Tuesday 3 August 2010

Better Greek than German.

Baltic Dry Index. 1977 +10
LIR Gold Target by 2019: $3,000.

Greece as Mary to Germany’s Martha.

Luke 10:38-42

For more on the Greek way of life, scroll down to the Crooks and scoundrels corner. We open today with bad news as good news for US stock markets. Things are now so “good” in the US economy that Nomura is calling for the Fed to start expanding its balance sheet again. I suspect we will not have to wait long before the Fed starts quantitative easing again. After yesterday’s stock market action, has the Fed already started by buying up US stocks.

"Considerable uncertainty is attached to all economic estimates"

Alan Greenspan.

Factory sector slows again in July

Manufacturing sector at 55.5% is lowest in 2010

Aug. 2, 2010, 12:31 p.m. EDT

WASHINGTON (MarketWatch) -- Activity among the nation's manufacturing firms in July slowed to the worst level since December, according to a closely followed survey of top executives released Monday.

The Institute for Supply Management's manufacturing index fell to 55.5% in July from 56.2% in June. This was above the 55.0% expected by economists surveyed by MarketWatch but the third decline in succession

Stocks added to their climb after the report was released because the headline was better than expected.

---- Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting.

The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last.

At the current level, the ISM's consistent with growth of about 5% at an annualized clip. Manufacturing has been much stronger than the rest of the economy.

The nation's economy, as measured by gross domestic product, grew at a 2.4% pace in the second quarter.

http://www.marketwatch.com/story/us-ism-factory-sector-slows-again-in-july-2010-08-02

Federal Reserve to start the deflation fight next week, expert claims

The Federal Reserve is set to kick-start a new phase of monetary easing, a leading Wall Street economist claims.

By James Quinn, US Business Editor Published: 11:19PM BST 02 Aug 2010

Paul Sheard, Nomura's chief global economist, argues that the current conditions are ripe for the American central bank to take affirmative action to put the US recovery back on track.

In the first call of its kind from a Wall Street economist, Mr Sheard says that given subdued growth and concern about inflation, the Federal Open Markets Committee will act when it meets a week today.

His comments follow those of James Bullard, president of the St Louis Fed, who last week said the central bank needs to equip itself with a plan for further quantitative easing should it be required, and after the latest US growth figures showed the American economy deteriorated somewhat in the second quarter.

------"We now believe that current conditions have moved policymakers into action and that the FOMC will adopt a more accommodative stance at its 10 August meeting," Mr Sheard wrote in a research note. "We expect the Fed to at least stop the passive contraction of its balance sheet."

Such a step is one of three possible options the Fed has in its arsenal, as outlined by Ben Bernanke, chairman of the Federal Reserve, before the US Congress last month.

The other two are restarting the asset purchase programme that ended in March, and changing the language in the FOMC's statements to make it clear deflation will not be tolerated.

However Mr Sheard argues that stopping the Fed's balance sheet from contracting further seems a sensible move.

"To the extent that the size of the Fed's balance sheet matters, this, in effect, amounts to a gradual tightening of monetary policy. Further shrinkage of its asset holdings now seems inappropriate in light of downside risks to growth," he continued.

Concerns about the health of the US economy shone through in the fate of the dollar yesterday, with the dollar index – which values it against a basket of currencies – hitting a three-month low on fears that US recovery is stalling.

http://www.telegraph.co.uk/finance/economics/7923054/Federal-Reserve-to-start-the-deflation-fight-next-week-expert-claims.html

Back across the Atlantic, in the lands where the world owes everyone a living, it is only fiat money after all and all allocation is political which is presumably why we start by giving it free to banksters, Italy has become the old Italy again, as the clock slowly turns back to the 1970s. Below, Italy on its way to joining Greece. Pretty much as predicted, all the cash for clunker programs achieved was to expedite future auto sales.

Italy trapped in slow lane as political crisis deepens

July car sales have plummeted in Italy, compounding the country’s woes as political crisis threatens months of wrangling and fresh concerns about the safety of Italian debt.

By Ambrose Evans-Pritchard Published: 9:13PM BST 02 Aug 2010

Rome said new registrations dropped 26pc from a year earlier, led by a 36pc fall for Fiat. "It is a complete disaster for everybody. The prime minister needs to take charge," said Filippo Pavan Bernacchi, head of the trade lobby Federauto.

Fiat’s chief executive Sergio Marchionne said Italy is the only part of the world where the resurgent company has not made a profit over the last eighteen months. "Italy’s industrial network cannot compete as it is," he said.

