Published by WallStreetWeather.net
Financial markets were bullish on the third anniversary that Lehman Brothers filed for bankruptcy. This was not the result of economic growth but a reaction to the announcement that the ECB in coordination with the Federal Reserve and other major central banks will provide access to U.S. dollar funding under the same type of arrangements created following Lehman’s demise.(1)
Full Moons mark a culmination point as the light of the Moon shines like a spotlight on issues that we are aware of but prefer to ignore or delay due to difficulty deciding what to do. Known as the Harvest Full Moon, the Full Moon in Pisces illuminates issues that raise fears of contagion concerns relating to credit. (The origin of the word credit means “to believe”). The Pisces Full Moon influences the final half of the Virgo New Moon cycle (September 12-26, 2011).
Pisces and its planetary ruler Neptune dissolve boundaries to demonstrate how interconnected everything is. Greece represents 2% of the Eurozone’s economy, but a Greek default would likely create a contagion effect that spills into the other PIIGS which includes the much larger economies of Italy and Spain, as their borrowing costs would substantially rise.(2) An agreement reached by Eurozone leaders on July 21 to expand the European Financial Stability Fund (EFSF) established in May 2010 to provide an additional €8 billion for Greece must be ratified by all 17 Eurozone countries which is estimated to take a couple of months. Finland is demanding Greece put up additional collateral to gain its approval. Greece is having trouble meeting its deficit reduction targets under the terms of the original bailout. Without additional funding, Greece appears to only have enough funds to operate through the end of September.
This has created a problem for the largest European banks (primarily the French and German banks) that own the bonds of Greece and the other PIIGS. According to European Banking Authority data, European banks hold €98.2 billion of Greek sovereign debt, €317 billion Italian government debt, and about €280 billion Spanish bonds.(3) European banks loaded up on Eurozone sovereign debt because bank regulators gave it a zero risk weighting. Since regulators believed the debt held zero risk, the banks did not have to hold any capital against their holdings of sovereign debt.
Calculations made by Autonomous Research concluded that 43 large European banks hold debt in troubled sovereigns that is equal to 63% percent of those institutions’ book values.(4) Substantial markdowns or a default of these bonds would force banks to raise more capital, further inhibiting their ability to lend. No one knows how such a scenario would play out since two rounds of stress tests on European banks failed to factor in how the banks would hold up if a country defaulted on its debt.
Lehman’s demise under the light of the September 15, 2008 Pisces Full Moon created a tsunami of systemic risk that nearly drowned the global financial system. Pisces energy is good at denial, becoming euphoric at any signs of a rescue on the horizon. But euphoria rapidly turns to panic at even the slightest glimpse under the veil of illusion. Markets are euphoric now, but the energies of the September 12, 2011 Pisces Full Moon reflect eerie similarities between the U.S. emanated crisis of 2008 and the Euro sovereign debt crisis now. Pisces rules the sea and tsunamis, which is why I’ve presented this imagery. So does The New York Times’ Gretchen Morgenson in the opening of her latest column: “The debt crisis in Europe has finally, and officially, washed up on American shores.”(4)
U.S. money market funds had provided a primary source of U.S. dollar-dominated short term funding for European banks, but that source has been steadily drying up in the heat of the Summer Sun. A dependency on commercial paper rather than deposits for short term funding is what created a liquidity crisis that led to the demise of Lehman. Yet according to Fitch Ratings, the 10 largest U.S. money funds still hold $309 billion in Euro bank debt obligations out of the funds $658 billion total assets. (4)
Venus rules currencies and banking. Venus entered its home sign Libra at 10:40 PM EDT September 14. Libra is an action-oriented (cardinal) sign that strives to create harmony and balance through relationships/partnerships, collaborative and coordinated efforts between two or more parties. So on the first business day that Venus was in Libra in Europe and the U.S. which just so happened to be September 15 (the third anniversary of Lehman’s collapse), the ECB announced its coordinated arrangements with the other central banks in an effort to help ease liquidity problems for Euro banks.
The Pisces Full Moon challenged the ECB’s natal Sun in Gemini, along with the Fed’s natal Venus in Sagittarius (which conjoins Fed Chairman Bernanke’s natal Sun in Sagittarius), Gemini’s opposite sign. The Sun indicates the ECB’s lead role while the Fed (Venus) provides the dollars. However, Venus in Libra opposing the sector of the Fed’s chart representing its reputation and squaring the Fed’s natal opposition between the Sun in Capricorn and Pluto in Cancer indicates there is more monetary action going on than swap arrangements alone.
