Sunday 30 May 2010

BP Fails – May 30, 2010

BP & Herman v Hermann the German Barbarian.

Sadly BP has failed in its latest attempt at plugging their GOM oil well. The aftermath is likely to alter BP far beyond current expectations. Going down with BP shareholders seems to be President Obama, whose detached management style seems to be turning him into likely one termer.

MAY 30, 2010, 12:42 A.M. ET

'Top Kill' Fails to Stop Flow of Oil From Gulf Leak

BP PLC has abandoned an attempt to plug a mile-deep oil and natural-gas gusher in the Gulf of Mexico by injecting thousands of barrels of drilling fluid and will now, after three days, try a new method.

"We have been unable to overcome the flow from the well," BP Chief Operating Officer Doug Suttles said Saturday in a news briefing. "We now believe it is time to move on to the next of our options," he said, adding it wasn't clear exactly why the procedure called a top kill failed to stem the flow of oil and gas. The decision to give up on the top-kill attempt was made late Saturday afternoon after consultation with U.S. Secretary of Energy Steven Chu and Interior Secretary Ken Salazar.

The failure is a huge blow to BP, which had big hopes for the top kill, and will increase the pressure being piled on the company by the Obama administration and legislators from both parties on Capitol Hill, where a number of investigations are under way. BP started the top kill Wednesday afternoon, shooting heavy drilling fluids into the broken valve known as a blowout preventer. The mud was driven by a 30,000 horsepower pump installed on a ship at the surface. But it was clear from the start that a lot of the "kill mud" was leaking out instead of going down into the well. BP tried to get around that problem with a series of "junk shots," in which materials like shredded rubber tires, pieces of rope and golf balls were fired in to clog the valve. In a statement, BP said that despite pumping over 30,000 barrels of mud in three attempts at rates of as much as 80 barrels a minute, the operation "did not overcome the flow from the well."

Engineers will now try to contain the flow of oil from the leak with a "lower marine riser package," or LMRP, cap. This operation would involve removing a broken drilling pipe, or riser, that lies atop the blowout preventer and capping the valve with a siphon that will take the oil to the surface. BP said the operation had never been carried out in 5,000 feet of water and its success couldn't be assured.

-----Mr. Suttles said the LMRP-cap procedure would take four to seven days. The LMRP cap is a newly made version of a type of device referred to as a top hat.

"The next thing to do is to capture all of the flow or as much of the flow as we can," he said. "We believe the LMRP cap has the potential to capture the great majority of [the leaking oil]," if it works. Mr. Suttles declined to give a percentage probability that the new containment effort would succeed, noting that nothing like this had been attempted at 5,000 feet below the surface of the sea. BP had said it gave the now-failed top-kill procedure a 60%-70% chance of success.

http://online.wsj.com/article/SB10001424052748704254004575274433337222768.html?mod=WSJEUROPE_hps_MIDDLETopNews

Documents Show Early Worries About Safety of Rig

By IAN URBINA Published: May 29, 2010

WASHINGTON — Internal documents from BP show that there were serious problems and safety concerns with the Deepwater Horizon rig far earlier than those the company described to Congress last week.

The problems involved the well casing and the blowout preventer, which are considered critical pieces in the chain of events that led to the disaster on the rig.

The documents show that in March, after several weeks of problems on the rig, BP was struggling with a loss of “well control.” And as far back as 11 months ago, it was concerned about the well casing and the blowout preventer.

On June 22, for example, BP engineers expressed concerns that the metal casing the company wanted to use might collapse under high pressure.

“This would certainly be a worst-case scenario,” Mark E. Hafle, a senior drilling engineer at BP, warned in an internal report. “However, I have seen it happen so know it can occur.”

The company went ahead with the casing, but only after getting special permission from BP colleagues because it violated the company’s safety policies and design standards. The internal reports do not explain why the company allowed for an exception. BP documents released last week to The Times revealed that company officials knew the casing was the riskier of two options.

Though his report indicates that the company was aware of certain risks and that it made the exception, Mr. Hafle, testifying before a panel on Friday in Louisiana about the cause of the rig disaster, rejected the notion that the company had taken risks.

-----BP’s concerns about the casing did not go away after Mr. Hafle’s 2009 report.

In April of this year, BP engineers concluded that the casing was “unlikely to be a successful cement job,” according to a document, referring to how the casing would be sealed to prevent gases from escaping up the well.

The document also says that the plan for casing the well is “unable to fulfill M.M.S. regulations,” referring to the Minerals Management Service.

A second version of the same document says “It is possible to obtain a successful cement job” and “It is possible to fulfill M.M.S. regulations.”

Andrew Gowers, a BP spokesman, said the second document was produced after further testing had been done.

-----A parade of witnesses at hearings last week told about bad decisions and cut corners in the days and hours before the explosion of the rig, but BP’s internal documents provide a clearer picture of when company and federal officials saw problems emerging.

In addition to focusing on the casing, investigators are also focusing on the blowout preventer, a fail-safe device that was supposed to slice through a drill pipe in a last-ditch effort to close off the well when the disaster struck. The blowout preventer did not work, which is one of the reasons oil has continued to spill into the gulf, though the reason it failed remains unclear.

Federal drilling records and well reports obtained through the Freedom of Information Act and BP’s internal documents, including more than 50,000 pages of company e-mail messages, inspection reports, engineering studies and other company records obtained by The Times from Congressional investigators, shed new light on the extent and timing of problems with the blowout preventer and the casing long before the explosion.

-----The documents show that in March, after problems on the rig that included drilling mud falling into the formation, sudden gas releases known as “kicks” and a pipe falling into the well, BP officials informed federal regulators that they were struggling with a loss of “well control.”

On at least three occasions, BP records indicate, the blowout preventer was leaking fluid, which the manufacturer of the device has said limits its ability to operate properly.

“The most important thing at a time like this is to stop everything and get the operation under control,” said Greg McCormack, director of the Petroleum Extension Service at the University of Texas, Austin, offering his assessment about the documents.

He added that he was surprised that regulators and company officials did not commence a review of whether drilling should continue after the well was brought under control.

------Bob Sherrill, an expert on blowout preventers and the owner of Blackwater Subsea, an engineering consulting firm, said the conditions on the rig in February and March and the language used by the operator referring to a loss of well control “sounds like they were facing a blowout scenario.”

Mr. Sherrill said federal regulators made the right call in delaying the blowout test, because doing a test before the well is stable risks gas kicks. But once the well was stable, he added, it would have made sense for regulators to investigate the problems further.

http://www.nytimes.com/2010/05/30/us/30rig.html?pagewanted=1&hp

In other news, it seems to be open war between the French run ECB and the sovereign nation state of Germany. The ECB seems to be making a power grab by joining the Brussels attempt to force through a European debt union. I doubt that German voters are in any mood to play milch cow to Brussels and Club Med forever. My guess is that we will not have to wait very long for Berlin’s riposte to the ECB-Brussels power play. Below that, Italy gets a taste of the Greek disease.

MAY 29, 2010

After Debt Crisis, New Tension Between ECB, Germany

FRANKFURT—The rift between the European Central Bank and Germany appeared to widen, as a top bank official offered what economists saw as a critique of the response of the euro zone's largest member to the rescue of Greece and other debt-burdened economies.

In a speech Friday in Morocco, ECB executive board member Lorenzo Bini Smaghi said that "in one large euro-area country it was thought that public support for swift action could be achieved only by dramatizing the situation, for instance, by telling the public that 'the euro is in danger' or by considering the possibility of expelling a country from the euro area."

Mr. Bini Smaghi didn't specifically name Germany. But the implication is clear, says Barclays Capital economist Julian Callow, that "this is a public chiding of Germany."

In March, German Chancellor Angela Merkel said there needs to be a mechanism under which "as a last resort, it's possible to exclude a country from the euro zone if again and again it doesn't fulfill the requirements."

----Such rhetoric made the eventual price tag higher, Mr. Bini Smaghi suggested. In the middle of a crisis, speaking about the euro being in danger or about expulsion of a member country is "like fanning the flames," and made the cost of the support package higher, he said.

"This is very strong and unusual for the ECB to call out a single country; without any doubt it refers to Germany," says Carsten Brzeski, economist at ING Bank.

The ECB declined to comment on whether Mr. Bini Smaghi's reference was directed at Germany.

------In a rare show of defiance for the consensus-driven ECB, Germany's central bank head Axel Weber told the German newspaper Börsen-Zeitung that he viewed the bond-buying decision "critically" and that it carried "substantial stability risks." National central bank governors such as Mr. Weber sit on the ECB's policy-setting Governing Council. Germany's Jürgen Stark, who like Mr. Bini Smaghi is on the ECB's Frankfurt-based executive committee, later said in a German television interview that he shared Mr. Weber's view that the bond purchases potentially posed risks to stability.

http://online.wsj.com/article/SB10001424052748703957604575272463950198700.html?mod=WSJ_hp_us_mostpop_read

Advance guard of angry women lead Italians into European protests over austerity cuts

Italy is the latest eurozone nation to be threatened by finacial woe - after Silvio Berlusconi assured his compatriots for months that they had weathered the crisis.

By Nick Squires in Rome Published: 7:49PM BST 29 May 2010

They were the advance guard of an army of Italians whose anger is rising as their country joins the rest of the continent struggling with the worst economic crisis of recent times.

Waving banners, blowing whistles and chanting "Shame!", hundreds of public service workers rallied outside Italy's parliament in Rome to protest against the austerity package announced by the centre-Right government of Silvio Berlusconi.

The measures aim to shave 24 billion euros off government spending in the next two years.

They include a crackdown on tax evasion and welfare fraud, a three year salary freeze for Italy's 3.4 million civil servants and substantial cuts to regional government which will almost certainly result in less money for hospitals and schools.

In pushing through the package with an emergency parliamentary decree, Italy joined Portugal and Spain in trying to fend off contagion from the crisis which has brought deadly riots to Greece and shaken confidence in the euro. The cuts are greater in scale than the £6 billion of immediate savings recently announced by Britain's new coalition government, but are comparable with what the UK may face over the next 12 months.

The protesters, mostly women, who had gathered outside Italy's lower house of parliament in Piazza di Montecitorio, a cobbled square lined with expensive hotels and boutiques, were stung by the announcement and fearful for the future.

For months Mr Berlusconi had been assuring his countrymen that Italy has weathered the global economic crisis much better than the rest of Europe.

