert Rubin. In recent years, Furman has worked as a budget expert at the Brookings Institution. There, he directed the Hamilton Project, an economic policy research group founded by Rubin.

Robert Wenzel provides the Juey Morris report  A Guide to understanding the Middle East, Syria, The West and Oil.

Americans tend to think that the Middle East is a basket case and fiery cauldron of evil because it’s Muslim and that those Muslims are terrorists who want to kill us and rain terror upon us.  Is it true?  The answer is an emphatic no! Read the rest of the story here>>

1C) … On Thursday May 30, 2013, rising gold and silver prices blasted Silver Mining Stocks, SIL, 5.6%,  SILJ, 6.6%, and Gold Mining Stocks, GDX, 5.5%, GDXJ, 6.7%, higher. Gold, GLD, rose 1.4%, and Silver, SLV, 1.2%, as the US Dollar, $USD, UUP traded sharply lower, as the Swedish Krona, FXS, the Euro, FXE, the Swiss Franc, FXR, the Brazilian Real, BZA, and the British Pound Sterling, FXB, rose, taking World Stocks, VT, higher, but well below their recent highs. On the other hand, the Indian Rupe, ICN, traded sharply lower,

Clean Energy, PBD, and its solar energy stocks, rose to a new high, taking Semiconductors, XSD, up to its previous high. US Healthcare Providers, IHF, rose to a new high. Indonesia Small Caps, IDXJ, rallied to a new high. The Too Big To Fail Banks, RWW, such as BAC, C, JPM, BK, STI, and PNC,  rose to new highs on continued enthusiasm on recent profitability reports; while the National Bank of Greece, NBG, fell 42%, to close at 7.07, just above its April 8, 2013 value of 6.40; Greece’s major financial institution has collapse. In shart contrast, Stockbrokers, IAI, such as SCHW, and Regional Banks, KRE, such as RF, rose to new highs, taking the Russell 2000, IWM, up near its previous high. Aerospace, PPA, Networking, IGN, and Small Cap Value, RZV, rose to previous highs.

Sweden, EWD, Italy, EWI, Germany, EWG, GERJ, the Netherlands, EWN, and Ireland, EIRL, and Vietnam, VNM, rallied to new highs. European Financials, EUFN, traded higher. On the other hand, Far East Financials, FEFN, The Philippines, EPHE, and Greece, GREK, traded sharply lower. New Zealand, ENZL, Thailand, THD, South Africa, EWZ, and Japan, EWJ, JSC, traded lower.

Benton te writes The real force (for driving the Nikkei, NKY, lower) has been climbing JGB yields or Japan’s crashing bond markets. I comment yes, rising Japanese Treasury rates is seen in the Inverse of the Japanese Treasury Bonds, JGBS, rising in value.  He continues, “It is unclear if the BoJ will be able to cap their interventions, given the repeated attempt by the 10 year JGBs to break the 1% threshold. I believe that the BoJ will be using up much of their programmed asset purchases just to stabilize the bond markets, which won’t be enough to cover her deficits.”  And he adds, “One surprising consoler of today’s Japan’s crash has been the Philippine Phisix, EPHE.  Many have been surprised at such selling violence despite the announcement that the Philippines posted the “best” economic growth in almost 3 years. The mainstream overlooked that today’s Phisix sympathy crash coincides with today’s spike in the yields of the Philippine 10 year bonds. This serves as an example of how interest sensitive stock markets are whether the Nikkei or the Phisix.”

Small Cap Pure Value Stocks, RZV, rose to its previous high on rising STMP, ENV, ROL, FLT, LACO, FHCO, MD, UNTD, WRLD, WWE, SFLY, and ENV. For the most part, these stocks have no real economic value; their moneyness has come largely from investors seeking safe haven from European debt contagion, and from the monetary stimulus of the world central banks and from global carry-trade investing. The Small Cap Pure Value Stocks, RZV, no longer receive moneyness from currencies per say, but rather from speculative leveraged investing.

Global Real Estate, DRW, US Real Estate, IYR, Residential REITS, REZ,  Small Cap Real Estate, ROOF, Chinese Real Estate, TAO, and Energy Partnerships, EMLP, AMJ, traded lower. Natural Gas, UNG, traded sharply lower. The Indian Rupe, ICN, traded sharply lower. Major World Currencies, DBV, and Emerging Market Currencies, CEW, continued lower today.

Economic Policy Journal posts The mayor of Rahmaland makes the cover of TIME. First, Rand Paul appears on the cover of TIME, now Rahm Emanuel. TIME writes: Chicago Mayor Rahm Emanuel left his job as White House Chief of Staff to run a broke, violence plagued city. He has been dubbed “Mayor 1%” by his enemies for cozying up to corporations, and the “murder mayor” for closing 50 public schools, some of which were in gang-troubled neighborhoods. In this week’s TIME cover story, editor-at-large David Von Drehle writes that Chicago “has budget problems and crime problems, problems of inequality and racial division, problems of mutual suspicion and failing schools, of high unemployment and aging infrastructure. And behind it all, special interests so deeply entrenched you need spelunking gear to go after them.” Yet in spite of all those daunting challenges, Emanuel tells Von Drehle, ”This is the happiest I’ve ever been in public life. I’ve always wanted to be mayor.”

1D) … On Friday May 31, 2013, debt deflation, that is currency deflation, currency volatility, and unwinding currrency carry-trades, turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower; this as Aggregate Credit, AGG, turned lower once again. Credit died in May 2013 causing the death of fiat wealth.

Volatility, ^VIX, as seen in the charts of TVIX, an VIXY, rising, showed that it was a pivotal day of derisking out of Stocks, VT, and deleverging out of Commodities, DBC.

Nation Investment, EFA, Small Cap Nation Investment, IFSM, and Emerging Markets, EEM, slid sharply lower today, with Japan, DXJ, EWJ, JSC, Asia Exluding Japan, EPP, Far East Financials, FEFN, such as NMR, IX, MTU, SMFG, MFG, WBK, European Financils, EUFN, such as IRE, Emerging Market Financials, EMFN, such as BAP, CIB, Emerging Market Dividend, EDIV, Chinese Financials, CHIX, Global Financials, IXG, leading lower.

Sectors trading lower included, Steel, SLX, Copper Mining, COPX, Industrial Mining, PICK, Coal Mining, KOL, China Industrials, CHII, Energy Service, OIH, IEZ, and Energy, XLE, XOP, PSCE, on a glut of oil, Biotechnology, IBB, Clean Energy, PBD, and Leverged Buyouts, PSP, on risk off investing, Emerging Market Infrastructure, EMIF, and Global Consumer Discretionary, RXI, on unwinding currendy carry-trade investing, Paper Products, WOOD, on a falling price of Timber Commodity, CUT, and Home Building ITB, on the exhaustion of the US Fed’s Monetary Policies.

Krista Giovacco of Bloomberg reports Private-equity firms from Bain Capital to Onex Corp. are raising loans through companies they own to pay themselves dividends at a pace that exceeds even the frothy days leading to the worst financial crisis since the Great Depression. Borrowers controlled by buyout firms are on pace to raise more than $11.5 billion this month through dividend deals, a record and up from $3.6 billion in April, according to Standard & Poor’s Capital IQ Leveraged Commentary & Data.  An increasing number of borrowers are taking advantage of investor demand for relatively high yields as the Federal Reserve keeps benchmark interest rates at about zero for a fifth year. Rather than refinancing debt at lower interest rates or funding expansion, dividend loans do little more than add leverage.

