Friday, 10 December 2010


Baltic Dry Index. 2111 -33

LIR Gold Target by 2019: $30,000. Revised due to QE.

"Higher education is a privilege and not a right so these hoodlums should be thrown out. They are spoiled brats who do not deserve to be at a great state university."
Governor Ronald Reagan

Anarchy visits Britain in the closing days of 2010. Stay long precious metals. Austerity has hardly even begun in modern Britain. Without condoning the violence, it was pretty mush predictable when all 3 major UK parties fought the May general election under false pretences, with none elected to bring in austerity. The minority partner in the weak coalition governing Britain, actually pledged not to bring in the university fees they voted for yesterday. So far none of the rioting students, anarchists and communist, have raised the obvious. If we have 100 billion to bailout the failed banksters, and the Bank of England invented 200 billion Pounds Sterling out of nothing to prop up UK bonds and UK real estate, why can’t the government just print up a mere few million to fund UK universities too, negating the need to triple university fees? On fiat currency, every decision is ultimately a political choice. I expect more riots ahead as 2011s European austerity programs roll out. Of course the rioting will just make things worse. The French revolution and the Russian revolution didn’t help either country to prosperity. Rioting in London, Dublin, Athens, or wherever, won’t make things any better in Europe either, but modern 24 hour news will cover it stoking the fire. Stay long precious metals as fiat currency dies.

"Thank God For Bank Bailouts"

Proper Charlie Munger.

London Bankers to Spend $1.6 Billion of Bonus Payout on Homes

Dec. 10 (Bloomberg) -- London bankers and other financial- services employees will spend about 1 billion pounds ($1.6 billion) of their 2010 bonus money on homes in the U.K. capital, 17 percent less than last year, Savills Plc said.

The purchases may not stop prices of London luxury homes from falling next year, though the drop probably won’t exceed 1 percent, Savills said in a statement. Values rose about 2 percent this year, helped in part by approximately 1.2 billion pounds of 2009 bonus money, the broker estimates.

This year’s payments won’t trigger a “measurable price rise as seen in the past,” Yolande Barnes, head of residential research at the London-based property adviser, said in the statement. “Rather, we anticipate that bonus money will be fed into the market over a longer time period.”

Bonus-earners typically account for half of the buyers of London homes costing more than 1 million pounds, according to Savills. Record payouts in 2006 and 2007 -- which the Centre for Economics & Business Research says totaled 11.5 billion pounds each year -- sent property values surging to all-time highs in neighborhoods such as Chelsea, Belgravia and Kensington.

The CEBR expects bonuses for the 300,000 financial-services workers in London to total 7 billion pounds before taxes in 2010, about 5 percent less than in 2009, according to Savills’s report.

“There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be, at a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”

Proper Charlie Munger.

Police tactics at tuition fees protest questioned after further angry clashes

At least 38 protesters and 10 officers injured as windows of buildings broken and car carrying Prince Charles attacked

Friday 10 December 2010

As temperatures fell towards freezing last night hundreds of demonstrators who had been kettled on Westminster Bridge were eventually allowed to leave around 11.30pm after the latest in a series of showdowns between protesters and police over tuition fees turned ugly.

The atmosphere for much of the afternoon had been relaxed and almost cheerful as many among the crowd repeated chants, danced to portable sound systems or huddled around small fires made from burning placards, but at 5.40pm, when news of the MPs' historic decision reached the crowds gathered in Whitehall, it took a turn for the worse.

Within an hour, the scuffles that had been erupting all afternoon escalated into more violent confrontations, windows were broken at several buildings including the Treasury and supreme court and Winston Churchill's statue was vandalised. The violence spread as protesters apparently caught police unaware and moved towards Oxford Street.

On nearby Regent Street, a car carrying Prince Charles and the Duchess of Cornwall was attacked as they headed for the Royal Variety Performance at the London Palladium, with a window of the vehicle being cracked in the violence. Paint was also thrown and splattered the car.

The violence poses questions for the Metropolitan police commissioner, Sir Paul Stephenson, over his force's tactics.

Superintendent Julia Pendry said the police had not lost control of the capital. "We are in control," she said. "There was no intelligence to suggest we were going to have rampaging people." She condemned the "wanton violence and wanton criminal damage".

The closing paragraph above say all you have to know about dumbed down modern Britain. Superintendent, Ms Pendry has been promoted above common sense. There was no intelligence, she says. Too right.

Below, how another European country intends tackling its own outbreak of anarchy that happened last weekend.

Spain to Seek Prison Time for Striking Air Controllers

By RAPHAEL MINDER Published: December 9, 2010

MADRID — Spain’s attorney general said Thursday that he would recommend prison sentences of as long as eight years for air traffic controllers found guilty of staging an illegal strike that shut down airports around the country last weekend.

Underlining the authorities’ determination to set a strong precedent and avoid any repeat of such wildcat action, Attorney General Cándido Conde-Pumpido also insisted that, while the strike’s leadership would most likely face the toughest sentencing, he would seek terms of at least three years for all those responsible for a chaotic weekend that affected about 650,000 passengers.

“This is a very serious crime,” he told reporters. “We’re talking about paralyzing an essential public service.”

Prime Minister José Luis Rodríguez Zapatero explained before Parliament his government’s decision to call an unprecedented state of alarm as a response to the strike, which he called “open rebellion against the state of law” and “a calamity.”

