Baltic Dry Index. 553 +05 Brent Crude 60.75
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Money,
again, has often been a cause of the delusion of the multitudes. Sober nations
have all at once become desperate gamblers, and risked almost their existence
upon the turn of a piece of paper.
Charles
Mackay. Extraordinary Popular Delusions and the Madness of
Crowds
I don’t know if they still ring a bell at the market top anymore, after all we are in an age central bankster fuelled free money, derivatives leveraged casino gambling, but this morning, bells are clanging away from fire stations to Europe’s Abbeys, claxons are blaring away, air raid and tsunami warnings are sounding, and an army of red flag wavers has appeared on the horizon. Buy more say the Fed’s talking chair and the ECB’s Draghi. Don’t you know that the ECB is just about to launch QE Constrained tomorrow? The last throw of the dice in the central bankster run RMS Titanic.
Below, reality in our global economy. Far from the gambling palaces of London and New York, far from the Keynesian Ivory Towers of the fiat money printers, fiat money isn’t working like before. Better close down democracy before 2015s voters go all Syriza. From miners to metal bashers, from farmers to frackers, and let’s not forget retailers and the gambling halls also known alongside stock markets as casinos, The Great Nixonian Error of fiat money seems to have entered the final act. The benefits of fiat money were all front loaded, and long since dissipated in the west in an orgy of wars, instant consumerism, and debt. What comes next is the true cost of the great crash of the GNE.
"There
is no reason whatever to fear a crash".
Charles
Mackay. 2 October 1845, Glasgow Argus, on Railway Mania.
Rajan Cuts India Rates in Unscheduled Move After Modi Budget
3:17 AM WET March 4, 2015
(Bloomberg) -- India’s central
bank lowered interest rates in an unscheduled move for the second time this
year, citing weakness in Asia’s third-largest economy.
Governor Raghuram Rajan cut the
benchmark repurchase rate to 7.5 percent from 7.75 percent, the Reserve Bank of
India said in a statement on Wednesday. The decision came four days after Prime
Minister Narendra Modi’s government shifted funding to infrastructure in its
first full-year budget and agreed to a formal inflation target.
“This makes explicit what was
implicit before –- that the government and the Reserve Bank have common
objectives and that fiscal and monetary policy will work in a complementary
way,” Rajan said in the statement, referring to the monetary policy framework
agreement. “In sum, then, the government intends to compensate for the delay in
fiscal consolidation with a commitment to an improvement in the quality of
adjustment.”
India’s move underscores a
strengthening cycle of global monetary easing outside the U.S., with Europe
tomorrow forecast to unveil more about its quantitative-easing plans. More than
a dozen central banks from Turkey to China have eased policy in 2015 as a slide
in oil prices damps inflation.
Morehttp://www.bloomberg.com/news/articles/2015-03-04/rajan-cuts-india-rates-in-unscheduled-move-after-modi-budget
Japan Public Debt is Keeping BNP's Chief Credit Analyst Awake at Night
3:01 PM WET March 3, 2015
(Bloomberg) -- For most of her
career, Mana Nakazora has taken a pre-dawn train to work regardless of whether
she arrived home just hours earlier.
Her colleagues describe BNP
Paribas SA’s Tokyo head of investment research as a powerhouse, and she was
Japan’s No. 1 bond picker from 2010 to 2012 and No. 2 for the last two years in
Nikkei Veritas newspaper polls. Even now, investors thank her for warning
against getting into Lehman Brothers Holdings Inc. before the investment bank
collapsed in September 2008.
“She’s frank and she says things
that are difficult to say,” said Keisuke Tsumoto, the head of fixed income for
Japan at Manulife Financial Corp.’s asset management unit in Tokyo, which
manages money for Japan’s Government Pension Investment Fund. “What she can’t
write down, she lets us know verbally.”
One thing keeping her up --
analysis of Japan’s public debt, which is expected to climb to 1.06 quadrillion
yen ($8.85 trillion) at the end of March. With a population that’s been
shrinking for the past six years and annual debt servicing costs that are
bigger than New Zealand’s gross domestic product, the world’s third-largest
economy is quite simply running out of people who can pick up the tab.
