Baltic Dry Index. 3329 +126
LIR Gold Target by 2019: $3,000.
The promise given was a necessity of the past: the word broken is a necessity of the present.
Niccolo Machiavelli
Another day, and two very different disasters dominate. In Europe, the Greek disaster now threatens to cost Germany 25 billion euro. Is the true scale of tiny Greece’s debts now 120 billion Euro? Who knows, each day brings yet another massive escalation of the size of the problem. I can’t wait until we try to uravel the finance black hole of Spain or Italy. Elsewhere, in the Gulf of Mexico, BP’s rig disaster also escalates by the day. Federal Reserve style, the blowout and oil leak has gone from being contained on Friday, to a modest leak of 1,000 barrels a day on Monday, to a worrying leak of 5,000 barrels a day yesterday. A change in winds today is expected to push the oil towards very sensitive shores.
Below, the Telegraph covers the transformation of Greece into Germany’s bottomless pit. From London it’s quite easy to see that the real solution lies in Greece leaving the Euro and restructuring its debt, perhaps by as much as a 50% haircut. Instead the Germans are trying to enforce a suicidal extreme austerity regime on a nation in no mood to accept additional cuts. This is a nation where the airforce pilots just went on strike after all. I suspect that the Greeks know the answer too. I suspect that they just want as much exit cash and good terms as they can get as they head out the door marked exit. Stay long gold and silver, it’s over for the euro as we knew it. The new Euro will either be a slightly harder version of the old Italian Lira or a slimmed down Teutonic Euro-zone operating on a renamed D-Mark. Right now the French leaders of the ECB and IMF plus President Obama, are trying to force Germany into the Lira solution. If Chancellor Merkel holds her nerve, she may yet get to dominate western Europe with the rise of a new international D-Mark.
Most people still believe in a hard day's work, but they also believe that it should be spread out over the course of a week.
Mad Magazine.
EMU domino fears as Spain downgraded, Germany drags feet on rescue
German leaders have agreed in principle to a rescue package of up to €135bn for Greece in emergency talks with EU and IMF officials, but failed to offer any clarity on the conditions for such aid.
By Ambrose Evans-Pritchard, in Berlin Published: 8:10PM BST 28 Apr 2010
LIR Gold Target by 2019: $3,000.
The promise given was a necessity of the past: the word broken is a necessity of the present.
Niccolo Machiavelli
Another day, and two very different disasters dominate. In Europe, the Greek disaster now threatens to cost Germany 25 billion euro. Is the true scale of tiny Greece’s debts now 120 billion Euro? Who knows, each day brings yet another massive escalation of the size of the problem. I can’t wait until we try to uravel the finance black hole of Spain or Italy. Elsewhere, in the Gulf of Mexico, BP’s rig disaster also escalates by the day. Federal Reserve style, the blowout and oil leak has gone from being contained on Friday, to a modest leak of 1,000 barrels a day on Monday, to a worrying leak of 5,000 barrels a day yesterday. A change in winds today is expected to push the oil towards very sensitive shores.
Below, the Telegraph covers the transformation of Greece into Germany’s bottomless pit. From London it’s quite easy to see that the real solution lies in Greece leaving the Euro and restructuring its debt, perhaps by as much as a 50% haircut. Instead the Germans are trying to enforce a suicidal extreme austerity regime on a nation in no mood to accept additional cuts. This is a nation where the airforce pilots just went on strike after all. I suspect that the Greeks know the answer too. I suspect that they just want as much exit cash and good terms as they can get as they head out the door marked exit. Stay long gold and silver, it’s over for the euro as we knew it. The new Euro will either be a slightly harder version of the old Italian Lira or a slimmed down Teutonic Euro-zone operating on a renamed D-Mark. Right now the French leaders of the ECB and IMF plus President Obama, are trying to force Germany into the Lira solution. If Chancellor Merkel holds her nerve, she may yet get to dominate western Europe with the rise of a new international D-Mark.
Most people still believe in a hard day's work, but they also believe that it should be spread out over the course of a week.
Mad Magazine.
