Recession/War Looms.

Baltic Dry Index. 565 -03    Brent Crude 58.15

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

We open with yet another red flag from Asia. South Korea joins in the fiat currency wars to the bottom. A slowing global economy and rising dollars sinks all ships.

Korea Hops on Rate-Cut Bandwagon With Move to Record Low

2:48 AM GMT  March 12, 2015
(Bloomberg) -- South Korea’s central bank cut its key interest rate to an all-time low to counter slowing inflation and a weak economic recovery, joining a global wave of monetary easing.

The Bank of Korea lowered the seven-day repurchase rate to 1.75 percent, a move forecast by two of 17 economists surveyed by Bloomberg. Domestic demand has fallen “substantially” and policy shifts in major countries pose risks for Asia’s fourth-largest economy, the BOK said Thursday.

With inflation at the slowest pace since 1999 and exports falling, South Korea joins more than 20 nations in loosening policy this year, including Thailand, which cut rates Wednesday. Governor Lee Ju Yeol said the central bank “decided to act preemptively” amid weaker-than expected economic data.

“The BOK would’ve been worried about falling behind the pace of global easing by holding the benchmark rate unchanged,” Park Sang Hyun, a Seoul-based economist for HI Investment & Securities Co. who correctly forecast the rate cut, said after the decision. “Further rate cuts will depend on economic data to be released from now.”

South Korea’s won weakened 0.6 percent to 1,132.98 per dollar at 12:29 p.m. in Seoul. It’s fallen 3.7 percent against the U.S. currency this year and depreciated 2.3 percent against the Japanese yen. The yield on three-year government bonds fell to a record low of 1.83 percent after the BOK decision and was last at 1.88 percent.

 “The 2 percent rate wasn’t constraining economic activity and the 25-basis-points cut will support recovery,” Lee said.

It takes about two quarters for rate cuts to affect spending, according to Lee. He said he couldn’t tell if there was room for a further cut.

HSBC Holdlings Plc, which along with HI Investment correctly forecast the cut to 1.75 percent, expects a further reduction of 25 basis points in the third quarter of this year.
More
http://www.bloomberg.com/news/articles/2015-03-12/south-korea-hops-on-rate-cut-bandwagon-with-quarter-point-move

Global finance faces $9 trillion stress test as dollar soars

The world is more dollarized today that any time in history, and therefore at the mercy of the US Federal Reserve as rates rise

By Ambrose Evans-Pritchard 9:29PM GMT 11 Mar 2015

Sitting on the desks of central bank governors and regulators across the world is a scholarly report that spells out the vertiginous scale of global debt in US dollars, and gently hints at the horrors in store as the US Federal Reserve turns off the liquidity spigot.

This dry paper is the talk of the hedge fund village in Mayfair, and the stuff of nightmares for those in Singapore or Hong Kong already caught on the wrong side of the biggest currency margin call in financial history. "Everybody is reading it," said one ex-veteran from the New York Fed.

The report - "Global dollar credit: links to US monetary policy and leverage" - was first published by the Bank for International Settlements in January, but its biting relevance is growing by the day.

It shows how the Fed's zero rates and quantitative easing flooded the emerging world with dollar liquidity in the boom years, overwhelming all defences.

This abundance enticed Asian and Latin American companies to borrow like never before in dollars - at real rates near 1pc - storing up a reckoning for the day when the US monetary cycle should turn, as it is now doing with a vengeance.

Contrary to popular belief, the world is today more dollarized than ever before. Foreigners have borrowed $9 trillion in US currency outside American jurisdiction, and therefore without the protection of a lender-of-last-resort able to issue unlimited dollars in extremis. This is up from $2 trillion in 2000.

More
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11465481/Global-finance-faces-9-trillion-stress-test-as-dollar-soars.html

In the bottomless pit of corrupt Ukraine, now under new American War Party management, the IMF has just financed the summer phase of the proxy war between America and Russia. Below, the IMF ships in another 17.5 billion, never to be seen again outside of Switzerland. “We are off to a good start,” said forever sunny IMF M.D, Christine Lagarde, in Berlin, well behind the front lines in God forsaken Ukraine. With 10 billion due to arrive almost immediately in time for a spring offensive, my guess is for renewed action by May. But will the EU have to match it? We apparently have unlimited cash for a corrupt Ukraine, but unlimited contempt for tiny bankrupt Greece.

