Baltic Dry Index. 3822 +115
LIR Gold Target by 2019: $3,000.
“From this arises the question whether it is better to be loved rather than feared, or feared rather than loved. It might perhaps be answered that we should wish to be both: but since love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.”
Nicolo Machiavelli.
Yesterday, by the grace of God, “Gordon Mugabe” fell into the Thames, no one pulled him out. The UK looked deep into a Brownian socialist coalition hell, and recoiled. A flawed coalition of the distrusted between the Conservatives and the shifty Liberal-Democrats was finally nailed together, but the Conservatives don’t trust the Liberals one bit. Worse, no one in the Lib-Dem party has ever run anything, let alone a government department. On the job training is now a great experiment in progress, in the midst of the UK now very much in the spotlight as the new Greece. I have little faith that the Libs will stick around for long, or take the hard austerity decisions needed to overcome 13 wasted years of Blair-Brown flim-flamery and deceit on the economy. Once they get to rig Britain’s voting system in their favour, I doubt that they’ll stick around at all. Forget national interest, this coalition is only about a power grab by a duplicitous Liberal Democrat Party desperate for the trappings of power they can’t get at the ballot box, after nearly 100 years in the wilderness. Stay long precious metals. Prime Minister Cameron deludes himself and his Party if he thinks the Lib-Dems have any other agenda than his and his Party’s demise. UK national interest be dammed. This new UK government starts out on probation and is already on borrowed time. Gilts anyone?
Oh, what times! Oh, what standards!
Cicero
Cameron Becomes Premier as Clegg Accepts Coalition
May 12 (Bloomberg) -- Conservative leader David Cameron struck a deal with Britain’s No. 3 party to form the first coalition government since World War II, ending 13 years of Labour control.
“We have deep and pressing problems,” Cameron said following his arrival at the prime minister’s Downing Street residence 90 minutes after Gordon Brown’s departure last night. “For those reasons, I aim to lead a proper and full coalition. That’s the right way to provide this country with the strong and stable, good and decent government this country needs.”
Cameron, 43, replaced Brown after five days of unprecedented talks following elections May 6 that failed to produce a majority for the first time since 1974. His coalition partner, Nick Clegg, head of the Liberal Democrats, became deputy premier.
They’ll propose 6 billion pounds ($9 billion) of cuts within 50 days to reduce a record budget deficit, raise the threshold to pay income tax, study a split between retail and investment banking and increase the Bank of England’s oversight of the financial industry, Conservative officials said.
With 363 lawmakers in the 650-seat House of Commons, the two-party government may ease investor concern that last week’s inconclusive vote would leave Britain with a leader too weak to fix U.K. finances. The pound and gilts rose yesterday after reports that Cameron was set to succeed Brown.
----- U.K. government debt will rise to 77 percent of gross domestic product this year and may approach 100 percent by 2014, Standard & Poor’s says. The rating company cut its outlook on the U.K.’s AAA grade from stable in May 2009, saying debt may rise to a level incompatible with its top assessment.
“We’re going to form a new government and more important than anything else a new kind of government,” Clegg told reporters after his party approved the deal early today. “I believe we are united in wishing to tackle the immense challenges this country faces and deliver a fairer future for Britain.”
Winston Churchill
With the deal struck, Cameron and Clegg, 43, each have to overcome skepticism over allying with a traditional antagonist. The Liberals haven’t had a role in government since Winston Churchill led a unity Cabinet 65 years ago. Conservatives have been out of power since 1997.
“I would rather be in a minority government,” Conservative lawmaker Graham Brady said. “Realistically, there’s not much more prospect of whatever arrangement is reached lasting for very long.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJf5LI7NiBhc&pos=8
Below, gold makes a new high as recent developments in Europe suggest the financial crisis is far from over. Fiat currency is in continuous decline.
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
Gold hits record high in Asian trade
6:11, Wednesday 12 May 2010
Gold hit a record high of 1,235.50 US dollars an ounce by midday in Hong Kong Wednesday, as investors sought a safe-haven over deepening concerns about the eurozone debt crisis.
The precious metal closed in Asia on Tuesday at 1,209.00 dollars but later climbed as high as 1,224.82 dollars an ounce in European trade.
Analysts said the commodity was likely to maintain its safe haven role while other markets remained vulnerable.
It opened at 1,229.00, just up from a previous record of 1,226.56 dollars for the metal set on December 3 last year.
"The response of the central banks and the IMF to the southern European mess is almost guaranteed to ensure continued volatility in world markets," said Capital Spreads analyst Simon Denham.
Investors had on Monday welcomed the European Union and International Monetary Fund aid package worth 750 billion euros (one trillion dollars) to resolve the debt and budget deficit crisis in Europe.
However, the euphoria faded on Tuesday amid resurgent doubts over countries' ability to reduce their deficits.
