Thursday, 27 January 2011

A Day To Remember.

Baltic Dry Index. 1234 -58

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

Sixty to seventy years ago Europe was convulsed with war. In the midst of all the horrors of war, the Nazis added the deliberate extermination of Europe’s Jews and some other groups. By the time the WW2 ended, some 6 million Jews had been murdered, along with another 5 million others, mostly Romany, communists, Polish intellectuals and religious, and homosexuals and the mentally ill. Today, the world remembers them all, and vows never again. But in our new world of state torture, death by remote drone, and suicide bombings, “never again” has never been under more threat. Up first, Google teams with the Yad Vashem museum to make the Jewish archive of the murders more accessible and make it easier for families to locate each other. Sadly there is no such archive for the others. Today we try to do our bit for never again.

Holocaust Memorial Day: Google launches Holocaust archive to help keep memories of tragedy alive

Google has partnered with Israel’s Yad Vashem museum, to help digitise the largest collection of Holocaust photos and documents in the world, to mark International Holocaust Remembrance Day.

By Emma Barnett, Digital Media Editor 6:30AM GMT 27 Jan 2011

The search giant is working with the Jerusalem-based archive to properly index and store in Google’s cloud 130,000 photographs, some of which are currently available on Yad Vashem’s website, but until now have been difficult to locate and discover online.

Google is also applying the same indexing and optical character recognition (OCR) technology to lots of documents, ranging from visas to survivor testimonials, in order to help people locate more easily online.

The project, which is not a financial agreement, was announced yesterday, on the eve of Holocaust Remembrance Day, which is a global day of remembrance for the six million Jewish Holocaust victims.

-----The Israel-based museum, which was founded in the 1950s, is prioritising the digitisation of its archive, in order to help continue educate the global community about one of the worst atrocities in modern times as well make it easier for families to locate their lost history and possibly discover long-lost relatives through common history.


In business news, the US budget deficit goes from bad to worse. Seen from outside, it’s almost like watching a slow motion national suicide. Without a major change of direction ahead, trillion dollar deficits lead to the collapse of the US currency, and with it the collapse of the global fiat currency system in place since President Nixon’s great blunder on August 15, 1971. Below, the latest developments in our world of unstable fiats.

America is a land of taxation that was founded to avoid taxation.

Dr. Laurence J. Peter

Budget Deficit Will Grow to $1.5 Trillion, CBO Says

By Brian Faler - Jan 26, 2011 11:13 PM GMT

The U.S. budget deficit will widen this year to $1.5 trillion, the Congressional Budget Office said in a report likely to further fuel the debate in Washington over how to put the government’s books in order.

The projected shortfall, up from last year’s $1.3 trillion, is set to increase, in part, because of the $858 billion tax-cut measure passed last month by Congress, the nonpartisan agency said.

The CBO said the Social Security program will run deficits beginning this year, five years sooner than expected, and the highway trust fund that finances road construction projects will become insolvent sometime next year.

The economy will grow this year by 3 percent, the agency said, while the unemployment rate will fall to 9.2 percent from the current 9.4 percent. The jobless rate will remain above 8 percent through the 2012 presidential election, according to the semi-annual report.

“The United States faces daunting economic and budgetary challenges,” the report said. “The sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activity -- combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession -- have caused budget deficits to surge.”

Exchange Rates and Reserve Currencies

China Plans Path to Economic Hegemony

By Wieland Wagner 01/26/2011

China would like to make the yuan one of the world's anchor currencies, forcing other countries to maintain reserves of Chinese money and providing significant advantages for Beijing. Yet the country cannot continue to keep the value of its currency artificially low if it hopes to become the world's dominant economic power.

----In written interviews with the Wall Street Journal and the Washington Post, the Chinese leader said that the world's monetary system, with the US dollar as its reserve currency, was a "product of the past."

China's long-term goal is to become a country with an anchor currency. If that happens, other countries will have to maintain reserves of the yuan instead of the current reserve currencies, the dollar and the euro. China could then use its own currency to conduct transactions, gaining more favorable terms as a result, in its global shopping spree, such as in the commodities markets.

Secret Lectures on Reserve Currencies

Years ago, Hu and the Politburo attended secret lectures in which Chinese professors explained the history of the rise and fall of major powers. During these sessions, the Chinese leaders realized that no modern country has ever become a superpower without a reserve currency.

The United States superseded the British Empire after World War II, when the dollar replaced the British pound as the dominant currency in the global financial system. This explains why Beijing has pursued the internationalization of the yuan since the outbreak of the global financial crisis, which the Chinese believe has irrevocably harmed their American rival.

China has a lot on its plate. Today the renminbi -- the official name in China for the "people's money," which is adorned with a portrait of Mao -- cannot even be freely exchanged into another currency. To keep the prices of its exports artificially low, the country also essentially links the exchange rate of its currency to the dollar. Until now, Beijing has used a complicated system of foreign currency controls to effectively shield the renminbi from global capital flows.

In order to have a reserve currency, China would have to give up all of this. It would have to gradually appreciate its currency, perhaps even allowing it to float freely, so that the exchange rate could be based on the real value of the currency and the strength of China's economy. This would make the country's exports substantially more expensive and would drastically curb growth.

Nevertheless, hardly a week goes by in which China does not launch new pilot projects to "internationalize" the yuan in the long term.


JANUARY 27, 2011, 1:50 A.M. ET

Euro, Pound Face Growing Inflation Threat

Investors have fretted of late about inflation problems in emerging nations, but they have given central bankers in Britain and the euro zone a free pass. But due to Europe's growing inflationary pressures and concerns that policy makers could be behind the curve, some analysts fear the U.K. pound and possibly even the euro could soon get punished.

