Baltic Dry Index. 2676 - 319 on the week
LIR Gold Target by 2019: $3,000.
“Overheard at Goldman Sachs”:
“We assume that you know what you’re doing,
In this ill-advised trade you’re pursuing,
But the opposite bet
That we place on your debt
May eventually hasten your ruin.”
Europe’s sovereign debt problems returned last week, as Europe’s PIIGS returned to the forefront like a bad penny. Nothing new really seemed to spark this unwanted return, and I’m tempted to think that it is somewhat contrived by Wall Street’s vampire squids, desperate to force an outcome favourable to their next bonuses, however, all is far from well in the PIIGS, and its only a matter of time until Greece defaults, probably taking out one to two more as they go. Oh what a tangled web we weave when first we practise to deceive, and few do deception like Brussels and the Club Med midgets. Below, some thoughts for our “Battle of Britain Sunday” weekend. [Only an idiot like Gordon Brown, cravenly seeking Catholic votes in his vainglorious attempt to cling on to power, would have invited a German Pope on a state visit to Britain that clashed with Battle of Britain Sunday. A subtle Scot’s joke on the Bishop of Rome?]
Ireland IMF bail-out rumours spook markets
The International Monetary Fund (IMF) has been forced to scotch rumours of a bail-out for Ireland that spooked investors and sent the cost of insuring the national debt to a record high
Philip Aldrick Published: 9:16PM BST 17 Sep 2010
Traders latched on to a strongly-worded article in the Irish Independent newspaper that cited a piece of research from Barclays Capital warning of a potential rescue package.
The report saw credit default swaps on Ireland's debt hit a record high of 4.25pc, up almost 0.38 of a percentage point, and the 10-year bond yield climbed 31 basis points to around 6.5pc – a record 4.10 percentage points above the benchmark German bund. The markets now think there is a 25pc chance of Ireland defaulting in the next five years.
------A combination of costly bank bail-outs, anaemic growth and one of the worst budget deficits in the European Union have stoked fears of a full-blown debt crisis in Ireland.
Analysts say this year's budget deficit could reach around 25pc of GDP including the one-off costs associated with bank bail-outs. Even without the one-off bank bill, the shortfall is still expected to be around 10pc next year on an underlying basis, over three times an EU limit of 3pc.
Ireland is struggling to raise the funds it needs from the markets as investors shun the country on fears over the sustainability of its finances. The European Central Bank has been buying small amounts of Irish bonds, traders said, with the latest installment yesterday.
Domenico Crapanzano, head of euro rates trading at Jefferies, said: "There are just no buyers out there for Ireland because of worries over its economy."
The latest fears have been prompted by the cost of bailing out Anglo Irish Bank, the nationalised lender that is being broken up. The bill is expected to be €25bn (£20bn). Standard & Poor's last month cut Ireland's sovereign credit rating to AA-, its lowest since 1995, due to the estimated €50bn cost of the bank rescues and the size of the Budget deficit.
Ireland has been widely praised for the austerity measures it is undertaking to cut the deficit and get on top of its public debt. However, economists are now questioning whether – given the austerity measures and the size of the banking crisis – Ireland will be able to pay its debts.
Darling attacks Germans over help for Greece
The euro has been permanently damaged by Germany's failure to intervene swiftly during the sovereign debt crisis earlier this year, Alistair Darling has said in an unusually frank attack.
Philip Aldrick, Economics Editor Published: 10:23PM BST 17 Sep 2010
The former Chancellor, who was in 11 Downing Street when Greece, Spain and Portugal came close to economic meltdown in the spring, made his unguarded comments at a conference of senior German and British officials on Thursday.
Privately, he is known to have been infuriated by Germany's failure to act swiftly as the markets scented blood, but has never before made his opinions public.
Speaking from the audience of the Königswinter Conference, he told Germany's Economics Minister Rainer Bruederle that the country had completely failed to come to terms with its responsibilities as a leader of the eurozone. He added that its reluctance intervene quickly "will have consequences" for the political future of the bloc.
At the height of the crisis, the euro's survival was in question as market confidence evaporated from the region and Germany, paralysed by public anger about domestic taxpayers rescuing Greek workers, pushed the Mediterranean nation to the brink. Germany also bitterly resisted external help from the International Monetary Fund.
-----The former UK Chancellor also laid into Europe's overly-bureaucratic engine and failure to deliver change. He said he would not be surprised if, when his grandchildren had grown up, European leaders were still promising progress on the Lisbon agenda and a breakthrough on Doha.
