Weekend Update – April 10, 2010

Baltic Dry Index. 2913 -09

LIR Gold Target by 2019: $3,000.

When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before.

H.L. Mencken.

This weekend, some of the held over interesting items and news from China and the George Soros sponsored conference in Cambridge. In Euroland, another sleepy weekend before a Greek default sinks all ships.

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.

Groucho Marx.

China Reports March Trade Deficit on Surging Imports
April 10 (Bloomberg) -- China posted its first trade deficit in six years in March even as the yuan stayed pegged to the dollar, aiding government efforts to play down the currency’s role in global economic imbalances.

The shortfall was $7.24 billion, the customs bureau said on its Web site today. That compared with a $7.6 billion surplus in February and the median forecast in a Bloomberg News survey of 26 economists for a $390 million deficit. Imports surged 66 percent from a year earlier and exports gained 24.3 percent.

A trade deficit for a single month may not persuade the U.S. to ease pressure on China to scrap the 21-month-old peg amid calls in Congress for the nation to be branded a currency manipulator. A return to a surplus is likely as soon as this month after seasonal labor shortages hurt exporters of clothes, shoes and bags in March, the customs bureau said yesterday.

“This is a temporary shortfall and we still believe that China will de-peg the yuan from the dollar in coming weeks,” Wang Qian, chief China economist with JPMorgan Chase & Co. in Hong Kong, said before the release.

-----“The most important reason for the March deficit is China’s booming domestic demand,” Huang Guohua, the head of the customs bureau’s statistics department, told reporters in Beijing yesterday. First-quarter import growth was the most since records began in 1980 as the nation’s demand aids the “global economic recovery and rebalancing,” he said.

----“The deficit is not sustainable,” Huang said yesterday, adding that the failure of some migrant workers to return to work immediately after a Chinese New Year holiday probably capped exports.

The first-quarter trade surplus fell 76.7 percent from a year earlier to $14.49 billion. The smaller numbers are likely to continue as exports face headwinds including a fragile global recovery and protectionism and imports stay strong, Huang said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN6LJ.zrF7RU&pos=1

China Boosts Oil Imports 29%, Remains Net Fuel Buyer

April 10 (Bloomberg) -- China, the world’s second-biggest energy consumer, increased March crude oil imports by 29 percent from a year earlier and remained a net importer of fuel as the country’s economic recovery drove demand.

Crude imports reached 21.1 million metric tons, or 4.98 million barrels a day, preliminary data released by the General Administration of Customs showed today. Net imports were 20.8 million tons, second only to December’s record 20.9 million tons.

Exports of Chinese-made goods rose 24.3 percent in March, spurring fuel consumption by factories. China may post a new all-time high for crude imports this year as a resurgent economy drives fuel-demand growth, an estimate from China National Petroleum Corp. showed on Feb. 4.
“China may refine a record volume of crude oil in April because of high fuel demand during the spring farming season, and the general recovery in the economy,” Qiu Xiaofeng, an oil analyst with China Merchants Securities Ltd., said by telephone from Shanghai. “How demand will trend from here depends on when and by how much the government adjusts fuel prices,” he said.
China relied on imports for more than half its crude oil needs last year as a demand recovery outpaced growth in domestic output. The economy, which expanded at the fastest pace in the fourth quarter since 2007, will grow four times faster than the U.S. in 2010, the United Nations said in December.
http://www.bloomberg.com/apps/news?pid=20601089&sid=a6j6p2ayD9V8

China Soybean Imports Jump 36 Percent, Customs Says
April 10 (Bloomberg) -- China’s soybean imports, the world’s biggest, jumped 36 percent in March from February as expanding livestock production boosted demand.

Imports were 4.01 million metric tons last month, compared with 2.95 million tons in February, according to the customs agency’s Web site today. That’s up 3.9 percent from the same month last year, according to calculations by Bloomberg News.

Soybean imports by China may climb to records on expanding livestock and crushing capacity, the country’s third-biggest crusher, Chinatex Grains & Oils Co., said March 24. China’s imports may help offset a record global soybean production this year.

“The market expects shipments arriving to be getting bigger and bigger,” said Nie Ben, an analyst at Shanghai Continent Futures Co., by phone from Dalian. “As long as the downstream demand is ok, China can still digest these beans.”

The most-actively traded soybean contract for September delivery in Dalian yesterday rose 0.3 percent to 7,738 yuan ($1,134) a ton. September soybean meal fell 0.3 percent to 2,827 yuan a ton.

Vegetable oil imports, including palm, soybean and canola oil, were 560,000 tons in March, customs figures showed. That was up from 370,000 tons in February.

Natural rubber imports were 190,000 tons in March, according to the agency
http://www.bloomberg.com/apps/news?pid=20601089&sid=aG7GWGEYJwMU

Below, UK and European news. While Greece goes for broke, Eurozone retail sales struggle, and George Soros suggests that whoever wins the UK General Election on May 6th, that Her Majesty’s next government should devalue the Pound, not that the existing government together with the Bank of England aren’t doing a good job of that already.

“There is no example of nation become rich by paying its debts. There are dozens of examples of nations becoming rich by defaulting or renegotiating.”

John Ralston Saul. A Doubters Companion: A Dictionary of Aggressive Common Sense.

Soros Says Pound Devaluation Is Option for Next U.K. Government
By Jennifer Ryan
April 10 (Bloomberg) -- Billionaire investor George Soros said the next U.K. government after the May 6 election should decide whether to allow a further devaluation of the pound to rebalance the economy and assist the recovery.