The government's overnight switch from breezy optimism to dire warnings of "very tough sacrifices" in order to spare Italy from a Greek-style bailout, and associated international ignominy attached, made the announcement of the austerity package all the more shocking to those with most to lose.

http://www.telegraph.co.uk/news/worldnews/europe/italy/7783603/Advance-guard-of-angry-women-lead-Italians-into-European-protests-over-austerity-cuts.html

We end with Europe’s unknown Caesar trying to march his armies against the wrong problem. Brussels Caesar Herman is leading his army of Franco-Belgian bureaucrats deep into the Teutoburg Forest. The problem is not Germany but Club Med. Below, the Telegraph covers the coming rout of the Euro.

Quintili Rompuy, D-Mark redde!

Herman and his Frankenstein euro have done enough damage already

The single currency was created by eurocrats, foisted upon its people and bound to end in tears. Now they want to tinker with banks when deep reform is needed.

By Liam Halligan Published: 9:49PM BST 29 May 2010

Last week I heard something that almost caused me to lose my temper. It came from the lips of Herman Van Rompuy, a profoundly uninspiring man who, somehow, is European Council President.

Van Rompuy's position makes him, on paper, the most senior policy-maker in the European Union – with its 27 member states and 500 million people. No one elected him to high office and few voters know what he thinks. Until his elevation was stitched up in the well-upholstered Eurocrat backrooms of Brussels, his EU-wide profile was zero.

Last Tuesday, Van Rompuy deigned to comment on the fiscal, financial and political chaos that is the eurozone – a chaos now in danger of plunging the entire Western world into a second bout of systemic instability, similar to what followed the collapse of Lehman Brothers in September 2008.

"We are clearly confronted with a tension within the system," Van Rompuy opined. "The dilemma of being a monetary union and not a fully-fledged economic and political union. The tension has been there since the single currency was created. However, the general public was not really made aware of it."

It was the last sentence that got my goat. My initial response, I admit, was a four-letter word. It could have been "What?!" but it wasn't. Despite what Van Rompuy says, some of us – economists, politicians and commentators – have been shouting about the dangers of the eurozone for many years.

When we did, the trough-nuzzling, self-appointed EU elite, which Van Rompuy represents down to the tip of his Mont Blanc pen, dismissed our concerns as "alarmist" and "anti-European". Meanwhile, the Brussels publicity machine spent vast amounts of taxpayers' money on propaganda telling the Western European public that the eurozone was not only safe, but if their countries didn't join then "jobs and growth" would suffer.

There was, of course, always a fundamental contradiction at the heart of the single currency project. While the European Central Bank controls interest rates and the money supply, each country's fiscal surplus or deficit is driven by the tax and spending decisions of its own sovereign government.

So it's simply impossible to enforce collective fiscal discipline in a currency union of individual states, each answerable to its own electorate. The only alternative is to subjugate domestic voters and create a federal government across the eurozone, with a common fiscal policy allowing cross-border transfers. But that's political union – something voters absolutely don't want.

-----Nobel-Prize winning economist, Milton Friedman, also weighed in early, warning the single currency would ultimately cause major problems. "The euro was really adopted for political and not economic purposes, as a step towards the myth of the United States of Europe," Friedman declared in September 1997. "I believe its effect will be exactly the opposite."

How right he was. How right many ordinary voters were as well – those without media platforms. Right across Europe, much of the public has been deeply suspicious of the euro ever since the idea was conceived. The French only voted "Oui" to joining by the narrowest of margins, after their government cobbled together votes from former colonies. The German public, like citizens in so many other member states, was never granted a referendum.

Since the single currency's launch in 1999, in fact, there hasn't been a single independent opinion poll in Germany in favour of euro membership. No wonder the hard-working German public is seething about the Greek bail-out – and who can blame them.

-----The sovereign debt crisis that started with Greece is now casting a long shadow not only across the eurozone, but all of Europe and the entire Western world. Just as the global economy is climbing out of recession, the instability of the Frankenstein currency union which the Brussels crew created could spark another deeply damaging asset-price plunge.

Even if that's avoided, the euro's fall is harming other economies. The single currency is down 25pc against the dollar since last October – making life more difficult for US exporters to Europe.

Many say sterling's recent "depreciation" is helping the UK economy recover. But while the pound has indeed fallen 12pc against the dollar during the past six months, its appreciated 11pc against a suffering single currency. Britain does over three times more trade with the eurozone than it does with the States, so the euro's decline has undercut the UK's trade-weighted competitiveness.

-----As if they haven't done enough already, the eurocrats seem determined to do even more damage with their economically-illiterate meddling. While they should be helping to push through the massive fiscal consolidation that needs to happen across the whole of Western Europe, the EU elite has instead dreamed up a levy on the region's banking sector, the proceeds of which could deal with a future banking crisis.

I'm no defender of Western banks, but this levy is a very bad idea. There is a big "moral hazard" – in that if banks are forced to put money aside for a bailout, they will feel entitled to state help and keep acting recklessly. The money the levy would raise – around 1pc of annual GDP over 15 years – is tiny anyway. The UK government has spent five times that on bank bailouts since "sub-prime" began. The money anyway won't be there when needed, because cash-strapped EU governments would already have spent it.

The biggest problem with the levy, though, is it's a diversion from what really needs to happen – that is, deep structural banking reform, above all the separation of investment and commercial banking in the form of a new "Glass-Steagall" divide.

There is no alternative to reinstating that firewall, so denying risk-driven money men access to taxpayer-backed retail deposits. That's the only way to stop the banks from plunging nations states ever deeper into debt.

http://www.telegraph.co.uk/finance/comment/liamhalligan/7783224/Herman-and-his-Frankenstein-euro-have-done-enough-damage-already.html

GI.

Saturday 29 May 2010

Weekend Update – May 29, 2010

Baltic Dry Index. 4078 -78
LIR Gold Target by 2019: $3,000.

I haven't failed, I've found 10,000 ways that don't work.

Thomas Edison

With BP still pumping mud into the GOM leaking oil well we don’t yet know the outcome of this latest attempt to kill the well, more on this probably tomorrow. During the week we got more distressing news and the first film, of the gigantic underwater plumes of oil water mix and emulsions, now drifting around in the Gulf of Mexico killing everything that gets in their path. From a BP shareholder perspective it’s hard to see any upside. I personally wouldn’t want to remain tied to their sinking ship. There will be plenty of opportunity to re-enter the oil sector later, at lower prices I suspect, once new regulations are published and we know just how costly to profits the new operating era in oil is going to be.

Today we have an update on our new “Dalton Minimum” in sunspots, one that I think ushers in a period of global cooling. There’s more on the links of the Sunspots and Global Cooling page. Below, “man made global warming from CO2” pseudo science or not, NASA is doing some real research in an area that really matters. My thanks to reader Dimitri for sending along the link.

I can give you a definite perhaps.

Samuel Goldwyn

Why NASA Keeps A Close Eye On Sun's Irradiance

by Adam Voiland
Washington DC (SPX) May 27, 2010
For more than two centuries, scientists have wondered how much heat and light the sun expels, and whether this energy varies enough to change Earth's climate. In the absence of a good method for measuring the sun's output, the scientific conversation was often heavy with speculation.

By 1976, that began to change when Jack Eddy, a solar astronomer from Boulder, Colo., examined historical records of sunspots and published a seminal paper that showed some century-long variations in solar activity are connected with major climatic shifts.

Eddy helped show that an extended lull in solar activity during the 17th Century --called the Maunder Minimum - was likely connected to a decades-long cold period on Earth called the "Little Ice Age."

Two years after Eddy published his paper, NASA launched the first in a series of satellite instruments called radiometers, which measure the amount of sunlight striking the top of Earth's atmosphere, or total solar irradiance. Radiometers have provided unparalleled details about how the sun's irradiance has varied in the decades since. Such measurements have helped validate and expand upon Eddy's findings. And they've led to a number of other discoveries-and questions-about the sun.

Without radiometers, scientists would probably still wonder how much energy the sun emits and whether it varies with the sunspot cycle. They wouldn't know of the competition between dark sunspots and bright spots called faculae that drives irradiance variations.

And they'd have little chance of answering a question that continues to perplex solar experts today: Has overall irradiance changed progressively throughout the past three 11-year cycles, or are variations in the sun's irradiance limited to a single cycle?

The answer has important implications for understanding climate change, as some scientists have suggested that trends in solar irradiance account for a significant portion of global warming.

The next space radiometer, slated for launch this November aboard NASA's Glory satellite, should help chip away at the uncertainty that surrounding the sun's role in climate change.

A Variable Sun
It's well known today that the sun's irradiance fluctuates constantly in conjunction with sunspots, which become more and less abundant every 11 years due to turbulent magnetic fields that course through the sun's interior and erupt onto its surface.

But as recently as the 1970s, scientists assumed that the sun's irradiance was unchanging; the amount of energy it expels was even called the "solar constant."

It was data from radiometers aboard Nimbus 7, launched in 1978, and the Solar Maximum Mission, launched two years later, that were the death knell to the solar constant. Soon after launching, instruments aboard both satellites showed that solar irradiance changed significantly as patches of sunspots rotated around the sun's surface. Irradiance would fall, for example, when groups of sunspots faced Earth. And it would recover when the sunspots rotated to the far side of the sun.

Likewise, in 2003, a radiometer aboard NASA's Solar Radiation and Climate Experiment (SORCE) satellite observed large sunspot patches that caused irradiance to drop by as much 0.34 percent, the largest short-term decrease ever recorded.

"When you look at longer scales on the sun, it's the opposite," said Lean, a solar scientist at the U.S. Naval Research Laboratory in Washington, D.C., and a member of Glory's science team. "Overall, irradiance actually increases when the sun is more active even though sunspots are more common."

How can increases in dark, cool sunspots yield increases in irradiance? "It didn't make much sense until we were able to show that sunspots are just half of the story," said Lean.

Measurements collected during the 1980s and 1990s gave scientists the evidence they needed to prove that irradiance is actually a balance between darkening from sunspots and brightening from accompanying hot regions called faculae, a word meaning "bright torch" in Latin.

When solar activity increases, as it does every 11 years or so, both sunspots and faculae become more numerous. But during the peak of a cycle, the faculae brighten the sun more than sunspots dim it.