EMU domino fears as Spain downgraded, Germany drags feet on rescue
German leaders have agreed in principle to a rescue package of up to €135bn for Greece in emergency talks with EU and IMF officials, but failed to offer any clarity on the conditions for such aid.
By Ambrose Evans-Pritchard, in Berlin Published: 8:10PM BST 28 Apr 2010
Hopes for a respite for Southern Europe's battered bond markets were quickly dashed as Standard & Poor’s downgraded Spain.
Rainer Brüderle, Germany’s economy minister, said the Greek bail-out would be much larger than first thought, acknowledging that Greece cannot hope to tap the private debt markets for three years.
The heads of the European Central Bank and the International Monetary Fund made a joint pilgrimage to Berlin, pleading with lawmakers in the Bundestag to throw their full weight behind rescue efforts before the chain-reaction spreads to Portugal and the rest of the EMU periphery. Their presence as supplicants in Berlin marks the symbolic moment when Germany appears the undisputed master of Europe.
Dominique Strauss-Kahn, the IMF’s chief, said the stability of the eurozone itself is in danger. "We need to act swiftly and strongly,” he said.
German Chancellor Angela Merkel once again refused to give concrete assurances, leaving the markets as wary as ever over the real intentions of Berlin. "This is about the stability of the euro overall, and we won't avoid this responsibility. But the challenge is for Greece to accept an ambitious program," she said.
“Europe risks the biggest coordination failure in modern history,” said David Simmonds, research chief at RBS. The Berlin talks are as vague as ever. “We believe that markets will remain very sceptical.”
-----The Greek debt market came close to disintegration yesterday. Yields on two-year bonds rose briefly to 38pc. “This no longer has anything to do with interest rates: it is a forward contract on the return of the Greek Drachma,” said Charles Dumas, head of Lombard Street Research.
Markets are already looking beyond Greece to Portugal where spreads on 10-year bonds rose to 330 points -- higher than the level that first prompted Athens to invoke aid -- before falling back on pledges of further austerity.
Premier Jose Socrates is to bring welfare cuts planned for 2011 and 2012, accepting that the markets will not give Portugal another year to tackle its deficit of 9.4pc of GDP.
S&P cut Spanish debt one notch to AA with a negative outlook, warning that the fall-out from the housing bust will keep the country trapped in near slump until 2016. It said private sector debt of 178pc of GDP was a major concern.
Daniel Cohn-Bendit, leader of the European Greens, said Europe’s handling of the crisis had been “catastrophic” and rebuked Germany for resorting the “discipline of the whip”.
But Mrs Merkel is treading on eggshells. She faces a crucial election in North Rhine-Westphalia on May 9 that will decide control of the Bundesrat, and risks a court challenge if any rescue breaches the EU’s no `bail-out clause’. David Marsh, author of `The Euro: The Politics of the New Global Currency` said the moment of truth has come when Germany must decide whether to accept the burden of propping up Europe’s southern ring or let Greece fail and endanger its strategic investment in Europe’s post-War order.
“There are some senior figures who would like so see the gangrenous leg of Greece chopped off, to set an example. But they want to avoid leaving any German fingerprints on the blood-stained knife,” he said.
It is far from clear whether Athens will agree to further austerity as strikes hit the country day after day. Andreas Loverdos, Greece’s labour minister, said the EU-IMF team wants further wages cuts. “We cannot accept that.”
Greece knows it can opt for default at any time, setting off an EMU-wide crisis and bringing down Europe’s banks. It also knows that key figures in the Bundestag favour debt restructuring.
“Those who chased high yield by purchasing Greek debt must share the costs,“ said Volker Wissing, chair of Bundestag’s finance committee. Leo Dautzenberg from the Christian Democrats said banks should prepare for a `haircut’ of up to 50pc.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7647645/EMU-domino-fears-as-Spain-downgraded-Germany-drags-feet-on-rescue.html
Next, Bloomberg on the rising reality that the best course is to let Greece exit and restructure.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.'
Ludwig von Mises.
Greece Turning Viral Sparks Search for EU Solutions
April 29 (Bloomberg) -- European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.
