Wednesday, 29 December 2010

The Great Fire of London 1940

Baltic Dry Index. 1773

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

The "Second Great Fire of London" is a name used to refer to one of the most destructive air raids of the London Blitz over the nights of 29 December/30 December 1940. The raid and the subsequent fire destroyed many Livery Halls and gutted the medieval Great Hall of the City's Guildhall, destroying an area arguably greater than that of the Great Fire of London of 1666.


Seventy years ago tonight, while Britain stood alone with the Dominions and Empire in opposing Nazi Germany, Germany’s airforce set about burning down London. On the night of the 29-30th, the Luftwaffe dropped 22,000 incendiary bombs on the City of London’s main business district. St Paul’s and London survived. By the war’s end, cities would not survive a single bomb.

Today in this last update of 2010, we focus on developments in China. The Project for the New American Century looks more and more having turned into the Project for the New Chinese Century. Up first, the multi-national firms set out to ride a Panda. Thankfully Pandas eat bamboo. But is this Panda really a tiger in disguise? I rather think that it might be.

"Let China Sleep, for when she wakes, she will shake the world,"

Napoleon Bonaparte.

DECEMBER 28, 2010

China Squeezes Foreigners for Share of Global Riches

BEIJING—Foreign companies have been teaming up with Chinese ones for years to gain access to the giant Chinese market. Now some of the world's biggest companies are taking a risky but potentially rewarding second step—folding pieces of their world-wide operations into partnerships with Chinese companies to do business around the globe.

General Electric Co. is finalizing plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market.

General Motors Co. established a joint venture this year with SAIC Motor Corp., its longtime partner in China, to produce and sell their no-frills Wuling-brand microvans in India, and eventually in Southeast Asia and other emerging markets as well.

The two deals show China Inc.'s growing international ambitions, as well as its increasing leverage over foreign partners. To make the GE deal happen, GE Chief Executive Jeffrey Immelt made an extraordinary concession, agreeing to fold into the venture all of GE's existing world-wide business in nonmilitary avionics. GM, in its deal, contributed technology, its manufacturing facilities in India and use of its Chevrolet brand name in that market.

Several forces are motivating China's foreign partners to strike global deals that would have been unthinkable a few years back. China's big government-backed companies now have enormous financial resources and growing political clout, making them attractive partners outside China. In addition, the Chinese market has become so important to the success of multinational companies that Beijing has the ability to drive harder bargains.


Next China attempts to slow their explosive, chaotic growth of road traffic.

Dec. 29, 2010, 12:30 a.m. EST

China auto shares mixed as tax-incentive expiry looms

HONG KONG (MarketWatch) — Chinese automobile stocks were mixed Wednesday after the government announced it will allow a tax incentive on small-car purchases to lapse by the end of the week, marking the latest move by China to ease the growth in vehicle use.

The Ministry of Finance Tuesday said that a tax on purchase of cars with engine capacity of 1.6 liters or less will be restored at 10% from Jan. 1 from 7.5% at present. The government had in January 2009 halved the tax to 5% to stimulate car purchases in the wake of the global financial crisis, before increasing the rate to 7.5% from the beginning of this year.

The looming expiry of the incentive, which had been well anticipated by prospective car buyers on the mainland, has boosted automobile sales in recent months as consumers brought forward their planned purchases. But sales next year could be a different story.


Outlook 2011: China Says No More Cars, Down Goes Auto Industry

December 27, 2010

While the world is still unwrapping the Christmas gift from China in the form of an interest rate hike, this other piece of news with ample implications for the auto industry seems to have gone largely under the radar -- The City of Beijing will limit the number of new license plates issued in 2011 to 240,000 to help control traffic congestion. Xinhua reported that car buyers in Beijing will have to draw lots before obtaining a vehicle license plate.


Below, China attempts to slow the west?

China to Tighten Limits on Rare Earth Exports

By KEITH BRADSHER Published: December 28, 2010

HONG KONG — China’s commerce ministry announced on Tuesday in Beijing a steep reduction in export quotas for rare earth metals in the first months of next year, a move that threatens to cause further difficulties for manufacturers already struggling with short supplies and soaring prices.