Overall, radiometers show that the sun's irradiance changes by about 0.1 percent as the number of sunspots varies from about 20 sunspots or less per year during periods of low activity (solar minimum) to between 100 and 150 during periods of high activity (solar maximum).

"That may seem like a tiny amount, but it's critical we understand even these small changes if we want to understand whether the sun's output is trending up or down and affecting climate," said Greg Kopp, a principal investigator for Glory and scientist at the Laboratory for Atmospheric and Space Physics at the University of Colorado in Boulder.

Though most scientists believe the 0.1 percent variation is too subtle to explain all of the recent warming, it's not impossible that long-term patterns - proceeding over hundreds or thousands of years - could cause more severe swings that could have profound impacts on climate.

Searching for a Trend Line
A total of 10 radiometers have monitored the sun since Nimbus 7, and by patching all of the measurements together into one data stream, scientists have tried to identify whether the sun's irradiance has increased or decreased over the last three cycles.

However, melding the results from different instruments has proven complicated because many of the radiometers record slightly different absolute measurements. And the areas of overlap between instruments in the long-term record aren't as robust as scientists would like.

As a result, questions remain about how the sun's irradiance has changed. Richard Willson, principal investigator for NASA's Active Cavity Radiometer Irradiance Monitor (ACRIM), reported in a 2003 paper that the overall brightness of the sun was increasing by 0.05 percent per decade.

Subsequent assessments of the same data have come to a different conclusion. Other groups of scientists have shown that the apparent upward trend is actually an artifact of the radiometers and how they degrade in orbit. Complicating the issue further, an instrument aboard NASA's Solar and Heliospheric Observatory (SOHO) measured irradiance levels during a solar minimum in 2008 that were actually lower than the previous solar minimum.

Which measurements are right? Has the sun experienced subtle brightening or dimming during the last few solar cycles? Such questions remain controversial, but the radiometer aboard Glory, called the Total Irradiance Monitor (TIM), is ready to provide answers. The Glory TIM will be more accurate and stable than previous instruments because of unique optical and electrical advances. And each of its components has undergone a rigorous regime of calibrations at a newly-built facility at the University of Colorado.

"It's a very exciting time to be studying the sun," said Lean. "Every day there's something new, and we're on the verge of answering some very important questions."

http://www.spacedaily.com/reports/Why_NASA_Keeps_A_Close_Eye_On_Sun_Irradiance_999.html

Have a great weekend.

I love deadlines, I like the whooshing sound they make as they fly by.

Anon at BP.

GI.

 

Friday 28 May 2010

“Unfortunately Familiar.”

Baltic Dry Index. 4156 -53
LIR Gold Target by 2019: $3,000.

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

J K Galbraith

For more on the “unfortunately familiar,” scroll down to the “Starr” of our Crooks section. We open this morning with discouraging news from the Gulf of Mexico. Despite encouraging early spin that all was “going to plan,” after a day of pumping mud into the oil and gas gushing BOP, BP’s top kill might not be working. Below the NY Times covers yesterday’s developments. Below that, the Houston Chronicle on other developments yesterday.

BP Resumes Work to Plug Oil Leak After Facing Setback

By CLIFFORD KRAUSS and JOHN M. BRODER Published: May 27, 2010

HOUSTON — BP on Thursday night restarted its most ambitious effort yet to plug the oil leak in the Gulf of Mexico, trying to revive hopes that it might cap the well with a “top kill” technique that involved pumping heavy drilling liquids to counteract the pressure of the gushing oil.

BP officials, who along with government officials created the impression early in the day that the strategy was working, disclosed later that they had stopped pumping the night before when engineers saw that too much of the drilling fluid was escaping along with the oil.

It was the latest setback in the effort to shut off the leaking oil, which federal officials said was pouring into the gulf at a far higher rate than original estimates suggested.

If the new estimates are accurate, the spill would be far bigger than the Exxon Valdez disaster in 1989 and the worst in United States history.

President Obama, who planned to visit the gulf on Friday, ordered a suspension of virtually all current and new offshore oil drilling activity pending a comprehensive safety review, acknowledging that oversight until now had been seriously deficient.

-----In the morning, federal officials expressed optimism that all was going well. “The top kill procedure is going as planned, and it is moving along as everyone had hoped,” Adm. Thad W. Allen of the Coast Guard, the leader of the government effort, told CNN.

And Robert Dudley, BP’s managing director, said on the “Today” program on NBC that the top kill “was moving the way we want it to.”

It was not until late afternoon that BP acknowledged that the operation was not succeeding and that pumping had halted at 11 p.m. Wednesday.

After the resumption, Doug Suttles, BP’s chief operating officer for exploration and production, struggled to offer guidance on whether the latest effort was likely to succeed.

“It’s quite a roller-coaster,” Mr. Suttles said. “It’s difficult to be optimistic or pessimistic. We have not stopped the flow.”

http://www.nytimes.com/2010/05/28/us/28spill.html?hp

Sea life concerns prompt BP dispersants cutback

By MATTHEW TRESAUGUE HOUSTON CHRONICLE May 27, 2010, 7:16PM

BP has scaled back the use of chemical dispersants to combat the massive spill in the Gulf of Mexico amid concerns over the long-term effects on sea life, officials said Thursday.

EPA Administrator Lisa Jackson told a House panel that the oil giant has reduced daily use of dispersants to 12,000 gallons from 70,000 gallons at the urging of the agency.

BP, which is responsible for the cleanup, has used more than 850,000 gallons of dispersants in an attempt to break up the oil before it reaches Louisiana's fragile coast — a tactic that Jackson described as the lesser of two evils.

“It's a tough trade-off,” she told the House Subcommittee on Energy and Environment.

The manufacturer of the dispersant, called Corexit 9500, did not dispute the characterization but said the product is effective and safe.

“You wouldn't put dispersants in the Gulf unless it's necessary,” Erik Frywald, president and CEO of Nalco, which makes the dispersants, said in an interview Thursday. “What we're hearing from the experts is that they're working and helping.”

Frywald said Corexit 9500 consists of six chemicals that are in everyday products, such as skin creams and shower cleaners, and should not be a risk to aquatic life, especially in the vast waters of the Gulf.

BP, however, has used an unprecedented amount of the chemicals to combat the spill, raising concerns among some government officials and environmental groups.

In a letter to BP last week, the EPA gave the company three days to find less toxic and more effective dispersant than Corexit 9500.

Federal officials later acknowledged that alternatives are not available in sufficient quantities.

http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7025745.html

New offshore drilling limited

Obama orders rigs to stop work on about 30 exploratory wells

By JENNIFER A. DLOUHY HOUSTON CHRONICLE May 28, 2010, 12:12AM

WASHINGTON — Describing the massive oil spill in the Gulf of Mexico as a wake-up call, President Barack Obama on Thursday banned new drilling in deep coastal waters and ordered floating rigs to stop work on some 30 exploratory wells.

He also blocked planned drilling in Arctic waters this summer and canceled long-planned sales of leases in the western Gulf of Mexico and a tract 50 miles off Virginia's coast. At the same time, Obama lifted a ban on new drilling in shallow waters, where generally less than 500 feet separate the seabed and surface.

“I continue to believe that domestic oil production is important, but I also believe that we can't do this stuff if we don't have confidence that we can prevent crises like this from happening again,” the president said during a White House news conference. “It's going to take some time for the experts to make those determinations.”

Obama said the delays would let an independent commission review what went wrong with the Deepwater Horizon rig. The pause also will give federal regulators a chance to implement new safeguards, including stiffened well control practices, the recertification of critical safety devices known as blowout preventers, and expanded training programs for rig workers.

Interior Secretary Ken Salazar advanced the new restrictions after a 30-day review of industry practices.

“We essentially will not allow any more deep-water drilling until we can ensure we are doing it in the safest way possible,” Salazar said. “And we believe we can do it safer.”

The administration's ban on approving new deep-water drilling permits for at least six months and the suspension of deepwater exploration do not affect the 4,515 shallow-water and the 591 deepwater Gulf wells now producing oil and gas. But industry leaders and advocates warned that lengthy drilling delays could lead to job losses and price hikes for gasoline.

-----Roughly a third of the nation's domestically produced oil comes from the Gulf, and much of that — about 70 percent in 2007 — is from operations in more than 1,000 feet of water.

Salazar said exploratory wells being drilled would be directed to stop operations as soon as it is safely possible.

The suspension will mean roughly 30 floating drilling rigs — typically leased for hundreds of thousands of dollars a day — will be idled indefinitely.

The suspensions will affect energy company contracts with drilling suppliers and other vessels involved in the operations.

http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7026038.html

In European news, “budget consolidation” is the name of the game , according to Der Spiegel. Below, Der Spiegel on Europe’s directly opposite economic plan to that of America. Europe seems to have lost sight of our new world operating on fiat currency. Below that, Spain finally starts to clean up its banks. But which Spanish banks will go under as they try?

European Austerity the First Step to Recovery

By Michael Kröger and Bahador Saberi 05/27/2010

Austerity programs are all the rage in Europe. Several countries have pledged to slash spending by billions in a frantic effort to balance budgets and save the euro. Economists say that it might work -- and that the US should take notice.

The good news came from Frankfurt on Wednesday: Germany's central bank, the Bundesbank, estimates that the country's budget deficit will not be quite as gaping as the government had feared. With the economy recovering more quickly than expected, the 2010 deficit will only be roughly 5 percent of gross domestic product, the Bundesbank wrote in its monthly report. In January, the government of Chancellor Angela Merkel had forecast a deficit of 5.5 percent.

Still, the report encouraged the government not to ease up on its efforts to cut spending. "Given the high deficit and rapidly climbing debt, potentially positive (economic) developments should not be seen as providing budgetary flexibility, but should be used to further consolidate," the report warned. It is the same message that is being heard in capitals across Europe these days.

Italy is the most recent example. On Tuesday evening, Prime Minister Silvio Berlusconi announced an austerity package worth €24 billion -- a savings plan that came as a surprise to many. The measures include cuts in civil servant salaries, pared down regional and municipal spending as well as tax increases. "The state has to cost less, that's the main point," said Berlusconi not long after his cabinet adopted the measures.

It seems to be a message that many in Europe have adopted as their own in recent weeks. Countries in the euro zone finally seem to be pulling together. Everywhere, the goal is the same: budget consolidation.

