Wednesday 30 June 2010

More Than a Wobble.

Baltic Dry Index. 2447 -35
LIR Gold Target by 2019: $3,000.

---the US now confronts a dilemma first identified in 1961 by the Belgian economist Robert Triffin.* To supply the world’s risk-free asset, the country at the heart of the international monetary system has to run a current account deficit. In doing so, it becomes more indebted to foreigners until the risk-free asset ceases to be risk-free.

Financial Times. June 29, 2010.

Global stock markets were hammered yesterday, from China to America and all across Europe. Even the Fed’s preferred method of US market manipulation, the high frequency trading programs of the crony great vampire squids, were overwhelmed. A good case can be made that they are they problem now, having become the only game in town on the far side of the Atlantic. Divorced from the reality of underlying cause in the valuation of US stocks, all they do is try to front run the order flow in the supply of liquidation orders or new entry orders, pulling their orders in the opposite direction. Result, a normal liquidation in response to changing economic fundamentals becomes a runaway rout or buying feeding panic of greed, with 90% up or down days by volume, now become the norm in the once great investment markets of America. Until fundamental change comes to the stock casinos of America and universal price discovery and reporting are restored, the US stock markets are no place for the public to be involved, though US stocks in particular, and most stocks in general, are no place to be putting money with the BDI the ECRI Weekly Leading Indicators, and Us consumer confidence numbers all suggesting a US and/or global recession right ahead. Below, Rupert Murdoch’s WSJ does its best to make a silk purse out of a pig’s ear.

“What me worry?”

Mad Magazine.

JUNE 30, 2010

Fear of a Stall Hits Market

Stocks, Bond Yields Dive on Bad News From Consumers, China, European Banks

American stocks and bond yields fell sharply as concerns mounted that the economy might be in for a slowdown.

The Dow Jones Industrial Average fell 2.6% back below 10000 on slumping U.S. consumer confidence, the downward revision of a Chinese economic indicator and worries about the health of Europe's banks. Yields on 10-year Treasury notes fell below 3% to their lowest level since April 2009, a sign investors were seeking out safe investments.

The Conference Board, a non-profit research group, reported Tuesday that consumer confidence dropped in June, wiping out gains from the previous two months. The index fell to 52.9, down sharply from a downwardly revised 62.7 the month before, with an increasing number of households saying jobs were "hard to get."

Earlier in the day, the Conference Board downwardly revised a leading indicator of Chinese economic growth. Investors were also jittery about the expiration of a European Central Bank program to extend 12-month financing to European lenders.

A double-dip recession is still widely viewed as unlikely. But the drop in confidence is just the latest sign suggesting the economy could lose steam in the second half of 2010 and perhaps grow more slowly than in the first half.

----But gathering signs of economic headwinds suggest future job growth could be slim.

Among these headwinds: signs that the housing sector is heading into a new downturn, and financial conditions that have turned less supportive of growth as stock prices decline, the dollar strengthens and credit markets struggle. The global backdrop has grown more uncertain as European governments such as the U.K. and Germany turn their attention to closing budget deficits.

------President Barack Obama expressed optimism about the outlook after a morning meeting with Federal Reserve Chairman Ben Bernanke. Mr. Obama said he and Mr. Bernanke "share the view that the economy is strengthening," noting that the U.S. has gone from losing 750,000 jobs per month last year to five months of job growth.

One thing weighing on the economy is the housing market, which, after stabilizing, is weakening again as government support disappears.

------Fed officials believe the positives are likely to outweigh the worries and keep the recovery on track, putting the Fed in a position to begin raising short-term interest rates some time far down the road. A stumble would pose a dilemma for Fed officials. Interest rates are near zero, so they lack the traditional tool of interest-rate cuts to combat a faltering economy.

The Obama administration is still pushing to advance an extension of unemployment benefits for laid-off workers now frozen in the Senate. House Democrats failed Tuesday in a renewed effort to pass an extension of unemployment benefits.

The housing market has served as a reminder of the potential impact of removing federal support in a fragile economy. In May, after home-buyer tax credits expired, the numbers of new homes on which builders broke ground fell a seasonally adjusted 10%, and new home sales plunged 33% to an annualized rate of 300,000—the lowest level on record.

The loss of stimulus funding is also hitting state and local governments, which are facing a combined budget deficit of some $137 billion this year and $144 billion in 2011. Some states have already gone through most of the federal education funds earmarked for the 2009-1010 and 2010-2011 school years. With no more money forthcoming, they've been cutting services and are firing tens of thousands of teachers.

Who in their right mind would invest in a NYSE stock and directly contribute to Ebenezer Squid’s next telephone number bonus?

Below, China’s stock market look’s over priced relative to growth prospects too. Who needs the squids HFT programs directly picking an investor’s pocket, when the stocks of Beijing’s largely command economy yo-yo to political decisions in Beijing?

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

No upside to China stocks as credit tightens, strategist says

June 29, 2010, 7:18 p.m. EDT

HONG KONG (MarketWatch) -- Chinese stocks will continue to trend lower in the second half of the year, pressured by tighter lending policies and a gloomy global outlook, according to a leading Hong Kong-based strategist.

Andrew Ferris, senior investment strategist for Asia at BNP Paribas, says the sharp sell-off in Shanghai on Tuesday, which saw China stocks skid to a 14-month low, is in line with the overall weakening trend that's been in place since the start of the year.

He believes asset prices are likely to remain under pressure until Chinese authorities ease up on their current tightening campaign -- something that won't happen for some time.

"They are not going to let go quickly or easily," Ferris said referring to the determination of Chinese authorities to push ahead with recent administrative measures to cool credit growth.

"China will continue to have tight monetary policy until the end of year," he added.

Beijing avoided using interest rates to slow lending and instead lifted the ratio of reserves that banks must set aside as deposits in three separates increases so far this year. Administrative measures to tamp down lending to overheated sectors such as real estate were also enacted.

In Tuesday's action in China, the Shanghai Composite tumbled 4.3% to end 2,427.05, its weakest finish since April 2009. The index had already entered into technical bear-market territory, having already declined 23% year to date before Tuesday's sharp losses.

The Shenzhen Composite Index, tracking China's No. 2 equity market, also sold off Tuesday, dropping 5.4%.

Ferris believes official figures showing China's economy grew at an annualized 11.9% in the first quarter masked an underlying deterioration in the economy -- with the government numbers appearing overly upbeat because of a weaker comparison base in the year-earlier period.

Below, the FT picks up on the BIS report that as good as said many EU banks are toast. In the ever so polite, jargon filled world, in the two handed writings of the BIS, the BIS warns of coming time of unmarketable governmental debt. There goes the EU banking neighborhood in effect. Will the Bundesbank really U-turn and allow the ECB to print and monetise all of Europe’s dodgy banks? The BIS doesn’t think so either, they fret. Stay long precious metals, another Lehman is looming into sight the BIS apparently thinks.

"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."

President F.D. Roosevelt, 1933

Bank fragility means recovery remains precarious

By John Plender Published: June 29 2010 18:09 Last updated: June 29 2010 18:09

After the Group of 20 meeting in Toronto and the passage of the US Financial Reform Bill, global economic recovery ought by rights to be in the bag. Yet the reality is otherwise. Like the fabled plane in the second world war, the global economy is limping along on a wing and a prayer, not least because the world’s debtor and creditor countries cannot agree on the way out of the present bind. In the meantime the financial system remains perilously fragile.

The onset of the Greek sovereign debt drama and the renewed funding difficulties of European banks has taken the crisis into new and challenging territory where, to change the metaphor, there is precious little left in the policymakers’ locker. As the newly published annual report from the Bank for International Settlements points out, Greece highlights the possibility that heavily indebted governments may not be able to act as buyers of last resort to save banks in a new crisis. If the debt of the government itself becomes unmarketable, the BIS adds, any future bail-out of the banking system would have to rely on external help. Yet where will the help come from?

-----The picture of the banking system painted by the BIS is also disturbing. While banks have returned to profit and strengthened their capital ratios, new capital injected into banks has not quite matched losses revealed during the crisis. The profits are overly dependent on poor quality revenue from fixed income and currency trading, while in Europe there are doubts whether all crisis-related losses have been recognised. Meanwhile, the default risk on sovereign debt is not confined to Greece.

