Baltic Dry Index. 1957 -07
LIR Gold Target by 2019: $3,000.
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises
Today, a slew of recent articles that suggest we are on the cusp of big trouble, plus probably the most bearish report you’ll ever read about the state of the global economy. Try Great Britain defaulting for one. Stay long precious metals. Amongst other reasons, China is liberalizing gold ownership again. What do their experts know about the fate of fiat money that our experts are busy covering up. Today, there may be trouble ahead.
China Said to Ask Banks to Test for 60% Housing Drop
Aug. 5 (Bloomberg) -- China’s banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60 percent in the hardest-hit markets, a person with knowledge of the matter said.
Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulator’s requirement hasn’t been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.
The tougher assumption may underscore concern that last year’s record $1.4 trillion of new loans fuelled a property bubble that could lead to a surge in delinquent debts. Regulators have tightened real-estate lending and cracked down on speculation since mid-April, after residential real estate prices soared 68 percent in the first quarter from a year earlier, according to estimates from Knight Frank LLP, the London-based property adviser.
“They probably think the problems are still out there and setting a more severe worse-case scenario is a way to help the market fully recognize the situation,” said Jinny Yan, a Shanghai-based economist at Standard Chartered Plc. “We certainly can’t say they believe prices will drop by 60 percent, which even we don’t think will happen.”
----- Banks were also told to stress test loans to industries including steel, cement, construction materials and home appliances that are related to housing, the person said.
A deep slump in China’s property market may further slow the nation’s economy, which grew at a less-than-forecast 10.3 percent pace in the second quarter. China is still the fastest growing major world economy.
-----Measures to cool property-price gains included raising minimum mortgage rates and down-payment ratios for second-home purchases, and a suspension of lending for third homes.
Property prices in 70 Chinese cities dropped 0.1 percent in June from the previous month, the statistics bureau said July 12. Prices rose 11.4 percent from a year earlier, the second monthly slowdown after April’s record expansion.
More.
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a9WrGuoZmp_s
China seeks to widen gold market
By Leslie Hook in Beijing Published: August 3 2010 19:27 | Last updated: August 3 2010 19:27
China has moved to liberalise its gold market further, increasing the number of banks allowed to trade bullion internationally and announcing measures that will encourage development of gold-linked investment products.
The move by Beijing’s central bank comes as the country’s investors pour record amounts of money into gold, in a trend that is becoming a significant factor on global prices.
Last year, Chinese investors bought 73 tonnes of bullion, up from 18 tonnes in 2007. The new policies were likely to increase liquidity in the domestic gold market and spur the development of gold financial products, analysts said.
China is the world’s largest gold producer and the second-largest consumer, after India, but its domestic market remains constrained by limited investment products.
---- GFMS, the London-based precious metals consultancy, said recently that Chinese investors, who are building wealth at an unprecedented rate, were diversifying their assets into gold to “protect themselves against inflation”.
The People’s Bank of China said “the need to perfect foreign exchange policies in the gold market is clear.”
It called for better financing services for bullion, opening the door for Chinese banks to hedge their gold risk overseas.
The central bank also hinted at changes in taxes on bullion. But it failed to endorse gold as an investment and to suggest it planned to increase the size of its bullion reserves, one of the world’s largest.
The new gold guidelines are part of the gradual internationalisation of the Chinese banking system. Restrictions on some renminbi-denominated investment products in Hong Kong have been lifted recently, and renminbi cross-border settlement programmes have been expanded this year.
http://www.ft.com/cms/s/0/49c6bbac-9f2a-11df-8732-00144feabdc0.html
Geithner rejects brief extension of Bush tax cut
Aug. 4, 2010, 4:07 p.m. EDT
WASHINGTON (MarketWatch) -- Treasury Secretary Timothy Geithner on Thursday rejected suggestions that Congress extend the tax cuts for those making over $250,000 a year until the economy recovers. In a speech at the Center for American Progress, Geithner said global investors would see the extension as a sign that the U.S. was not serious about deficit reduction. Extending the tax cut for even one year would require the government to borrow an additional $30 billion. "The top 2 percent would save most of that increase in after-tax income," he said. Geithner hammered away at the tax cut for the wealthy. "Borrowing to finance tax cuts for the top 2 percent would be a $700 billion fiscal mistake," Geithner said.
http://www.marketwatch.com/story/geithner-rejects-short-extension-of-bush-tax-cut-2010-08-04
Next warns of slowdown on the high street
By James Thompson Thursday, 5 August 2010
Two of the UK's biggest retail chains warned of faltering consumer demand in the second half of the year, as the Government's austerity measures start to take their toll.
Next, the fashion and homewares chain, said there had been a "noticeable cooling in retail demand" since early May.
----- The flooring firm Carpetright added it remained "cautious" about the outlook for consumer spending.