Spain has even gone so far as to further tighten a package of austerity measures it previously introduced. In 2010 and 2011, Madrid wants to spend €15 billion less than first planned, a sum which represents 1.5 percent of the country's gross domestic product. Like Italy's savings package, Spain plans public sector salary cuts, a pension freeze and cuts in public spending. Value-added tax is to rise as well.

The Greek austerity program is even more extreme. Under the stewardship of the European Union and the International Monetary Fund, Athens has pushed through a package of measures worth some €30 billion by 2014 -- equivalent to 13 percent of the country's GDP.

Is Europe back on track? Will the euro zone succeed in regaining its strength? Financial markets are still skeptical -- as are ordinary Germans. According to a survey carried out for Stern magazine, more than three-quarters of Germans are concerned that public debt will get out of control. Some 59 percent fear that politicians will not be able to deal with the current fiscal problems.

But in the light of the efforts of the past few weeks, many experts are beginning to feel a sense of optimism. "The crisis has forced Europe to act together, and the countries have actually managed to find a common position within a short space of time," explains Roland Döhrn of the Rhine-Westphalia Institute for Economic Research (RWI) in Essen

----"The message has been heard: Deep cuts are now necessary," says Josef Kaesmeier, chief economist of the private bank Merck Finck. Even if Spain or Greece were to slip into recession due to drastic austerity measures, there is no alternative to their course of action, Kaesmeier says.

The economist sees much bigger problems outside the euro zone. "I'm worried about what's happening in the UK and the US," he says. "The Americans say: The dollar is the global currency, and we'll happily keep on printing money. Instead of cutting spending, they are simply passing one economic stimulus package after the other."

Eugen Keller, a foreign currency strategist at Metzler Bank, also sees the US as being the "epicenter of the crisis." For the past 20 years, he says, the world's largest economy has lived beyond its means. "That's not going to end well," he says. He argues that respectable businessmen in the current situation would tighten their belts and fix their balance sheets. "But that isn't happening in Washington," Keller says. The financial expert also believes the situation in Europe has eased in recent weeks.

http://www.spiegel.de/international/business/0,1518,697030,00.html#ref=nlint

Spain orders banks to come clean on debts to restore shattered faith

The Bank of Spain has ordered the country's lenders to face up to bad debts and set aside reserves of up to 30pc on property holdings in a bid to restore global confidence in the Spanish financial system after weeks of investor flight.

By Ambrose Evans-Pritchard Published: 9:08PM BST 27 May 2010

The new rules target the savings banks or cajas that account for the lion's share of the €445bn (£377bn) of property debt accumulated during the credit boom, when real interest rates were negative.

The authorities acted after severe strains in the inter-bank market had begun to raise questions about the ability of Spanish lenders to access routine funds from global peers. Deutsche Bank said Spanish lenders need to refinance €125bn by late 2011. "Liquidity is our main area of concern. Savings banks are in a very weak and risky position," it said.

Even the strongest banks – Santander and BBVA – are paying a stiff premium over Libor. The Wall Street Journal reports that BBVA has been unable to roll over €1bn in commercial paper. This has raised fears of a chain reaction through Europe's banks due to the nexus of loans. Data from the Bank for International Settlements show that European banks – led by German lenders, in some trouble themselves – have $851bn (£584bn) in exposure to Spain, as well as $240bn to Portugal and $189bn to Greece.

No Spanish bank has raised money on the capital markets for a month. They are relying on the European Central Bank's lifeline. ECB funding has reached €89bn, the highest level since the Lehman Brothers crisis.

The new rules will force lenders to write down bad debts within a year instead of stretching out the pain for up to six years. They must set aside reserves on €60bn of foreclosed property still sitting on their books at face value, using a rising scale of up to 30pc. Santander and BBVA have already done this.

"Spanish accounting was completely out of line with the rest of Europe," said Hans Redeker, currency chief at BNP Paribas. "It had reached a point where investors no longer believed in Spanish balance sheets because equity ratios are distorted by overvalued holdings of real estate. This move was absolutely the right thing to do. You can't camouflage bad debts any longer. Those days are over," he said.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7773427/Spain-orders-banks-to-come-clean-on-debts-to-restore-shattered-faith.html

Stay long precious metals. Bad money drives out good. Until the US alters its policy of flooding the world in fiat dollars, the chaotic fiat currency regime will just continue getting more chaotic. The end of fiat currency is the ultimate in economic distress and collapse. Sadly, that is still where we are headed, lead by an out of control delusional, spendthrift Washington.

"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But is has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”

J.K. Galbraith. The Great Crash: 1929.

At the Comex silver depositories Thursday, final figures were: Registered 52.58 Moz, Eligible 65.94 Moz, Total 118.52 Moz.

Day 19 of Hitler’s attack in the west that almost brought down western civilization. Dunkirk evacuation day 2.

Dunkirk & the Battle of France – Day by day 70 years on.

http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html

+++++

Crooks & Scoundrels Corner.

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

We end for the week, and month of May, back with yet another alleged Madoff wanabe. Step forward today’s “Star” of the Crooks section, Mr. Kenneth I. Starr, money manager to, what else, the “stars,” or perhaps that should be Starrs. Below the NY Times takes up coverage of the interesting case. Of course, everyone is innocent until some court says they’re not, just like deficits don’t matter until suddenly they do, still the NYT’s writers rise to the occasion including the sharp eyed agents spotting his shoes poking out from under a closet door. One almost feels sympathy for poor Mr. Star, having had to spend all his time fawning over “socialites, financiers, philanthropists, A-list actors and Hall of Fame athletes.” Only in Manhattan, as they say. “Starr had an M.O. that has become unfortunately familiar in recent times,” Preet Bharara, the United States attorney in Manhattan, said at a news conference on Thursday. “He used his access to famous and powerful clients to burnish an image of trustworthiness, inducing them to entrust him with management and control of their financial affairs.”

Adviser to Stars Named in Fraud

By NELSON D. SCHWARTZ and JAMES BARRON Published: May 27, 2010

He was the moneyman to the stars, entrusted with managing fortunes for the likes of Wesley Snipes, Sylvester Stallone and Annie Leibovitz.

But when they arrested him on Thursday, federal prosecutors described him as something else: a mini-Madoff who diverted $30 million of his clients’ money to buy himself a sprawling Upper East Side condo complete with an indoor swimming pool and a 1,500-square-foot garden.

Much like Bernard L. Madoff, who is serving a 150-year sentence for bilking tens of billions of dollars from his closely knit network of clients, prosecutors say, Kenneth I. Starr of Manhattan cultivated business at charity events and lavish parties, bridging the worlds of New York and Hollywood to build a star-studded client list of socialites, financiers, philanthropists, A-list actors and Hall of Fame athletes.

Mr. Starr, who is not related to the special prosecutor who investigated former President Bill Clinton, is said to have made access to his company seem exclusive, much as Mr. Madoff did.

“Starr had an M.O. that has become unfortunately familiar in recent times,” Preet Bharara, the United States attorney in Manhattan, said at a news conference on Thursday. “He used his access to famous and powerful clients to burnish an image of trustworthiness, inducing them to entrust him with management and control of their financial affairs.”

A criminal complaint unsealed on Thursday in federal court in Manhattan listed charges of fraud and money laundering, in what prosecutors describe as a scheme that also touched Andrew J. Stein, a former City Council president, assemblyman and Manhattan borough president who left politics in 1994.

Mr. Stein was also arrested in connection with the case and charged with lying to tax authorities and the federal government.

The complaint against Mr. Starr says that Mr. Stein used about $1.6 million from a company created through Mr. Starr to cover “extravagant personal expenses,” including hundreds of thousands of dollars in credit card bills.

However, prosecutors say that Mr. Stein, who gained a reputation as a corruption fighter while in office, was unaware of Mr. Starr’s fraud.

Lawyers for Mr. Starr and Mr. Stein did not respond to requests for comment.

The complaint did not name any victims of the suspected fraud, but it described some, including “an actress” and “an elderly heiress.”

The heiress named as a victim in the complaint is Rachel Lambert Mellon, 99, the widow of Paul Mellon, and a philanthropist, according to her lawyer Alexander Forger. Mr. Starr is accused of using $5.75 million of Mrs. Mellon’s money to help buy his condo.

“She was shocked by the disclosure that Mr. Starr has been accused of criminal activity, she has known him for many years and has trusted him, and committed to him the authority to manage her investments,” Mr. Forger said.

When Mr. Starr, 66, was arrested Thursday morning, he was found hiding in a closet, betrayed when agents spotted his shoes under the door.

According to the complaint, Mr. Starr sometimes raised money for dubious investments. In other cases, he simply diverted the money for his own personal use.

The complaint said Mr. Starr solicited money for investments that he said were safe, then channeled the money to either himself, his wife, his son or Mr. Stein and other associates, or put it into investments they controlled. These listed associates included “a former national official of a major political party” as well as “a partner in a prominent national law firm.”

An affidavit filed by an I.R.S. agent also indicated that Mr. Stein served as a “placement agent,” directing prospective clients to Mr. Starr.

One victim, an actress identified as Client 2 who was a close friend and client for more than a decade, first became concerned late last year when she noticed that her assets had mysteriously dropped with no explanation from Mr. Starr and that $1 million had been wired to an associate of Mr. Starr’s.

After the actress pressed Mr. Starr for months, the $1 million was returned — but Mr. Starr took that money from other accounts, including a former executive at a talent agency and his wife, the complaint said.

http://www.nytimes.com/2010/05/28/business/28sec.html?hp

Another weekend and a holiday weekend in America and Britain. The summer of 2010 begins. On the blog we continue with the fall of France 1940 and “miracle of Dunkirk.” God intervened, and eventually Hitler’s criminal Germany was defeated, though only at the price of leaving half Europe under murderous Godless communism for 45 years. In the aftermath of WW2, the dollar reserve standard was born, linked to gold to keep US politicians and dollar managers honest. That barely lasted until August 15, 1971, when the dollar’s link to gold was ended by a panicked President Nixon. Now we have reached the end game of fiat currency. The benefits were long ago partied away. Our new decade will not be like any other, as a great currency reform ultimately gets imposed. Time for now, to put such thoughts away, and to enjoy God’s holiday weekend. Check with the blog across the weekend. The next LIR email will be Tuesday. Have a great weekend everyone. Let’s hope BP manage to cap the errant oil well before then. Below, a hint of what soon enough comes next.