The European banking system would need more capital even if there were no uplift in the regulatory capital requirements in prospect from the impending Basel III regime. Yet too many investors, from sovereign wealth funds to conventional institutions, have burned their fingers advancing fresh capital to banks to be willing to put up more for such shaky prospects. Nor will fiscally stretched governments rush to pump more money into the political equivalent of a leper colony.

It is an unfortunate fact that the global economy remains hostage to the bankers. A variety of worthy reforms are now in place in the US and Europe, not all of them relevant to the causes of the crisis, not all of them tried and tested. And policymakers have conspicuously failed to take the measure of the big issue that matters: banks that are too important to fail, in a market that has become even more concentrated because of shotgun marriages and bail-outs.

-----So where does this leave us? In the middle of an unprecedented and unnerving global experiment is the short answer.

------The dollar’s role as the pre-eminent reserve currency is not at issue. Yet as Francis Warnock points out in a paper for the Council On Foreign Relations, the US now confronts a dilemma first identified in 1961 by the Belgian economist Robert Triffin.* To supply the world’s risk-free asset, the country at the heart of the international monetary system has to run a current account deficit. In doing so, it becomes more indebted to foreigners until the risk-free asset ceases to be risk-free.

The end-game to Triffin’s paradox is a global wholesale dumping of US Treasuries.

We end for today with BP news, BP appears to be dodging a bullet from Hurricane Alex and from Anadarko’s attempt to go totally AWOL on their share of damages. The latest revelations would warm the cockles of even the stoniest US tort lawyer’s heart. Who said there was honour among thieves? Thankfully that’s what lawyers are for. Ominously, hurricane Alex is the first Atlantic June hurricane since 1995. 1995 as I recall, was the year when God managed to line up 4 Atlantic hurricanes at the same time, although thankfully not all of them made landfall. The models show hurricane Alex passing into Mexico slightly south of the US border, as a dangerous but modest category 2 storm. BP finds itself trapped in an off-scale category 5.

Exxon or Shell should buy BP for £88bn, says analyst

BP'S share price fell by a further 2pc, after a prominent City expert suggested it should be bought by US rival Exxon Mobil in the wake of the Gulf of Mexico oil spill.

By Rowena Mason, Energy Correspondent. Published: 10:54PM BST 29 Jun 2010

Fred Lucas, an energy analyst at JP Morgan Cazenove, speculated that Exxon or Shell could swoop on the beleagured British oil giant for approximately £88bn. Exxon is the most financially strong oil company, he said, adding that it could make a cash and stock offer while spinning off $50bn (£33bn) of refining and marketing assets.

"We must emphasise," Mr Lucas adds in the note, "that this is our idea and it is only an idea."

The mooted 473p offer price is 30pc less than the £123bn the company was worth before the Deepwater Horizon rig exploded killing 11 men and triggering a catastrophic leak on April 20.

However, it is substantially more than the current £57bn market value of the oil giant, which has slipped from Britain's biggest company to the fifth behind Shell, HSBC, Vodafone and GlaxoSmithKline.

BP has already spent $2.65bn on the clean-up and committed $20bn to environmental compensation. The cost of additional lawsuits, pay-outs to Gulf Coast residents and punitive fines are likely to add many more billions to these bills.

-----The bad weather is already hampering efforts to capture oil coming from the leak and operations to clean up the growing slick off the southern US coast.

Oil skimming ships were sent back to Louisiana amid strong winds and big waves - although the storm itself will not hit the affected region. On Monday, BP said its plan to increase oil being captured has been delayed, but current equipment piping oil to the surface remains in place.

However, operations continued nearer to shore with a plan to remove up to 800 unhatched turtle eggs to protect the sea creatures from the effects of the oil.

Earlier in the day, a Facebook group calling on people to boycott oil from BP service stations was removed from the social networking website but later reinstated. It grew in size to almost 750,000 members after people thought the site was being censored.

Anadarko approved key BP well designs

By Carola Hoyos in London Published: June 29 2010 22:33 Last updated: June 29 2010 22:33

Anadarko, the US partner to BP in its ill-fated Macondo well in the Gulf of Mexico, approved several key aspects of the UK company’s designs for the project that have been sharply criticised by Washington lawmakers.

Anadarko, which owns 25 per cent of Macondo, also knew of significant operational decisions made by BP that some lawmakers believe could have been a factor in causing the explosion at the well, according to senior executives at both companies.

Anadarko attempted this month to distance itself from BP by saying the oil spill at the well had been preventable and was likely because of the UK company’s “reckless decisions and actions”.

However, both Anadarko and BP have confirmed to the FT that the US company was aware of design choices that lawmakers, who have accused the UK company of cutting corners to cut costs, have criticised.

These decisions include the choices for how it lined the well and how many so-called centralisers – devices that stabilise a well before it is cemented – were used.

-----John Christiansen, Anadarko’s spokesman, said: “What we knew was that the design, the long string and the use of centralisers all met industry standards if executed correctly.

“The problems were caused by BP’s execution of each of these.”

BP, in a statement to the FT, explained that it gave or made available to its co-owners reports and other documents that showed the well design, changes to the well design, and identified major well control events encountered during drilling operations and that personnel from the co-owners engaged in periodic communications with BP personnel about well design and other issues related to the well.

We have reached the end of the second quarter and end of the first half of 2010. Normally we could expect all the “friends of the Fed,” to come in near the close and move the US stock markets sharply higher in accordance with the Fed’s attempt at recreating the Greenspan stock bubble of the 1990s. Unfortunately, barring a dramatic U-turn by the ECB, the ECB is about to pull the plug on the ECB’s largest bank liquidity program ever. Some 442 billion euros, or so they say. Spanish banks are going nuts at the prospect of going quite rapidly bust thereafter. German bankers are looking deathly ill too. In view of the above, the Friends of the Fed might not be quite so willing to do the Fed’s dirty work of rigging US markets higher. Who wants to be long anything except gold, ahead of America’s Independence Day long weekend. If the ECB doesn’t change, Spain will be the new Greece by the end of July.

"We shouldn't pour cold water on everything. We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

At the Comex silver depositories Tuesday, final figures were: Registered 49.58 Moz, Eligible 64.47 Moz, Total 114.05 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, just alleged Russian spies, although if the court filings are accurate there’s not a lot of doubt that they were Russian agents, even if they seem to have been very loth to actually get on with meaningful spying, rather than just enjoying the American way of life. With very little in the public domain except what the US prosecutors have put there, I expect that this will quickly change in the coming weeks ahead. Below, yet another false British passport was apparently used. Does anyone anymore travel on a real one?

"He alone could have led Russia into the enchanted quagmire; he alone could have found the way back to the causeway. He saw; he turned; he perished. The strong illuminant that guided him was cut off at the moment when he had turned resolutely for home. The Russian people were left floundering in the bog. Their worst misfortune was his birth: their next worst his death."

Winston S. Churchill. On Lenin.

Russian spy 'held fake British passport'

One of the 10 people arrested in the United States for allegedly being a Russian spy held a fake British passport, according to US government papers

Published: 4:14PM BST 29 Jun 2010

The FBI arrested 10 people for allegedly serving for years as secret agents of Russia's intelligence service, the SVR, with the goal of penetrating US government policy-making circles.

It is alleged that they were tasked with gleaning intelligence on nuclear weapons, foreign policy and Congressional politics.

US Department of Justice papers said that Tracey Lee Ann Foley travelled on a "fraudulent British passport prepared for her by the SVR". Foley was arrested in Boston on Monday.

A Foreign Office spokeswoman said: "We have seen the reports and, obviously, we will look into them."

President Barack Obama declined to comment on allegations of Russian spying in the United States.

The 10 arrested are accused of conspiracy to act as unlawful agents of a foreign government. Nine of them also face a charge of conspiracy to launder money.

An 11th suspect named "Christopher R Metsos" was arrested on Tuesday in Cyprus.

It also emerged that one of the 10 was in contact with a subsidiary group of Oxford University.

-----The case echoes revelations earlier this year in which forged British passports were allegedly used by Israeli agents in the killing of Hamas leader Mahmoud al-Mabhouh in Dubai.

Officials in Dublin are also investigating whether a false Irish passport was allegedly to be used by members of the spy ring.

The Irish Government said officials had been warned about a link to the so-called "deep cover" operation.