Britain “has more room to use exchange rate adjustments as a way of adjusting the economy” than do nations that use the euro, he said in an interview yesterday in Cambridge, England. “It’s a question for the next government to decide. It has a number of options, of which a currency depreciation is one.”

The pound has dropped about 25 percent on a trade-weighted basis since the start of 2007, making exporters’ goods less expensive overseas. Bank of England policy makers are counting on sterling’s weakness to aid the recovery and rebalance the economy away from domestic spending at a time when the nation faces a record budget deficit.

“It’s a question now of, if you now cut the budget deficit and borrow less, you could probably keep the currency, raise the interest rate, you could keep the currency from going down,” he said. “Britain, by having kept out of the euro, has that option of allowing the exchange rate to adjust.”

-----Soros said that history shows Britain still has room to borrow more to bolster its public finances. Its debt levels have been higher, and Japan’s 10-year borrowing costs are about 1.5 percent even after its debt load swelled, he said.

“Probably Britain is not at the limit of its borrowing capacity,” he said. Still, “Britain is in a very difficult situation.”

-----Soros was attending a conference organized by the Institute for New Economic Thinking in Cambridge.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoU43SK8lHoI

Below, more on the infamous Keynesian King’s College, conference in Cambridge. New ways to bailout failed gambling Banksters probably. About the best that can be said for it, at least it isn’t Trinity College, famous for supplying Britain’s upper class traitorous communist spies for Stalin.

What do you call 100 banksters on a sinking ship?

A start.

The Economic Crisis and the Crisis in Economics
April 8-11, 2010

The Inaugural Conference

The Institute for New Economic Thinking’s Inaugural Conference will take place at King’s College, University of Cambridge in Cambridge, UK on April 8-11, 2010. The landmark event reflects the organization's commitment to invigorate the conversation surrounding economic theory, method, and policy. More than 150 academic, business, and government policy thought leaders from around the world will convene to explore the reasons prevailing economic theory failed to predict the financial and economic crisis that erupted in 2007-2008. Conversations will examine the implications for reform, provoke creative energy, and foster the development of original contributions to economic thinking.

About King’s College

Set on the banks of the River Cam, in stunning historic surroundings, King's College was founded in 1441 by Henry VI (1421-71) and is one of the 31 colleges in the University of Cambridge. King's has an outstanding academic record and is world-famous for its Chapel and choir.

The Significance of King's

In the 1930’s John Maynard Keynes responded to the widespread suffering of the Great Depression with a challenge to free-market theories that spawned an economic revolution and transformed capitalism worldwide. Now, in 2010 when the need for reform is greater than ever, we must apply the same Keynesian courage and innovation. Thus, it seems most appropriate to commence this global dialogue where Keynes himself pondered and debated economic theory: King’s College.
http://ineteconomics.org/initiatives/conferences/kings-college

European Retail Sales Decline Most in Nine Months
By Simone Meier

April 8 (Bloomberg) -- European retail sales declined the most in nine months in February as rising unemployment prompted consumers to cut back spending.

Sales in the 16-nation euro region fell 0.6 percent from January, when they decreased 0.2 percent, the European Union’s statistics office in Luxembourg said today. That’s the biggest drop since May 2009. Economists forecast sales to remain unchanged, the median of 15 estimates in a Bloomberg News survey showed. From the year-earlier month, February retail sales declined 1.1 percent.

Euro-area companies may have to rely on exports to bolster sales as a double-digit jobless rate and increasing energy costs erode consumer confidence. Europe’s manufacturing growth accelerated in March and investor confidence rose this month. Henkel AG, the German maker of Loctite glues, said last month that it aims to boost sales in faster-growing emerging markets.

“Consumption will remain a burden to growth,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “The labor market continues to weigh on spending. This year will be better than 2009, but we’re still far from normal conditions.”

In the 27-nation EU, retail sales remained unchanged from January while declining 0.7 percent from a year earlier. Sales declined in 13 EU member states and increased in seven, today’s report showed. Portugal had the biggest drop, with a 3.4 percent decline.

-----Oil prices have increased 8.1 percent this year, leaving consumers with less money to spend just as companies are eliminating jobs and cutting labor costs to bolster earnings. The euro region’s jobless rate increased to 10 percent in February, the highest since August 1998.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amkYT.9TzVOM

We end on this Grand National Day in suddenly spring like England, with P-26. Twenty-six more days of UK politicians of all parties lying about how they won’t really be raising taxes and firing public servants starting after the general election. Magically the UK’s Labour wrecked finances are all going to restored by “efficiency savings” in the UK civil service. Our easy going free lunch is coming towards its lifestyle changing end. Just whatever you do, don’t let on to the UK voters.

UK Polling Day -26.

"Reading out the figures in a shrill, rapid voice, Gordon Brown proved to them in detail that they had more oats, more hay, more turnips than they had had in Thatcher's day, that they worked shorter hours, that their drinking water was of better quality, that they lived longer, that a larger proportion of their young ones survived infancy, and that they had more straw in their stalls and suffered less from fleas."

With Apologies to George Orwell. Animal Farm.

UK General Election polls.
http://www.ukpollingreport.co.uk/blog/

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


“The whole of the situation of the Conservative Party today springs from that night when they dismissed the best prime minister the country had had since Churchill.”

Denis Thatcher.

More on Monday. Have a great weekend.

“To His Majesty the King of Sweden.”

Labour Prime Minister Callaghan toasting the King of Norway.

GI.