With Greece’s budget turmoil infecting markets from Rome to Madrid, economists are urging German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and other officials to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks, the economists said.
Bonds and stocks plunged across Europe in the past week as Merkel’s government delayed approving a rescue plan for Greece and Standard & Poor’s downgraded Greece, Portugal and Spain. As OECD head Angel Gurria likens the crisis to the Ebola virus, Europe may need to come up with a plan equivalent to the $700 billion Troubled Asset Relief Program deployed by the U.S. after the collapse of Lehman Brothers Holdings Inc.
“It is perhaps time to think of policy options of the last resort in the current sovereign crisis,” said David Mackie, chief European economist at JPMorgan in London. “It may now be time for the euro area to do something much more dramatic in order to prevent the stress from creating another broad-based financial crisis which pushes the region back into recession.”
----Nouriel Roubini, the New York University professor who anticipated the economic collapse of 2008, said yesterday that the national debt crisis that’s spreading out from Greece is a warning sign for countries ranging from the U.S. to Japan and the U.K.
“Greece is just the tip of the iceberg,” Roubini said. “There’s been a massive releveraging of the public sector.”
------A Greek agreement may not be enough to end a crisis that’s ricocheting through all euro-region markets and governments may have to come up with a blanket plan for the bloc as a whole, said Mackie. He calculates that in a worst-case contagion scenario, supporting Spain, Portugal and Ireland and Greece may require aid worth 8 percent of the gross domestic product of the rest of the region. That’s equivalent to about 600 billion euros.
“This is a big number, but the region has the fiscal capacity to backstop both banks and these countries,” said Mackie. Governments also could guarantee each other’s debt for a limited period such as three years, an “attractive form of support because no money is needed up front,” he said.
The ECB may also have a role to play even if the crisis has its roots in fiscal policy. With Greek debt now rated as junk by S&P, the Frankfurt-based central bank may need to dilute its collateral rules again so as it can keep accepting the country’s bonds when making loans, said economists led by Juergen Michels at Citigroup Inc.
Under current rules, Greek bonds will be ineligible at money-market operations if Fitch Ratings and Moody’s Investors Service cut them to junk as well.
-----A default by “rich” Greece on its debt would be the best way to ease the European fiscal crisis and help allay fears of a contagion, said Mark Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management Ltd. Greece should consider restructuring its debt to pay 25 cents to 50 cents for every dollar, helping to cut its debt level to a more sustainable level, he said in an interview with Bloomberg Television in Singapore today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCW0uYHW707A&pos=3
Elsewhere in Europe, way off the radar screen, Hungary has a similar problem to Greece.
Rainer Brüderle, Germany’s economy minister, said the Greek bail-out would be much larger than first thought, acknowledging that Greece cannot hope to tap the private debt markets for three years.
The heads of the European Central Bank and the International Monetary Fund made a joint pilgrimage to Berlin, pleading with lawmakers in the Bundestag to throw their full weight behind rescue efforts before the chain-reaction spreads to Portugal and the rest of the EMU periphery. Their presence as supplicants in Berlin marks the symbolic moment when Germany appears the undisputed master of Europe.
Dominique Strauss-Kahn, the IMF’s chief, said the stability of the eurozone itself is in danger. "We need to act swiftly and strongly,” he said.
German Chancellor Angela Merkel once again refused to give concrete assurances, leaving the markets as wary as ever over the real intentions of Berlin. "This is about the stability of the euro overall, and we won't avoid this responsibility. But the challenge is for Greece to accept an ambitious program," she said.
“Europe risks the biggest coordination failure in modern history,” said David Simmonds, research chief at RBS. The Berlin talks are as vague as ever. “We believe that markets will remain very sceptical.”
-----The Greek debt market came close to disintegration yesterday. Yields on two-year bonds rose briefly to 38pc. “This no longer has anything to do with interest rates: it is a forward contract on the return of the Greek Drachma,” said Charles Dumas, head of Lombard Street Research.