Two forces have revived what some foreign-exchange market experts consider a long-standing prejudice against the abilities of developing-world central bankers relative to their colleagues in the developed world. A jump in food, oil and material prices across the globe, especially in India and Indonesia, has investors worried that runaway inflation will erode the value of some emerging-market currencies.

Such concerns are strengthening currencies in Europe, where investors are overlooking the threat of "stagflation," a debilitating combination of weak economic growth and high inflation that crippled the U.S. and U.K. in the 1970s.

Instead of punishing Europe for unexpected inflation, investors are giving central bankers there the benefit of the doubt and expecting them to raise interest rates to cool off price pressures they consider much less severe than in developing countries. Higher interest rates boost the returns these investors get on bond investments.

The double-standard is the latest chapter in a 15-year-old story in the currency markets, where investors assume inflation won't pose a problem in places like Britain and Germany but could spin out of control in developing economies with a checkered history of dealing with price pressures. The danger is that investors are giving too much credit to European economies that remain fragile after the global financial crisis.


We end with flood hit Australia. The government there is planning a one off levy on incomes to help pay for the flooding disaster, but it’s not certain that they can get it voted through.

The only difference between a taxman and a taxidermist is that the taxidermist leaves the skin.

Mark Twain

Gillard Plans Levy, Says Australian Floods to Cost $5.58 Billion

By Gemma Daley - Jan 27, 2011 3:16 AM GMT

Australian Prime Minister Julia Gillard said the nation’s worst flooding will cost an estimated A$5.6 billion ($5.58 billion) and her government plans a one-off levy to help pay for reconstruction.

Gillard said the tax will raise about A$1.8 billion. A levy of 0.5 percent will be applied on income between A$50,001 and A$100,000 and a 1 percent rate applied on taxable income above A$100,000, Gillard said in speech notes e-mailed to Bloomberg.

-----Almost two months of torrential rains in the northeastern state of Queensland have killed as many as 32 people, affected about 30,000 properties, shut coal mines, cut rail lines and damaged crops. Economists estimate it may cost A$20 billion in repairs and rebuilding after the flooding that has also hit Victoria and New South Wales states.

Gillard said the government will save A$2.8 billion by cutting climate control measures and limiting rent assistance and A$1 billion through delaying infrastructure projects. It will speed up processing for skilled labor migrants to help with the rebuilding, she said.

Surplus Forecast

The government in November forecast an A$3.1 billion surplus in the year ending June 30, 2013. Treasurer Wayne Swan will make a speech in Brisbane tomorrow about the broader revenue impact of the disaster.

“The levy has just wiped out the government’s 2010 and 2011 tax cuts,” said Helen Kevans, senior economist at JPMorgan Chase & Co in Sydney. “This will slow consumer spending while people are facing rising living costs, so there will be a bigger impact on the economy than the government has factored in.”

Any flood levy will require new laws in Parliament where Gillard’s minority Labor government needs support from four non- party lawmakers. The Liberal-National opposition coalition will oppose the move.

There is no such thing as a good tax.

Winston Churchill

At the Comex silver depositories Wednesday, final figures were: Registered 44.24 Moz, Eligible 60.60 Moz, Total 104.84 Moz.


Crooks and Scoundrels Corner.

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

Today a couple of Davos rogues warn of a UK double dip. The man who broke the Bank of England and John Major’s incompetent 1990s government, suggests that H. M.’s weak coalition G. ought to ease up a little on the austerity. Who am I to disagree, since the whole idea is purely political to get the pain over long before the next election is due.

When there is an income tax, the just man will pay more and the unjust less on the same amount of income.


Davos WEF 2011: George Soros says UK risks slipping back into recession

George Osborne’s austerity Budget will push the UK back into recession unless the Government eases up on spending cuts, billionaire investor George Soros has warned.

By Philip Aldrick, Economics Editor in Davos 4:13PM GMT 26 Jan 2011

The hedge fund manager, most famous in the UK for “breaking the Bank of England” by betting against the then-Tory government remaining in Europe’s Exchange Rate Mechanism in 1992, said Britain’s austerity measures risked killing off economic growth.

“I don’t think they can be implemented without pushing the economy into a recession,” he said at the World Economic Forum in Davos. “My expectation is that it will prove to be unsustainable.”

Mr Soros’s warning comes just one day after shock data from the Office for National Statistics showed the economy contracted by 0.5pc in the final three months of last year, raising fears of a double dip recession.

Concerns about UK growth were also voiced by Nouriel Roubini, professor of economics at New York University also know as Dr Doom. In an earlier session, he said: “Tail risks of outright double dip and outright deflation are lower than last year even if the data in the UK and peripheral eurozone economies seem to suggest that there are risks.”

Mr Soros’s comments are the first really serious challenge George Osborne has had to his economic policy. The International Monetary Fund and credit ratings agencies have thrown their weight behind the austerity budget as the UK attempts to grapple with its vast public debts.

However, there have been rising concerns that the Government does not have a growth strategy. The delayed White Paper on growth, which was due last year, has fuelled those fears.


It would be a hard government that should tax its people one-tenth part of their income.

Benjamin Franklin

The monthly Coppock Indicators finished December:

DJIA: +171 Down 7. NASDAQ: +238 Down 9. SP500: +165 Down 2.

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. December is the seventh down month, but the downward momentum has virtually stopped. I would put on (purchased) synthetic double options here for a breakout in either direction. Professional traders would adopt much more risky granted option strategies.

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