Baltic Dry Index. 2712
LIR Gold Target by 2019: $3,000.
“The war has developed not necessarily to Japan's advantage.”
Emperor Hirohito, August 1945
Japan yesterday became the first of the G-7 to return to quantitative easing. Where a bold policy was needed to break the rise of the yen, the BOJ opted instead for a baby step policy, and so the yen rose and Japan’s stocks slumped. Once started QE is virtually impossible to stop. A bad policy with eventual ruination as its destination, if you’re going to use QE, the BOJ forgot the only rule that applies, “you might as well be hung for a sheep as a lamb”. With the yen rising and taxes high, “Panasonic Corp., the maker of Viera televisions, said Aug. 20 it will move part of its plasma display panel production to Shanghai.” I wonder how much of that decision was down to China restricting rare metals exports and ending them entirely in 2015. Plasma panels require phosphors with rare earth doping. (Red requires europium, new blue europium phosphor retains brightness ten times longer than previous blue phosphors, and green is generated by phosphor doped with terbium.) Unless the west comes up with alternate non Chinese based rare earths and metals sources, the technology manufacturing future looks to be Chinese.
“Japan is an important ally of ours. Japan and the United States of the western industrialized capacity, 60 percent of the GNP, two countries. That's a statement in and of itself.”
Vice President Dan Quayle.
Japan renews QE as recovery falters
Japan has launched a fresh monetary and fiscal boost to shore up its faltering recovery and stem the slide into deflation, becoming the first major country to inject further stimulus since the Great Recession ended.
By Ambrose Evans-Pritchard, International Business Editor Published: 8:20PM BST 30 Aug 2010
The Bank of Japan agreed at an emergency meeting to boost its special loan facility by ¥10 trillion to ¥30 trillion (£220.7bn). "We need to watch out more carefully for downside risks to Japan's economy," said Governor Masaaki Shirakawa, who cut off his trip to the Jackson Hole forum in the US.
"Several weak US figures came out, while the yen rose and stock prices fell. When we saw this, we decided that we need to take more precautions."
Premier Naoto Kan said Tokyo would tap into its reserve fund for a ¥920bn spending package on jobs and investment. "We want to take swift measures as the second pillar of stimulus to support easing by the bank," he said.
The sums are tiny, a sign of Mr Kan's limited room for manoeuvre as public debt reaches 225pc of GDP. Rating agencies are already circling ominously.
The economy stalled in the second quarter, growing just 0.1pc. Prices have fallen for the past 17 months. Core deflation is running at -1.1pc.
The Bank of Japan's move was too timid to stabilise exchange markets. The yen appreciated sharply to ¥84.6 against the dollar. It is once again closing in on a 15-year high.
---- Even so, it is the first central bank to start loosening again.
While the Bank of England has hinted at more quantitative easing, and the Fed is taking steps to avoid "passive tightening", neither has yet launched fresh QE
http://www.telegraph.co.uk/finance/economics/7972098/Japan-renews-QE-as-recovery-falters.html
Japan Policy Tinkering Leaves ’Huge’ Risk to Growth
Aug. 31 (Bloomberg) -- Japan’s limited policy response yesterday to risks facing economic growth after a surge in the yen may leave the recovery dependent on overseas spending.
---- The measures won’t alter the outlook for growth, which is poised to slow in the second half, according to economists at Goldman Sachs Group Inc. and Sumitomo Mitsui Asset Management Co. Pressure on Japan’s currency to rise may also be sustained after the announcements prompted the yen to rise from its low of the day yesterday against the dollar.
----- The Nikkei 225 Stock Average tumbled 2.1 percent as investors shrugged off government reports today that showed the recovery remains intact even as it slows. Industrial production unexpectedly expanded 0.3 percent in July from June, when it declined 1.1 percent. Retail sales rose 0.7 percent from a month earlier as hotter-than-usual summer weather spurred shopping.
Japan’s recovery from its worst postwar recession has depended on exports, propelled by Asia, which now makes up a majority of overseas demand for the country’s products. That reliance is unlikely to change given limited prospects for domestic spending with a shrinking population and sustained deflation.
