Baltic Dry Index. 2515 +27
LIR Gold Target by 2019: $3,000.
If anything can go wrong, it will.
Murphy’s Law.
We open today with another of failed guru Greenspan’s spectacular errors. This one the internet mal-investment bubble spawned by the old fraud in 1994, after he took fright after blowing up Orange County California in another spectacular miscalculation by unexpectedly changing interest rates in February of that year. With memories of October 19, 1987 irrevocably burned into the former guru’s mind, the gun shy old charlatan reinvented himself as “Bubbles Greenspan”, the Fed Chief who could spin half-truths into gold by way of setting off an internet and telecoms bubble. Below, Lycos the 12 billion mal-investment bubble knocked down to the Indians for $36 million. Oh well, it’s only fiat money after all, and there’s plenty more where that comes from. Shame about the deluded investors though. Unless they were a bank, all they got was a small measure of tax loss relief.
If all else fails, immortality can always be assured by spectacular error.
J. K. Galbraith.
Lycos, an Internet bubble-era star, is sold to Indian firm
Aug. 17, 2010, 10:14 p.m. EDT
SAN FRANCISCO (MarketWatch) -- Lycos Inc., an Internet-bubble highflier that sold roughly a decade ago for more than $12 billion, has been acquired for $36 million by Indian digital-marketing-services firm Ybrant Digital from South Korea's Daum Communications.
In a statement published Monday, Ybrant Digital Chief Executive Suresh Reddy said the Lycos brand "needs no introduction."
Lycos Chief Strategy Officer Edward Noel added in an email that, "Ybrant is a global provider of marketing solutions, and Lycos is one of only a few globally recognized providers of Internet consumer services."
Noel said that Lycos became profitable last year "for the first time in the history of the company."
Founded in 1994, Lycos went public on the Nasdaq two years later. The company touted the then-novel approach of offering free, advertising-supported Internet search and content.
The Lycos IPO came just a few months after that of another Internet-bubble icon, Netscape Communications, which helped kickstart widespread investor interest in anything Internet-related.
http://www.marketwatch.com/story/lycos-a-web-bubble-star-is-sold-to-indian-firm-2010-08-17
Up next, will Potash’s owners be gulled into swapping real wealth for the illusion of wealth via fiat money. If global cooling arrives, or even if global warming arrives, owning a fertilizer money machine is going to prove an unlimited goldmine to whoever owns Potash at the time. But will the existing owners of Potash see it that way? Will the lure of acres of pictures of dead American Presidents prove too tempting to resist? Will John Bull and Aussie Bruce lure the Manhattan Indians into a swap for trinkets? I rather think they will. Still, acres of dead Presidents can buy a whole lot of tacky trinkets from China.
To err is human, but to persevere in error is only the act of a fool.
Cicero.
AUGUST 18, 2010
A $39 Billion Food Fight
Canada's Potash Corp. Rejects Bid by Miner BHP to Tap Agriculture Market
Anglo-Australian mining giant BHP Billiton made an unsolicited $38.6 billion offer for the world's largest fertilizer producer, Potash Corp. of Saskatchewan Inc., in an aggressive wager that developing economies will drive up demand for the world's food supply.
Potash is an important nutrient that replenishes soil and increases farmland's crop yield. Global potash supplies are relatively limited, and Potash Corp., based in the prairies of central Canada, controls approximately 20% of the supply.
The offer is likely to set off a long struggle for the fate of the Canadian company, a crown jewel of the country's natural-resources-based economy.
Potash's board rejected the BHP offer of $130 a share in cash, a 16% premium to Potash's Monday closing price, calling it "grossly inadequate."
In trading Tuesday, the fertilizer company's shares soared far above the offer, a sign traders expect BHP to raise its bid or other suitors to emerge. Potash shares closed at $143.17, up $31.02, or 27.7%.
The company's chief executive, Bill Doyle, said the board wasn't opposed to a sale, "we just don't expect someone to come steal the company."
People familiar with the matter said BHP would decide in the next few days whether to take its offer directly to Potash shareholders, a move that would officially make BHP's unsolicited offer a hostile one.
Potash adopted a shareholder-rights plan on Tuesday that puts a 20% ceiling on any single stakeholder.
Such a "poison pill" may be less effective in Canada than in the U.S. because a hostile bidder can lobby Canadian securities regulators to have the target company eliminate its plan and allow a tender offer to shareholders.
We close for the day with Moody’s remembering that it’s a ratings company. Wonders will never cease. After a decade or more doing God’s work, turning the water of junk securitized mortgages into the wine of “triple-A” securities for unsuspecting mugs, Moody’s now says that the something for nothing era is ending. Time is running out for the west. The great Nixonian Error is nearing its end. My suggestion, stay long physical precious metals, preferably far from the larcenous grasp of Uncle Sam and John Bull. Moody’s seems to think that pictures of Her Majesty or dead US Presidents have passed their shelf life. The logical outcome of the reign of spectacular errors that flowed out of the Greenspan Fed and Brownian UK Treasury.