“Maybe there’s no point in
throwing stones at this huge rock, but if you keep hurling just maybe you can
open up a crack,” Nakazora said in an interview at BNP’s Tokyo offices on the
42nd floor overlooking the nation’s parliament and Imperial Palace. “If Japan can’t
get its finances under control, people are going to start questioning what
exactly the difference between Japan and Greece is.”
Morehttp://www.bloomberg.com/news/articles/2015-03-03/bnp-mom-sleepless-in-tokyo-tells-abe-ignore-greece-fate-at-peril
French factory decline even worse than Greece
New orders dry up and overseas demand falls, as output contracts in France at an even faster rate than in troubled Greece
The economic divide between
Europe's largest economies widened in February, as a closely-watched survey
showed manufacturing output in France contracted at a faster rate than Greece,
despite the weakening euro.
Output at French factories fell
for a ninth consecutive month in February, as new orders dried up and overseas
demand fell. This led to a further fall in employment, Markit said, as it
described general demand in France as "lacklustre".
By contrast, a stronger rise in
new business helped output at German manufacturers expand for the 22nd
consecutive month in February. Markit described the latest rise as
"broad-based", but said growth was "weak by historical standards".
Despite an 8pc decline in the euro against the dollar since the start of the year, Markit's French manufacturing PMI fell to 47.6 in February, from 49.2 in January.
This was well below the 50 level
that divides growth from contraction, and also worse than economists' expectations
of a decline to 47.7. This also means output in France contracted at a faster
rate than in Greece last month, where the decline steadied to 48.4.
Germany's PMI rose to 51.1 in
February, up marginally from January’s reading of 50.9.
Jack Kennedy, senior economist at
Markit, said French manufacturing was in a "funk".
Morehttp://www.telegraph.co.uk/finance/economics/11444091/French-factory-decline-even-worse-than-Greece.html
Eurozone faces first regional bankruptcy as debt debacle stalks Austria's Carinthia
Fitch has stripped Austria of its AAA rating, adding that 'within a short space of time the debt dynamics of Austria have deteriorated significantly'
The Alpine region of Carinthia
faces probable bankruptcy after Austria’s central government refused to vouch
for debts left by a disastrous banking expansion in eastern Europe and the
Balkans.
It would be the first
sub-sovereign default in Europe since the Lehman Brothers crisis, comparable in
some respects to the bankruptcy of California's Orange County in 1994 or the
city of Detroit in 2013.
Austria’s finance minister, Jörg
Schelling, said Vienna would not cover €10.2bn (£7.4bn) in bond guarantees
issued by the Carinthian authorities for the failed lender Hypo Alpe Adria, or
for the "Heta" resolution fund that succeeded it. This leaves the
550,000-strong province on the Slovene border to fend for itself as losses spin
out of control.
“The government won’t waste
another euro of taxpayer money on Heta,” he said, insisting that there must be
an end to moral hazard. The Hypo affair has alredy cost taxpayers €5.5bn. The
Austrian state has said it will cover €1bn of its own guarantees “on the nail”
but nothing more.
Sources in Vienna suggested that
even senior bondholders are likely to face a 50pc writedown, becoming the first
victims of the eurozone’s tough new “bail-in” rules for creditors. These rules
are already in force in Germany and Austria, and will be mandatory everywhere
next year.
“We are at a very delicate phase
when Europe’s banking system switches from a bail-out regime into a much
tougher bail-in regime, and Austria has just thrown this into sharp relief,”
said sovereign bond strategist Nicholas Spiro. The biggest bondholders are
Deutsche Bank’s DWS Investment, Pimco, Kepler-Fonds and BlackRock. The World
Bank also owns €150bn of Hypo debt.
Austria’s banking regulators
surprised markets by intervening over the weekend to wind down Heta and suspend
debt payments until 2016 after discovering a further shortfall in capital of
€7.6bn. The surge in the Swiss franc in January after the collapse of
Switzerland’s currency floor against the euro appears to have been the last
straw, setting off another wave of likely losses from eastern European
mortgages denominated in francs.
Morehttp://www.telegraph.co.uk/finance/economics/11447805/Eurozone-faces-first-regional-bankruptcy-as-debt-debacle-stalks-Austrias-Carinthia.html
The
bankster in his mansion,
The
taxpayer at his gate,
Draghi
made them high or lowly,
He disordered
their estate.
With
apologies to All things bright and beautiful.
