Wednesday, 8 December 2010

Ireland Hammered.

Baltic Dry Index. 2173 -06

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

“The Irish situation is pretty drastic,” Charles Dumas, research director at London-based Lombard Street Research Ltd., said in a Bloomberg Television interview. “They won’t get the deficit improvement they’re hoping for because they are hammering the economy.”

Yesterday Ireland was hammered on Ireland’s blackest day, and hammered not by the English or Scots, but by the Irish politicians working for Brussels and Berlin. It is hard to see how dumping an extra 85 billion euro of new debt on Ireland and raiding the state pension fund, is going to accomplish much other than to force Ireland to have to default at some point ahead. But first this good news story from Iceland.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

Iceland Emerged From Recession in 3rd Quarter

By DAVID JOLLY Published: December 7, 2010

Iceland emerged from recession in the third quarter, official data showed Tuesday, returning to growth for the first time since its financial system collapsed at the height of the crisis in 2008.

Iceland’s real gross domestic product grew by 1.2 percent in the July-September period from the previous quarter, the first quarterly increase since the same period in 2008. Iceland entered a slump after its overleveraged financial sector collapsed in the wake of Lehman Brothers’ bankruptcy.

Like Ireland and Greece, Iceland has taken a large dose of austerity measures to rebuild its economy. Unlike Ireland and Greece, however, Iceland allowed private banks to fail, and its currency, the krona, has declined by about 46 percent against the dollar since the start of 2008.

“Excluding the financial system, the real economy is doing well,” Arsaell Valfells, a professor of business and finance at the University of Iceland, said in telephone interview. Retail spending was still shrinking, he said, but the export sector, consisting mainly of fish, aluminum and tourism, was improving.

“We’ve basically gone back to 2003 in terms of the level of standard of living,” he said. The worst has been felt by younger people who borrowed at the height of the bubble and are now having to reduce their debt, he said. “But they’ll come through this,” he added.

Iceland’s experience, he said, offered a lesson for the euro zone as it grappled with its own crisis: “This is the proper process. If you go through a bubble economy and you need to correct it, the answer is not to convert private debt into public debt. Rather it is to restructure the debt to the level of the assets.”


So what’s the difference between Iceland and Ireland? The letter “r” and the unloved euro. Iceland was free to tell the international banks that lent to Iceland’s bankrupt banks to take a hike, and to devalue its currency to rebuild its economy. Ireland is trapped in the Germanic euro, and must impoverish many until a new Irish government finally defaults. Stay long gold and silver. Nothing is fixed in Euroland. Is Italy coming up next?

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

Ireland's austerity budget puts the squeeze on public sector workers

Ireland's public sector workers are to bear the brunt of next year's austerity measures with cuts to their pensions, pay and staff numbers as the government tries to grapple with the scale of the nation's debts.

By Philip Aldrick, Economics Editor 8:25PM GMT 07 Dec 2010

The €6bn (£5bn) package of tax rises and spending cuts cleared a vital parliament vote late on Tuesday night opening the way for the release the €67.5bn of aid pledged by the European Union and International Monetary Fund.

Civil servants are facing a torrid 2011, with the pay of new recruits to be slashed by 10pc, the pensions of working age individuals reduced by up to 8pc, and 18,500 staff – 6pc of the entire public sector – to be made redundant.

In addition, income taxes across the spectrum are set to rise to bring in an extra €900m of revenues next year after Brian Lenihan, the Irish finance minister, said: "Our income tax system is no longer fit for purpose."

Members of government will lead by example, with the Prime Minister's office taking a €14,000 pay cut to €214,000 – lifting the total salary reduction since the austerity began two years ago to €90,000. Ministers' pay has been reduced by €60,000 in that time.

Under Mr Lenihan's plans, €4bn of the austerity plan will come from spending cuts – including an €873m reduction in welfare support, €1.4bn will come from tax rises and the balance from asset sales. Mr Lenihan claimed that the budget was "progressive", hitting those who could afford it hardest.

The measures will reduce the budget deficit to 9.4pc of GDP, Mr Lenihan said, from the 12.2pc without any fiscal consolidation.

Pressing ahead with the programme has been a condition of receiving the EU and IMF portion of Ireland's €85bn rescue package – €17.5bn of which is coming from the state's own public pension fund coffers. EU ministers on Tuesday officially "adopted a decision providing financial assistance and a recommendation setting out the conditions" that Dublin must meet in exchange for financial aid.

Front-loading the programme is a key demand. A further £9bn of austerity measures are planned over the following three years. The €15bn package comes on top of €14.6bn of consolidation already undertaken since 2008

Eurozone members left to fend off markets alone

European nations in crisis over their massive debts have been left to sort out their woes alone after Germany opposed any increase to the eurozone bail-out fund.

By Philip Aldrick, Economics Editor 7:39PM GMT 07 Dec 2010

Ministers said individual countries were taking the necessary actions, with Ireland outlining a €6bn (£5bn) austerity package for 2011 and Portugal expected to follow suit despite the recent general strike over planned reforms.