Court papers claimed one of the defendants, Richard Murphy, was told by his handlers to travel from the US to Rome where he would be given the forged Irish documents.

-----Many of the details of the criminal complains read like an outline of a John LeCarre novel.

A defendant known as "Anna Chapman" allegedly communicated with a Russian official in Manhattan in January as she sat in a coffee shop and he pulled up outside in a van. The FBI alleges that they used a wireless network via paired computers.

Two months later, a similar communication allegedly took place when she was in a bookshop and the Russian official, based at Russia's mission to the United Nations, was outside with a briefcase.

Chapman was later approached by an FBI agent posing as a Russian who told her: "My name is Roman, I work in the consulate."

He told her to give a false passport to another agent and that she was to introduce herself her by saying: "Excuse me but haven't we met in California last summer?" The other agent was to reply: "No, I think it was in the Hamptons."

------Court papers allege that the defendants led ordinary suburban lives, "deepening" their false identities by taking ordinary jobs, living as married couples, having children and even trying to buy homes in the US.

-----Experts have expressed their astonishment at the scale and dedication of the scheme allegedly undertaken by SVR.

Oleg Kalugin, a former KGB general who was a Soviet spy in the United States in the 1960s and 1970s under “legal” cover as a diplomat and Radio Moscow correspondent, said he believed the project was more ambitious than similar attempts by spies during the cold war.

He told the New York Times: “It’s a return to the old days, but even in the worst years of the cold war, I think there were no more than 10 illegals in the U.S., probably fewer.”

Vladimir Kolesnikov, deputy chairman of the security affairs committee in the lower house of Russia's parliament, said the arrests signalled that some quarters of Washington opposed warmer ties with Russia.

"Regrettably, there are people in America burdened by the legacy of the Cold War, the legacy of double standards," he said. "And they react improperly to the warming of relations spearheaded by the presidents. It's a blow to President Obama."

-----He said that US secret agents were active in Russia and suggested that Moscow might respond in kind to Washington's round-up.

"Previously we have quietly evicted some of them," he said. "Now I think we should more actively apply criminal legislation against them."

Russia's foreign minister said Moscow was waiting for a US explanation about the arrests of the 10 alleged Russian spies.

In a statement, Russia’s Foreign Ministry said: “Such actions are baseless and improper.

“It is highly deplorable that all of this is happening against the background of the reset in Russia-US ties announced by the US administration itself.”

Russian spy ring: Barack Obama knew before meeting Dmitry Medvedev

Barack Obama knew about the FBI operation to arrest an alleged spy ring before meeting his Russian counterpart Dmitry Medvedev last week, but did not raise it at the talks, according to the White House.

Published: 12:01AM BST 30 Jun 2010

Robert Gibbs, the White House spokesman, said the revelations, which were condemned by Russia, would not interfere with the effort by both sides to "reset" their relations, which has been pursued ever since Mr Obama became president last year.

The alleged operation was busted just a few days after a warm summit between Obama and Medvedev at the White House at which both sides made an elaborate effort to bury any lingering Cold War tensions.

"I do not believe this will affect the reset of our relationship with Russia," Mr Gibbs said.

"We have made great progress in the past year and a half. I do not think this will affect those relations."

Mr Gibbs said Mr Obama had been briefed on what he termed a law enforcement issue and had known about it before he met Medvedev, but did not raise it at the talks and a joint trip to a burger joint in suburban Virginia last week.

The State Department meanwhile said the 11 alleged Russian agents arrested this week were "vestiges" of "old attempts to use intelligence," but the relationship between the two Cold War foes was still improving.

"We're moving towards a more trusting relationship. We're beyond the Cold War; our relations absolutely demonstrate that," said Phil Gordon, the assistant secretary of state for European Affairs.

That the handling of this roundup is “unusual” is a gross understatement. Since Yeltsin, the “usual” way of handling “spook” cases has been bad publicity, a media expose and immediate expulsion. Does someone have an agenda in undermining Obama-Medvedev détente, or did President Obama really deliberately set out to make President Medvedev look a chump back home ? Did US counter intelligence agents just get tired of a costly, multi-year, multi-agent byzantine operation that appeared to be going nowhere? But if so, why now, why in this manner, and why put so much US counter intelligence tradecraft into the public domain, allowing for all the world’s other intelligence agencies to start to conduct reverse data mining? My guess is that we will soon see a tit for tat response. All the western spooks in Russia must be having a fit. What next, back to termination with ultimate prejudice Berlin and Vienna late 1940s style? Plus, it’s a funny way to go about getting UN cooperation on Iran and North Korea. More, much more to come, I think.

“I believe there is something out there watching us. Unfortunately, it's the government.”
Woody Allen

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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.


Sunspots – A 22 year colder world? (From 2004?)

Spotless Days June 29
Current Stretch:0 days

2010 total: 35 days (20%)
2009 total: 260 days (71%)
Since 2004: 803 days
Typical Solar Min: 485 days

Tuesday 29 June 2010

Austerity. Presidents.

Baltic Dry Index. 2482 -19
LIR Gold Target by 2019: $3,000.

The bastards murdered half my family.

Prince Philip
In room full of press agents, commenting on Russians in 1967, having been asked whether he would consider a visit there.

We start today with the world view from Berlin. What is the point of G-8 and G-20 meetings that cost the hosts a billion dollars, before adding in the damage from the violent anarchists and communists they attract? Below, Der Spiegel on the forgery in Toronto.

"But I don't want to go among mad people," Angela remarked.
"Oh, you can't help that," said Stephen Harper: "we're all mad here. I'm mad. You're mad."
"How do you know I'm mad?" said Angela.
"You must be," said Mr. Harper, "or you wouldn't have come here."

With apologies to Lewis Carroll.

G-20 Differences

Half-Hearted Promises and Mutual Blame

By Gregor Peter Schmitz and Philipp Wittrock in Toronto 06/28/2010

-----In reality, the results of the G-20 summit are much less impressive than Merkel would have the press believe. The expectations for the Toronto meeting had been low -- and they were not exceeded.

Another Weak Agreement

At first glance, the promises of the G-20 nations, which were meeting in this format for the fourth time, sounded impressive. National deficits will be "at least" halved by 2013, according to the summit's closing statement. But the agreement has no teeth, given that it does not foresee any binding mechanisms to make sure that the commitment is kept. Every country will manage its own cost-cutting efforts, with some taking action sooner, others later. The measures will be "tailored to national circumstances," the statement reads.

The discussion of possible new rules for the financial sector was postponed to the next summit in South Korea, which is scheduled for November. Merkel was not able to find sufficient allies to push through a worldwide bank levy or a global financial transaction tax. France and Germany are now working on a EU plan for a financial transaction tax.

The G-20 members may have been united during the crisis, but now they are diverging -- both in terms of regulation and their economic health. National interests have once again become more important than the big picture.

Merkel wants to economize. The British have no other choice but to do so. China is allowing its currency to slowly appreciate against the dollar. And the Americans are expected to continue with their strategy of racking up new debt, at least for the time being.

Divided on Economic Growth

Different countries have "differentiated responses," US President Barack Obama said Saturday. It's a formulation that is intended to save face. Obama insisted that countries shared the goal of "long-term sustainable growth" that creates more jobs.

In the run-up to the G-20 summit, the US and Germany had traded salvoes over their differing approaches to tackling the economic crisis. Obama wants more stimulus spending in Europe to ensure that the fragile economic recovery isn't jeopardized, while Merkel is adamant that austerity measures are the correct response to the European debt crisis.

Already on Friday, at the G-8 summit that preceded the G-20 meeting, Obama had made it clear that he did not want open confrontation over growth strategies, according to sources in the German delegation. Then, speaking at the start of the official G-20 dinner on Saturday evening, Obama praised European efforts to reduce their deficits, something that the German side interpreted as a signal of reconciliation.

He left the dirty work to others, such as US Treasury Secretary Timothy Geithner. "Without growth now, deficits will rise further and undermine future growth," Geithner said. History shows the devastating consequences of a premature end to state stimulus spending, he argued, citing the example of the Great Depression.

