Baltic Dry Index. 3514 -65
LIR Gold Target by 2019: $3,000.
World Cup Odds. Who will be World Campion 2010?
http://world-cup.betting-directory.com/
"The diligent farmer plants trees, of which he himself will never see the fruit."
Cicero
Early last month we asked “Can BP survive?” We thought that they could but not in their present form, with BP America’s profits being diverted and assets possibly pledged against years of GOM mitigation and litigation to come. At the time, complacency ruled in faraway London, where the unfolding disaster in the Gulf of Mexico was greatly under-appreciated and great faith was placed in BP’s abilities to quickly stop the blowout well in accordance with their pre-drilling emergency plan. Misplaced faith as it turns out, and I suspect that BP themselves in Houston always knew that only a relief well was a viable option to cap the well. Below, Bloomberg on yesterday’s developments.
The UK is better placed than in the past to deal with these challenges.
Gordon Brown. On Lehman Brothers.
BP Trades as Junk, Credit-Default Swaps Invert: Credit Markets
June 10 (Bloomberg) -- BP Plc bonds and credit-default swaps are trading as if the energy company has lost its investment-grade rating as costs mount from the worst oil spill in U.S. history.
BP’s $3 billion of 5.25 percent notes due in 2013 fell as low as a record 89.94 cents yesterday, pushing the yield to 7.57 percentage points more than Treasuries. The spread compares with an average of 7.26 percentage points for junk bonds, Bank of America Merrill Lynch indexes show. The cost to protect $10 million of BP debt for a year with credit-default swaps almost doubled to $512,000, according to CMA DataVision. It was $29,000 on April 30.
“That’s just pure out panic,” said Michael Donelan, who oversees $3.5 billion of bonds at Ryan Labs Inc. in New York. “That’s like, ‘Get me out of here now.’ What the market is pricing in now is increased regulatory oversight and heavy, heavy punitive damages.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY4OfLFcxQGE&pos=3
As a political football in this November’s USA critical mid term election, like the Great Vampire Squid busy doing “God’s work” raping and pillaging their American clients, enemies, and anyone else unfortunate enough merely to stumble across their path, BP has gone beyond the point of no return, in my opinion. Unlike the Great Vampire Squid, BP hasn’t inserted it’s alumni deep into every aspect of western government across G-6 of the G-7. BP is virtually friendless in a world of bent politicians seeking cheap re-election and great vampire squids sensing the ultimate short opportunity. BP is starting to smell like the next Lehman. Below, leading oil investment banker Matt Simmons suggests that BP’s board will soon wake up and realize that a Chapter 11 filing is inevitable. A new 2010 development to banksterism not capitalism, as media and political hype have found a new game for the decade. After a near miss with Toyota, have the vandals and squids made a direct hit on BP. Like Matt Simmons, I rather suspect that they have.
Let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event. There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and it still has a way to go...
Alan Greenspan. On Lehman Brothers.
BP hit by doubts over ability to pay for costs of oil spill
June 9, 2010, 6:58 p.m. EDT
SAN FRANCISCO (MarketWatch) -- BP PLC shares slumped Wednesday, leaving its market value halved in fewer than seven weeks, while the oil giant's bonds were crushed as questions mounted over whether it can afford to clean up the worst environmental disaster in U.S. history.
Oil-industry insider Matt Simmons, head of the Texas-based, energy-focused investment bank Simmons & Co., told Fortune magazine Wednesday that BP will run out of cash from lawsuits, cleanup costs and other expenses.
"They have about a month before they declare Chapter 11" bankruptcy, Simmons said.
"One really smart thing that [President Barack] Obama did was about three weeks ago, he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup," he added. "But there isn't enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this, my guess is that they'll panic and go into Chapter 11."
http://www.marketwatch.com/story/bps-market-value-halves-as-spill-costs-loom-large-2010-06-09
BP pits fears against assets
June 9, 2010, 7:12 p.m. EDT
Commentary: Steep selloff clears out bargain-hunters
SAN FRANCISCO (MarketWatch) -- Shares of BP PLC turned treacherous Wednesday.
The stock tumbled nearly 16% to $29.20 in heavy volume; 240 million shares, eight times the three-month daily average, traded hands.
With this latest setback, stock has now lost half its value since April 22, the day the Deepwater Horizon drill rig disappeared into the Gulf of Mexico, replaced by a plume of crude. Read more about BP's solvency worries.
Two weeks ago, BP was clearly a "buy." The oil spill is tragic, but the stock's initial hammering seemed a gross overreaction. After all, BP is one of the biggest, publicly traded oil companies engaged in one of the most profitable businesses in the world.
