Friday, 17 December 2010

Going Down.

Baltic Dry Index. 2028 -19

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

"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

The big idea to save the euro, seems to be to punt the problem out to 2013, when from then on European bank and sovereign debt bondholders are supposed to get “haircuts” on any new debt they take on if the issuer gets into trouble and needs to default, err make that “restructure”. The real plan is to somehow get rid of Germany’s Chancellor Merkel by then, and have a more “European” malleable German Chancellor agree to take Germany into an EMU debt union. As usual, the EU’s Lords of the Universe are living in a parallel universe to the one that exists in reality. Below, welcome to Europe as it really is. Rioting against austerity in London, Dublin, Rome and Athens. Europe’s banks all holding each other’s national debt in a giant daisy chain that leads to insolvency. A core country with no government for 6 months which looks like it’s going to disappear. A central bank that’s gearing up to try to bailout Spain, in violation of its own rules, and which appears to be a job that is likely beyond its abilities. A Bank of England that already owns most of UK banking, warning of a new tsunami of losses ahead and that the new BIS rules will cost almost 10 million banking sector jobs. Stay long precious metals. I doubt Europe has until 2013 to save the unloved Euro. The Euro’s going down, and the pace is quickening. The Squids are now betting against the banksters. The Squids never lose.

"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."

Leonard Read

EU Creates Post-2013 Crisis Tool Amid Next Step Split

Dec. 17 (Bloomberg) -- European Union leaders agreed to amend the bloc’s treaties to create a permanent crisis- management mechanism in 2013, while divisions flared over steps to prevent concern over debts from engulfing Portugal and Spain.

Germany, the biggest contributor to Europe’s bailouts of Greece and Ireland, pushed through an accord to set up a system that would allow financial aid “if indispensable” to underpin the euro and might force bondholders to bear some of the costs of future rescues.

“Our task now is to hold the course, walk not talk, and prove those wrong who predicted the demise of our common currency,” European Commission President Jose Barroso told reporters after the first session of an EU summit in Brussels late yesterday. The summit is slated to end around 1 p.m. today.


DECEMBER 17, 2010

Bailout Deal Fails to Quell EU Rifts

Europe's leaders endorsed plans for a new fund to rescue indebted euro-zone countries, and proposed treaty changes to make that possible, but failed to resolve deepening disagreements over whether more radical action is needed to quell a debt crisis that has raged on the region's fringe for more than a year.

Meeting in Brussels for the final 2010 summit, European Union leaders agreed to replace the region's emergency rescue fund, which ends in 2013, with a permanent crisis-finance program.

But the crisis gripping the weaker governments of the euro zone showed no signs of abating. On Thursday, Spain was forced to offer significantly higher interest rates at a debt auction Thursday than it paid just a month ago. Bond markets fell across Europe.

Earlier on Thursday, the head of the International Monetary Fund said he's worried European officials are "too much behind the curve" in comparison with the speed at which markets are moving, risking further contagion in the euro area.

"The risk is always to act only at the last minute," IMF Managing Director Dominique Strauss-Kahn told Thomson Reuters, adding Europe must press urgently ahead with developing a comprehensive and integrated crisis-management plan.

Interview with Flemish Separatist De Wever 12/16/2010

'Belgium Has No Future'

Six months after the general election, Belgium still has no new government. Flemish nationalist Bart De Wever, head of the country's largest party, wants to split Belgium into two states. In an interview that has caused a scandal in his country, he told SPIEGEL why the nation has "no future."

Belgium has sunk into political chaos. Following the parliamentary elections six months ago, all attempts to build a new government have failed. The country is divided into two camps that oppose each other, apparently irreconcilably: the socialists, who won the most votes in Wallonia, the French-speaking southern region of the country, and the nationalist conservatives in Flanders, the wealthier Dutch-speaking northern region.

The New Flemish Alliance (N-VA) obtained the most parliamentary seats in June's elections. Its leader Bart De Wever wants to split Belgium into two. In an interview with SPIEGEL that was published in German on Monday, De Wever described how Begium is the "sick man" of Europe and has "no future in the long run."

The interview caused a massive outcry throughout Belgium. The French-speaking daily Le Soir called it "a bomb" intended to stir up the markets for Belgian government bonds. The Flemish newspapers were more sympathetic regarding the content of the interview, but criticized its timing.

De Wever himself said he regreted it if anybody felt insulted but confirmed the message of the interview. "I have my opinion and my analysis is accurate," he said. "There is nothing in the interview that is not true."


European Central Bank arms itself for Spanish crisis

The European Central Bank (ECB) is to double its capital base to cope with "credit risk" stemming from the eurozone debt crisis, paving the way for direct action to shore up the Spanish debt markets if necessary.

By Ambrose Evans-Pritchard 6:00AM GMT 17 Dec 2010

The ECB said it would raise its subscribed capital by €5bn (£4.2bn) to €10.76bn, the first increase since the launch of the monetary union.

"Basically they are insuring themselves in case they have to step up bond purchases, and that probably implies Spain," said Julian Callow from Barclays Capital. "They have to be ready to dig the fire-break early on this because Spain is too large to handle, and there is risk of contagion to Italy."

The ECB's move came as Spain braved the debt markets following a downgrade alert by Moody's. Madrid paid the highest interest rates for a decade with yields on 10-year bonds rising to 5.45pc, compared with 4.63pc in November.

Spain's government and banks have to refinance almost €300bn of debt next year, leaving the country prey to a buyers' strike. "The auction wasn't a disaster but the markets are going to lose patience very quickly if the bond spreads widen further," said Elizabeth Afseth from Evolution Securities.