This line of argument did not, however, make much of an impact in Toronto.,1518,703235,00.html#ref=nlint

Next, the NY Times covers where austerity Europe is heading, and Ireland is positively booming compared to deadbeat Iceland which still won’t/can’t agree to pay off its debts to Britain and Holland. Well actually, they aren’t strictly enforceable debts of the Icelandic people, who quite rightly are playing the modern game of fiat back against the EU bullies, but that is for another day. Below, Ireland in the poor house on the treadmill to nowhere, trapped in the unloved fiat currency Euro. At some point ahead, like the Greeks, the Irish will figure out the remedy of propping up the banks and a one size fits all German Euro, is worse than the disease.

In Ireland, a Picture of the High Cost of Austerity

By LIZ ALDERMAN Published: June 28, 2010

DUBLIN — As Europe’s major economies focus on belt-tightening, they are following the path of Ireland. But the once thriving nation is struggling, with no sign of a rapid turnaround in sight.

Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.

Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.

Now, the Irish are being warned of more pain to come.

“The facts are that there is no easy way to cut deficits,” Prime Minister Brian Cowen said in an interview. “Those who claim there’s an easier way or a soft option — that’s not the real world.”

Despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

Other European nations, including Britain and Germany, are following Ireland’s lead, arguing that the only way to restore growth is to convince investors and their own people that government borrowing will shrink.

-----“Europe is in a tough bind,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund and now a Harvard professor. “If you want to escape default, the Irish path is the only way to go. But the Ireland experience points to the profound challenges that the current strategy implies.”

Politicians here have raised taxes and cut salaries for nurses, professors and other public workers by up to 20 percent. About 30 billion euros ($37 billion) is being poured into zombie banks like Anglo Irish, which was nationalized after lavishing loans on developers.

The budget went from surpluses in 2006 and 2007 to a staggering deficit of 14.3 percent of gross domestic product last year — worse than Greece. It continues to deteriorate. Drained of cash after an American-style housing boom went bust, Ireland has had to borrow billions; its once ultralow debt could rise to 77 percent of G.D.P. this year.

“Everybody’s feeling quite sick at what happened because things were going so well for Ireland,” said Patrick Honohan, the Irish central bank governor. “But we don’t have the flexibility to do a spending stimulus now. There’s no one who is even arguing for it.”

Mr. Honohan predicts growth could revive to a rate of about 3 percent by 2012. But that may be optimistic: Ireland, as one of the 16 nations in Europe that has adopted the euro as its common currency, is trying to shrink the deficit to 3 percent of G.D.P. by 2014, a commitment that could weaken its hopes for recovery.

-----Wage cuts were easier to impose here because people remembered that leaders moved too slowly to overcome Ireland’s last recession. This time, Mr. Cowen struck accords swiftly with labor unions, which agreed that protests like those in Greece would only delay a recovery.

But pay cuts have spooked consumers into saving, weighing on the prospects for job creation and economic recovery. And after a decade-long boom that encouraged many from the previous years of diaspora to return, the country is facing a new threat: business leaders say thousands of skilled young Irish are now moving out, raising fears of a brain drain.

Below, the latest news from Greece, where austerity is just beginning to be implemented and hasn’t yet really hurt anyone yet, if one ignores the three murdered bank workers killed by arsonist anarchists and communists in an earlier union strike.

Greece hit by fresh 24-hour strike over austerity plans

Tuesday, 29 June 2010 07:38 UK

Another 24-hour general strike is under way in Greece in protest at planned pension and labour reforms.

Trade unions say ferry services and international flights will be disrupted, leaving tourists stranded.

The industrial action comes as the parliament is due to debate austerity measures demanded by the International Monetary Fund and European Union.

They include cutting pensions, raising the retirement age and making it easier for companies to dismiss employees.

Greece has been suffering a severe economic crisis, and the government is imposing a swathe of austerity measures in return for a 110bn-euro (£89bn) bail-out from the EU and IMF.

Blockade threat

After more than six months of austerity measures and industrial strife, the confrontation between the government and the trade unions is reaching a climax, says the BBC's Malcolm Brabant in Athens.

Parliament is to start discussing the proposed reforms on Tuesday, in a debate expected to last more than a week.

The challenge for the trade unions is to get as many people on the streets as possible to convince potentially rebellious Socialist MPs to vote against their own party and defeat the bill, our correspondent says.

He adds that much attention will be focused on the port of Piraeus, where Communist-affiliated unionists plan to prevent ferries from sailing to the Greek islands.

Their strike has been declared illegal, as was a similar blockade last week. Then the government did not enforce the court order, and thousands of tourists had their travel plans disrupted.

The holiday industry was in uproar, claiming that such confrontations did irreparable damage to Greek tourism, which generates almost 20% of national income.

The big question is whether the government will try to break the blockade in order to help the tourists, or do nothing, for fear of aggravating the unions during the period of this crucial debate, our correspondent adds.

Strikes against austerity measures have brought the country to a standstill on several occasions, closing airports, roads and railways.

In other trans-Atlantic news, Canada looks to be heading to get a US style President! After 4 bad presidents in a row south of the border, and with a surfeit of EU Presidents having just strutted their stuff around Toronto, I’d have thought Canadians were smarter than that. Talk about a dumbed down world. Not that Tone Blair and Gordon Brown didn’t do their best to get that result in the UK too. UK’s class war hating socialists just can’t wait to occupy Buck Pal as president on the Zimbabwe model. Thoughtfully, the ever hospitable generous Canadians, laid on lashings of rain to make the Royal couple feel right at home, even if no one knew she was coming and don’t really know why she is there. Ominously for monarchy supporting Brits, Her Majesty said she was glad "to be home." Is the UK Royal Family about to move west from austerity Britain? What does she know that we don’t?

It's a pleasant change to be in a country that isn't ruled by its people.

Prince Philip
To Alfredo Stroessner, the Paraguayan dictator.

Canadians apathetic about visit from the Queen

Almost half of all Canadians believe that the Queen is "a relic" of the country's colonial past and has no role in the country's future.

Published: 7:00AM BST 29 Jun 2010

The poll on Canadian attitudes to the monarchy comes as the Queen and Duke of Edinburgh arrived for a nine-day tour of the country.

"It is very good to be home," the Queen told hundreds of Canadians standing in blustery rain.

However, a Canadian Press Harris-Decima survey of 1,000 Canadians found that 45 per cent of respondents didn't know that the Royal couple were coming and 44 per cent said they would support a referendum on cutting ties to the monarchy.

Tom Freda, director of Citizens for a Canadian Republic, told Canadian Press that the poll showed Canadians were apathetic about the Queen.

"Most Canadians just don't care about the monarchy," he said.

"It doesn't make sense in the 21st century for a country of Canada's stature to share its head of state with another country.

"It's a symbol of Canada's subservience. It's a symbol of Canada's lack of ability to stand alone in the world as an independent nation."

During her 22nd official tour of Canada, the queen will preside over a parade of naval warships in Nova Scotia. The Canadian vessels still bear the initials HMCS - Her Majesty's Canadian Ship. Her visit coincides in part with the centennial of Canada's Navy.

Britain 'might not cope with another bank emergency'

By Sean O'Grady and James Moore</AUTHOR itxtvisited="1"> Tuesday, 29 June 2010

Britain's mountain of debt could leave the country powerless to launch another rescue bid in the wake of a fresh financial crisis, the world's central bankers warned yesterday. Their "club" - the Bank of International Settlements - presented in its annual report a frightening picture of the impact of a second banking emergency on heavily indebted nations such as Britain.

The Bank of England's Governor, Mervyn King, has estimated that the Government has pumped as much as £1trillion of taxpayers' money into the banking system. Billions of pounds were spent part-nationalising the Royal Bank of Scotland and Lloyds Banking Group, as well as fully nationalising Northern Rock, in an attempt to stave off collapse. Measures such as the "special liquidity" scheme propped up other lenders and prevented the system from freezing up.

But a BIS report warned yesterday that repeating these measures could be impossible. It said: "Events coming out of Greece highlight the possibility that highly indebted governments may not be able to act as a buyer of last resort to save banks in a crisis. That is, in late 2008 and early 2009, governments provided the backstop when banks began to fail. But if the debts of the government itself become unmarketable, any future bailout of the banking systemwould have to rely on external help." Central bankers fear Europe is running out of "external backstops" that could step in, other than the US and the International Monetary Fund. This has unnerved capital markets in the EU, prompting some sharp swings in the value of shares and other financial instruments in recent days.