The comments from two of the sector's biggest chains will darken the mood in retail boardrooms, particularly as many of the measures, notably an increase in VAT to 20 per cent in January, unveiled by the Government in June, are yet to be felt by consumers.
The biggest lie about U.S. companies
Commentary: Healthy balance sheets? They owe $7.2 trillion, the most ever
Aug. 3, 2010, 12:01 a.m. EDT
BOSTON -- You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.
You could hear this great news pretty much anywhere -- maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."
Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?
It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock.
American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.
http://www.marketwatch.com/story/the-biggest-lie-about-us-companies-2010-08-03
Finally, the most bearish report you’ll probably ever get to read. Still, that doesn’t necessarily mean it’s wrong. Click on the link or email for a copy.
GMI Describes "The Future Recession In An Ongoing Depression" In This Must Read Report
Raoul Pal, who retired from managing money at the ripe age of 36, after co-managing GLG's Global Macro Fund, and the hedge fund sales business in equities and equity derivatives at Goldman among others, and has been publishing the attached Global Macro Report since, has just come out with the most condensed version of truth about our economic reality we have read in a long time. The attached report provides the most in depth observation on the "future recession in an ongoing depression" which is arguably the best way the describe the current economic predicament. Raoul goes all out in describing he worst recovery in history, touches on he complete disconnect between the bond world and the imaginary equity surreality, provides countless evidence the economy has not only not left the recession but is getting progressively deeper into it, shares several trade recommendations, and on occasion swear like a drunken sailor. A must read report for everyone who is sick of the CNBC/sellside daily one sided propaganda.
http://www.zerohedge.com/article/gmi-describes-future-recession-ongoing-depression-must-read-report
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
J. K. Galbraith
At the Comex silver depositories Wednesday, final figures were: Registered 50.88 Moz, Eligible 58.08 Moz, Total 108.96 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No crooks today just scoundrels snooping. Everyone’s big brother now. Coming soon, variable pricing to fleece you of every last nickel you can afford. Seems to me like a fast way of killing off internet trade and shifting it back into stores.
If you want a vision of the future, imagine a boot stamping on a human face - forever.
George Orwell.
AUGUST 4, 2010
On the Web's Cutting Edge, Anonymity in Name Only
You may not know a company called [x+1] Inc., but it may well know a lot about you.
From a single click on a web site, [x+1] correctly identified Carrie Isaac as a young Colorado Springs parent who lives on about $50,000 a year, shops at Wal-Mart and rents kids' videos. The company deduced that Paul Boulifard, a Nashville architect, is childless, likes to travel and buys used cars. And [x+1] determined that Thomas Burney, a Colorado building contractor, is a skier with a college degree and looks like he has good credit.
The company didn't get every detail correct. But its ability to make snap assessments of individuals is accurate enough that Capital One Financial Corp. uses [x+1]'s calculations to instantly decide which credit cards to show first-time visitors to its website.
In short: Websites are gaining the ability to decide whether or not you'd be a good customer, before you tell them a single thing about yourself.
The technology reaches beyond the personalization familiar on sites like Amazon.com, which uses its own in-house data on its customers to show them new items they might like.
By contrast, firms like [x+1] tap into vast databases of people's online behavior—mainly gathered surreptitiously by tracking technologies that have become ubiquitous on websites across the Internet. They don't have people's names, but cross-reference that data with records of home ownership, family income, marital status and favorite restaurants, among other things. Then, using statistical analysis, they start to make assumptions about the proclivities of individual Web surfers.
"We never don't know anything about someone," says John Nardone, [x+1]'s chief executive.
A Wall Street Journal investigation into online privacy has found that the analytical skill of data handlers like [x+1] is transforming the Internet into a place where people are becoming anonymous in name only. The findings offer an early glimpse of a new, personalized Internet where sites have the ability to adjust many things—look, content, prices—based on the kind of person they think you are.
New York-based Demdex Inc., for instance, helps websites build "behavioral data banks" that tap sources including online-browsing records, retail purchases and a database predicting a person's spot in a corporate hierarchy. It crunches the data to help retailers customize their sites to target the person they think is visiting.
"If we've identified a visitor as a midlife-crisis male," says Demdex CEO Randy Nicolau, a client, such as an auto retailer, can "give him a different experience than a young mother with a new family." The guy sees a red convertible, the mom a minivan.
The technology raises the prospect that different visitors to a website could see different prices as well. Price discrimination is generally legal, so long as it's not based on race, gender or geography, which can be deemed "redlining."
In financial services, fair-lending laws prohibit discrimination based on race, color, religion, national origin, gender, receipt of public assistance or marital status. The laws also require that borrowers have access to any data used to evaluate their creditworthiness.
http://online.wsj.com/article/SB10001424052748703294904575385532109190198.html?mod=WSJ_WSJ_US_News_6
In a time of universal deceit - telling the truth is a revolutionary act.
George Orwell.
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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