The Bottomless Pit.

Baltic Dry Index. 2911 -02

LIR Gold Target by 2019: $3,000.

"In the short-term this may calm things but within 10 years the eurozone is not going to exist any longer in its current form"

Professor Ekkehard Wenger from Würzburg University.

Two days on from the great European bailout of Greece, Eurozone unity got tossed right out of the window as German politicians quickly backtracked on the idea of funding the bottomless pit. The fact that hard working German voters were expressing outrage at being forced to subsidize the tax and work shy Greeks, only added to the speed of the German retreat. I agree with the good Professor from Wurzburg U. I think that the Eurozone is finished and will cease to exist in its present form. Club Med’s bottomless pit, will be separated from the Teutonic Euro at some point ahead, though I doubt that the two Eurozone camps have the luxury of 10 years of dithering and drift.

Below, the reality sinks in about the famous Euroland bailout of the Greek way of life. The Greeks meanwhile, at least those with any sense and wealth, will continue to move their wealth over to Switzerland. To get any of the EU and IMF cash, the Greek government first has to impoverish most Greeks. Now it looks likely that even if they do the EU’s wallet will stay closed. Don’t you just love the EU way of government.

We stand today at a crossroads: One path leads to despair and utter hopelessness. The other leads to total extinction. Let us hope we have the wisdom to make the right choice.

Woody Allen.

Euphoria over Greek rescue fades as first cracks appear
Euphoria over a joint EU-IMF rescue deal for Greece worth €45bn (£39.8bn) has given way to caution after angry reactions in Germany and continued concerns among bond investors that any bail-out merely delays the day of reckoning.
By Ambrose Evans-Pritchard Published: 10:30PM BST 12 Apr 2010

Greek borrowing costs have fallen from post-EMU highs last week but still remain at stress levels. The yield spread on 10-year bonds over German Bunds dropped by 45 basis points to 6.75pc on Monday.

"This is a short-run fix, not a long-run solution," said David Owen at Jefferies Fixed Income. "At the end of the day, Greece has to carry out monumental fiscal tightening even as it slides deeper into recession. They risk chasing their tale."

Mohamed El-Erian, head of the US bond fund Pimco, doused hopes that his firm would soon step in to buy Greek debt, saying the rescue package at rates near 5pc does not address the underlying "solvency challenges" facing the country.

The German taxpayers' union accused Chancellor Angela Merkel of caving into pressure, saying Germany would be left on the hook for huge liabilities.

Christoph Steegmans, spokesman for the finance ministry in Berlin, insisted that "nothing had changed" as a result of the weekend pledge by eurozone states for €30bn of loans. Help is "not automatic" and cannot be activated if any state objects. "The fact that the fire extinguisher has been primed says absolutely nothing about the probability of a fire," he said.

Frank Schäffler, a Free Democrat finance expert in Mrs Merkel's coalition, said the rescue deal is "clearly a subsidy" and violates the EU summit deal in March. "We're on very thin ice legally," he said, hinting at likely court challenges.

Professor Ekkehard Wenger from Würzburg University said the aid for Greece is "another step on the slippery slope downwards. All rational economic rules are being thrown out of the window. This is a bottomless pit."

"In the short-term this may calm things but within 10 years the eurozone is not going to exist any longer in its current form," he told Handelsblatt.

----- Dominique Strauss-Kahn, managing director of the IMF's, said that neither default nor EMU exit were options for Greece. "The only effective remedy that remains is deflation. That will be painful. That means falling wages and falling prices. There is no other way for Greece to become competitive," he said.

Fitch Ratings yesterday downgraded mortgage bonds issued by three Greek banks. This followed a move last Friday to cut Greek sovereign debt to by two notches to BBB-, the minimum required by the European Central Bank for loans.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7583304/Euphoria-over-Greek-rescue-fades-as-first-cracks-appear.html

APRIL 13, 2010
Trichet's Voice Is Drowned Out in Rescue Effort
FRANKFURT—Jean-Claude Trichet, an architect of European monetary union, has found himself in an unfamiliar place as Europe confronts its biggest fiscal crisis in decades: the sidelines.

