Cash not Ash – Part 2.

Baltic Dry Index. 2998 -04

LIR Gold Target by 2019: $3,000.

“A clever man commits no minor blunders.”

Goethe.

We open this morning to the sound of roaring jet engines, as millions of distressed and immensely poorer travelers begin the process of flying in or out of the UK’s airports. Cash, or the European airlines rapidly arriving lack of it, has triumphed over Iceland’s ash. This morning it now looks like the six day closure of Europe’s airspace was a monumental blunder of Brownian proportions! Someone, most likely someone in England, grossly over reacted last week to Iceland’s ash, and abruptly closed the UK’s airspace, triggering similar gross over reaction panic across most of Europe. By yesterday with airlines on the brink of collapse, stranded passengers running out of money to buy alcohol and places to stay, and with airport owners staring bankruptcy down the road, someone finally noticed that the alleged ash had traveled thousands of miles by the time it reached Europe, dissipating and diluting along the way. In finest Gilbert and Sullivan tradition, Her Majesty’s Government of incompetents, nincompoops, and serial muddlers, simply reversed themselves and declared the UK’s airspace was now an ash free zone, safe for the world’s airplanes to fly in. Of course, by now no one really knows what the truth is about the great European 21st century flying fiasco. You really couldn’t make this sort of incompetence up. Below, the Telegraph takes up recent developments. Con trails are back in our skies again.

“There are few, very few, that will own themselves in a mistake.”

Jonathan Swift.

Iceland volcano: UK airports reopen as BA claims shutdown 'unnecessary'
The blanket ban on flights has been lifted, as of 10pm on Tuesday, as British Airways claimed the unprecedented shutdown was unnecessary.

By Gordon Rayner, David Millward and James Kirkup Published: 8:29PM BST 20 Apr 2010

After six days without flights, which have cost the economy more than £1.6 billion, left 500,000 passengers stranded and disrupted schools, the no-fly zone was lifted.

The decision was made after ministers were put under pressure to explain why British flights were being stopped while most of European air space was open, despite the cloud of volcanic ash from Iceland. After a meeting between the Civil Aviation Authority, Lord Adonis, the Transport Secretary, and airlines it was agreed to open most British air space, including all airports, from 10pm last night.

Lord Adonis said: “Safety remains my paramount concern. Since the flight restrictions were imposed, the Civil Aviation Authority has been working around the clock with the aircraft manufacturing industry, the airlines and the research community to better understand how different concentrations of ash affect aircraft engines. As a result, the Civil Aviation Authority has now established a wider area in which it is safe to fly, consistent with the framework agreed by the EU transport ministers yesterday.”

Willie Walsh, the British Airways chief executive, said it could take “weeks” for the airline industry to return to a “normal level of operation”.

“I do not believe it was necessary to impose a blanket ban on all UK air space last Thursday,” he said.

Mr Walsh said he was “pleased” with the decision to reopen airports, but added: “We will have plenty of time to look back on what could have been done better and I do believe lessons can be learned from this.”

Aviation experts said the Government had previously ignored calls for an urgent review of the no-fly zone, which threatened to bankrupt several airlines.

Despite bold statements from the Prime Minister about emergency transport for tourists, fewer than 300 Britons were directly helped, after being allowed to board a Navy vessel in Spain, to the dismay of those left behind. As the crisis entered its seventh day:

Thousands of schoolchildren faced major disruption to lessons and exam preparations because they or their teachers could not get home

Airlines were facing a compensation bill from stranded passengers of at least £250? million
Tourists were warned it could take “weeks” to repatriate everyone.

Airports dealt with 200 flights yesterday, eight per cent of usual operations, but only in Scotland and the North East.

The restrictive regime compared with 60 per cent of normal services taking off and landing in mainland Europe, amounting to 14,000 flights from hubs including Paris and Amsterdam. More than 20 long-haul British Airways flights took off from abroad yesterday, expecting to land in Britain later today.

Airlines and airport operators said the CAA and Nats, the air traffic control centre, had “over-reacted” to the crisis caused by the ash cloud over Europe and the Atlantic.

David Henderson, of the Association of European Airlines, said Britain had taken a stricter approach than other parts of Europe.

“We had hoped there would be genuine co-ordination across Europe,” he said. “We are disappointed that this has not happened.

“There are probably 100 to 150 airlines in Europe, some large, some small, some tiny and some that are not going to be around in a week or two, that’s for sure.”

