Baltic Dry Index. 1801 +20
LIR Gold Target by 2019: $3,000.
The goal of the constitutional government is to conserve the Republic; the aim of the revolutionary government is to found it... The revolutionary government owes to the good citizen all the protection of the nation; it owes nothing to the Enemies of the People but death.
Robespierre.
This weekend marks the start of the great UK and European holiday season, more about that later. Later today, long after UK and European markets are closed, though not those in America, the Committee of Public Safety, aka the Committee for European Banking Supervisors, release the results of their “stress test” for European banks. As with America’s bank stress test, carried out last year, the test is specifically designed for most banks to pass. In widely leaked rumors, only Germany’s rescued HVB bank is expected to fail, although some others might get some embarrassing qualifications besmirching their names. Unhappily, US markets are still open when Europe hangs out its dirty linen, plodding their way through another lazy Friday summer afternoon, seeking to build on yesterday’s High Frequency Trading buying frenzy that had little to do with the real state of the US economy. Below, Germany’s Der Spiegel covers the European whitewash. Will it prove an own goal to release the results while America’s great vampire squids are still on the loose? Time will very soon tell.
I brake for scholars, priests, and no apparent reason.
Caravan sticker.
Europe's Financial Giants Nervous on Eve of Stress Test Release
By Anne Seith
On Friday, European banking authorities will release the results of the first major stress test of the Europe's banks. Doubts have been raised about the rigor of the tests and some fear it will just be a staged show of stability for the industry. SPIEGEL ONLINE analyzes what the stress tests will actually deliver.
Externally, the message is one of calm and tranquillity. With European stress tests set to be released at the end of European trading on Friday, banks and financial oversight authorities are at pains to demonstrate that they have everything under control.
Behind the façade, however, it is a different story. Financial institutions, national oversight authorities and the Committee for European Banking Supervisors (CEBS), which is carrying out the tests, are hectically finalizing their plans for Friday. Exactly when and how the results are to made public was to be the subject of a Thursday conference call among the European Union ministers concerned.
Even the timeline itself, which had seemed set in stone for weeks, was up for debate again this week. The plan to release the results on Friday evening was initially seen as a way to give banks the weekend to react to bad news if they needed to. Suddenly, though, there was talk of already going public on Friday morning. Some were concerned about giving markets in the United States a head start in interpreting the results -- as though nobody had thought of it before. A European Commission spokesperson had to clear the waters -- the original plan remains valid: The results will be released on Friday at 6 p.m.
The last-minute chaos belies the stability the stress tests are supposed to inject into European financial markets. As concerns over sovereign debt have grown in Europe, banks been having an increasingly difficult time raising money. With investors increasingly doubting their durability, Spanish banks, in particular, have complained of trouble. In response, Madrid took the initiative in lobbying for the publication of the stress tests as a way of injecting confidence into European financial markets.
Whether it will work, remains to be seen. Many experts have complained that the tests have not been rigorous enough and worry that the markets won't take them seriously. Some bank managers, meanwhile, worry that too much honesty might harm their institution's image.
But how do the stress tests really work? What is the point? And what effects might they have on European financial markets? SPIEGEL ONLINE takes a look at the most important questions.
More.
http://www.spiegel.de/international/business/0,1518,707957,00.html#ref=nlint
Just in case the Committee blunders and releases a shocker, the embarrassed banks have a weekend to concoct some sort of plausible cover story, although most banks have already probably been tipped as to what the Committee has to say about each individual bank and their PR hacks have worked overtime to be ready with the best possible spin once the results are released. The weekend press will probably deconstruct all the Committee’s best planned smoke and mirrors.
In other news, the great Eur-Asian drought and floods continues to make the weather market driving grain prices. Below, the latest developments in our most unusual year. We haven’t seen the last of this continuing saga, I think, I suspect that there’s some really shocking crop figures still to come.
Caution: I drive like you do!
Caravan sticker.
Putin Reverses Grain Intervention Strategy
22 July 2010
By Olga Razumovskaya
The state will begin unloading grain from its stockpiles August 4 to help relief efforts in drought-stricken regions, Agriculture Minister Yelena Skrynnik said Wednesday, ending two years of stockpiling meant to support prices.
The government also has said it hopes to help farmers and is considering five-year subsidized loans to purchase grain from stockpiles among other bailout measures to lessen the impact of the drought.
Twenty-three regions across Russia have declared a state of emergency as weeks of record-breaking heat have ruined 9.6 million hectares of grain this season.
Three million tons of grain from the 2005 and 2008 harvests will be distributed among cattle and poultry breeders, flour mills and processing plants in the affected regions, Skrynnik said.
Some farmers had been slaughtering animals and rushing the meat to market because of the rising prices to feed their herds.
Prime Minister Vladimir Putin held a separate meeting Wednesday with First Deputy Prime Minister Viktor Zubkov, whom he ordered to head a working group that will coordinate the response among governors.
"I think the situation should be taken under much tighter control. I'm asking you to create a working group and monitor the situation daily," Putin told Zubkov, according to a transcript posted on the government web site.