The BIS has previously said that the ultimate calamity - payments systems freezing and cash machines running out of money - was only narrowly avoided when the US investment bank Lehman Brothers collapsed in 2008. A deeper economic slump was averted by nationalising other banks and making loans amounting to $10trn (£6,620bn).

But the BIS report implies that governments may not be able to repeat such a bailout in the event of a second crisis, which some commentators fear could be triggered by another economic shock.

Despite the warnings, the G20 nations significantly eased the pressure on banks this week by delaying the introduction of tougher rules on the amount of capital they must hold to deal with potential crises. The new regulations were planned for the end of this year but are not now due until 2012. Countries will also be given far more leeway inhow the rules must be applied. Critics say this amounts to a watering down of the reforms needed to stave off the sort of disaster the BIS fears.

Stay long precious metals. The last thing our upside down, bankster world needs, is yet another Carter, Bush, Clinton, Bush, Obama, Putin, Mugabe style Presidency in the world. Given the warning from the BIS, destitution lies ahead after the next Lehman. With Spain needing to borrow another 24 billion Euro next month, the next Lehman may be closer than we think.

We end for the day with a trailer sent in by a reader in California. Is getting natural gas from shale using current “fracking” technology, another deep water drilling disaster in slow motion? I have no idea from far away London, but the issues raised need addressing at the highest levels, and fast. Polluting the aquifers risks making much of world short of drinking water, in an age when we are already stretching water resources to the limit.

"Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to," said the BIS.
"I don’t much care where--" said the BOE.
"Then it doesn’t matter which way you go," said the BIS.

With apologies…..

At the Comex silver depositories Monday, final figures were: Registered 50.71 Moz, Eligible 64.22 Moz, Total 114.93 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, just Britain’s former Prime Minister at Heathrow, hired by Scottish Football supporters and a baked bean outfit to welcome home Fabio Capello and the England World Cup football team.


RBS tells clients to prepare for 'monster' money-printing by the Federal Reserv

How do you keep the natives off the booze long enough to pass the test.

Prince Philip
To a Scottish driving instructor, 1995.

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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.

Monday 28 June 2010


Baltic Dry Index. 2501 -01
LIR Gold Target by 2019: $3,000.

"But together we represent some 85 per cent of the global economy, and we have forged a coordinated response to the worst global economic crisis of our time."

President Barack Obama. Toronto June 28, 2010.

Below, after hapless Canadian taxpayers footed a bill for 1 billion CDN to host the G-8 and G-20 summits of the elite, the vainglorious, the incompetent, the irrelevant, the despicable and the downright murderous, money surely that could have been spent better on the poorest and the disabled of Canada, the best that was achieved was to “forge” consensus that adopted the very worst of the European Union’s Herman in Wonderland’s “assymetrical translation.” In effect, in translation, everyone agrees to read the final communiqué as adopting their own position entirely. And for this was a billion dollars of Canadian wealth poured away into the sewers of Toronto. If only the world’s top diplomatic negotiators ever spent 45 hours drafting a solution to Darfur, Israel-Palestine, ending the bankster gambling economy, setting safe standards for deep water oil and gas drilling before we wreck the planet, or getting back to sound money before the crash of the Euro or dollar wipe out 21st century life as we know it. Below, The Telegraph on the forged consensus. Stay long precious metals. Unable to solve the problems of their own countries, these misfits think they are “God’s,” and can solve each other’s problems instead!

In a sign of how much work was involved to forge the G20 consensus, negotiators spent at least 45 hours drafting the summit's final communique.

G20 summit: leaders agree to halve deficits by 2013

Leaders at the G20 summit in Toronto have agreed to cut national budget deficits in half by 2013.

Published: 4:25AM BST 28 Jun 2010

The deadline for stripping debt has been pushed back by 12 months, giving banks more time to adopt tougher rules.

In a reversal from the unity of the past three crisis-era Group of 20 summits, the leaders decided to adopt "differentiated and tailored" policies for each country.

"Our challenges are as diverse as our nations," US President Barack Obama said. "But together we represent some 85 per cent of the global economy, and we have forged a coordinated response to the worst global economic crisis of our time."

In a sign of how much work was involved to forge the G20 consensus, negotiators spent at least 45 hours drafting the summit's final communique.

In the document, the Group of 20 endorsed a flexible timeline for building up higher levels of capital and liquidity, giving some breathing room to banks that say they are still struggling after the global recession.

Stephen Harper, the Canadian prime minister, said the group's richest members should halve their deficits within three years, a timeline that every major G20 country had already committed to before the summit.

The delay marks a victory for banks and countries such as Japan, Germany and France, which said that the shift to stricter rules by 2012 would have imposed huge capital-raising burdens on banks and jeopardise lending and economic recovery.

However, the chief executive of Deutsche Bank warned that too much variance in the timelines could lead to an uneven playing field for banks.

Proposals for a global levy on banks have been dropped, Mr Harper said. Instead, that will be left to individual countries.

Herman Van Rompuy coins new 'EUphemism'

"Asymmetrical translation" is an new European Union phrase coined by its President to spare Gordon Brown's political blushes.

Published: 7:00AM GMT 27 Mar 2010

Herman Van Rompuy came up with the idea, early on Friday morning, after a Franco-German call for an "economic government" horrified the Prime Minister.

"We consider that the European Council should become the economic government of the EU," said the Franco-German text.

To get around the G-word, "ideologically unacceptable" to Britain, but insisted on by Nicolas Sarkozy, the French President, Mr Van Rompuy came up with a novel solution to keep everyone happy.

As a result, the French version of the binding summit text, agreed on Thursday, used the original words "le gouvernement économique".

To spare Mr Brown's feelings, the English text used the more innocuous and less controversial term "economic governance".

"There is no fundamental difference of view, but rather a sensitivity to certain words which has led to an asymmetrical translation," remarked the EU president.

Below, score at least one major victory for the world’s great vampire squids lead by Ben Bernanke and NY’s Ebenezer Squid.

“Proposals for a global levy on banks have been dropped, Mr Harper said. Instead, that will be left to individual countries.”

In European news, the austerity backlash is growing, and we haven’t really imposed any real austerity on the public yet. Below the NY Times covers the beat. Stay long precious metals. Social distress will lead to tax evasion and labour unrest in the second half, I suspect.

Safety Net Frays in Spain, as Elsewhere in Europe

By SUZANNE DALEY Published: June 27, 2010

MADRID — This was the deal that Gema Díaz, 34, thought she had made: When she took a job with this city as a purchasing agent 12 years ago, she knew her salary would be low.

But the income would be reliable. She could expect steady raises, manageable hours, six weeks of vacation, a good pension and the usual benefits — from free health care to subsidized housing.

Now, as Spain embarks on a range of austerity measures, the careful math of Ms. Díaz’s life is coming undone. Her salary is being cut. Her pension does not look so secure. Even the day care for her second child — due in August — will cost more.

“There can be no more illusions about getting help from the state,” said Ms. Díaz, at home on a recent evening in a charmless, government owned complex on the outskirts of the city. “We talk about it all the time. We talk about it with our friends. We talk about it with our family. The fear is the worst part.”

Hers is a story repeated across Europe, fueling the protests and strikes that have tied up airports, blocked highways and, in Greece, even turned deadly.

For millions of Europeans, modest salaries and high taxes have been offset by the benefits of their cherished social model — a cradle-to-grave safety net which, in the recent boom years, seemed to grow more generous all the time.

Now, governments across Europe say they have little choice but to pull back on social benefits, at least for now. Tax revenues are falling; populations are aging and rising deficits are everywhere, threatening the euro. Cutbacks and higher taxes have been announced in Ireland, Spain, Italy, Greece and Portugal. Even France, until recently a holdout, has now proposed to raise the legal retirement age to 62 from 60.

The reforms, however, may be politically explosive. In Spain, they come at a particularly hard time. The austerity measures are hitting a population that is already reeling from the highest unemployment in the euro zone — 20 percent over all, 40 percent for its young people. In some cases, entire families are surviving on the pension of a grandparent.

With each new proposal, the popularity of the Socialist government has plummeted. One recent poll found that more than 50 percent of the population wanted Prime Minister José Luis Rodríguez Zapatero to call early elections, which he would lose by more than 10 percentage points.