The cautious seldom err.
Confucius.
Time is running out for the West
The Great Recession has dramatically shrunk the time left for the big AAA states to prevent a full-blown sovereign debt crisis as their demographic time-bomb threatens, US rating agency Moody's has warned.
By Ambrose Evans-Pritchard Published: 7:36PM BST 17 Aug 2010
"Genuinely adverse debt dynamics were only expected to materialise in 15 to 20 years. The crisis has 'fast-forwarded' history, eroding all the time available to adjust, " said the group's quarterly Sovereign Monitor.
Moody's fears that the US will crash through its safety buffer by 2013 if growth falters (adverse scenario), with interest payments topping 14pc of tax revenues. The debt-to-revenue ratio has already doubled in three years to 430pc.
The US, UK, Germany, France, and Spain are all at risk of an "interest rate shock", either because they must roll over a cluster of short-term debt (US, France, Spain) or because deficits are so large.
Countries that "fail to demonstrate the level of social cohesion required to stabilise debt" will lose their AAA rating. "Intra-generational" conflict between young and old requires careful handling. States that delay pension reform risk spiralling downwards.
Moody's said the world had changed since Europe's debt crisis. None of the large sovereign states can still assume it is credit-worthy. "The burden of proof now falls on governments," it added.
---- The current crisis differs starkly from the "one-off" debt spikes after the Second World War, when young economies were able to outgrow the debt burden. This time the threat lies ahead as the aging crisis drives up pension and health costs on a static tax base. "While the current stock of debt is large, it is dwarfed by the accumulation of future liabilities if policies do not change."
http://www.telegraph.co.uk/finance/economics/7950775/Time-is-running-out-for-the-West.html
If everything seems to be going well, you have obviously overlooked something.
Murphy’s Caution.
At the Comex silver depositories Tuesday, final figures were: Registered 50.99 Moz, Eligible 58.94 Moz, Total 109.93 Moz.
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Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No crooks or squids today, yesterday’s repulsive dose was enough for one week. Today, Reuters covers in depth the US “provocation” in the Yellow Sea. If it goes ahead, my guess is that China will signal its displeasure with South Korea. Below, Reuters on the US Navy’s fear of “misunderstanding and miscalculation” in the Yellow Sea.
Left to themselves, things tend to go from bad to worse.
Murphy’s First Corollary.
ANALYSIS-China, U.S. playing risky game on the high seas
Tue Aug 17, 2010 6:32am GMT
BEIJING, Aug 17 (Reuters) - The game of military bluff that China and the United States are playing off the Chinese coast could erupt in full-fledged crisis hitting the arteries of global trade if Pentagon worries about missteps ever come true.
China has been investing big slices of its growing wealth in modernising its military, and turning its once creaky navy into a blue water fleet that can project power far from its shores, with nuclear submarines and, maybe one day, aircraft carriers.
China is sending naval vessels further afield, to the waters off Somalia to fight pirates, and most recently through the southern Japanese islands, to Tokyo's angst.
That also worries Washington, the world's dominant power, which keeps a hefty military presence in the Asia-Pacific.
While war between the two economically intertwined powers remains a remote possibility, the Pentagon warned on Monday of risks of "misunderstanding and miscalculation" getting out of hand in this trade-driven part of the world plied by thousands of ships daily carrying cargo and oil.
----- Through missteps or miscalculations, the shadowing and jostling between the two sides could flare into a crisis drawing in other governments around the region and rattling investors who fear discord between Beijing and Washington.
The past few years have seen a number of incidents between the two sides, most seriously in 2001, when a U.S. spy plane made an emergency landing on Hainan after a collision with a Chinese fighter jet over the South China Sea. China released the 24 crew after a U.S. apology and a tense couple of days.
With the two militaries not speaking after Beijing cut off contacts over U.S. plans to sell arms to Taiwan, the self-ruled island that China claims as its own territory, the risk of something bad happening is now elevated further.
http://af.reuters.com/article/somaliaNews/idAFTOE67307G20100817
When working toward the solution of a problem, it always helps if you know the answer. Murphy’s Rule of Accuracy.
Corollary: Provided, of course, that you know there is a problem.
What? Me worry?
Mad Magazine.
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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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 Aug 17
Current Stretch:0 days
2010 total: 35 days (15%)
2009 total: 260 days (71%)
Since 2004: 803 days
Typical Solar Min: 485 days
The long minimum seems to have ended. 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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