Baltic Dry Index. 2639 +70
LIR Gold Target by 2019: $3,000.
"Too bad ninety percent of the politicians give the other ten percent a bad reputation.”
Henry Kissinger.
Today it is all about currency. Fiat currency to be precise. With every country now trying to rig its currency, ahead of a major set of meetings now coming up, the world’s central banksters and their bag carriers, are all out spinning in the media to the effect that “it’s not me gov. It’s all them other fellas rigging their currency”. While ECB meets today to do nothing, trapped into forever buying up Club Med’s debt, the real event is the game being played out in Washington, where the pots and busy calling the kettles black. While its all smiles at the photo ops, it’s daggers drawn in the backrooms where the US, and UK and EU, are attempting to force China’s yuan higher. Below, tdhe big story of the day and tomorrow. Stay long precious metals. Sooner or later even the dumbest central bankster will figure out fiat currency is broken. The American scam of the dollar reserve standard was wrecked by the people they elected into government, and the something for nothing spendthrift policies they pursued.
"When people look back on this period in five or ten years from now, they'll say that this was something approaching a turning point for the American economy."
Robert A. Rubin, Chairman National Economic Council, 1994.
Geithner steps up pressure on China
When large economies undervalue rates, other countries follow: Geithner
Oct. 6, 2010, 3:04 p.m. EDT
WASHINGTON (MarketWatch) — Treasury Secretary Timothy Geithner on Wednesday stepped up the pressure on China, effectively blaming the world’s number-two economy for the emergence of what some are calling a “currency war” ahead of an important global gathering.
The U.S. believes that it is important to see more progress by major emerging economies to move to more flexible, market-oriented exchange rate systems, Geithner said in advance of an annual International Monetary Fund gathering in Washington set for later this week.
It is unfair to countries that were already running more flexible regimes and let their currencies appreciate,” Geithner said, focusing a large part of his comments at a Brookings Institution event on China’s exchange rate policy “And it requires a cooperative approach to solve, because emerging economies individually will be less likely to move, unless they are confident other countries would move with them.”
While China said in June that it would allow more exchange-rate flexibility, there has been little movement since then in the yuan/dollar rate
-----The Geithner comments came as the head of the International Monetary Fund, Dominique Strauss-Kahn, warned in an interview against countries using currencies as “policy weapons.”
-----Continuing to talk about the relationship between China and the U.S., Geithner also argued that with America saving more, emerging countries that are overly reliant on exports to the U.S. -- such as China -- must change their policies or else global growth will slow.
Geithner said countries that run “chronically” large surpluses need to change their policies to boost their domestic demand.
http://www.marketwatch.com/story/geithner-steps-up-pressure-on-china-2010-10-06
China Hardens Opposition on Yuan, Says Back Off to EU
Oct. 7 (Bloomberg) -- China stiffened its opposition to a rapid appreciation of the yuan, setting the stage for a confrontation over exchange rates at this week’s international monetary meetings in Washington.
Premier Wen Jiabao said China will stick to its policy of gradually increasing the currency’s flexibility and lashed out at European Union leaders for teaming with the U.S. to pressure the Chinese government.
“Europe shouldn’t join the choir” clamoring for a higher yuan, Wen told a business conference yesterday before an EU- China summit in Brussels. “If the yuan isn’t stable, it will bring disaster to China and the world. If we increase the yuan by 20-40 percent as some people are calling for, many of our factories will shut down and society will be in turmoil.”
China has capped the yuan’s rise at 2 percent since relaxing a dollar peg in June, leading to criticism that it is stunting the recovery in the industrial world by shielding its market from U.S. and European imports.
International exchange-rate diplomacy shifts into high gear at the Oct. 8 Group of Seven meeting in Washington after China rebuffed EU and U.S. pleas, the Bank of Japan sought to drive down the yen by unexpectedly easing monetary policy, and Brazilian Finance Minister Guido Mantega warned of a global “currency war.”
More.
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a4__wyEI.yUw
G-20’s Interventions Risk Protectionist Reprisals
Oct. 7 (Bloomberg) -- The race for cheaper currencies may have only just begun as nations from Japan to Brazil seek a competitive edge in international trade.
Japan last month intervened for the first time in six years to restrain the yen, while China is resisting calls to let the yuan rise faster. At same time, a potential revival of U.S. and U.K. asset-purchase plans may spark declines in their currencies. UBS AG says the “mega-trend” of interventions will roil the $4 trillion-a-day foreign-exchange market for the next decade.
While lower exchange rates can lift an economy by helping exports, the danger is that the moves escalate into devaluations and protectionist retaliation, impeding global growth. Brazil’s Finance Minister Guido Mantega, a delegate to the International Monetary Fund annual meetings in Washington this week, said Sept. 27 that there’s already a worldwide “currency war.”
“There’s a real danger of a more unilateral approach taking hold,” said Mansoor Mohi-uddin, the Singapore-based head of global currency strategy at UBS, the world’s second-biggest currency trader. “There will be more countries outright intervening and others inadvertently weakening their currencies.”
Even as Group of 20 finance deputies meet today in the U.S. capital, followed by a G-7 ministers’ dinner tomorrow, officials aren’t signaling a return to the currency accords of the 1980s. Japanese Finance Minister Yoshihiko Noda said he’s ready to explain his country’s recent currency sales at the talks.
