Wednesday 1 September 2010

A Year of Records.

Baltic Dry Index. 2713 +01
LIR Gold Target by 2019: $3,000.

"We shouldn't pour cold water on everything. We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

We are privileged to be living through a year of records. Of course every year is a year of records of sorts, but this time it’s different, to use the old Wall Street banksters’ cliché. Up first, the Dow logs an August record of the wrong sort. Despite all the NY Fed’s backroom manipulation, and trillions in global stimulus, all the Dow managed to achieve was its worst August since 2001. 2001 for those who’ve forgotten, was the year that fallen guru Greenspan’s dot con and telecoms bubble went pop, and the boffins at the Fed came up with the idiotic idea of setting off a 1920s style Florida real estate bubble to rectify things. According to the High Priest of Mammon, we were all to get rich now, trading homes to each other and borrowing against our homes to buy knick knacks we didn’t really need from China. Not too worry, the great vampire squids had it all under control, they would securitise the new mortgages and peddle the “triple-A” trash to pension funds, hedge funds, municipalities and to those brain dead European bankers not already being scammed by Bernie Made-off. What could possibly go wrong?

AUGUST 31, 2010, 7:04 P.M. ET

Dow Logs Worst August in 9 Years

Stocks limped to their worst August since 2001, battered by a wave of discouraging data that cast doubt on the faltering economic recovery.

Investors now enter September, a month that has been historically challenging for the stock market, against a backdrop of broad uncertainty, including slow growth and deflation fears.

The Dow Jones Industrial Average battled to a stalemate on Tuesday, rising 4.99 points, or 0.05%, to finish at 10014.72. The blue-chip index's 4.3% drop for the month was the worst since a dismal May, and the measure's first down August in five years. The Dow had rallied 7.1% in July.

August is typically a positive month for stocks, whereas September declines tend to come as companies begin issuing warnings ahead of third-quarter results and mutual-fund managers get back to work after the typically light volume in the summer.

The Standard & Poor's 500-stock index fell 4.7% for August, while the Nasdaq shed 6.2%. Small-capitalization stocks, a leading indicator of the economy, took an even bigger hit. The Russell 2000 index of small-cap stocks posted its worst August in 12 years, falling 7.5%.

Other barometers of economic activity are flashing warning signals, too. Technology stocks were the weakest performers on Tuesday, taking a hit after technology-research firm Gartner cut estimates for computer sales, reinforcing growing concern about the outlook for the sector.

-----Crude-oil prices also fell, dropping 3.7% to bring the month's fall to 8.9%. Gold edged closer to all-time highs, capping a 5.6% gain for the month.

http://online.wsj.com/article/SB10001424052748703467004575463152437588596.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

Another of this year’s records, according to the Bank for International Settlements in Basel, still busy trying to figure out Germany’s World War 1 loser reparations, was the growth industry of global fiat currency gambling. Another unintended consequence of the calamitous great Nixonian error of abandoning the dollar convertibility link with gold. Though the pace of gambling slowed, trading increased to an average of some $4 trillion a day, says the central banksters’ bankster in Basel. Each month now, the gamblers manage to gamble roughly $120 trillion dollars, not bad in an annual global economy of less than half that size. Stay long gold and silver, I think we all know how this ends.

Currency-Trading Growth Slowed Amid Crisis, BIS Says

Sept. 1 (Bloomberg) -- Growth in foreign-exchange trading slowed in the three years through April as heightened price swings after the credit markets seized up lowered the appetite for risk, a Bank for International Settlements survey showed.

Trading increased 20 percent to $4 trillion a day on average, the BIS said in the poll, which is released every three years. Growth lagged the 72 percent, three-year expansion recorded in the last survey, published in 2007, which was partly fueled by “low levels of financial market volatility and of risk aversion, and expansion in the activity of hedge funds,” the Basel, Switzerland-based BIS said today.

Asia-Pacific currencies accounted for 35.9 percent of average daily foreign-exchange trading, the most since the Basel, Switzerland-based BIS started compiling the surveys in 1998, up from 33 percent in 2007. That is also the first increase since the 2001 figures, the BIS said today.

----“Since the crisis it’s just been complete chaos, and volatility has gone to extreme levels from all-time lows pre- crisis,” said Kevin Rodgers, London-based global head of foreign-exchange derivatives at Deutsche Bank AG, the world’s largest currency trader. “Though it has come off, it remains historically high. The market is a very much jumpier, less- liquid place than it was pre-crisis.”

