Baltic Dry Index. 3288 -135
LIR Gold Target by 2019: $3,000.
“Paper money eventually returns to its intrinsic value -zero.”
Voltaire.
Another weekend past and another EU country cutting back and raising taxes. This time it’s Club Med leader France, where austerity means raising the retirement age from 60. Those poor hard working Germans will just have to work until 90, to pay for the remaining Gallic way of life. By my rough count, all of the major EU powerful economies except Italy, have now announced or are implementing serious cutbacks and tax increases austerity programs. The tiddlers like Austria, Ireland, Portugal and Greece are all on the bandwagon too. Is Europe about to take a ride on the Keynesian death spiral?
“I have tried to lift France out of the mud. But she will return to her errors and vomitings. I cannot prevent the French from being French.”
Charles de Gaulle
JUNE 14, 2010
France Targets Deficit, Retirement Age
PARIS—France said it would cut public spending by €45 billion ($54.48 billion) over the next three years and raise its retirement age, following other European nations that have announced austerity measures.
Saturday's announcement came ahead of a week in which President Nicolas Sarkozy is scheduled to have talks with German Chancellor Angela Merkel in Berlin, and the French government is expected to announce details of a rise in France's current standard retirement age. Prime Minister François Fillon said the cuts were aimed at bringing France's public deficit back down to the European Union's limit of 3%.
"We've made a commitment to bring down our deficit [to 3% from 8%] by 2013 and we will concentrate all of our efforts on it," Mr, Fillon told a gathering of members of his and Mr. Sarkozy's center-right UMP party. "It would be cowardly of us to tell the French people that their pensions could be maintained without lengthening their working lives and without altering the symbolic retirement age of 60."
Paris has lagged behind its neighbors in imposing cuts, as other major European economies have rushed to reduce their budget deficits after Greece's debt crisis. In particular, Germany's willingness to make public-spending cuts has pressured France to take similar measures.
In all, Mr. Fillon said the French government would reduce its public deficit by €100 billion. In addition to the €45 billion in spending cuts, another €5 billion would come from closing tax loopholes; €35 billion from increased tax revenue as the economy recovers; and €15 billion from stopping temporary extra spending designed to boost the economy.
The government based its tax-revenue estimate on an expectation the economy will grow 1.4% this year. The Bank of France last week forecast growth of 0.5% in the second quarter, following an expansion of 0.1% in the first.
An announcement on raising the standard retirement age—likely to either 62 or 63 from 60—is expected Wednesday.
Elsewhere in Europe, Belgium takes a giant leap forward towards finally splitting itself into two countries. Brussels, the bureaucratic parasite of the great United States of Europe serfdom project, joins the Netherlands, Britain, Germany and Spain, with weak coalition or minority government. Euros anyone? Stay long precious metals. A country of “Europe” simply doesn’t exist except in the minds of elitist Lord of the Universe “one worlder” Bilderbergers. One has only to look at all the European national teams playing in the World Cup in South Africa, the equivalent would be the USA represented by half a dozen of its top State teams. Below, the Times covers Caesar Rompuy’s faux Ruritania. Ruritania with all of the vices but none of the virtues.
“Belgium is a country invented by the British to annoy the French.”
Charles de Gaulle
June 14, 2010
Poll brings Flemish separatists closer to their goal
A separatist party was on course to win the most votes in Flanders last night for the first time in a Belgian general election, increasing the prospect that the country will split into the Flemish north and French-speaking south.
The New Flemish Alliance, led by Bart de Wever, 39, was heading for about 29 per cent of the votes in Flanders on a promise to break away from Wallonia and become an independent member of the European Union.
Mr de Wever’s success comes four days after Geert Wilders’s anti-Islamic Freedom Party claimed third place in next-door Netherlands on 15 per cent of the national vote as the economic crisis fuels nationalist fervour.
Both countries will now be plunged into weeks of difficult negotiations to form a workable government coalition from a fragmented patchwork of parties, with potentially disastrous implications for their economies.
The process is even more complex in Belgium, where there are no national parties, with the combined Wallonian and Flemish Socialists likely to be the biggest group. Mr de Wever has said that he would be content to see the Socialist Elio di Rupo become the first French-speaking Prime Minister since 1974, provided that the new government devolved more power to the regions. The Socialists are strongly against the break-up of Belgium.