Many investors, smelling a sweet deal, moved into the shares, confident BP would cap the well and resume business as usual. On May 27, BP shares rallied 7%, riding high on widespread speculation that the "top kill" would do the trick.
Many of those same investors bailed out Wednesday, their confidence shaken by visions of other corporate giants swiftly undone by a calamitous chain of events.
-----BP is a real oil company, with real assets in the ground -- literally. It sits on vast petroleum reserves around the world, runs huge refining and transport operations and makes billions of dollars a year from international operations.
If BP goes down, it would be because investors fear insurmountable liabilities from the Gulf spill. Fear is now clearly a powerful force in how this plays out. But so are assets.
http://www.marketwatch.com/story/bp-selloff-pits-fears-against-assets-2010-06-09
We end on the next Lehman with the scale of the disaster only now starting to become apparent. Taking out BP, takes out a pretty large slice of HMGs UK government taxes, UK pensioners assets and cash flow, and with roughly 40% of BP now owned by North American shareholders, does a pretty good number on US investors too. All of these are people who rightly or wrongly believed they were making informed decisions to invest in a oil exploration and production company who’s upper liability was capped under US law. Inappropriate as that may be, faced with back door expropriation, BP’s board now needs to start playing hardball back. They have a duty to their shareholders to do nothing less.
AIG was until recently the world's largest insurance company. It provides over a hundred billion dollars of capital to banks, and it is in trouble too.
These really are unprecedented days. This is not stress testing, this could be testing where the failure point lies.
John Moulton. Alchemy Partners.
Barack Obama's attacks on BP hurting British pensioners
Barack Obama has been accused of holding "his boot on the throat" of British pensioners after his attacks on BP were blamed for wiping billions off the company's value.
By Louise Armitstead and Myra Butterworth Published: 10:12PM BST 09 Jun 2010
City investors said the president was jeopardising the pensions of millions with his "excessive" criticism of the energy company following the Gulf of Mexico oil spill.
Before the accident on April 20, BP was Britain's biggest company, with a stock market value of £122 billion. Since then, £49 billion has been wiped off its value.
On Wednesday, BP's share price fell a further 17.35p to 391.55p – representing a 40 per cent drop on the 655p price of a share two months ago.
Experts have said that the clean-up costs of the oil spill will run to between £10 billion and £20 billion but the biggest cost to the company is from investors dumping stock for fear of BP being further punished by the US Government.
Those fears have been heightened by Mr Obama's increasingly aggressive rhetoric towards BP, which some investors see as an attempt to deflect criticism of his own handling of the crisis. Last month, a White House spokesman said the President's job was to keep his "boot on the throat" of the company.
In the past week, Mr Obama, who insists on referring to BP by its former name British Petroleum, has suggested that its chief executive, Tony Hayward, would have been sacked if he worked for him.
BP's position at the top of the London Stock Exchange and its previous reliability have made it a bedrock
of almost every pension fund in the country, meaning its value is crucial to millions of workers. The firm's dividend payments, which amount to more than £7 billion a year, account for £1 in every £6 paid out in dividends to British pension pots.
BP is so concerned about Mr Obama's power to affect share value that it has urged David Cameron to appeal to the White House on its behalf. Downing Street, however, has refused to get involved. "We need to ensure that BP is not unfairly treated – it is not some bloodless corporation," said one of Britain's top fund managers. "Hit BP and a lot of people get hit. UK pension money becomes a donation to the US government and the lawyers at the expense of Mrs Jones and other pension funds."
Mark Dampier of the financial services company Hargreaves Lansdown said: "[Mr Obama] is playing to the gallery but is not bringing a solution any closer. Obama has his boot on the throat of British pensioners. There is no point in bashing BP all the time, it's not helpful. It is a terrible situation, but having the American president on your back is not going to get it all cleared up any quicker."
The President and US government on present course, will merely force BP into endless expensive rounds of court battles. Lawyers not the affected will eventually end up the only winners. If the laws were inadequate, that is the fault of whoever wrote the laws. If States had inadequate disaster cleanup response plans, that is the fault of the States. If they chose to rely on the Federal Government that is a knowing decision they took. If the States had inadequate compensation schemes for their citizens, while later seeking relief and reimbursement for valid claims via the courts, that is a fault of local politicians. Like BP who didn’t insure, the States could have taken out disaster insurance for their citizens. If Federal regulation of deep water drilling is now proving lax, that is a fault of the US Federal government, its rich to blame the companies that complied with existing laws.