Boris Johnson, the Mayor of London, questioned the science behind the lockdown.
http://www.telegraph.co.uk/travel/travelnews/7612109/Iceland-volcano-UK-airports-reopen-as-BA-claims-shutdown-unnecessary.html

My guess is that now a monumental UK and European cover up will begin. Who is going to foot the bill for the most expensive bureaucratic blunder in history? How could one relatively small volcanic eruption in Iceland produce enough volcanic ash to cover a continent wide multi-thousand feet high European airspace? The search for a suitable disposable scapegoat begins. Ominously, the ECB and the IMF fly into Greece today to tell them just how high they must jump to get access to the 45 billion of bailout cash. My guess is that sensible Greeks will follow the sensible Icelanders and tell ECB and IMF where to go. Below, some more collateral damage from the British blunder of the new century?

“You are a worthy representative of the new democracy in Brazil.”

Old Labour Prime Minister James Callaghan, welcoming the President of Portugal to Britain.

Volcanic eruption threatens disruption for elite London Marathon field
It is meant to be the ultimate endurance test over 26.2 miles but for many of the leading runners due to compete in Sunday's Virgin London Marathon, the race to the finish line could be thousands of grueling miles long.
By Simon Hart Published: 9:09PM BST 19 Apr 2010

The cloud of volcanic ash that has turned Britain into a no-fly zone has forced athletes from as far afield as Kenya, Ethiopia, Japan and the United States into a race against the clock just to make it to the start-line. Unless the flight ban ends and air travel returns swiftly to normality, they face punishing journeys on planes, trains and automobiles every bit as energy-sapping as the race from Blackheath to The Mall.

One athlete, Ethiopian Tsegaye Kebede, who was runner-up in last year’s race, is booked on a nightmarish trip that begins in Addis Ababa on Tuesday and then takes him by air to Tel Aviv, followed by another flight to Madrid and then a gruelling overland trip to London, via Paris.

Kebede has had the added problem of having to obtain new visas for his re-routed journey. He will deserve a medal just for making it to the capital.

As other runners contemplate trips every bit as difficult, race organisers were on Monday drawing up emergency travel arrangements to smooth their passage to London and ensure a top-quality field for the world’s richest marathon.

Among the options being considered was chartering a jet to pick up athletes from Kenya and Ethiopia, who form the bedrock of the men’s elite field. Money would be appear to be no object to save a race that has been billed as the strongest men’s marathon in history.

But if the flight ban continues, even a charter flight from east Africa would still involve flying the athletes to Madrid and then transporting them overland by bus or train to London, with the prospect of just a couple of days’ rest before the big race.
http://www.telegraph.co.uk/sport/othersports/athletics/london-marathon/7608517/Volcanic-eruption-threatens-disruption-for-elite-London-Marathon-field.html

In Goldman news, “The Fab” has been barred from working in the City. I sense “let’s make a deal” comes next. Goldman seems to think so too, as it appears to be about to sacrifice The Fab. Having allegedly trashed the clients for filthy lucre, Goldie now seems to be positioning to trash the employee. Doing God’s work up at Goldman, will soon have the workers paranoid. Soon who is bugging who, will come down to everyone.

“It is important for Britain and France to work closer together, and, of course, our relationship with Germany is immensely important.”

Prime Minister Tony Blair, welcoming German Chancellor Angela Merkel to Downing Street.

Goldman Sachs trader barred from the City over SEC charges
Fabrice Tourre – the bond trader at the heart of Goldman Sachs' fraud case – was on Tuesday barred from working in the City of London in the first 'victory' for financial regulators on both sides of the Atlantic.

By James Quinn in New York and Philip Aldrick Published: 9:06PM BST 20 Apr 2010

Mr Tourre – accused of mis-selling a complex parcel of toxic mortgages to the bank's own clients while another client was shorting them – was removed from the Financial Services Authority's register, in a move which overshadowed Goldman's bumper $3.46bn (£2.25bn) profits in the first quarter.

Although the request to remove him emanated from Goldman, it is understood that the City regulator placed pressure on the investment bank to effectively ban him from working in the Square Mile in a regulatory function.

The decision will however have been a difficult one for Goldman, given the negative signals it sends about Mr Tourre's culpability in relation to the Securities and Exchange Commission's charges, which the bank has consistently denied.

The US regulator has charged both Mr Tourre – who remains on extended leave but has been cleared of any wrongdoing by the bank – and Goldman itself with actively misleading its own clients over the sale of a complex $1bn parcel of toxic derivatives tied to the downfall of the US housing market.

An FSA spokesman would say only Mr Tourre's removal from the register was "a matter for the firm". A source close to the situation said the financial services watchdog is "content with the outcome."

The FSA has begun an investigation against Goldman's London branch, and has been in contact with its general counsel in New York, who said he would be as helpful as possible in helping the City regulator understand the transaction under scrutiny.

The situation overshadowed Goldman's stellar financial results, which were largely a result of strength in the division on which the SEC probe centres – the bank's fixed income, currency and commodities division.