IMF seeks 'immediate' stabilization in latest Ukraine bailout

By Howard Schneider WASHINGTON Wed Mar 11, 2015 8:25pm EDT

(Reuters) - The International Monetary Fund has agreed to pump $10 billion into Ukraine's troubled economy over the next year, providing swift assistance for the country's struggling finances as part of a larger four-year bailout.

The IMF board on Wednesday approved a loan of $17.5 billion, with the bulk of the money heading out the door fast: $5 billion likely by the end of this week and another $5 billion in coming months, IMF officials said.

That will be combined with $7.5 billion in loans from other international organizations and an expected $15.4 billion in debt relief that Ukrainian officials hope to negotiate with bondholders.

The program "is very strongly front-loaded during the first year," IMF Managing Director Christine Lagarde said in Berlin. "Ukraine has satisfied all the prior actions that were expected and required of it in order to start running the program. ... We are off to a good start."
More
http://www.reuters.com/article/2015/03/12/us-ukraine-crisis-imf-idUSKBN0M71D620150312

In other rush to war news, Uncle Scam is now leaning on Vietnam. If I didn’t know better, I’d think that someone was trying to isolate and surround Russia and China.

Exclusive: U.S. asks Vietnam to stop helping Russian bomber flights

By David Brunnstrom WASHINGTON Wed Mar 11, 2015 3:55pm EDT

(Reuters) - The United States has asked Vietnam to stop letting Russia use a former U.S. base to refuel nuclear-capable bombers engaged in shows of strength over the Asia-Pacific region, exposing strains in Washington's steadily warming relations with Hanoi.

The request, described to Reuters by a State Department official, comes as U.S. officials say Russian bombers have stepped up flights in a region already rife with tensions between China, U.S.-ally Japan and Southeast Asian nations.

General Vincent Brooks, commander of the U.S. Army in the Pacific, told Reuters the planes had conducted "provocative" flights, including around the U.S. Pacific Ocean territory of Guam, home to a major American air base.

It is the first time that U.S. officials have confirmed the role of Cam Ranh Bay, a natural deep-water harbor, in Russian bomber plane activity that has increased globally.

Brooks said the planes that circled Guam were refueled by Russian tankers flying from the strategic bay, which was transformed by the Americans during the Vietnam War into a massive air and naval base.

Vietnam's willingness to allow Russia to use Cam Ranh Bay reflects Hanoi's complex position in a geopolitical tug-of-war that frequently pits China and Russia on one side and the United States, Japan and much of Southeast Asia on the other.

   Washington is keen to secure greater access itself to Cam Ranh Bay as part of its strategic "pivot" to Asia to counter China's growing strength in the region. U.S. ships have visited for repairs in recent years.
More
http://www.reuters.com/article/2015/03/11/us-usa-vietnam-russia-exclusive-idUSKBN0M71NA20150311

In Greek tragedy news, Greece brings up the war. The dying EUSSR is anything but a land of brotherly love.

Greece demands Nazi war reparations and German assets seizures as creditor squeeze continues

Prime Minister Alexis Tsipras revives claims for compensation in return for the crimes carried out by the Third Reich

By Mehreen Khan 2:30PM GMT 11 Mar 2015

Greece's prime minister has demanded Germany pay back more than €160bn (£112bn) in Second World War reparations as his country is squeezed by creditors to overhaul its economy in return for vital bail-out funds.

In an emotive address to his parliament, Alexis Tsipras said his government had a "duty to history, to the people who fought and to the victims who gave their lives to defeat Nazism."

The Leftist government maintains it is owed more than €162bn - nearly half the value of its total public debt - for the destruction wrought during the Nazi occupation of Greece.

"The government will work in order to honour fully its obligations. But, at the same time, it will work so that all of the unfulfilled obligations to Greece and the Greek people are met," said Mr Tsipras on Tuesday at a parliamentary debate on the creation of a reparations committee.