------This month, the yen has jumped to a 15-year high against the dollar, while the Swiss franc has soared to a record against the euro as investors sought havens amid deepening pessimism about the global economy.

Britain maintained its position as the biggest global foreign-exchange hub, with U.K.-based banks increasing their share of the market to 36.7 percent from 34.6 percent in 2007. The U.S. had an 18 percent share, followed by Japan, Singapore, Switzerland, Hong Kong and Australia.

Dollar’s Share

The dollar was used in a smaller proportion of foreign- exchange transactions. Some 85 percent of currency trades in the three-year period involved the dollar, down from a 90 percent peak in the BIS’s 2001 survey. Europe’s single currency increased its portion by 2 percentage points to 39 percent, while emerging-market currencies also gained market share, led by the Turkish lira and the Korean won.

Currency-trading growth over the past three years was paced by a 48 percent jump in so-called spot transactions, where trades are settled in cash almost immediately, as opposed to transactions for future delivery.

U.K. Turnover

Spot trading accounted for 37 percent of total foreign- exchange turnover, the report said. Transactions involving central banks, hedge funds, pension funds, mutual funds and insurance companies rose by 42 percent to $1.9 trillion, according to the report.

Average daily turnover in the U.K. rose 25 percent to $1.85 trillion, the Bank of England said in a separate statement. The increase was driven by a 108 percent surge in spot transactions, which account for 38 percent of turnover.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=axu6YvvwhgHg

Other records are being racked up in the planet's weather too. While the southern hemisphere has suffered through a record cold winter in many parts, from South America across to Australia, our northern hemisphere summer was producing records of its own too. Does a record northern hemisphere winter now lie ahead to round out 2010? While record high temps and drought burnt out Russian forests and their wheat crop, parts of China couldn’t get out of the rain. Pakistan is just finally starting to get out from under the greatest Eur-Asian flood since Noah. Below, Der Spiegel on the record summer in Germany. Our new Dalton Minimum arriving perhaps?

Drought and Floods 08/31/2010

A Record Summer of Extremes

It has been a summer of crazy weather, according to the German Weather Service. A searing heatwave in July was followed by the wettest August since records began in 1881.

It has been a summer of record-breaking weather in Germany, with extreme heat and drought followed by the wettest August on record, the German Weather Service has announced.

July was so hot that forest fire alerts were issued for much of eastern Germany and scores of passengers collapsed on ICE trains when the air conditioning systems broke down.

Then came August with storms and heavy rain causing severe flooding. August had the highest rainfall for that month since records started being kept in 1881. Yet despite the rain, the searing heat in July will end up making the summer of 2010 the eighth or ninth hottest since records began.

The German Weather Service said on Monday that its 2,100 measuring stations recorded an average temperature of 17.8 degrees Celsius (64.22 degrees Fahrenheit) during the summer, 1.5 degrees above the long-term average. It was even hotter in 2003, when temperatures were 3.3 degrees above average.

Rainfall this summer at 291 liters per square meter was 21 percent above average, thanks to a sodden August in which precipitation was 157 liters, more than twice the average for the month. Yet the sun shone for 662 hours from June until the end of August, 10 percent above average.

http://www.spiegel.de/international/germany/0,1518,714917,00.html#ref=nlint

We end for today with 21st century Luddites striking a blow for OPEC, Russia, Venezuela and Iran. Pity the poor people of Greenland, forever doomed to live in backward isolation by the dictat of the self appointed eco-Nazis of Greenpeace. BP’s Deepwater Horizon fiasco should not be the end of all difficult drilling, rather just a reminder to always follow industry best practice. Greenland should treat Greenpeace as the pirates they are and follow the precedent of the navies off Somalia. Greenpeace has no divine right to rule the world with its jackboot tactics.

Greenpeace claims to have shut down Greenland oil well

Greenpeace claims its activists have shut down a ''dangerous'' oil drilling operation by a British energy company in the Arctic.

Published: 10:08AM BST 31 Aug 2010

The envvironmental group said four expert climbers in inflatable speedboats had evaded the Danish navy to climb up the inside of the Cairn Energy oil rig off Greenland.