As Europe has struggled to cope with Greece's debt troubles, culminating in Sunday's agreement on a potential aid package, Mr. Trichet's efforts to shape the response largely failed.

On key issues, ranging from his opposition to International Monetary Fund involvement in a bailout to his call for governments to speak with a unified voice, Mr. Trichet appeared out of sync with euro-zone capitals, and his advice often went unheeded.

"The problem now is he's in charge of an institution which is supposed to be the guardian of the euro, but a lot of the decisions that are going to affect the future of the single currency are out of his hands," says Philip Whyte, senior research fellow at the Centre for European Reform, a pro-European think tank based in London.

Mr. Trichet's lack of influence over the response to a crisis central to the stability of the euro and Europe's economic future could weaken the office of ECB president and prompt broader questions about the ECB's ability to effectively respond to future flareups, analysts say.
The ECB declined to comment.

-----In contrast to the ECB, the U.S. Federal Reserve has seen its influence grow in the aftermath of the financial crisis, economists say. Fed Chairman Ben Bernanke gets his share of criticism, but his views on the economy, regulation and fiscal policy a carry substantial weight with policymakers, elected officials and the public at large. That image gap could put more pressure on the value of the euro.

"The ECB has an outstanding reputation, but the governments have pretty much ignored it and then dragged it along, and you lose faith in euro-zone policy making if what looks like the strongest institution is marginalized," says Marco Annunziata, chief economist at UniCredit Group.
http://online.wsj.com/article/SB10001424052702304506904575180161026558300.html

Up next, Iceland’s report into the collapse of its banks, except that it now appears that they weren’t really banks, just something closer to out of control hedge funds operating on the Bernie Madoff rules of accounting. So why are the poor Icelanders being forced to pay off 100% of the losses? There were plenty of writers writing of the insane risks that Iceland’s banksters were racking up. Plenty of writers covering the insider dealing that seemed to be going on. Plenty of warning that these “banks” had little in the way of internal controls. I look forward to reading America’s “Truth Report” into how Wall Street peddled hundreds of billions of “triple-A” securities to the world that weren’t, even as some of the great vampire squids bet against them.

"Part of the $10 million I spent on gambling, part on booze and part on women. The rest I spent foolishly."

George Raft

Iceland lifts lid on banks 'excessive loans' to billionaires
Iceland’s banks gave “excessive” loans to a handful of powerful billionaires, including Robert Tchenguiz, the property entrepreneur, Jon Asgeir Johannesson, the retail tycoon, and Bjorgolfur Gudmundsson, the former owner of West Ham FC, according to a damning inquiry.
By Rowena Mason Published: 6:00AM BST 13 Apr 2010

Its parliamentary investigation – The Truth Report – found numerous potential cases of illegality, including possible share price manipulation and exaggeration of asset values, within the island nation’s three banks – Kaupthing, Glitnir and Landsbanki.

The long-awaited report also suggests that the banks were effectively controlled by five investors wielding “unlimited influence”, with some acting as shadow directors. The report accuses the bank’s owners of pressuring management into awarding loans to their companies and friendly clients, with little or no collateral.

The UK lost £8bn in the Icelandic collapse of October 2008, and charities and councils are still waiting for £1bn in compensation. Most controversially, the Treasury bailed out 300,000 British savers with Landsbanki’s high-interest Icesave accounts, sparking a diplomatic row over the responsibility for the £2.3bn bill this produced.

It emerged in the report that companies connected to Mr Gudmundsson, whose family owned 40pc of Landsbanki, had borrowed almost as much as the entire £2.3bn Icesave debt to finance their own private investments. The loans amount to 140pc of the bank’s equity.
The report quotes Sigurjon Arnason, ex-chief executive of Landsbanki, as saying: “Resisting the requests from the owners of the banks would have equalled quitting from my position.”
The report also criticises Kaupthing’s loans to London-based property entrepreneur Mr Tchenguiz, whose companies received £1.4bn.