Syriza's leader added the atrocities of the Nazi occupation remained "fresh in the memory" of Greek people and "must be preserved in the younger generations."

Greece's demand for reparations centres on a war loan of 476m Reichsmarks the Greek central bank was forced to make to the Nazis. Athens is also calling for wider compensation for the destruction and suffering caused by the occupation.

The country's justice minister went further, threatening the seizure of German assets in order to compensate the relatives of Nazi war crimes.

Nikos Paraskevopoulos told Greek television he was willing to back a supreme court ruling which would lead to the foreclosure of German assets in Greece.

A spokesman for the German Finance Ministry dismissed the threats, saying there would be no negotiation over the war-time debts.

“We won’t be conducting any talks or negotiations with the Greek side,” said Germany’s Martin Jaeger when asked about the latest Greek demands.

“Making these emotional and backward-looking allegations doesn’t help in the context of the work we need to tackle together with the Greeks.”

The Third Reich famously subdued Greek resistance in a matter of weeks in 1941, after the country had held out for months against Mussolini’s Italian army.

The occupation that followed saw more than 40,000 civilians starved to death in Athens.
More
http://www.telegraph.co.uk/finance/economics/11463568/Greece-demands-Nazi-war-reparations-as-rhetoric-turns-nasty-in-creditor-talks.html

We close for today with America’s David Stockman taking on “Bubbles,” “Bernocchio,” and “the talking chair,” to task for what all too ominously looks like the next recession looming into view. Is this really the right time to start raising US interest rates?

The Great Immoderation: How The Fed Is Sowing The Next Recession

by David Stockman • March 11, 2015

In February 2004 Ben Bernanke famously declared the business cycle had been tamed and took a bow in behalf of enlightened monetary management, claiming it was the principal source of this beneficent development. Exactly 55 months later, of course, he terrorized the Congressional leadership and a clueless President with the frieghtening proposition that a Great Depression 2.0 was just around the corner.

As to why he had been so stupendously wrong, Bernanke did not say. Nor did he explain why the brilliantly “stable” US economy had suddenly stumbled to the edge of an abyss despite the Fed’s energetic money printing in the interim. And the Fed had not been stingy in the slightest; it balance sheet had actually expanded by $150 billion or nearly 4.5% annually between February 2004 and the Lehman bankruptcy.

Indeed, six and one-half years on from the financial crisis—-events that made a mockery of the Great Moderation—–the monetary politburo and its acolytes on Wall Street have offered no coherent explanation as to why Armageddon loomed nigh and why the worst business cycle plunge since the 1930s actually materialized. Certainly their lame Monday morning claim that “prudential regulation” had failed doesn’t cut it.

Indeed, depicted below is the staggering growth of household debt in the US economy between the two signal financial events of this century—the dotcom bust and the Lehman meltdown. Households literally borrowed themselves silly during that period, extracting upwards of $3 trillion of MEW (mortgage equity withdrawal) from their home ATM machines, among other delusionary outbreaks. Yet to say that this borrowing binge was caused by inadequate bank supervision is an insult to intelligence. It might as well be argued that the “financial contagion” that fueled the crisis arrived on a mysterious comet from deep space!

In fact, the eruption of $7 trillion of new household borrowing during this period—-or more than all the household debt outstanding at the turn of the century—-is the work of the central bank. It was the Fed’s 1% interest rates and stock market puts that had already triggered the housing and mortgage frenzy, even as Bernanke boasted about its management prowess in February 2004.

Never having explained the causes of the Great Financial Crisis (GFC) or acknowledged its own evident complicity, the Fed has nevertheless energetically doubled down on the same monetary toxins that caused the last crisis. In fact, between the September 2008 plunge that Bernanke said couldn’t happen and the plunge lurking just around the corner once again in March 2015, the Fed’s balance sheet has soared by 4.5X or at a 27% CAGR for nearly seven years running.

So now the third immense financial bubble of this century has been fully inflated. And there are abundant signs that what we really have is a Great Immoderation—–a baleful, not beneficent, development that can be laid exactly at the door step of the central bank.

