We Live In The Age Of Global Government (BND, UBT, TMF, TIP, JNK, MUB, EMB, SHY, RZV, IWM, RZG, IRV, EWX, RJA, FUD, FXY)

An Observing Mind notes that we live in the age of global and federal governance. The Sovereigns, that is the Congresspeople, passed the Dodd Frank legislation that created the authority of Financial Regulator, in the person of the Secretary of the Treasury, and gave him sweeping discretionary power to address financial, banking, lending and credit issues such as the current mortgage foreclosure moratorium. I believe that at some point in the future he will provide a solution that integrates the banks with the Government in state corporate governance over housing, banking and mortgage securitization. An old English term for Financial Regulator, is Seignior, meaning top dog banker who takes a cut. I believe that out of coming crises, many people will come to trust in him, and conduct their economic affairs through him, and that he will oversee all banking, lending, and credit throughout the entire North America Continent. His word, will and way will be the law of the land.

Global Governance would come to no surprise to the Apostle John, who on the island of Patmos about 90 AD, had a dream, that is a vision, detailing “things which must shortly take place”, Revelation 1:1

He saw a globalization as process. Specifically he saw a Beast System rising rising from the sea of humanity to rule mankind, via a world-wide system of ten regions of government, Revelation 13:1-4.  His vision was fulfilled in the call by the Club of Rome in 1974 for ten regions of global governance. One of these regions is the Eurozone, another is the North American Continent, and another is the ASEAN trading group.

The Apostle’s vision also call for a global governor, that is a Sovereign, rising to rule mankind, Revelation 13:5-10

The world leader will be complemented by the Seignior, Revelation 13:11-18, meaning top dog banker who takes a cut. He is a also a Spiritual Leader with a unifying Global Vision. Eventually he will direct the 666 credit system,  Revelation 13:17-18, where one will be given the charagma, or mark, necessary to conduct commercial activity.

Today bonds, (NYSE:BND), trading down to 82.53 which is below their October 7, 2010 high of 82.93.

The Great World Wide Bond Rally is over. The Bond Bubble has been pricked by bond vigilantes calling the interest rate on the 30 Year US Government bond, $TYX, and the interest rate on the 10 Year US Government Note, $TNX, higher.  

The interest rate on the 30 Year US Government bond, $TYX, is now in its fourth day of breakout and trading at 38.98.

The longer out US Government bonds are falling hard now, as bond traders are concerned that the Fed’s QE 2 is monetization of debt. Bond purchasers believe that the Fed’s QE 2 bond purchases are no longer stimulative of either stock or bond prices; and that the Fed’s action is simply printing of money that cannot stimulate spending nor help lower unemployment.

The investor is no long entitled to a growing return of investment in a bond ETF or bond mutual fund. 

One can follow a number of Inverse ETFs to be sold short in this Finviz  Screener.

(NYSE:UBT) ProShares — (NYSE:UBT), 200% US 30 Year Treasury xx fell 2.78% today, creating gain for the short seller  
(NYSE:TMF) Direxion — (NYSE:TMF), 300% US 30 Year Treasury xx fell 4.56% today, creating gain for the short seller

One can follow these in the chart of TMF and UBT.

Tyler Durden reports in ZeroHedge article Primary Dealer Stick Save Prevents Rout: ”PDs took down 58.6% of the auction, the highest since May of 2009″.  And CNBC reports: Bonds Add to Losses After Dismal 30-Year Auction. I relate that currently the 30:10 Yield Curve, $TYX:$TNX,  is quite steep at 1.580. A steep yield curves is typically considered conducive to economic growth and investment, but will today’s artificially steepened curve assist growth and encourage continued investment?

Of note the Zeroes, (NYSE:ZROZ) are at the edge of a massive head and shoulders pattern, manifesting a huge bearish engulfing candlestick, this suggests they could fall massively lower in value. As they break lower, then those short (NYSE:TMF) and (NYSE:UBT) will be nicely rewarded.    

In a strange quirk, the TIPS are rising and even more surprisingly the longer out  (NYSE:LTPZ) at 58.72 has risen faster in value than the shorter duration (NYSE:TIP). 