Stephen Foley of Financial Times reaports Investors are giving up many of the protections that have traditionally accompanied lending to risky companies, with the hunt for high-yielding assets shifting the balance of power towards borrowers. Many of the world’s most highly-indebted companies have been able to issue new loans without covenants, which limit the amount of debt they can take on or which give lenders a major say in the business if its results start to lag. The proportion of so-called ‘cov lite’ loans has soared to more than 50% of all leveraged loan issuance so far this year, twice the level seen during the credit boom in 2007. Leveraged loans are issued by high-risk companies, such as those owned by private equity firms, and sold to investors through the credit markets. Some strategists argue that ‘cov lite’ lending could be a ‘new normal’, the wisdom of which will be tested in the next downturn.

All of the yield bearing sectors trading lower included. Australia Dividend, AUSE, India Earnings, EPI, Brazil Financials, BRAF, Emerging Market Dividend, EDIV, International Small Cap Dividend, DLS, Shipping, SEA, Telecom, IST, Global Utilities, DBU, Electric Utilities, XLU, Mortgage REITS, REM, Global Real Estate, DRW, Chinese Real Estate, TAO, Residential REITS, REZ, and Dividends Excluding Financials, DTN, Energy Partnerships, AMJ, EMLP, traded lower.

Kuroda Abenomics, the BoJ program to end deflation and revitalise the Japanese economy, is failing as Japan, EWJ, JSC, which traded parobolically higher on its anticipation, is now trading verticaly lower on its implementation. In as much as Japanese Financial Institutions, NMR, IX, MTU, SMFG, MFG, hold, according Benton te, 42.7% of all the outstanding JGBS, I consider them to be insolvent financial institutions. Japan’s monetary program induced the failure of Aggregate Credit, AGG, and has started a global currency war by currency traders who are short selling currencies, starting a tidal wave of global competitive currency devaluation, as well as starting derisking out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM.

Of note Monami Yui and Shingo Kawamoto of Bloomberg report Japan’s government bond yields have climbed to levels near lending rates, reducing the incentive for banks to make loans and undermining the effects of the nation’s unprecedented monetary stimulus. The average rate on new long-term loans was 0.9% in April, bringing the gap with yields on benchmark 10-year sovereign notes to 9 1/2 basis points.

Country investment destabilized by Abenomics includes Russia, RSX, ERUS, on a slide in its currency; Thailand, THD, on currency turmoil; India, INP, SCIN, following the  trade lower in the Indian Rupe, ICN; Finland, EFNL, Spain, EWP, Italy, EWI, Netherlands, EWN, Ireland, EIRL, Greece, GREK, on volatile Europen Financials, EUFN;  Peru, EPU and Chile, ECH on falling commodity prices; Turkey, TUR, as its trade gap ballooned in April sending its bonds and the Lira lower; Canada, EWC, on a lower Canadaian Dollar; Brazil, EWZ, EWZS, on a falling Brazilian Real, BZF; Australia, EWA, on a falling Australian Dollar, FXA; South Africa, EZA, on a falling South Africa Rand; New Zealand, ENZL, on a falling New Zealand Dollar; Singapore, EWS, EWSS, Hong Kong, EWH, Malyasia, EWM, Indonesia, IDX, the Philippines, EPHE, on lower Far Far East Financials, FEFN; and Emerging Markets, EEM, on lower Emerging Market Currencies, CEW.

Three weeks ago Bengt Saelensminde wrote Abenomics will eat itself. Japan’s new prime minister hit the floor running. Shinzo Abe came in at the beginning of the year and his new economic plan gave rise to the term ‘Abenomics’. It’s been frighteningly successful in terms of its aims: lowering the value of the yen and introducing a bit of inflation. I say frightening, because they haven’t even reached the peak of the money printing onslaught yet. To put it in perspective, Japan is set to print around $74bn each and every month. In proportion to the size of the Japanese economy, that’s a lot more than the Fed is attempting with QE3. Not only that, but the Japanese aren’t just buying bonds with the cash. They’re investing in the stock market too… even in real estate funds. Of course the stock market is going up!

And there’s another powerful effect. Japan is an export-led economy… so as the yen dives, it’s giving a serious boost to its exports. Yesterday, Sony reported a massive turnaround in fortunes, reporting an annual profit for the first time in five years. That’s because the yen is off some 20% since last November, taking with it about a fifth off Sony’s export prices. No wonder sales are up!

That’s why the stock market is sizzling. Now, I’m sure you don’t need me to tell you that this is a lot of smoke and mirrors. For a start, the falling value of the currency means that your investment wouldn’t have risen by the full 35%. In sterling terms, you’d knock about 15% off that figure. Now, I’m not saying you wouldn’t be happy with a rise of about 20% in just four months.

One of the express aims of Abenomics is to re-acquaint Japan with inflation. Inflation’s perceived importance is a complex issue. But there’s no doubt that it’s largely to do with the nature of debt. Because inflation helps debtors by reducing the real value of their debts. According to Campbell Gunn, a fund manager at T.Rowe, Japan’s ongoing deflation means that real wages are down some 12% since 1997. Imagine that! If your income is falling, then, of course, you’re not terribly motivated to take out a big loan to do anything. And modern economies need new suckers to take on new debts.

But of course, this only helps anyone that wants more debt and anyone that’s heavily borrowed (namely, the banks). It doesn’t help savers (because interest rates aren’t going up) and it doesn’t help the man on the street. I mean, the other day I read that the price of a McDonald’s burger has just gone up by 20% in downtown Tokyo. That’s hardly fantastic news for the average punter. Deflation is not bad for everyone!

And consider that all of this inflation is going to hit the large corporations pretty soon too. Yes, sales have been boosted by the falling yen… but pretty soon, inflation is going to increase costs. The cost of all foreign inputs are going to go up… on average, probably something like 20%. Of course, this takes time to feed through. The firms are currently working off old inventory, and they’re probably currently renegotiating new rates with suppliers. In due course, these cost increases will feed through. Don’t be gored by the bull.  For real economies, this is all a zero sum game. In fact, if anything, all the confusion caused by changing prices and relative currency values will only serve to weaken trade and economies. But the real point I want to make is that this is all good news for stock markets. There’s quite a bit of momentum behind this raging bull now.

FT Alphaville chart article relates Suddenly, a bad last day of May for the stock market.  I comment that the great reflation trade, that is the EUR/JPY, seen in Action Forex EURJPY Weekly Report, as of June 1, 2013, and seen in the chart of FXE:FXY, is history, as the mother of all bears markets has started. Imagine the global economic chaos that is coming as this carry-trade unwinds.

Back on April 7,2013, Gordon Long, with John Rubino wrote in Safehaven.com ABE-nomics has all the ingredients of igniting a global crisis but with the already 25% YTD devalued YEN, Japan has established a new front in the raging global currency wars. Well most definitely, that is the case as the Major World Currencies, DBV, and Emerging Market Currencies, CEW, are selling off, on the failue of Aggregate Credit, AGG, causing derisking and delveraging out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM.

Ambrose Evans Pritchard weighs in relating South Africa is leading nation investment lower on competitive currency devaluation. South Africa’s rand punched through the psychological barrier of 10 to the dollar as investors flee countries with big current account deficits, deemed most at risk. The country’s central bank said it would take action to stem the fall in the rand if moves became “abrupt and disorderly”. The Johannesburg Stock Exchange says foreigners have withdrawn €1.1bn (£940m) from South African bonds over the past 10 days. The Turkish lira fell to the lowest in 17 months against the dollar, though it has just been upgraded to “investment” quality by Moody’s. The Thai baht (THB) fell to a one-year low, a pattern seen in much of emerging Asia. Bond yields have spiked sharply in Turkey, South Africa, Mexico and Hungary, rippling through down corporate spreads.