If BP’s going down they have nothing left to lose by fighting back, not that will cap the well any sooner. If this turns into an ecological calamity, it’s a calamity that was entirely foreseeable in advance. There were many writers and experts in the field who said we had inadequate technology for the challenge. In the rush to make money from oil and in the rush to reduce American dependence on foreign oil, no one wanted to pay much attention to delaying the drilling for studies of the challenge. If BP’s board does get some backbone and start defending their shareholders interest, BP will probably still likely lose out in the end. It’s hard to see US courts siding with BP vs the whipped up mob. However, what happens to BP can happen to any other oil company. Can happen to any other Toyota, to any other “next Lehman.” Simply put, in a changed environment like this, the valuation of most large multi-national companies is now grossly overstated. An Exxon, a Shell, a Halliburton, a Toyota, a Ford, a nuclear power operator and many others, are now all too dangerous to hold at current values.
Should Government Be Responsible For Corporate Disasters?
There has always been, and will always be, natural disasters. And since the moment our long-dead ancestors stood upright there have been, and will always be, man-made disasters. For millions of years volcanoes erupted, earthquakes shattered, rivers flooded and only those unfortunate souls who stood at the base of the volcano, the crack of a fault line, or the banks of a river were affected by Mother Earth's indigestion.
But now we live in a technological era, where we can watch devastation and suffering from thousands of miles away in the comfort of our own home. Mix that up-to-the-second technology with the fundamental American right to criticize corporations, as well as our elected officials, and it's no surprise we're hearing such vitriolic missives about the BP oil spill in the Gulf of Mexico.
A month into the oil spill, the blame game has begun and while there are plenty of parties at fault, the broader message of how the government's response is slow doesn't quite make sense. Indeed, the New York Times is debating: Is this Obama's spill now? And it really boils down to a matter of opinion: Do you believe the company who owns the rig is responsible for clean up or do you believe the government is responsible for the clean up?
To compound that message, we're hearing, "This is President Obama's Katrina." Indeed, as Manny Ortiz, senior lobbyist at Washington, D.C agency Quin, Gillespie & Associates told PRNewser, "They (Republicans) want to create the notion that this has been mishandled."
While there are some parallels between Katrina and the BP oil spill, they are superficial.
For example, both are in the same location: Gulf of Mexico. And everything from the destruction caused by both to the aid they require - economic, recovery and rebuilding - is something most can't quite fathom. Katrina was a hurricane that swept in and did damage because of shoddy engineering, and the BP oil spill is discharging thousands of barrels a day into the water because of, well, shoddy engineering. But that's about it. Oh, and apparently the government's response to both was way too slow. Which begs the question, why does the government need to respond to a company's problem?
There are some who are saying that the Obama administration's lack of response (and/or help) is similar to that of President Bush's slow response to Katrina. But looking closer at these sentiments, it's hard not to see the political football bouncing in numerous directions:
The BP oil spill was because of failure of a company (actually, several companies) in a poorly regulated industry.
People are calling for the government to step in, but the government doesn't have the resources to fix it. You can't complain about lack of government resources when you don't pay your taxes (47% of U.S households don't pay income tax), which finance those necessary resources - both in the labor and in parts. And you certainly can't complain about lack of government resources when you have a political ideology that believes the government that governs least, governs best.
More.
http://www.huffingtonpost.com/josh-sternberg/should-government-be-resp_b_592093.html
We end for the day with all every American needs to know about owning gold for protection from the out of control, crooked central banksters and bent politicians. As America goes European socialist 1960-70s s style and heaps corporate socialism and banksterism on top, comrades it’s time to get long physical gold and silver against the end of fiat currency. Coming soon to a McDonalds near you, the starting wage of $1 million a year.
"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
U.S debt to rise to $19.6 trillion by 2015
June 8 (Reuters) - The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress.
The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.
"The president's economic experts say a 1 percent increase in GDP can create almost 1 million jobs, and that 1 percent is what experts think we are losing because of the debt's massive drag on our economy," said Republican Representative Dave Camp, who publicized the report.
He was referring to recent testimony by University of Maryland Professor Carmen Reinhart to the bipartisan fiscal commission, which was created by President Barack Obama to recommend ways to reduce the deficit, which said debt topping 90 percent of GDP could slow economic growth.
The U.S. debt has grown rapidly with the economic downturn and government spending for the Wall Street bailout, the wars in Afghanistan and Iraq and the economic stimulus. The rising debt is contributing to voter unrest ahead of the November congressional elections in which Republicans hope to regain control of Congress.
The total U.S. debt includes obligations to the Social Security retirement program and other government trust funds. The amount of debt held by investors, which include China and other countries as well as individuals and pension funds, will rise to an estimated $9.1 trillion this year from $7.5 trillion last year.
http://www.reuters.com/article/idUSN088462520100608
"The paper standard is self-destructive."
