Baltic Dry Index. 3888 +66
LIR Gold Target by 2019: $3,000.
All within the state, nothing outside the state, nothing against the state.
Benito Mussolini.
We open today with the unelected bureaucrats of Brussels making a massive power grab over the hapless governments and citizens trapped in the unloved and failing Euro. In reality it’s a power grab for Germany’s money and the death of meaningful national government in the Eurozone. As reported, Caesar Barroso and Clown Prince Van Rompuy, even want to extend their Divine Right powers to include every nation in the disastrous EU, not just the unfortunate serfs in Euroland. Chancellor Merkel’s U-turn is now being taken in Brussels as a green light to turn the EU into the EUSSR. Below, the NY Times on Brussels going for broke in the power stakes. Stay long precious metals. EU leaders return to type.
Barroso's political activity began in his college days, before the Carnation Revolution of 25 April 1974. He was one of the leaders of the underground Maoist MRPP (Reorganising Movement of the Proletariat Party, later PCTP/MRPP, Communist Party of the Portuguese Workers/Revolutionary Movement of the Portuguese Proletariat)
E.U. Plans Peer Review for Member States' Budgets
By STEPHEN CASTLE Published: May 12, 2010
BRUSSELS — Seeking to capitalize on the momentum generated by Europe’s huge rescue plan for its single currency, the European Commission on Wednesday outlined ambitious proposals to give countries that use the euro a say over each other’s budget plans.
Proposing the most far-reaching integration ever envisaged for the 16-country single-currency zone, the European Commission president, José Manuel Barroso, warned Europeans that they “can’t have monetary union without having economic union.”
“Member states should have the courage to say whether they want an economic union because, if they don’t want that, it is better to forget monetary union altogether,” Mr. Barroso said at a press conference in Brussels.
Among the ideas announced Wednesday was a plan to make the huge safety net for the euro that was decided on over the weekend a permanent crisis-resolution mechanism.
The European Commission, the executive agency of the European Union, also argued that the current E.U. focus on budget deficits should be broadened so that, for example, emerging asset bubbles and imbalances in the euro zone could be spotted and dealt with.
Fears of a default in Greece and contagion within the single currency ultimately required France and Germany to overcome their differences and agree on a €750 billion, or $950 billion, bailout package, backed by the euro-zone countries and the International Monetary Fund.
Olli Rehn, the European commissioner for economic and monetary affairs, said Wednesday that the economic “good times were not used for reducing public debt, and macroeconomic imbalances were ignored.”
The revised system would mean that national spending plans would be examined by all euro-zone countries before they are approved — a step likely to prove highly controversial. After a recommendation from the European Commission, E.U. governments could issue warnings if a country was thought to be pursuing irresponsible policies.
Mr. Rehn said it was important for the euro’s rule book to have more “teeth.” But the proposals announced Wednesday, which will need approval by E.U. national governments, left vague what sanctions could be applied to governments that ignored recommendations from other euro-zone members. Though all countries would be covered by the measures, rules would be tougher on euro members.
-----The European Commission also proposed that its rule book, which focuses on debt and deficit reduction, should be broadened to include more criteria and tackle other imbalances within the euro zone.
Under current E.U. rules, budget deficits must not exceed 3 percent of gross domestic product and debt must not be more than 60 percent of gross domestic product. But these stipulations have been widely ignored.
Mr. Rehn said new criteria could include unit labor costs, productivity, employment rates and current account surpluses.
-----On Tuesday, France’s economy minister, Christine Lagarde, called for rules that would include measures on competitiveness and consumption. That could prompt countries like Germany to inflate domestic demand to help other, less competitive, euro-zone countries.
http://www.nytimes.com/2010/05/13/business/global/13euro.html
Democracy is beautiful in theory; in practice it is a fallacy.
Benito Mussolini.
While Europe’s new economic overlords attempt to recreate the failed USSR in once free Europe, across the Atlantic “God’s work” has come under the scrutiny of yet more prosecutors. Who knew what and when did they know it? It’s fast becoming let’s make a deal time for crooks and let’s turn whistleblower time for the rest. Is the perp walk about to come back into fashion on Wall Street? Will Bernie be getting some pals for Christmas? Are the Squids about to become New York calamari? Has anyone heard from old Ebenezer Squid recently? Below, the NY Times and WSJ get on the trail of “Dead Presidents.”
Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.
Benito Mussolini.
Prosecutors Ask if 8 Banks Duped Rating Agencies
By LOUISE STORY Published: May 12, 2010
The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.
The investigation parallels federal inquiries into the business practices of a broad range of financial companies in the years before the collapse of the housing market.
Where those investigations have focused on interactions between the banks and their clients who bought mortgage securities, this one expands the scope of scrutiny to the interplay between banks and the agencies that rate their securities.