And back on April 3, 2013, Russ Winter wrote in Seeking Alpha South Africa facing economic, sovereign, currency and mining collapse.  The current situation in the Union of South Africa, EZA, is ominious. Exposure of its currency (ZAR) to large amounts of foreign “hot money” further adds to the impact. Since 2009, gross South Africa public debt grew by about $80 billion, with half picked up by foreign creditor “yield chasers.”  Currently, South Africa only has $40 billion in forex reserves. Given the country’s ballooning trade deficits at 6.3% of GDP, that’s enough to cover about three or four months of import (similar to Egypt: see Economic Collapse in Egypt).  But unlike Egypt, South Africa’s currency is relatively well traded, making it especially vulnerable to a currency-speculator attack. Such an attack is increasingly likely as the country runs out of rope. The rand decline against another second-rate currency, the U.S. dollar, has been steady. South Africa’s fundamentals are overwhelming and getting worse. The country faces inflation, labor unrest, lack of investment and a decaying infrastructure. Electricity costs in the country have jumped an average of 25% over the past three years, hurting its key mining industry. Education is a disgrace. According to the World Economic Forum, South Africa ranks 132nd out of 144 countries for its primary education, and 143rd in science and math. The unemployment rate, officially 25%, is probably nearer 40%. Half of S. Africans under the age of 24 are looking for work and have none. Among those who have jobs, a third earn less than $2 a day. Crime and murder is among the highest in the world and is believed to be under-reported. Typifying the worldwide yield-chasing bubble, South African sovereigns pay only 6.5% This is barely enough to cover inflation in the country, which is reported at around 6%, let alone the credit risk. The rating agencies are once again behind the curve, but late last year they cut the rating to BBB.  From an investor actionable perspective, S. Africa is important for several reasons. A blow up in the currency and sovereign debt will have an impact on the inflated, crowded, emerging bond bubble. Of additional importance to precious metal investors, in particular the PGMs and gold, is that South Africa’s mining decline is not cyclical. It is a collapse. This is removing considerable supply to the market. To my thinking, this makes miners and deposits in the safer jurisdictions that I favor even more valuable. The former No. 1 in production saw gold output fall by 8.1% in terms of volume in January. This comes just months after the agency released numbers revealing an even more drastic output drop of 32.2% in November of last year. Platinum exports were particularly hard hit, falling 18.5% last year. Russia and South Africa produced the great majority of palladium. This ties in directly with South Africa’s rapidly worsening trade deficit issues. Just two decades ago, South Africa led the world in gold production. The country’s output peaked at an average of 1,000 tons in 1970; but by 2012, that outstanding amount had dwindled to a meager 190 tons.

A well known investment principle is that carry-trades depreciate funding currencies while they last, and appreciate them when they unwind. With the rise in the Japanese Yen, FXY, over the last two weeks, Large Cap Growth Stocks JKE, finally was the style loss leader of the day. Investors delveraged out of carry-trade investment in Japan’s HMC, NSANY, KUB, CAJ, SNY, France’s SNY, Switzerland’s ABB, NVS, RIG, WFT, SYT, Ireland’s COV, JHX, Netherland’s PHG, ASML, UN, Brazil’s SID, Taiwan’s TSM, Germany’s SI, SAP, and America’s PPG, AMGN, MU, AMAT, IP, MON. Investors are no longer able to profit from investing in large cap growth companies. The chart of the S&P 500, $SPX, shows a decline of 1.4% on Friday May 31, 2013, and a 1.1%, decline for the week. The era of profitable investing in the S&P 500, SPY, which came via currency carry-trade investing and supported by junk debt, JNK, is done and over.

Of great significance, the chart of Aggregate Credit, AGG, shows a strong trade lower, being led so by the toxic credit that gave seigniroage to Liberalism’s grand finale rally; this included High Yield Junk Bonds, UJB, Junk Bonds, JNK, Emerging Market Bond, EMB, and Distressed Investments, FAGIX, such as those taken in by the US Federal Reserve under QE 1 to restart the global economy after the 2008 Financial System Crash. The ongoing steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, together with the rise in the Interest Rate on the USTen Year Note, ^TNX, to 2.16%, communicates that the bond vigilantes have gained control of interest rates. With Aggregate Credit, AGG, trading lower, credit as a political and economic experience, is history. Credit was a pleasant economic experience of the age of Liberalism. With Aggregate Credit’s pivot lower in value, Authoritarianism’s unpleasant experience of debt servitude commenced. In May 2013, the Interest Rate on the US Ten Year Note, ^TNX, entered an Elliot Wave 3 Up, which will utterly serve to destroy credit forever. Not only have Stocks, VT, and Credit, AGG, traded lower, but,  Oil, USO, BNO, Gold, GLD, Silver, SLV, Cotton, BAL, Timber, CUT, Natural Gas, UNG, led Commodities, DBC, lower. All forms of fiat wealth traded lower at the end of May.

Lisa Abramowicz of Bloomberg reports Junk bonds are headed for their first monthly loss in a year as dealers take on more of the debt amid rising yields and a record pace of issuance. Dollar-denominated speculative grade bonds have declined 0.3% in May after returning 15.4% the previous 11 months, according to Bank of America Merrill Lynch index data. The 21 primary dealers that do business with the Federal Reserve boosted positions in the debt by $2.7 billion in the three weeks ended May 22 to $8.35 billion, as companies sold $44.1 billion of the debt, an unprecedented pace for the period. The losses are prompting a pullback by investors from funds that buy junk debt.”

The chart of the US Dollar, $USD, UUP, shows a trade up for the day to close the week up at $83.30, as Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower as competitive currency devaluation picked up speed, with the currency traders able to sell a number of currncies at will on the credit excesses of the world central bank leaders. Monetization of debt has finally led to the destruction of fiat currencies, turning “money good” investments bad. At one time money had value, because it was scarce, but the Inflationistas, the Credit Giants, have inflated money so much, that it no longer has value. The global credit bubble, and the fiat money bubble has finally burst. The age of fiat wealth appreciation is over, and the age of fiat asset deflation has commenced.

About a century ago competitive currency devaluation policies emerged ago as a means of taking over export wealth from other nations. Today, competitive currency devaluation comes at the hands of currency traders calling and selling currencies lower.  With the Brazilian Real, BZF, the Australian Dollar, FXA, the Indian Rupe, ICN, the Canadian Dollar, FXC, and Emerging Market Currencies, CEW, trading lower, on the failure of Aggregate Credit, AGG, Liberalism’s fiat money system is dying and is being replaced by Authoritarianism’s diktat money system. The Telegraph relates No saviour in sight as world credit cycle rolls over.

Yes, with the rise of the $US Dollar, $USD, beginning in February 2013, the Milton Friedman Free to Choose Floating Currency System (which came on line supporting and defining Liberalism as an economic paradigm beginning in 1971 with the replacement of the gold standard) is in an accelerated state of decay, induced by the collapse of Aggregate Credit, AGG, in May 2013.  EU Observer reports on the destruction of money relating Capital flight continues as savers flee Cyprus banks.