Mercury the planet of communication in its home sign Virgo was in harmony with Jupiter in Taurus (the other sign ruled by Venus which rules banking, money, and assets). This influence helped insure the announcement generated a big market impact. Taurus the bull viewed the announcement and the prior day’s optimistic statements by Treasury Secretary Geithner that there was “not a chance” of a Lehman Brothers-type event occurring in the Eurozone, together with a conference call between Germany, France, and Greece as a reason to rejoice.(5) But the fact that the market took a temporary dive Wednesday morning after initially misinterpreting Austria’s decision to delay taking a vote to expand the EFSF as a rejection, shows the underlying fundamentals of the rally are not solid.
While the major indices were unfazed by Treasury Secretary Geithner’s warning Friday that the sovereign debt crisis has brought “catastrophic risks” to financial markets, people should be wondering why Geithner took the “unusual” step of appearing at a conference of Eurozone finance ministers in Poland when his plate is piled sky high with fiscal responsibilities at home as indicated by Saturn in Libra squaring his natal Venus in Cancer.
Venus exactly conjoined his natal Mars in Libra Friday which explains why the Treasury Secretary is expending so much energy trying to broker a solution to avoid a default in the Eurozone. Jupiter in Taurus opposing Geithner’s natal Neptune in Scorpio reflects that his grand plan to leverage the money already in the EFSF by having Eurozone governments guarantee the debt of financial institutions for a fee so that private investors would feel comfortable buying the debt to ease the liquidity crisis.(5) A program similar to the TARP has been estimated to cost up to $1 trillion to recapitalize Eurozone banks. The political climate in the Eurozone indicates this is an unlikely path.
Scorpio is ruled by Pluto, the planetary energy ruling money lending, debt, defaults/bankruptcy, insurance, and anything that is occult and opaque. Since Pluto entered Capricorn the sign of government in 2008, so much private debt has been transferred to public debt at a time when public debt had already reached unsustainable levels. Ruled by the contractive energies of Saturn, Pluto in Capricorn reflects governments implementing austerity measures to reduce their deficits. Capricorn represents frozen conditions, and Pluto in Capricorn reflects lending conditions that have become frozen over collateral issues. Uranus the planet of change and revolution indicates current conditions will unexpectedly shift so Pluto’s process of decay, death, and rebirth can begin to get underway.
Pluto’s energies are more potent now as Pluto appears to be stationary in the sky from Earth’s vantage point September 12-21, as Pluto turned direct September 16. In another eerily similar scenario to the Summer of 2008, the cost of insuring the bonds of the Euro banks reached levels higher this Summer than at the time of Lehman’s collapse, and Libor rates have been steadily rising as they did then.(3) Credit defaults swaps (CDS) are pricing in a 98% probability that Greece will default on its debt.
CDS are pure Pluto: an opaque and unregulated insurance-type product that trades in secret. No one knows how to value (Venus) the CDS-traded private transactions. While the housing crisis was not ignited by CDS, CDS amplified the damage many fold. The trouble with banks expressing their exposure to European debt CDS as a net number is that it doesn’t reveal counterparty risk (Libra!) such as AIG and the monoline insurers.(6)
The main reason AIG was rescued by the government following Lehman’s demise was because of the contingent risk that AIG would fail as a counterparty and drag down the rest of the financial system along with it. It could be argued that one of the factors that brought down Merrill Lynch (which was acquired by Bank of America) was that the protection Merrill purchased from the monoline insurers had to be written down.
Libra represents the counterparties to a transaction. It was counterparty risk that brought the financial system to its knees in September 2008 as the Sun, Mercury, Venus, and Mars in Libra squared Jupiter in Capricorn which expanded Lehman’s collapse into a global crisis that resulted in large scale government intervention.
The Dodd-Frank financial reform legislation passed last July attempted to address counterparty risk by forcing standardized derivatives contracts onto exchanges. Lobbying by the banks, individual companies, and Warren Buffett is stalling the rules making process to implement exchanges being the counterparty to all standardized derivative transactions. These parties do not want to relinquish the profitability of opaque trading and also do not want to have to post margin on their transactions.
When U.S. banks claim their net exposure to European sovereign debt is very low, that assumes there is no counterparty risk. What really matters is the bank’s gross exposure (i.e. who the bank is a counterparty to on each side) that banks will not publicly reveal. A bank’s net exposure is meaningless if the counterparties providing the protection run into financial trouble and cannot meet their obligations.
Returning to the interconnectedness of Neptune and Pisces, if one counterparty fails it creates systemic risk by causing a chain reaction that can cause other counterparties to fail. The parties at risk might not be who you think they are as some of the nation’s top commercial banks are the largest derivatives traders. In essence the FDIC is indirectly backing derivatives through insuring deposits at commercial banks. This is why I believe Treasury Secretary Geithner is being so aggressive with Eurozone leaders to pull out all the stops to prevent a default that would trigger CDS payouts.