The reduction in quotas for the early months of 2011 — a 35 percent drop in tonnage from the first half of this year — is the latest in a series of measures by Beijing that has gradually curtailed much of the world’s supply of rare earths.

China mines more than 95 percent of the global supply of the metals, which are essential for smartphones, electric cars, many computer components and a range of military hardware. In addition, the country mines 99 percent of the least common rare earths, the so-called heavy rare earths that are used in trace amounts but are crucial to many clean energy applications and electronics.

In what seemed to be an effort to reassure traders and users of rare earths, the commerce ministry said in a follow-up statement late Tuesday on its Web site that it had not decided what the total export quotas would be for all of 2011. The ministry typically issues a second, supplementary batch of quotas each summer.

The ministry said on Tuesday night that companies should not make guesses about the total export quotas for next year based on the initial reductions issued earlier in the day.

“We will be considering the production of rare earths in China, domestic demand and sustainable development needs to determine” the full quotas for the entire year, the ministry Web site quoted its foreign trade department director as saying, without naming the director.

Earlier this month, China’s finance ministry raised export taxes to 25 percent from 15 percent for some of the most crucial rare earths. The ministry also extended taxes to exports of some rare earth alloys that previously were not taxed.

China gradually reduced its annual tonnage of export quotas from 2006 to 2009, then cut the tonnage of allowed exports by more than half in the second half of 2010.

Separately, the Chinese government imposed an unannounced embargo on shipments of raw rare earth minerals to Japan from mid-September to late November, a ban that started during a territorial disagreement over disputed islands.

In addition, rule changes for export quotas have had the effect of reducing the availability of supplies leaving China. Until now, the quotas mostly covered alloys and oxides with a rare earth content of at least 50 percent.

Starting next year, industry executives said, exports of some additional alloys will face restrictions as well, which will have the effect of tightening quotas by about 6 percent.


Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."

Oakley R. Bramble

At the Comex silver depositories Tuesday, final figures were: Registered 46.22 Moz, Eligible 58.26 Moz, Total 104.48 Moz.


Crooks and Scoundrels Corner.

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

Today, how the roof just fell in on the next Lehman, the insolvent Bank of America. Sounds like another print job for the Fed and America’s long suffering tax slaves. 2011 is about to become mortgage payback time for the giant US banks. Stay long precious metals. Once on Quantitative Easing, it’s impossible for a fiat currency to stop. BoA is a too big to fail, crony of the Fed. But in 2011 the Fed will be bailing out fraudsters, will the new Congress really allow them to do that? I’d bet the Squids have gone heavily short BoA. Time to split BoA into a good bank-bad bank affair, hammering the good bank part into JP Morgan?

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F.A. von Hayek

How Allstate Used Sampling To Confirm BofA/Countrywide Lied About Virtually Everything When Selling Mortgages

Submitted by Tyler Durden on 12/28/2010 17:43 -0500

A few days ago, news broke that MBIA was allowed to use statistical sampling in its ongoing Bank of America fraud lawsuit. This happened despite the Countrywide acquiror's loud protests. And now, courtesy of today's brand new lawsuit against BofA (and Agent Orange himself) filed by Allstate, in which the insurer "seeks unspecified damages, alleges fraud, negligent misrepresentation and violation of U.S. securities laws" we know just why Bank of America was so very against allowing sampling to be used by plaintiffs. According to the full report (pdf attached below), Allstate has determined that Bank of America misrepresented virtually everything in its prospectuses: from the percentage of owner-occupied properties reped in prospectuses (about a 10% differential), to the LTV thresholds on represented loans (both at the 90% and 100% threshold), while inbetween finding willful and malicious intent to defraud and deceive. We are confident that none of this, however, will result in a prison sentence for Mozillo, as laws in America are meant to be broken by anyone who can demonstrate an LTV more than 100,000% or have more than $100MM in annual income (including that derived from golden parachutes).

From the just released prospectus, which opens a green light for everyone who believes that the banks or its predecessor was dishonest in representing any and all deal components, and wishes to do so using statistical sampling, which is now permitted:


"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

A very happy, healthy and prosperous New Year to all. The next update will be Monday January 3. Check with the blog for the weekend update.

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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