Dispensationalism presents the concept that liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing authoritarianism, which is the age of regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

The world central bankers, together with The Too Big To Fail Bankers, RWW, The European Financials, EUFN, and the Far East Financials, FEFN, defined Libealism’s money; and the Asset Manager, BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN, and BEN, seen in this Finviz Screener, coined Liberalism’s money.

The Economist reports China’s shadow banks, the credit kulaks. The growth in wealth management products reflects deeper financial distortions.  I comment that many are starting to distrust bankers and the institution of banking. Tthe very nature of credit and money has become so inflated and so warped, and so distorted, that they no longer can serve as the basis for economic and political activity.

Please consider that those who set the rules for the formation of the new money will determine everything else. The diktat money system is rising establishing Authoritarianism as mankind’s economic and political paradigm. Diktat money is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity schemes that are experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, and sale of a country’s central bank’s gold reserves, when sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability. The chart of Thailand, THD, shows a weekly loss of 6.3% and Quartz reports Threat of capital controls looms over Thailand as it loses currency war.

2)  … In Political News

Liberty Crier writes The real meaning of President Obama’s national security speeches.  And Dr Worden writes of nullification. As of May 2013, about half of the states, including Kansas, Wisconsin, Texas, Florida, Alabama, Louisiana, Mississippi and Georgia had refused to expand Medicaid as permitted in the federal legislation. Individuals in those states who have incomes from the poverty level ($11,490) to $45,960 will still be able receive federal tax credits to subsidize the purchase of private health insurance. Childless adults below the poverty line, however, will be unable to receive the tax credit or enroll in Medicaid. In those states, those people make too little to qualify for assistance. For example, the Kansas Medicaid program provides no coverage for able-bodied childless adults, and adults with dependent children are ineligible if their income exceeds 32% of the poverty level. A family of three, for example, with an income between $6,250 and $19,530 “will have no assistance,” Sandy Praeger, the insurance commissioner of Kansas, said early in 2013. Nationwide, 5.7 million uninsured adults with incomes below the poverty level were estimated at the time by the Urban Institute to be uninsured under the upcoming Obamacare because they live in states without the expansion in Medicaid. From one vantage point, this is a price of federalism (i.e., semi-sovereign states). From another standpoint, it is an opportunity to live in a society with a small-government, self-reliance philosophy that is more fully actualized into law. It should be noted that that philosophy does not necessarily mean leaving the poorest of the poor to fend for themselves. In Wisconsin, Gov. Scott Walker, who turned down the federal expansion in Medicaid, proposed a plan in February 2013 that would allow extremely poor adults without dependent children to enroll in Badgercare (Wisconsin’s Medicaid program) while shifting those adults in the program with somewhat higher incomes (excepting elderly and the disabled) into the federal marketplace. An estimated 87,000 Wisconsinites would be dropped from Badgercare while 82,000 would become eligible for the program. Even though 5,000 fewer would be in Badgercare, those pushed out would be able to access insurance policies through the federal exchanges. Essentially, Badgercare would shift downward, picking up the most vulnerable while figuring that those on the upper end of Badgercare could afford to pay a small premium for health insurance. A single person with income at the federal poverty level ($11,490) would pay a maximum premium of $228, or just $19 a month, in 2014. “Nineteen dollars a month isn’t an unreasonable amount,” Walker said. “Any reasonable conclusion shows that it’s extremely affordable.” A family of four with an income just above the poverty level ($23,550) would pay an annual premium of $468. Of course, that family would have the freedom to pick among different policies. “Some people will portray this as not caring about people. I think it’s just the opposite,” Walker said as he was unveiling his proposal. “I care too much about the people of this state not to empower them to control their own destiny.” This is vintage “limited government” thinking.

In short, federalism enforced by the U.S. Supreme Court makes it possible for Wisconsin and other states with “small government, personal liberty” majorities as expressed through representation to devise approaches to health insurance that are consistent with the political philosophy even as the governments of other states expand Medicaid. In fact, one state, Massachusetts, had already enacted a law of universal health insurance that has resulted in an astounding 98% of the population being covered. Were it not for Obamacare, it would be possible for a state to adopt a single-payer approach, preferring it to competition, while another state treats health-insurance as a market commodity sans subsidies. In other words, while federal legislation establishes a floor that is in theory a minimum standard for everyone living in the United States, that floor restricts the extent to which the states can diverge in fulfilling their respective political beliefs. Given the interstate diversity, Congress should take care not to put the floor too high.

3) … In Syria News

Reuters reports Assad says Syria received Russian missile shipment. Syria has received the first shipment of a sophisticated air defense system from Russia, President Bashar al-Assad was quoted as saying, sending a signal of military strength days before an EU arms embargo on the country lapses. Russia had promised delivery of the S-300 missile system to the Syrian government despite Western objections, saying the move would help stabilize the regional balance at a time of insurgency in Syria waged by Western-backed rebels. Moscow is a staunch ally of Assad and it has appeared to grow more defiant since the European Union let its arms embargo on Syria expire as of June 1, opening up the possibility of the West arming the Syrian rebels.  Jason Ditz of Antiwar writes Syria missile defense acquisition a Red Line for military action, Israel says.  And Business Insider reports An Israeli attack on new Syrian missiles would kill a lot of Russians.

Wikipedia relates The Russian S-300 Rocket, NATO reporting name SA-10 Grumble, is a series of initially Soviet and later Russian long range surface-to-air missile systems produced by NPO Almaz, all based on the initial S-300P version. The S-300 system was developed to defend against aircraft and cruise missiles for the Soviet Air Defence Forces. Subsequent variations were developed to intercept ballistic missiles.  The S-300 system was first deployed by the Soviet Union in 1979, designed for the air defence of large industrial and administrative facilities, military bases, and control of airspace against enemy strike aircraft. The project-managing developer of the S-300 is Russian Almaz corporation (government owned, aka “KB-1″) which is currently a part of “Almaz-Antei” Air Defence Concern. S-300 uses missiles developed by MKB “Fakel” design bureau (a separate government corporation, aka “OKB-2″). The S-300 is regarded as one of the most potent anti-aircraft missile systems currently fielded.[3] Its radars have the ability to simultaneously track up to 100 targets while engaging up to 12. S-300 deployment time is five minutes.[3] The S-300 missiles are sealed rounds and require no maintenance over their lifetime.

Robert Wenzel of Economic Policy Journal posts What it is like to have green tea with war monger Bernard-Henri Lévy. Katie Rophie writes in NYT writes It is very likely that if you sit with Bernard-Henri Lévy over green tea in the lobby of the Carlyle hotel and he explains his wildly ambitious new exhibition at the Fondation Maeght in the South of France, you will not entirely understand the concept. You will worry that you are being airheaded for not following all the Kant and Goethe thrown around, but you will nonetheless be entirely persuaded that the exhibit is fascinating and important, because Lévy is nothing if not a truly great talker, a creator of excitement, a seducer of more cautious or less resourceful minds, even in his English, or maybe especially in his English, which he apologizes for with panache.

