Thursday, 20 January 2011

A Revised Balance.

Baltic Dry Index. 1411 -21

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

"We shouldn't pour cold water on everything. We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

The Baltic Dry Index has slumped from 4200 last May, all the way down to just about 1400 yesterday. While some of that has to do with new ships coming on-stream that were ordered at the height or the last boom, and some of the slump probably has to do with Australia’s floods that closed coal mines and export ports, something else is going on in the global economy, and it’s probably not good. But today’s big story, as it has been all week, is the state visit of China’s President Hu to Washington and later Chicago. The world’s biggest individual economy is hosting what is now believed to be the world’s second biggest national economy. The world’s biggest debtor by far, is meeting its largest creditor and banker, who is now increasingly concerned about getting repaid. Two almost lame duck Presidents are meeting with different agendas, and are not quite in control of events in their respective countries.

Below, coverage from either side of the Atlantic.

“There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be, at a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”

President Hu. With apologies to Proper Charlie Munger.

JANUARY 20, 2011

Rivals Seek New Balance

Obama, Hu Emphasize Common Ground, Gloss Over Lasting Disputes at Summit

WASHINGTON—U.S. President Barack Obama and Chinese President Hu Jintao, seeking a steadier footing for the often-troubled U.S.-China relationship, played up the two nations' common interests—and soft-pedaled or ignored longstanding issues that divide them.

Their uneasy balance—neither friend nor foe—is emerging as the operating principle behind the globe's most critical bilateral relationship. In a one-hour press conference in the White House's East Room, the two leaders sought to demonstrate they can live with areas of tension, even if they can't cure them, including China's currency policy, its human-rights record and the nuclear ambitions of North Korea.

In private sessions, senior administration officials said, the two leaders addressed some of the countries' friction points: They spent about half their time discussing economic issues, and the rest on Iran, North Korea, human rights and other areas, aides said. President Obama's aides said that he pressed Mr. Hu more gently than Congressional critics did on letting China's currency rise, noting it has gradually risen 3.5%, and more if inflation is accounted for. "But he said that China needs to do more, needs to move faster," said a senior aide.

---- During the previous two visits of Chinese leaders to White House, China was clearly the junior partner and treated as such. That's no longer the case, as China has grown to the top echelon of economies and become the U.S.'s largest banker, as well as competing for political and commercial influence in Asia, Latin America and Africa.

Underscoring its rapid economic advance, China reported early Thursday in Beijing that its gross domestic product grew 10.3% in 2010, faster than many economists expected and well over twice the likely pace of the U.S. The latest data make it highly likely that China surpassed Japan as the world's No. 2 economy in 2010—although Japan's full year data hasn't been issued yet. When Mr. Hu last visited the White House five years ago, China was the world's fifth-biggest economy, less than half its current size.


Barack Obama welcomes Hu Jintao with human rights rebuke

Barack Obama issued a challenge to the Chinese president over the country's human rights record as he made his welcoming address at the White House.

By Toby Harnden, in Washington 8:12PM GMT 19 Jan 2011

In comments that risk infuriating Beijing, the US president also raised the thorny issue of Tibet and said that the key to a nation's success is to uphold "the universal rights of every human being".

Although Mr Obama's message was couched in diplomatic language, it was a clear rebuke to Mr Hu and marked a toughening of America's stance towards China.

The four-day visit is seen as crucial to improving relations between the two countries.

In a rare joint press conference, Mr Obama delivered a frank message to Mr Hu on human rights. "We have some core views, as Americans, about the universality of certain rights – freedom of speech, freedom of religion, freedom of assembly – that we think are very important and that transcend cultures.

"I have been very candid with President Hu about these issues."

He also made clear his dissatisfaction over Chinese business practices. "I did also stress to President Hu that there has to be a level playing for American companies competing in China, that trade has to be fair," he said.

Mr Obama also called for talks between China and the Dalai Lama "to resolve differences in preserving the religious identity of the Tibetan people."

In his welcoming address: "History shows that societies are more harmonious, nations are more successful and the world is more just when the rights and responsibilities of all nations and all people are upheld, including the universal rights of every human being."

Mr Hu said he hoped to "increase mutual trust" between China and the United States and to build a "comprehensive" friendship for the 21st century. He also conceded that "a lot still needs to be done" in China on improving human rights.

"Our co-operation as partners should be based on mutual respect," he said. "China and the United States should respect each other's choice of development path and each other's core interests."


China's economy grows 10.3 pct in 2010


BEIJING, Jan. 20 (Xinhua) -- China's economy grew 10.3 percent last year, up from 9.2 percent in 2009, the National Bureau of Statistics (NBS) announced Thursday.

Gross domestic product (GDP) hit 39.8 trillion yuan (6.05 trillion U.S. dollars) last year, up 10.3 percent year on year calculating at comparable prices, Ma Jiantang, director of the NBS, told a press conference Thursday.

In the fourth quarter, GDP growth picked up to 9.8 percent year on year from 9.6 percent in the third quarter, after slowing from 11.9 percent in the first quarter and 10.3 percent in the second.

"In the past year, China has consolidated and boosted its recovery from the global financial crisis, and the national economy is generally operating well," Ma said.

