Tuesday, 11 January 2011

Fiat Madness.

Baltic Dry Index. 1495 -24

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

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

As our fiat money system gets closer to collapse, the latest scam by our dissembling central banksters is for them all to buy up each other’s sovereign debt, in an attempt to keep up the pretence that the system hasn’t gone bankrupt. Stay long precious metals. When the wave of sovereign debt restructuring hits, and it will, this madness simply ensures that the contagion is widely spread and triggers one default after another. Below, Reuters on the latest attempt to hold the one size fits all Euro together. In this Alice in Wonderland world, deeply troubled and heading for bankruptcy Japan, is going to join communist, still largely command economy China, in buying up European debt, so their governments can carry on supporting their banks, to try to keep Japanese and Chinese exporters selling to European consumer, who are all mostly still living beyond their means. That this ends badly when the next Lehman hits isn’t in doubt. Only the timing is still uncertain.

"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."

Henry Hazlitt

Japan Joins China in Assisting Europe in Debt Crisis

By Toru Fujioka and Aki Ito - Jan 11, 2011

Japan plans to buy bonds issued by Europe’s financial-aid funds, its finance minister said, joining China in assisting the region as it battles against a debt crisis that prompted bailouts of Ireland and Greece.

“There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland,” Finance Minister Yoshihiko Noda said at a news conference in Tokyo today. “It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.”

The euro gained against the yen as the statements of support showed that the country with the world’s second-largest foreign-exchange reserves, after China, may help stem the risk of the crisis spreading. Portugal’s borrowing costs jumped last week as concern deepened that nation may be unable to avoid tapping the European Union’s rescue fund.

“This signals that the world is coming together” to save Europe, said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “But it’s unlikely the euro will maintain its current strength. It’s unclear whether the market will be able absorb all the bonds being issued by the problematic euro-zone nations.”



We’ve had fun with this before, but with FT Alphaville publishing it again today it seemed timely for me to do so as well. Click on the link for a picture of what a trillion US dollars really looks like. Don’t even think about counting it. Keep in mind the US is running trillion plus deficits as far as the end of the new decade, if they can actually get that far without the whole Nixonian fiat money error collapsing.

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster

What does one TRILLION dollars look like?

All this talk about "stimulus packages" and "bailouts"...

A billion dollars...

A hundred billion dollars...

Eight hundred billion dollars...

One TRILLION dollars...

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.



Since for the moment we are headed for the quadrillions and collapse, the following table is provided as a service to those unable to master the scientific notation that will rapidly be needed in handling our currency.

Million - 1,000,000

Billion - 1,000,000,000

Trillion - 1,000,000,000,000

Quadrillion - 1,000,000,000,000,000

Quintillion - 1,000,000,000,000,000,000

Sextillion - 1,000,000,000,000,000,000,000

for comparison,

in seconds Million - 11.5 days

Billion - 31.7 years

Trillion - 31,700 years

Quadrillion - 31,700,000 years

Quintillion - 31,700,000,000 years

Sextillion - 31,700,000,000,000 years

In other under reported news from Asia, at the end of last year China’s English language People’s Daily suggested that China’s recent reduction in first half 2011 rare earth export quotas wasn’t enough. Possibly implying a more severe cut for the second half of 2011. Vital components in everything from cell phones, to TVs, to lasers, to crude oil refining, to electric vehicles, and our very 21st century way of life, China is the source of 97% of these vital rare earth oxides. When China speaks on REEs it pays to listen. The race is on in the west to bring on-stream new western mines and supply.

Chinese experts: Rare-earth export cuts 'insufficient'

December 30, 2010

The announcement that rare-earth exports would be cut next year points to China's dilemma in the production and trade of the minerals, analysts said.
The 11 percent reduction did not seem deep enough to match the repeated attempts by authorities to regulate the sector and to reduce its environmental impact, experts said.
They suggested that instead, given that the cut was not sufficient to truly impact on foreign buyers of China's rare earths, the world should blow a sigh of relief that the cuts were not worse.
The quota is not aimed at limiting the trade of rare earths, but instead seeks to regulate the sector and reduce its environmental impact, Chen Zhanheng, head of research at the Chinese Society of Rare Earths (CSRE), told the Global Times.
"China wouldn't trade its rare earths for huge economic returns at the risk of environmental degradation," Chen said. "International demand for China's rare-earth resources stands at only 50,000 tons annually, but that China's production of 200,000 tons of rare earths a year makes it necessary for the country to consolidate and regulate the industry."
The Ministry of Commerce announced Tuesday the first round of 2011 export quotas for rare earths, standing at 14,446 tons, an 11 percent first-round drop on last year.
It added that no quota had been set for the full year, and cautioned against predicting the full-year figure based on the quota for the first half.
According to traditional production processes, to produce each ton of rare earth will destroy 200 square meters of land, strip away 300 square meters of meter soil and cause catastrophic soil erosion, the China Business Times reported.


We end for today with yet another food scandal in Europe. In this one, somehow in Germany non food chain industrial dioxin tainted fat was blended into rendered food chain fat and put into animal feed. Now thousands of German farms are closed down. Consumers are avoiding German eggs and anything made from them, and it might not be a good idea to eat German chicken, pork and beef. I suppose that just leaves bread and beer. This scandal is destined to grow. Below Der Spiegel updates the growing scandal.

