Baltic Dry Index. 2461 -23
LIR Gold Target by 2019: $3,000.
History fails to record a single precedent in which nations subject to moral decay have not passed into political and economic decline. There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration leading to ultimate national disaster.
General Douglas MacArthur.
Right after America’s leading agency for calling recessions after they happened, the National Bureau of Economic Research, declared America’s latest unexpected recession was over, one of America’s greatest “great vampire squids” said you’ve got to be joking. Yesterday Warren Buffett declared “We are still in recession”. Below, Reuters covers the great man’s shared pearls of wisdom. Better warm up the helicopters on the roof of the Fed.
I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious.
Thomas Jefferson.
Warren Buffett: "We're still in a recession"
NEW YORK Thu Sep 23, 2010 10:50am EDT
NEW YORK (Reuters) - Billionaire investor Warren Buffett said the U.S. economy remains in recession, disputing this week's assessment by a leading arbiter of economic activity that the downturn ended more than a year ago.
"We're still in a recession," Buffett told CNBC television in an interview broadcast on Thursday. "We're not gonna be out of it for a while, but we will get out."
On Monday, the National Bureau of Economic Research said the world's largest economy ended an 18-month recession in June 2009, but cautioned that its assessment did not mean normal activity had resumed.
Buffett said he defines a recession differently from the NBER, saying it ends when real per capita gross domestic product returns to its pre-downturn level.
----Buffett, 80, runs Berkshire Hathaway Inc, which has roughly 80 operating businesses. "A great majority" of these businesses are "coming back slowly," he said.
Berkshire's operations cover a broad swath of the economy, including the Burlington Northern Santa Fe railroad, Dairy Queen ice cream, Geico auto insurance, and luxury jewelers such as Borsheim's.
Shipments at Burlington Northern are "61 percent of the way back," Buffett said. "Our carpet business, our brick business, our insulation business, they're not back 61 percent, but they are moving back."
On Tuesday, the U.S. Federal Reserve, which has already driven short-term lending rates to near zero, said it is prepared to provide additional stimulus to support economic expansion and avert possible deflation.
"We've used up a lot of bullets," Buffett said. "And we talk about stimulus. But the truth is, we're running a federal deficit that's 9 percent of GDP. That is stimulative as all get out."
Next, stay long precious metals and be prepared for the clash of titans. Both parties are now locked into positions where there can only be one winner one loser, with the collateral damage to the rest of the world economy. Below the NY Times covers yesterday’s dramatic upping the ante by President Obama v China. At least one unnamed Chinese official seems to be misreading America’s position as entirely posturing for November’s mid-term election, according to the NY Times coverage. With a harder line Congress coming no matter who wins the election in November, it’s complete nonsense to think this issue will go away once the election is over.
With Warning, Obama Presses China on Currency
By DAVID E. SANGER Published: September 23, 2010
UNITED NATIONS — President Obama increased pressure on China to immediately revalue its currency on Thursday, devoting most of a two-hour meeting with China’s prime minister to the issue and sending the message, according to one of his top aides, that if “the Chinese don’t take actions, we have other means of protecting U.S. interests.”
But Prime Minister Wen Jiabao barely budged beyond his familiar talking points about gradual “reform” of China’s currency policy, leaving it unclear whether Mr. Obama’s message would change Beijing’s economic or political calculus.
The unusual focus on this single issue at such a high level was clearly an effort by the White House to make the case that Mr. Obama was putting American jobs and competitiveness at the top of the agenda in a relationship that has endured strains in recent weeks on everything from territorial disputes to sanctions against Iran and North Korea.
Democrats in Congress are threatening to pass legislation before the midterm elections that would slap huge tariffs on Chinese goods to undermine the advantages Beijing has enjoyed from a currency, the renminbi, that experts say is artificially weakened by 20 to 25 percent.
----One Chinese official speculated Thursday that Mr. Obama’s insistence on spending so much time on the issue was motivated by pre-election politics, suggesting that the pressure might abate after early November.