Instead, European Union finance ministers confirmed that a second, more stringent round of stress tests on the banks would be carried out in February and that the details of a permanent crisis resolution mechanism for troubled euro members would be outlined next week.

Weaker nations had been pushing for the €440bn euro area rescue package to be increased to calm tremulous bond markets. Facing resistance from Germany, the strongest nation in the single currency bloc, the plans were dropped. European Council President Herman Van Rompuy said: "Up to now there is no need to increase the means available for the facility. If needed, we will consider, but there is no question today."

In the meantime, the European Central Bank continues to prop up Greece, Ireland and Portugal by buying their sovereign debt from banks to provide liquidity. Last week, it bought nearly €2bn – its most concerted action in five months.

Traders said the bank is resisting buying Spanish sovereign debt to draw a line between the troubled peripheral nations and their much larger Mediterranean neighbour, which many fear may be infected by the default fears sweeping across Europe. Legal & General Investment Management heaped fresh pressure on the country on Tuesday, though, by warning it would not buy Spanish debt unless the ECB took the lead. Spain has a huge refinancing exercise next year.

Italy’s Budget Adds Political Risk to Fiscal Woes: Euro Credit

Dec. 8 (Bloomberg) -- Italy’s passage of a 2011 budget plan paves the way for a confidence vote that will decide Prime Minister Silvio Berlusconi’s political fate and complicate passage of more deficit cuts called for by the European Union.

The premium investors demand to hold Italian 10-year debt over German bunds reached a euro-era high of 212 basis points on Nov. 30, a day after Ireland requested European-Union emergency aid and EU Monetary Affairs Commissioner Olli Rehn said Italy may need additional budget cuts to pare its shortfall. The spread has narrowed to 158 basis points, still almost double the average level of 2009.

“It’s a problem if Italy really does become ungovernerable, or if Berlusconi is clinging on for dear life,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London.

The Dec. 14 confidence vote threatens to fuel political instability in Italy at a time investors are punishing euro- region governments for not making good on their deficit-cutting commitments.

---- The European Commission estimated on Nov. 29 that Italy’s budget deficit will be 4.3 percent of gross domestic product next year, worse than the government’s 3.9 percent forecast. The difference is the equivalent of about 6 billion euros. Rehn said during the presentation of the European Commission’s outlook that it was “essential that Italy sticks to its fiscal targets,” which may require additional austerity measures.

Italy, which has the euro region’s second-largest debt, has fared better than the other so-called peripheral countries since Greece’s near default in May led to a jump in borrowing costs for the region’s high-deficit nations. Unlike in Spain and Ireland, Italy’s economic growth wasn’t fueled by a housing and borrowing boom, and the country’s banks remain relatively healthy. The government also avoided the stimulus spending that inflated deficits in other European countries.

We close for the day leaving the last word to the Irish Times. Old fashioned civilized rule of law still prevails in Dublin, I’m glad to say. A lesson for modern America and Blair’s serfdom Britain. Below, coming “to the unlawful attention of gardai”.

Reilly went to trial for armed robbery. The jury foreman came out and announced, "Not guilty." "That's grand!" shouted Reilly. "Does that mean I can keep the money?"

Wednesday, December 8, 2010

High Court overturns refusal to give serial Dáil protester bail

A MAN who parked a cherry picker emblazoned with protest slogans at the gates of Dáil Éireann yesterday morning was released from jail last night after his defence challenged the court’s right to keep him in custody.

Joseph McNamara (41), Dun na Carraige, Blackrock, Co Galway, was arrested by gardaí after he came down from a cherry picker, a high-reaching crane, shortly before 9am.

He was already facing charges of criminal damage following an incident in September when he allegedly drove a cement mixer containing the words “Anglo Toxic Bank” into the gates of Leinster House. He was out on bail when yesterday’s incident occurred.

Mr McNamara, a former property developer, was taken to Dublin District Court yesterday morning where he was charged with dangerous driving.

Judge Patrick McMahon remanded him in custody after Garda Insp John Rice objected to him being released on the grounds he had breached the terms of his previous bail. These required that he not come to “the unlawful attention of gardaí”.

Mr McNamara’s legal team then went to the High Court, under Article 40 of the Constitution, to challenge the State’s right to keep him in custody.

Counsel for the defendant, Michael O’Higgins SC, said his client did arrive at the Dáil in a cherry picker and was there to engage in legitimate protest. He had decked out the vehicle with various posters referring to politicians and to “Mr Ahern’s pension plan” and how the cost of it would be borne by the taxpayers.

He said Mr McNamara had engaged in protest on other occasions and “it was a curiosity” that he had felt “the full wrath of the law on the same day the offence occurred”.

