Baltic Dry Index. 3379 +27
LIR Gold Target by 2019: $3,000.
"There is more fraud out there, and everyone knows it: front-running, manipulation of the commodities markets, trading ahead of interest-rate moves, hidden losses, Enron-esque accounting, Ponzi schemes in the precious-metals markets, you name it. We gave these people nearly a trillion bailout dollars, and no one knows what service they actually provide beyond fraud, gross self-indulgence and the occasional transparently insincere public apology."
Matt Taibbi.
http://www.rollingstone.com/politics/news/;kw=[3351,136554]?RS_show_page=2
We open today with the UK voters heading to the polls, Greece's new serfs heading to the barricades, and the ECB's largely irrelevant members headed to Lisbon to leave interest rates unchanged and to issue yet another fatuous explanation of what in their dreamland version of reality, won't happen next in Portugal and Spain. After their U-turn earlier in the week to take Greek junk bonds at their rescue window, the ECB has lost the last shred of credibility about being an independent central bank, free from political manipulation. Below, the German media correctly sum up the Euro on a downward death spiral. After 10 years operating as a faux D-Mark, the rest of the Euros short life will be as a Peseta, Lira and Drachma.
"If you misprice risk, don't come looking to us for liquidity assistance. The longer this goes on and the more risky positions are built up over time, the more luck you need."
Axel Weber. Davos 2007. The next ECB President?
The conservative daily Die Welt writes:
"With an eye on Greece, the ECB has unceremoniously announced that it will now accept state bonds that the rating agencies have classified as junk. It might sound like merely a technical detail, but it also represents a significant sin. ECB President Jean-Claude Trichet has made it clear to the entire world that his words carry no more value. At the beginning of April, he pledged that the securities of no country would be given preferential treatment. But now the ECB has given a free ticket to all countries that are deficit offenders. In doing so, the bank has lost its innocence."
"The consequences are dramatic. How is the ECB supposed to justify its actions when it raises interest rates to fight inflation, even when that simultaneously hurts its program for Greece? The whole purpose of having a central bank is to watch over the savings of a population and to guarantee the stability of its currency's value. If people lose their faith in it, they will cease to make long-term plans. But if the ECB president can throw important principles out the window within just a few weeks' time, how should the euro continue to remain stable for decades?"
"Europe's politicians and central bankers have failed to answer these questions. They put out the blaze in Greece knowing full well that there wouldn't be enough water left for Spain, Portugal and Italy. And, in the crisis, they have also sacrificed the credibility of almost all EU institutions, from the European Commission on down to the central bank. These are the true costs of rescuing Greece."
http://www.spiegel.de/international/europe/0,1518,692966,00.html#ref=nlint
After yesterday's horrifying scenes from Athens, it's pretty obvious that the Greek part of the bargain, the draconian austerity measures, will never be fully implemented as announced. So where does that leave Portugal and Spain who both need similar, if far larger, Greece type bailouts ASAP. Where does it leave the Frankfurt ECB, who throughout the Greek rescue were irrelevant to the paymasters in Berlin? The Euro now exists just as long as it suits Berlin's purpose. With Greece the outlier for Portugal, Spain, Italy, the UK, Japan and eventually the USA, the demise of fiat money in the decade ahead, if in fact we have that long, portends immense societal change, even if most countries will be spared Athens mayhem and murder. Stay long precious metals. At some point ahead the fiat currencies will re-link to a precious metals clearing, mechanism. Rothschild style fractional reserve banking seems to have met its match once central banks delinked from gold or silver, and papering the public became the only game in town.
David Rosenberg: Euro Breakdown Could Drive Gold to $3,000
Wednesday, 05 May 2010 11:49 AM
Gluskin Sheff analyst David Rosenberg says the breakdown of the euro could well drive the price of gold to $3,000.
"The case for gold heading to $3,000 an ounce is getting stronger by the day," Rosenberg writes in a note to investors.
"The euro has already broken below 1.30 to the U.S. dollar and there is plenty of room for additional decline going forward."
"It's only at a one-year low — wait until it moves to a decade low."
The European Central Bank, Rosenberg notes, has been forced to water down its charter as it permits sub-investment grade Greek bonds as collateral.