When he isn’t having tea at the Carlye, he is quite the war monger. Wikipedia details some of it Lévy was one of the first French intellectuals to call for intervention in the Bosnian War in the 1990s. In March 2011, he engaged in talks with Libyan insurgents in Benghazi. He prompted and then supported Nicolas Sarkozy’s seeking to persuade Washington, and ultimately the United Nations, to intervene in Libya. … Lévy argues for military intervention in Syria

I comment that the Ezekiel 38 war is coming soon to Syria. This confligration, is one of the most heavily written about subjects in bible prophecy; it will be matched in size and in destruction only to the Battle of Armeddon. Jack Kelley writes on this soon coming war here

4) … The Credit Giants who have stalked the land of promise and prosperity, Genesis 35:9-11, the modern day Nephelim, that is the Giants of Banking, Ben Bernanke, Mario Dragi, and especially Hiroki Kuroda, in going to Zero, have crossed the Rubicon of sound monetary policy, and have spoiled investment trust, with the result that bond vigilantes, are calling interest rates higher, and currency traders are selling currencies lower, destroying money, that is accumulated wealth, beginning first with the yield bearing stocks, especially Utilities, and Real Estate Stocks, and now with Nation Investment, and Small Cap Nation Investment.  

In reference to the pre-deluge days, Scripture reveals that the Nephilim were on the earth in those days, and also afterward. They were the heroes of old, men of renown, Genesis 6:1-4.  And as foretold, as it was in the days of Noah, so it will be in the days of the coming of the Son of Man, Matthew 24:17, and Luke 17:26, communicating that the giants would return doing epic things. No greater thing has been accomplished than the inflation of fiat wealth by the world’s central bankers, making and preparing for the imminent return of Christ.

Please consider that Jesus Christ, God’s Son, has been appointed the sovereign of all sovereigns; He is the head of all sovereign authority, Colossians 1:15. He is before all things, and all things cohere in Him, Colossians 1:16. He is preeminent in all things, Colossians 1:17 … And God has tasked Him with the administrative oversight of all things; specifically He is at the helm of the economy of God, Ephesians1:1, producing Liberalism’s Peak Experience in all of its various facets, bringing them to both fullness and completion.

In February 2013, Jesus Christ pivoted the Emerging Market Miners, EMMT, the Emerging Market Financial Institutions, EMFN, and the Emerging Market Infrastructure, EMIF, lower, only to revive the latter two, to turn them lower again in May 2013, together with with the Emerging Market Bonds, EMB, and the Emerging Market Currencies, CEW, largely fueled by an Abenomics carry-trade.  Industrial Metal Mining, PICK, countries, Peru, EPU, and Chile, ECH, have steadily declined in value.  Mexico traded lowe as its bond yields rose to their highest level since January, sending the Mexico Peso lower. South Africa, EZA, a hotbed of labor difficulties, and a dependent on mining, has plummeted rather steadily since February 2013. Australia, EWA, KROO, and new Zealand, ENZL, turned lower in May on falling currencies.  Now Brazil, EWZ, EWZS, has turned sharply lower on a lower currency as well.  This week Turkey, TUR, traded lower on fears that the Syria war, will become a global conflagration, as Selcan Hacaoglu and Benjamin Harvey of Bloomberg report Steps by the European Union and Russia to arm opposing sides in Syria’s conflict are aggravating tensions over the border in Turkey and increasing investor risk. The cost of protecting Turkish debt against default has risen 21 bps to 133 since car bombings on May 11 killed 52 people in Reyhanli, a town near the Syrian border; and as Turkey’s trade gap ballooned in April sending its bonds and the Lira lower. Thailand, THD, is trading lower on currency turmoil. Mexico, EWW, turned sharply lower in May on a lower Mexico Peso. The Philippines, EPHE, has sold off very sharply, along with the failure of the carry-trade juicke, that is the Far East Financials, FEFN.  This week, Hong Kong, EWH, EWHS, and Singapore, EWS, EWSS, sold off steeply, largely on the trade lower in the Far East Financials, FEFN.  Steel, SLX, Coal Miners, KOL, Uranium Miners, URA, began to sell off right at the first of 2013, and now continued lower again.

Competitive currency devaluation, seen in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, pivoting lower, is part of the great ZIRP unwind, as the monetary policies of the world central banks have finally resulted in turning “money good” investments bad.

The failure of the monetary policies of the world central banks means the death of both credit and money as they have been known. Falling currencies and rising interest rates means the fast destruction of wealth and the banking system as it is has been known.

Please consider the tweets of Lisa Abramowicz credit reporter at Bloomberg as evidence of the pivoting of the world from inflationism to destructionism with the result that the destruction of bonds is now underway ….. On May 30, 2013, Biggest challenge to banks is “not credit risk, its interest-rate risk,” acc’ding to Wells Fargo’s Stumpf at investor conference …..  And tweets on May 30, 2013, Investment grade bonds due in 7-10 yrs have lost 2.6 percent this month, the most since October 2008 ….. And tweets on May 30 2013, Bond buyers are hiding from rising rates in shorter-duration debt ETFs, with the funds seeing a record $17.1 billion of deposits in 2013 ….. And the retweet on May 29, 2013, of Lawrence McDonald ‏@Convertbond QE = Thirst for Yield = One Crowded Trade ….. And the tweet on May 28, 2013, You know the market’s hot when companies sell record volumes of debt to pay their PE owners dividend ….. On May 28, 2013, Investment grade corporate bonds are poised for their biggest monthly loss since November 2011, declining 1.15 percent in May.

And please consider that the tweets of Lisa Abramowics credit reporter at Bloomberg as evidence that the very nature of banking as it has been constructed is coming to an end ….. On May 13, 2013, Wall Street starting to forecast a reduction in U.S. Treasury debt auctions for first time in 3 years.

Debt deflation, is now stalking the globe, devouring who ever it may, destroying both the investment value of credit investments but also stocks investments as well.  It’s only a matter of time before the national sovereignty of democratic states gives way, and regional alliances form, as forseen by the 300 illuminaries of the Club of Rome in 1968, as organized by the Morgenthau Group, for the purpose of establishing ten regional zones for mutual security, stability, and sustainability.

Governance and moneyness will no longer be exercised rewarding investment choice as it was under Liberalism. Now, under authoritarianism, rule will come from regional statist leaders exercising diktat.

Credit, that is trust, collapsed in May 2013, as is seen in the chart of Aggregate Credit, AGG, trading lower parabolically lower in value. The debt laden Electric Utilities, XLU, which were carry-trade darlings, were left abandoned on the dance floor, as investors rushed to the exit doors, on a rapidly steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the chart of the Steepner ETF, STPP, steepening, on the sharp rise in the Interest Rate on the US Yen Year Note, ^TNX.  The interest rate sensitive, Mortgage REITS, REM, such as IVR, traded strongly lower in value. The pursuit of yield, which came with the blow off top in Liberalism’s grand finale rally, and which was in large part seigniorage, that is moneyness of the US Federal Reserve, exhausted in May 2013, turning Retail REITS, O, NNN, GGP, Residential REITS, REZ, Small Cap Real Estate, ROOF, Premium REITS, KBWY, Real Estate, IYR, Global Real Estate, DRW, Industrial REITS, FNIO, and Chinese Real Estate, TAO, sharply lower. Doug Noland reports Freddie Mac 30-year fixed mortgage rates surged 22 bps to 3.81%, with a four-week gain of 46 bps (up 6bps y-o-y). Credit is literally evaporating as Kristine Aquino of Bloomberg reports Asia outside of Japan is poised for its first week in eight without any corporate bond sales denominated in U.S. dollars as regional bond risk and Treasury yields jumped. The drought this week comes after companies raised a record $81.4 billion since the start of 2013, the most for any first five months of the year in Bloomberg compiled figures going back to 1999. The Bond market has turned from risk appetite to risk aversion.