The Wall Street bank generated a post-tax profit of $3.46bn, up 91pc on the same period last year, on revenues of $12.8bn, up from $9.43bn a year ago.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7612047/Goldman-Sachs-trader-barred-from-the-City-over-SEC-charges.html

Goldman Sachs Says SEC Case Hinges on Actions of One Employee
April 21 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. fraud case against the firm hinges on the actions of the employee it placed on paid leave this week.

Fabrice Tourre, the 31-year-old Goldman Sachs executive director who was accused of misleading investors about a mortgage-linked investment in 2007, will also be de-registered from the Financial Services Authority, a spokeswoman at the firm in London said yesterday.

“It’s all going to be a factual dispute about what he remembers and what the other folks remember on the other side,” Greg Palm, Goldman Sachs’s co-general counsel, said in a call with reporters yesterday, without naming Tourre. “If we had evidence that someone here was trying to mislead someone, that’s not something we’d condone at all and we’d be the first one to take action.”

By characterizing the case as a dispute involving a single employee, Goldman Sachs may be taking its first steps to publically distance itself from Tourre in the case, some lawyers said. That could reduce bad publicity and ultimately make it easier for the company to settle the case.

Goldman Sachs may also want to separate itself from Tourre if it’s concerned he will cooperate with the SEC or implicate more senior employees, said Onnig Dombalagian, a professor at Tulane University Law School in New Orleans and former attorney fellow at the SEC.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4wQK24j3.Mo&pos=2

Below, the IMF agenda for the upcoming G-20 finance ministers meeting. The IMF feels a tax coming on.

“It’s nice to be in Devon Again.”

Liberal Democrat leader Paddy Ashdown speaking in Cornwall.

April 20, 2010
Leaked IMF document urges two new taxes for banks

The IMF wants two separate taxes on banks to address the huge burden of support after the 2008 financial crash

The IMF is proposing a double-tax regime for banks that would fund future bailouts and penalise both the profits and pay of lenders.

The proposal emerged in a leaked confidential document prepared for the G20 meeting of finance ministers to be held this week in Washington.

The IMF wants two separate taxes on banks to address the huge burden of support after the 2008 financial crash.

According to the fund, unrecovered costs of bank rescues in the most affected G20 countries represent 4 per cent to 5 per cent of GDP.

The first tax, a Financial Stability Contribution, would be a levy to fund any future government support. The second would be a Financial Activities Tax on the sum of the profits and remuneration of financial institutions.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7103244.ece

“This is a great day for France.”

Richard Nixon, attending the funeral of Charles De Gaulle.

At the Comex silver depositories Tuesday, final figures were: Registered 50.19 Moz, Eligible 64.44 Moz, Total 114.63 Moz.

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Crooks & Scoundrels Corner.

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

This morning, yet another scandal in the world of outrageous front running the order flow, aka high-frequency trading.

“The President is going to lead us out of this recovery. It will happen.”

Vice President Dan Quayle.

Ex-Societe Generale Trader Accused of Stealing Code
By Thom Weidlich - Apr 19, 2010
Former Societe Generale trader Samarth Agrawal was charged by the U.S. with stealing the company’s computer code for high-frequency trading.

Agrawal, charged with one count of theft of trade secrets, is accused of making copies last June of one part of the code he’d been given access to and another part he hadn’t. Agrawal was arrested today, according to federal prosecutors in New York.

“Over the past several years, the financial institution has spent millions of dollars to develop and maintain a computer system that allows the financial institution to engage in sophisticated, high-speed trading on various securities markets,” according to a criminal complaint unsealed today.
Agrawal was hired by Societe Generale in New York in March 2007 to work as a quantitative analyst in the high-frequency trading group, according to the complaint. He was promoted to trader last April and resigned in November, prosecutors said.

Agrawal’s lawyer, Steven M. Statsinger, didn’t immediately return a call seeking comment.
The Paris-based bank discovered the misappropriation after conducting an internal probe, informed law enforcement and has been cooperating with the investigation, according to a company statement e-mailed by spokesman James Galvin.

“No client information or funds were involved in the incident,” according to the statement. “SG vigorously protects its propriety information and intellectual property.”

After he submitted his resignation, the bank tried to get Agrawal to stay, according to the complaint. He said he wanted to return eventually to his native India to start his own high- frequency trading firm, according to the complaint.

Societe Generale is France’s second-largest bank by market value. BNP Paribas SA is France’s biggest bank.
http://preview.bloomberg.com/news/2010-04-19/ex-societe-generale-trader-accused-of-stealing-computer-code-u-s-says.html

"Forward, the Light Brigade!

"Was there a man dismay'd?

Not tho' the soldier knew

Someone had blunder'd:
Theirs not to make reply,

Theirs not to reason why,

Theirs but to do and die:

Into the valley of Death

Rode the six hundred.”

Alfred, Lord Tennyson

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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