“We consider that Kaupthing’s loans to Robert Tchenguiz and companies have been in excess of that which could reasonably be considered a commercial assumption. Rules on large exposures were not followed,” it says. The report adds that it is “difficult to see how loans of this magnitude were taken with the bank’s interests in mind”.

Mr Tchenguiz, who owned large stakes in Sainsbury’s and Mitchells & Butlers before they were seized by Kaupthing’s winding-up committee, was not a direct shareholder. However, he sat on the board of Exista, an investment firm that owned 23pc of the bank. He denies any wrongdoing and said his loans were not against the rules.

Mr Johannesson, the former boss of failed British retail giant Baugur, a current director of House of Fraser and chairman of Iceland Foods, also comes under ­scrutiny for his role at Glitnir. Companies connected to Mr Johannesson, one of Glitnir’s biggest shareholders, borrowed £3.5bn.

The 2,000-page document is heavily critical of Iceland’s former ruling political party.
It says ex-Prime Minister Geir Haarde acted with “gross ­negligence” and reveals that former central bank manager David Oddsson turned down help from his UK counterpart Mervyn King.
The banks’ owners and key shareholders have all repeatedly denied any wrongdoing.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7583268/Iceland-lifts-lid-on-banks-excessive-loans-to-billionaires.html

Stay long precious metals. Our banksters are all still gambling like there’s no tomorrow. All still operating on mark to fantasy accounting rules. All still effectively betting the ranch to rack up telephone number bonuses before “the next Lehman” hits. There appears to be no will anywhere to reform the system before the next Lehman hits. We are deliberately flirting with crashing the G-20 fiat currency financial system.

We end for today with a warning from AFP on Japan. Japan floats on a sea of new debt that it continuously sells to its citizen savers. But Japan’s population is rapidly aging and the savers appetite and ability to buy up the new debt is approaching its limit. Japan may soon have to compete in the global market for access to funds. But no one in the global market will lend to Japan at anything like the low interest rates Japan pays to its captive savers. If Japan has to start paying even Germany’s interest rate Japan will probably go broke. Is Japan the ultimate financial weapon of mass destruction? In the next 5 years we are about to find out.

If that's art, I'm a Hottentot!

Harry S. Truman.

Risk of Japan going bankrupt is real, say analysts
Sun Apr 11, 12:56 AM
TOKYO (AFP) - Greece's debt problems may currently be in the spotlight but Japan is walking its own financial tightrope, analysts say, with a public debt mountain bigger than that of any other industrialised nation.

Public debt is expected to hit 200 percent of GDP in the next year as the government tries to spend its way out of the economic doldrums despite plummeting tax revenues and soaring welfare costs for its ageing population.

Based on fiscal 2010's nominal GDP of 475 trillion yen, Japan's debt is estimated to reach around 950 trillion yen -- or roughly 7.5 million yen per person.
Japan "can't finance" its record trillion-dollar budget passed in March for the coming year as it tries to stimulate its fragile economy, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"Japan's revenue is roughly 37 trillion yen and debt is 44 trillion yen in fiscal 2010, " he said. "Its debt to budget ratio is more than 50 percent."
Without issuing more government bonds, Japan "would go bankrupt by 2011", he added.

----Standard & Poor's in January warned that it might cut its rating on Japanese government bonds, which could raise Japan's borrowing costs amid the faltering efforts of Prime Minister Yukio Hatoyama's government to curb debt.

The system of Japanese government bonds being bought by institutions such as the huge Japan Post Bank has been key in enabling Japan to remain buoyant since its stock market crash of 1990.

"Japan's risk of default is low because it has a huge current account surplus, with the backing of private sector savings," to continue purchasing bonds, said Katsutoshi Inadome, bond strategist at Mitsubishi UFJ Securities.

But while Japan's risk of a Greek-style debt crisis is seen as much less likely, the event of risk becoming reality would be devastating, say analysts who question how long the government can continue its dependence on issuing public debt.