And in yield bearing stocks, Risk on Investing, ONN, has turned to Risk off Investing, OFF, as High Dividend Paying Australia Dividends, AUSE, traded lower on the sharp trade lower in the Australia Dollar, FXA, as well as the Australia Bank, WBK and as Kristine Aquino of Bloomberg reports Reserve Bank of Australia Governor Glenn Stevens has gone an interest-rate cut too far for Mrs. Watanabe, as Japan’s households look closer to home for returns. Aussie uridashi sales slumped 71% to A$1.8 billion ($1.7bn) this year, even as A$9.4 billion in such debt matures in 2013. Japanese investors cut Aussie debt holdings by a record 1.7 trillion yen ($17bn) in the five months through March. Japanese individual investors, a group often nicknamed Mrs. Watanabe because many are housewives, are piling into local assets as unprecedented Bank of Japan monetary easing drives the best equities gains in the developed world.”  Also, India Earnings, EPI, traded lower on the strong trade lower in the Inidan Rupe, ICN. And Brazil Financials, BRAF, traded sharply lower on the trade lower in the Brazilian Real, BZF. And Investors derisked out of higher yield bearing Telecom Stocks, IST, Energy Partnerships, AMJ, EMLP, and Emerging Market Dividends, EDIV.

The souring of investment trust, has terminated Nation Investment, EFA, as well as Small Cap Nation Investment, IFSM.

Corey Rosenbloom posts The crude oil compression continues into June relating “I used a line chart to highlight the compression in price about the $34 central value area or midpoint. We can clearly see a compression in the larger picture but perhaps more importantly for short-term traders in the July 2012 to present activity. “

I comment, the monthly chart compression shows a consolidation triangle with pivot point at 34. This week, the daily chart of Oil, USO, shows a pop higher from last week’s sell off to strong resistance at 34; but then a continual decline, throughout the week to close at 32.61. The direction for oil is now down, as it failed to rise through strong resistance. Massive consolidation triangles, or compressions are akin to broadening top patterns where prices fluctuate, only to fall through the middle point. Bespoke Investment Group reports Record high crude oil inventories. Given such massive supply, the only way for price to go is down.

During May 2013, Jesus Christ, acting in the administrative plan of God for the fullness and completion of the age of Liberalism, Ephesians, 1:10, produced Peak Democratic Freedom, Peak Nation State Sovereignty, Peak Seigniorage, seen in Peak Money, VT, Peak Currencies, DBV, CEW, Peak Credit, AGG, and Peak Clientelism and Dependency as well; all of which came through what Doug Noland terms wildcat finance, that is through speculative leveraged, toxic credit, carry-trade investment, producing Peak Peace and Peak Prosperity, all based on ever increasing moral hazard, and coming with great libertine and ponerous living.

Doug Noland reports what is likely Peak Sovereign Wealth, that is the topping out of the wealth of the Sovereign Money Lords stating  Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $672bn y-o-y, or 643%, to a record $11.145 TN. Over two years, reserves were $1.288 TN higher, for 13% growth …  And it appears that Peak Accessible Wealth of Amreicans has been achieved as he relates  M2 (narrow) “money” supply declined $11.9bn to $10.542 TN. “Narrow money” expanded 6.4% ($637bn) over the past year. For the week, Currency increased $1.4bn. Demand and Checkable Deposits added $3.3bn, while Savings Deposits fell $12.3bn. Small Denominated Deposits declined $1.5bn. Retail Money Funds fell $2.8bn.

Liberalism commenced with the planning and establishment of the Creature from Jekyll Island, that is the US Federal Reserve, between 1910 and 1913; that economic and political experience terminated on the credit excesses of the world central banks in May 2013. Now Authoritarianism is rising as mankind’s economic and political experience.

Jesus Christ, in his task of completing the dependent life experience in Liberalisms’s scheme of clientelism and dependency, as presented in Ephesians 1:10, is suggested in the details of the Robert Wenzel Economic Policy article 7 newly classified mental illnesses. If you can get something declared a “mental disorder,” the money flows, government money and insurance money, to treat the “disorder.”.   The American Psychiatric Association has just released its revised fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, or DSM for short. Below are 7 new “mental illnesses” listed in DSM (via MarketWatch)

1. Premenstrual Dysphoric Disorder;  Symptoms include depression, “feelings of hopelessness” and bloating sensations at specific times during a woman’s menstrual cycle—severe enough to interfere with people’s ability to function at work or school.

2. Hoarding Disorder; MarketWatch says Some DSM critics believe the creation of hoarding disorder could be driven by pharmaceutical interests: “All they are saying is, we think hoarding should be made an illness that we can get paid for,” says McHugh, who believes psychiatrists should investigate the root causes of the hoarding in order to formulate a treatment plan that could involve behavior therapy instead of drugs.

3. Caffeine Withdrawal

4. Rapid Eye Movement Sleep Behavior Disorder. The phenomenon became particularly problematic for comedian Mike Birbiglia after he jumped through a second-story hotel window in a dream about escaping a missile, landing him in the emergency room with glass wounds, says MW.

5. Restless Legs Syndrome

6. Disinhibited Social Engagement Disorder. Children with disinhibited social engagement disorder can be “inattentive and impulsive,” says MW.

7. Central Sleep Apnea and Sleep-Related Hypoventilation. Having trouble breathing at night? You are mentally ill.

I comment that it is likely that the new DSM V definitions of mental illness will serve as a basis for receiving social security disability; this at a time when he number of people receiving SSD is swelling.

Those qualifiying for and receiving SSD, garner $700 Cash, $200 Food Stamps, and up to $700 Rent Assistance via Public Housing or Section 8 Housing, for a total of up to $1,600 a month, which is $19,200 a year. Considering that there are roughly 2000 working hours, that is 52 weeks at 40 hours a week, this government dole is equivalent to working at $9.00 a hour. And those on SSD receive Federal DSHS Obamacare, which provides one doctor visit a month, referral to specialists of all types, no charge prescriptions, and no charge surgery. I know people living on SSD, who have had numerous surgeries and stand as the model of prime health, after having blown out their health on a lifetime of crashing and smashing in bars, as well as after having spent years in prison locked away for antisocial behavior. One individual I know has the jail house tattoos all over him, and bears the name Jesus Christ on his knuckles; he recently told me at a free community meal that he is a libertarian; I wanted to tell him no, you are a libertine, but I did not dare to do so. An inquiring mind asks, has not Jesus Christ awesomly completed his mission of fulfilling Liberalism’s Clientelism and Dependency.

Benton te writes How the Welfare State promotes violence: The Swedish Edition A society that depends heavily on welfare state produces both political and income inequality as revealed by the brewing frictions between natives and foreign born residents in Sweden. Yet the welfare state has been enabled and facilitated by debt and inflation which are the pillars of the paper money system. Today’s global polices have clearly been designed to favor the debtors over creditors. Such been primarily meant to boost the insolvent welfare states, their clients, patrons (political agents, banking system) and other related interests (cronies).

And Benton te writes a fascinating article More signs of the end of easy money? Brazil raises rates amidst stagflation. Tight competition for scarce resources from the sector’s underpinning the property bubble which has been compounded by the burgeoning growth of government spending, all of which has been financed by credit expansion, has led to higher price inflation amidst stagnant growth. In essence, Brazil endures from both stagflation and asset bubbles. Yet the actions of Brazil’s authorities if sustained will put enormous strains on these wealth consuming activities over the near term. This will come with nasty repercussions/ Every boom eventually turns into a bust, as the great Ludwig von Mises warned: But the boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances. Such applies to Brazil’s boom bust cycle.  I comment that Brazil Financials, BRAF, that is BBD, and ITUB, plummeted 5%, Brazil, EWZ, 4%, and Brazil Small Caps, EWZS, 3%; and the Brazilian REAL, BZF, plunged 2.4%, in immediate reaction to the news.