Gross domestic product growth will be more than halved in the final six months of this year, to an annual pace of about 1 percent from about 2.4 percent in January to June, according to Goldman Sachs.
Corporate Taxes
“There are huge downside risks” to the expansion, said Chiwoong Lee, a senior economist at Goldman Sachs in Tokyo. Rather than the “limited” action taken yesterday by policy makers, “what’s needed are measures that lead to innovative steps,” such as reductions in corporate tax rates for industries including technology, he said.
Tax rates for electronics companies in Japan are around 29 percent in Japan, compared with 6 percent in the U.S., Lee said.
Keidanren, Japan’s biggest business lobby, has called on the government to support investment by cutting corporate taxes. Without such a step, companies may plow their record cash holdings abroad rather than at home.
Nissan Motor Co., Japan’s third-largest automaker, began selling a Thai-made compact car in July to counter the rising yen. Panasonic Corp., the maker of Viera televisions, said Aug. 20 it will move part of its plasma display panel production to Shanghai.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=alu_oRV._Ouw&pos=5
In other Asian news, China’s gain is Europe’s loss. Well. It isn’t yet but it soon will be. With Russia’s oil production hitting its limits and set to decline from next year onwards, Russia will soon have the option of deciding who stays warm in the northern hemisphere winter. Washington’s colour revolution policy of encircling Russia and going in for the kill, backfired badly as it forced Russia and China into a defensive alliance. Western Europe will soon get to pay for the ill conceived and poorly executed colour revolutions in faraway places, but Russia’s backyard.
Russia opens China pipeline for Siberian oil
By Isabel Gorst in Moscow
Published: August 29 2010 18:00 Last updated: August 29 2010 18:00.
Vladimir Putin, the Russian prime minister, on Sunday opened a new pipeline to export east Siberian oil to China that will help Russia reorientate its oil trade towards the east.
The pipeline, running 67km from Skovorodino in east Siberia to China’s north-eastern frontier, is an offshoot of a new oil export route Russia is building to the Pacific Ocean, providing a strategic window on the fast-growing energy markets of Asia.
----Russia began exporting oil this year from a new export terminal on the Pacific Ocean built to serve fields in east Siberia, one of the world’s last untapped oil provinces. Some Kremlin-friendly oil companies have been granted tax breaks to speed development of east Siberian reserves and offset a decline in production in other regions.
Transneft, the Russian oil pipeline monopoly, completed the construction of a pipeline from Taishet in the Irkutsk region to Skovorodino last year, the first stretch of a planned 2,757km pipeline to the Pacific. On completion in 2012, the pipeline will be capable of carrying up to 1.6m barrels of oil a day, about one-third of Russia’s current exports.
----Russia accepted a $25bn (€19.6bn, £16bn) loan from China in exchange for future oil deliveries last year, cementing its energy-trading relations with the world’s fastest growing oil consumer. The deal entitles China to import 300,000 barrels a day of Russian oil for 20 years starting in 2011.
Transneft said last year that Russia would boost its daily oil production by 1m barrels to 11m b/d after 2012, providing enough oil for exports both ways.
But analysts have warned that Russian oil production, after rising to an all-time record of 10.2m b/d this month, will begin to fall next year as a decline accelerates at mature fields.
http://www.ft.com/cms/s/0/dd89374a-b38c-11df-81aa-00144feabdc0.html
We end today with signs of global cooling arriving, perhaps?
China's largest saltwater lake grows after 50 years of shrinking
10:40, August 02, 2010
The surface area of China's largest saltwater lake had grown in size over the past five years amid increased rain and decreased evaporation, an expert from the Qinghai Provincial Center of Geomatics said Saturday.
The surface area of the Qinghai Lake had reached 4,249.3 square kilometers, 4.3 square kilometers more than in 2005, Wang Yuan, deputy director of the center, said.
"The year 2005 was a turning point. Before then, the lake's size was decreasing due to climate change and human activities," Wang said.