-----Instead, the most realistic hazard brought by huge Japanese debt is prolonged deflation under a shrinking economy, say analysts.

"Regaining fiscal health needs fiscal austerity, which could weigh on economic growth," said Kiuchi.

"And when the economy is bad, people don't spend money as they are worried about their future, which in turn intensifies the deflational trend," he said.

Continued deflation could further worsen Japan's fiscal health because of less tax revenue and more stimulus spending, stirring fears over big tax hikes, which in turn weigh on demand and again reinforce deflation, analysts said.
http://ca.news.finance.yahoo.com/s/11042010/24/f-afp-risk-japan-bankrupt-real-say-analysts.html

There was a dithering PM from Fife,
Who was greatly distrusted in life;
They sang him a ballad,
And fed him on salad,
And sent the dithering PM back to Fife.

With Apologies to Edward Lear, and the Poor People of Fife.

At the Comex silver depositories Monday, final figures were: Registered 49.50 Moz, Eligible 65.56 Moz, Total 115.06 Moz.

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Crooks & Scoundrels Corner.

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

Today, more on Nu Labour’s dodgy MPs charged with having difficulty with the concept of honest accounting and the idea that reimbursement of expenses is supposed to mean that the expenses claimed actually occurred. Unbelievably, and only in Gordon Brown’s socialist wrecked, EU run, upside down modern Britain, the House of Crooks crooks are to get legal aid, and so get to victimise hapless UK taxpayers yet again.

"Politics is the art of choosing between the disastrous and the unpalatable."

J.K. Galbraith.

MPs' expenses: Politicians granted legal aid
Three politicians accused of fiddling their expenses have won a bid to get the public to pick up their legal bill.

Court officials said that the trio of Labour MPs will receive taxpayer-funded legal aid.
David Chaytor, Elliot Morley and Jim Devine are due to go on trial later this year accused of theft by false accounting

They are accused of stealing almost £60,000 in allowances through false mortgage applications, rent claims and invoices for services.

The cost of preparing their defence and of their legal representatives is likely to run into six figures, depending on the length of the trial.

But it could spiral far higher as the men threaten to take their battle to have the case against them thrown out to the Supreme Court.

Lord Hanningfield, who is accused of making false claims for travel allowances, has not made an application for legal aid, the court official added.

The three MPs have brought together some of the country's most eminent barristers, who can charge hundreds of pounds an hour, to fight their cases.

They have already told judges they should be dealt with by Parliamentary authorities instead of the courts.

Barrister Julian Knowles QC said the defendants will claim to be protected by parliamentary privilege, covered in the 1689 Bill of Rights.

There is now likely to be protracted legal argument over whether the men should face trial at all later this year.

The opening exchanges will be made a two-day hearing before trial judge Mr Justice Saunders at Southwark Crown Court from May 27.

An HM Courts Service spokesman confirmed an application for legal aid for the three men was granted last Friday.

Legal argument was originally due to take place from May 4 onwards, but this was rescheduled because some representatives were unavailable.

There has already been speculation that the total cost of prosecuting the four could exceed £3 million.

Scotland Yard said its inquiry into the expenses scandal has cost £508,500 so far, with the final bill likely to be considerably higher.

Mr Knowles, a leading junior barrister who represented the three MPs at their first magistrates' court appearance, declined to comment.

A spokesman for Edward Fitzgerald QC, who is due to represent at least two of the MPs at the crown court, said he was not aware of a legal aid decision.

Bury North MP Chaytor, 60, of Todmorden, Lancashire, is accused of falsely claiming rent on a London flat he owned, falsely filing invoices for IT work and renting a property from his mother, against regulations.

Scunthorpe MP Morley, 57, of Winterton, North Lincolnshire, allegedly falsely claimed £30,428 in interest payments between 2004 and 2007 towards a mortgage on his home which he had already paid off.