"Unless Europe makes changes internally, its growth will be sclerotic," he said.
The UK was represented by Vince Cable, the Business Secretary, who described the Coalition's plans as "growth-friendly deficit reduction", but was forced to concede to Mr Darling that it hopes rest on little more than a gamble.
Mr Cable acknowledged that the Government's goal of stimulating private sector job creation to offset the planned 600,000 public sector job cuts was a hope, not a certainty.
Bank of England may shift to 'heavy-duty credit easing', says rate setter Adam Posen
The Bank of England might aim to cut borrowing costs in specific areas of the economy should its buying of government bonds prove ineffective in stimulating economic growth, Monetary Policy Committee member Adam Posen said
Reuters Published: 9:16AM BST 17 Sep 2010
He told a confence in Washingon the Bank of England's next step, if necessary, would be to shift into "heavy-duty credit easing".
Mr Posen defined credit easing as the targeting specific sectors, such as the United States did with housing markets.
The Bank of England, like the US Federal Reserve, has embarked on a £200bn progamme of purchases of gilts to boost growth after having lowered benchmark interest rates to an historic low of 0.5pc.
However, further quantitative easing may see diminishing returns in stimulating growth.
Mr Posen played down the usefulness of having the Fed target the yield on the ten-year Treasury note as a possible next page in its playbook.
US officials are contemplating further quantitative easing if the economic outlook darkens, but policymakers may eventually need to find other tools
Consumer Sentiment in U.S. Hurt by Delay in Extending Tax Cuts
Sept. 18 (Bloomberg) -- Concern that U.S. personal income taxes will increase next year caused an unexpected decline in consumer confidence in September, indicating the biggest part of the economy will struggle to pick up.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to a one-year low of 66.6, figures showed yesterday. The decrease was due entirely to a rise in pessimism was among households with incomes above $75,000, the group said. A separate report from the Federal Reserve showed household wealth declined 2.8 percent in the second quarter as stock prices fell.
While lawmakers have said they plan to extend the George W. Bush-era tax cuts for the middle class, they’re at odds about whether to continue them for wealthier Americans. The delay in achieving passage prompted declines in the higher income group’s views this month about personal finance, buying plans and prospects for the economy.
“Just not knowing whether you’ll get hit with a big tax hike is a huge negative,” said Nariman Behravesh, chief economist at IHS Inc., a consulting firm in Lexington, Massachusetts. “The delay and the uncertainty are dangerous.” Congress and the president “are playing with fire.”
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aJVGCwQolSsY&pos=1
"If the tax cuts for the wealthy goes down, our income is going down and, trust me, yours and everyone else's lifestyle is going down, too."
Ebenezer Squid, during a break from “God’s work” shorting Greek debt.
Stay long physical precious metals but far from the larcenous reach of ever more desperate Uncle Sam and John Bull. With past form on the theft of their citizens’ wealth, as fiat money fails I fully expect to see them try it again. In London’s case that might not be quite so easy, the bullion banksters have already stolen the gold marked “unallocated” on their books, as the soon to be distressed and angry holders of unallocated metal are about to find out if they try to take delivery and ship their wealth overseas, and out of the Bank of England’s reach. As we now know, the BOE deliberately lied about its gold holdings back in the 1930s, but that’s alright, it was done in the interests of “national security”. In America FDR just blatantly stole the citizens’ gold, and then devalued the dollar against it cheating them a second time round. Nice guys banksters and gangster politicians, and today’s crop don’t even have yester year’s moral code, ethics or restraint.
In today’s morally bankrupt world, water-boarding’s not torture, never ending discretionary war is in, with nary a thought for an exit plan, paid for by robbing future generations of their chance at wealth. Eavesdropping doesn’t require a warrant, habeas corpus is an option that varies at the discretion of the government, double jeopardy is back as a weapon of government, and banks are allowed to deliberately misstate the value of securities on their books. It’s anyone’s guess what’s stored in Fort Knox anymore, if anything at all. When state’s fail, rule of law is one of the first casualties, and increasingly it’s looking like the west is starting to fail. In the UK, in the midst of undeclared war, the weak coalition government is even talking about downsizing Britain’s already dangerously shrunken armed forces. The UK is starting to resemble society after the last Roman Legion left. Remind me again of what happened next.
Have a great weekend everyone.
GI.
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