Tuesday, 30 November 2010

The Euro Is Dying.

Baltic Dry Index. 2145 -25
LIR Gold Target by 2019: $30,000. Revised.

Should the EU really impose a 6.7pc interest charge on Ireland’s bail-out loans, it should not be surprised if the new Irish government in January walks away from the whole stinking arrangement, and pulls the plug on Europe’s banking system. Many might cheer.

Well they didn’t impose 6.7% debt slavery on Ireland, merely 5.7% slavery but they all but confiscated the Irish pension pool. Day after day we get to witness the Irish government selling out its own people in the cause of rescuing banksters in Germany, France, the UK and USA. Any reasonable Irish government would just nationalise the 3 bankrupt banks and tell the international bondholders, including the ECB, to get in line while the Irish government restructures the wreckage and figures out how much or how little each bondholder will eventually get back in Euro. The international banksters should then write down the holdings to zero, and if that causes problems, they can apply for assistance at their own central bank and/or the ECB/Federal Reserve.

This program of enslaving the Irish population was supposedly put in place to prevent contagion to the rest of dodgy Club Med. In that it has spectacularly failed, and we are now watching the slow death of the Euro. The policy having failed, what gain is there to anyone in continuing the crushing of the Irish population? Below, yesterday‘s rout of the Brussels master plan that was supposed to salvage the Euro. Stay long precious metals. This tragedy is likely to get worse for all countries trapped in the dying Euro.

“The big elephant in the room is not Portugal but, of course, it’s Spain. There is not enough official money to bailout Spain if trouble occurs.”

Professor Nouriel Roubini.

Germany faces its awful choice as Spain wobbles

Desperate moments call for desperate measures. In June 1940, the British War Cabinet led by Winston Churchill offered a total national merger to a shattered France.

By Ambrose Evans-Pritchard 5:45AM GMT 29 Nov 2010

“France and Great Britain shall no longer be two nations, but one Franco-British union,” read the declaration.

“The constitution of the Union will provide for joint organs of defence, foreign, financial and economic policies. Every citizen of France will enjoy immediately citizenship of Great Britain, every British subject will become a citizen of France.”

The text was drafted by Jean Monnet, the father of the European Project. If alive today, he would be pounding on the door of the Kanzleramt, exhorting Angela Merkel to offer a total fiscal union to all members of the eurozone before everything falls apart, and to be enshrined in EU treaty law forever.

“All debts of Greece, Cyprus, Italy, Spain, Portugal, and Ireland will be fused immediately with German debt; a single treasury will control spending, and issue euro-bonds for all Euroland,” or some such formula.

This is the sort of game-changer that may now be required to save EMU and the Monnet dream. Germany must contemplate doing for Euroland what it has done for its own Volk in the East over the last 20 years – pay big transfers – or watch its strategic investment in the post-War order of Europe collapse with a bang, and in hideous acrimony. Tough call.

It is clear to those working in the bond markets that the debt crisis in the EMU periphery is nearing danger point, and risks spiralling out of control as quickly as the Lehman-AIG-Fannie-Freddie crisis in 2008.

Prof Willem Buiter, chief economist at Citigroup, said last week that Portugal is likely to need a rescue before the end of the year and that Spain will follow “soon after”.

Klaus Baader from Societe Generale issued a report the same day entitled “Eurozone sovereign debt crisis: next stop Spain”. He suggests that the EU bail-out fund raises money to buy Spanish bonds pre-emptively. Nice idea, but what would the German constitutional court have to say about that?

At Deutsche Bank, Thomas Mayer said Spain might soon need a flexible credit from the IMF. Informed opinion has turned.

Markets are already pricing a 23pc chance of default in Spain (34pc for Portugal, and 39pc for Ireland). If the country needs a rescue, it instantly exhausts the credible financial and political firepower of the EMU system.



Spain Is ‘Big Elephant’ in Room After Ireland, Roubini Says

Nov. 29 (Bloomberg) -- Spain is the “big elephant” in the European debt crisis because there may not be enough money to bail out the Iberian nation, said Nouriel Roubini, the New York University professor who predicted the global financial crisis.

Investor concern has shifted to Spain and Portugal since yesterday, when European governments sought to bolster the euro by giving Ireland an 85 billion-euro ($113 billion) aid package and diluting proposals that would have forced bondholders to bear some costs of future bailouts.

-----HSBC Holdings Plc estimates Spain may need 351 billion euros over three years. The European Union may be able to deploy only 255 billion euros of the 440 billion-euro European Financial Stability Facility, according to Nomura International Plc. That’s because the bailout fund is financed by bonds, and governments agreed to set aside cash and link lending to the creditworthiness of donors to secure a AAA rating.

