Tuesday, 16 November 2010

48 Hours To Save The Euro.

Baltic Dry Index. 2261 -52
LIR Gold Target by 2019: $30,000. Revised.

They did not wear their scarlet coats,
For blood and wine are red,
And blood and wine were on their hands
When they found the Euro with the dead,
The poor dead Euro whom they loved,
And murdered in founding bed.

With apologies to Oscar Wilde, and Reading Gaol.

Today and tomorrow, it’s all about Ireland. That crashing, creaking and splintering sound is the sound of the Eurozone starting to breakup. As Europe’s finance ministers head off to Brussels, we borrow today’s headline from the Irish Times, Europe’s finance ministers literally have 48 hours to save the Euro. Whatever they put in place, if it fails, probably results in a two sped Euro at best, at worst, most of Club Med exiting the Eurozone. Whatever happens in Brussels today and tomorrow, the Euro as global reserve currency is dead. Trying to replace the failing fiat dollar reserve standard with the Euro is worse than the problem it’s supposed to cure. At least America’s midget states in the Union can’t collapse the dollar. In the bureaucratic states of Europe, unhappily “BSE”, twinned with mad cows disease, any one of a number of crackpot tax and work shy European states can wreck the unloved Euro, at some point it won’t just be the Irish and Greeks waking up to the notion that they are better off out of the Euro, the Germans will wake up to the fact that they arebetter off forming their own Germanic northern euro-mark of hard working tax paying northern European Lutherans.

Today, the bunglers of Brussels, together with unelected Presidents Van Rompuy (who?) and Barroso, and the assembled cast of Europe’s finest, the finance ministers, get to work over Ireland in the cause of holding the Euro together into the next crisis later next year. Stay long precious metals. Is fiat currency great or what?

And strange it was to see Ireland pass
With a step so light and gay,
And strange it was to see Portugal look
So wistfully at the day,
And strange it was to think that Greece
Had such a debt to pay.

With apologies to Oscar Wilde, and Reading Gaol.

Ireland isn't working: Celtic Tiger becomes sick man of Europe

By David McKittrick, Ireland Correspondent Tuesday, 16 November 2010

Just a couple of years ago, Irish ministers and officials used to look forward to meetings such as tonight's gathering of European Union finance ministers in Brussels.

Such occasions gave them a chance to bask in the glory of the amazing turnaround which had transformed Ireland into one of the world's most striking economic success stories, making it the envy of Europe.

When Ireland styled itself the Celtic Tiger, it did so with huge pride. But now these meetings have a character of crisis: gone are the congratulations, to be replaced by a general sense of desperation as Ireland struggles to stay afloat.

-----The Irish Republic has braced itself for four consecutive swingeing budgets aimed at bringing borrowing down to a 3 per cent target by 2014. That would wipe out many of the achievements of the previous years, a back-to-the-past scenario. But there is an awful suspicion that even these moves may not be enough; the fear is that the whole thing could go into freefall. Although the authorities are taking desperate measures, there is as yet no widespread Irish feeling that stability is about to be achieved anytime soon.

-----Instead, the mood is closer to dismay as crisis follows crisis, with government estimates of the scale of the problem getting worse and worse over the months, to be balanced with precious little in heartening news. The old depressing consequence of Irish recession, that of emigration to the United States, Australia and elsewhere, has yet to return on any significant scale. But emigration fairs around the country are attracting large numbers investigating the possibilities of moving abroad.

At some stage there could come a tipping point when significant groups of people will conclude, regretfully, that the economy will take many years to recover and will buy one-way tickets to places with brighter prospects.


Tuesday, November 16, 2010, 06:46

Taoiseach insists Ireland not seeking bailout from Europe


Ireland not making an application for EU or IMF funding for the State, according to Taoiseach Brian Cowen. He said last night an application was not being made because the country was already funded right up to the middle of next year.

Mr Cowen accepted that the cost of money for Ireland on the bond markets was high but the issue would be discussed by Brian Lenihan and the other EU finance ministers at their meeting in Brussels today.

----Although the European authorities in Brussels sought to play down expectations that the Government would soon apply for aid under the EU/IMF rescue scheme, public remarks from the top level of the European Central Bank (ECB) indicated that a move to bolster Ireland’s banks is under discussion. Talks seeking a common position on how this could be done will continue today ahead of the finance ministers’ meeting, with Department of Finance sources saying last night it was too early to predict the outcome.

In Vienna yesterday, ECB vice-president Vitor Constancio said the Government would be able to use the emergency fund for euro governments to recapitalise banks. However, senior Dublin sources played down the prospect of any early step in that direction.

Mr Constancio said: The Irish state is financed until part of next year, but it is also a problem of the banks that are at the centre of the problems in Ireland and considerations have to be pondered.