The agencies themselves have been widely criticized for overstating the quality of many mortgage securities that ended up losing money once the housing market collapsed. The inquiry by the attorney general of New York, Andrew M. Cuomo, suggests that he thinks the agencies may have been duped by one or more of the targets of his investigation.
http://www.nytimes.com/2010/05/13/business/13street.html?hp
MAY 11, 2010
U.S. Probes Morgan Stanley
Prosecutors Look at Mortgage Securities; Firm Says It Hasn't Been Contacted
U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against, people familiar with the matter said, in a step that intensifies Washington's scrutiny of Wall Street in the wake of the financial crisis.
Morgan Stanley arranged and marketed to investors pools of bond-related investments called collateralized-debt obligations, or CDOs, and its trading desk at times placed bets that their value would fall, traders said. Investigators are examining, among other things, whether Morgan Stanley made proper representations about its roles.
Among the deals that have been scrutinized are two named after U.S. Presidents James Buchanan and Andrew Jackson, a person familiar with the matter said. Morgan Stanley helped design the deals and bet against them but didn't market them to clients. Traders called them the "Dead Presidents" deals.
-----The investigation grew out of an ongoing civil-fraud investigation launched by the Securities and Exchange Commission in 2009, examining the mortgage-bond business of more than a dozen Wall Street firms, the people said. The Manhattan U.S. Attorney's office now is investigating some of those firms' activities in a criminal probe.
"We've not been contacted by the Justice Department about any transactions that were raised in The Wall Street Journal article and we have no knowledge whatsoever of a Justice Department investigation," Morgan Stanley Chief Executive James Gorman said during a news conference in Tokyo on Wednesday.
At the Comex silver depositories Wednesday, final figures were: Registered 50.82 Moz, Eligible 65.26 Moz, Total 116.08 Moz.
Day Four 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 it’s compare and contrast time as we pit Spain against NY State and the State of California. All three are going broke and headed for social disorder at some point ahead. Sadly, so is the UK probably once Britain’s new “BOGOF” government gets round to cutting the public sector budget too. Stay long precious metals. The effort to prop up failing fiat currency triggered by the greed and fraud of the Squids, is now a clash between setting off a deflationary death spiral or setting off hyperinflation.
It's good to trust others but, not to do so is much better
Benito Mussolini.
EU imposes wage cuts on Spanish 'Protectorate', calls for budget primacy over sovereign parliaments
Spain has followed Ireland and Greece in imposing 1930s-era wage cuts to slash the budget deficit, complying with EU demands for further austerity in exchange for the €720bn `shock and awe’ rescue for eurzone debtors.
By Ambrose Evans-Pritchard, International Business Editor Published: 11:15PM BST 12 May 2010
Premier Jose Luis Zapatero told a stunned nation that public sector pay will be reduced by 5pc this year and frozen in 2011. "We must make an extraordinary effort," he said.
Pension rises will be shelved. The country’s €2,500 baby bonus will be cancelled. Aid to the regions will be slashed and infrastructure projects will be put on ice. Mr Zapatero’s own monthly pay will fall 15pc to €6,515.
Mariano Rajoy, the conservative opposition leader, said years of ostrich-like denial by the Zapatero team had reduced the country to an EU "protectorate".
Commission president Jose Barroso unveiled plans for EU control over national budgets, including an incendiary demand that Brussels should vet budgets before their first reading in Westminster, the Bundestag, and other parliaments. Current account deficits and credit growth will be monitored. Brussels can imposing sanctions on states that let booms run out of control. "We must get to the root of the problems," he said.
Such a plan would greatly improve the working of the EMU system, but it would also entail a drastic erosion of sovereignty. The intrusive surveillance is a wake-up call for states that have tended to view the euro as a free lunch.
Mr Zapatero - who long prided himself on being an "anthropological optimist" - plans to cut the deficit from 11.2pc to 6pc of GDP this year, with further cuts next year. The fresh move is to placate bond vigilantes and to calm German fears that eurozone discipline is breaking. He has already raised income taxes and lifted VAT from 16pc to 18pc.
US President Barack Obama played a key role behind the scenes, pleading with Mr Zapatero for "resolute action". The telephone call from the White House is a clear indication that contagion from Greece and Portugal to the much larger debt markets of Spain had become a global systemic threat by late last week.
"The markets were going in for the kill: the eurozone itself was on the brink of collapse," said Jose Garcia Zarate from 4Cast. The austerity package has gained time but investors are eyeing the response of the Spanish people.
"Just months ago the government said it would never cut wages, so this is a very humiliating U-turn. There will be protests, but we don’t know yet whether there will be a general strike," he said.
------ Spain’s UGT union federation warned of "social conflict" and vowed to inflict "maximum punishment" on the government. However, the nation as a whole has so far handled a property slump and a rise in unemployment to 20pc with stoicism, befitting the tradition of the Spanish-born Stoic philosopher Seneca.