The degree of the 2008 Pisces Full Moon exactly opposed the USA’s natal Neptune in Virgo, exposing the interconnectedness of the U.S. financial system as it shattered the illusions of the “American Dream” (home ownership). The 2011 Pisces Full Moon squared the USA’s natal Mars in Gemini. Mars in Gemini is located in the sector of the USA chart that represents America’s relationships with other nations as this is the sector of the chart naturally ruled by Libra. Mars in Gemini squares Neptune in Virgo in the sector ruling ethics and foreign interests, reflecting the USA’s aggressive, critical, and “preachy” attitude toward other countries as America seeks to aggressively promote its idealistic vision abroad.
There are several planetary connections between the U.S. and Greece. There are financial connections (USA Venus in Cancer exactly conjoins Greece’s Venus; USA Venus and Jupiter in Cancer squares Greece’s Moon and Pluto in Libra). Greece’s Ascendant (the nation’s outlook) which conjoins Saturn in Cancer conjoins the USA Sun in Cancer. The USA has a lesson to learn from its financial relationship with Greece as both nations undergo a major economic restructuring. Credit shocks describe Greece’s natal Neptune in Sagittarius opposing the USA Uranus in Gemini. The Sun represents the nation’s identity and its leadership. Progressing the charts forward in time, Greece’s progressed Sun in Virgo exactly opposes the USA progressed Sun in Pisces. This creates a “Full Moon” energy similar to the Pisces Full Moon.
Greece’s progressed Mars in Virgo exactly squares the USA Mars and conjoins the USA Neptune. Expanding the IMF’s financial assistance to Greece is an unlikely option in the current political climate since the U.S. is the fund’s biggest contributor. Yet some type of U.S. financial aid intervention could occur to prevent the spread of systemic risk from a Greek default spilling over into in the U.S. financial system. Greece’s progressed Mars conjoins President Obama’s Mars in Virgo. Virgo is a dualistic energy; President Obama’s first financial crisis emanated from the housing bubble bursting and the second crisis relates to foreign and domestic (U.S. deficit) sovereign debt.
The Pisces Full Moon is definitely heating up the action on both sides of the Atlantic as Greece’s progressed Mars also conjoins the natal Mars for Europe’s Birthday (the Schuman Declaration) which called for a united Europe. This increase in activity was foreseen in the chart for the August 28 Virgo New Moon. And the Full Moon conjoined the natal Moon in Pisces in the chart for January 1, 2001 when Greece became a member of the Eurozone. The Moon squaring Pluto in Sagittarius and Venus in Aquarius squaring Jupiter and Saturn in Taurus at the time creates further challenges to the planetary patterns in Greece’s natal chart where the Moon conjoins Pluto and Venus conjoins Saturn. Too much debt and not collecting enough tax revenue is putting enormous pressure on the finances of the Eurozone and Europe’s banks which in turn affects the global financial system as Jupiter once again transits Taurus.
The Treaty on the EU commonly referred to as the Maastricht Treaty, officially created the European Union which called for a common currency leading to the creation of the Euro. The 171 year conjunction of Uranus and Neptune in Capricorn at the time the Treaty went into effect in 1993 reflects changes in government structures that dissolved old boundaries and borders that had historically existed for centuries between European nations. Mercury retrograde conjoining Mars and Pluto in Scorpio increases the potential the goals of the treaty could come undone through the bankruptcy of a member nation. The progressed Sun in Scorpio conjoined natal and progressed Pluto in its home sign Scorpio last summer. This indicated that failure to establish a bailout fund last year could have resulted in the bankruptcy of a member nation which at that time could have easily led to the dissolution of the Eurozone. (A similar energy occurred when Pluto in Scorpio conjoined the USSR’s natal Sun which resulted in the breakup of the Soviet Union.)
As Saturn in Libra conjoins the Treaty’s natal Venus and squares the Uranus/Neptune conjunction (exact late September/early October), unexpected shocks are likely to occur resulting from leaders imposing austerity measures on member nations that are so tight it becomes impossible for the countries to stay solvent unless these restrictions are relaxed.
Between now through September 28, Venus, the Sun, and Mercury in Libra will oppose Uranus in Aries and square Pluto in Capricorn. Eurozone leaders must reach agreement to provide immediate funding and easing of austerity measures if Greece is to avoid defaulting before month’s end. All of these energies are contained in the chart for the September 27 Libra New Moon which exactly conjoins Greece’s Moon/Pluto conjunction in Libra.
Every chart - from the PIIGS, France, and Germany, to the U.S. is impacted by the Libra New Moon which features the Sun, Moon, Mercury, Venus, and Saturn in Libra. Jupiter in Taurus brings the total number of planets ruled by Venus to six. The strong Venus energies are reinforced as the New Moon impacts the natal or progressed Venus placements for Europe, Greece, the U.S. and Italy. The New Moon connects to placements in these charts along with the charts for the Euro and the other PIIGS. At best, these energies could bring additional funds and more accommodative arrangements for Greece. A more likely scenario indicates unexpected shocks in store as Greece’s debt troubles start to impact counterparties in swap transactions as dissention among Eurozone members fails to shore up additional financial support for Greece.