David Biller and Juan Pablo Spinetto of Bloomberg repaort The second-biggest depreciation among major currencies has failed to stop the deterioration of Brazil’s current account, signaling the real may need to weaken further to restore competitiveness. Brazil’s current account gap surpassed 3% of gross domestic product in April, the widest in almost 11 years. The Brazilian currency lost 25% since reaching a 12-year high on July 26, 2011, the worst performance among major currencies after the South African rand. In the medium-term ‘the currency would have to weaken to equilibrate somehow this current account balance,’ Paulo Vieira da Cunha, a former Brazil central bank director, said. ‘If you’re running into these very large current account deficits, there’s something the matter.’”

Brazil suffers from the Twin Crises of Dollarization, that is price inflation and stagflation, as a result of what Matias Vernengo terms Dollarization.

And Benton te writes another interesting article Fitch defies S&P on China’s credit bubble.  Defying the consensus, US Credit rating agency Fitch ratings says China’s bubble is unsustainable. In short, current inflationist policies by the Chinese government motivates the public to speculate on housing and other financial packages rather than invest on productive enterprises. Such housing bubble has likewise drawn in hot money as shown by the chart from Zero Hedge.  The Chinese government has recently moved to curtail hot money flows using copper imports to facilitate “carry trades” based on “interest rate arbitrages”. Going back Fitch. Ms. Chu says China’s statistical data has been unreliable. Importantly she says that much of what I call Ponzi finance may have found a channel in the burgeoning “Shadow Banking Sector”. The Moody’s estimates that China’s Shadow Banking System have reached 29 trillion yuan or  $4.7 trillion  compared to 17.3 trillion yuan in 2010. Shadow banks are manifestations of regulatory arbitrages or the circumvention of regulations. China’s shadow banks has been mainly through Wealth Management Products (WMP) which have mainly been about short term financing. Quoting Ms. Chu from another article: WMPs are vehicles that can borrow/lend, and banks engage in transactions with their own and each other’s WMPs. This makes the pools of assets and liabilities tied to WMPs in effect second balance sheets, but with nothing but on-balance-sheet liquidity, reserves, and capital to meet payouts and absorb losses. These hidden balance sheets are beginning to undermine the integrity of banks’ published balance sheets.

Bloomberg reports Chinese banks are adding assets at the rate of an entire U.S. banking system in five years. To Charlene Chu of Fitch Ratings, that signals a crisis is brewing. Total lending from banks and other financial institutions in China was 198% of gross domestic product last year, compared with 125% four years earlier, according to calculations by Chu. ‘There is just no way to grow out of a debt problem when credit is already twice as large as GDP and growing nearly twice as fast,’ Chu, 41, said. Chu’s view puts her in a minority among those charting the future of the world’s biggest nation. She questions how long China can maintain the model of growth driven by bank lending that has allowed its economy to sidestep the global financial crisis. Her views have struck a nerve. ‘Everyone is talking about credit, about the credit cycle, leverage and credit-quality problems,’ said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, adding that there’s not enough good data available. ‘It’s a big black box, and it’s quite scary.’”

Real Estate Investment is now in a bear market. Chinese Real Estate, TAO, with only the exception of Residential REITS, REZ, has led real estate investing over the last five years, as is seen in the ongoing combined Yahoo Finance chart of DRW, REZ, TAO, IYR, FNIO, and ROOF. US Federal Reserve Quantitative Easing, was primarily oriented to the restoration of bank owned real estate investments; it accomplished its goal in May of 2013 as Nick Barrickman of WSWS writes US banks post record profits in first quarter. US banks posted a record $40.3 billion in the first quarter of 2013, according to a report by the Federal Deposit Insurance Corporation. Real Clear Markets weighs in relating Financialization of the economy suffocates living standards.

Peter Schiff writes The great reflation (Some take) the strong housing data is taken as proof that the economy has turned around and that a recovery is under way. Cooler heads may simply see how government policies have channeled money into real estate in order to reflate a bubble that has been collapsing for the last five years. Although the money is entering the market through slightly different paths than it did in 2005 and 2006, its effects on housing, and the broader economy, are the same as they were before the bubble burst. When the inevitable happens again, the ensuing damage will be eerily familiar. The truth is that most buyers cannot afford today’s prices without the combination of government guarantees and artificially low mortgage rates. The Federal Reserve has been conducting an unprecedented experiment in economic manipulation. By holding interest rates near zero and by actively buying more than $40 billion monthly of mortgage-backed securities and $45 billion of Treasury bonds, the Fed has engineered the lowest mortgage rates in generations. At the same time, Federal control of the mortgage industry has become nearly complete, with government agencies Fannie Mae, Freddie Mac, and the FHA buying or guaranteeing virtually all new mortgages. In addition, a variety of Federal programs, such as the Home Affordable Modification Program (HAMP) are in place to help keep underwater homeowners in homes that they could not otherwise afford. Taken together, these programs create far more favorable terms for home buyers than those that existed before the crash. The “wealth effect’ from rising home prices combined with the similar influence of rising stock prices creates an aura of recovery. In fact, this week’s revisions to first quarter GDP revealed that consumer confidence and spending are up despite real discretionary per capita incomes plunging at a 9.03% annualized rate. That is worse than the largest plunge during the 2008-2009 crisis (7.52%). Additionally, the household savings rate fell to an abysmal 2.3%, the lowest since the 3rd quarter 2007. Debt-financed consumption supported by inflated asset prices is what led to the financial crisis of 2008. It’s amazing how willing we are to travel down that road again.

The European Financials, EUFN, have been a great reflation trade, as Viral Acharya, Sascha Steffen of write in Vox The banking crisis as a giant carry trade gone wrong A pernicious aspect of the Eurozone crisis is the ‘doom loop’ linking European banks and governments. This column argues that poor European policy choices in the wake of the 2008 Global Crisis worsened the problem. Rather than being forcefully recapitalised as in the US and UK, many Eurozone banks were left undercapitalised and free to gamble for redemption. In what may be the greatest carry trade ever, they borrowed cheap, first in short-term debt markets and then from the ECB, to invest in high-yield but risky sovereign debt. Substantial bank recapitalisations against sovereign-bond losses is the way forward.

And the Financial Times reports BIS warns of dangers of cheap money driving up stock prices. Markets are “under the spell” of the world’s central bankers, with cheap money driving stock prices to record highs despite a lack of good economic news, the Bank for International Settlements has said.

Ambrose Evans Pritchard reports BIS records startling collapse of eurozone interbank loans. Cross-border lending is falling drastically across the western world as banks slash exposure to Europe and bend to tougher capital rules, according to data from the Bank for International Settlements.

Economic Times reports Thousands protest Europe crisis in Spain.

A collectivized Europe is the grand design of God, a working of destiny, to produce the failied economic structure, out of which will come Authoritarianim’s Beast Regime to replace Liberalism’s Banker Regime.

