Friday, 15 October 2010

Currency War Update.

Baltic Dry Index. 2769 +21
LIR Gold Target by 2019: $3,000.

"And if all others accepted the lie which the central banks imposed—if all records told the same tale—then the lie passed into history and became truth. 'Who controls the money' ran the central bankers’ slogan, 'controls the future: who controls the money controls the present.'"

With apologies to George Orwell. 1984

Later today, a speech by Dr. Bernanke on the US economy and monetary policy, I really can’t wait. The man hired by George Bush the younger for his supposed knowledge and expertise on the Great Depression and how to prevent new ones. He never saw the Great Recession coming, then denied it was here when it arrived. He expressed confidence in the US banking system just before it blew up with Bear Stearns and vey nearly took out the world financial system when Lehman Brothers collapsed, declared that there was no bubble in the US real estate market, just before it spectacularly imploded, then declared that it wouldn’t impact the wider US economy right before it did just that, went on to pontificate that house prices had reached bottom in 2008, right before they relapsed into a downward death spiral that continues to this day. This is the man now working on collapsing the dollar in some kind of bizarre plan to punish the Chinese by impoverishing ordinary Americans, most of whom have nearly 100% of their wealth tied up in the fiat dollar, in contrast to the ordinary Chinese who have virtually no exposure to the fiat dollar, this is the man who is about to share his destructive thoughts with us peons, later in the day.

Below, the state of the currency wars so far. Even Dr. Bernanke’s weak dollar policy isn’t working the way he thought it would.

'Si monumentum requiris, circumspice.' (If you seek Bernake’s monument, look around.)"

With apologies to Sir Chistopher Wren.

Dollar fall sparks stability warnings

By David Oakley and Peter Garnham in London and Michael Mackenzie in New York

Published: October 14 2010 19:55

The dollar tumbled against most major currencies on Thursday, prompting warnings that the weakness of the world’s reserve currency could destabilise the global economy and push other countries into retaliatory devaluations to underwrite their exports.

Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.

----A senior European policy-maker, who asked not to be named, said a further aggressive round of monetary easing by the US Federal Reserve would be “irresponsible” as it made US exports more competitive at the expense of its rivals.

Simon Derrick, chief currency strategist for BNY Mellon, said: “In narrow terms, the US is winning the currency wars as a weaker dollar will help its economy, but it could damage the other big economic blocs of China, Japan and Europe.”

The dollar’s fall was given fresh impetus after the Monetary Authority of Singapore surprised the market when it tightened policy by widening the trading band for its currency, allowing it to appreciate. The move by the Singapore authorities, responding to fears over inflation, helped push up other Asian currencies.

Russia’s finance minister Alexei Kudrin, in a meeting with European Union officials, blamed the US – and others – for global currency instability.

He said one reason for exchange rate turmoil “is the stimulating monetary policy of some developed countries, above all the United States, which are trying to solve their structural problems in this way”.

Commodities, which are mostly traded in dollars, were boosted by the US currency’s slide. Copper hit a two-year high of $8,490 per tonne at one point, while gold surged to a record of $1,387 per troy ounce.

China warns US against making yuan dispute a 'scapegoat' for a flagging economy

China has again warned the US not to use the dispute over the value of the Chinese currency, the yuan, as a “scapegoat” for its high unemployment and flagging growth prospects.

By Peter Foster in Beijing Published: 6:30AM BST 15 Oct 2010

The remarks from China’s ministry of commerce came hours before the US was due to release a report on whether it considers China a “currency manipulator” as fears grow that tensions over the currency could lead to a protectionist trade war.

The report has been repeatedly delayed despite a growing chorus of demands from US legislators and union bosses for the Obama administration to take tougher action against China’s alleged trade distortions.

However Yao Jian, a Chinese Ministry of Commerce spokesman, rejected US complaints as unfair. “It's totally wrong to blame the yuan for the Sino-U.S. trade imbalance,” he said, “The Chinese yuan shouldn't be a scapegoat for the U.S.' domestic economic problems.”

The artificially weak Chinese currency, which some analysts say is trading up to 25pc below its true market rate, has become a growing political issue in the US where it is blamed for giving Chinese exporters and unfair advantage at the cost of millions of US jobs.

However China has repeatedly said it cannot afford the costs of substantially re-valuing the yuan at a time when global demand for its exports remains weak and the recovery from the global recession remains fragile.

“Job losses would hurt the Chinese economy and domestic consumption. A relatively large yuan appreciation would definitely hurt Chinese exports, so a stable yuan exchange rate is needed for domestic consumption and the stability of the world economy," Mr Yao added.

China has also said that legislation currently being formulated in the US to impose trade tariffs as a result of the yuan’s under-valuation would be in breach of World Trade Organisation regulations.