Markets are already looking beyond Greece to Portugal where spreads on 10-year bonds rose to 330 points -- higher than the level that first prompted Athens to invoke aid -- before falling back on pledges of further austerity.
Premier Jose Socrates is to bring welfare cuts planned for 2011 and 2012, accepting that the markets will not give Portugal another year to tackle its deficit of 9.4pc of GDP.
S&P cut Spanish debt one notch to AA with a negative outlook, warning that the fall-out from the housing bust will keep the country trapped in near slump until 2016. It said private sector debt of 178pc of GDP was a major concern.
Daniel Cohn-Bendit, leader of the European Greens, said Europe’s handling of the crisis had been “catastrophic” and rebuked Germany for resorting the “discipline of the whip”.
But Mrs Merkel is treading on eggshells. She faces a crucial election in North Rhine-Westphalia on May 9 that will decide control of the Bundesrat, and risks a court challenge if any rescue breaches the EU’s no `bail-out clause’. David Marsh, author of `The Euro: The Politics of the New Global Currency` said the moment of truth has come when Germany must decide whether to accept the burden of propping up Europe’s southern ring or let Greece fail and endanger its strategic investment in Europe’s post-War order.
“There are some senior figures who would like so see the gangrenous leg of Greece chopped off, to set an example. But they want to avoid leaving any German fingerprints on the blood-stained knife,” he said.
It is far from clear whether Athens will agree to further austerity as strikes hit the country day after day. Andreas Loverdos, Greece’s labour minister, said the EU-IMF team wants further wages cuts. “We cannot accept that.”
Greece knows it can opt for default at any time, setting off an EMU-wide crisis and bringing down Europe’s banks. It also knows that key figures in the Bundestag favour debt restructuring.
“Those who chased high yield by purchasing Greek debt must share the costs,“ said Volker Wissing, chair of Bundestag’s finance committee. Leo Dautzenberg from the Christian Democrats said banks should prepare for a `haircut’ of up to 50pc.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7647645/EMU-domino-fears-as-Spain-downgraded-Germany-drags-feet-on-rescue.html
Next, Bloomberg on the rising reality that the best course is to let Greece exit and restructure.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.'
Ludwig von Mises.
Greece Turning Viral Sparks Search for EU Solutions
April 29 (Bloomberg) -- European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.
With Greece’s budget turmoil infecting markets from Rome to Madrid, economists are urging German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and other officials to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks, the economists said.
Bonds and stocks plunged across Europe in the past week as Merkel’s government delayed approving a rescue plan for Greece and Standard & Poor’s downgraded Greece, Portugal and Spain. As OECD head Angel Gurria likens the crisis to the Ebola virus, Europe may need to come up with a plan equivalent to the $700 billion Troubled Asset Relief Program deployed by the U.S. after the collapse of Lehman Brothers Holdings Inc.
“It is perhaps time to think of policy options of the last resort in the current sovereign crisis,” said David Mackie, chief European economist at JPMorgan in London. “It may now be time for the euro area to do something much more dramatic in order to prevent the stress from creating another broad-based financial crisis which pushes the region back into recession.”
----Nouriel Roubini, the New York University professor who anticipated the economic collapse of 2008, said yesterday that the national debt crisis that’s spreading out from Greece is a warning sign for countries ranging from the U.S. to Japan and the U.K.
“Greece is just the tip of the iceberg,” Roubini said. “There’s been a massive releveraging of the public sector.”
------A Greek agreement may not be enough to end a crisis that’s ricocheting through all euro-region markets and governments may have to come up with a blanket plan for the bloc as a whole, said Mackie. He calculates that in a worst-case contagion scenario, supporting Spain, Portugal and Ireland and Greece may require aid worth 8 percent of the gross domestic product of the rest of the region. That’s equivalent to about 600 billion euros.
“This is a big number, but the region has the fiscal capacity to backstop both banks and these countries,” said Mackie. Governments also could guarantee each other’s debt for a limited period such as three years, an “attractive form of support because no money is needed up front,” he said.