Specifically, yesterday’s abysmal data on the soaring wholesale sales/inventory ratio (I/S ratio) is not only a sharp stick in the eye to the “escape velocity” chatter that emerged in last year’s second half for the fifth year running; it also offers crucial insight into a issue that the Fed and its partisans incessantly gum about but never get right.  Namely, the matter of monetary policy transmission—–or the pathways through which the Fed’s interest rate manipulations, balance sheet expansions and verbal guidance work their way into the wider financial system and macro-economy.

The long and short of it is this. The credit channel of monetary policy transmission has long been over and done because the US economy has reached a condition of peak debt.

More

http://davidstockmanscontracorner.com/the-great-immoderation-how-the-fed-is-sowing-the-next-recession/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."

Elgin Groseclose

At the Comex silver depositories Wednesday final figures were: Registered 68.83 Moz, Eligible 108.51 Moz, Total 177.44 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, a giant wobble in what was supposed to be the “Great American Century.” But are the surprising results real?  Perhaps the tests relied on English and arithmetic. Maybe there were no questions on reality shows, drugs, gangs, or the Clintons and Bushes. Perhaps American Millennials were denied “phone a friend” on their iPhones.  

All right, brain. You don't like me and I don't like you, but let's just do this and I can get back to killing you with beer.

Homer Simpson, All American.

American Millennials are among the world's least skilled

March 10, 2015, 3:49 PM EDT

Surprised? So were the researchers who tested and compared workers in 23 countries.

We hear about the superior tech savvy of people born after 1980 so often that we tend to assume it must be true. But is it?

Researchers at Princeton-based Educational Testing Service (ETS) expected it to be when they administered a test called the Program for the International Assessment of Adult Competencies (PIAAC). Sponsored by the OECD, the test was designed to measure the job skills of adults, aged 16 to 65, in 23 countries.

When the results were analyzed by age group and nationality, ETS got a shock. It turns out, says a new report, that Millennials in the U.S. fall short when it comes to the skills employers want most: literacy (including the ability to follow simple instructions), practical math, and — hold on to your hat — a category called “problem-solving in technology-rich environments.”

Not only do Gen Y Americans lag far behind their overseas peers by every measure, but they even score lower than other age groups of Americans.

Take literacy, for instance. American Millennials scored lower than their counterparts in every country that participated except Spain and Italy. (Japan is No. 1.) In numeracy, meaning the ability to apply basic math to everyday situations, Gen Yers in the U.S. ranked dead last.

Okay, but what about making smart use of technology, where Millennials are said to shine? Again, America scored at the bottom of the heap, in a four-way tie for last place with the Slovak Republic, Ireland, and Poland.

Even the best-educated Millennials stateside couldn’t compete with their counterparts in Japan, Finland, South Korea, Belgium, Sweden, or elsewhere. With a master’s degree, for example, Americans scored higher in numeracy than peers in just three countries: Ireland, Poland, and Spain.
Altogether, the top U.S. Gen Yers, in the 90^th percentile, “scored lower than their counterparts in 15 countries,” the report notes, “and only scored higher than their peers in Spain.”

“We really thought [U.S.] Millennials would do better than the general adult population, either compared to older coworkers in the U.S. or to the same age group in other countries,” says Madeline Goodman, an ETS researcher who worked on the study. “But they didn’t. In fact, their scores were abysmal.”

What does that mean for U.S. employers hiring people born since 1980? Goodman notes that hiring managers shouldn’t overestimate the practical value of a four-year degree. True, U.S. Millennials with college credentials did score higher on the PIAAC than Americans with only a high school diploma (albeit less well than college grads in most other countries).

“But a degree may not be enough,” Goodman says, to prove that someone is adept with basic English, can do what she calls “workaday math,” or has the ability to use technology in a job. Curious about how the PIAAC measures those skills, or how you’d score yourself? Check out a few sample math questions, or take the whole test.

More

http://fortune.com/2015/03/10/american-millennials-are-among-the-worlds-least-skilled/?xid=nl_termsheet

You tried your best and you failed miserably. The lesson is 'never try'.

Homer Simpson

The monthly Coppock Indicators finished February

DJIA: +120 Down. NASDAQ: +213 Down. SP500: +169 Down.