When Mr. Zapatero announced a move to stimulate the economy last week — an overhaul of the country’s labor laws, which make it virtually impossible to fire older workers — unions, traditionally his allies, called for a general strike in September, the first one in nearly a decade.

In other news, as austerity bites, the wisdom of fighting never ending wars diminishes, even if they are largely financed by borrowing from Beijing and quantitative easing. Money being fungible, QE allegedly raised to support the economy, or real estate, or car sales, simply allows the diversion of other funding to support the never ending war. In the past, this sort of wealth depleting finance only existed during existential war, e.g. the American Civil War, the UK, Germany and France in WW1, the UK, America and Germany in WW2. Since the abandonment of the dollar-gold link in the Nixonian error of 1971, and the adoption of universal fiat currency ponzi finance, has now become the norm under pinning the western way of life. We have just about run exhausted fiat finance, undone by the greed and theft of the great vampire squids. A great fiat currency financial crisis lies ahead. The G-8 and G-20 summits just blew another chance to try to avert it. Below, the west slowly coming to the realization never ending war is not an end in itself.

JUNE 25, 2010

Corruption Suspected in Airlift of Billions in Cash From Kabul

KABUL—More than $3 billion in cash has been openly flown out of Kabul International Airport in the past three years, a sum so large that U.S. investigators believe top Afghan officials and their associates are sending billions of diverted U.S. aid and logistics dollars and drug money to financial safe havens abroad.

The cash—packed into suitcases, piled onto pallets and loaded into airplanes—is declared and legal to move. But U.S. and Afghan officials say they are targeting the flows in major anticorruption and drug trafficking investigations because of their size relative to Afghanistan's small economy and the murkiness of their origins.

Officials believe some of the cash, if not most, is siphoned from Western aid projects and U.S., European and NATO contracts to provide security, supplies and reconstruction work for coalition forces in Afghanistan. The North Atlantic Treaty Organization spent about $14 billion here last year alone. Profits reaped from the opium trade are also a part of the money flow, as is cash earned by the Taliban from drugs and extortion, officials say.

The amount declared as it leaves the airport is vast in a nation where the gross domestic product last year totaled $13.5 billion. More declared cash flies out of Kabul each year than the Afghan government collects in tax and customs revenue nationwide. "It's not like they grow money on trees here," said a U.S. official investigating corruption and Taliban financing. "A lot of this looks like our tax dollars being stolen. And opium, of course."

Britain will not defeat Taliban and should open talks, says head of Army

Britain and its allies will not defeat the Taliban with military force and should soon open peace talks with insurgents in Afghanistan, the head of the Army said yesterday.

By Jon Swaine Published: 6:00AM BST 28 Jun 2010

General Sir David Richards said he believed the time had come for negotiations with Nato’s enemies to pave the way for the eventual withdrawal of troops.

The Chief of the General Staff said that while British forces would continue to “punish” the Taliban battle by battle, he was “less certain” that an overall victory could now be secured.

There's always been a point at which you start to negotiate with each other," Gen Sir David said. In his “private view” there was “no reason why we shouldn't be looking at that sort of thing pretty soon,” he said.

His comments came soon after the death of another British serviceman in the conflict. The soldier, from 4th Regiment Royal Artillery, had been injured in an explosion in Helmand Province on June 10.

It was the 19th British fatality this month, raising the total close to last June’s record of 22. In all 308 British servicemen have now died in the Afghan campaign.

Another allied soldier was killed yesterday, bringing Nato’s death toll to 91 this month, which was already the deadliest for international forces since the war began in 2001.

In other UK news, the Daily Mail on UK public sector employment practices that make the Greeks look positively efficient. The long suffering taxpayers on both sides of the Atlantic are calling for and expecting change. Since it’s all only fiat money and we electronically print it to bailout banksters, why should anyone care? Stay long precious metals, fiat’s free lunch is coming to its end.

"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

The Great Inertia Sector: A whistleblower’s account of council work where staff pull six-month sickies.

We end for the day with more debunking of the “man made global warming from CO2” pseudo-science. When is “peer review” an attempt to disgracefully mislead the public over already discredited claims. Below, the bogus science specialists at the UN’s discredited, new age socialist, Intergovernmental Panel on Climate Change, still try to defend the indefensible. King Canute was a Newtonian genius compared to the dolts of the UN’s shameless IPCC.

Amazongate: the missing evidence

The story of the IPCC's claims about threats to the Amazon rainforest takes another bizarre turn, says Christopher Booker

By Christopher Booker Published: 6:22PM BST 26 Jun 2010

Last week the beleaguered global warming lobby was exulting over what it took to be the best news it has had in a long time. A serious allegation, which last January rocked the authority of the UN’s Intergovernmental Panel on Climate Change, was “corrected” as untrue by The Sunday Times, the newspaper which most prominently reported it. The reputation of the IPCC, it seemed, had been triumphantly vindicated. The growing tide of scepticism over climate change had at last been reversed. But this episode leaves many questions unanswered.

The “correction”, gleefully quoted by everyone from the WWF and The New York Times to The Guardian’s George Monbiot related to what was known as “Amazongate”. This was one of the series of controversies which exploded round the IPCC last winter, when it was shown that many of the high-profile claims made in its 2007 report had been based on material produced by environmental activists and campaigning groups rather than on proper, peer-reviewed scientific evidence.

------The story of “Amazon-gate” has unfolded through three stages. Step one was the passage in the IPCC report almost identical to one made in a non-peer-reviewed WWF paper of 2000 on forest fires in the Amazon. Specifically the IPCC stated that “up to 40 per cent of the Amazonian forests could react drastically to only a slight reduction in precipitation”. But the only source the WWF in turn had been able to cite to support this was a paper published in Nature in 1999, from a team led by Dr Daniel Nepstad, formerly employed by the WWF but now the “senior scientist” with another advocacy group closely linked to the WWF, the Woods Hole Research Center. Certainly Nepstad’s paper was peer-reviewed: however its subject was not climate change but the impact on the Amazon rainforest of “logging and fire”. It found that “logging companies in Amazonia kill or damage 10-40 per cent of the living biomass of forests”. This had nothing whatever to do with global warming but was cited as the origin of that “up to 40 per cent” figure later used by the WWF and the IPCC.

Step two, when all this was reported last January, was a disclaimer from the WWF, emphasising that its 2000 report did “not say that 40 per cent of the Amazon forest is at risk from climate change”. But it went on to say that the real source for its 2000 paper (which had been “mistakenly omitted”) was another paper, “Fire in the Amazon”. This was also written by Dr Nepstad, as head of yet another advocacy group linked to Woods Hole, the Amazon Environmental Research Institute. Although it was now being suggested that this paper should have been cited as the original source for the IPCC’s claim, it too was not peer-reviewed. Thus, twice over, the IPCC’s claim appears to rest both on non-peer-reviewed science and on studies not related to global warming at all.

So great was the IPCC’s embarrassment over these revelations that the story moved to a third stage. Various scientists, led by Dr Nepstad, suggested further studies which might justify the claim. But an exhaustive trawl through all the scientific literature on this subject by my colleague Dr Richard North (who was responsible for uncovering “Amazongate” in the first place), has been unable to find a single study which confirms the specific claim made by the IPCC’s 2007 report. If one exists we would very much like to see it.

There are several studies based on computer models which attempt to estimate the possible impact of climate change on the Amazon rainforest, but none of these have so far supported that 40 per cent figure. Other researchers in turn have been highly critical of these models, suggesting that they are too crude to replicate the complex workings of the Amazonian climate system and that all observed evidence indicates that the forest is much more resilient to climate fluctuations than the alarmists would have us believe.

Nothing did more to excite attention over the effect of climate change on the rainforest than the exceptional drought of 2005, just when the IPCC’s 2007 report was being compiled. Since then, however, abnormally heavy rainfall in the region has brought disastrous floods to Brazil, both last year and again last week.

In other words there is a real mystery here. Nothing so far made public seems to justify an assertion that the IPCC’s specific claim is “supported by peer-reviewed scientific evidence”. In view of all the controversy this issue has aroused over several months, it might seem odd that, if such evidence exists, it hasn’t been produced before.

