Tuesday 17 August 2010

This Time It Will Be Different.

Baltic Dry Index. 2488 +20
LIR Gold Target by 2019: $3,000.

“The report also showed China’s holdings of long-term [US] Treasuries fell for the first time in 15 months to $839.7 billion, a 2.5 percent drop. Its overall Treasury position declined for a second month to $843.7 billion, the lowest since May 2009. The decline represents the first year-over-year decline in China’s Treasury holdings since 2001. The holdings peaked in July 2009 at $939.9 billion.”

After two lost decades, a gazillion of different stimulus packages, and even wheezes as desperate as buying up Japanese stocks, MarketWatch reports this morning that the latest hapless incumbent of the Prime Minister’s office in Tokyo is about to launch another stimulus package. “This time it will be different lads, honest it will. This time it will work, just like in America. Trust me, I’m a Japanese Prime Minister! What could possibly go wrong?”

“I think there is a world market for maybe five computers.”

Thomas Watson, chairman of IBM

Japan PM reportedly mulling another stimulus

Aug. 16, 2010, 7:28 p.m. EDT

SAN FRANCISCO (MarketWatch) -- Japanese Prime Minister Naoto Kan said his government may launch another set of stimulus measures to bolster the economy, according to a report published Monday. The Nikkei business daily reported that the stimulus steps could include extending consumer-spending incentives, programs to support job-seeking graduates and measures to help small businesses. Japan reported "tepid" 0.4% real gross domestic product growth for the quarter ended in June, while the strong yen and poor stock market performance "threaten to derail the economic turnaround."

http://www.marketwatch.com/story/japan-pm-reportedly-mulling-another-stimulus-2010-08-16

Below, follow up to yesterday’s focus on the deteriorating relationship between America and China. The delayed reports timing is purely coincidental, if unfortunate. China seems to be developing its own East Asian version of America’s Monroe Doctrine.

AUGUST 16, 2010

U.S. Sounds Alarm at China's Military Buildup

WASHINGTON—The Pentagon voiced alarm over China's military buildup, saying it was expanding its advantage over Taiwan and investing heavily in ballistic and cruise missile capabilities that could one day pose a challenge to U.S. dominance in the western Pacific.

In its annual report to Congress on Chinese military capabilities, the Pentagon also cited China's advances in electronic warfare. The U.S. government has been the target of cyber intrusions the report says appear to have originated in China and aimed to steal military secrets. "These intrusions focused on exfiltrating information, some of which could be of strategic or military utility," the report said.

Though their two countries are increasingly interlinked economically, ties between the U.S. military and the People's Liberation Army of China have deteriorated since January, when the Obama administration notified Congress of a plan to sell Taiwan up to $6.4 billion in arms.

Defense Secretary Robert Gates has appealed to the Chinese to re-engage to reduce the risk of any military miscommunications. But U.S. officials say they have seen few signs of a thaw.

Washington has long voiced alarm over China's military buildup opposite Taiwan. In this year's report, which was delivered months behind schedule, the Pentagon said China's military edge over Taiwan was continuing to "shift in the mainland's favor," the main argument used by the Obama administration in approving the arms deal.

A particular concern for the U.S. is China's development of an antiship ballistic missile with a projected range of nearly 1,000 miles. The missile is meant to give the PLA the capability of attacking ships, including aircraft carriers, in the western Pacific, the report said.

Some experts say the missile could herald the end of U.S. naval domination. Others say the PLA has yet to conduct any realistic tests of the conventionally armed ballistic missile and has no reliable way of targeting U.S. carrier task forces when they are at sea because China doesn't have enough low-earth-orbit reconnaissance satellites.

----The report referenced cyber intrusions it says appear to have originated within China. It is unclear whether these were conducted by or at the behest of the Chinese military.

The Wall Street Journal reported last year, and U.S. officials recently acknowledged publicly, that the Pentagon's largest weapons program, the Joint Strike Fighter, had been infiltrated. Investigators believe attackers in China were behind the effort to siphon off engineering designs and other information.

http://online.wsj.com/article/SB10001424052748703908704575433933444265178.html?mod=WSJ_hps_MIDDLEThirdNews

We end on China with the UK’s right wing Telegraph kowtowing a little too much to Beijing. The idea was right but the execution horrible. The writer must have missed associate editor Mr. Heffer’s recent missive on the need to maintain standards.

“640k ought to be enough for anybody.”

Bill Gates, Co–Founder and CEO of Microsoft, 1981

China surges ahead

Telegraph View An economic miracle has transformed the country's global standing

Published: 7:31PM BST 16 Aug 2010

The market liberalisation launched by Deng Xiaoping in December 1978, has delivered a remarkable prize. Growth figures published yesterday showed that China has overtaken Japan to become the world's second largest economy. At this rate, it is set to supersede the United States just 20 years from now, to become the world's economic superpower. This prodigious feat has come at a high price. Social tensions have grown as the rural poor have migrated in their tens of millions to the manufacturing megalopolises that flood the West with cheap consumer goods. The dash for growth has also created immense environmental problems, while official corruption is endemic. In short, China is paying the same price for its economic lift-off (magnified many times) as did Western countries during the Industrial Revolution. Intrinsic to its success has been the size of its population and the low-cost labour it offers.