-----The issue of currency manipulation is expected to be the central theme of a meeting of Group of 20 finance ministers meet in South Korea on October 22-23 ahead of a heads of state meeting in early November.

China’s Trade Gap With U.S. Climbs to Record; First Since 2008

Oct. 15 (Bloomberg) -- China ran up a record $28 billion trade surplus with the U.S. in August, bolstering complaints from American business groups and lawmakers that a weak Chinese currency gives exports an unfair advantage.

“China’s decision to undervalue its currency has been a persistent thorn in the side of our relationship,” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement after meeting with Chinese officials in Beijing yesterday.

China’s exports to the U.S. climbed to a record $35.3 billion, while U.S. exports dipped to $7.3 billion, according to Commerce Department figures released yesterday. It’s the first record-setting trade gap since the financial crisis hit in 2008. A weak currency makes a country’s exports cheaper.

In previous years, China’s exports to the U.S. increased in August and peaked in October as retailers stocked goods for the holiday shopping season.

“A lot of what we are seeing is a resurgence in retail,” Art Wong, public information officer at the Port of Long Beach, California, said in an interview. “In this period we get all the Christmas stuff.”

-----A twice-annual report by the U.S. Treasury Department about whether China manipulates its currency is due later today. Under Presidents George W. Bush and Barack Obama, the department has resisted calls from Congress to make such a determination. In recent weeks, Treasury Secretary Timothy F. Geithner has become increasingly vocal in pressing for China to act on its currency.

Overall, international trade subtracted 3.5 percentage points from U.S. growth in April through June, the most since 1947, as imports surged at the fastest pace since 1984.

The U.S. trade deficit grew 8.8 percent to $46.3 billion, an increase that took place even as the dollar’s value dropped, according to the Commerce Department.

We end for the week giving the last word to the NY Times on the Black Swan that flew in to the banksters' fraudclosuregate. Even now the media and Wall Street still haven’t grasped the scale of the fraud and it’s implications. With many internet sites now showing exactly how to go about checking titles for fraudulent documents and fraudulent signatures, many home owners are going to do just that. Up to 60 million US residential home titles are clouded, a figure equal to the entire UK population. Potential new buyers will now demand the most thorough of title searches, anything suspicious is likely to block the sale whether fraudulent or not. And just wait until taxpayer owned Freddie and Fannie start putting back failed securitisations. My guess is that the banksters will want another TARP bailout to cover it all up.

Mortgage Mess May Cost Big Banks Billions

By NELSON D. SCHWARTZ Published: October 14, 2010

One billion dollars? Six billion? Ten billion? More?

After scratching their heads for weeks over how much the foreclosure mess will hurt banks’ bottom lines, investors got out their calculators Thursday to tally the potential costs — and sent bank stocks plunging.

Analyst estimates of the possible toll varied widely, but the fear was evident in the stock market. The share price of Bank of America fell 5.2 percent, while shares of JPMorgan Chase sank almost 2.8 percent.

“The market never likes uncertainty, and it seems like every day we’re adding to the list of things we need to worry about with the financials,” said Jason Goldberg, an analyst with Barclays Capital. “The industry needs to work quickly to put this issue behind them.”

Wall Street initially hoped the banks would do just that but as the political furor grew, a quick end to the crisis was looking less and less likely. On Wednesday, 50 state attorneys general announced they were investigating the practices of the mortgage servicing industry, while Florida’s attorney general subpoenaed the nation’s largest mortgage processor, L.P.S., as part of a broader investigation.

----I don’t see how it can be cleared up in a short period of time,” said Richard X. Bove, an analyst with Rochdale Securities. “The moratorium won’t last that long but the problem will last at least four or five years, maybe a decade.” In the short term, he said, “it could easily cost $1.5 billion per quarter.”

Meanwhile, the foreclosure machinery in many states has ground to a halt. Major institutions like Bank of America, JPMorgan and GMAC Mortgage have halted foreclosures in many states, and have not said when they would resume. As a result, foreclosed homes will remain on the bank’s books while racking up thousands of dollars a month in extra costs.

Until Thursday, Wall Street regarded the foreclosure issue as a risk to the banks’ reputations, rather than their bottom lines. Indeed, some analysts insisted it was unlikely that wide-scale abuses would be found.

-----Inside the investment houses, several traders said nerves were frazzled further by worries that banks could face much bigger mortgage related losses, not from foreclosures, but because of questions about how the money was lent in the first place. If it turns out that mortgages were bundled together and sold improperly, more holders could sue the banks and force them to buy back tens of billions in mortgage-backed securities.

An alarming report on Bank of America, compiled by Branch Hill Capital, a San Francisco hedge fund, circulated widely on Wall Street on Thursday. Branch Hill suggested that the bank, the nation’s largest, could be facing more than $70 billion in losses from mortgage securities that it may have to repurchase from Fannie Mae and Freddie Mac, as well as private investors.

