Baltic Dry Index. 2712 +09
LIR Gold Target by 2019: $3,000.
"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?"
George Orwell, Animal Farm.
While England, Wales and Northern Ireland party away today, on the last bank holiday of summer, leaving the dour, formerly Calvinist Scots to soldier on slaving away to save the nation from the criminal follies of the Bank of England’s cronies, a clash between the G-7 and G-9 China took a big step forward at the weekend. With the USA sliding back into recession again, if it ever left rather than it just being the figures fixed, and with Dr. Bernanke about to try a second dose of Zimbabwe’s medicine in the form of a another bout of quantitative easing, beating up on China has rarely looked more attractive to politicians in the G-7. Below, the NY Times and The Telegraph cover the developing story. With the traditional stock market crash season upon us, and 3 repeat Hindenburg Omen signals in US stocks in a week, what better than to blame China for all the troubles of the west. Stay long precious metals. The real trouble is the great Nixonian error of going on to a fiat money reserve currency. Since the banksters won’t address that problem until we all go broke in the west, another round of Voodoo economics is called for.
"If a window was broken or a drain was blocked up, someone was certain to say that Snowball had come in the night and done it, and when the key of the store-shed was lost, the whole farm was convinced that Snowball had thrown it down the well. Curiously enough, they went on believing this even after the mislaid key was found under a sack of meal."
George Orwell, Animal Farm.
China Fortifies State Businesses to Fuel Growth
By MICHAEL WINES Published: August 29, 2010
BEIJING — During its decades of rapid growth, China thrived by allowing once-suppressed private entrepreneurs to prosper, often at the expense of the old, inefficient state sector of the economy.
Now, whether in the coal-rich regions of Shanxi Province, the steel mills of the northern industrial heartland, or the airlines flying overhead, it is often China’s state-run companies that are on the march.
As the Chinese government has grown richer — and more worried about sustaining its high-octane growth — it has pumped public money into companies that it expects to upgrade the industrial base and employ more people. The beneficiaries are state-owned interests that many analysts had assumed would gradually wither away in the face of private-sector competition.
New data from the World Bank show that the proportion of industrial production by companies controlled by the Chinese state edged up last year, checking a slow but seemingly inevitable eclipse. Moreover, investment by state-controlled companies skyrocketed, driven by hundreds of billions of dollars of government spending and state bank lending to combat the global financial crisis.
They join a string of other signals that are fueling discussion among analysts about whether China, which calls itself socialist but is often thought of in the West as brutally capitalist, is in fact seeking to enhance government control over some parts of the economy.
The distinction may matter more today than it once did. China surpassed Japan to become the world’s second-largest economy this year, and its state-directed development model is enormously appealing to poor countries. Even in the West, many admire China’s ability to build a first-world infrastructure and transform its cities into showpieces.
Once eager to learn from the United States, China’s leaders during the financial crisis have reaffirmed their faith in their own more statist approach to economic management, in which private capitalism plays only a supporting role.
“The socialist system’s advantages,” Prime Minister Wen Jiabao said in a March address, “enable us to make decisions efficiently, organize effectively and concentrate resources to accomplish large undertakings.”
More. 3 pages.
http://www.nytimes.com/2010/08/30/world/asia/30china.html?_r=1&hp
Backlash over China curb on metal exports
China's draconian export curbs on rare earth minerals needed by the rest of the world for frontier technologies is escalating into a serious diplomatic and trade clash with the United States and other leading powers.
By Ambrose Evans-Pritchard Published: 9:52PM BST 29 Aug 2010
Japan's foreign minister Katsuya Okada issued what amounted to a formal protest at top-level meeting with Chinese officials in Beijing over the weekend, saying the sudden cut-off was "affecting the global production chain".
It is the latest sign of rising pressure after angry complaints by companies outside China that rely on this family of 17 metals for hybrid cars, mobile phones, superconductors, navigation, and a host of high-tech industries.
China's commerce minister Chen Deming said that Beijing would not back down over the export quotas. "Mass-extraction of rare earth will cause great damage to the environment, that's why China has tightened controls," he said, repeating the official line.
Beijing set off shockwaves in early July when it announced a 72pc reduction in rare earth exports over the second half of this year. The country has acquired a near monopoly, with 97pc of global output after under-cutting the rest of the world with Mongolian ores in the 1990s. The sudden cut-off since July has drastically restricted supplies to the rest of world.
The last US mine shut 14 years ago, discouraged by tough US environmental rules. The US General Accounting Office said China now has a "dominant position" with market power. "Rebuilding a US rare earth supply chain may take up to 15 years," it said.
Washington is examining claims that China's curbs breach World Trade Organisation rules by giving preferential access to Chinese companies. The US Trade Representative is collecting data from US firms to assess the basis for a legal challenge. There are strong suspicions that Beijing's aim is to force foreign companies to locate technology plants in China.
Baotou Steel High Tech Co said in February that it was building storage space for 200,000 tonnes of rare earth oxides. The company has since been told to stockpile metals by party bosses in Inner Mongolia. China Daily reports that Baotou and Jiangxi Copper are aligning their policies and now "virtually control" the market.