The ECB may also have a role to play even if the crisis has its roots in fiscal policy. With Greek debt now rated as junk by S&P, the Frankfurt-based central bank may need to dilute its collateral rules again so as it can keep accepting the country’s bonds when making loans, said economists led by Juergen Michels at Citigroup Inc.
Under current rules, Greek bonds will be ineligible at money-market operations if Fitch Ratings and Moody’s Investors Service cut them to junk as well.
-----A default by “rich” Greece on its debt would be the best way to ease the European fiscal crisis and help allay fears of a contagion, said Mark Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management Ltd. Greece should consider restructuring its debt to pay 25 cents to 50 cents for every dollar, helping to cut its debt level to a more sustainable level, he said in an interview with Bloomberg Television in Singapore today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCW0uYHW707A&pos=3
Elsewhere in Europe, way off the radar screen, Hungary has a similar problem to Greece.
IMF Trust in Hungary Budget Data ‘Distressing,’ Matolcsy Says
By Zoltan Simon
April 29 (Bloomberg) -- The International Monetary Fund’s trust in the credibility of Hungary’s budget data is “distressing,” said Gyorgy Matolcsy, who is the main candidate to become economy minister, according to Heti Valasz.
“It’s distressing that the IMF is a prisoner of the budget figures of the outgoing government,” Matolcsy told the weekly newspaper. “Besides them, everyone is aware that the 3.8 percent budget deficit is unsustainable. Even if they sense this at the IMF, they can’t say it publicly until the new government is formed.”
Incoming Prime Minister Viktor Orban, whose Fidesz party won this month’s elections, has said the government falsified budget data and that the gap may be double the 2010 target. The IMF and the European Union, which gave the bulk of a $26.4 billion bailout in 2008 that helped Hungary avert a default, say the target is “achievable,” though additional measures may be warranted.
The budget gap for this year “belongs to the past” and the new cabinet’s priority will be to jumpstart growth and create jobs in the recession-hit economy, Orban said on April 26. Generating growth is a precondition of further fiscal consolidation, he said.
http://www.bloomberg.com/apps/news?pid=20601095&sid=a.WyoD8_3Idg
In oil news, the Gulf of Mexico oil spill gets worse. Below the latest updates from the Houston Chronicle and Wall Street Journal. If the oil enters the Gulf wetlands, the resulting reaction is likely to highly populist and very bad for the offshore drilling industry. BP is probably just days away from a trip through hell.
Well springs third leak; officials raise spill estimate
By BRETT CLANTON, MATTHEW TRESAUGUE and MONICA HATCHER HOUSTON CHRONICLE
April 28, 2010, 11:01PM
BP said Wednesday night that a third leak has developed in an undersea oil well and government officials raised their estimate of how much oil is leaking into a growing slick that threatens the Gulf Coast.
Rear Adm. Mary Landry, commander of U.S. Coast Guard District 8, said the government has offered BP access to Defense Department technology that may not be available in the commercial sector in its efforts to address the increasingly serious spill resulting from a deadly drilling rig explosion last week.
Earlier Wednesday, the Coast Guard set fire to portions of the advancing slick, hoping to limit the amount of crude that reaches this particularly vulnerable coastline.
The new leak is near the wellhead 5,000 feet down, and like the other two, is in a now-tangled pipe called a riser that connected the well to the rig on the surface.
Officials have been estimating the well is leaking at least 1,000 barrels, or 42,000 gallons, every day, but on Wednesday night raised the top range to 5,000 barrels.
----A 1,000-member task force with the British oil giant has so far failed to stanch the flow.
The huge slick — estimated to be 600 miles in circumference — began when the Deepwater Horizon drilling rig sank into the Gulf after an apparent blowout sent it up in flames April 20. The rig, owned and operated by Swiss-based Transocean, had been drilling a well at BP's Macondo prospect some 40 miles off the Louisiana coast when the accident occurred. Eleven of 126 workers aboard are presumed dead.
The Mississippi forks in three directions from Venice. Through the river's southern pass, it's about 30 miles to the Gulf — two hours' sail for a large cargo ship.
Teams scrambled to create a buffer zone from the mouth of the Mississippi to Mobile Bay in Alabama, with officials acknowledging in the frankest terms yet that the spill will likely reach shore.