For example, in 1882, when inflation raged, he was asked the reason that Delmonco's Restaurant raised its price of a Delmonico Steak (a sirloin steak) from $0.75 to $1.00.  He said, "I can't help it.  The other day I had one of my cooks cut up four short loins to see precisely what they would make in beef, porterhouse and rib steaks, filets and Chateuabriands;  and after the most careful computations, allowing even for the trimmings given to the servants and the bones used for making soup, I found the entire yield was $46.50, while the cost to me was $40.75.  Considering the butter used on the steaks, the rent and other expenses, that meant a decided loss to the establishment."

Charles Constant Delmonico. The Great Inflation of ’82.

The monthly Coppock Indicators finished April:

DJIA: +245 UP. NASDAQ: +448 UP. SP500: +276 UP. The great Bull market goes on with the all three continuing higher in positive numbers. But how much Bull is enough?

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.

Thursday 27 May 2010

US Pots and EU Kettles.

Baltic Dry Index. 4209 +22
LIR Gold Target by 2019: $3,000

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

Dr. Bernanke. November 2005.

While the world awaits news from the Gulf of Mexico on the success or otherwise of BP’s “top kill” attempt to end the spilling oil well disaster in the Gulf, we open the morning with the US pot calling the EU kettle black. US Treasury Secretary Geithner back from eating humble pie in China, rides his high horse across Europe this week, starting in London. Our failed Nixonian experiment with fiat money gets more bizarre by the week. Below the Telegraph on tax challenged Timmy’s European infatuation with Keynesianism. Most European nations are doing the exact opposite as they impose iffy government austerity programs intended one way or another to bailout Europe’s increasingly dodgy banks. Oh what a tangled web we weave when first we practice Goldmanite Greek government accounting. Below Mr. Geithner goes to Berlin.

"the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."

US Treasury Secretary Paulson. March 13th, 2007

MAY 26, 2010

U.S. Chides Europe's Crisis Response

LONDON—U.S. Treasury Secretary Timothy Geithner landed in Europe and reasserted a traditional American role of dispenser of financial advice to the world, telling European governments to get their fiscal houses in order.

After two years in which an historic financial crisis seemed to deprive the U.S. of its self-confident global economic leadership, Mr. Geithner signaled a new-found willingness to reassert American authority on the future of the world economy. "What Europe should do is implement the program they laid out," Mr. Geithner said Wednesday. "The basic lesson of financial crises is that you have to come in and act quickly and with force."

Inside No. 11 Downing Street, the home of his British counterpart, Mr. Geithner pushed continental Europe to speed up the rescue of debt-laden economies, and to not stint on fiscal stimulus. Thursday, in Frankfurt and in Berlin, he will chide the Germans about their recent move to ban certain financial practices, which has spooked markets.

The resumption of U.S. fiscal lecturing marks a turnaround from late 2008, when Asian and Europeans largely blamed the U.S. for dumping the world into a recession.

Mr. Geithner's visit came as the euro fell to $1.22 in New York trading, just above its four-year low, while U.S. stocks tumbled late in the day to close below 10000 for the first time since Feb. 8. New data showed that European banks are increasingly hoarding cash rather than lending, and are borrowing less in short-term lending markets— a sign that investors may be reluctant to do business with banks in countries such as Spain, Portugal and Italy.

Though the U.S. is still burdened with a large deficit, officials argue that its ambitious stimulus program has helped spur growth. Meanwhile, markets and governments are blaming Europe for the renewed tensions in financial markets and the cloud over the nascent global recovery. The deeper Europe's debt problems now grow, the more self-assured U.S policy makers become about what Europe should do next.

----At an economic and strategic summit in China the previous few days, the difference was marked; U.S. confidence remains at low ebb there. Mr. Geithner and other U.S. officials were publicly reticent on the question of revaluing the China's currency, a top priority for some U.S. lawmakers, fearing it could backfire politically.

Mr. Geithner's European tour is reminiscent of the Asian financial crisis of a decade ago when many current Obama economic officials, including Mr. Geithner and White House economic adviser Lawrence Summers, traveled Asia doling out advice and worked behind the scenes at the International Monetary Fund to keep bailout cash flowing. Time magazine dubbed a trio of U.S. officials "the Committee to Save the World."

Mr. Geithner traveled from London to Frankfurt Wednesday, for a working dinner with European Central Bank President Jean-Claude Trichet. On Thursday morning Mr. Geithner is scheduled to meet with President of the German Bundesbank Axel Weber before travelling to Berlin for talks with German Finance Minister, Wolfgang Schäuble.

------ An even larger program for other troubled European nations—as much as $1 trillion—hasn't eased market concerns. Part of the reason, Mr. Geithner believes, is that European nations haven't spelled out the details of how the procedure would work.

The U.S. believes that without the heavy involvement of President Obama and Mr. Geithner, Europe wouldn't have been willing to put together the size of bailout package that would impress markets that government had a handle on the problem.

The U.S. is also advising European countries that can afford it—the U.K., Germany, France—to keep pumping stimulus into their economies. That would help ensure the European economy can continue to expand while economically troubled countries like Spain and Greece make wrenching cutbacks to reduce out-of-control deficits.

http://online.wsj.com/article/SB10001424052748704717004575268284276354448.html?mod=WSJEUROPE_hps_MIDDLETopStories

Clearly preoccupied by keeping China buying US debt and watching the slow motion BP oil disaster in the Gulf of Diesel, Mr. Geithner hasn’t noticed that the UK is firmly in the deficit camp of deadbeat Spain and Greece. Pumping stimulus into the UK economy wasn’t an option even in our Alice in Wonderland former Nu Labour pre election economy. It would be interesting to hear the great man’s thoughts too, on where France is supposed to come up with extra cash for stimulus. Nor, I suspect, will the great man’s socialist largess with Germany’s taxpayer money be much in tune with the mood in Berlin. The Greek way of life is completely expendable to Hans, Fritz and Brunehilde. I wonder what they smoke in Club Obama?

"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." "All the signs I look at" show "the housing market is at or near the bottom,"

US Treasury Secretary Paulson. April 20th, 2007

Germany Tries to Plug Gaping Hole in Its Budget

By Ralf Beste, Christian Reiermann and Merlind Theile 05/26/2010

The task of putting together next year's budget is presenting German Chancellor Angela Merkel with a huge challenge. The government urgently needs to cut costs in order to comply with the country's new debt ceiling rule and to help stabilize the euro. The chancellor wants to set an example for Europe on how best to cut costs.

It was the afternoon of Sunday, May 16 when Germany's coalition government of the center-right Christian Democrats (CDU/CSU) and the liberal Free Democratic Party (FDP) finally got down to the business of governing -- six months after taking office. In her office on the eighth floor of the Chancellery in Berlin, Chancellor Angela Merkel met with Finance Minister Wolfgang Schäuble, who had just been released from the hospital.

The chancellor briefly asked about the health of her finance minister, who for several weeks had only been able to perform his official duties with difficulty. After being plagued with a surgical wound that refused to heal properly, Schäuble had to be readmitted to the hospital when he had an adverse reaction to a medication.

The two politicians eventually turned to a similarly urgent case, Germany's national budget, which is currently faring almost as poorly as the minister who is in charge of it. By the end of June, Merkel and her finance chief will not only be called upon to assemble an austerity package, but will also have to restructure the government's finances from the ground up.

It's an enormous challenge. The German government faces an ongoing gap of €75 billion ($93 billion) between what it takes in and its expenditures, something that economists refer to as a structural deficit. Contrary to previous assumptions, this deficit has risen by another €5 billion because projected tax revenues have turned out to be lower than expected, as the most recent forecast by the relevant experts showed. The need to cut costs is growing, partly as a result of the new "debt brake" or debt ceiling provision that has been incorporated into Germany's constitution, which will require Merkel and Schäuble to reduce the government's budget by an additional €10 billion a year between now and 2016.

http://www.spiegel.de/international/germany/0,1518,696760,00.html#ref=nlint

In other European news its high noon time for Spain. Mr. Geithner and his horse won’t be visiting Madrid. Below, Spain’s minority socialist government has a Damascene conversion and attempts some overdue Thatcherite reform. Below that, another Spanish bank gets near the wall. Below that, PIMCO’s Mr. Gross states the obvious. But will the restructuring come before more riots and strikes turn Greece into an unsolvable basket case?

'The worst is likely to be behind us"

US Treasury Secretary Paulson. May 7, 2008

Zapatero Bets Future on Austerity as Political Support Wavers

May 27 (Bloomberg) -- Spain’s deepest budget cuts in 30 years may be just the start of a U-turn by Prime Minister Jose Luis Rodriguez Zapatero that’s already sent his popularity plunging and prompted calls for a general strike.

As parliament debates the first wave of cuts today, his minority administration is preparing the ground for further measures that his traditional Socialist allies may oppose. After cutting civil servants’ salaries by 5 percent, the government now plans to rein back some of the best worker protection in Europe and raise the retirement age.

Zapatero’s latest steps to reduce the euro region’s third- biggest deficit won applause from the International Monetary Fund as the government tries to reassure investors that Spain can avoid the same fate as Greece. With smaller parties still refusing to guarantee support for those measures in today’s vote, the risk for Zapatero is that he’ll struggle to push through further cuts.

-----At least three Socialist lawmakers refused to join the rest of the party in a standing ovation when Zapatero first announced the cuts on May 12 and the opposition, pro-business People’s Party says it will vote against them today. With 169 seats in Spain’s 350-member assembly, Zapatero’s Socialists are seven short of a majority and pass legislation on a vote-by-vote basis.

The debate starts at 9 a.m. local time and a vote will be held later today. As four parliamentary groups plan to vote against the measures, Zapatero is depending on the abstention of 10 lawmakers from the Catalan Convergencia i Unio party. A spokeswoman said late yesterday they would probably do so though no decision has been taken yet.

Even if the measures are approved, Zapatero will still have to patch a coalition together to get the 2011 budget through parliament.

----Zapatero’s policies mark a turnaround for a prime minister who has raised pensions, courted unions, and created subsidies for new mothers since coming to power in 2004.

Finance Minister Elena Salgado said as recently as February that Spain wouldn’t cut wages for government workers. A public sector strike is planned for June 8 and the largest union, Comisiones Obreras, has said a general strike is getting closer.

http://www.bloomberg.com/apps/news?pid=20601085&sid=azgZJAxLv9sw

BBVA Pares Gains on Report It Can’t Renew Funding

May 26 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, pared gains after the Wall Street Journal reported the lender was unable to renew about $1 billion of short-term funding.