THERE also happened in this reign the memorable Charta, known as Magna Charter on account of the Latin Magna (great) and Charter (a Charter); this was the first of the famous Chartas and Gartas of the Realm and was invented by the Barons on a desert island in the Thames called Ganymede. By congregating there, armed to the teeth, the Barons compelled John to sign the Magna Charter, which said:

1. That no one was to be put to death, save for some reason (except the Common People).

2. That everyone should be free (except the Common People).

3. That everything should be of the same weight and measure throughout the Realm (except the Common People).

4. That the Courts should be stationary, instead of following a very tiresome medieval official known as the King's Person all over the country.

5. That `no person should be fined to his utter ruin' (except the King's Person).

6. That the Barons should not be tried except by a special jury of other Barons who would understand.

1066 And All That.

At the Comex silver depositories Friday, final figures were: Registered 51.12 Moz, Eligible 63.26 Moz, Total 114.38 Moz.


Crooks and Scoundrels Corner.

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

No, not BP today, although with the Caribbean tropical storm apparently heading towards Mexico, the Gulf clean up efforts and capture effort will hopefully finally get a break in their favor. This week it’s the turn of the head derivatives idiot at AIG’s Financial Products division in London, that wrote hundreds of billions in uncovered CDS risk derivatives, that spectacularly went wrong and blew up the firm and Goldman Sachs, before the US taxpayers in the form of the FED stepped in to pay off all the CDS derivatives at face. Socialism for the great vampire squids. Thank God it’s only fiat money, and there’s plenty more where that comes from, just don’t say a word to the roughly 1.3 million American’s losing their unemployment benefits this week.

AIG executive to face public grilling by US politicians

One of the executives blamed for bringing American International Group to its knees will this week appear in public for the first time since the insurance giant's near collapse, in what is expected to be a bruising encounter with US politicians.

By Jonathan Sibun and Jamie Dunkley Published: 10:23PM BST 26 Jun 2010

Joseph Cassano, who as head of the AIG's Financial Products division was responsible for overseeing the insurer's activity in subprime mortgage derivatives, is set to be grilled by the Financial Crisis Inquiry Commission on Wednesday.

AIG Financial Products managed $2 trillion (£1.3 trillion) of derivatives, many of which went sour following the subprime mortgage crisis and collapse of Lehman Brothers, the US investment bank, in late 2008.

Mr Cassano was last month cleared of any criminal wrongdoing following investigations by US and UK regulators.

"Perhaps he thinks now is the time that he would be able to speak more freely," Ernest Patrikis, a former AIG general counsel, told Bloomberg.

"It's not going to be a pleasant thing. He owes an awful lot to the people of AIG who were harmed financially."

AIG was saved from collapse after an $182bn bail-out by the US Government in 2008-9.

Goldman Sachs President Gary Cohn, Chief Financial Officer David Viniar and former AIG chief executive Martin Sullivan will also appear at the inquiry, which is looking at the role of derivatives in the financial crisis.

It comes as the US investment bank has received a welcome boost after a Deutsche Bank salesman was cleared of illegally disclosing information to a hedge-fund manager, in the first US lawsuit alleging insider trading of credit-default swaps.

US District Judge John G Koeltl ruled that there was no evidence that Jon-Paul Rorech and Renato Negrin – a former Millennium Partners portfolio manager – had violated laws against insider trading. He added that information exchanged by the pair in telephone calls, which was presented by the Securities and Exchange Commission (SEC) as evidence, was not

The SEC, America's leading financial regulator, accused Mr Rorech of illegally feeding Mr Negrin information so that he could buy credit-default swaps and profit from the announcement of a debt restructuring by Dutch media company VNU Group, according to the civil complaint filed last year. Mr Negrin made a $1.2m (£797,000) profit on the deal.

Both men had a bench trial in April before Judge Koeltl. In a written decision on Friday, he agreed with defence arguments that the information shared was not confidential. "It is far-fetched to think that Mr Rorech could believe that the very information shared with outsiders by his supervisor and the head of high yield capital markets would somehow not be appropriate for him to share," the judge wrote. He said the SEC had not shown that Mr Rorech had any motive to share "inside" information with Mr Negrin.

The news will come as a boost to Goldman Sachs, which has also been charged with fraud by the SEC. The regulator claims Goldman defrauded investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the housing market began to collapse. Goldman has denied the charges.

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873.

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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.


Sunspots – A 22 year colder world? (From 2004?)

Spotless Days June 27
Current Stretch:0 days

2010 total: 35 days (20%)
2009 total: 260 days (71%)
Since 2004: 803 days
Typical Solar Min: 485 days


Saturday 26 June 2010

Weekend Update – June 26, 2010

The New World Order. The Elite Meet.

Baltic Dry Index. 2502

LIR Gold Target by 2019: $3,000

Who are you going to believe, me or your own eyes?

Grouch Marx.

Serfs of the world know your place! And that place isn’t anywhere near Toronto Canada, at least not when the new Kings and Emperors want to strut their stuff for the new world order. Truly a gathering worthy of everything socialist, bureaucratic, undemocratic Brussels strives for. Canada’s Torontonians, get the bum’s rush treatment from their betters. Not to worry, it’s all for their own good, really it is. While Brazil’s President ducks this summer’s event due to disastrous flooding in Northeast Brazil, and Australia’s new Prime Minister ducks the summit too, she only took over mid week after a palace coup, the EU has sent along a full contingent lead by the unelected joke “President” of the EU, Belgium’s obscure and unaccomplished, Herman Van Rompuy, not to be confused with the unelected “President” of the EU, former Maoist, Portugal's Jose Barroso. Both are not to be confused with Jerzy Buzek, who also calls himself a president of the EU.

For puzzled other attendees, like the Presidents of Malawi, Argentina, Indonesia, Japan and South Africa, Van Rompuy is the EU President in the cream coloured suit usually accompanied by the elderly lady in mauve, Barroso is the EU President in the dark suit accompanied by the young lady in a dark coloured trouser suit and striped top. EU President Buzek, “the prof” to his friends in the EU “Parliament”, couldn’t make this summer’s junket in Toronto opting instead to co-chair the National Democratic Institute conference on transatlantic dialogue in Washington on Monday and Tuesday next week. No word yet on what EU lady will be accompanying him. Who needs Toronto and a cast of thousands sharing top billing, when there’s Washington DC at one’s disposal. Needless to say, the long suffering European taxpayers get to pick up all the bills. You really couldn’t make this sort of thing up.

Those are my principles, and if you don't like them... well, I have others.

Grouch Marx.

'Secret' law lets police arrest for failing to show ID near summit

The Ottawa Citizen June 25, 2010

TORONTO — The Ontario government secretly passed legislation giving police sweeping new powers for the duration of the G8 and G20 summits.

Police are now able to jail anyone who refuses to furnish identification and submit to a search while within five metres of a designated security zone in downtown Toronto.

Critics reacted furiously to the new rules, which remained unpublicized until Thursday when a 32 year-old man was arrested in Toronto for refusing to show ID to police.

New Democrat MPP Peter Kormos said Friday the provincial Liberals created a “Kafka-esque” situation where people could be arrested for violating rules they didn’t know existed.

------The Canadian Civil Liberties Association (CCLA) said it was “extremely concerned” that the new measures violate constitutional safeguards.

Nathalie Des Rosiers, general counsel for the CCLA said the changes are contrary to Canadian law.

“You don’t have any obligation to speak to Canadian police, to give your name or the reasons for your existence unless you’ve done something wrong — unless you’re being detained or arrested,” she said. “So on its face, it’s a dramatic change from what our constitution guarantees.”

-----Premier Dalton McGuinty and his Community Safety Minister, Rick Bartolucci, defended the government action.

McGuinty said he attempted to “limit the intrusiveness” of the powers by applying them to a specific zone in downtown Toronto.

------Bartolucci, who is also the minister of correctional services, said the changes were voted in by a special five-member meeting of cabinet on June 14. The regulations were then posted on a relatively obscure government website,

He said the changes were demanded by Toronto police.

----The changes deemed Toronto’s downtown security zone — surrounded by a three-metre fence — a “public work” akin to a hydroelectric station or courthouse. Those fixtures are governed by a 1939 law known as the Public Works Protection Act.

Police can use sound cannons, but with limits: judge
Jill Mahoney

Globe and Mail Update Published on Friday, Jun. 25, 2010 10:50AM EDT Last updated on Friday, Jun. 25, 2010 3:59PM EDT

Toronto Police can use sound cannons during the G20 summit with restrictions, a judge ruled Friday.

