Tuesday, 18 January 2011

Ireland’s Big German Bet.

Baltic Dry Index. 1439 unch

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

Note: due to travel, the next LIR update will be on Thursday.

"The paper standard is self-destructive."

Hans F. Sennholz

We open with more news from booming China. As President Hu heads for some burgers and fries with President Obama, inflation aside, things have never looked better in the Chinese economy. In America on the other hand, endless wars excepted, the economy is on Federal Reserve life support, with QE2 pouring into the inflated stock market, with the giant TBTF banks in danger of a new collapse and unwilling to lend to anyone for anything. It should be an interesting conversation over dinner. I wonder which one will get the Whopper”?

But first this, some very bad news from Europe. Desperate Ireland has gone off the EU reservation, according to Zerohedge, and started electronically printing up Euro’s. Stay long precious metals. Having raided the Fed to support its failing banks, and then raided the ECB to the point that the ECB needed to raise more funds, it still wasn’t enough so Ireland went all in and started electronically expanding Euros. Nothing good comes out of this, of course, and they will still probably default in the end, as they should. But I wonder if they know back in Berlin. This would all be hilarious of it wasn’t so serious, thank God, Stalin MacBroon kept the UK out of the Continental Euro as part of his no holds barred war on Tony Blair. “Not worth a Continental” springs to mind.

"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

Fianna Fáiled: Ireland Prints 25% of its GDP in German Euro's

Submitted by Jack H Barnes on 01/17/2011

-----Ireland Central Bank was allowed, with or without permission, to print up up new Euros without new sovereign debt issued behind them.  By December of 2010, the EU appears to have been more worried about the appearance of the ECB balance sheet as a whole, than of rogue individual activity by its member states.

----The Irish Central Bank has crossed the Rubicon in European Union currency terms.  They have printed up about 25% of their GDP in electronic credits, and stuffed those credits into their banks.  These deposits, if you will, do not have new debt issued behind them.

This is a form of hyperinflation if you will, at least in context that a Central Bank, with no actual printing press, or a functioning bond market, has now electronically printed up new currency units for their banks without issuing debt behind these actions.

While this has happened before in history, it has not happened in the Euro currency project officially before today. This act is going to move the monetary policy of the union, to the individual capitals.  The capacity to print electronic credits, with out the creation of cash currency or debt, is a new wrinkle in the economic landscape.

The implications and ramifications will take a while to appear, but “Mark” my words, Germany both as a people, and as a political organization will notice this event.  The German people now find themselves captured in a currency where neighbors who are in political and financial stress, have the capacity to print up German Euros on demand.



And now back to China, which these days is busy buying up Euro debt in preference to America’s. I wonder if they can find little Ireland on the map?

Jan. 17, 2011, 10:59 p.m. EST

China's 2010 FDI surges to record $105.74 billion

HONG KONG (MarketWatch) -- Foreign direct investment into China surged 17.4% in 2010 from a year earlier to a record $105.74 billion, according to Ministry of Commerce figures released Tuesday, according to the official Xinhua news agency. Investment rose 15.6% in December, as China attracted $14.03 billion, the 17th straight month of expansion. The investment surge was linked to the service sector as well as spending in the China's central and western regions, which saw annualized gains of 28.6% and 27.6% respectively, the report cited Commerce Ministry Spokesman Yao Jian as saying.


Solar Panel Maker Moves Work to China

By KEITH BRADSHER Published: January 14, 2011

BEIJING — Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.

The factory closing in Devens, Mass., which Evergreen announced earlier this week, has set off political recriminations and finger-pointing in Massachusetts.



In other US news, it looks like Goldman can’t stand the Facebook heat it generated. In “the deal of the century” for Goldman if not necessarily their clients, to avoid scruitiny, old Ebenezer Squid has pulled the deal from their American clients. “Lucky” Europeans and Asians are now the Squids intended “babies”. When Wall Street calls – hang up.

"God, no, we don't club baby seals. We club babies."

Goldmanite, quoted in The Times of London, November 8 2009.