Skrynnik said the state-run United Grain Company, created in March 2009 to regulate exports, would start accrediting organizations to participate in trading sessions at the National Mercantile Exchange on Monday.
The grain intervention fund currently has 9.5 million tons in storage. Since 2007, the last year Russia sold grain from its stockpile, Russia has only been intervening in the market to purchase grain.
http://www.themoscowtimes.com/news/article/putin-reverses-grain-intervention-strategy/410832.html
Rainstorms hit northeast China, 152,000 people relocated
BEIJING, July 22 (Xinhua) -- Rainstorms have caused havoc in the northeastern provinces of Liaoning and Jilin since Monday, leading to the collapse of 5,700 houses and relocation of 152,000 people, the Ministry of Civil Affairs said Thursday.
In Liaoning, 5,200 houses were flattened and 105,000 people relocated as of 10 a.m. Thursday, while in Jilin 500 houses were destroyed and 47,000 people moved, said a ministry spokesman.
Nearly 2 million people in the two provinces were affected, he said.
Some areas have recorded more than 300 mm of rainfall since Monday, he added.
http://news.xinhuanet.com/english2010/china/2010-07/22/c_13410286.htm
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BEIJING, July 22 (Xinhua) -- China Thursday launched an early-warning response to Typhoon Chanthu as it is believed the tropical cyclone could devastate parts of the nation's southern coastal areas.
The National Disaster Reduction Commission and the Ministry of Civil Affairs alerted civil affairs authorities in Guangdong, Hainan, Guizhou and Hunan provinces and Guangxi Zhuang Autonomous Region, about the risks posed by Chanthu.
Chanthu, the third typhoon of the season, made landfall at the coastal area of Wuchuan City, southern China's Guangdong Province, at around 1:45 p.m. Thursday.
The ministry required local governments, particularly in areas previously hit by floods and landslides, and relevant departments to closely monitor the development of Chanthu and take action to alleviate disasters.
http://news.xinhuanet.com/english2010/china/2010-07/22/c_13410394.htm
Staying with weather for now, BP has to shut down its Macondo operations and fret out the weekend hoping that nothing else goes wrong while everyone is away sheltering in port. Given the recent track record, that’s quite a leap of faith.
If this sticker is getting smaller, the light is probably green.
Caravan sticker.
Storm Threat Forces Ships to Leave Work at Oil Spill Site
By HENRY FOUNTAIN Published: July 23, 2010
As the threat of a storm stalled efforts to permanently seal BP’s blown-out well in the Gulf of Mexico, the government said Thursday that the well would be left closed off and unattended if ships had to leave the area.
By late Thursday evening, Thad W. Allen, the retired Coast Guard admiral who leads the federal response effort, said many vessels at the well site were preparing to leave now that a tropical depression had developed into a tropical storm, Bonnie, that was headed into the gulf.
Among those preparing to evacuate, he said, was a drill rig that is working on a relief well, which is considered the ultimate way to seal the well. It was beginning the process of disconnecting a riser pipe from the rig to the seabed and pulling it up, a process expected to take up to 12 hours.
The decision to leave the well capped, which was made at the recommendation of Energy Secretary Steven Chu, means that scientists with the government and with BP think that the well is undamaged and that there is little risk it would deteriorate if kept under pressure, as it has been since valves on a new cap were closed a week ago. Reopening the valves would mean that oil, which has not flowed since they were closed, would once again pour into the gulf.
“We have enough confidence to leave the well shut in,” Kent Wells, a senior vice president of BP, said in a conference call with reporters in Houston.
At the well site, 50 miles off the Louisiana coast, most work was halted during the day in advance of the storm’s arrival.
----- Mr. Wells said the storm would delay operations 10 to 12 days, depending on its severity and how close it passed by the site. That would push back completion of a relief well to the middle of August, he said.
The drill rig that is working on the relief well is most likely to be among the first to leave because it travels very slowly.
http://www.nytimes.com/2010/07/24/us/24spill.html?_r=1&hp
We end for the weekend with a US report stating the obvious, the great vampire squids, whose avarice and worse nearly crashed the whole international financial system, were and are overpaid. Happily for Wall Street’s squids, there’s no way to force them to disgorge any of their ill gotten gains, nor any serious attempt to reform them. Real reform must await “the next Lehman,” when the whole fiat currency system comes crashing down.
Stupidity is not a crime so you’re free to go
Caravan sticker
Federal Report Faults Banks on Huge Bonuses
By ERIC DASH Published: July 22, 2010
With the financial system on the verge of collapse in late 2008, a group of troubled banks doled out more than $2 billion in bonuses and other payments to their highest earners. Now, the federal authority on banker pay says that nearly 80 percent of that sum was unmerited.
In a report to be released on Friday, Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.
The group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and the American International Group as well as small lenders like Boston Private Financial Holdings. Mr. Feinberg’s report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses, the people with knowledge of his findings said, and he has singled out Citigroup as the biggest offender.
Even so, Mr. Feinberg has very limited power to reclaim any money. He can use his status as President Obama’s point man on pay to jawbone the companies into reimbursing the government, but he has no legal authority to claw back excessive payouts.