Mortgage Backed Bonds, (NYSE:MBB), fell lower to  109.66. Junk Bonds, (NYSE:JNK), manifested a dark cloud covering candlestick at the top of an ascending wedge to close lower at 40.13; this suggests that we have passed through peak investment liquidity.  Municipal Bond, (NYSE:MUB), closed lower at 106.25. Emerging market bonds, (NYSE:EMB), manifested a dark cloud covering candlestick and traded lower at 113.01. Although the US Federal Reserve is communicating a new QE package, the bond market is selling off, as even the short duration US Government Bonds, the 2 Year Notes, (NYSE:SHY), turned down today.

Moses Kim writes “Gresham’s law is starting to play out as this debt crisis continues. As people start to realize that currencies are being devalued globally as a matter of national policy, they will start to buy gold. Believe it or not, this monster rally in gold is flying under the radar for the average person. There is no question in my mind that there will be shortages in gold and silver that will make the supply constraints in 2008 look minor in comparison. I urge you all to step in front of trends instead of chasing them. It is likely that you will see competitive devaluations globally and that all major currencies will fall relative to gold. It is also likely that U.S. bonds will decline precipitously in response.”

Given that stocks, (NYSE:ACWI), appears to be topping out at 45.13, and that bonds, (NYSE:BND), turned lower today, we have likely passed through Peak Wealth. We have passed from the age of prosperity into the age of debt servitude. Said another way, today, we passed through Peak Credit.

Not only will bonds now fall fast and hard but stocks as well with the small caps, especially the Small Cap Value, (NYSE:RZV), the Russell 2000, (NYSE:IWM), the Small Cap Growth, (NYSE:RZG), the Emerging Markets Small Cap Leaders, (NYSE:EWX),  and the S&P International Materials, (NYSE:IRV), leading the way down as is seen in the chart of  RZV, RZG, EWX, IWM and IRV     

The Fed must have foreseen this day. I conclude that the Fed’s actions are a final step to integrate banks into the Federal Reserve so that both participate in state corporate rule over the people. Promising more stimulus only monetizes sovereign debt, and causes money to take flight to safety in gold, (NYSE:GLD), and to speculate in buying commodities, such as agricultural commodities, (NYSE:RJA), and food commodities, (NYSE:FUD), inflating the price of such to the world’s population. I conclude that the purpose of QE2 is a final chapter in integrating the Banks and the Government into a combine of state corporate rule, that is state corporatism.   

The Spigot of Investment Liquidity coming from the Government, being turned past full on, has become toxic to investing long both the bond and the stock markets.

The Spigot of Investment Liquidity coming from the Currency Traders going long the carry trades, can be seen in the major currencies, relative to the Yen, DBV:FXY, and the developing currencies relative to the Yen, CEW:FXY, both turned lower today, suggesting that yen based carry trades will now be unwinding causing disinvestment from stocks.

With both spigots of invesment liquidity being turned off, debt deflation will not get actively underway once again. 

Debt deflation is the contraction and crisis that follows credit expansion.  One of the most famous quotations of Austrian economist Ludwig von Mises is from page 572 of Human Action: “There is no means of avoiding the final collapse of a boom brought about by credit expansion.  The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”

Global Debt Deflation commenced on April 26, 2010, when the value shares failed to outperform the growth shares.

It was on April 26, 2010, the currency traders went long the yen and short the global currencies with the onset of the European Sovereign Debt Crisis.

Now, once again the currency traders may sell the world currencies against the Yen, in a revulsion of QE2; or they may sell the US Dollar, $USD, the choice is theirs. If someone calls the Yen, (NYSE:FXY), higher over night, that is above 121.47, it is likely that they will sell the world currencies against the Yen tomorrow. 

Written By Richard K. Gorton From Economic Review Journal

ABOUT: I am not an investment professional. I do not engage in stock or currency trading. I am a blogger and investor who believes debt deflation has created an investment demand for gold, and that gold bullion is the sole means of wealth preservation.  The chart of gold, $GOLD, reveals that with the onset of the European sovereign debt crisis in April 2010, gold has morphed from a base metal commodity to a currency, in fact the world’s sovereign currency.

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