----The Bilbao, Spain-based lender hasn’t been able to renew the funding in the U.S. commercial paper market this month, according to the newspaper. The bank still has substantial European-based funding and deposits and about $9 billion in U.S. commercial paper, the newspaper said today.

Spanish bank shares have plunged this year on concern over the government’s ability to restore economic growth after the worst recession in 60 years and bring down a budget deficit that the government expects will be 9.3 percent of gross domestic product this year. Shares in BBVA, which last month reported first-quarter profit of 1.2 billion euros ($1.5 billion) as its bad loans stabilized, have dropped 36 percent this year, valuing the lender at 31 billion euros.

http://www.bloomberg.com/apps/news?pid=email_en&sid=a_05F28lJ8D8

Greece Debt Restructuring Is Inevitable, Gross Says

May 26 (Bloomberg) -- Pacific Investment Management Co.’s Bill Gross said restrictive lending rates and austerity measures that slow growth will leave Greece with “no way out” of a debt restructuring.

“The growth required in order to shoulder Greece’s debt burden is so excessive and the fiscal restrictiveness being imposed on the country is so restrictive they there will be no way out,” Gross said, in an interview with Bloomberg Television. “Restructuring at some point down the road -- perhaps a year or two years down the road -- will take place.”

Pressured by a sliding euro and soaring bond yields, European leaders agreed this month to an unprecedented loan package worth almost $1 trillion to keep the sovereign-debt crisis that originated in Greece from spreading. Greece pledged to implement austerity measures equal to almost 14 percent of gross domestic product in exchange for rescue funds from the European Union.

The average euro-area budget gap will widen to 6.6 percent of gross domestic product this year from 6.3 percent in 2009, the European Commission forecasts. The Maastricht Treaty stipulates that EU states should keep their budget deficits within 3 percent of GDP.

“At the now-restrictive yields of Libor plus 300-350 basis points being imposed by the EU and the IMF alike, there is no reasonable scenario which would allow Greece to ‘grow’ its way out,” Gross wrote in his June investment outlook today on the Newport Beach, California-based company’s website.

http://www.bloomberg.com/apps/news?pid=20602007&sid=aZAUNeSuGf48

Next, a US lawsuit that threatens to turn a spotlight on Wall Street’s rapacious practices during the great Lehman crash of 2008, and on JP Morgan in particular. When great vampire squids fall out, the resulting discovery is going to prove very informative for the rest of us. The regulators and Attorney Generals will watch this case like hawks. Do Lehman’s whiplash Willies, have access to a JPM whistleblower? Time will tell, but I suspect that in the months ahead, JPM will join the Goldmanites in Wall Street’s reviled sin bin. Whatever next? AIG sues Goldman? Bear Stearns ex-shareholders sue JPM?

"it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."

US Treasury Secretary Paulson. July 20th, 2008

Lehman Sues JPMorgan for Billions of Dollars in ‘Lost Value’

May 27 (Bloomberg) -- Lehman Brothers Holdings Inc. sued JPMorgan Chase & Co. to recover tens of billions of dollars in “lost value,” accusing the bank of precipitating its downfall and preventing it from winding down in an orderly fashion.

JPMorgan, which was Lehman’s main short-term lender before its September 2008 bankruptcy, helped cause the failure by demanding $8.6 billion of collateral as credit markets tightened during the financial crisis, Lehman said in a complaint filed yesterday in U.S. Bankruptcy Court in New York.

“On the brink of LBHI’s bankruptcy, JPMorgan leveraged its life and death power as the brokerage firm’s primary clearing bank to force LBHI into a series of one-sided agreements and to siphon billions of dollars in critically needed assets,” Lehman said in the complaint.

Lehman, once the fourth-biggest investment bank, has said it may spend another five years selling assets to pay unsecured creditors as little as 14.7 cents on the dollar. Any money recovered through lawsuits may increase the payout.

“The lawsuit is ill conceived, and the costly litigation will cause a further drain on the limited resources available to the Lehman bankruptcy estate,” said Joe Evangelisti, a JPMorgan spokesman.

The lawsuit follows a report by Lehman examiner Anton Valukas, who said in March that Lehman might have grounds for suing JPMorgan and other banks.

Lehman said JPMorgan’s top managers took advantage of privileged information they gained as Lehman’s primary clearing bank to “capitalize” on a Lehman bankruptcy.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a0cYmuEK7P_o

We close with rising trouble in China’s bubble. The workers want a better deal. Below, Honda gets shutdown by industrial action. In parts of China like the Pearl River delta, China now has a labour shortage which strengthens the hand of the workers. Depending how long the shutdown lasts, Honda can probably make up the lost production, but I suspect that the easy profits manufacturing phase of China’s great modernization has come to its end. Foreign manufacturers will increasingly find profits squeezed.

Honda shares slip; China production said halted

TOKYO (MarketWatch) -- Japanese car maker Honda Motor Co. stopped production at all four of its Chinese auto plants after workers at a parts factory went on strike, seeking higher wages, according to published reports Thursday. Honda closed two plants in Guangzhou, Guangdong province on May 24 and plants in Guangzhou and Wuhan, Hubei province, on May 26, after workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong province, went on strike May 17, Bloomberg News reported. In Tokyo, Honda shares were down 0.8%, while the Nikkei Stock Average was down 0.6%.

http://www.marketwatch.com/story/honda-shares-slip-china-production-said-halted-2010-05-26

“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”

Ben Bernanke. November 8, 2007

At the Comex silver depositories Wednesday, final figures were: Registered 52.60 Moz, Eligible 64.82 Moz, Total 117.42 Moz.

Day 18 of Hitler’s attack in the west that almost brought down western civilization. Dunkirk evacuation day 1.

Dunkirk & the Battle of France – Day by day 70 years on.

http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html

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Crooks & Scoundrels Corner.

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

Today, a crop circle article that I suspect turns tongue in cheek. Could anyone seriously be dumb enough to believe the explanation.

"'Speak English!' said the Eaglet. 'I don't know the meaning of half those long words, and I don't believe you do either!'"

Alice in Wonderland.

Crop circle season arrives with a mathematical message

By Matilda Battersby Wednesday, 26 May 2010

It is perhaps little known that the beautiful county of Wiltshire, famed for Stonehenge and the white horses carved into its hills, is the most active area for crop circles in the world, with nearly 70 appearing in its fields in 2009.

It is unsurprising then, that the appearance of a phenomenally complex 300ft design carved into an expanse of rape seed on a Wiltshire hillside has caused excitement. But it's not just the eye-pleasing shape which has drawn attention to it. The intersected concentric pattern has been decoded by experts as a “tantalising approximation” of a mathematical formula called Euler’s Identity (e ^ ( i * Pi ) + 1 = 0), widely thought be the most beautiful and profound mathematical equation in the world.

crop1_380727t circles

The design (pictured above) appeared beside Wilton Windmill late on Friday night. Lucy Pringle, a founder of the Centre for Crop Circle Studies, was one of the first on the scene. She says: “What has happened in this particular crop circle is that there are 12 segments and within each segment there are 8 partly concentric rings. Each of these segments indicates a binary code based on 0 and 1. If you use an Ascii Table [computer calculation system], the pattern transposes itself into a tantalising approximation of Euler’s equation.”

The average person finds such complex mathematical talk utterly confounding, so The Independent Online asked Dr John Talbot, a maths research fellow at University College London, for his take on the matter. He said: “Looking at the crop circle, the link with Euler’s most famous theory seems to make perfect sense. However, the way the formula has been executed is partially incorrect. One of the discrepancies is that one part of the formula translates as ‘hi’ rather than ‘i’, which could be somebody’s idea of a joke.”

The Wilton Windmill circle is not the first to have provoked mathematical exposition. In July 2008 a photograph of a crop circle near Barbary Castle (also in Wiltshire) caught the attention of retired American astrophysicist Mike Reed when he saw it in a national newspaper. He was struck by its shape and eventually concluded that it was a coded image representing the first ten digits of Pi (3.141592654), a conclusion declared to be a “seminal event” by Pringle at the time.

Sceptics dismiss crop circles as utter rubbish, but despite decades of research nobody knows conclusively how they’re made. As Francine Blake of the Wiltshire Crop Circle Study Group, explains: “The difficulty is that we don’t know the answer. It’s something that needs to be treated with great respect, but is too often talked about flippantly in the media which, I think, closes the subject rather than opens it.”

There has been extensive scientific exploration into the affect the circles have on nearby wildlife. Flowers and soils inside crop circles are dramatically altered, Blake explains. Pringle observed in a 2003 experiment that seed samples taken from inside a crop circle had 40 per cent higher protein levels than those taken from outside it.

Another interesting element is the nature of the soil on which the circles appear. Pringle says that 93.8 per cent of crop circles are made on chalk, "a worldwide phenomenon" recorded in 54 different countries. She says the significance may be connected to underground springs called aquifers commonly found in chalk: "It is thought that the originating force probably originates in the ionosphere (an area of atmospheric electricity). The force then spirals to earth in the form of a vortical plasma and hits the ground with some 100 of 1000's of volts per metre for just a nano second only, else the crop would be burnt. Occasionally we do see evidence of scorched flattened crop inside certain circles. The electromagnetic fields of both the underground springs and the descending force work in harmony or conjunction with each other."

Blake also remarks on the significance of the chalk, which she says the ancients often built their monuments on - an observation which the existence of Neolithic sites like Stonehenge and Avebury attest. She says the ancients also built their temples on “energy lines” and has observed that “crop circles always appear on or near these lines.” Blake was impressed with the Barbary Castle circle and its derivations because the shape itself was “like a Labyrinth,” which “gives it a spiritual as well as a mathematical tradition.”

Nobody knows for sure how crop circles are made. Reports of strange mists creating the complicated patterns in a matter of minutes, their connotations with little green men and Midwich Cuckoos and elaborate hoaxes have fostered a widespread unwillingness to take the idea seriously. This approach both feeds the mystery around the concept and prevents further exploration of it, as it is an area of research that is unlikely to be awarded large research grants or space on university courses. But, as Blake remarks: “There’s neither rhyme nor reason, they just keep coming.” And with crops nearly at their full height, the UK’s crop circle season is upon us. If you want to see for yourself Wiltshire is your best bet.

http://www.independent.co.uk/news/uk/this-britain/crop-circle-season-arrives-with-a-mathematical-message-1982647.html

"I don't believe there's an atom of meaning in it."