The ECB has so far bought €71bn of Greek, Irish, and Portuguese bonds in a bid to cap yields, but this was done against Bundesbank objections, and may breach EU treaty law. Jean-Claude Trichet, the ECB's president, is irked that the bank is having to shoulder the burden of propping up the EMU periphery, blurring the lines between fiscal and monetary policy. Critics in Germany say the ECB is turning into a "bad bank" for toxic debts.

----Officials fear that the ECB could face losses on bond purchases, as well as loans worth €334bn to Greek, Irish, Portuguese, and Spanish banks – much of it in exchange for suspect housing collateral. Barclays Capital said eurozone central banks have already lost about €5bn.

A report by Goldman Sachs said EMU states hold $760bn (£487bn) of Spanish debt securities, on top of other loans, or
three-quarters of all foreign holdings. "Debt sustainability in the European periphery is to a very large extent a domestic problem for the eurozone," it said.

France has $252bn, Germany $212bn, Luxembourg $77bn, Ireland $62bn, The Netherlands $61bn, and Belgium $48bn. Outside EMU, Britain has $69bn and the US $26bn.

Banks face an extra £80bn of bad debts

Britain's four largest lenders are facing losses on loans to consumers of up to £80bn over their own forecasts, the Bank of England has warned.

By Philip Aldrick, Economics Editor 6:00AM GMT 17 Dec 2010

The four banks – Royal Bank of Scotland, Lloyds Banking Group, Barclays and HSBC – have set aside £71bn in provisions, the Bank noted. However, losses on consumer debts alone – such as mortgages and credit cards – will be £100bn if "write-off rates return to their pre-crisis average" and £150bn if losses on bad debts hit "levels seen in the early 1990s recession", the Bank said in its Financial Stability Report.

The extra impairments will "be a further drain on banks' profits" and, in the extreme case, would amount to 28pc of lenders' £281bn of total core tier one capital – their buffer against future problems.

Although "manageable", the Bank said the extra bad debts are just one risk the industry is facing. A resurgent eurozone crisis would also devastate UK bank profits. The lenders have a £210bn exposure to Spanish and Irish debt – about 75pc of total capital. Another £288bn is in German and French debt, which may suffer if the eurozone crisis worsens.

In addition, the Bank said, UK lenders have to refinance £400bn to £500bn of wholesale funding in the next two years, having managed just £130bn this year. If refinancing costs rise 50pc above current levels as funding conditions deteriorate, the Bank said, lenders would lose "around 15pc of pre-tax profits in 2011 and 20pc in 2012".

Pressure on banks' profits comes as they begin an eight-year transition to new regulatory standards on capital and liquidity. The industry has warned that the new rules could reduce global growth by more than 3pc over five years and cost a potential 9.7m jobs.

"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."

Elgin Groseclose

At the Comex silver depositories Thursday, final figures were: Registered 46.40 Moz, Eligible 57.36 Moz, Total 103.76 Moz.


Crooks and Scoundrels Corner.

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

Today, a must read article for all who follow precious metals especially silver. In addition to JPMorgan and HSBC, who else is massively short silver and seemingly holding the massive losses for now off balance sheet. Stay long physical precious metals. The next Lehman will take out the Fed.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

Something’s Wrong in the Silver Pit, and It’s Much Bigger than J.P. Morgan

Dec 10, 2010 - 12:52 PM By: Rob_Kirby

When researching the precious metals, often times things are seldom as they appear on the surface. GATA Secretary and Treasurer – Chris Powell – has said that the true picture of a nations’ gold holdings are, “more closely guarded than their nuclear secrets”.

This has been more-or-less proven true based on the Federal Reserve’s reaction to GATA’s 2009 FOIA request for information concerning GOLD SWAPS. The Fed is ON RECORD admitting they’ve done gold swaps – which, by definition, necessarily utilize sovereign American gold stocks.

To date, the Federal Reserve has stonewalled GATA’s FOIA request citing their ‘privileged status’ and reluctance to divulge ‘trade secrets’.

GATA has maintained that the Federal Reserve / U.S. Treasury in conjunction with other Central Banks have for years been suppressing the price of gold [and silver too] – in efforts to mitigate and to cover up their own debasement of fiat currencies.

Historically, when Central Banks or governments print more and more fiat money, precious metals prices RISE. The money printing is not only inflationary but when done to excess it can undermine confidence in faith based fiat currency regimes. Precious metal has no counterparty risk and cannot be printed – which is why it “is” and always will be money. Remember folks, gold is money, as evidenced by EVERY Central Bank in the world listing gold bullion on their balance sheet as an official reserve asset.

GATA has identified and documented that Central Banks utilize precious metals derivatives, and in particular swaps, as a primary method by with Central Banks rig metal prices.

In the presence of EXTREME money printing, it’s understandable why Central Banks and governments would want to suppress the price of gold [and silver] and be less than transparent about their nefarious activity in this regard. Knowledge and detail regarding these activities could undermine a nations’ currency, their credit rating and thus their ability to service their sovereign debt.


Another weekend, and our new Ice Age returns across Britain. For much of Europe it never ended. Now the unloved Euro has entered its own Ice Age as it skates and stumbles towards disintegration. A one size fits all Euro really only now fits the hard working, tax paying Germans. The Greeks and Irish are being crushed to save Europe’s fat cat banksters. Coming next, crushing the freeloading peoples of the Iberian peninsula. The Squids can easily see what comes next in 2011. The crushed become the bankster crushers, when they rebel and vote in governments willing to default. To the Squids it’s like taking money off a baby. The Squids have Europe’s banksters over a barrel. Have a great last Christmas shopping weekend everyone.

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

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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