Inside the Dioxin Scandal

The Criminal Machinations of the Feed Industry

By SPIEGEL Staff 01/10/2011

Once again, contaminated animal feed is threatening the health of consumers. The control system is too lax, and information policy is a disaster. The most recent dioxin scare shows that the authorities have learned very little from the food safety scandals of the past.

Belgium, the spring of 1999: Inspectors find high levels of dioxin, along with other toxins, in eggs. An oil-and-fat recycling company had supplied a feed producer with fats that contained high levels of dioxin, and the toxic substance found its way into chickens, pigs and cattle -- and eventually into the stomachs of German consumers.

The losses were in the billions. The German Health Ministry was outraged over the Belgians, and the European Union announced drastic changes.

German, the winter of 2011: Eggs remain unsold on supermarket shelves. Mothers are concerned about giving their children cow's milk to drink. The authorities shut down close to 5,000 farms and order hundreds of thousands of eggs destroyed. Some 150,000 tons of feed were contaminated with fat containing dioxin supplied by a producer in Uetersen near Hamburg.

-----Germany has a new food safety scandal on its hands. And once again it is being sold as an isolated case. Yet, can this really be the regrettable lapse of a single company? Insiders believe that Aigner's position is naïve. There are too many signs of deficiencies within the system.

-----It is astonishing, however, that an animal feed supplier is even handling so-called technical fat, which is not intended for use in the food chain. Commenting on the technical fat issue, Siebert said that his company maintains a "parallel production for the paper industry." And when asked why this part of the business is not mentioned on the company website, he told SPIEGEL: "It's hard to say, at the moment."

-----Experts like N. are also critical of the fact that many fat recyclers also handle special waste. It comes as no surprise that hardly any other industry extracts as much from trash as the animal feed industry. It turns garbage into meals and degrades animals into waste disposal systems. In this system, it can easily happen that ground feathers and sawdust are used as fillers. There are no limits to the audacity of some businesses in the feed industry, which has been known to use sewage sludge in feed and to experiment with liquid manure and tannery wastewater.



"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket."

Michael Belkin

At the Comex silver depositories Monday, final figures were: Registered 44.89 Moz, Eligible 59.35 Moz, Total 104.24 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, just three companies to watch in the year ahead. One Electric Vehicle manufacturer of note that goes by the name of Ford. A Florida energy company that will revolutionize EV battery making called Planar Energy. And finally, a successful silver mining company that I liked from the first moment I read of them and their management almost 10 years ago, Endeavour Silver.

Ford to Hire 7,000 to Help Make Electric, Hybrid Cars

By Keith Naughton - Jan 10, 2011 3:24 PM GMT

Ford Motor Co., revealing three new electric or hybrid vehicles to the public today, plans to hire more than 7,000 workers in the next two years, including engineers with expertise in battery-powered cars

Ford will hire 4,000 factory workers and 750 engineers this year and add 2,500 hourly workers next year, Mark Fields, Ford’s president of the Americas, said today at the North American International Auto Show in Detroit.

Ford plans to recruit engineers at the show, where the company is debuting the Focus Electric car, the C-Max Energi plug-in hybrid and the C-Max Hybrid gasoline-electric wagon today. The automaker has said electric and hybrid vehicles may account for as much as 25 percent of its sales by 2020.

We’ll “show growth not only in our employment numbers but also in our new product offerings,” Fields said today.

Automakers are developing models powered all or in part by electricity to meet standards such as the U.S. rules for average fuel economy by company of 35.5 mpg in 2016, up from 25 mpg now.

Demand for hybrids has waned. The models that run on batteries and gasoline engines peaked at 3.3 percent of the U.S. market in 2008, when gasoline topped $4 a gallon. With fuel prices down about 25 percent from their peak, hybrids accounted for 2.4 percent of U.S. auto sales last year, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey.


Driving The Solid State Battery Revolution

Planar Energy has developed a game-changing technology for solid state batteries for electronics and automotive applications. Lithium ion battery technology has hit a wall - batteries need substantial cost reductions to be viable for energy demanding applications.

Planar's technology is superior to Li-Ion at less than half the cost per kWh, with three times the energy density. Solid state batteries replace the plastics, binders, powders and liquids of Li-Ion batteries with durable, nanostructured films.

The fundamental challenge of solid state batteries is that current fabrication methods don't scale to large format batteries because of the cost of vacuum deposition. Planar has developed an alternative, game changing deposition process and has demonstrated the ability to make nanostructured electrolyte and electrode materials with superior chemistries using this process.


Endeavour Q4 output rises to record

By: Liezel Hill 7th January 2011

TORONTO (miningweekly.com) – Vancouver-based Endeavour Silver produced 895 931 oz of silver in the fourth quarter, the company's best quarterly performance to date and an increase of 15% compared with a year earlier.

Endeavour operates two precious-metals mines in Mexico, Guanacevi and Guanajuato, and expects production will rise again this year, CEO Bradford Cooke said in a statement.

Gold production rose 6%, to 4 871 oz, which also represented a record for the company.

Full-year silver production rose 26% year-on-year, to 3,3-million ounces, beating Endeavour's target of 3,1-million ounces, and gold was up 33%, at 17 713 oz in 2010.

The company has discovered a number of new high-grade veins at the Guanajuato mine, and is now considering a “major” plant expansion at the operation this year, Cooke said.

“We therefore expect to achieve our seventh consecutive year of organic production growth this year.”

Endeavour will publish production forecasts for 2011 later this month



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

John Paul Getty.

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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