The decision by Ontario Superior Court Justice David Brown means officers can use the voice function of Long-Range Acoustical Devices, but not the ear-piercing alert function.

Toronto Police Chief Bill Blair said police will abide by the ruling. Officials said the force would formally change its procedures to comply with existing Ontario Provincial Police protocol by Friday afternoon.

“We are committed that it’s … safe for the people of Toronto, safe for all the people engaged in protests and safe for our officers,” he told reporters.

Chief Blair said police consider the devices communications tools. Toronto Police obtained four in the lead up to the summit.

Trans-Atlantic Tiff Brewing Ahead of G-20 Summit


The G-20 talks in Canada this weekend are to focus on shoring up the global economy but German commentators are not expecting much in the way of agreement. Ahead of the summit Germany and the US have been trading barbs about whether the best strategy is to save or spend.

A trans-Atlantic tiff has been brewing ahead of this weekend's G-8 and G-20 summits as the US and Europe disagree on how to best ensure recovery from the global economic crisis.

Ahead of the meetings at a lakeside resort north of Toronto, US President Barack Obama wrote a letter to the G-20 leaders urging a pro-growth policy in what seemed a thinly veiled criticism of German plans to slash spending in a bid to tackle the country's deficit. It "is critical that the timing and pace of consolidation in each economy suits the needs of the global economy," Obama wrote.

Chancellor Angela Merkel, however, is not backing down from austerity. On Thursday she told German public broadcaster ARD that her center-right coalition was going to "implement the efforts we have agreed to," adding: "I do not think we should relent."

-----Berlin is concerned at the spiralling deficits across Europe, particularly since Germany, Europe's largest economy, has been forced to shoulder the lion's share of the rescue package for Greece and other struggling European countries. To that end, Merkel's government announced sweeping cuts of some €80 billion ($98 billion) over the next four years in order to keep a lid on Germany's deficit.

Obama, meanwhile is concerned that the austerity measures in Europe could choke off the tentative recovery and even plunge the world into a double-dip recession, repeating the mistakes of the 1930s that led to the prolonged Great Depression.

German Finance Minister Wolfgang Schäuble joined the debate this week with a guest contribution to the business daily Handelsblatt, writing that "governments should not become addicted to borrowing as a quick fix to stimulate demand. Deficit spending cannot become a permanent state of affairs."

The tit-for-tat interviews and letters ahead of this year's summit are a far cry from the unprecedented united front just two years ago.

Back in 2008 the G-20 leaders found it easy to agree on a response to the global economic crisis by assembling giant stimulus packages to restart growth and financial rescue plans for the frozen banking system. Now that financial meltdown has been averted and economies are tiptoeing towards renewed growth, divisions are opening up on how best to proceed.

Germany is not the only European country opting for saving over spending. The new government in London introduced a drastic budget on Tuesday aimed at tackling the deficit by cutting public spending and raising taxes.,1518,702854,00.html#ref=nlint

More than 150,000 remain homeless amid Brazil floods

By the CNN Wire Staff June 25, 2010 -- Updated 1457 GMT

Rio Largo, Brazil (CNN) -- Federal aid is flowing to rain-ravaged areas of northeastern Brazil and the number of missing has diminished to less than 140, but more than 150,000 people remained homeless or displaced Friday, the government said.

President Luiz Inacio Lula da Silva said Friday he will not attend this weekend's G20 meeting in Canada to attend to the emergency at home, the Agencia Brasil government news outlet reported. Finance Minister Guido Mantega will take Lula's place.

The death count in two hard-hit states still stood at 46 -- 29 in Alagoas state and 16 in Pernambuco, Agencia Brasil said.

There were nearly 75,000 homeless or displaced residents in Alagoas and more than 80,000 in Pernambuco, the national civil defense office said.

In addition, civil defense said, there were more than 19,000 homes in Alagoas that were damaged or destroyed, as were 79 bridges.

China has also been suffering from disastrous flooding.

Heavy rains to pound China's flooded south regions again

BEIJING, June 24 (Xinhua) -- China's National Meteorological Center (NMC) warned Thursday that torrential rains are expected to pound the nation's badly-flooded southern regions over the next two days.

Heavy downpours are likely to hit many areas in provinces of Guizhou, Hunan, Jiangxi, Zhejiang, Fujian, and Guangxi Zhuang Autonomous Region from Thursday to Friday, according to the NMC.

Torrential rain was also forecast for the country's north and west regions, including some areas in Xinjiang Uygur Autonomous Region, provinces of Yunnan and Sichuan, and Tibet Autonomous Region.

As of Wednesday, floods in south China had left 211 people dead and 119 others missing, causing direct economic losses to 43.3 billion yuan (6.3 billion U.S. dollars), according to the Ministry of Civil Affairs

Back in the real world of rapidly going bust Europe, the Greeks have apparently taken up German newspapers suggestion for raising cash. I wonder if anyone has thought to wire President Hu? But there again, maybe not.

Greece starts putting island land up for sale to save economy

Desperate attempt to repay debts also driven by inability to find funds to develop infrastructure on islands

Elena Moya, Thursday 24 June 2010 21.33 BST

There's little that shouts "seriously rich" as much as a little island in the sun to call your own. For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideway.

Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts.

The Guardian has learned that an area in Mykonos, one of Greece's top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations.

Potential investors also looking at property on the island of Rhodes, are mostly Russian and Chinese. Investors in both countries are looking for a little bit of the Mediterranean as holiday destinations for their increasingly affluent populations. Roman Abramovich, the billionaire owner of Chelsea football club, is among those understood to be interested, although a spokesman denied he was about to invest.

Greece has embarked on the desperate measures after being pushed into a €110bn (£90bn) bailout by the EU and the IMF last month, following a decade of overspending and after jittery investors raised borrowing costs to unbearable levels.

The sale of an island – or convincing a member of the international jet-set to take on a long-term lease – would help to boost its coffers. The Private Islands website lists 1,235-acre Nafsika, in the Ionian sea, on sale by private interests for €15m. But others are on offer by private owners for less than €2m – less than a townhouse in Mayfair or Chelsea.

Greek gov't denies report on sales of islands, large estate properties to Chinese, Russian

ATHENS, June 25 (Xinhua) -- Greek government spokesman George Petalotis sent an official letter to "The Guardian" newspaper on Friday, categorically rejecting a report published in the English daily newspaper regarding "plans to sale Greek islands" to foreigners, especially Chinese and Russian, to tackle a severe debt crisis.

"I was deeply disappointed by the misleading article written by Elena Moya. The assertion that the Greek government is involved in the sale of any islands is wholly inaccurate," stressed Petalotis in his reply, noting that sale of privately owned islands in Greece is nothing new for years.

We close for today, while we await word from our overlords, with the IRS now wanting their piece of BP’s pensioners former dividends. Who’d have ever thought America’s IRS would become a BP victim too. Is the victim culture great or what? Looks like Mexico wants in on the game too. Stay long precious metals, I sense another bailout coming up.

Updated: IRS says it wants its share of BP payments received by oil spill victims

Published: Friday, June 25, 2010, 12:19 PM

WASHINGTON -- The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.
Under current law, BP payments for lost wages are taxable -- just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.
BP officials have agreed to create a $20 billion fund for spill victims, as well as a $100 million fund to support displaced oil rig workers.
The IRS issued the guidance today to help spill victims sort through the law's complexities. The agency has posted tax information for oil spill victims on its website and plans to hold forums in seven Gulf Coast cities on July 17 to help victims with tax troubles or questions.
"As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it," IRS Commissioner Doug Shulman said. "We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution."

Mexico finds possible traces of oil spill on Gulf of Mexico beach

MEXICO CITY, June 25 (Xinhua) -- Officials from Mexico's northern state Tamaulipas have found traces on the Gulf of Mexico beach which might be from the massive oil spill in U.S. territorial waters, Mexican media reported on Friday.

Officials from the Civil Protection Agency were quoted as saying that they had found solid lumps of crude along Miramar close to Ciudad Madero, one of the state's most famous tourist beaches.

More Monday when we know just what idiotic things the G-20 going on G-200 have meddled with.

There's one way to find out if a man is honest - ask him. If he says, "Yes," you know he is a crook.

Grouch Marx.