Goldman keeps U.S. from Facebook offer

Jan. 17, 2011, 2:26 p.m. EST

NEW YORK (MarketWatch) — Goldman Sachs Group Inc. is opting to restrict its private placement of Facebook shares to investors outside the United States, according to reports published Monday.

Conducting the placement under “intense media attention” might violate market regulations, the investment bank said in an emailed statement to The Wall Street Journal, Bloomberg News and Reuters.

Goldman started notifying clients of its decision on Sunday night in Asia, while Goldman clients in Europe and the United States were being informed on Monday, people familiar with the situation told the Journal.

Facebook referred questions about the matter to Goldman Sachs, the reports said.

The deal involving a private offering of as much as $1.5 billion in shares of the social-networking company sparked intense interest after surfacing two weeks ago.

One Goldman client was informed the placements were being offered solely to non-U.S. customers due to regulatory concerns, the Journal reported


We end for today, with a possible black swan in coal. In their haste to get the coal mines open quickly again, the miners are proposing to dump the mine floodwaters into the creeks. Not to worry, the nearby creeks “feed strongly flowing watercourses” which eventually end up flowing into the sea. So that’s alright then, I suppose. Australia’s swans are already black.

Queensland floods cost miners billions, coal prices to rise

By: Esmarie Swanepoel 17th January 2011

PERTH (miningweekly.com) – Queensland’s coal sector has lost sales worth A$2,3-billion because of flooding and wet weather, the Queensland Resources Council (QRC) said on Monday.
Reporting to the state government’s economic recovery coordination task force, QRC CEO Michael Roche said that the state’s coal mines were working “around the clock” to remove floodwater from mine sites.
“QRC estimates that about 15% of the state’s coal mines are in full production, with 60% operating under restrictions and a further 25% yet to resume normal operations,” he stated on Monday

----Meanwhile, Roche has praised the efforts of both the state government and coal rail network owner QR National in supporting the coal industry’s recovery.
“QR National has restored the Moura line to Gladstone and we are hoping for similar good news for the Blackwater system later this week. However, it is also clear that the restoration of rail services to mines west of Brisbane and in the Surat basin are going to take much longer.”
He noted that to take full advantage of the prospective return of rail services, coal mines and some coal seam gas sites needed further dispensation from the Department of Environment and Resource Management (DERM) to pump floodwater into nearby creeks that feed strongly flowing watercourses.
QRC has now made such submissions to DERM and was hoping for a response early this week.

-----Researcher Wood Mackenzie stated in a report on the implications of the floods on the coal industry, that more than 50% of Australian exports were likely to be affected, impacting on the global coal markets.
The mines affected, account for around 55% of Australia’s total exports, with 80% of the affected exports being metallurgical and 27% thermal coal operations.
The affected metallurgical exports accounts for 91% of the country’s hard coking coal exports, and most of the consumers for this output were steelmakers in the Asia Pacific region.
“The overall production loss is still uncertain. But if all the 46 mines ceased production for one month, the export impact will be 14-million tons.



“Overheard at Goldman Sachs”:
“We assume that you know what you’re doing,
In this ill-advised trade you’re pursuing,
But the opposite bet
That we place on your debt
May eventually hasten your ruin.”


At the Comex silver depositories Friday, final figures were: Registered 45.23 Moz, Eligible 59.18 Moz, Total 104.41 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, just more on the arrival of global cooling, and its consequences. If as I and many others suspect, it’s related to the arrival of a new “Dalton Minimum” in sunspots and a 20 to 30 year bout of global cooling, our political leaders are preparing for the wrong climate problem. Below, the latest news from the northern hemisphere.

Over 9,200 cattle die from northern cold spell

The extremely cold weather affecting the northern region has caused 9,200 cattle to die and it is likely the figure will increase, said a spokesperson from the Livestock Production Department.

Most of the cattle deaths are from mountainous provinces of Lao Cai, Cao Bang, Hoa Binh, Bac Giang and Tuyen Quang and central provinces of Quang Binh, Ha Tinh and Thua Thien-Hue. Cao Bang is one of the worst hit provinces with over 2,000 cattle dying.

The new cold front that slammed into northern Vietnam yesterday has made mountainous areas extreme cold.