“We think this is a very important issue, and the liability will be substantial,” said Manal Mehta, a partner at Branch Hill. “There has been pervasive bad behavior throughout the system.” The fund is betting that Bank of America shares could decline because of the potential liability.

----For now, bank executives are not making any predictions how long the foreclosure halt will last.

“If you’re talking about three or four weeks it will be a blip in the housing market,” said Jamie Dimon, chief executive of JPMorgan Chase, in a conference call on Wednesday. “If it went on for a long period of time, it will have a lot of consequences, most of which will be adverse on everybody.”

"Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious."

George Orwell, 1984

At the Comex silver depositories Thursday, final figures were: Registered 52.20 Moz, Eligible 60.41 Moz, Total 112.61 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, and a break from America’s black swan of massive bankster fraudulent foreclosures too. Today, a warning that the UK can expect snow next week. Not unprecedented but if it happens unusually early, especially since we’re all supposed to believe in the new age religion of “global warming”, now rebranded “climate change" after last year’s fiasco in snowy Copenhagen. Below The Telegraph covers next week’s weather and Russia Today covers the “coldest winter in 1,000 years" expected later this coming winter. I have my doubts, although anything is possible, but were it to happen, look for exceptional winter kill of wheat and barley, across much of Europe out as far as Kazakhstan. If that were to actually happen, I would expect grain prices to double again from here, with serious consequences for food price inflation. In an age of austerity, I would think that quickly leads to widespread social instability.

"Hot is Cold; Freedom is Slavery; Ignorance is Strength."

With apologies to George Orwell. 1984.

Snow to hit Britain

Winter will come early to Britain next week as snow is forecast for the north while the south will shiver in frosty sub-zero nights.

Published: 3:21PM BST 13 Oct 2010

The cold snap will seem worse after temperatures soared to 75F (23C) last weekend.

Forecasters warned snow is due in Scotland and possibly northern England next week, with frost as far south as southern England, which will see bitter 48F (9C) daytime maximum temperatures.

A northerly air stream in the middle part of next week means coldest conditions will probably be in Scotland, with sleet or snow showers and snow settling on higher ground,” said forecaster Brian Gaze of independent forecasters The Weather Outlook.

“Even southern England will feel distinctly chilly."

Forecasters Positive Weather Solutions have already predicted a ‘white-out’ winter almost as harsh as last winter - with widespread snow, temperatures down to -4F (-20C) and transport chaos.

The Weather Outlook, which has an accurate seasonal forecasting record, warned the UK is now being gripped by a bitter series of winters comparable with the harsh 1939-42 winters which made conditions so horrendous during the Second World War.

Last winter was the coldest for 31 years, with an average UK-wide temperature of just 34F (1.5C).

“Winters were mostly milder than average from 1991 to 2007, but this changed with a colder winter in 2008-09 and last winter being the worst since 1978-79,” Mr Gaze said.

“History shows cold winters do tend to come in clusters, indicating underlying factors cause them to persist for a number of years.

“It’s unusual to have three consecutive cold winters, a good example of which are the 1939-40 to 1941-42 winters.

Coldest winter in 1,000 years on its way

04 October, 2010, 07:20

After the record heat wave this summer, Russia's weather seems to have acquired a taste for the extreme.

Forecasters say this winter could be the coldest Europe has seen in the last 1,000 years.

The change is reportedly connected with the speed of the Gulf Stream, which has shrunk in half in just the last couple of years. Polish scientists say that it means the stream will not be able to compensate for the cold from the Arctic winds. According to them, when the stream is completely stopped, a new Ice Age will begin in Europe.Read more

So far, the results have been lower temperatures: for example, in Central Russia, they are a couple of degrees below the norm.

“Although the forecast for the next month is only 70 percent accurate, I find the cold winter scenario quite likely,” Vadim Zavodchenkov, a leading specialist at the Fobos weather center, told RT. “We will be able to judge with more certainty come November. As for last summer's heat, the statistical models that meteorologists use to draw up long-term forecasts aren't able to predict an anomaly like that.”

In order to meet the harsh winter head on, Moscow authorities are drawing up measures to help Muscovites survive the extreme cold.

Another weekend and autumn is in full cry. The first icy blast of the winter to come is about to hit, just as Her Majesty’s coalition government is about to announce its draconian austerity cuts. Cuts that no party would talk about prior to last May’s election. Cuts that no party in the coalition has a true public mandate to carry out. Stay long precious metals against the coming public backlash. A backlash soon to catapult the UK into front position again in the international race to Reykjavik. Have a great weekend everyone. Time to see where I last left the snow shovel.

Rather more than a quarter of a year has passed since the new Government came into power in this country. What a cataract of disaster has poured out upon us since then!

With apologies to Winston S. Churchill. 1940.

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 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. September is the fourth down month in a row.

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