The government's environmental protection work had contributed to the increase in surface area, Wang said.
The lake's surface area shrunk more than 300 square kilometers beginning in the 1950s, according to the Qinghai Province Meteorological Sciences Academy.
http://chinatibet.people.com.cn/7089362.html
At the Comex silver depositories Monday, final figures were: Registered 51.91 Moz, Eligible 58.85 Moz, Total 110.76 Moz.
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Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today it’s the crooks and scoundrels in the Intergovernmental Panel on Climate Change again. The nutters who brought the world the scam of “carbon trading, carbon taxes, and carbon capture”, in the cause of fighting “man-made global warming for CO2”, now rebranded “climate change”, since the public got wise to the man-mad global warming scam, are found guilty of being economical with the truth, and more than a little self serving. Things were apparently so bad, it was the best the finest whitewash committee could come up with. No need to tell them about Qinghai Lake.
How about we refund your money, send you a new one at no charge, close the store and have the manager shot. Would that be satisfactory?
Chinese laundry sign.
IPCC 'must avoid playing politics'
The UN's climate change body has been told to stick to the science and avoid playing politics in a landmark review of how it operates
By Stephen Adams Published: 7:00AM BST 31 Aug 2010
A group of leading scientists from around the world said on Monday that the leaders of the UN's Intergovernmental Panel on Climate Change had left themselves open to the accusation that they had "gone beyond IPCC's remit".
In March the Amsterdam-based InterAcademy Council (IAC) was called in after a number of errors were found in the IPCC's landmark 2007 Fourth Assessment Report into man-made climate change.
Key among those was the unsubstantiated claim - based on an article in New Scientist magazine - that most of the Himalayas' glaciers would have melted by 2035.
Its inclusion gave ammunition to those sceptical about the climate change science, who dug for further evidence that the IPCC's report was flawed and the organisation biased.
On Monday the IAC announced its recommendations on how to strengthen the IPCC, saying it "needs fundamental reform" to convince an ever more sceptical public that its science was solid.
It did not call into question the main findings of the 2007 report, and said that overall its assessment process of the rate of, and risks from, climate chance had "been a success and served society well".
However, the IAC said: "IPCC’s slow and inadequate response to revelations of errors in the last assessment, as well as complaints that its leaders have gone beyond IPCC’s mandate to be 'policy relevant, not policy prescriptive' in their public comments, have made communications a critical issue."
Harold Shapiro, a Princeton University professor of economics, who chaired the IAC committee, noted that "controversies have erupted over the perceived impartiality of IPCC towards climate policy".
He said guidelines should be drawn up "on how to speak on the IPCC's behalf while staying within the the bounds of IPCC reports".
The report also recommended that a "rigorous conflict-of-interest policy" should be drawn up for senior IPCC leadership and authors of its reports. In the future no individual should chair the IPCC for more than one six-year term, it stated.
Additionally, "formal qualifications for the chair and all other Bureau members need to be developed", the IAC said.
While Prof Shapiro stipulated that the IAC's recommendations were "not in any way motivated by an evaluation of the current leadership of IPCC", many will see them as putting pressure on Dr Pachauri.
The Indian scientist, who started his career as a railway engineer, refused to resign following the Himalaya debacle.
He has also been dogged by questions over conflict of interest, which he has resolutely denied. He has been in the post since 2002 - he was awarded a new six-year term in 2008 - and he plans to remain until 2014.
The IAC also said the IPCC should tighten up on its use of so-called "gray literature" - that which has not been peer-reviewed.
Prof Shapiro said: "IPCC has guidelines for the use of such sources, but these guidelines are vague and have not always been followed."
Phew! So that’s alright then. Move along, nothing to see here. For a moment there we actually thought you might be conducting an impartial review.
“They have all the virtues I dislike and none of the vices I admire.”
With apologies to Winston Churchill.
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 30
Current Stretch:0 days
2010 total: 39 days (16%)
2009 total: 260 days (71%)
Since 2004: 807 days
Typical Solar Min: 485 days
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