Claiming victory last night, Mr de Wever told cheering supporters: “The N-VA has won the election. We stand before you with a party that has some 30 per cent (of the Flemish vote).”
Pierre Verjans, a University of Liège political scientist, said that he felt “a sense of mourning going on”. He added: “French-speakers now fear a Belgium without Dutch-speakers.”
-----Many Flemish voters are also increasingly frustrated at having to subsidise social security bills in the poorer, French-speaking south, where the collapse of traditional industry has led to much higher unemployment than in the north. The unhappy marriage of the parsimonious Germanic north and spendthrift Latin south is often cited as a microcosm for the centrifugal forces undermining the EU’s own response to the financial crisis.
Another nail was driven into the coffin of the political system when the last Government fell after failing to redraw Flemish and French-speaking electoral boundaries — an arcane row compared to the urgent need to address the burgeoning national debt.
Belgium was created in 1830 and is made up of 6.5 million Dutch speakers and 4 million French speakers
http://www.timesonline.co.uk/tol/news/world/europe/article7149542.ece
As the IMF arrive in red hot summer Athens today, where rumour has it, government tax revenues are already down from earlier estimates, Europe’s banks are mired in ever deepening trouble. Below, Bloomberg covers the growing summer crisis. Still, in football mad Europe and most of the world, the crisis will probably be delayed until after the end of the World Cup down in wintry South Africa.
“One does not arrest Voltaire.”
Charles De Gaulle
Europe’s Banks Face Second Funding Squeeze on Sovereign Crisis
June 14 (Bloomberg) -- European banks at risk of writedowns from the sovereign debt crisis face a funding squeeze that may depress earnings, curb lending and imperil economic recovery in the region.
Investors are shunning bank securities on concern Greek, Portuguese and Spanish bonds held by the lenders will plunge in value. Bank bond sales slowed in May to the lowest since Lehman Brothers Holdings Inc.’s failure in 2008 as the extra yield buyers demand to hold the securities over government debt soared to the highest this year. Firms are wary of lending to each other, depositing record funds with the European Central Bank.
“There is a lot of mistrust,” said Christoph Rieger, co- head of fixed-income strategy at Commerzbank AG in Frankfurt. “Banks are trading with the ECB rather than with each other.”
The central bank is preventing a crisis by providing banks with unprecedented funding. In substituting long-term money with shorter-maturity ECB cash, policymakers are making it harder to wean banks off life support as well as the short-term financing that regulators blame for the credit crisis.
The cost of insuring bank debt from default rose close to a record last week. The Markit iTraxx Financial Index of swaps on 25 European banks and insurers climbed to 208 basis points on June 8, approaching the all-time high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show.
http://www.bloomberg.com/apps/news?pid=20601095&sid=aHl8DzEheXq8
We end on dodgy Europe today, with problems rapidly escalating for austerity ridden Ireland. In “ABF” Ireland, anyone but France to win the World Cup in South Africa, the private sector continues choking on last decades commercial real estate excess. Below, the Guardian covers yet another company liming towards NADA? Ireland’s bad bank for new reality struck fallen wheeler-dealers. When is a trophy not a trophy but a millstone?
“Vanity of vanities, all is vanity”
Ecclesiastes. 1.2.
Hotels group Maybourne seeks to raise £610m to refinance debt
• Luxury hotels company needs to secure loans by Christmas
• Claridge's, Connaught and The Berkeley owner in talks with Deutsche Bank
Elena Moya guardian.co.uk, Sunday 13 June 2010 17.29 BST
The company that owns the five-star Claridge's, Connaught and Berkeley hotels in London needs to refinance more than £600m of loans before the end of the year to avoid falling into the hands of its banking creditors.
The three hotels, which each trace their history back more than 100 years and whose guests have included royalty, Hollywood stars and celebrities – from Queen Victoria to Cary Grant and Audrey Hepburn to Madonna – could be up for sale.
The Maybourne hotel group, partly owned by Irish property tycoon Derek Quinlan, needs to refinance £610m of loans by Christmas. In the latest accounts posted at Companies House by parent company Coroin, the business had debts of £672m due after one year. The debt level compares with total assets, minus liabilities due within one year, of £679m, which could put the company at the mercy of its two banking creditors, the Bank of Ireland and Anglo Irish Bank.
The company is in talks with Deutsche Bank about a refinancing, the Guardian has learned. The talks, which would suggest the exit of the two Irish banks after the deal, "are proceeding steadily", the company said. It added that lending institutions are showing "sufficient interest" to refinance its debt.