----- Spain’s wage cuts amount to an "internal devaluation" within EMU. Stephen Lewis from Monument Securities said the EU is pushing a clutch of countries into contractionary policies at the same time. These will feed on each other, creating a deflation bias across the region akin to the 'Gold Bloc’ in the 1930s.
"It is not a viable policy. Weakening demand will cause the tax base to shrink. If the population could see light at the end of the tunnel, they might put up with it, but there is no light: it is a long dark passage leading nowhere," he said.
The EU cites the Irish austerity plan as a model, but Ireland has an open economy with a dynamic export sector, and may be sui generis. In any case, Ireland’s nominal GDP has fallen 18.6pc, without a commensurate fall in debt. Ireland is not yet safely out of its debt-deflation trap.
May 12, 2010, 5:36 pm
Judge Temporarily Blocks Furlough of State Workers
By NICHOLAS CONFESSOREALBANY — A federal judge temporarily blocked on Wednesday a one-day furlough of state workers scheduled by Gov. David A. Paterson for next week, reversing a plan that Mr. Paterson has said is necessary to keep the state from running out of money at the end of the month.
Judge Lawrence E. Kahn of United States District Court issued a temporary restraining order against Mr. Paterson, after unions representing state employees and public university teachers filed a lawsuit alleging that the furloughs, approved by the Legislature on Monday, were illegal.
Judge Kahn’s ruling (see below) also bars Mr. Paterson from seeking any further furloughs pending a hearing in his chambers, scheduled for May 26.
In his ruling, the judge wrote that the furloughs, which could cost roughly 100,000 state workers a day’s pay, would cause irreparable harm if put into effect and that the unions were likely to win their case in court, two conditions for issuing a temporary restraining order.
State and federal courts around the country have largely upheld challenges to mandatory furloughs ordered by state officials.
Judge Kahn also ruled that Mr. Paterson was required to include in future emergency budget bills raises that had been scheduled for state workers starting in April but that Mr. Paterson had declined to appropriate money for, saying the state could not afford it. Union leaders have refused to voluntarily give up the raises.
Mr. Paterson’s furlough plan, which would have affected roughly half of the state’s workforce, drew thousands to a rally in Albany on Monday and sharp criticism from lawmakers, who attacked the furloughs as unnecessary even as they voted to approve them. Mr. Paterson had inserted the furlough provisions into an emergency budget bill, effectively forcing the Legislature to approve his plan.
State agencies were already making contingency plans when Judge Kahn’s ruling came down, such as temporarily closing a call center run by the State Department of Taxation and Finance and Department of Motor Vehicle offices.
http://cityroom.blogs.nytimes.com/2010/05/12/judge-bars-furlough-of-state-workers/?hp
Schwarzenegger's revised budget plan is expected to eliminate health programs
Home healthcare for the elderly and disabled and the Healthy Families program for low-income children could be dismantled. Previous efforts at scaling back such programs were overturned.
By Shane Goldmacher and Evan Halper, Los Angeles Times May 12, 2010 | 9:09 p.m.
Gov. Arnold Schwarzenegger is expected to present a revised budget plan Friday that would dismantle some of California's landmark healthcare programs after efforts to scale them back have been reversed by federal courts.
The rulings, issued mostly over the last two years, have already forced the state to unwind roughly $2.4 billion in cuts approved by the governor and Legislature and have alarmed other financially strapped states seeking ways to balance their budgets.
Schwarzenegger has lashed out at the federal judges, saying they've been "going absolutely crazy" and accusing them of interfering with the state's ability to get its finances in order.
The rulings tie their hands, administration officials say, and they are asking the U.S. Supreme Court to intervene in a petition supported by 22 other states.
"We can't make any changes to these programs," said Susan Kennedy, the governor's chief of staff. "Anybody can just walk into a courthouse and freeze them."
Administration officials declined to reveal which specific programs the governor would eliminate. But officials involved in the budget process, who spoke on condition of anonymity because they are not authorized to speak publicly, said they would probably include home healthcare for the elderly and disabled, a nearly $2-billion program that serves 440,000 Californians. Cuts that lawmakers and the governor made to the program in an effort to balance the budget have been blocked by legal rulings over the last year.
http://www.latimes.com/news/health/healthcare/la-me-state-budget-20100513,0,266819.story
The keystone of the Fascist doctrine is its conception of the State, of its essence, its functions, and its aims. For Fascism the State is absolute, individuals and groups relative.
Benito Mussolini.
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.
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Sunspots – A 22 year colder world? (From 2004?)
Spotless Days May 12
Current Stretch:4 days
2010 total: 25 days (19%)
2009 total: 260 days (71%)
Since 2004: 795 days
Typical Solar Min: 485 days
The long minimum seems to have ended, or has it?
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