China claims it will need a growing proportion of these metals for its own industries, but US and Japanese officials say privately that Beijing's methods are not in keeping with the WTO ethos. Japan has already drafted a "Strategy For Enhancing Stable Supplies of Rare Metals" and has been stockpiling.
Rare earth metals are sprinkled in iPads, BlackBerrys, plasma TVs, lasers, wind turbines, hybrid engines, and smart bombs. They cannot easily be replaced, if at all. Neodymium enhances magnets at high heat, and cerium is used in catalytic converters.
Rare earth ores are not in fact rare, merely scattered and costly to extract. There are ample reserves in the US, Australia, Canada, Russia, and Greenland. A number of explorers are reopening mines but will not produce significant amounts until mid-decade.
Rare Metal blog. http://www.raremetalblog.com/
The superior man makes the difficulty to be overcome his first interest; success comes only later.
Confucius.
At the Comex silver depositories Friday, final figures were: Registered 51.91 Moz, Eligible 59.23 Moz, Total 111.14 Moz.
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Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No crooks today, although if the newspaper allegations against the Pakistan cricket team are accurate they would be a good candidate, instead two developing stories with the possibility to have a major impact as the week unfolds. Up first, hurricane Earl, an Atlantic strengthening hurricane with the potential to hit the east coast of the USA. For now, computer models suggest that it will swing northwards and probably miss landfall on the east coast of the USA.
Hurricane Earl Strengthens to Category Two; Threatens Leewards
Aug. 30 (Bloomberg) -- Hurricane Earl strengthened as it moved toward the northern Leeward Islands and is expected to become a “major” storm later today, the U.S. National Hurricane Center said.
Earl was upgraded to a Category 2 hurricane on the five- step Saffir-Simpson scale with maximum sustained winds of 100 miles (160 miles) per hour, the Miami-based center said in an advisory at 11 p.m. Miami time yesterday.
Hurricane warnings are in effect for Anguilla, Antigua, Barbuda, Montserrat, St. Barthelemy, St. Eustatius, St. Kitts and Nevis and St. Martin in the northern Leewards and the British Virgin Islands, the hurricane center said. A hurricane watch was issued for the U.S. Virgin Islands and Puerto Rico.
“Hurricane Earl will become a major hurricane over the next few days and will pose a serious threat to the East Coast as we approach Labor Day weekend,” said Jim Rouiller, energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania yesterday.
“The next few days will be critical because each day that passes this week without any true and sustained hook northward will result in threat levels dramatically increasing for a major hurricane strike to the East Coast,” he said.
Earl was moving west-northwest at 15 mph and is expected to continue in this direction for the next day or so, the center said.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aad1BkI24JR4&pos=9
Next, an Indonesian volcano coming back to life after 400 years. The expectation is for the danger to pass, but Indonesian volcanoes can have spectacular eruptions. Worryingly, the Toba caldera and super-volcano is located only about 50 miles away. Any sign of Toba returning to activity would be very big news indeed.
Thousands evacuated as Indonesian volcano erupts
By Karima Anjani in Jakarta Monday, 30 August 2010
Thousands of Indonesians were evacuated from the slopes of a volcano yesterday after it erupted for the first time in more than 400 years, spewing out lava and sending smoke and dust 1,500 metres into the air.
Mount Sinabung, in the north of the island of Sumatra, began erupting around midnight after rumbling for several days, prompting some villagers to panic before the mass evacuation got under way.
Indonesia is on the so-called Pacific Rim of Fire, an arc of volcanoes and geological fault lines triggering frequent earthquakes around the Pacific Basin. The eruption triggered the highest, red, volcano alert. Two people died, one from breathing problems and the other from a heart attack, and two suffered injuries in road accidents as lorries, ambulances and buses were mobilised in the rescue operation.
"This is the first time since 1600 that Sinabung has erupted and we have little knowledge in terms of its eruptive patterns," said Mr Surono, the head of Indonesia's vulcanology centre.
Authorities took at least 12,000 people from high-risk areas on the slopes of the 2,460-metre volcano to temporary shelters. Local television showed women and children wearing face masks in cramped tents.
The area around the volcano is largely agricultural.
"Since this is the first eruption we've had in Sinabung, we're anticipating residents will remain at the shelters for at least a week while waiting for further status alerts," said Priyadi Kardono, a spokesman at the national disaster management agency.
Toba’s cataclysmic eruption.
http://www.andaman.org/BOOK/originals/Weber-Toba/ch1_intro/text1.htm
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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Sunspots – A 22 year colder world? (From 2004?)
Spotless Days Aug 29
Current Stretch:0 days
2010 total: 39 days (16%)
2009 total: 260 days (71%)
Since 2004: 807 days
Typical Solar Min: 485 days
The long minimum seems to have ended or has it? I’m beginning to think our new Dalton Minimum of arriving global cooling, might turn out in fact to be a much longer more severe Maunder Minimum.
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