He read into the record an affidavit of Cahir O’Higgins, solicitor to Mr McNamara, describing what had happened at the District Court. The solicitor said his client had been remanded “in summary fashion”. He said he told the District Court judge his client’s conduct “was in fact a lawful civil protest”. He said the judge accused him of “playing with words”, would not listen to his arguments and refused bail. He had also said “you are not being heard, I’m not hearing you,” when the solicitor protested and he called for the next case.

High Court Judge Mr Justice Michael Peart asked what the evidence had been of dangerous driving. If it was of “a dramatic and stark nature” it could sway a judge, he said. But counsel said it was not the case that the cherry picker had been driven wildly, “or anything of that sort”.

After a one-hour break, counsel for the State, Paul Anthony McDermott, said he had been directed by the Director of Public Prosecutions not to oppose the application to release Mr McNamara.

Mr Justice Peart then made an order releasing him from custody.

He is due to appear before the court again next Tuesday.

After his release at the back of the courtroom, Mr McNamara shook hands with Insp Rice, who had opposed his bail. “Stop bringing plant machinery up to the Dáil, that’s all I’m telling you,” the inspector remarked.

Outside the court, Mr McNamara’s solicitor, Mr O’Higgins, said his client was “very pleased” with the outcome of the High Court case, but was “enormously respectful” of the District Court judge.

“He is anxious to say he doesn’t wish nor did he ever wish to come to the unlawful attention of the gardaí in any shape or form but on this blackest of days for Irish society and this country he felt a need to make some form of legitimate and legal civil protest,” Mr O’Higgins said.

A Kerryman rang Aer Lingus and asked how long it took to fly from Dublin to London.
"Just a minute sir," said the girl on the desk.
"Thank you," said the Kerryman and hung up.

At the Comex silver depositories Tuesday, final figures were: Registered 49.06 Moz, Eligible 57.69 Moz, Total 106.75 Moz.


Crooks and Scoundrels Corner.

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

No crooks again today, just more signs of global cooling arriving. While Great Britain freezes and Scotland digs out from the great blizzard of 2010, and Europe reels from Arctic air from Siberia, on the other side of the Atlantic winter has arrived early too. Don’t tell the assembled 15,000 hoard of global warming freeloaders in Cancun that they are working on the wrong program. With the current and next sunspot cycle expected to be weak cycles, we are probably entering a new 22 year long “Dalton Minimum” of global cooling. At its worst, a 100 year new “Maunder Minimum”. Below, today’s Journal on a frosty Florida.

DECEMBER 8, 2010

Cold Blast Strains Farmers

Early Frost Kills Crops in South, Drives Up Prices as Growers Try to Shield Produce

An unusually early blast of cold air is cloaking the southeast, forcing farmers to toil through the night to save their livestock and crops of strawberries, tender green beans and sweet corn.

In parts of Florida, hit Tuesday morning with a freeze not seen this early since 1937, some growers were already reporting severe frost burn and ruined plantings, reducing supply and driving up prices for winter vegetables amid the holiday season.

Florida growers endured a freeze and difficult spell of weather in January, "but now, the timing is more unfortunate because we are gearing up to put vegetables out for peoples' holiday meals," said Lisa Lochridge, spokeswoman for the Florida Fruit & Vegetable Association. The association was still determining total loss on Tuesday.

In Palm Beach County, the nation's top producer of winter vegetables, the price of a bushel of green beans soared 62% Tuesday to between $24 and $26, compared to $14 to $16 over the weekend, said J.D. Poole, vice president of Pioneer Growers Cooperative in Belle Glade, Fla.

Frigid air from Canada pushed into the southeast Monday, bringing snow to mountains in Tennessee and West Virginia, cancelling schools in parts of North Carolina, and ushering in temperatures 15 to 20 degrees below normal in some places. The National Weather Service issued a freeze warning through Wednesday morning for most of Florida, the southeast corner of Alabama and southern Georgia.

While farming's peak season is over in many regions of the country, it's still in full swing throughout parts of the south—meaning farmers can get caught off guard by an early freeze. In Iron City, Ga., cattle farmer Yancy Trawick has erected a wall of hay in his field as a fort to protect his 75 newborn calves from the wind. "This is rough on them," he said.

In Loxahatchee, Fla., workers at Hundley Farms were up all night into Tuesday, running warm water between crops of sweet corn and green beans to fend off frost. Starting at 3:40 a.m., six helicopters flew at varying levels back and forth over Hundley's fields an in attempt to push the layer of warm air down on the crops, said Tom Perryman, crop supervisor.

Still, Tuesday morning revealed that about 30% of the crops were hurt by freeze, with delicate green beans the worse off, he said, adding, "And still have to get through tonight. I can't remember a time when we had a freeze by Dec. 7," he said.

A man walked into a bar in Dublin and asked the barman if he had heard the latest Kerryman joke,
"I'm warning you," said the barman, "I'm a Kerryman myself."
"That's all right," said the man, "I'll tell it slowly."

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.

No comments:

Post a Comment