More.
http://noir.bloomberg.com/apps/news?pid=20601103&sid=aj1UYgNSPuO8
BOE May Step Away From Exit as U.K. Economy Stumbles
Oct. 7 (Bloomberg) -- Bank of England Governor Mervyn King is getting pushed back toward the printing presses as central banks in the U.S. and Japan turn their focus on more bond purchases to defend the global recovery.
King is battling to keep the economy from sliding back into recession as Prime Minister David Cameron prepares the biggest public-spending squeeze since World War II. Pressure to do more is building after the Federal Reserve signalled in the past two weeks it may buy more assets to bolster U.S. growth, while the Bank of Japan on Oct. 5 pledged further purchases.
“The debate has been shifting toward the argument in favor of loosening, and it’s likely we’ll see another step in that direction at this meeting,” said Jonathan Loynes, chief European economist at Capital Economics Ltd. in London. “When we see the gory details of the spending cuts it may knock confidence and that increases pressure on policy makers.”
The danger for the Bank of England is that more easing by U.S. and Japanese authorities may strengthen the pound relative to their currencies, further undermining the recovery. The pound has already risen 10 percent against the dollar since falling to a 14-month low in May. Adding to evidence of an economic slowdown, mortgage lender Halifax said today that U.K. house prices dropped in September by the most since at least 1983.
http://noir.bloomberg.com/apps/news?pid=20601102&sid=aMhEFAi0zvOA
Dollar set for sharp decline, Goldman forecasts
The dollar will embark on a sharp decline over the next 12 months, Goldman Sachs forecast on Wednesday, as policy makers in Washington look poised to press the trigger on another round of printing money.
By Richard Blackden Published: 6:00AM BST 07 Oct 2010
The investment bank expects the dollar to drop to $1.79 against the pound in six months and $1.85 in 12 months. Sterling closed at $1.5891 in London yesterday. The euro won’t be spared either, with the dollar’s slump forcing it to $1.50 six months from now and $1.55 in a year’s time.
Powered by President Obama’s stimulus package and a rebound in inventories, the US recovery peaked in the final three months of last year and has been slowing ever since.
As the summer delivered a diet of weak economic data, the conviction has strengthened among a growing number of officials at the Federal Reserve that it should risk another bout of quantitative easing - printing money to inject into the economy.
“More QE is seen as a co-ordinated effort to get the dollar lower,” said Thomas Stolper of Goldman Sachs. “It makes sense for the US.”
Separately, Goldman’s chief economist, Jan Hatzius, warned that the world’s biggest economy faces a “fairly bad” or a “very bad" scenario over the next six to nine months.
More tomorrow for whether they opted for “fairly bad” or the “very bad” outcome.
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
At the Comex silver depositories Wednesday, final figures were: Registered 52.25 Moz, Eligible 59.62 Moz, Total 111.87 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Below, how Europe’s PIIGS got the keys to the ECB’s vaults. The Club Med lifestyle gets to party on into 2011.
"Anybody has the right to evade taxes if he can get away with it. No citizen has a moral obligation to assist in maintaining the government."
J.P. Morgan.
Trichet ‘Trapped’ by Banks’ Addiction to ECB Cash: Euro Credit
Oct. 7 (Bloomberg) -- European Central Bank President Jean- Claude Trichet staked his reputation on propping up banks with cheap cash during the financial crisis. Now credit markets won’t let him take away that support.
Near-record borrowing costs for nations across the euro region’s periphery are making it harder for the ECB to wean commercial banks off the lifeline it introduced two years ago. The extra yield that investors demand to hold Irish and Portuguese debt over Germany’s rose last week to 454 basis points and 441 basis points respectively. Spain’s spread hit a two-month high.
The risk for the ECB is that it gets pulled deeper into helping the banking systems of the most indebted nations in the 16-member euro bloc. Governing Council member Ewald Nowotny said Sept. 6 that addiction to ECB liquidity is “a problem” that “needs to be tackled.” Complicating the ECB’s task is that interbank lending rates have risen, tightening credit conditions and making access to market funding more expensive for banks.
“The ECB is trapped and the exit door is blocked,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “The state of credit markets is going to force them to stay in crisis mode for longer than some of them would like.”
The ECB’s 22-member Governing Council convenes today in Frankfurt. Policy makers will set the benchmark lending rate at a record low of 1 percent for an 18th month, according to all 52 economists in a Bloomberg News survey. That announcement is due at 1:45 p.m. and Trichet holds a press conference 45 minutes later.
-----Irish 10-year bond yields soared to a record on Sept. 29 on concern the bailouts of Anglo Irish Bank Corp. and Allied Irish Banks Plc. would overwhelm government finances. The Portuguese- German 10-year yield spread, which hit a record on Sept. 28, was at 398 basis points yesterday, up from 88 basis points on March 10.
Rising sovereign borrowing costs are “having a knock-on effect on their banks’ ability to roll their short-term financing at interest rates that make economic sense,” said James Nixon, co-chief European economist at Societe Generale SA in London. That’s “leaving the banks in these countries heavily dependent on ECB financing,” he said.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=a3hNjhNlOGUY&pos=3
"Get a good night's sleep and don't bug anybody without asking me."
President Richard M. Nixon.
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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