This is beginning to change. The "one child" policy means China has one of the fastest-ageing populations in the world; from next year, the number of 15- to 29-year olds – the core of the workforce – will start to fall. This will not only impose new social costs, but is already emboldening workers to fight for better wages. Last year, the average wage increased by 17 per cent. This may make Chinese products a little more costly in the West but can only be beneficial to its economy because it will help to stimulate domestic demand.

With a population of 1.3 billion, the next phase of China's economic miracle must be the creation of a vibrant internal market, and this will doubtless be achieved every bit as single-mindedly as the trade-led growth that has transformed the country's global standing. What an export opportunity a newly-prosperous Chinese middle class will then present to economies like ours.

http://www.telegraph.co.uk/travel/destinations/asia/china/7948954/China-surges-ahead.html

Dear Colleagues - Simon Heffer
http://londonirvinereport.blogspot.com/p/intraday-news.html

We end today with BP and the now forgotten capped Macondo oil well. Like a bad penny it’s about to return, according to the blogosphere. Both articles are troubling and worth reading. BP’s long suffering shareholders are about to get a white knuckle ride if BP has to remove the cap, the blowout preventer and/or complete the relief well, say the outside experts.

“Airplanes are interesting toys, but are of no military value.”

Marechal Ferdinand Foch, Professor of strategy, Ecole Superieure de Guerre

BP's Deepwater Oil Spill - The Two Options - and Open Thread

Posted by Heading Out on August 16, 2010 - 10:33am

http://www.theoildrum.com/node/6860#more

Relief Wells Delayed ... New Tests Show "Gap" in Oil "Well Column" Causing Loss of Pressure ... Does the Government Have ANY IDEA What It's Doing?

An oil and gas industry veteran with 30 years experience who goes by the alias Fishgrease gave a pretty good recap of BP and the government's record of failure in capping the oil well:

http://www.zerohedge.com/article/relief-wells-delayed-new-tests-show-gap-oil-well-column-causing-loss-pressure-does-governmen

“Everything that can be invented has been invented.”

Charles H. Duell, Commissioner, U.S. Patent Office, 1899

At the Comex silver depositories Monday, final figures were: Registered 50.99 Moz, Eligible 59.51 Moz, Total 110.50 Moz.

Note: I have now added several more rare earths and metals companies to my list of mining companies listed on the page at the top.

http://londonirvinereport.blogspot.com/p/mining-stocks-of-interest.html

+++++

Crooks and Scoundrels Corner.

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

Today, another great vampire squid, goes over the top in his do or die effort to thwart President Obama’s tax plans. In the process he manages to “do a Hayward”, and inadvertently I hope, slight the victims of Hitler, by trivializing the true monstrosity of Hitler. Mr. Schwarzman needs to take time out from counting up his billions and buy a book on Hitler to see that however misguided President Obama may be likening Mr. Obama to Adolf Hitler is grossly offensive and untrue. President Obama is probably too wise to seek damages by suing Mr. Schwarzman in the UK High Court, where such actions are easy to win.

Blackstone chief Schwarzman likens Obama to Hitler over tax rises

The billionaire head of the private equity giant which owns Center Parcs and the London Eye has likened US President Barack Obama’s plans to raise taxes on the private equity industry as being akin to Adolf Hitler’s invasion of Poland.

By James Quinn Published: 9:27PM BST 16 Aug 2010

The comments, made by Blackstone chairman and co-founder Steve Schwarzman in what he thought was a private meeting, reflect the strength of feeling among Wall Street’s private equity chiefs who are being threatened with paying the same levels of tax on their income as ordinary Americans.

In an appearance before the board of an unnamed charity, Newsweek reported that Mr Schwarzman, who is estimated by Forbes to be worth $4.7bn (£3bn), said: “It’s war. It’s like when Hitler invaded Poland in 1939.” The Daily Telegraph has verified that the comments were made and are accurate.

It follows the Obama administration’s consideration of raising the tax on “carried interest” – the share of profits private equity managers receive from the portfolio companies they manage – from 15pc to 35pc.

His remarks are even more noteworthy given that Mr Schwarzman is a practising member of the Jewish faith.

It is not the first time Mr Schwarzman has attacked the Obama administration, and what he appears to increasingly believe are its anti-Wall Street policies.

In a comment piece in The Washington Post in February, he wrote that bank-bashing could destroy the US economy’s fledgling recovery, as banks may become too scared - “under siege”, as he put it - to start lending again.

His new comments caused consternation among the American media, with The New York Times referring to it as his “unfortunate war analogy”, while Salon quipped about “Obama’s invasion of Poland”.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7949062/Blackstone-chief-Schwarzman-likens-Obama-to-Hitler-over-tax-rises.html

An accession of wealth is a dangerous predicament for a man. At first he is stunned, if the accession be sudden; he is very humble and very grateful. Then he begins to speak a little louder; people think him more sensible, and soon he thinks himself so.

Richard Cecil.

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.

No comments:

Post a Comment