The four campaigners are now hanging from the rig 15m above the icy Arctic ocean in tents suspended from ropes, halting its drilling operation, Greenpeace said.

---- The campaigners, who are protesting against what they claim are the ''huge risks'' energy companies are taking with the environment by drilling for oil in deep water, say they have enough supplies to occupy the tents for several days.

They claim that if they halt drilling for a short time, Cairn will struggle to meet the deadline to complete exploration before the winter conditions set in, forcing the company to abandon the search for oil off Greenland until next year.

Sim McKenna, from the US, who is one of the climbers, said: ''We've got to keep the energy companies out of the Arctic and kick our addiction to oil, that's why we're going to stop this rig from drilling for as long as we can.

http://www.telegraph.co.uk/news/worldnews/europe/greenland/7972748/Greenpeace-claims-to-have-shut-down-Greenland-oil-well.html

The private sector will find ways to structure debt arrangements that will ensure that most US homeowners facing big increases in their mortgage payments will stay in their homes, Ed Lazear, chairman of the White House council of economic advisers has told the Financial Times.

Mr Lazear said the administration did not believe it would be helpful to set up a government-sponsored vehicle to organise debt arrangements, which involve rescheduling or reducing payments by the borrower.

Market can solve subprime crisis’

By Krishna Guha in Jackson Hole Published: September 2 2007

At the Comex silver depositories Tuesday, final figures were: Registered 51.91 Moz, Eligible 58.85 Moz, Total 110.76 Moz.

+++++

Crooks and Scoundrels Corner.

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

No not more banksters, nor the clowns in the University of East Anglia’s dodgy science Climate Research Unit, today it’s Mort Zuckerman on the most fiscally irresponsible US government in history. A logical outcome when US politicians and central banksters get to play God with fiat money. We are far down the road to ruination, yet there is no will in Washington or Europe to change direction. Stay long gold and silver for the day we finally get to press “reset”.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

The Most Fiscally Irresponsible Government in U.S. History

Current federal budget trends are capable of destroying this country

By Mortimer B. Zuckerman Posted: August 26, 2010

There is an instinctive conclusion among the American public that President Obama's stimulus package has failed to create a sustained recovery. Unemployment has increased, not declined; consumers have retrenched; housing starts have crashed along with mortgage applications; and there is a fear that a double-dip recession may very well be in the pipeline. The public perception, reflected in Pew Research/National Journal polls, is that the measures to combat the Great Recession have mostly helped large banks and financial institutions, and that's a view common to Republicans (75 percent) and Democrats (73 percent). Only one third of either political leaning thinks government policies have done a great deal or a fair amount for the poor.

There is another instinctive conclusion among the American people. It is that the national deficit, and the debts we have accumulated, are of critical political importance. On the national debt, the money the government has spent without the tax revenues to pay for it has produced mind-numbing numbers so large as to be disconnected from reality. Zeros from here to infinity. The sums are hard to describe; it is hard to describe an elephant, but you know one when you see one. The public knows that, shuffle the numbers as you may, the level of debt is unsustainable.

----- People see the stimulus, fashioned and passed by Congress in such a hurry, as a metaphor for wasted money. They are highly critical about the lack of discipline among our political leaders. The question that naturally arises is how to forestall a long-term economic decline.

The Fed has lowered rates dramatically to keep the economy ticking and maybe continue the painfully slow recovery, but at the receiving end there is no feeling of relief at all. People know that the stimulus is about to stop stimulating. They know that money is petering out. They know that states are preparing to cut $200 billion to balance their budgets. They realize that the Great Recession has wiped out huge amounts of wealth and that, unlike other recessions, this will not be followed by the kind of economic boom when people who had sat on their money during the lean years unleash pent-up demand for all sorts of goods and services.

There is no sign of that happening this time around. Households and businesses have kept their hands in their pockets. And so while many think that the only way to revive the economy and to inject more money into it is through governmental spending, the general feeling is that we can't afford that right now. The government will be writing more IOUs on top of those we already can't afford. Why plan a second stimulus if the first stimulus couldn't prevent high unemployment?

More 3 pages.

http://politics.usnews.com/opinion/mzuckerman/articles/2010/08/26/the-most-fiscally-irresponsible-government-in-us-history.html

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

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. Anyone heard from Hindenburg ?

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