Baltic Dry Index. 3707 +99
LIR Gold Target by 2019: $3,000.
John Reid, the former Labour Home Secretary, warned that a Labour-Lib Dem coalition would result in “mutually assured destruction” for both parties.
He also suggested that England would bear the brunt of public sector cuts under any Labour coalition deal because it would be dependent on support from nationalist MPs from Scotland and Wales. Mr Reid said that would “further enrage” English voters.
Seventy years ago this month the UK was facing a fight for its survival. A political crisis in London was resolved when Prime Minister Chamberlain stepped down in favour of Churchill who set about building a coalition of national unity with the Labour Party. By strength of character, Mr Churchill kept defeatists in UK politics from cutting a deal with Hitler leaving Europe forever under Germany’s jackboot. Yesterday poor Churchill was spinning in his grave. The UK’s current Prime Minister, the worst since Lord North lost the American colonies, a man who just lead his party to repudiation at the polls last Thursday, desperately tried to cling on to power by offering a shabby coalition of the losers with the Liberal Democrats, a party that was thoroughly repudiated at the polls even more so than Labour.
None of this would matter were it not for the fact that after the EU-IMF bailout of the euro, Britain is the next Greece. Stay long gold and silver. The Bank of England will soon be the only buyer of UK debt. Pity the poor English taxpayers, lead by “rich” Londoners. To placate unreformed Old Labour in Scotland and the Scottish Nationalists to make the Corrupt Coalition of Losers work, the bulk of new taxes and cuts will now fall on the victims of the plot.
Below, the WSJ on the discredited men of London.
If Gordon Mugabe fell into the Thames, that would be a misfortune; if anybody pulled him out, that would be a calamity.
With apologies to Disraeli & Gladstone
MAY 11, 2010
Britain Now Sleepwalking to Disaster as Brown Plots Coalition of the Absurd
You have to hand it Gordon Brown: he's persistent. Having lost the general election he announced to a baffled Britain yesterday that he plans to continue as Prime Minister for five months to oversee the transition to a Labour successor. He has resigned, in order to stay on.
"The guy can't even resign properly. Other people say 'I resign', then they go. But not Gordon. He only sort of resigns," said one of a large crowd of MPs gathered along with a circus load of excited journalists at the House of Commons yesterday. In front of them, in hastily organized press conferences and crisis meetings held by the various parties, a constitutional crisis was unfolding.
The Conservatives—the party with the largest number of votes and seats which it was widely accepted would have the first chance of forming a government after an election resulting in a hung parliament—may now be headed back to the opposition benches.
That Mr. Brown's party on polling day recorded its lowest vote share since 1983 with 29% of the vote and that the Tories are by far the largest party with 306 seats compared to Labour's 258 are mere trifling details in the universe of someone as stubborn as the Prime Minister.
-----By Monday morning Mr. Clegg was having serious difficulty selling any deal with the Tories to his own MPs and activists. The Lib Dem leader had kept open various lines of communication with Labour. Mr. Brown and Lord Mandelson met Mr. Clegg on Monday morning to suggest that he had an alternative option: a pact of some sort with Labour in which he would get an instant vote in the Commons on his desired aim of changing the voting system. It would not require a referendum.
If Mr. Clegg needed his path smoothed to such a deal, then Mr. Brown would indicate publically that he planned to step down in September. By then a Labour successor could be chosen.
At a chaotic Westminster, the Lib Dem group of MPs met for several hours and applied pressure to its leadership. There was great unhappiness at the thought of any arrangement with the Tories and backing for the idea of full talks with Labour. Into this chaos stepped the PM, with his non-resignation resignation statement. The Tory/Lib Dem deal looked off, a Labour/Lib Dem deal seemed on.
But Mr. Brown last night had serious problems. MPs wonder whether his survival in office for five months is remotely credible in a country that just voted him out. Such a coalition would not have enough seats combined for a Commons majority. Labour and the Lib Dems would need to secure the backing of the nationalists and various other small parties.
And even though the Prime Minister has told Mr. Clegg that there can be an instant Commons vote on electoral reform, it is highly questionable whether Mr. Brown can even deliver the votes of his own party. A significant chunk of Labour MPs, particularly from Scotland, see first past the post as non-negotiable. Only a handful would be required to vote against it to prevent Mr. Brown and his new friend Mr. Clegg forcing through reform.
The former Labour Home Secretary John Reid was first to speak up last night. He is no longer an MP but is still close to Tony Blair and is a figure of considerable influence in his party. He denounced Mr. Brown's attempts at brokering an accommodation. He described any Brown-Clegg partnership formed with the support of minor parties as "inherently unstable" and a "potential disaster for the country".
Below, the Times of London’s take on the UK flirting with national suicide. Unfortunately, national suicide is all too likely to trigger “the next Lehman” in global finance.
May 11, 2010
Preparing for Government
The Liberal Democrats have an historic choice before them. Are they serious about power or do they want to retreat to their comfort zone?
