Greek Default by April 20th?

Baltic Dry Index. 2922 -25

LIR Gold Target by 2019: $3,000.

"Taking all the information I have, a default is not an issue for Greece."

Jean Claude Trichet. President of the European central Bank.

Is it all over for Greece? The specs and the markets yesterday started betting it is. The biggest one way bet after betting that the Fed is still propping up US stocks, is that Greece has become expendable to the other members of the European Monetary Union. Yesterday’s action suggested that Greece’s euro exit might come as soon as this weekend, although I personally think that zombie Greece will stagger on into next month before like the Acropolis, the roof falls in and Greece opts out of the pain. Until then, Greece has a limited time to persuade the rich and tax paying Germans to have a heart and come to their aid. Below, BUBA shows the ECB who’s really in charge in the Euro when push comes to shove. The ECB’s Trichet is starting to look as irrelevant and ridiculous as Caesar van Rompuy and Baroness Whatsit. Below that, Zero Hedge, citing Bankingnews.gr, thinks that at least one great vampire squid is betting that Greece defaults before April 20th.

“Never believe anything in politics until it has been officially denied”.

Count Otto von Bismarck.

Bundesbank attacks Greek rescue as a threat to stability
Germany's Bundesbank has fired a warning shot at Chancellor Angela Merkel, attacking the joint EU-IMF rescue plan for Greece as a threat to economic stability and probably illegal.
By Ambrose Evans-Pritchard Published: 10:44PM BST 08 Apr 2010

Leaked extracts from an internal report appeared in the Frankfurter Rundschau and may have contributed to a fresh day of mayhem for Greek bonds. Investors were already digesting reports that Greek residents had shifted €10bn (£8.8bn) abroad over the first two months of the year.
The yield on two-year Greek bonds surged by 136 basis points in early trading to 8.3pc, up from 5.2pc last week. The market stabilised later as Athens announced a 40pc cut in the budget deficit over the first quarter, suggesting that austerity measures are bearing fruit.

The Bundesbank document offers a withering critique of the deal agreed by EU leaders two weeks ago, saying the plan had been cobbled together without consulting central banks and will lead to monetisation of debt. "It brings problems in respect to stability policy that should not be underestimated."

The joint rescue between the IMF and the EU would turn the Bundesbank into a "money-printing machine" for the purchase of Greek bonds, according to Rundschau. This would breach the EU's 'no-bail clause'.

Hans Redeker, currency chief at BNP Paribas, said the report greatly strengthens the hand of EMU critics in Germany. A group of professors is already itching to file a complaint at the constitutional court to block the Greek rescue. "This reduces Merkel's room for manoeuvre to zero," he said.

The Bundesbank, headed by ultra-hawk Axel Weber, said the decision to bring in the IMF makes matters worse, arguing that the EU would impose tougher budgetary discipline.
The report mocked the IMF as the "Inflation Maximising Fund", saying the body had gone soft under Dominique Strauss-Kahn, a French socialist and Keynesian. It has shifted focus from fiscal cleansing to "growth-oriented" financial policies. "Currency reserves from the Bundesbank cannot plausibly be made available for such purposes," it said.

At the least, it will be hard for Mrs Merkel to relax her insistence on "market rates" for any loans to Greece. Officials have talked of a figure near 6pc to avoid moral hazard but this has angered Greece. It hopes to borrow below 4.5pc like Portugal or Ireland. A Greek government spokesman said yesterday that "barbarous conditions" were being imposed on his country.
Jean-Claude Trichet, the president of the European Central Bank, played down talk of a continued rift between Berlin and Brussels, saying the EU agreement to help Greece was "a very, very serious commitment: nobody should take lightly a statement which is signed by the heads of state."

"Taking all the information I have, a default is not an issue for Greece," he said, speaking after the governing council's meeting. The bank left rates at a record low of 1pc.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7569358/Bundesbank-attacks-Greek-rescue-as-a-threat-to-stability.html

Is A Big US Bank Betting On A Greek Default In 11 Days?
Submitted by Tyler Durden on 04/08/2010 16:50 -0500
Bankingnews.gr has disclosed something interesting. According to the Greek website, an account, allegedly a large US bank, has been dumping, in what it classified as "panic selling", its holdings of a 10 Year GGB maturing on April 20, 2010, or in 11 days. What is unclear is whether the bank has been trading for its own account or for a client. What is clear, is that the seller is certainly not too convinced that the bond will see a repayment of principal when it matures, in other words believes that Greece will go bankrupt before April 20th.

-----We did some snooping of our own and uncovered one bond issue that is due on April 20, however it is a 5 Year, not a 10 Year as bankingnews.gr claims. The 5 Year bond in question is a €8.22 billion in size, issued at 100.037, and was trading at 99.9008x99.9058.

Yet even if the Greek site simply mistook the tenor of the bond, a TRACE of recent activity indicates a rather substantial spike in trading (and thus both buying and selling).