Mr Marchionne is embroiled in a showdown with Italy’s trade unions, demanding a radical overhaul of working practices before agreeing to fresh investment. "We want to run the plants. There is nothing obscene about that, but here in Italy it seems like we are asking for the moon," he said.

Italy has weathered the crisis of the last three years in good shape, thanks to modest private debt and the firm hand of finance minister Giulio Tremonti.

However, political risk is rising as the ruling party of premier Silvio Berlusconi breaks apart over claims of corruption, masonic conspiracies, wire-tap abuses, and attempts to interfere with the courts and free speech. Mr Berlusconi’s attempts to silence his erstwhile ally and chief critic Ginafranco Fini have back-fired badly, leading to revolt that has stripped the government of its parliamentary majority.

----Car sales fell 24pc in Spain and 13pc in France as scrappage schemes are phased out and consumers brace for austerity. The contours of a two-speed recovery in the eurozone are becoming clearer, with Club Med lagging far behind a turbo-charged Germany.

Germany’s KfW-IFO confidence index for Mittelstand firms has surged to 21.1, the highest since reunification in 1991. "There is now a property mini-boom in cities such as Dusseldorf, Munich, and Berlin: people are buying like mad," said Hans Redeker, currency chief at BNP Paribas.

As widely predicted, Europe’s scrappage schemes "cannibalised" future sales, leading to a cliff-edge effect that now weighs on economic recovery.

"We think Europe’s economy will start rolling over again as we move into September and October, and may even contract in the fourth quarter," said David Owen from Jefferies Fixed Income.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7923246/Italy-trapped-in-slow-lane-as-political-crisis-deepens.html

Since it’s only fiat money, nothing to do with the Italian cars, and all fiat money decisions are purely political, I have a solution for Italy, and it’s far cheaper than forever bailing out banksters. Give each of the 2 million unemployed one million on condition that they all have to buy an Italian car and house within six months, followed by taking at least one holiday in Italy, and eating out at least twice a week. For the purist, make the gift a 10 year loan at 0.5% interest, and make the loan via a government deposit in an Italian bank. Offset any unpaid taxes or fines and impose a 100% transfer tax on any attempt at sending any of the money to money heaven in Switzerland. By now you get the idea. Unemployment solved and an Italian boom, just like you get when you take a country to war, but without the war. And all on a loan that may or may not get paid back, but at least half will be able to cover the interest. In 10 years time who knows, roll it or write part of it off, or simply put a lien on the property they bought......

"We pay the debts of the last generation, by issuing bonds payable by the next generation."

Dr. Laurence J. Peter, author, The Peter Principle

We end for the day awaiting the “solar tsunami.” Is it all hype, or will we notice an effect later today and tomorrow?

Nasa scientists braced for 'solar tsunami' to hit earth

The earth could be hit by a wave of violent space weather as early as Tuesday after a massive explosion on the sun, scientists have warned

By Andrew Hough Published: 9:00PM BST 02 Aug 2010

The solar fireworks at the weekend were recorded by several satellites, including Nasa’s new Solar Dynamics Observatory which watched its shock wave rippling outwards.

Astronomers from all over the world witnessed the huge flare above a giant sunspot the size of the Earth, which they linked to an even larger eruption across the surface of Sun.

The explosion, called a coronal mass ejection, was aimed directly towards Earth, which then sent a “solar tsunami” racing 93 million miles across space.

Images from the SDO hint at a shock wave travelling from the flare into space, the New Scientist reported.

Experts said the wave of supercharged gas will likely reach the Earth on Tuesday, when it will buffet the natural magnetic shield protecting Earth.

It is likely to spark spectacular displays of the aurora or northern and southern lights.

"This eruption is directed right at us," said Leon Golub, of the Harvard-Smithsonian Center for Astrophysics (CfA).

"It's the first major Earth-directed eruption in quite some time."

-----Dr Lucie Green, of the Mullard Space Science Laboratory, Surrey, followed the flare-ups using Japan's orbiting Hinode telescope.

"What wonderful fireworks the Sun has been producing,” the UK solar expert said.

“This was a very rare event – not one, but two almost simultaneous eruptions from different locations on the sun were launched toward the Earth.

"These eruptions occur when immense magnetic structures in the solar atmosphere lose their stability and can no longer be held down by the Sun's huge gravitational pull. Just like a coiled spring suddenly being released, they erupt into space.”

She added: "It looks like the first eruption was so large that it changed the magnetic fields throughout half the Sun's visible atmosphere and provided the right conditions for the second eruption.

"Both eruptions could be Earth-directed but may be travelling at different speeds.

http://www.telegraph.co.uk/science/space/7923069/Nasa-scientists-braced-for-solar-tsunami-to-hit-earth.html

At the Comex silver depositories Monday, final figures were: Registered 51.52 Moz, Eligible 58.84 Moz, Total 110.36 Moz.