Congress failed to pass the TARP legislation on the day of the September 29, 2008 Libra New Moon which squared the USA Venus/Jupiter as it does now. Exactly three years to the day after the U.S. House failed to pass TARP, the German parliament is scheduled to vote on approving expanding funding for the EFSF to provide a second bailout tranche to Greece. Venus conjoins Saturn that day with the Moon (sentiment) in Scorpio which could bring fears of bank writedowns on the debt they own.
These influences occur at the same time Saturn conjoins the Euro’s natal Mars and the USA’s progressed Mars in Libra while squaring the 1993 Uranus/Neptune conjunction in Capricorn. Signs of serious reductions in military spending in the U.S. are part of the fiscal reductions that could elevate the dollar as the Euro’s value comes under pressure. These influences are reinforced at the October 11 Full Moon in Mars-ruled Aries and the fact that the Sun conjoining Saturn October 13 conjoins the Maastricht Treaty’s natal Venus.
If Greece’s situation is not resolved or is only given a temporary “fix,” then the Eurozone sovereign debt crisis is likely to accelerate beyond Greece’s borders, reigniting the other Eurozone countries into crisis as Mercury turns retrograde on November 24, the day before the Solar Eclipse in the global sign Sagittarius. November 24 is a public holiday in the U.S., a day that has tended to bring large moves in foreign markets that usually correspond to a stronger dollar in reaction to global financial and geopolitical events.
As mentioned in previous posts, Venus appearing in the evening sky September 23 through Spring 2012 indicates equities are likely to decline in value as Venus is in the weaker part of its dualistic cycle. The need to collaborate and compromise to reach agreement becomes particularly urgent during this period.
According to the EU’s website, “The circle of gold stars [in the EU’s flag pictured above] represents solidarity and harmony between the peoples of Europe. The number of stars has nothing to do with the number of Member States. There are twelve stars because the number twelve is traditionally the symbol of perfection, completeness and unity. The flag therefore remains unchanged regardless of EU enlargements.”
There are 12 signs of the zodiac reflecting 12 energies of expression. Since a chart contains 12 sectors, each individual or entity’s chart expresses the energies of all 12 zodiac signs. As the last sign of the zodiac, Pisces has absorbed the energies of all the signs preceding it. The Pisces Full Moon illuminates that twelve really becomes one.
Uranus square Pluto indicates the world has entered unchartered waters where a sovereign debt could be anything but “orderly.” The U.S. and Europe didn’t fully pay attention to everything the 2008 Pisces Full Moon illuminated, so now at the 2011 Pisces Full Moon the harvest remains barren. Uranus in Aries the first sign of the zodiac squaring Pluto in Capricorn indicates that we cannot return to the past as it is gone forever. The massive changes and structural transformation underway between now and 2015 are birthing a new cycle. The only way to improve the future is through collaboration and cooperation in the here and now to bring what is out of balance back toward equilibrium.
(1)The ECB’s swap lines are with the Federal Reserve and the central banks of Japan, Switzerland, and the UK.
(2)PIIGS: Portugal, Ireland, Italy, Greece, and Spain.
(3) “How Long Can the ECB Prop Up Europe’s Sick Banks?” by Simon Kennedy and Gavin Finch, Bloomberg Businessweek 8/24/11
(4)”Suddenly, Over There Is Over Here” by Gretchen Morgenson, The New York Times 9/17/11
(5)Geithner also said there was “not a chance” the U.S. would lose its triple-A bond rating.
Geithner was born with the Moon in Scorpio. Whether his Moon conjoins natal Neptune is uncertain without a birth time.
(6)The monoline insurers (Ambac and MBIA) were principally municipal bond insurers who strayed into insuring structured products based on subprime mortgages.
(7)The Sun and Moon are luminaries but are classified as planets because they are the two primary influences on human behavior.
European Central Bank: June 1, 1998 12:00 AM CEDT Frankfurt
Federal Reserve: December 23, 1913 6:02 PM EST Washington, DC
Ben Bernanke: December 13, 1953 time unknown Augusta, GA
Timothy Geithner: August 18, 1961 time unknown New York City
USA: July 4, 1776 5:10 PM LMT Philadelphia, PA
Greece: July 24, 1974 4:00 AM EET Athens
Europe’s Birthday: May 9, 1950 4:00 PM CET Paris
Treaty on the EU: November 1, 1993 12:00 AM CET Brussels
Euro: January 1, 1999 12:00 AM Frankfurt