The company said the loans have not been transferred to the National Asset Management Agency, Ireland's "bad bank". The agency buys troubled loans from Irish banks at a discount to clean their balance sheets and help reignite lending.
The refinancing talks could also involve Barclays Bank, already a banker to Maybourne, and are now focused on how much equity shareholders might inject, as that could determine whether creditors force the company into a sale of assets.
Real estate investors said the properties are openly for sale, at the right price, although Maybourne said it has no plans to sell. The three properties could attract US, Middle Eastern or Asian multimillionaires seeking trophy assets and a place to impress potential clients or investors.
-----Maybourne's majority shareholders, including Quinlan and Paddy McKillen, another property developer, "are prepared to inject additional equity if required", the company said. Other investors include Moya Doherty and John McColgan, the entrepreneurs behind Riverdance.
-----Maybourne is one of many highly leveraged property companies built during the years of cheap and ample debt. The company bought its hotels, which also included the Savoy in London, for £750m in 2004, valuing each room at about £1m. The Savoy was later sold for £230m. Hundreds of companies which followed a similar strategy now have a combined £55bn of property debt up for refinancing this year in Britain. Another £50bn are in breach of their financial covenants, three times more than in 2008, according to the British Property Federation. The breaches come as commercial property values plunged by about 45% since the peak of the market in June 2007, the federation said.
http://www.guardian.co.uk/business/2010/jun/13/maybourne-hotels-refinance-debt
We end for today with BP, again, and one of the many knee jerk political solutions that may prove worse than the disease. Welcome to the modern world of corrupt media driven, bankrupt political “democracy.” Can a Salem witch trial for BP and other oil service companies be very far away. Intelligent debate, rule of law, and scientific thought is out, mob rule whipped up by desperate power grabbing politicians, and great vampire squids seeking shorts is in. Nothing good for prosperity and mankind lies this way. If this sort of society worked, Africa would be the prosperity and lifestyle poster child for the world. We are entering upon a new “Dark Ages” if this is to be the west’s future. Stay long precious metals. Below the NY Times preaches sanity to the deaf. Don’t confuse me with the facts, my mind’s made up. Don’t just sit there, do something, and get your piece of the great BP giveaway. Below that, Bloomberg on the reality of BP on the energy sector.
A Sand Trap in the Gulf
By ROBERT YOUNG Published: June 11, 2010
OF the many cleanup solutions being pursued in the Gulf of Mexico, few are as ambitious as Louisiana’s berm project. The Army Corps of Engineers recently authorized the state to construct some 45 miles of artificial berms in an effort to protect Mississippi River Delta wetlands and barrier islands from the oil gushing from the Deepwater Horizon leak, with BP promising to pay the state $360 million for the entire project. Many more miles may be authorized in the coming weeks.
The state understandably wants to move quickly and on a large scale, and no one wants to stop a project like this simply because it is spending too much of BP’s money. The problem, however, is that the berms won’t work as promised, and their construction will monopolize resources that could be used more effectively elsewhere.
The berms, essentially a series of long, low-lying islands made of dredged sand, seem like a good idea for blocking an oil slick. But as any engineer will tell you, the difficulties are often in the details. Although federal and state agencies were given only a short time to respond to the application, their comments, included in the permit documentation, raise serious concerns about the proposal and its potential effects.
The Environmental Protection Agency and the Department of the Interior, for instance, question whether an effort that will take at least six months to build will appreciably diminish the amount of oil entering the delta wetlands.
Moreover, both agencies note that the berms are not designed to block the tidal flow of water completely, which would be deadly to the wetlands they are meant to protect. But that makes it unclear how much oil the berms would actually prevent from passing into the marshes and estuaries, even when the project is completed.
Then there is the question of the berms’ longevity. The ebb and flow of coastal waters is extremely powerful; even without a storm, the berms will begin to erode immediately. Vast portions are likely to be already gone before the rest of the project is finished.
Of course, summer in the gulf is hurricane season, and at six feet above sea level at high tide, the berms will not have the elevation or sand volume to withstand storm waves or surges. If just one of this year’s storms passes near them, they will be wiped out.
Then there are the environmental risks. A completed berm could potentially increase the impact of storm surges on the coastal lowlands, and instead of blocking oil it could merely redirect the natural tidal flow — and with it thousands of gallons of oil — to even more environmentally important areas. Likewise, by impeding the outflow of water, it could prevent the natural flushing of some oil.