Mr. Feinberg’s political leverage has been weakened by the banks’ speedy repayment of their bailout funds. Eleven of the 17 companies that received criticism in the report have repaid the government with interest, so they have no outstanding obligations to reimburse.
As a result, Mr. Feinberg will merely propose that the banks voluntarily adopt a “brake provision” that would allow their boards to nullify or alter any bonus payouts or employment contracts in the event of a future financial crisis. All 17 companies have told Mr. Feinberg that they will consider adopting the provision, though none has committed to do so.
http://www.nytimes.com/2010/07/23/business/23pay.html?ref=business
At the Comex silver depositories Thursday, final figures were: Registered 53.34 Moz, Eligible 57.59 Moz, Total 110.93 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No great vampire squids today, not even a dodgy photographer hired by BP. No bent politicians either, sadly, though another one was just charged with fraudulently fiddling his House of Commons expenses this week. No crooked regulators either, though why no one at the SEC, or CFTC has been charged for aiding and abetting by looking away Bernie Madoff, Hank Paulson, “Bubbles” Greenspan, Geithner, Bernanke, et al, remains a mystery to the rest of the world, now suffering from the avarice of Wall Street and US bent politicians trying desperately to enforce the dying fiat currency, dollar reserve standard. Today it’s Toyota, and their engineers, who seemingly re-created a hybrid engine by borrowing without attribution or compensation, the work of a Russian émigré engineer to the United States. If only the troublesome Mr. Severinsky had remained in obscurity in the old Soviet Union, no one would have been any the wiser.
If you can read this, I have lost my caravan.
Car sticker.
Russian Inventor Settles Toyota Dispute
22 July 2010 By Alisa Fialko / Vedomosti
Soviet emigre Alexei Severinsky reached a settlement Tuesday with Toyota after seeking compensation for the carmaker's use of what he claimed was his design for a hybrid engine.
Severinsky emigrated from the Soviet Union to the United States in 1978, and in 1994 he invented and patented a high-voltage power-train technology for a hybrid electric-gasoline automobile.
The system is used in the Prius and other Toyota cars with a hybrid engine. Severinsky said the Prius works because of him, while the carmaker said the engine was created by its own engineers.
In 2005, a U.S. federal court sided with Severinsky and required Toyota to pay him $25 for every car sold in the United States, where the patented technology is used. In addition to the Prius, the Lexus RX400h and the Toyota Highlander also use the technology.
The award was too small for Severinsky, however — he was asking $98 for each car and an appellate court sided with him, Bloomberg reported. Toyota contested this, but Severinsky's company, Paice, petitioned the United States International Trade Commission, asking it to limit the import of Japanese hybrids to the United States.
The first hearing was scheduled for Monday, but Toyota and Paice announced the day before that they had agreed on a settlement.
The conflict with the Japanese automaker is over, Severinsky told BusinessFM. Toyota, he said, compensated his company, but declined to give a figure. Toyota representatives did not say either, but they did confirm that compensation was paid, adding that the carmaker simply decided to stop the conflict and save money on court costs.
If Severinsky had won the case in court, Toyota would have had to pay him $1.4 million per month, Bloomberg reported. In June alone, the company sold 14,639 hybrids in the United States (Prius, Camry, Lexus HS250h and Lexus RX450h).
All legal challenges to Toyota have been withdrawn, Paice said in a press release. Both sides acknowledged that the Toyota technology is equivalent to what was patented by Paice but was developed independently from the invention by Severinsky and his company.
Nevertheless, Toyota reached a licensing agreement on all Paice's patents, the last of which expires in 2019, a spokesperson told Vedomosti. Toyota representatives confirmed this but declined to give details, saying only that payments would be made until the patents expire.
http://www.themoscowtimes.com/business/article/russian-inventor-settles-toyota-dispute/410802.html
Another weekend and the height of the summer holiday season now gets underway. Millions of Europeans criss cross Europe in search of rest and relaxation in far away places, in strange languages they barely comprehend. Peculiar foods of all description are also consumed, as some way of atoning to God for all their previous sins. Here in Britain, we reserve a special form of cruel and unusual punishment for those taking the old fashioned UK vacation. Endless hours of 30 mph motoring, stuck behind rank amateurs practicing towing caravans for the first time since this time last year. A few brave Europeans venture forth to America, in search of abuse and vilification at the hands of America’s national Nazi squad that have taken over and occupied all points of entry and exit. It’s the German Grand Prix too, and a chance for Herr Vettel to get even with the upstart Australian Webber, who thoroughly trounced him in the British Grand Prix, despite being force to give all the best parts on his car to Herr Vettel. Mr Webber’s Red Bull car will now likely get the “Toyota treatment” to steering and brakes, from a team that has very much only one result in mind. Have a great weekend everyone, especially anyone enjoying the wonders of UK caravaning.
The Caravan Club provides services for one million caravan, motor caravan and trailer tent owners, as well as offering a superb choice of quality caravan parks and caravan sites in the UK and Ireland. We also have the largest touring caravan insurance scheme in the UK
The monthly Coppock Indicators finished June:
DJIA: +269 Down. NASDAQ: +460 Down. SP500: +290 Down.
The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators.
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