The cost of insuring the debt of Spain and Portugal soared to record-high levels today, according to CMA prices for credit- default swaps. Contracts on Spain climbed 14 basis points to 336 while Portugal rose 23 basis points to 524.

-----“At some point there might be debt restructuring that become inevitable for the sovereigns and also those financial institutions” that are providing funds, Roubini said. The International Monetary Fund may be one such institution, he said.


For once I have to disagree with the great Professor Roubini. Even a rescue for Spain can be botched together by Germany, the ECB and the rest of the the ill fated Eurozone. But each fix just brings up a bigger problem, and in this case that problem is Italy. But Germany and the rest can’t bailout Italy without putting themselves at risk of sovereign failure. At that point the Germans walk away and the Euro dies. The whole world and his dog can see the ending. For now, no one wants to face up to this harsh reality. Better to enslave tiny Ireland, and pray that the problem will miraculously go away.

Contagion strikes Italy as Ireland bail-out fails to calm markets

The EU-IMF rescue for Ireland has failed to restore to confidence in the eurozone debt markets, leading instead to a dramatic surge in bond yields across half the currency bloc.

By Ambrose Evans-Pritchard, International Business Editor 8:15PM GMT 29 Nov 2010

Spreads on Italian and Belgian bonds jumped to a post-EMU high as the sell-off moved beyond the battered trio of Ireland, Portugal, and Spain, raising concerns that the crisis could start to turn systemic. It was the worst single day in Mediterranean markets since the launch of monetary union.

----- "The crisis is intensifying and worsening," said Nick Matthews, a credit expert at RBS. "Bond purchases by the European Central Bank are the only anti-contagion weapon left. It needs to act much more aggressively."

Investor reaction comes as a bitter blow to eurozone leaders, who expected the €85bn (£72bn) package for Ireland agreed over the weekend to calm "irrational markets".

While the Irish rescue removed the immediate threat of "haircuts" for senior bondholders of Irish banks, it leaves open the risk of burden-sharing from 2013 on all EMU sovereign bonds and bank debt on a "case-by-case" basis. Traders said bond funds have been dumping Club Med bonds frantically to comply with their "value-at-risk" models before closing books for the year.

Yields on 10-year Italian bonds jumped 21 points to 4.61pc, threatening to shift the crisis to a new level. Italy's public debt is over €2 trillion, the world's third-largest after the US and Japan.

"The EU rescue fund cannot handle Spain, let alone Italy," said Charles Dumas, from Lombard Street Research. "We we may be nearing the point where Germany has to decide whether it is willing take on a burden six times the size of East Germany, or let some countries go."



I doubt that God cares one way or the other over the fate of the Euro. I doubt that the problems of Club Med go away. Instead, we’ll plod along botching together serial fixes, fixes that never quite fix anything. Stay long precious metals. 2011 looks set to be a disastrous year for fiat currency.

"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket."

Michael Belkin

At the Comex silver depositories Monday, final figures were: Registered 48.44 Moz, Eligible 58.82 Moz, Total 107.26 Moz.


Crooks and Scoundrels Corner.

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

No crooks and scoundrels today, they are all busy partying in Cancun, while Great Britain and much of Europe enter our new Ice Age. Today just a warning from Wikileaks. Will it be "God's team" up at Ebenezer Squid's outfit, or the biggest derivatives gambler of all, the gambling mad banksters up at the house of Morgan?

"All previous attempts to base money solely on intangibles such as credit or government edict or fiat have ended in inflationary panic and disaster."

Donald Hoppe

US bank is next target for major leak, says Assange

By Rob Hastings Tuesday, 30 November 2010

Banking will be targeted in the next batch of WikiLeaks releases, the website's founder, Julian Assange, has said.

Mr Assange said that he planned to publish a major leak exposing a "big US bank" early next year, uncovering "flagrant violations" that "could take down a bank or two".

He refused to give any more details as to the company's identity, nor to speculate on whether it would reveal criminal offences, but compared the scale of the release to that of the emails that came to light following the collapse of Enron. "It's not as big a scale as the Iraq material," he told the business magazine Forbes, "but it's either tens or hundreds of thousands of documents depending on how you define it."

Mr Assange said that WikiLeaks had so far prioritised releasing leaked documents relating to governments and international relations, but estimated that about 50 per cent of the information it was holding related to private-sector companies. He confirmed that the website was in possession of many documents relating to BP, but was still assessing if the material was "original". Pharmaceutical firms could also be implicated by future leaks.



"The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day, and serving political goals and ambitions. This difference alone sounds the alarm to all perceptive observers."

Hans F. Sennholz

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. November looks like making that six.

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