+++++

Crooks and Scoundrels Corner.

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

Today, more on those Goldman assisted, dead-beat, tax cheat Greeks, from Germany’s Der Spiegel. Hard working, tax paying, hard saving German workers, are tired of paying for the Greek way of life. The suggestion is that Greeks will have to go out and get a job, pay taxes and save for the future just like the rest of the world. The Greeks would rather riot and strike first, confident in the knowledge that if they mess up their economy badly enough, others will step in to with barrels of bailout cash, lest the whole European Monetary Union come crashing down. From faraway London, it’s hard to picture a Greek working and paying taxes, although some in the City still assert great vampire squids are human and have feelings, which if true, makes anything possible I suppose. Below, how 300 Athens swimming pools turned into 17,000. How to own a 100,000 Euro car on an income of 10,000 a year. As for me, I’d rather be Greek than German.

Diogenes wandered around ancient Greece carrying a lantern and searching for an honest man. He never found one.

Finding Swimming Pools with Google Earth

Greek Government Hauls in Billions in Back Taxes

By Daniel Steinvorth in Athens 08/02/2010

In a bid to increase revenues, the Greek authorities are employing all kinds of clever tricks to crack down on tax cheats, including using Google Earth to find undeclared swimming pools. But efforts by the government to liberalize markets could unleash a wave of civil unrest.

---- "Greek statistics" has become something of a running joke in Brussels and Strasbourg. The term stands for tricks, political manipulation and creative accounting. It stands for the entire Greek tragedy, for the numbers-juggling that drove the country to the brink of bankruptcy, and for the statistical pipe dreams of Logothetis' predecessors -- one of whom has already fled abroad.

----There is apparently a sea change underway in Greece these days, the Mediterranean country where, according to one government official, "virtually everyone cheats, and virtually everyone evades taxes." The Greeks, out of necessity, are about to embark on a kind of cultural revolution. The money that has been pledged to save them from collapse comes with stringent conditions.

----- The so-called troika of the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank (ECB) has been in the country again since Monday of last week. The three auditors are to decide again if the efforts made to date by the government of Greek Prime Minister George Papandreou have been sufficient to warrant the transfer of an additional €9 billion ($11.7 billion) out of a total bailout package of €110 billion over three years, which the euro zone countries and the IMF have pledged to provide. The Dane Poul Thomsen, the Belgian Servaas Deroose and the German Klaus Masuch have taken up residence in the luxurious Grande Bretagne hotel in Athens. The three Europeans have the Greeks trembling with fear because, during their two-week inspection tour through the ministries and agencies, all doors and books have to be opened to the men in dark suits. "We Greeks have long since lost all sovereignty," says one hotel manager. "They are the real rulers in this country."

----- Kapeleris, 50, is currently the busiest worker in the Papandreou administration. His workday begins every morning at 7 a.m., in a vast room decorated with Byzantine icons, where three phones continuously ring. This is where he receives his visitors: tired from lack of sleep, smoking, gripping a coffee mug in one hand and wearing a partially unbuttoned shirt.

"Take a look at this," he says, and pulls out a printed Excel table from a pile of documents in front of him. "Here you can see how many cases of tax fraud the Greek state was able to document in the Athens tourist sector in June 2009. Five hundred and six. And do you know how many we found in June 2010? Four thousand, three hundred and forty."

Another table lists the names of doctors, who are considered in Greece to be particularly corrupt. "In May we uncovered 4,357 cases of tax evasion among our doctors," says Kapeleris. "In May of last year it was only 24."

Tracking Down Swimming Pools

His staff have become very creative when it comes to tracking down tax offenders: They use police helicopters to fly over Athens' affluent suburbs and make films of homes owned by doctors, lawyers and businesspeople. They use satellite pictures by Google Earth to locate country villas, swimming pools and properties. And these tactics have revealed that the suburbs didn't have 324 swimming pools, as was reported, but rather 16,974.

Tax fraud investigators spent a number of weeks on nightclub parking lots in Athens and noted down the registration numbers of luxury sedans. Their investigation revealed that approximately 6,000 car owners have vehicles worth €100,000, but only reported to the tax authorities that they have an annual income of €10,000.

More.

http://www.spiegel.de/international/europe/0,1518,709703,00.html#ref=nlint

“We have reason to believe you have committed an offence."

City of London. 1960s parking ticket.

The monthly Coppock Indicators finished July:

DJIA: +264 Down. NASDAQ: +427 Down. SP500: +275 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. July seems to have confirmed June’s reversal and end of the bull market.

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