Livingston MP Devine, 56, of Bathgate, West Lothian, is said to have wrongly submitted two invoices worth a total of £5,505 for services provided by Armstrong Printing Limited.
He also faced a second charge alleging that he dishonestly claimed cleaning and maintenance costs of £3,240 by submitting false invoices from Tom O'Donnell Hygiene and Cleaning Services.
Former Essex County Council leader Lord Hanningfield, 69, faces six charges of making dishonest claims for travelling allowances.

The politicians could face up to seven years in jail if found guilty of stealing taxpayers' cash. Each defendant will be tried separately.
http://www.telegraph.co.uk/news/newstopics/mps-expenses/7582362/MPs-expenses-Politicians-granted-legal-aid.html

UK General Election polls. – Why a hung Parliament looks likely.
http://www.ukpollingreport.co.uk/blog/


"An empty taxi arrived at 10 Downing Street, and when the door was opened, Gordon Brown got out"

With Apologies to Churchill on Atlee.

The monthly Coppock Indicators finished March:

DJIA: +168 UP. NASDAQ: +370 UP. SP500: +196 UP. The great Bull market goes on with the all three continuing higher in positive numbers.

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Help the LIR fight Banksterism, the EU, and for sound money.
If you can, help the LIR stay around and make a difference. Please make a donation at the PayPal link on the website or better still become a sponsor for what looks like an exciting 2010. Capitalism not banksterism. Many thanks to all who have helped.

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Sunspots – A 22 year colder world? (From 2004?)

Spotless Days April 11
Current Stretch: 1 days
2010 total: 7 days (7%)
2009 total: 260 days (71%)
Since 2004: 777 days
Typical Solar Min: 485 days
http://www.spaceweather.com
The long minimum seems to have ended.

New Solar Cycle Prediction
http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm

Is the Sun Missing Its Spots?
http://www.nytimes.com/2009/07/21/science/space/21sunspot.html?8dpc

Are Sunspots Different During This Solar Minimum?

-----But something is unusual about the current sunspot cycle. The current solar minimum has been unusually long, and with more than 670 days without sunspots through June 2009, the number of spotless days has not been equaled since 1933.

----During the period from 1645 to 1715, the Sun entered a period of low activity now known as the Maunder Minimum, when through several 11- year periods the Sun displayed few if any sunspots. Models of the Sun's irradiance suggest that the solar energy input to the Earth decreased during that time and that this change in solar activity could explain the low temperatures recorded in Europe during the Little Ice Age.

----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.http://www.leif.org/EOS/2009EO300001.pdf

Big freeze could signal global warming 'pause'
The Arctic conditions which have brought Britain to a standstill over the past week could be the start of a "pause" in global warming, some scientists believe.
Published: 9:20AM GMT 11 Jan 2010
http://www.telegraph.co.uk/earth/environment/globalwarming/6965342/Big-freeze-could-signal-global-warming-pause.html

Sunspot cycle 24: Together with sunspot cycle 25, the next two global cooling cycles. The new “Dalton Minimum?” Twenty Nine months now with low sunspots numbers, and counting. March was the 29th month of yet another low number of 15.4 http://en.wikipedia.org/wiki/Dalton_Minimum

Smoothed sunspot numbers (SSN). 2007, Oct. 0.9. The end of cycle 23.

Sunspot cycle 24: Nov 1.7. Dec 10.1. Jan 3.4. Feb 2.2. Mar 9.3 April 2.9. May: 2.9. June 3.1. July 0.5. August 0.5. Sep 1.1 Oct. 2.9. Nov. 4.1 Dec 0.8. Jan 1.5. Feb 1.4. Mar 0.7. Apr 1.2. May 2.9. June 2.6. July 3.5. Aug. 0.0. Sep 4.2. Oct 4.6. Nov 4.2. Dec 10.6 Jan 13.1 Feb 18.6 Mar 15.4.