“It's premature to say it's catastrophic. I will say it's very serious,” Landry said earlier Wednesday.
The Coast Guard started a controlled burn of thick, clumpy pockets of crude within the slick late Wednesday afternoon and stopped at nightfall. Weather permitting, burns were to resume this morning.
The process involves boats using 500-foot sections of containment boom to tow oil to remote areas, where the Coast Guard said several thousand gallons of oil would be burned in about an hour.
But a storm system developing in the central U.S. is forecast to bring strong winds from the southeast today, raising concerns that if the burns aren't finished by then, they will send black smoke and a pungent odor of oil toward New Orleans.
-----Walter Chapman, a chemical and biomolecular engineering professor at Rice University, said a controlled burn can help reduce the size of the spill and break up some of the heavier components in the oil.
But sustaining a burn won't be easy with ocean water sapping heat needed to feed the flames. And dense “tar balls,” too heavy to float on the water's surface, will probably not be consumed in the fire and could still wash ashore, Chapman said. “We're still going to see some environmental damage.”
Whatever its size, people in Venice are watching the advancing slick with concern. Steps away from the response staging area are dozens of shrimp boats. Shrimping season opens May 17, but it's possible that the spill could force closures.
-----BP, as owner of the offshore lease where the well was being drilled, is required by a 1990 oil pollution law to cover the costs of regaining control of the well and the cleanup. The company has estimated the effort is costing it $6 million per day.
http://www.chron.com/disp/story.mpl/business/energy/6979467.html
APRIL 29, 2010
Leaking Oil Well Lacked Safeguard Device
The oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills.
The lack of the device, called an acoustic switch, could amplify concerns over the environmental impact of offshore drilling after the explosion and sinking of the Deepwater Horizon rig last week.
The accident has led to one of the largest ever oil spills in U.S. water and the loss of 11 lives. On Wednesday federal investigators said the disaster is now releasing 5,000 barrels of oil a day into the Gulf, up from original estimates of 1,000 barrels a day.
U.S. regulators don't mandate use of the remote-control device on offshore rigs, and the Deepwater Horizon, hired by oil giant BP PLC, didn't have one. With the remote control, a crew can attempt to trigger an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated.
The efficacy of the devices is unclear. Major offshore oil-well blowouts are rare, and it remained unclear Wednesday evening whether acoustic switches have ever been put to the test in a real-world accident. When wells do surge out of control, the primary shut-off systems almost always work. Remote control systems such as the acoustic switch, which have been tested in simulations, are intended as a last resort.
Nevertheless, regulators in two major oil-producing countries, Norway and Brazil, in effect require them. Norway has had acoustic triggers on almost every offshore rig since 1993.
The U.S. considered requiring a remote-controlled shut-off mechanism several years ago, but drilling companies questioned its cost and effectiveness, according to the agency overseeing offshore drilling. The agency, the Interior Department's Minerals Management Service, says it decided the remote device wasn't needed because rigs had other back-up plans to cut off a well.
The U.K., where BP is headquartered, doesn't require the use of acoustic triggers.
----Tony Hayward, BP's CEO, said finding out why the blowout preventer didn't shut down the well is the key question in the investigation. "This is the failsafe mechanism that clearly has failed," Mr. Hayward said in an interview.
http://online.wsj.com/article/SB10001424052748704423504575212031417936798.html?mod=WSJ_hps_LEFTTopStories
“Paper money eventually returns to its intrinsic value - zero.”
Voltaire.
At the Comex silver depositories Wednesday, final figures were: Registered 51.17 Moz, Eligible 63.83 Moz, Total 115.00 Moz.
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Crooks & Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
"Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess.”
Professor Irving Fisher.
Today, has the WSJ found an honest Wall Street firm? Well, New Jersey Wall Street anyway. Can the Journal put away its Diogenes lamp having found a nice great vampire squid? Below, the firm that turned down Goldman’s invite to create synthetic CDOs designed to fail. The “fabulous Fab” got turned down and sent on his way to ACA. Below that, another Brownian blunder for Britain.