Hans F. Sennholz
At the Comex silver depositories Wednesday, final figures were: Registered 52.34 Moz, Eligible 65.28 Moz, Total 117.63 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today it’s more news from Europe’s stitch up politicians. Forget the unelected nobody Herman van Rompuy and his part time “European Foreign Minister” Baroness “whats-it,” they at least are good for laughs and the stock-in-trade of stand up comedians specializing in political satire, today it’s focus time on Euroland’s paymasters and the Circus ringmaster who wants to hire many more socialist acts. Below, Der Spiegel covers Europe’s Laurel and Hardy tackling the crisis on the ever disappearing Euro. Fiat Euros anyone? Europeans have even more reason than American’s to get long precious metals. Is everyone really sure that there’s any gold and silver somewhere on the custodians books and vaults to back up all the ETFs? Tomorrow will not be like today which was like yesterday. The great dollar era of 1945-2000 has ended. Brought down eventually by fiat currency 1971 to ????
"In a country whose currency is not convertible into gold, inflation leads to its continuous devaluation in terms of foreign currencies."
Michael A. Heilperin
The World from Berlin
'Does Angela Merkel Still Trust Nicolas Sarkozy?'
06/09/2010
Angela Merkel's last-minute decision to cancel a dinner with Nicolas Sarkozy this week has left many questioning the state of relations between the two countries. But German papers warn that the common currency can only be saved through their leadership.
By the time Angela Merkel unexpectedly cancelled her planned dinner meeting with Nicolas Sarkozy on Monday, the French press corps had already landed at Berlin's Tegel Airport. In Paris and Berlin, the surprise move triggered endless speculation over why the chancellor had cancelled -- was she doing it to protect Sarkozy from a prickly domestic political debate over budget cuts or out of irritation over their differences on how to address the euro crisis?
The surprise decision came the same day the chancellor announced a contentious package of savings measures that would slash her government's budget by around €80 billion ($95 billion) by 2014 to meet the requirements of the European Union's stability pact as well as the so-called "debt brake" amendment to the German constitution requiring a balanced budget by 2016.
In Germany and France, the cancellation is being perceived in the media as reflective of the growing divide between Paris and Berlin over how best to deal with the sovereign debt and euro crisis. Merkel has said she would like to adopt a savings package that would serve as a model for other European countries and show the way out of a crisis that has pressured the euro.
But in Paris, French government officials have rejected adopting the kind of heavy austerity measures being championed in Berlin. France's government minister in charge of stimulus efforts, Patrick Devedjian, on Tuesday warned against similar measures for his country, saying it "would be dangerous because it risks killing growth."
The two countries are also split on how to save the euro. Sarkozy is pushing for a euro zone economic governance which would include only the 16 euro zone member states in tighter coordination of economic policies. Merkel, however, would like to see greater economic policy coordination between all 27 EU member states and has called for the European Council to establish an economic policy forum. So far, neither side has shown a willingness to budge.
The French media were highly critical of Monday's cancellation. Liberation wrote, "Does Angela Merkel still trust Nicolas Sarkozy? It is extremely rare that a bilateral meeting is cancelled only a few hours before it is to take place." And French paper of record Le Monde wrote that Merkel was "not willing" to discuss the issues with Sarkozy on Monday night. "That's too bad," the paper wrote, "Nothing is possible without agreement between the two." Liberation has also reported that Sarkozy has stated "privately" that he is frustrated with Merkel's hesitance and delays in moving to prop up the euro. Speaking on French radio, former French Prime Minister Dominique de Villepin, said the cancellation was a sign that Germany "has lost its faith in France."
In Berlin, the government has downplayed the kerfuffle, saying the French press speculation about a rift between Merkel and Sarkozy is "untrue." The German daily Frankfurter Rundschau claims that officials speaking off the record said Merkel was seeking to spare Sarkozy from Germany's "domestic showdown" over the savings package as well as possible uncomfortable questions from reporters on why France has no plans for major austerity measures.
On Tuesday and Wednesday, most German newspaper editorials don't buy that logic, arguing that Franco-German relations are ailing and Merkel's decision is a sign of the malaise.
-----The conservative Frankfurter Allgemeine Zeitung writes:
"How else can one interpret this than as being a sign of irritation that has risen out of deep-seated differences of opinion, that the chancellor cancelled her meeting … at the last minute? … But a dispute like that is the last thing the EU and the German-French relationship needs right now. A rescue and lasting stabilization of the currency union will only happen if Paris and Berlin can negotiate as one on fundamental questions. Without credible German-French coordination, there will be no credibility in the euro zone."
http://www.spiegel.de/international/europe/0,1518,699672,00.html#ref=nlint
"Farmers are the only indispensable people on the face of the earth."
Li Zhaoxing. Ambassador, China
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.
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