Sunspots. http://solarscience.msfc.nasa.gov/SunspotCycle.shtml

The count. http://sidc.oma.be/products/ri_hemispheric/

Why a New Minimum. http://sesfoundation.org/dalton_minimum.pdf

The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm

Current Space Weather.
http://www.swpc.noaa.gov/

What happened to global warming?
http://news.bbc.co.uk/1/hi/sci/tech/8299079.st

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This week’s featured links: Silver & Gold Miners + Rare Metals.
With US trillion dollar deficits stretching as far as the eye can see, and voodoo economics the order of the day at the central banks, I think it is now time to begin selectively scaling into precious metals companies that mostly meet the following criteria:

Adequate cash reserves. Good management. Strong in-ground reserves or prospects. NAFTA based, or else located in countries with strong rule of law.

Endeavour Silver Corp. TSX: EDR. http://www.edrsilver.com/s/Home.asp

Semafo TSX: SMF http://www.semafo.com/home_company_intro.php

ATW Gold Corp. TSX.V: ATW. http://www.atwgold.com/

US Silver Corp. TSX.V: USA. http://www.us-silver.com/s/Home.asp

Excellon Resources Inc. TSX: EXN. http://www.excellonresources.com/

First Majestic Silver Corp. TSX: FR http://www.firstmajestic.com/s/Home.asp

New Jersey Mining Company. OTCBB: NJMC
http://www.newjerseymining.com/index.html

Atna Resources Ltd. TSX: ATN. http://www.atna.com/s/Home.asp

Barkerville Gold Mines TSX.V: BGM. Formerly International Wayside Gold Mines Ltd.
http://www.barkervillegold.com/s/Home.asp

Shoreham Resources Ltd. TSX-V: SMH http://www.shoreham.ca/

ATAC Resources Ltd, TSX.V: ATC. http://www.atacresources.com/s/home.asp

Evolving Gold Corp. TSX.V: EVG http://www.evolvinggold.com/

Lydian International Ltd. TSX: LYD. Note: LYD operates in Armenia, a region carrying higher risk than our usual safer picks in NAFTA lands. http://www.lydianinternational.co.uk/

The story of rare earths and metals is mostly one of China producing and exporting, Japan, America and everyone else importing. Vital to our new technologies, and lifestyle, and critical to hybrid and electric cars, Rare Earth Elements and Heavy Rare Earths, are a strategic choke point held in China’s hands. Lately China has been squeezing that choke point. I think that AVL at Thor Lake Canada, has a property of global importance. A property with the ability to offer NAFTA access to REEs and HREs for the decades ahead. As America and the west move to reduce over dependence on oil from unstable regions, we will see demand for rare metals take off.

Avalon Rare Metals Inc. TSX: AVL. www.avalonraremetals.com

We will be adding more REEs as appropriate.

Warning.

Sadly we are all in unexplored territory. The world has never before suffered a severe recession/depression while operating on fiat currency. As is widely apparent, the central banks haven’t a clue and are making up the rules as the flounder along. They never saw it coming they claim, although it was obvious to many fine writers though not unfortunately in the mainstream media, that a giant financialised derivatives gambling economy would always end badly. There are no experts now, for the simple reason that we have never before faced such a sudden synchronised and deep collapse in the global economies.

The unfortunate fact that we are operating on fraudulent currencies is highly likely to mean it all ends many months from now, in a fiat currency revulsion, but only after the monetary authorities have first tried pouring in endless amounts of newly created money. A derivatives gambling world with an estimated quadrillion dollars of face value has to be unwound and the losses absorbed. In this sort of investing environment, cash, gold and silver and tangible assets are favoured over stocks and intangible assets.

As always if thinking about making an investment, it’s important to do one’s own due diligence. No one has more at risk in an investment than you do yourself. In these difficult economic times, there will likely be several false bottoms before the real one arrives and hindsight allows us to confirm that the bottom is in. Even then, a “V” shaped rebound is highly improbable. A double dip recession seems likely. Beware the false "statistical" government subsidised "recovery." It is a "recovery" bought from a future of fiat currency collapse.

Graeme Irvine

London Irvine Report: www.londonirvinereport.com/
Graeme@londonirvinereport.com