At the Comex silver
depositories Tuesday final figures were: Registered 68.85 Moz, Eligible 108.94
Moz, Total 177.79 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today more on NASDAQ 5,000, the return of Greenspan
mania. The bigger the bubble, the harder the bust.
Son,
if you really want something in this life, you have to work for it. Now quiet!
They're about to announce the lottery numbers.
Ebenezer
Squid, with apologies to Homer Simpson.
Nasdaq 5,000 Is Different This Time……But Not In A Good Way!
by David Stockman •
The robo-traders and Wall Street
punters were busy painting the tape yesterday, and did bump the Nasdaq
composite across the magic 5,000 threshold for the first time since March
2000. But even as Wall Street urged home-gamers to “return with us to the
thrilling days of yesteryear”, the caveats about this time is different were
flowing with abundance:
This time, the Nasdaq at 5,000 is
underpinned by substantial companies with strong sales and credible plans for
growth, not wishful schemes to “monetize eyeballs” and sell pet food online.
Not exactly. This time is
very different, but, as they say, not in a good way. Not even close.
Since the two days of March 9 and
10 in the year 2000 when the Nasdaq closed over the 5,000, the financial
markets have been converted into central bank managed gambling halls and the
global economy has bloated beyond recognition by 15 years of non-stop financial
repression. Back then, a few hundred stocks were wildly over-valued based on
monetizing eyeballs; now the entire market is drastically overvalued owing to
the false financial market liquidity generated by $14 trillion of central bank
asset monetization—-mostly public debt— since the turn of the century.
As a result, the global financial
system and economy are orders of magnitude more fragile and vulnerable to
collapse then they were 15 years ago. Indeed, nearly all of the tail winds
which managed to quickly revive markets and economic growth after the
dotcom crash have now played out, and, if anything, will morph into stiff headwinds
in the period immediately ahead.
For better or worse, for example,
China proved to be a powerful tailwind after the turn of the century. It
functioned as an enormous global locomotive that generated hyper-growth in
the energy and resource industries; and which also ignited a supplier boom
in a whole variety of EM industries from Brazil’s soybean
and iron ore sectors to shipbuilding and semiconductor production
in South Korea.
Yet this was accomplished not
through healthy, balanced, market- driven investment and enterprise, but
through the most spectacular credit bubble in human history. At the end of
the year 2000, China’s debt was about $2 trillion and its GDP was about
the same.
By contrast, today its credit
market debt outstanding is about $28 trillion or 14X greater, according to
McKinsey’s research. Notionally its GDP is up by 5X to about $10 trillion,
but that doesn’t really mitigate the debt explosion. That’s because China’s GDP
growth was a force draft concoction of state directed credit spending
that resulted in massive waste and unproductive investment. Rather than
catalyze permanent gains in wealth and sustainable output, its erected a phony
hothouse economy which will inexorably implode and crater.
MoreThe Price of Oil Is About to Blow a Hole in Corporate Accounting
12:00 AM WET March 4, 2015
Bloomberg) -- There’s one place
in the world where oil is still $95 a barrel.
On paper.
The U.S. Securities and Exchange
Commission requires drillers to calculate the value of their oil reserves every
year using average prices from the first trading days in each of the previous
12 months. Because oil didn’t start its freefall to about $45 till after the
OPEC meeting in late November, companies in their latest regulatory filings
used $95 a barrel to figure out how much oil they could profitably produce and
what it’s worth. Of the 12 days that went into the fourth-quarter average,
crude was above $90 a barrel on 10 of them.
So Continental Resources Inc.,
led by billionaire Harold Hamm, reported last month that the present value of
its oil and gas operations increased 13 percent last year to $22.8 billion. For
Devon Energy Corp., a pioneer of hydraulic fracturing, it jumped 31 percent to
$27.9 billion.
This year tells a different
story. The average price on the first trading days of January, February and
March was $51.28 a barrel. That means a lot of pain -- and writedowns -- are in
store when drillers’ first-quarter numbers are announced in April and May.
More
“But it (the boom) could not last forever
even if inflation and credit expansion were to go on endlessly. It would then
encounter the barriers which prevent the boundless expansion of circulation
credit. It would lead to the crack-up boom and the breakdown of the whole
monetary system.”
Ludwig Von Mises
The monthly Coppock Indicators finished February
DJIA: +120 Down. NASDAQ: +213 Down. SP500: +169 Down.
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