The Duke of Dunstable had one-way pockets. He would walk ten miles in the snow to chisel an orphan out of tuppence.
P.G. Wodehouse.
APRIL 29, 2010
SEC Questions 'Not Us' Firm
Executives of Investment Company Had Rejected Goldman Deal as Too Risky
The Securities and Exchange Commission in recent weeks has questioned executives of a little-known firm that played a key role in the business of arranging mortgage investments, as part of the agency's probe into now-controversial deals struck at the height of the housing bubble.
GSC Group Inc. was one of several firms that helped banks including Goldman Sachs Group Inc. put together deals that allowed investors to bet on the housing market.
The New Jersey investment firm turned down Goldman's request to select assets for the debt deal at the center of the agency's fraud lawsuit against Goldman, according to a person familiar with the matter and an email released by a Senate subcommittee this week. The concern: The deal was too risky for investors, according to the person and the email.
GSC received a subpoena from the SEC last summer and held subsequent discussions with the agency, including in recent weeks, according to an executive at the firm.
"GSC's involvement here is strictly as a witness, and we're cooperating with the SEC," said Daniel Ross, a lawyer for the firm.
----In January 2007, Goldman bankers approached GSC to select mortgage-backed securities for a complex deal known as a synthetic collateralized debt obligation that it was creating at the behest of hedge-fund manager John Paulson, At the time, Mr. Paulson was bearish on the mortgage market, according to an email released this week by a Senate subcommittee questioning Goldman executives and according to the SEC complaint. GSC turned away the business.
"As you know, a couple of weeks ago we had approached GSC to ask them to act as portfolio selection agent for that Paulson-sponsored trade, and GSC had declined given their negative views on most of the credits that Paulson had selected," said the email, from Mr. Tourre in late-January 2007.
Goldman eventually tapped ACA Management LLC to select the securities for the deal, which was named Abacus 2007-AC1. The SEC alleges Goldman and Mr. Tourre didn't inform investors that Mr. Paulson's firm, Paulson & Co., played a role in picking the assets and that Goldman and Mr. Tourre misled ACA about Paulson's position.
The deal quickly lost value, leading to investor losses in excess of $1 billion and gains to Paulson of about $1 billion.
http://online.wsj.com/article/SB10001424052748703648304575212641381556412.html?mod=WSJ_hps_MIDDLESecondNews
April 29, 2010
Brown’s ‘bigot’ blunder plunges Labour campaign into crisis
Gordon Brown prostrated himself as a “penitent sinner” yesterday after a brush with a voter triggered a calamitous chain of events that threatened to derail Labour on the eve of tonight’s pivotal TV debate.
The Prime Minister spent an unscheduled 45 minutes inside the terraced house of Gillian Duffy apologising to the Labour-supporting widow for insulting her behind her back.
His muttered description of her as a “bigoted woman”, picked up by a microphone as he drove off from their combative but apparently friendly encounter, plunged Labour’s high command into its most serious crisis of the campaign.
Instead of pressing the party’s record on the economy before tonight’s final trial by television, the election machine was reduced to desperate firefighting as Lord Mandelson led a series of Cabinet ministers on to the airwaves. The Business Secretary said that Mr Brown had been wrong to criticise Mrs Duffy, whose mistake, on her way to buy a loaf of bread, had been to buttonhole the Prime Minister over the deficit, immigration and student debts.
A mortified Mr Brown issued six apologies over the next six hours, including one by e-mail to Labour supporters for letting them down. Despite saying sorry to Mrs Duffy over the telephone, he ignored aides and insisted on driving back to Rochdale from Manchester, abandoning his preparation for tonight’s third and final leaders’ debate, to atone in person for his blunder.
He emerged from her house smiling fixedly, saying that he had misunderstood her earlier words.
http://www.timesonline.co.uk/tol/news/politics/article7111086.ece
It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine.
P.G. Wodehouse.
Why A UK Hung Parliament is Likely. Stay long precious Metals.
http://www.ukpollingreport.co.uk/blog/
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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