To be sure, someone is unwilling to take the risk of picking 20 bps through maturity for holding this bond another 11 days. Alternatively, anyone convinced that Greece is going under in two weeks time, and that this bond will trade flat, can arb the accrued interest by selling today with the expectation that the bond will not only plunge but the 3.1% of accrued interest payment will certainly not be owed. One thing that is certain: this is an outflow of €8.2 billion that Greece would certainly much rather not have to stomach. This bond will take out all the incremental cash generated from the most recent "successful" bond auction and then some.
http://www.zerohedge.com/article/big-us-bank-betting-greek-default-11-days


Staying with Greece for now, we give Bloomberg the last word for this pre-default weekend?

Greece Needs Political Will to Take ‘Hard Medicine,’ White Says
By Svenja O’Donnell and Francine Lacqua
April 9 (Bloomberg) -- Greece needs the political will to make budget reforms and convince its population to take the “hard medicine” to prevent a debt default, former Bank of International Settlements Chief Economist William R. White said.

“There’s a lot of low-hanging fruit that could be taken down to improve the situation in Greece,” White said in a Bloomberg Television interview in Cambridge, England yesterday. “Ultimately what it comes down to is that it’s a question of the political will of the government to do it, and the capacity to get the people on side to take the kind of hard medicine that they really do need to take.”

----White spoke while attending a conference organized by the Institute for New Economic Thinking in Cambridge.
http://www.bloomberg.com/apps/news?pid=20601100&sid=a7AAyeLP2O40

Trichet Thwarted as Greek Crisis Erodes His ‘Mr. Euro’ Status

April 9 (Bloomberg) -- Mounting speculation that Greece will default on 304.2 billion euros ($405.2 billion) of debt is depriving European Central Bank President Jean-Claude Trichet of the stable markets needed to bring Europe out of its worst post- war recession.

Since early February when politicians began squabbling over how to rescue Greece from Europe’s largest deficit as a percentage of gross domestic product, the euro has lost 4.1 percent against the dollar and the extra yield demanded by investors to hold Greek debt rather than German bunds increased as high as a record 4.43 percentage points as traders saw a greater risk of default. Trichet, who was supposed to spend his final year in office nurturing the region’s nascent recovery, finds himself powerless to resolve the crisis because he has no control over fiscal policy.

“Trichet is essentially an observer in the current crisis,” said Colin Ellis, an economist at Daiwa Capital Markets Europe Ltd. in London and a former Bank of England official. “He does not hold the levers of power.”
http://www.bloomberg.com/apps/news?pid=20601100&sid=akNjOHV2OxBk

Ever wonder why the banksters are so desperate to pay themselves telephone number bonuses like there’s no tomorrow? For some of them, if not all of them, there may be no tomorrow once the next Lehman hits and the “dancing” stops. We end for what will possibly become a historic weekend, with the dodgy, I think insolvent, banks on the far side of the Atlantic. Repo 105 seems to be compulsory for America’s too big to fail banksters. Stay long physical gold and silver, but see Crooks Corner to be sure that your physical bullion is actually physical metal that really exists, and not some fraud on the books of the too big to fail banksters books. Below the Journal on the banksters hiding from the public their true level of risk. Nothing learned from the past, the probity challenged and bailed out once US banksters, seem determined to “God’s work” over and over again, until one day even God goes bust. We live in lawless times.

APRIL 9, 2010
Big Banks Mask Risk Levels
Quarter-End Loan Figures Sit 42% Below Peak, Then Rise as New Period Progresses; SEC Review

Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York.

A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.

Excessive borrowing by banks was one of the major causes of the financial crisis, leading to catastrophic bank runs in 2008 at firms including Bear Stearns Cos. and Lehman Brothers. Since then, banks have become more sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished.

That practice, while legal, can give investors a skewed impression of the level of risk that financial firms are taking the vast majority of the time.

"You want your leverage to look better at quarter-end than it actually was during the quarter, to suggest that you're taking less risk," says William Tanona, a former Goldman analyst who now heads U.S. financials research at Collins Stewart, a U.K. investment bank.

Though some banks privately confirm that they temporarily reduce their borrowings at quarter's end, representatives at Goldman, Morgan Stanley, J.P. Morgan and Citigroup declined to comment specifically on the New York Fed data. Some noted that their firm's financial filings include language saying borrowing levels can fluctuate during the quarter.

"The efforts to manage the size of our balance sheet are appropriate and our policies are consistent with all applicable accounting and legal requirements," a Bank of America spokesman said.

-----An official at the Federal Reserve Board noted that the Fed continuously monitors asset levels at the large bank-holding companies, but the financing activities captured in the New York Fed's data fall under the purview of the Securities and Exchange Commission, which regulates brokerage firms. The New York Fed declined to comment.

The data highlight the banks' levels of short-term financing in the repurchase, or "repo," market. Financial firms use cash from the loans to buy securities, then use the purchased securities as collateral for other loans, and buy more securities. The loans boost the firms' trading power, or "leverage," allowing them to make big trades without putting up big money. This amplifies gains—and losses, which were disastrous in 2008.
http://online.wsj.com/article/SB10001424052702304830104575172280848939898.html

“There is a Providence that protects idiots, drunkards, children and the United States of America.”

Count Otto von Bismarck.

At the Comex silver depositories Thursday, final figures were: Registered 53.62 Moz, Eligible 61.83 Moz, Total 115.45 Moz.