While the United States has been pressing China for years to lift the strict controls on its currency, which keep Chinese exports competitive and more factory workers employed, American voters and lawmakers have only recently seized on exchange rates as a potent political issue. Mr. Obama pressed much harder on Thursday than during a visit to Beijing last year, perhaps because a Chinese commitment several months ago to allow the value of the currency to rise has resulted in a change of less than 2 percent.
The meeting with Mr. Wen came as the United States appeared to lean toward its longtime ally, Japan, in an increasingly heated standoff between China and Japan over who has claim on territory near the South China Sea.
http://www.nytimes.com/2010/09/24/world/24prexy.html?hp
The most likely outcome now is the President Obama is forced to deliver something ahead of November’s election. Superficially he’s the winner, Premier Wen the loser. America wins out over China. China, the rising power is seen to have over reached and been slapped down, by the old fading power. If that in fact happens, my guess is that China will get as focused as Russia did after the US fomented the Ukraine’s Orange revolution on Russia’s backdoor.
Below, Japan manipulates its currency. Yet Washington is Japan’s friend in its spat with China over disputed islands that were supposed to be transferred back in the settlement at the end of WW2. Thanks to the Great Nixonian Error of 1971, Washington is now both against and for currency manipulation, in the ever more dysfunctional regime of the fiat dollar reserve standard. Stay long precious metals for the day this insanity ends.
U.S. dollar gains on talk of yen intervention
TOKYO (MarketWatch) — The U.S. dollar edged higher against most other currencies Friday afternoon in Asia, climbing back above 85 yen after speculation that Japanese authorities might have intervened again in foreign exchange markets.
Japanese Finance Minister Yoshihiko Noda declined comment on whether authorities intervened, according to reports.
“Large-lot selling orders” placed after 1 p.m. in Tokyo weakened the yen, and market players were betting that the Bank of Japan intervened in the currency market at the government’s request, Nikkei reported
http://www.marketwatch.com/story/us-dollar-gains-on-talk-of-yen-intervention-2010-09-24
But Japan also quietly caved in to China’s demands and is releasing the Chinese captain held for allegedly resisting arrest by Japan’s navy. Below, the NY Times on recent developments. Anyone think China’s arrests were linked? No I didn’t think so either. Still I wouldn’t want to be short precious metals across the weekend.
Gold still represents the ultimate form of payment in the world.
Alan Greenspan.
Japan Said to Free Chinese Captain Amid Tensions
By KEVIN DREW and IAN JOHNSON Published: September 24, 2010
HONG KONG — Prosecutors in Japan are releasing the Chinese captain of a fishing boat that collided with Japanese coast guard ships this month, Japanese news agencies reported on Friday.
However, in a sign that relations between two of the world’s three largest economies remained tense, prosecutors said they have not yet decided whether to file charges against the captain and that the decision would be based on the future progress in ties between Japan and China, the Kyodo news service reported.
It was not immediately clear whether the captain was still in custody, with some reports saying that he had already been freed.
Chinese analysts said the move could help ease tension between the two economic partners. Wang Xiangsui, a foreign policy analyst at the Beijing University of Aeronautics and Astronautics, said China especially objected to Japan using its domestic laws to deal with the captain. This implied that the territories were Japanese and not subject to negotiation.
http://www.nytimes.com/2010/09/25/world/asia/25chinajapan.html?ref=world
China Arrests Four Japanese Amid Tensions
By IAN JOHNSON Published: September 23, 2010
BEIJING — In what could be another sign of rising tensions between Japan and China, the authorities here said Thursday that four Japanese had been arrested for videotaping military installations.
The terse report by the official Xinhua news agency said four Japanese citizens were detained at a military base near the city of Shijiazhuang, about 190 miles southwest of Beijing.
“Currently, the case is being investigated,” said a statement issued by authorities and carried on the Web site of China Daily, a government-controlled newspaper. Japan’s Foreign Ministry confirmed that four of its citizens were being held, according to Reuters.