It is quite possible that we will look back on yesterday as the moment the Liberal Democrats demonstrated they are totally unsuited to the serious business of government. All the pious talk from Nick Clegg about the people being the kingmakers has turned out to be so much nonsense. Nick Clegg is the kingmaker and he has decided he can make any king he likes. With the resignation of the Prime Minister, narrow party interest replaced national interest in the calculation.
Mr Clegg has been taught a depressing lesson by his party. They are constitutionally unready to govern. Ideologically, they were caught out with policies — such as ditching Trident and an amnesty on immigration — that were not those of a government in waiting. Organisationally, they passed, in Southport in 1998, an obscure resolution, called the “triple lock”, which means that three quarters of the MPs and three quarters of the federal executive need to sanction a deal. Failing that, a special conference needs to be reconvened to consider the matter. It somehow feels appropriate that the current vice-president of the federal executive is Brian Orrell, who used to play a Cyberman alien in Doctor Who.
Nick Clegg now has to make a choice between weakness and leadership. His party may well be feeble, in love with its own eccentricity and perfectly happy to be inconsequential but that does not excuse the statement that Mr Clegg made about his plan to begin formal talks with the Labour Party. Having said repeatedly that the party with the most seats and the most votes has the right to govern, Mr Clegg’s volte-face is bordering on the dishonourable.
To defy his own party would, in fact, be to act in its own best interest. The paradox of Mr Clegg opening formal talks with the Labour Party is that, inspired by narrow party interest, it will in fact achieve the opposite.
The Prime Minister will be a man who was not elected by his party and then lost the general election, securing the support of just 30 per cent of the 65 per cent who voted. That Prime Minister will then leave office, to be replaced by someone chosen only by members of the Labour Party, someone who was not even mentioned in the general election just gone. That new prime minister might then change the electoral system with, if the Liberal Democrat MPs got their way, no prior referendum. All of that is supposed to be conducted under the auspices of a rickety coalition of every conceivable nationalist, an independent Unionist and a Green.
The notion that Gordon Brown can be permitted to stay on as Prime Minister for another five months is an affront to democracy and — as the immediate movement of the pound showed — a danger to the economy. The mooted deal, in which the new coalition might force through a change to the electoral system without putting that to the people in a referendum, would be cynical to the point of moral corruption.
http://www.timesonline.co.uk/tol/comment/leading_article/article7122367.ece
In other EU news, the ECB sold out to France, says France. German taxpayers are now to be fleeced a daily basis! My guess is that German voters will have the last say. Europe is now seriously unstable. The ECB’s U-turn is likely to be money down the drain, merely delaying an EU restructuring.
ECB risks its reputation and a German backlash over mass bond purchases
The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders.
By Ambrose Evans-Pritchard Published: 5:30AM BST 11 May 2010
Jean-Claude Trichet, the ECB's president, denied there had been any political interference. "We are fiercely and totally independent," he said.
It is clear, however, that the two German members of the ECB's council voted against the move, a revelation that may cause a catastrophic political backlash in Germany.
Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that's why I'm critical of this part of the ECB's council's decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.
The European Commission made matters worse by announcing the decision in the small hours of Monday morning before the ECB had spoken, fuelling suspicions that monetary policy is being dictated by the political authorities. French President Nicolas Sarkozy further enraged Berlin by claiming that 95pc of the $1 trillion "shock and awe" rescue package was based on French proposals.
"Germans are watching this in horror," said Hans Redecker, currency chief at BNP Paribas. "If this ends up in full-blown quantitative easing, people are going to be up in arms."
As recently as last Thursday Mr Trichet said the governing council had not even discussed buying bonds. Julian Callow, of Barclays Capital, described the volte-face as incredible. "The ECB has ripped up its exit strategy. They have always prided themselves on transparency and consistency, and now they have done this abrupt U-turn."
The ECB said it was intervening in "those market segments that are dysfunctional", almost certainly buying Greek, Portuguese, Irish and Spanish bonds. It will sterilise purchases through other means so that the action will not add net stimulus or undermine monetary policy, at least for now.
-----Marco Annunziata, chief economist at UniCredit, said the ECB alone is powering the market, raising concerns that any rally will be short-lived. "The spread tightening has so far been driven mostly by ECB purchases and some short-covering, with much less buying interest from real money accounts," he said.
Mr Redeker said China and other emerging powers have lost confidence in EU management and stopped buying Club Med bonds, leaving the euro vulnerable to further sell-offs.
-----The ECB resisted the purchase of state bonds after the Lehman crisis, arguing such action would amount to a subsidy for the most indebted states. But it also made no secret of its disdain for quantitative easing by the Bank of England and the US Federal Reserve, viewing this as the start of a slipperly slope towards "monetisation" of deficits.
ECB board member Lorenzo Bini Smaghi went so far as to deride QE an inflation policy, saying: "It is not what people in Europe want." The sudden change in policy will come as a shock to those who see the ECB as last bastion of orthodoxy in a world of heretics.