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Crooks & Scoundrels Corner.

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

Today, more on the bombshell at the CFTC position limit hearings, when it was revealed that most “physical gold and silver” on the books of the major bullion banks doesn’t exist, and that they hold at best 1 oz of real bullion for every 100 ozs of physical bullion that they pretend to have on the books. The next disaster to hit once the owners of physical gold and silver want delivery of their precious metals, if only to move it out of London where its vulnerable to government expropriation, to move it to Dubai, Hong Kong, and probably Shanghai.

“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.”

George Bernard Shaw.

The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form.

Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."

Also note the interesting detour into what Stephan Spicer of the Central Fund Of Canada, said regarding his friend at a major bank, who wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for it to be flown in from Hong Kong.

It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders' willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.
http://www.zerohedge.com/article/latest-gold-fraud-bombshell-canadas-only-bullion-bank-gold-vault-practically-empty

First Official Complaint Filed To DOJ-Anti Trust Over JPM's Role In Silver Manipulation Case
Submitted by Tyler Durden on 04/09/2010 00:13 -0500

Someone had to do it. So we applaud Jason Hommel of Silver Stock Report for submitting the first official complaint to the United States Department of Justice over the recent revelations of unprecedented manipulation and fraud in the silver (and gold) market.

-------Step 1: Fully Describe Your Concern
1. What are the names of companies, individuals, or organizations that are involved?
The CFTC, the Commodity Futures Trading Commission, is withholding the names, with the excuse given that they cannot reveal the names, because of statute. But, a statute, which may violate other laws, is no excuse for obstruction of justice, dereliction of duty, misprison of fraud, or conspiracy to defraud the United States. The COMEX, owned by the CME Group, also has the data on who is primarily involved, as the antitrust violaters trade on their exchange. http://finance.yahoo.com/q?s=cme

JPMorgan Chase & Co. has been named by thousands of writers in the private sector, all over the internet, based on the reports of the BIS, the Bank of International Settlements and the OCC, the Office of the Comptroller of the Currency at the US Treasury, that they manipulate the precious metals markets by fraudulently selling metal that does not exist. This Bank report indicates that JPMorgan Chase & Co. is heavily involved, far more than any other, in derivatives, exceeding $72 trillion.

-----The BIS, the Bank of International Settlements indicates that the notional value of "other precious metals" (silver) in the "over the counter" category increased to $203 billion by June of 2009. http://www.bis.org/statistics/otcder/dt21c22a.pdfYet, the entire world's annual production of silver, at about 600 million oz., at $17/oz., is barely $10 billion, which is a mere 1/20th of the amount owed in these bullion accounts, which are dominated by JP Morgan. But the $203 billion of mostly silver, is 12 billion ounces of silver, which is 24 times world annual production, and perhaps 100 to 160 times the actual supply of physical silver held in London for delivery against such accounts, which may be as little as 75 million ounces or less.
JPMorgan Chase & Co. is also the custodian of the ETF, SLV, which is supposed to have up to 300 million ounces held by JP Morgan, which is also likely not there.

JPMorgan Chase & Co. is thus likely engaged in a Ponzi scheme of selling silver to clients, without actually purchasing the real physical silver in the marketplace, which is a totally fraudulent and illegal activity.
More.
http://www.zerohedge.com/article/first-official-complaint-filed-doj-anti-trust-over-jpms-role-silver-manipulation-case

Odds Checker. UK General Election Betting Odds.
http://www.oddschecker.com/specials/politics-and-election/next-uk-general-election/most-seats

“People never lie so much as after a hunt, during a war or before an election.”

Count Otto von Bismarck.

Another weekend, and Greece looks a lost cause to me, although it probably won’t be decided this weekend. At some point though, even the dumbest Greek finance minister can see that staying in the Euro costs the Greek economy and ordinary Greeks more than getting out of the Euro. At that point it becomes open season on the Iberian “Greeks”. For now, the downwardly mobile UK still gets a pass. The Pound can take the strain in our stealth competitive devaluation against the EU, and America, and with the yuan still linked to the dollar China, the specs and great vampire squids will mostly want to wait out the results of the UK general election. For the rest of us UK serfs, time to be diverted with the arrival of spring and that great British horse racing spectacle, The Grand National. Have a great weekend everyone. Check with either blog for the weekend update.

Sir John Chilcot: If I could take you back, please, to the early discussions about the weapons of mass destruction and the issue of whether regime change was ever discussed…?

Prime Minister: Oh yes… I often talked to members of my inner cabinet and, indeed to Mr Blair… about regime change… his!
http://charonqc.wordpress.com/2010/01/22/gordon-brown-testifies-early-at-the-iraq-inquiry/

"'That's exactly it,' replied Stalin MacBroon, 'that's just how beautifully I've worked it all out -- because for a Prime Minister to go crazy for good reason, how much is that worth? My idea is to become a lunatic for no good reason at all.'"

Gordon Brown. With Apologies to Don Quixote.

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 07
Current Stretch: 0 days
2010 total: 6 days (6%)
2009 total: 260 days (71%)
Since 2004: 776 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