"Gold is holding ground... and with doubts about the effectiveness of the EU/IMF already surfacing could be poised for a fresh challenge higher to target last year's all-time high," said analyst James Moore at TheBullionDesk.com.
The euro continued to be sold as investors became less risky. The single currency was trading at 1.2624 US dollars at 0450 GMT.
IMF head Dominique Strauss-Kahn has hailed the trillion-dollar aid package as a big step forward.
However, higher gold prices indicated that traders remain sceptical over the deal, according to analysts.
Up next, Professor Doom on the European bailout so far. In reality, so far no money has actually changed hands, and Greece has a pressing date to repay on May 19. Are we are about to see some German hard cash? Will the Greeks default after all? I don’t see the Germans reneging on a deal not yet a week old, but can the Greeks really deliver their end of the deal? My guess is that they won’t really try. On to Portugal and Spain, but don’t count the UK out just yet. The first time the Con pact looks on the rocks, the UK moves to the head of the list of shorts.
So in all human affairs one notices, if one examines them closely, that it is impossible to remove one inconvenience without another emerging.
Nicolo Machiavelli.
Roubini Says Greece May Lead Euro Exodus, China Faces Slowdown
May 12 (Bloomberg) -- New York University professor Nouriel Roubini said Greece and other “laggards” in the euro area may be forced to abandon the common currency in the next few years to spur their economies.
A “real depreciation” in the euro is needed to restore competitiveness in nations including Spain, Portugal and Italy, he said in an interview on Bloomberg Television today. The euro will remain the currency for a smaller number of countries that have “stronger fiscal and economic fundamentals,” Roubini said.
The European Union and International Monetary Fund last week approved a 110 billion-euro ($139 billion) lifeline for Greece to arrest the country’s fiscal crisis and stop the turmoil from spreading. Europe’s debt woes may push it into a “double-dip” recession, growth in advanced nations will be “anemic” and China’s overheating economy risks a slowdown, Roubini said, adding that Greece may still eventually need to restructure its debt.
“The challenge of reducing a budget deficit from 13 percent to 3 percent in Greece looks to me like mission impossible,” Roubini said. “I would not even rule out in the next few years one or more of these laggards of the euro zone might be forced to exit the monetary union.”
Greece agreed to the package on May 2, pledging 30 billion euros in wage and pension cuts and tax increases in the next three years to tame the euro-region’s second-biggest deficit.
Prime Minister George Papandreou had revised up the 2009 budget deficit to more than 12 percent of gross domestic product, four times the EU limit, and twice the previous government’s estimate. EU officials revised the deficit further on April 22, to 13.6 percent of GDP.
‘Ugly’ Process
The fiscal changes Greece needs to undertake as part of an international bailout will be an “ugly” process that will only get worse, Roubini said. Public opposition to the plan sparked riots in Athens last week that led to three deaths.
“They are not going to be able to raise taxes and cut spending that much,” he said. “As you raise taxes and cut spending in the short run, output is going to fall even more. The IMF expects another two to three years of recession in Greece. How much austerity and recession can a country take?”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aWx2RrHBu90A&pos=7
Below Der Spiegel on the reality of modern Greece. Is the Greek way of life really about to change?
Is It Already Too Late to Save Greece?
05/11/2010
The International Monetary Fund and the European Union are coming to Greece's aid with a financial commitment worth billions. But is it already too late to rescue the cash-strapped country? By SPIEGEL staff.
One of Greece's purported saviors is a short, rotund, 72-year-old man named Leandros Rakintzis. He was once a respected constitutional judge on the country's highest court, the Areopagus. Since 2004, he has been the head of a government agency that is the first of its kind for Greece. Rakintzis is Greece's general inspector of public administration.
His body twitches and shakes with delight as he talks about his successes and discoveries. For example, he discovered that on weekends, hospitals admit elderly people who require nursing care or are confused because their children bring them there so that they can take a few days of vacation. This, of course, drives up healthcare costs.
He also discusses an administrative office called Kopais, named after the lake of the same name near Thebes, which was established in 1957. The purpose of the office was to prepare for the draining of the lake so that roads could then be built in the lakebed.
In that same year -- which is now over half a century ago -- the lake disappeared forever. But there are still 30 employees working at Kopais today. When employees retire or are let go, their positions are filled with new employees, who are paid monthly salaries of up to €2,500 ($3,175). They supposedly work on drainage issues, but no one knows exactly what those issues are or who benefits from their work.
Rakintzis has stories to tell that take place throughout Greece, and some are downright unbelievable. For example, the government agency that was created to manage a bid to make Greece's second-largest city, Thessaloniki, a European cultural capital in 1997 is still humming away. Its employees are supposedly working on winding down the major event and settling up the accounts -- 13 years later.
How many people work there? "I don't know. Not even the government knows that," says Rakintzis.