We close for today with more bad news from China’s bubble. Add another country to the list of accidents waiting to happen.
China’s April Inflation Accelerates, Lending Surges
May 11 (Bloomberg) -- China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.
Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.
Asian stocks pared gains on concern that Chinese officials will move to cool the fastest-growing major economy, while yuan forwards rose. China’s top priority should be preventing excessive increases in asset prices and liquidity after Europe’s almost $1 trillion loan package reduced the risk of another global slump, central bank adviser Li Daokui said yesterday.
-----The increase in consumer prices compared with 2.4 percent in March and the 2.7 percent median estimate of 30 economists surveyed by Bloomberg News. Producer prices jumped 6.8 percent, also topping estimates, today’s release from the statistics bureau showed.
The jump in property prices in 70 cities was the biggest since data began in 2005, defying a government crackdown on speculation that intensified last month.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZiryyuIpKwg&pos=2
"MacBroon’s clever," said Pooh thoughtfully. "Yes," said Piglet, "MacBroon’s clever." "And he has Brain." "Yes," said Piglet, "MacBroon has Brain." There was a long silence. "I suppose," said Pooh, "that that's why he never understands anything."
With Apologies to The House at Pooh Corner and A. A. Milne.
At the Comex silver depositories Monday, final figures were: Registered 51.66 Moz, Eligible 65.08 Moz, Total 116.74 Moz.
Day two of Hitler’s attack in the west that almost brought down western civilization. We continue our (almost) 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, more on the Deepwater oil disaster, not yet a calamity but only by the grace of God. Below the NY Times covers the latest news, but the spin is clearly anti new drilling for now. If the message is that we need to know why the blowout preventer failed before new deep water drilling is licensed, I think all could agree. My guess is though that the intent is to close off new drilling entirely.
New Ways to Drill, Old Methods for Cleaning Up
By JAMES C. McKINLEY Jr. and LESLIE KAUFMAN Published: May 10, 2010
HOUSTON — As hopes dim for containing the oil spill in the Gulf of Mexico anytime soon, more people are asking why the industry was not better prepared to react.
Members of Congress are holding hearings this week and demanding to know why the federal Minerals Management Service did not force oil companies to take more precautions. Environmentalists are saying they tried to raise the alarm to Congressional committees that the industry had no way to respond to a catastrophic blowout a mile below the sea.
Local officials in the gulf are beginning to ask, “What was Plan B?” The answer, oil industry engineers are acknowledging, was to deploy technology that has not changed much in 20 years — booms, skimmers and chemical dispersants — even as the drilling technology itself has improved.
“They have horribly underestimated the likelihood of a spill and therefore horribly underestimated the consequences of something going wrong,” said Robert G. Bea, a professor at the University of California, Berkeley, who studies offshore drilling. “So what we have now is some equivalent of a fire drill with paper towels and buckets for cleanup.”
For years, major oil companies, as well as the Minerals Management Service, played down the possibility of an uncontrolled blowout on the sea floor, arguing that safeguards like blowout preventers were practically foolproof.
In November, Walter D. Cruickshank, deputy director of the Minerals Management Service, told a Senate committee that an undersea blowout and massive spill that had occurred in East Timor last year was highly unlikely in the Gulf of Mexico because of tighter United States regulations. All wells had safety devices to shut off the flow in emergencies, he said.
At the same hearing, a BP vice president, David Rainey, promoted the oil companies’ “blowout preventer technology, which includes redundant systems and controls” and told senators that “contrary to popular perception, ours is a high-tech industry.”
What government regulators and industry officials did not foresee in the Deepwater Horizon disaster last month is that the rig would sink and that robots would not be able to stanch the flow of oil at such depths, even though a consultant hired by government regulators in 2003 had warned that they were unreliable.
“This is the first time the industry has had to confront this issue in this water depth, and there is a lot of real-time learning going on,” BP’s chief executive officer, Tony Hayward, acknowledged at a news conference Monday. “The investigation of this whole incident will undoubtedly show up things that we should be doing differently.”
Once oil was flowing into the water, the methods of dealing with it have changed little in decades, environmentalists say. Tenting spills with giant upside-down funnels has been done in shallower waters, but until last weekend, it had not been tried in deep water. The first attempt failed.
“The oil industry went off the deep end with a new kind of risk, and they didn’t bother to build a response capability before they had a big disaster,” said Richard Charter, an advocate with Defenders of Wildlife who studies offshore drilling.
The heart of the industry’s plan to contain the oil falls to the Marine Spill Response Corporation, a nonprofit organization formed in 1990 after the Exxon Valdez disaster. It is maintained largely by fees from the biggest oil companies.
Judith Roos, a vice president of Marine Spill Response, said the majority of its equipment, including booms and skimmers, was bought in 1990. “The technology hasn’t changed that much since then,” she said.
Steve Benz, president of the corporation, said his group had no budget for research.
More.
http://www.nytimes.com/2010/05/11/us/11prepare.html?hp
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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