The state of alarm, which was decreed Saturday and has left Spain’s air traffic control under military supervision, is set to last 15 days. Mr. Zapatero, however, did not rule out prolonging it beyond that deadline, which could help avoid further disruption over the Christmas vacation period.

“What we are judging today is neither a labor conflict nor a strike, but an act of disobedience and a challenge to the democratic order,” Mr. Zapatero said. “The state can respond to a blackmail situation.”

Up next, today’s leading business story. While China boycotts the Nobel Prize ceremony and restricts news access in China, China’s out of control boom rolls on. An interest rate hike is widely expected this weekend.

China’s Trade Surplus, New Lending Top Estimates

Dec. 10 (Bloomberg) -- China’s trade surplus and new lending exceeded forecasts in November, underscoring the case for higher interest rates and a stronger exchange rate to stem the nation’s escalating inflation.

Exports rose 35 percent to a record $153.3 billion from November 2009 and imports advanced 38 percent to an unprecedented $130.4 billion, leaving a $22.9 billion excess, the customs bureau said on its website. New loans were 564 billion yuan ($85 billion).

Today’s trade report indicates a sustained rebound in demand among Chinese consumers and overseas customers, buttressing the argument for Premier Wen Jiabao’s government to remove stimulus measures adopted during the global crisis. Failure to allow faster gains in the yuan risks pushing U.S. lawmakers into passing protectionist legislation.

“There is no excuse for China not to allow the renminbi to appreciate faster, as its international trade has fully recovered and exceeded pre-crisis levels,” said Liu Li-Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd. who previously worked at the Hong Kong Monetary Authority and World Bank. “A rate hike is almost certain over the weekend.”

We close for the week with a footnote in the Madoff fraud. 2 years on from the Madoff fraud and Switzerland’s financial reputation still hasn’t recovered. Death by a thousand cuts reports Bloomberg.

Geneva Funds of Hedge Funds Assets Fall 60% After Madoff Fraud

Dec. 10 (Bloomberg) -- Geneva’s funds of hedge funds are losing assets two years after Bernard Madoff was arrested for masterminding a Ponzi scheme that cost investors as much as $65 billion.

The money invested in more than 180 Geneva-based funds of hedge funds totaled $14.8 billion at the end of October, down 60 percent from the week before Madoff’s arrest on Dec. 11, 2008, according to data compiled by Singapore-based Eurekahedge Pte.

Union Bancaire Privée, Banco Santander SA’s Optimal Investment Services and Notz, Stucki & Cie. are among at least seven Geneva-based firms that suffered $7 billion of losses from the Madoff fraud. The model the city’s banks helped pioneer in the 1960s is broken and faces competition from investments that charge lower fees, said Drago Indjic, project manager at the London Business School’s Hedge Funds Center.

“Funds of funds won’t explode or implode but slowly fade, death by a thousand cuts,” Indjic said.

"The leaders of the French Revolution excited the poor against the rich; this made the rich poor, but it never made the poor rich."

Fisher Ames, 1758-1808.

At the Comex silver depositories Thursday, final figures were: Registered 47.75 Moz, Eligible 60.31 Moz, Total 108.06 Moz.


Crooks and Scoundrels Corner.

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

Today, the New York Times on the reality of Christmas 2010. Stay long precious metals. 2011 is shaping up to be a year of rolling crises.

"If you can count your money, you don't have a billion dollars."

J. Paul Getty

On Christmas Shopping Lists, No Credit Slips

By STEPHANIE CLIFFORD Published: December 9, 2010

Christmas will no longer be on credit for many shoppers, despite tempting offers from retailers and credit card companies trying to coax the plastic out of consumers’ wallets.

The lowest percentage of shoppers in the 27-year-history of a national survey said they used credit cards over the Thanksgiving weekend, while the use of general credit cards like Visa and MasterCard fell 11 percent in the third quarter from a year earlier, according to the credit bureau TransUnion.

“Cash is the route I’m taking this year, from past experiences with credit cards and being in debt and trying to pay it off for so many years,” said Liz Gonzalez, a community-college employee in Signal Hill, Calif. Her debt problems started two Christmases ago, when she charged the gifts that turned into the bills that sent her life into disarray. Ms. Gonzalez, 40, still owes $2,200 from that Christmas, and said her recent divorce had been caused in part by the stress of debt.

So this year, she is buying gifts only for her two children, and will use cash to stay on a $500 budget.

---- Britt Beemer, chief executive of America’s Research Group, a survey firm, said that was a common sentiment. “The consumer really feels a lot of pressure from previous debts, and they just aren’t going to dig themselves into that kind of hole,” he said.

After the Thanksgiving shopping weekend, the group found that just about 17 percent were paying with credit — just over half of last year’s level and the lowest rate in the 27 years it has conducted a survey.

Some people are shunning credit cards for budgeting reasons, while others do not have a choice. More than 15 million Americans lost their cards because of strict credit-card regulations that were passed last year, or when issuers cut back on credit during the recession, said David Robertson, publisher of The Nilson Report, a credit card industry newsletter.


Another weekend and a brief respite from our new ice age. Two days to be exact, before a month of very cold weather, according the boffins at the Met Office who never saw Scotland’s great blizzard of 2010 coming. Oh well, only another 16 years or so, of our new Dalton Minimum to go. Have a great weekend everyone.

"Never lend money to someone who must borrow money to pay interest."

Swiss Banker's Maxim. Obsolete.

The monthly Coppock Indicators finished November:

DJIA: +178 Down. NASDAQ: +247 Down. SP500: +167 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. November is the sixth down month in a row.

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