Lewis Carroll. Alice in Wonderland.

The monthly Coppock Indicators finished April:

DJIA: +245 UP. NASDAQ: +448 UP. SP500: +276 UP. The great Bull market goes on with the all three continuing higher in positive numbers. But how much Bull is enough?

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.

Wednesday 26 May 2010

Top Kill Day.

Baltic Dry Index. 4187 +244
LIR Gold Target by 2019: $3,000.

"A well is constructed and completed the same way a house is built—at the direction of the owner and the architect. And in this case, that's BP."

Transocean spokesman.

More on BP later where today is intended to be a make or break “top kill” day, but first more news from ground zero in the financial crisis roiling the markets. Italy joins the sackcloth and ashes brigade. The news from Greece just goes from bad to worse. According to yesterday’s article in Der Spiegel, tourism has collapsed in Greece, especially tourism from Germany, it seems. Trapped in the straightjacket of the Euro, Greece is hopelessly over priced compared to next door Turkey. It doesn’t take a genius to see what eventually comes down the road. Restructuring and a different sort of Euro lie ahead.

"Tourism is our heavy industry," says hotel manager Andreas Metaxas. "It's a key economic sector next to agriculture and shipping." The latter is also suffering as a result of the global crisis.

MAY 25, 2010, 11:27 P.M. ET

Italy Approves Budget Cuts

Rome joins Europe's crisis-driven effort to reduce public spending

ROME—The government of Italian Prime Minister Silvio Berlusconi approved budget cuts Tuesday of up to €24 billion ($29.7 billion) over the next two years in an effort to shore up public finances.

The cuts come as other European governments try to reduce public spending in response to the growing levels of sovereign debt.

Spain last week approved measures valued at €15 billion for this year in an effort to trim a budget deficit equal to 11% of gross domestic product. Britain's new coalition government, which outlined $9.05 billion in budget cuts on Monday, plans to unveil further cuts next month.

Italy is heavily indebted, with an outstanding public debt equal to 115% of GDP. However, the government's budget deficit—forecast at 5.3% of GDP for this year—is relatively modest compared with other EU countries. The government expects its cuts to bring Italy's deficit down to 3.9% in 2011 and 2.7% in 2012.

-----The government will carry out half of the cuts by reducing the amount of funds that Italy's central government allocates to regions and cities. About €6 billion in cuts will be made through wage freezes and wage cuts for public-sector workers.

The plan cuts current salaries of government ministers and parliamentarians by 10% in 2011 and introduces a so-called "construction amnesty."

That measure will allow Italians who built houses without the approval of zoning officials to register their homes by paying a fine that is lower than the sum of the taxes that are owed on the property.

Mr. Berlusconi's government didn't announce any tax increases, an option that would have been deeply unpopular in Italy, where tax burdens remain heavy and evasion is rampant.

http://online.wsj.com/article/SB10001424052748703341904575266732437861628.html?mod=WSJEUROPE_hps_SECONDTopStories

Crisis Hits Greek Tourism as Cancellations Soar

By Manfred Ertel 5/25/2010

The Greek tourism industry, which was hoped to contribute to the country's recovery, is in crisis. Hundreds of hotels are for sale, and visitor numbers are in sharp decline. The cash-strapped government is hardly in a position to help.

The season got off to a late start this year. It is mid-May, there is bright sunshine in the skies over Greece, and Dimitris Fassoulakis is standing on the abandoned terrace of his hotel on the southern coast of Crete. The lobby and the restaurant are empty, and there is no one in the pool. "Pick a spot," says the manager, spreading his arms widely.

-----Reservations are down by an average of about 30 percent nationwide since last summer, and experts expect a large number of cancellations. The Association of Greek Tourism Enterprises (SETE) reported that in the first 24 hours after the general strike in early May, more than 5,800 reservations were cancelled in 28 Athens hotels. According to SETE calculations, at least 300,000 Germans will decide not to make their usual trips to Greece this year.

Dozens of conferences and major events have been cancelled in the country's two largest cities, Athens and Thessaloniki, as well as in Crete and the northern Greek beach resort area of Chalkidiki. After the riots in the capital, some countries, like Romania, issued travel warnings for Athens.

More than 400 hotels are now officially for sale: 81 on the Ionian Islands, 48 on Rhodes, 50 on the Cyclades and 44 on Crete. The Greek vacation atlas, with names like Paros, Naxos, Andros, Milos, Santorini, Corfu and Kos, reads like one big bargain-basement sale. The Athens daily newspaper Kathimerini estimates the value of all properties currently on the market at more than €5 billion ($6.2 billion). They also include luxury hotels, the names of which have been concealed from the public.

Marred by general strikes, mass protests, burning banks and deaths, the vacation paradise hasn't looked like one for weeks, at least not in the news. The Greeks themselves have less money to spend on vacation, while tourists have other options.

And then there are the ongoing stories of corruption, sleaze and fraud, like the massive tax debt of pop singer and actor Tolis Voskopoulos. Using tricks and deception, he managed to avoid paying €5.5 million on back taxes for 17 years. Until last week, the singer's wife was the deputy minister for tourism in the administration of Prime Minister George Papandreou. She resigned because of her husband.

One in five jobs depends directly or indirectly on tourism, as does -- or did, at least -- 18 percent of the country's gross domestic product. Some 850,000 people work in the tourism industry in Greece.

"Tourism is our heavy industry," says hotel manager Andreas Metaxas. "It's a key economic sector next to agriculture and shipping." The latter is also suffering as a result of the global crisis.

http://www.spiegel.de/international/europe/0,1518,696493,00.html#ref=nlint

We end for the day on Europe, with the great EU project turning against itself. Suddenly it looks like it’s open season on Germany. The twin midget Caesars of Europe have abruptly started biting the German hand that feeds them. An unwise move for both I think. Euros anyone? Restructuring the PIIGS looks to me the only sensible way out.

It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought.

J. K. Galbraith.

Barroso Attacks Merkel over Calls for EU Reform

05/25/2010

The EU remains divided over how to respond to the euro-zone debt crisis, with Commission President Jose Manuel Barroso calling Chancellor Angela Merkel's plans for EU reform "naive." Meanwhile concerns about the European banking sector continue to batter the euro.

European stock markets fell sharply on Tuesday and the euro continued to weaken amid investor concern about the stability of the banking system following the near-bankruptcy of a Spanish savings bank, Cajasur.

-----The rescue highlights problems in the European banking sector. Many commercial banks are heavily exposed to the euro crisis through their holdings of government bonds issued by highly-indebted southern European countries such as Greece, Spain and Portugal.

-----Meanwhile, in a further sign of divisions in Europe over how to deal with the euro crisis, the president of the European Commission, Jose Manuel Barroso, called Chancellor Angela Merkel's demands for modifications to the EU treaty to enhance control of member states' budgets "naive."

"We will not propose treaty modifications even though we are open to good ideas," Barroso told German newspaper Frankfurter Allgemeine Zeitung in an interview published on Tuesday. "It would also be naive to think one can reform the treaty only in areas Germany considers important."

If the treaty were amended to boost economic governance, other member states would want to see modifications in other areas too, said Barroso.

Barroso also questioned Merkel's calls for persistent debt offenders in the euro zone to have their voting rights withdrawn. "When it comes to procedures against countries with excessive deficits, it is already the case under current rules that the member state affected is not allowed to vote. Under constitutional law it would be nearly impossible to do more, in my view," he said.

EU finance ministers had met on Friday to discuss the consequences of the Greek crisis. There was agreement on the need for "financial and non-financial sanctions" to force high-debt countries to curb spending. But EU leaders are divided on how to achieve this goal. EU Council President Herman Van Rompuy said amendments to the European treaty demanded by Germany were not a priority.

http://www.spiegel.de/international/europe/0,1518,696555,00.html#ref=nlint

Now back to make or break day for BP. Below, the latest on the BP oil rig disaster from the WSJ. BP seems to have admitted responsibility for the fatal error of judgment to proceed after a “very large abnormality” had occurred. Later today, BP is about to attempt its “top kill.” The effort to close down the spewing oil well by pumping drilling mud under high pressure into the top of the breakout preventer. By their own standards BP rates the likelihood of success about 70%. An increasingly unhappy US public is unlikely to be tolerant of failure, heaven help BP if they make it worse.

“I understand people want a simple answer about why this happened and who is to blame,” Tony Hayward, BP chief executive officer, said in a statement. “The honest truth is that this is a complex accident, caused by an unprecedented combination of failures. “A number of companies are involved, including BP, and it is simply too early – and not up to us – to say who is at fault.”

MAY 26, 2010

BP Cites Crucial 'Mistake'

'Very Large Abnormality' in the Well Wasn't Heeded Hours Before Fatal Explosion

Oil giant BP PLC told congressional investigators that a decision to continue work on an oil well in the Gulf of Mexico after a test warned that something was wrong may have been a "fundamental mistake," according to a memo released by two lawmakers Tuesday.

The document describes a wide array of mistakes in the fateful final hours aboard the Deepwater Horizon—but the main revelation is that BP now says there was a clear warning sign of a "very large abnormality" in the well, but work proceeded anyway.

The rig exploded about two hours later.

The congressional memo outlines what the lawmakers say was a briefing for congressional staff by BP officials early Tuesday. Company representatives provided a preliminary report on their internal investigation of the April 20 disaster, which killed 11 workers and continues to spill thousands of barrels of oil daily into the Gulf of Mexico.

-----According to the memo, BP identified several other mistakes aboard the rig, including possible contamination of the cement meant to seal off the well from volatile natural gas and the apparent failure to monitor the well closely for signs that gas was leaking in, the congressmen wrote in their post-meeting memo. An immense column of natural gas, erupting from the oil well, fueled the fireball that destroyed the rig.

A BP spokesman declined to comment on the memo's specific statements. He said the company had identified "what we believe to be a series of underlying failures" that caused the accident.