"Sadly, the central bank is not a remake of the Bundesbank and the Euro is less of a "hard currency" than its architects could have ever envisaged a decade ago," Rosenberg says. "Now there is talk that the ECB is contemplating a quantitative easing plan."
"Contagion risks" from the Greek financial crisis loom, "and there are simply not enough trees on the planet that can provide enough paper currency to backstop countries like Portugal and Spain," Rosenberg says.
"And let's not forget about Italy — its public finances are less dire but still fragile"— all of which make this a great time to buy gold.
Gold prices fell for a second day Wednesday as a possible downgrade to Portugal's debt added to troubles for Greece and the euro, which slid further against the U.S. dollar.
http://moneynews.com/Headline/Rosenberg-Euro-Gold-3/2010/05/05/id/357940?s=al
We end today's shortened LIR update with significant news from the Gulf of Mexico. One oil leak down two remaining to go. Below Bloomberg covers the latest from BP.
BP Stops One Leak From Gulf of Mexico Oil Well
May 5 (Bloomberg) -- BP Plc stopped one of three oil leaks from its well in the Gulf of Mexico, advancing efforts to end a spill after a drilling rig sank last month, the U.S. Coast Guard said.
Crews successfully closed a valve installed yesterday, stopping leakage from a section of drill pipe severed from the well when the rig sank, John Curry, spokesman for London-based BP, said today. There is no change in the official estimate that the well is leaking 5,000 barrels of oil a day, he said.
BP is planning to have an underwater containment structure on the well working by May 10 that would capture oil from the largest leak and pipe it to a ship on the surface, Doug Suttles, chief operating officer of exploration and production for the company, said at a press conference today in Robert, Louisiana.
The Deepwater Horizon rig, which BP leased from Geneva- based Transocean Ltd., exploded on April 20 and sank two days later with the loss of 11 crew. Oil leaking from the well may, by the third week of June, surpass the amount spilled by the Exxon Valdez in 1989.
-----The spill is a "far more serious" threat to the oil industry than the 1989 Exxon Valdez oil spill off the coast of Alaska, Barclays Capital analysts said in a note to clients today.
"A failure in the implementation of upstream technology raises more difficult issues than failures in the transportation midstream, particularly when they occur at the cutting edge of frontier province developments," a team of Barclays analysts that includes Paul Horsnell and Kevin Norrish said in the note.
Depth, Pressure
The well is 5,000 feet underwater, at 42 degrees Fahrenheit (6 degrees Celsius) and under pressure of 2,300 pounds per square inch, Dave Clarkson, BP's project manager for the underwater containment plan, said today in a conference call.
In those conditions, explosive natural gas trapped in the oil could expand and freeze as it rises to the surface in a mile-long metal pipe, Clarkson said. BP plans to circulate warm surface water and antifreeze around the pipe to prevent that, he said.
Asked which part of the procedure is most worrisome, he responded, "I'm worried about every part." An explosion won't occur, he said.
BP reckons that oil, gas and water will rise naturally up the pipe into a drill ship, which will separate the three substances. It will flare the gas, pump clean water over the side, and hold the oil for processing at a BP refinery, Clarkson said.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acl6VYs_6LeY
Below, the ever excellent website The Oil Drum covers the issues involved. Click on the comments for some of the best informed industry assessments on BP's chance of success with it's dome.
Comments on Some Recent Oil Spill News Items, Including the Dome
Posted by Heading Out on May 4, 2010 - 11:25am
-----The steel and concrete containment dome that is the first of the three systems that BP hope will be able to cap the leaking riser has been built and will be shipped out today. There are three points at which the riser is leaking oil. The main leak is some 600 ft from the well head apparently. Part of the concern as to how well it will work, even if it does get put in place by the end of the week, lies with the relatively soft seabed at the point where the cap will be placed.
Nate Hagens has a good description of what is intended, showing the plan for capping each leak.
http://www.theoildrum.com/node/6430#more
At the Comex silver depositories Wednesday, final figures were: Registered 51.66 Moz, Eligible 64.99 Moz, Total 116.65 Moz.
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.