Luu Minh Hai, deputy director of the Lao Cai Province Hydro Meteorological Center said that on yesterday morning, temperatures in Sa Pa town dropped to -0.4 degree Celsius. This resulted in snow falling on the O Quy Ho mountain pass and along the Hoang Lien Son ranges.

Similarly, Y Ty Commune from the province’s Bat Xat District also experienced snowfall. This is the second time this year that ice and snow has affected the areas of Sa Pa and Y Ty.

Today, the cold front will move further into northern and central regions resulting in more cold weather.


Britain’s Wind Farms are ‘No Spin Zones’ When Cold Hits
By Peter C Glover Posted on Jan. 14, 2011

----Recently, serious cold weather has badly affected Britain and its much-vaunted ‘wind power experience’ and it turns out that wind farms are, quite literally in deepest winter, no spin zones.

Such is the grip the Big Freeze has had on Britain (as in northern Europe and the eastern U.S.) since early November that leading industrialists have forcibly reiterated last years’ warning about growing over-reliance on wind power. As the latest figures show, just when Britain was in the greatest need from its burgeoning wind farm industry to perform from November through January with temperatures plunging to as much as minus 20 celsius, wind power failed miserably.

Britain’s world lead in wind development is primarily because of two major natural advantages: Britain has the windiest conditions in Europe along with the longest continuous coastline. In short, if wind power can’t work in Britain it cannot work anywhere else. But fail it did yet again this winter. Indeed, as it has for most of the last 12 winters.

Figures released in early January showed that as temperatures plunged to well below freezing and electric power demand soared, electricity production at Britain’s 3,100+ wind turbines fell from an average of 8.6 percent of Britain’s electricity mix to just 1.8 percent. Instead of serving up to 3 million homes, wind farms were serving just 30,000 homes, a mere one-hundredth of normal capacity. On the evening of December 20 Britain’s average temperature fell to minus 5.6 celsius. At 6.30 that evening, the nation’s wind farms, which claim a generating capacity of 5.2 GW of electricity, were actually generating a piffling 40 MW, the equivalent of 20 turbines working at full capacity.



Snowfalls are now just a thing of the past

By Charles Onians  Monday, 20 March 2000

----However, the warming is so far manifesting itself more in winters which are less cold than in much hotter summers. According to Dr David Viner, a senior research scientist at the climatic research unit (CRU) of the University of East Anglia,within a few years winter snowfall will become "a very rare and exciting event".

"Children just aren't going to know what snow is," he said.


In the southern hemisphere, Queensland’s massive cleanup is underway. I wonder if they know about the creeks and what’s eventually coming downstream?

Massive flood clean up continues

Tuesday, 18 January 2011 Paula Wallace

It’s hard to estimate the scale of the clean up task facing Queensland’s flood affected areas which account for more than 75% of the state. But with thousands of volunteers arriving last weekend to help, resources were “stretched to the max” according to the Waste Contractors and Recyclers Associations’ Rick Ralph, with traffic jams and flood waters preventing truck access to many areas.

Premier Anna Bligh said 500,000 square kilometres of the state, including 86 towns and cities, had been affected and that 2 million people were living in areas declared disaster zones. Governments would have to pay billions of dollars to replace destroyed infrastructure, she said, and more than 28,000 Queensland homes would need to be rebuilt.

Ralph said the industry has been working around the clock to clear away as much waste and debris as possible with some transfer stations and landfills operating 24 hours a day. Brisbane City Council’s transfer stations are accepting general and green waste free of charge, and have extended operating hours from 6am to 9pm seven days per week.

----Ralph said the clean up effort is very well organised and risks had been mitigated in regard to hazardous and putrescible wastes for instance.
Brisbane City Council has commenced the rollout of bulk bins to flood affected parts of Brisbane, more than 170 at last count. At the moment the bins are to be used for foodstuffs and perishable goods only.

----“Business has really been impacted,” he said, “because a lot of them can’t re-open until the waste is removed.”
Cohalan said they still couldn’t access Rocklea in particularly but there were around 30-40,000 homes inaccessible due either to flood water, clean up activities or because mud had not been cleaned off the streets.



"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

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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