------Greece has more than five times as many civil servants per capita than the United Kingdom. The country's inflated government apparatus consumes tens of billions of euros a year. It's money the Greek state doesn't have -- and actually never did. Greece's gross domestic product is only slighter higher than that of the German state of Hesse and is just one-tenth the size of Germany's total economic output.
For this reason, the government has been borrowing fresh funds on the international capital markets for years, generously and cheerfully spreading the wealth among its citizens. The introduction of the euro made it even easier to incur debts because, by joining the common currency, Greece qualified for lower interest rates than anyone would ever have thought possible.
But now the bubble has burst. Greece threatens to turn into another Lehman Brothers -- except on a whole new scale. The €300 billion in debt that the country has accumulated poses a threat to the entire European community.
http://www.spiegel.de/international/europe/0,1518,694263,00.html#ref=nlint
It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.
Nicolo Machiavelli.
At the Comex silver depositories Tuesday, final figures were: Registered 50.82 Moz, Eligible 65.26 Moz, Total 116.08 Moz.
Day three 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, the bent twin European “Gs,” Greece and Germany. The EU at its very best. Ve haf vays of getting eban for ze Sedan. German industry bought Greek politicians with “Miza,” and in a wonderful, delicious, God given irony, now German taxpayers are forced by the French to pay off the Greek way of life. After they get through with that, according to Nicholas Sarkozy, they can get on with paying for the Spanish and Portuguese way of life. Below, Der Spiegel on the German way of doing business. Who knew that you have to pay off twice.
“Well, fancy giving money to the Government! Might as well have put it down the drain.”
A. P. Herbert. Misleading Cases.
How German Companies Bribed Their Way to Greek Deals
By Jörg Schmitt 05/11/2010
Greece's rampant corruption is one of the reasons why the country's economy is in such a mess. German companies have taken advantage of the system for years in order to secure lucrative deals.
Miza and fakelaki are the lubrication that keeps the Greek economy running smoothly. Fakelaki -- literally "small envelope" -- is a payment used when Greeks need to be treated by a doctor or are having trouble with a tax auditor.
Miza, on the other hand, is the money that doesn't fit into a small envelope and requires something bigger, like a suitcase, or when the cash needs to be squirreled away in an account in one of the world's many tax havens. Without miza -- i.e., bribes -- virtually no foreign company could do business in Greece. Large government contracts are particularly prone to miza.
These deals often allow millions to flow via shell corporations around the world and back into the pockets of industrialists, civil servants, the military and politicians. Meanwhile, the payments are usually declared on the company's books as commissions for negotiating contracts. And German industry is one of the major players in the game of miza Monopoly.
Germany is one of Greece's leading trading partners. Last year, Germany exported goods worth €6.7 billion ($8.5 billion) to Greece -- compared to a volume of imports of only €1.9 billion. But what methods are used to achieve this enormous surplus?
According to the US Securities and Exchange Commission, for example, German carmaker Daimler has paid miza in past years to pave the way for vehicle deliveries to Greece. And even Germany's national railway operator Deutsche Bahn apparently resorted to bribes to win an underground railway contract in the run-up to the 2004 Olympic Games in Athens. To clinch the deal, a six-digit sum was reportedly given to a Greek decision-maker via an adviser. Transparency International rates Greece as the one of the most corrupt countries in Europe.
Such business deals are highly lucrative -- even with miza. "Anyone who pays bribes to get a government contract can pad his margin with a few extra million," says one investigator. "The excessive prices are of course shouldered by taxpayers."
This man must know what he is talking about -- he's been investigating for years the Siemens corruption scandal, in which a double-digit million euro amount was allegedly siphoned off for kickbacks in Greece. The Siemens branch in Athens reportedly relied on such sums to fuel the company's business deals in Greece until the year 2006. This included contracts with the former state-owned telecommunications company OTE, surveillance and security technology in connection with the 2004 Olympic Games, and underground railways.
Investigators into the Siemens scandal have found that the company's Greek branch needed an annual slush fund of some €15 million. To secure the €500 million OTE contract alone, the firm allegedly paid €35 million in miza in the late 1990s. At Siemens headquarters in Munich, they spoke with great admiration of their branch in Athens for years -- hardly any other national subsidiary had delivered such impressive results.
Even politicians in Athens have allegedly benefited from the deal. According to statements made by company executives involved in the payoffs, up to 2 percent of the revenues from the Siemens Hellas telecommunications division were paid to the two main political parties, the Panhellenic Socialist Movement, better known as PASOK, and the conservative New Democracy. In Athens one never knows which government will remain in office -- or for how long. Both parties have denied accepting any payments.
http://www.spiegel.de/international/europe/0,1518,693973,00.html#ref=nlint
Men never do good unless necessity drives them to it; but when they are free to choose and can do just as they please, confusion and disorder become rampant.
Nicolo Machiavelli.
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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