Baltic Dry Index. 2727 - 35 on the week
LIR Gold Target by 2019: $3,000.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
It’s all over in South Korea. At the G-20 finance minister’s summit, they came, they lied to each other in their official capacity on behalf of their respective state, and in the end they issued a monstrous lie to a disbelieving world. What are you going to believe? Their words or their actions. According to their words, the US has just committed the Fed to abandon plans for QE2, which can only devalue the dollar. Is the Bank of England also going to abandon its quantitative easing program and allow the Pound to soar back towards $2.00 to the Pound? The really sad part is that the hapless taxpayers of the G-20 nations, all have to pick up the bill for all this state sanctioned lying.
It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place.
H.L. Mencken.
G-20 to Avoid Competitive Devaluations, Backs Market Currencies
Oct. 23 (Bloomberg) -- Group of 20 finance chiefs pledged to avoid weakening their currencies to boost exports and let markets increasingly set foreign exchange values to defuse mounting trade tensions before they hurt the world economy.
The G-20 agreed to “move towards more market determined exchange rates systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies,” its finance ministers and central bankers said after talks today in Gyeongju, South Korea.
It was the first time they had formed a joint stance on foreign exchange as they sought to end mounting concern that nations from the U.S. to China are relying on cheap currencies to spur growth, risking a protectionist backlash. The policy makers delayed further debate over a U.S. proposal for current account targets until next month’s Seoul summit of leaders.
“I don’t think the G-20 meeting will completely turn things around in the currency market,” Thomas Lam, chief economist at OSK-DMG in Singapore, said before the statement’s release. “There is little evidence to suggest that countries such as China who have been intervening will stop it.”
The G-20 officials met as China’s restraint of the yuan and the U.S. dollar’s recent slide forces trade partners including South Korea and Brazil to temper gains in their own currencies to remain competitive. The dollar has dropped as the Federal Reserve shifts toward easing monetary policy to lift growth.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=a2m9Pyg8FHZk&pos=1
Next, coming soon to most of Europe, once all the uncoordinated austerity packages kick in. A Greek vision of our future? If it happens in Britain, unlike the Greeks, most of us aren’t in a position to steal the VAT levy, which apparently is part of the Greek business model, which explains why the Germans must work harder for longer. Euros anyone? Honest, they’re not going to devalue.
A good politician is quite as unthinkable as an honest burglar.
H.L. Mencken
A World Upside Down for Greeks
By NIKI KITSANTONIS Published: October 22, 2010
ATHENS — Giorgos Sofronas, 66, has run a small shop selling ladies’ bags in central Athens for more than four decades. This year, all of a sudden, the future became uncertain.
Mr. Sofronas has seen his sales drop by 45 percent since the onset of an unprecedented debt crisis earlier this year that prompted the Greek government to increase taxes and cut public salaries, in return for a €110 billion, or $154 billion, rescue package from its euro-zone partners and the International Monetary Fund. The measures have sliced profit margins at businesses large and small and damped consumer demand.
Watching shops closing one after another on his street has made Mr. Sofronas nervous, but he will not contemplate bankruptcy. “This business feeds nine people,” he said, referring to his family and five employees. “I can’t give up.”
In Greece, small businesses — defined as stores or workshops employing fewer than 10 people, though many are one-person operations — account for 96 percent of all enterprises and employ around two million of Greece’s five million-strong work force. Many small businesses, particularly in Athens and on Greece’s many islands, support the tourism sector, a crucial part of the economy that is also reeling from the repercussions of the debt crisis.
“Small businesses are Greece’s lifeblood,” said Vassilis Korkidis, chairman of the National Confederation of Greek Commerce, known by its Greek acronym Esee. “What we’re seeing now is a hemorrhage.”
----- The government has also pledged €25 billion in guarantees to enable Greek banks to issue more loans to businesses.
Mr. Papandreou has repeatedly stated his government’s commitment to reducing taxes on all businesses — currently 24 percent on retained earnings and 40 percent on dividends — but has not given a time frame. Last month, in a speech before entrepreneurs in the port of Thessaloniki, Mr. Papandreou pledged to speed up relief for businesses by bringing forward planned cuts to the retained earnings tax — to 20 percent from 24 percent — having them apply from next year instead of 2014.
Mr. Korkidis, the commerce group chairman, said the measures would help when they materialized. Still, it remains unclear whether more credit lifelines will save small businesses. Many are already in debt to banks, owing a total of €144 billion in loans for business expenses and expansion, according to Mr. Korkidis. Small businesses also owe €3 billion in taxes that must be paid over the next three months. These are chiefly outstanding value-added (sales) tax bills that businesses must pay by the end of the year or face legal action.
Of course much of this tax liability is theoretical as many businesses have traditionally avoided paying their VAT bills to the state.
“For many, pocketing the VAT was the only way they managed to stay afloat,” Mr. Korkidis said.
----- The problems are acute both in production and in the retail sector. Small manufacturers face higher operating costs and fewer orders from cash-strapped retailers. In retail, those suffering most are stores selling clothes, shoes and accessories. They have seen their revenue drop by an average of 35 percent, according to the Esee.
The downturn is evident on the streets of the capital. On some roads, one in every four shops is boarded up.
---- The stagnation is reflected in the official statistics. According to the Esee, 27,574 small businesses closed in the first six months of this year while 27,495 new businesses opened, a ratio of nearly one to one. Last year, the ratio for the same period was two to three, with 24,513 businesses closing and 32,758 opening.
According to the Confederation of Greek Craftsmen and Merchants, this situation will worsen significantly by the end of 2011. The group expects one in five businesses — or 175,000 out of a total of around 800,000 — to close.
More.
http://www.nytimes.com/2010/10/23/business/global/23greececon.html?pagewanted=2&ref=business
The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.
H.L. Mencken.
Have a great weekend everyone.
GI.
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