If we knew for certain that the berms would keep significant amounts of oil away from fragile wetlands, then such risks might be worth it. But the proposal was so hastily written that no one has estimated its chances of success, or worked out the possibility of adverse consequences. There’s not even a clear, scientific rationale for the efficacy of the design. Instead, it simply presents the project’s logic as self-evident.
Now that this berms have been given permits, the Louisiana governor’s office and the Corps of Engineers should, at the very least, engage scientists and engineers to monitor the first berm to see how it performs and examine any unintended impacts. If it does in fact take several months to build the other berms, there will be plenty of opportunities to change the design if needed or abandon the effort if it is failing.
We should also remember that while there is no magic bullet for the spill, that doesn’t mean we should just try everything and see what sticks. It would be more prudent to continue fighting with methods like modified booms (as is being suggested for Alabama’s Perdido Pass) and collection until effective long-term solutions can be fully vetted by engineers and scientists specializing in coastal environments.
The BP spill will be with us not for weeks or months, but for years. If we want to do our best to stop the oil from hurting critical habitats, then it’s worth taking a little time to get it right.
http://www.nytimes.com/2010/06/14/opinion/14Young.html
BP Crisis Wipes $19 Billion From Energy Bonds: Credit Markets
June 14 (Bloomberg) -- The biggest oil spill in U.S. history has wiped about $19 billion off the value of energy company bonds as investors bet increasing regulation will curb revenue and profits.
Debt sold by energy companies has lost almost 4 percent from this year’s peak on April 27 amid mounting costs from the April 20 Deepwater Horizon oil rig explosion, according to Bank of America Merrill Lynch’s Global Corporates Energy index. The market value of the index, which contains 805 securities of companies from London-based BP Plc to Anadarko Petroleum Corp. of The Woodlands, Texas, ended June 11 at $510.8 billion.
“There are fears in the market of much tighter regulation and concern they’ll have to re-price the risk of fines and cleanup costs,” said Christian Weber, a Munich, Germany-based strategist at UniCredit SpA. “The entire sector is under a lot of pressure.”
The drop in debt prices has pushed yields to the highest since July relative to government bonds, the Bank of America Merrill Lynch index shows. That means the 50 biggest energy company borrowers may have to pay an extra $763 million in annual interest to refinance $80.3 billion of bonds coming due through 2012, according to data compiled by Bloomberg.
Interest costs are “going to hurt the company directly, because that feeds right into the bottom line,” said James Barnes, a money manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., where he helps oversee $1 billion in fixed-income assets. “We don’t look at today’s market as a buying opportunity.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=awnn0jsk6F.c&pos=4
“I have heard your views. They do not harmonize with mine. The decision is taken unanimously.”
Charles de Gaulle
At the Comex silver depositories Friday, final figures were: Registered 52.34 Moz, Eligible 65.59 Moz, Total 117.93 Moz.
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Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
This morning, it’s back to Wall Street’s finest vampire squids again, busy doing “God’s work” by upholding the very best ethics of the Madoff era. Up first, this time out, someone came up with a Belgian Royal family alleged connection, if you overlook that the royal family in question isn’t THE Belgian Royal family, which sports “THE King of the Belgians,” among its number, but the “royal” family of Chimay, a sort of Belgian county specializing in Trappist beer, nestled close to the French border, on the traditional German invasion route that ends in Paris. Below that, Goldman’s ethics apply until they don’t. Rather the reverse of “deficits don’t matter,” until they do.
Judge: Do you promise to tell the truth, the whole truth, and nothing but the truth?
Goldman: To a point.
Judge: What point is that?
Goldman: To the point that I am no longer telling the truth
http://www.zerohedge.com/article/seeking-clarity-goldmans-ethics-waiver
New York Money Manager Chimay Charged With Larceny, Forgery
By Karen Freifeld and Joshua Gallu
June 12 (Bloomberg) -- New York money manager Guy Albert de Chimay was indicted in New York on grand larceny and forgery charges, according to the Manhattan District Attorney’s office.
Chimay, 47, chairman and chief investment officer of Chimay Capital Management Inc., was arrested yesterday in Wrightsville Beach, North Carolina, on a New York state warrant, said Adam Kaufmann, chief of the investigation division of the Manhattan District Attorney’s office.