Yes it's back to the great vampire squids again today, as outrage in America morphs towards retribution. "Don't get mad get even," was a favourite saying of Robert Kennedy. We haven't seen anything yet, I suspect, as more and more details of life in Goldman flood out.
"Are you now, or have you ever been a member of Goldman Sachs?"
With apologies to Senator McCarthy.
Why a Criminal Case Against Goldman Sachs Matters and Why Charges Could Stick
By PAM MARTENS
----- Change appears to be swallowing Goldman Sachs. It began quietly moving out of its storied and staid headquarters at 85 Broad last Fall to flashy new multi-billion dollar digs at 200 West Street, including a 54,000 square foot gym (roughly the size of 20 homes for average Americans; those who can still afford one after the Wall Street pillage). And after the release of internal emails by the SEC and Senate, Goldman looks more like a sleazy boiler room pump and dump operation in drag than an investment bank (in drag as a bank holding company).
----- It all sounds eerily familiar to the wealth transfer maneuver by Goldman Sachs Trading Company in the asset bubble of 1928. The Trading Company was a closed end fund (called a trust in those days) that Goldman Sachs created and offered to the public at $104 a share, stuffed with conflicted investments while paying Goldman a hefty management fee, only to end up a few years after the 1929 crash trading at a buck and change. On May 20, 1932, Walter Sachs, President of the Goldman Sachs Trading Company, was grilled by the Senate Committee on Banking and Currency. The implication was the same as the current round of Senate hearings: Goldman royally fleeced its customers to line its own pockets.
Security lawyers who watched the Senate Permanent Subcommittee on Investigations grill Goldman Sachs employees on April 27, 2010 hopefully were more eagle-eyed than investment guru Warren Buffet, who is now echoing the same refrain as Goldman CEO Lloyd Blankfein, that the firm has done nothing wrong and is being unfairly pummeled. Never mind that Mr. Buffet has $5 bilsky invested in Goldman on which he is earning 10 percent. (Goldman employees like to refer to $1 billion in their emails as a bilsky when bored of characterizing what they're selling to clients as crap or sh---y deals.)
-----
To a lay jury, this might fly as legitimate conduct; something akin to a short order cook who shops for the groceries, whips up the omelets, throws a little parsley garnish on the plates, serves the diners, and tallies up his P&L at the end of the day. If he overbought on ground beef, he might have to have three days of specials like Shepherd's Pie, Hungarian Goulash, and Spaghetti with Meat Sauce to "flatten" his position and "get closer to home." Nothing criminal going on here; just good ole American know-how and innovative workouts.
The major problem with this analogy, and most others in defense of Goldman, is that the short order cook wasn't trying to pass off E. coli beef for prime rib. Another problem for Goldman is that embedded in the heart of every securities law is the principle that the customer must be treated honestly and fairly and any mechanism or device to deceive, manipulate or defraud is patently illegal. Remember, securities laws grew out of the ingrained Wall Street corruption exposed in two years of Senate hearings in 1932 and 1933.
It is difficult to see how one can be engaging in proprietary trading for the benefit of the firm at one moment, acting in an agent capacity for the benefit of the customer the next moment, and creating investment products designed to fail on a latte break. Sparks, Birnbaum and Swenson all had principal licenses to engage in investment banking activities like underwriting as well as the Series 7 license to trade securities. Mr. Tourre had only the Series 7 and Series 63 licenses to trade securities. He had no principal license according to his regulatory file available online. That could be a big legal issue for Goldman as a firm, for Mr. Sparks who supervised him, and for the controlled-demolition investment product he assisted in creating without a principal license. Failure to supervise is one of the first areas security lawyers review in assessing a firm's liability.
----- Clearly, Goldman's defense is being structured around the idea that anything goes if you call yourself a market maker. That seems like a fairly lame defense when your shareholders have lost $20 billion in market cap despite your top tier law firms playing hardball and the Oracle of Omaha waving pompoms.
More.
http://www.counterpunch.com/martens05042010.html
"Are you now, or have you ever been dumb enough to be a client of Goldman Sachs?"
European Investment Banker Application Form, 2010.
Why A UK Hung Parliament is likely. Stay long precious Metals.
http://www.ukpollingreport.co.uk/blog/
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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