Euro under siege after Portugal hits panic button

The euro is facing an unprecedented crisis after another country indicated that it was at a “high risk” of requiring an international bail-out
10:00PM GMT 15 Nov 2010

Portugal became the latest European nation to suggest it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.

Greece also disclosed yesterday that its economic problems are even worse than previously thought. Last night, the German Chancellor Angela Merkel raised the spectre of the euro collapsing as she warned: “If the euro fails, then Europe fails.”

European finance ministers will meet in Brussels tomorrow to begin discussions over a new European stability plan that is expected to lead to billions of pounds offered to Ireland, Portugal and possibly even Spain.


Europe Fears That Debt Crisis Is Ready to Spread

By LANDON THOMAS Jr. and JAMES KANTER Published: November 15, 2010

LONDON — European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.

-----While some important details are different, the current situation feels eerily similar to what happened months ago in Greece, where the cost of borrowing rose precipitously.

-----Stronger countries and weaker countries using the common currency of the euro are being pulled in different directions.

Some economists wonder if unity will hold or if some new system that allows countries to move on one of two parallel financial tracks is needed.

Despite the insistence of Irish officials that only its banks need additional help, investors continue to bet on an Irish rescue, driving down the bond yields on that country’s debt against a benchmark again on Monday.

Portugal’s yields increased to 6.7 percent, underscoring the emerging concern in Brussels, the administrative center of the European Union, that it would be irresponsible to adopt a plan to prop up Ireland without addressing the possibility that turmoil could ultimately engulf Portugal, or even Spain. Like Ireland, Portugal has struggled to grow under the fixed currency regime of the euro. Though Portugal has raised enough funds of late from bond markets, its budget deficit is 9 percent of its gross domestic product, much higher than the 3 percent limit for countries in the euro zone. With its weak government and slow growth, investors have grown fearful that Portugal, too, will eventually run out of funds.

-----The Portuguese finance minister, Fernando Teixeira dos Santos, said Monday evening in Brussels that the situation in Ireland was creating dangers for all countries using the euro.

“If things are getting worse in Ireland, for instance, that will have a contagion impact on the other euro zone economies and particularly on those that are under closer scrutiny of markets, like Portugal,” he said.


NOVEMBER 16, 2010

For Europe's sake, take the money

Ireland's day of reckoning has arrived. When Brian Lenihan meets his fellow European Union finance ministers in Brussels Tuesday, he will find himself in the surreal position of being begged to accept a European Union bailout, despite the fact Ireland doesn't need to tap bond markets until the middle of next year and his government will next month deliver a budget which it believes will enable the country to bring its borrowing under control. But this crisis is now about the survival of the euro zone. Mr. Lenihan should take the money —and the rest of Europe must hope that does the trick.

For Mr. Lenihan this will be a bitter moment. For the last two years, he has done almost everything the markets could have expected to maintain investor support. But his government's decision in September 2008 to guarantee almost all the unsecured creditors in its banking system proved a single catastrophic misjudgment. The public finances have been overwhelmed by the sheer scale of the losses that have emerged from the banks.

With doubts now emerging about the state of bank mortgage loan books, wholesale funding has evaporated and deposits have been withdrawn, leaving the banks reliant on European Central Bank funding for their survival. The ECB is currently lending Irish banks €80 billion, equivalent to 80% of GDP. Bank of Ireland last week reported its loan to deposit ratio had risen from 145% to 160%, even as it deleveraged by shedding assets. The bank now has just €12 billion of ECB eligible collateral, half the level three months ago. For other Irish banks, the situation is likely to be even tighter.

Factor in the ECB's recent Irish bond purchases and it is clear Ireland is already being bailed out to a far greater extent than euro zone policymakers have been willing to acknowledge. As a monetary authority, the ECB can justify intervening in markets to provide markets with liquidity. But the ECB does not have a mandate to take credit risk, which is arguably what Ireland now presents. A bailout that exposes taxpayers to losses needs to be a fiscal operation, the preserve of democratically-elected governments.


"Buy gold and sit on it. That is the key to success."

Dr. Franz Pick

At the Comex silver depositories Monday, final figures were: Registered 50.28 Moz, Eligible 57.15 Moz, Total 107.43 Moz.


Crooks and Scoundrels Corner.

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

"Start buying gold now, regardless of the price. By acting now, you will not have to react when it's too late. Too late will be when the majority of the public finally figures out what is happening to paper money and frantically tries to get aboard. Remember, if you're one of the ones holding paper in the end, you will have given away your products and services for nothing."

Robert Ringer

No crooks and scoundrels today, they’re all too busy in Brussels.

"Whenever an overall breakdown of a monetary or financial system occurs, return to gold always restores order, revives confidence and brings back prosperity."

Donald Hoppe

The monthly Coppock Indicators finished October:

DJIA: +204 Down. NASDAQ: +289 Down. SP500: +196 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. October is the fifth down month in a row.

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