The U.S. Securities and Exchange Commission sued Chimay yesterday, accusing him and his firm of fraud for touting investments he claimed were tied to the Chimay royal family of Belgium, and then stealing millions of dollars to pay his divorce lawyers and the mortgage on his house in the Hamptons on Long Island east of New York City.
“He lied to investors, took their money and used it to support his lifestyle,” Kaufmann said in a phone interview.
The SEC obtained an emergency court order to freeze the assets of Chimay and his firm.
Chimay Capital claimed to be the U.S. investment arm of the royal family based in the Chimay region of Belgium and dating to the 14th century, according to the SEC.
“Chimay used the trappings of royalty to perpetrate the most common of frauds,” said George Canellos, director of the SEC’s New York regional office. “Chimay blatantly lied to investors about non-existent investments and then used their money to bankroll his exorbitant personal and business debts.”
Bridge Loan
Chimay solicited money from October 2008 to September 2009 for a bridge facility that he said would make lucrative short- term loans to firms with ties to the Belgian royal family, the SEC said in its complaint. There is no evidence that any loans were made and some funds were used to pay off disgruntled investors in Chimay’s other business ventures, the agency said.
In December, Chimay sought a multimillion dollar loan, falsely claiming he had $14 million in liquid assets in a Bermuda bank account to serve as collateral, the SEC said. In reality, the account was empty, the agency said.
Phone numbers listed for Chimay and Chimay Capital weren’t in service yesterday. He and the firm, which are facing at least three investor lawsuits, have no known defense counsel, the SEC said.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aj4evMXRSb2E
Seeking Clarity On Goldman's Ethics Waiver
Submitted by Tyler Durden on 06/12/2010 23:44 -0500
Now that Goldman is a household name, courtesy of a variety of litigation overtures, both in the civil and criminal arena, demonstrated by Goldman's popularity among the broader population, the firm has been kind enough to publicize its "Code of Business Conduct and Ethics" in an attempt to placate the concerned populace, and demonstrate that Goldman has a whopping 4 pages dedicated to promoting legal behavior amongst its nearly 30,000 employees. What confuses us is the placement at the very end of this document of the following section, Waivers of This Code, in which one reads: "From time to time, the firm may waive certain provisions of this Code." In other words, Goldman's activities comply fully with legality until such time that Goldman decides it is in the name of the greater good to "waive" this compliance. We are confused that in light of this glaring loophole, not one question has been asked of Mr. Blankfein as to what specific circumstances have necessitated the invocation of the "ethics waiver", by either executive and non-executive employees: something which none other than former Goldman CEO Hank Paulson recently used in order to pursue the full taxpayer-funded rescue of precisely this firm. Which is why, in the absence of others doing so, we have decided to ask this question directly of Goldman head of PR Lucas van Praag.
To wit:
Dear Lucas, in going through the Goldman Sachs code of business conduct and ethics, we have noted Section III "Waivers of this Code" where it states:
From time to time, the firm may waive certain provisions of this Code. Any employee or director who believes that a waiver may be called for should discuss the matter with an Appropriate Ethics Contact. Waivers for executive officers (including Senior Financial Officers) or directors of the firm may be made only by the Board of Directors or a committee of the Board.
Could you please advise when the most recent invocation of an ethics waiver occurred for GS executive officers (and whether this was in fact approved by the BOD), and also whether there have been any ethics waivers for any non-executive employees of Goldman over the past five years either in connection with currently ongoing civil and criminal litigation involving Goldman's Structured Products Division, or any other Goldman group, including, but not limited to: Fixed Income Currency and Commodities, Sales and Trading, Quantitative Strategies, Quantitative Resource Group, Goldman Sachs Asset Management, Goldman Global Alpha, Correlation Trading, Investment Banking, and Primary Dealers, and the specific details thereto.
Your prompt response is much appreciated.
The Zero Hedge team.
We are confident that since Goldman has nothing to hide in this or any other matter, a prompt response is indeed forthcoming.
http://www.zerohedge.com/article/seeking-clarity-goldmans-ethics-waiver
“I have come to the conclusion that politics are too serious a matter to be left to the politicians.”
Charles de Gaulle
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.
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Sunspots – A 22 year colder world? (From 2004?)
Spotless Days June 13
Current Stretch:0 days
2010 total: 33 days (20%)
2009 total: 260 days (71%)
Since 2004: 802 days
Typical Solar Min: 485 days
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