It was unclear whether the arrests were linked to tensions set off this month over a Chinese fishing boat that collided with — the Japanese say rammed — two Japanese naval ships near uninhabited islands known as Senkaku in Japan and Diaoyu in China. The islands, northeast of Taiwan, are controlled by Japan but claimed by China.
http://www.nytimes.com/2010/09/24/world/asia/24chinajapan.html?ref=asia
This Act (the Federal Reserve Act, Dec. 23rd 1913) establishes the most gigantic trust on earth. When the President (Woodrow Wilson) signs the Bill, the invisible government of the Monetary Power will be legalized
Charles Lindbergh Sr.
At the Comex silver depositories Thursday, final figures were: Registered 53.90 Moz, Eligible 56.94 Moz, Total 110.84 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No crooks today unless like me you count the whole Bilderberger “United States of Europe” project crooked. Today, Ireland and Club Med move closer to default. Ireland’s economy is contracting again, and Germany’s recovery is suddenly slowing. It’s pretty obvious that Ireland and Club Med need to add restructuring of debt, to their arsenal of austerity tools to overcome the near bankruptcy of their economies. With Ireland heading into recession and deflation, in effect it’s now the ECB guaranteeing the depositors in Ireland’s banks. But will the ECB really back stop the Irish government, and if they do, does that mean they’re now going to guarantee the depositors in all Eurozone banks? With what? It might be time to move deposits out of Ireland’s banks.
Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation.
Karl Marx.
Ireland faces double dip, mulls restructuring of junior bank debt
Irish borrowing costs have surged to a post-EMU record after Ireland's recovery buckled over the summer and Dublin said creditors of Anglo Irish Bank may be asked to "share" losses, a warning to bondholders that the dam may at last be breaking on debt restructuring in the eurozone.
By Ambrose Evans-Pritchard Published: 7:24PM BST 23 Sep 2010
The Irish economy contracted at a 1.2pc rate in the second quarter, making Ireland the first country since the Great Recession to face a double-dip downturn. The setback is blow for hopes that Ireland can slowly grow its way out of debt, and may renew concerns that fiscal austerity without other forms of relief risks tipping the economy into a self-reinforcing spiral.
Ireland has been praised for grasping the nettle early in its debt crisis with public sector wage cuts of 13pc, leading the way for other eurozone debtors in trouble. But the reward for good behaviour has yet to come.
Dr Issing said it would be "suicide" for any country to leave the euro, but it could happen anyway if a state finds itself "in such a disastrous situation that extreme parties get a majority". A recent poll by the German Marshall Fund found that 55pc of EU citizens now think the euro is a "bad thing".
The Irish upset came as the PMI purchasing managers index for eurozone fell sharply in August. Manufacturing orders fell to the lowest in 14 months. The German PMI fell to an eight-month low of 54.8, a sign that Germany's mini-boom is losing steam. "This data has marked slowdown written all over it," said Martin van Vliet from ING.
Spreads on Ireland's 10-year bonds have risen to 405 basis points. Gavan Nolan from Markit said credit default swaps measuring bond risks on Irish banks are nearing the levels of Icelandic banks shortly before they defaulted two years ago, reaching 955 for Anglo Irish (senior debt), 615 for Allied Irish and 530 for Bank of Ireland.
Brian Lenihan, the finance minister, sent shivers through debt markets by refusing to rule out a haircut for holders of Anglo's €2.4bn subordinated debt during a hearing of the Dail's finance committee.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8021463/Ireland-faces-double-dip-mulls-restructuring-of-junior-bank-debt.html
Another weekend, and our weather is now decidedly autumn like here in the rural Thames Valley. We even have the slight chance of frost. Getting Chinese, Japanese, American relations back up to merely frosty, would be a big improvement if achieved this weekend. Nothing good comes from the clash of Titans. Our Nixonian world experiment in fiat currency is drawing to its end. As foreseen by 18th and 19th century economists, nothing good for most comes from a world of bankster currency. Have a great weekend everyone.
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
John Maynard Keynes.
The monthly Coppock Indicators finished August:
DJIA: +243 Down. NASDAQ: +366 Down. SP500: +243 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. August is the third down month in a row and “crash season” approaches.
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