Although the memo identifies some of the problems that led to these mistakes, it doesn't identify who made the key decisions. Most of the work aboard the rig was performed by employees of Transocean Ltd., the rig's owner and operator, and other contractors, but BP had managers aboard the rig to supervise the work at the time of the accident.

http://online.wsj.com/article/SB10001424052748704026204575265701607603066.html?mod=WSJEUROPE_hps_LEFTTopStories

In related news, NOAA has expanded the GOM fishing ban, though other media reports say that the ban is being widely flouted. If true, the violators are putting the whole GOM fishing industry at risk of a consumer backlash.

NOAA: Fishing Ban Now Covers 22% of Gulf Federal Waters

Deepwater Horizon Incident Joint Information Center Tuesday, May 25, 2010

NOAA has extended the closed fishing area in the Gulf of Mexico to match the Louisiana state waters closure west of the current boundaries, and to incorporate an area reportedly with oil in the southwest. Closing fishing in these areas is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers.

The closed area now represents 54,096 square miles, which is slightly more than 22 percent of Gulf of Mexico federal waters. This leaves more than 77 percent of Gulf federal waters still available for fishing. The closure will be effective at 6:00 p.m. EDT. Details can be found at http://sero.nmfs.noaa.gov/.

The federal and state governments have systems in place to test and monitor seafood safety, prohibit harvesting from affected areas, and keep oiled products out of the marketplace. NOAA continues to work closely with the U.S. Food and Drug Administration and the states to ensure seafood safety, by closing fishing areas where tainted seafood could potentially be caught, and assessing whether seafood is tainted or contaminated to levels that pose a risk to human health. NOAA and FDA are working to implement a broad-scaled seafood sampling plan. The plan includes sampling seafood from inside and outside the closure area, as well as dockside- and market-based sampling.

According to NOAA, there are approximately 5.7 million recreational fishermen in the Gulf of Mexico region who took 25 million fishing trips in 2008. Commercial fishermen in the Gulf harvested more than one billion pounds of fish and shellfish in 2008.

http://www.rigzone.com/news/article.asp?a_id=93758&hmpn=1

We end with the great legal fight for the spoils just beginning and this is only on the civil side of the coming litigation. Below, Transocean wants its cake and to eat it too. More and more BP looks like being a very troubled stock for several years to come. It may already be too late for BP Plc to try to ring fence the problems into BP America, but even if they could, what is the true shareholder value of the resulting rump?

Legal maneuvering may situate Gulf of Mexico oil spill litigation in Houston

By Rebecca Mowbray, The Times-Picayune May 23, 2010, 7:00PM

The 19th century maritime law that Transocean Ltd. cited in filing a lawsuit to limit its liability in the April 20 explosion of its Deepwater Horizon rig could also give the companies involved in the disaster an edge to move all the litigation surrounding the incident to Texas.
On May 13, Transocean filed a proceeding in Houston under an outmoded 1851 law known as the Limitation of Shipowner's Liability Act to limit its legal exposure to $26.8 million, or the value of the sunken rig and whatever freight it was carrying. The limitation of liability act also allows a vessel owner to consolidate all litigation over a shipping accident to a venue of its choosing, and like a bankruptcy filing, halts all proceedings in other courts.
In maritime law, a rig is considered a vessel. Attorneys say it's an uphill battle for vessel owners to successfully limit their liability in a such a proceeding, so the primary reason for filing may be to nudge the massive litigation that is expected over the rig explosion and oil leak to Houston.
"I think there was a considered thought process on behalf of BP and Transocean to hometown the litigation and do anything that they could do to get the litigation in Houston and out of Louisiana," said Scott Bickford, who filed the first lawsuit the day after the explosion in federal court in New Orleans on behalf of the family of a worker who was killed. "Why is this thing in Texas other than the fact that the wrong-doers are there? This is a terrible situation."
More than 100 cases have been filed in federal courts across the Gulf Coast over the rig explosion and oil spill, many of them in New Orleans, plus others in state court, and those proceedings are expected to be consolidated into one giant case.
Reserve plaintiff attorney Daniel Becnel has filed an application with a panel of federal judges that considers consolidation requests to hold the proceedings in New Orleans. BP, which leased the Macondo well where the Deepwater Horizon was drilling, has filed application with the panel to consolidate the proceedings in Houston. The U.S. Judicial Panel on Multi-District Litigation will meet in Boise, Idaho, on July 29 to consider arguments from both sides about where the proceedings should be held, and is expected to make a decision within a few weeks of the gathering.
But as Transocean's proceeding moves forward in Houston to determine whether the company is eligible limit its liability, all depositions and discovery of facts will take place within the context of that suit. As work on the Transocean case proceeds in Houston, it could preempt the work of the panel of federal judges or help make the case that Houston has already become the nucleus of the litigation.
"The center of the entire litigation will move away from Louisiana to a state that has absolutely no damage. The legal implications are you get Texas justice for Louisiana," Bickford said.
In Houston, Judge Keith Ellison has already stayed all legal proceedings involving Transocean because of Tranocean's suit. On Tuesday morning, Ellison will hold a status conference to clarify issues related to the stays and to set a date for a hearing on motions filed by Bickford to dismiss the limitation of liability proceeding or move it to Louisiana. Attorneys representing fishers and the Louisiana Environmental Action Network have made similar requests

------Although Transocean seeks to limit its liability in the disaster to $26.8 million, the company has already collected $401 million from its rig insurers, according to a first quarter earnings conference call held April 26, just days after the explosion.
In a May 13 press release, Transocean said that it filed to limit its liability at the instruction of its insurers.

http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/05/legal_maneuvering_may_situate.html

So far we have stayed away from commenting of the growing crisis between the two Koreas, because a war between the two still seems unlikely, but as in 1914, events can have an unfortunate way of getting away from all the parties involved. With the US well stretched in Iraq and Afghanistan and busy building up Naval forces off Iran, a real war in the region is one war too many. While the USA will be looking to China to restrain North Korea, and who probably will, that reality will not be lost on the East Asian region. Once again, yet another reason to stay long precious metals.

"Germany was until now a big winner from the euro. I feel that more politicians in Germany should make that clear"

Jose Manuel Barroso.

At the Comex silver depositories Tuesday, final figures were: Registered 52.60 Moz, Eligible 65.46 Moz, Total 118.06 Moz.

Day 17 of Hitler’s attack in the west that almost brought down western civilization. We continue our daily update on the “Dunkirk” page.

Dunkirk & the Battle of France – Day by day 70 years on.

http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html

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Crooks & Scoundrels Corner.

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

Today a reported Madoff settlement that might not be quite all that’s claimed, plus more on the egregious case of a gross deliberate illegal breach of privacy by Google. Who wrote the computer program and who authorised it? Who got all the data illegally collected? What purpose was intended for the illegal data? If this was known and authorised at board level, someone needs to go to jail to make sure this never happens again.

Madoff Investors, Banks Settle for $15.5 Billion, Lawyers Say

By Charles Penty and Stephanie Bodoni

May 25 (Bloomberg) -- Banks agreed to pay about $15.5 billion to settle claims by about 720,000 investors outside the U.S. who lost money in Bernard Madoff’s fraud, according to a group of law firms that represent victims.

About 80 percent of the clients represented by the firms are covered by the settlements, said Miguel Larios, a senior associate at Cremades & Calvo-Sotelo. The Madrid firm last year helped set up a network of lawyers that were taking on Madoff- related complaints. The New York Times reported the settlement agreement yesterday.

Banco Santander SA, Spain’s biggest lender, last year offered compensation in the form of preferred shares paying 2 percent interest in an attempt to repair relationships with private banking clients who lost 1.38 billion euros ($1.7 billion) on Madoff-linked products Santander sold them.

European banks have come under increased pressure since Madoff’s arrest as investors in France, Ireland and Luxembourg have sued seeking repayment of losses. UBS AG and HSBC Holdings Plc, Europe’s largest bank, are together facing more than 100 investor complaints for allegedly failing in their duties as custodians for European Union-regulated funds.

“We have never, ever heard of these settlements,” Edouard Fremault a senior analyst at Deminor International, which advises some 1,200 investors in Europe who lost money invested with Madoff, said in a telephone interview. “We are a bit skeptical. I am certain that there’s been no deal in France, Belgium, Luxembourg or the Netherlands.”

Javier Cremades, chairman of Cremades & Calvo-Sotelo and president of the law firm network will hold a news conference in New York today to talk about the settlements, Larios said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4by.X3XQYKg&pos=6

Google Street View 'single biggest breach of privacy in history'

The Australian communications minister has labelled internet search giant Google "creepy" and said that the company's collection of wireless network data through its Street View service was the single biggest breach of privacy in history.

Bonnie Malkin in Sydney Published: 1:37PM BST 25 May 2010

Earlier this month, Google announced it had discovered that the roving cars it uses to create its online mapping services were inadvertently gathering data on people's website use over unsecured wireless networks.

Google apologised, but the admission caused alarm across the globe.

Germany's consumer protection said that Google had acted "illegally" and failed to show respect for the privacy of its citizens. The UK Information Commissioner has asked Google to delete information gathered on British citizens as soon as possible.

Now Stephen Conroy, Australia's minister for broadband, communications and the digital economy, has told a senate committee that Google deliberately decided to collect the private information.

Mr Conroy, whose plan to implement an internet filter in Australia has been strongly criticised by Google, blamed the company's CEO Eric Schmidt.

"I think the approach taken by Mr Schmidt is a bit creepy frankly," Mr Conroy said.

"When it comes to their attitude to their own censorship, their response is simply, 'trust us'. That is what they actually state on their website: 'Trust us'."

Mr Conroy said that the search engine considered itself above government.

"They consider that they are the appropriate people to make the decisions about people's privacy data and that they are perfectly entitled to drive the streets and collect as much private information by photographing over fences and collecting data information," he said.

He said claims by Google that it collected the data by mistake were wrong and that the company deliberately wrote a computer code designed to gather the information.

Google has dismissed the claims.

In a statement a spokesman for the company said that Google was surprised to hear criticism about its privacy record in a hearing that was supposed to be focused on the proposed internet filters.

http://www.telegraph.co.uk/technology/google/7763461/Google-Street-View-single-biggest-breach-of-privacy-in-history.html

“We have reason to believe you have committed an offence."

City of London. 1960s parking ticket.

The monthly Coppock Indicators finished April:

DJIA: +245 UP. NASDAQ: +448 UP. SP500: +276 UP. The great Bull market goes on with the all three continuing higher in positive numbers. But how much Bull is enough?

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.