New sovereignty and new seigniorage is coming. Out of a soon coming global credit bust and financial system collapse, Revelation 13:3, EU leaders will meet in summits and workgroups to waive national sovereignty and pool sovereignty regionally for regional security, stability and sustainability.  Pooled sovereignty is the EU’s future. Democratic nation states, and traditional banking, along with globalization is history. Through regionalization, regional nannycrats will act in public private partnerships, that is in statist combines of banking, commerce, and trade, will provide the seigniorage, that is the moneyness of diktat.  Diktat will serve as credit, currency, money and wealth.

According to Investopedia, credit means borrowed money “must be paid back to the lender at some point in the future.” Liberalism’s  credit will be paid back by Authoritarianism’s debt servitude and austeity. Benton te writes Abenomics, will Japan face a debt crisis soon? Given the constrained options of the Japanese government, I think that they could or most likely resort to the Cyprus bail-in model. They may be targeting part of the ¥1,230 trillion for bank deposits haircuts. Poor households [8] (as of December 2012). I hope I am wrong about all these. But it pays to take the necessary precaution.

The failure of the high yielding nation investment dividend paying ETFs, during May 2013, such as AUSE, BRAF, and EPI, communicates the end of credit as it has been known. The seigniroage of both developed and developing countries and their banks has failed, terminating credit as a profitable economic experience. The end of yield chasing means the end of Liberalism’s QE scheme. The seigniorage of regional nannycrats and regional bodies such as the ECB is commencing Authoritarianism’s schemes of ditkat such as bailins, new taxes, and diktat enforcing debt servitude. Under Liberalism, credit was often secured to investors via individual responsibility. But under Authoritarianism, all debt owed will be served and shared by common currency owners, ie all those in Sweden, using the Swedish Krona, will be on the hook for the debt of all Swedes. In other words, under Authoritarianism, debt servitude for all, regardless if they were not responsible for its orgination.

During May 2013, Jesus Christ pivoted the world from the old economy to the new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of regional governance, totalitarian collectivism, debt servitude and austerity, as foretold in Bible Prophecy of Revelation 13:1-4, also known as the ten toed kingdom of regional governance, as presented in Daniel 2:25-45. The world is passing into Authoritarianism’s wildcat governance, where leaders will bite, rip and tear one another apart, to become top dog leader, Revelation 13:5-10, and top dog banker, Revelation, 13:11-18.

5) … In Apocalyptic Vision, the Apostle John writes that Jesus Christ is coming to terminate the double entry bookkeeping system and all other bipolar sigularities as well,  Revelation 1:1, that He might be The Universal Singularity, providing life, virtue and ethics.

5A) … Jesus Christ is The Universal Singularity, Colossians 1:17-18, who provides the experience of the riches of His glory via the Mystery of Christ in you, the hope of glory, Colossians 1:27; this contrasts with the Mystery of Iniquity, which is at work in the unbelievers 2 Thessalonians 2:7. And in Dispensation, Ephesians 1:10, that is the in the operation of the economoy of God, He is coming to provide Himself as life, and to terminate all existing economic and political life, which is based upon the double entry bookkeeping system, and to terminate all other bipolar sigularities as well, that He might be The Universal Singularity, manifesting everywhere, especially as virtue and ethics in the elect, 2 Peter 1:1-11.

Halden Doerge.of  Inhabitatio Dei writes The singularity of Jesus and the mission of the church.  My contention is that the focus upon the singularity of Jesus Christ forces us to rethink what we mean by the task of theology as being both dogmatic and missionary in today’s context. By dogmatic I mean to say that Christian theology is to be given to the confession of the praise of the doxa, the glory of the Lord, that shows forth in the apocalyptic singularity of Jesus Christ. And that glory is that Jesus, as the eternally sent One, has liberated the world from its oppressed laboring under the powers and principalities and, by way of this liberation, has reconciled the world to Godself. That is the gospel; that is the good news. By missionary I mean to stress that theology can only be faithfully dogmatic insofar as it is forged in the ongoing encounter and solidarity with the world’s hearing of and response to this singular gospel.

This, it seems to me, means two things primarily for how theology is to be rethought and practiced today. First, it means to insist upon the apocalypse of Jesus Christ as the singular dandum from which all theological thought must emerge. Second, we must not forget that the singular identity of Jesus Christ as the resurrected crucified one is the identity of that one who was not afraid to lose himself in abandonment to and in identity with the marginalized and oppressed of this world. Mission, as such, thus becomes that movement of self-giving whereby we are given ever-anew to receive that one Christ who gives himself precisely by giving himself ever-anew in what Bonhoeffer calls the “strangeness” of the other.

5B … Christ is one’s life enabling one to have life, Colossians 3:3-4, and live in virtue and ethics, 2 Peter 1:1-11.

From the Dispensational Manifest, I present Corollary Number 14 … Jesus Christ is providing a New Reality, transitioning one from human experience to the experience of the divine nature; where the elect are called to live in godliness, 2 Peter 1:6, mainly manifest in the fruits of the spirit, and experience Christ as one’s life, Colossians 3:3-4, and one’s all inclusive life experience, Colossians 3:11.

Christ dispenses faith, Ephesians 1:10, specifically He allots faith equally precious, as that of the apostles, which comes from the righteousness of Himself, 2 Peter 1:1.

The faith provides grace, that is spritual resource, as well as peace, that is acceptance 2 Peter 1:2.

And the faith provides all things which pertain unto life and godliness.  Ones’ calling is not dependent upon ones meritocracy, but rather one’s calling is based soley upon God’s glory and virtue, that is His excellency and strength. 2 Peter 1:3.

It is God’s promises that one is able to partake of the divine nature and escape corruption that has entered the world by lust, 2 Peter 1:4.

Withnes Lee on page 1148, of the Recovery Version of the Bible, in footnote four, pertaining to verse 3 communicates that spriritual life is defined as the inward energy and strength that comes from the dispensation of Christ to bring forth outward godliness which leads to and results in glory.

Through the exercise of virtue and its companion, ethics, one makes one’s calling and election sure, that is a genuine thing, and one avoids stumbling, and one is assured of a broad entrance into the Kingdom of God, 2 Peter 1:10-11..

Christ is one’s life, Colossians 3:3-4, enabliing one to manifest virtues and ethics. Virtue is defined as praiseworthy attributes and ethics is defined as the economic regard in speech and behavior, for the person and property on another.

Scripture presents biblical ethics: 1) when Paul said, I have defrauded no one, 2 Corinthians 7:2, and 2) when the author of Hebrews instructed, one to pursue peace with all men, Hebrews 12: 14-17, and 3) when John wrote, unto the church: but Diotrephes, who loves to have the preeminence among them, receives us not, 3 John 9, and 4) when Paul instructed, not to a busybody in the affiars of another, 2 Thessalonians, 3:11, and 5) when Paul instructed, to keep away from all who walk disorderly. 2 Thessalonians 3:6

5C … The elect contrast with the fiat who have will worship in philosphy or religion, Colossinans 2:23, which fails to prevent indulgence in carnality and iniquity, which is the opposite of virtue and ethics; many of the elect be libertine or worse psychopathic.  

There is no choice on the part of the believer as all things are of God, 2 Corinthians 5:18 . There is no exercise of ones’ will as it died in gaden with Adam.  There is only God exercising his will, Ephesians 1:11, making one accepted in the beloved, Ephesians 1:6.  Only those whe have been appointed uno eternal life believe, Acts 13:48. These God chose from before the foundation of the world, Ephesiasn 1:4, and are motivated by the indwelling Spirit of God, as well as by a mental comprehension and understaning of Him Collosians: 1:9-10.