"The country is at a key stage of turning recovery into stable growth," he said.


As the great and the not so great get ready to party and rig things in Davos Switzerland, the host says that the world needs another 100 trillion dollars of new credit in the decade ahead. And there was I thinking that it was too much credit dissipated rashly or fraudulently, largely by Wall Street, that brought us to the brink of catastrophe. Somehow I don’t think the WEF is intending any of that new credit to trickle down to ordinary people. Attendees at the WEF should get in line after checking in. Stay long precious metals. Watch what they do not what they say.

“If you misprice risk, don't come looking to us for liquidity assistance. The longer this goes on and the more risky positions are built up over time, the more luck you need… It is time for financial market to move back to more adequate risk pricing and maybe forego a deal even if it looks tempting… Global liquidity will dry up and when that point comes some of this underpricing of risk will normalize. If there is much less liquidity around, people will not go into such high risk engagements and will unwind them.”

Axel Webber. Davos Jan 26 2007

World needs $100 trillion more credit, says World Economic Forum

The world's expected economic growth will have to be supported by an extra $100 trillion (£63 trillion) in credit over the next decade, according to the World Economic Forum

By Emma Rowley 8:49PM GMT 18 Jan 2011

This doubling of existing credit levels could be achieved without increasing the risk of a major crisis, said the report from the WEF ahead of its high-profile annual meeting in Davos.

But researchers warned that leaders must be wary of new credit "hotspots", where too much lending takes place, as the world emerges from a financial catastrophe blamed in large part "to the failure of the financial system to detect and constrain" these areas of unsustainable debt.

"Pockets of credit grew rapidly to excess – and brought the entire financial system to the brink of collapse," said the report, written in conjunction with consulting firm McKinsey. "Yet, credit is the lifeblood of the economy, and much more of it will be needed to sustain the recovery and enable the developing world to achieve its growth potential."

The global credit stock has already doubled in recent years, from $57 trillion to $109 trillion between 2000 and 2009, according to the report.

In global warming news, now rebranded “Climate Change”, yet another global warming scare story bites the dust. This one was so egregious even the Al Gore fantasists could see it was screwy.

Climate change study had 'significant error': experts

by Kerry Sheridan Wed Jan 19, 11:33 am ET

WASHINGTON (AFP) – A climate change study that projected a 2.4 degree Celsius increase in temperature and massive worldwide food shortages in the next decade was seriously flawed, scientists said Wednesday.

The study was posted on the website of the American Association for the Advancement of Science and was written about by numerous international news agencies, including AFP.

But AAAS later retracted the study as experts cited numerous errors in its approach.

"A reporter with The Guardian alerted us yesterday to concerns about the news release submitted by Hoffman & Hoffman public relations," said AAAS spokeswoman Ginger Pinholster in an email to AFP.

"We immediately contacted a climate change expert, who confirmed that the information raised many questions in his mind, too. We swiftly removed the news release from our Web site and contacted the submitting organization."

Scientist Osvaldo Canziani, who was part of the 2007 Nobel Prize winning Intergovernmental Panel on Climate Change, was listed as the scientific advisor to the report.


“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”

Vladimir Ilyic Lenin.

At the Comex silver depositories Wednesday, final figures were: Registered 44.84 Moz, Eligible 59.57 Moz, Total 104.41 Moz.


Crooks and Scoundrels Corner.

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

Scoundrels today, “green” scoundrels out to save the planet from an imaginary problem largely generated by Wall Street to promote carbon trading schemes, carbon credits, “cap and cover”, and carbon futures. Below, if the Friends of the Earth nutters get their way, South Africans will lack jobs and electric power, Americans will lack jobs, and two cutting edge US coal mining machine companies will lack a much needed order. About the only good thing to come out of the article is that it does show one of the many hidden ways in which King Coal is subsidized. When it comes to energy, renewable energy and nuclear usually take the hit on subsidies, but in reality all energy sources get subsidies in one way or another, especially during the start up phase.

US Ex-Im Bank urged to deny funding to South Africa’s Kusile coal power project

By: Martin Creamer 19th January 2011

JOHANNESBURG ( – An environmental group is urging a US government-funded bank to deny finance to South Africa’s coal-fired Kusile power project, Milwaukee’s Journal Sentinal reports.

Milwaukee hosts two giant mining machine companies – Bucyrus International and Joy Global – which have asked the bank to provide certain loan-guarantee underpinning for the Kusile project in order to place them in a favourable position to win a contract to build a coal-mining dragline that would take 30 months to manufacture at a cost of some $120-million.

"We know the mine would need a dragline. If the Export Import Bank processes this decision the way we hope they will, it means jobs in Milwaukee, one way or the other," the publication quotes Bucyrus executive Tim Sullivan as saying.

But this has come up against the Friends of the Earth policy coordinator Karen Orenstein, who is urging Washington not to allow the US Export-Import Bank (Ex-Im) to provide finance to underpin Kusile, on the grounds that the power station will emit 36,8-million tons of carbon dioxide, as well as toxins and heavy metals such as arsenic and mercury.

The environmental group is also urging the bank, which has already given some early approvals to Kusile’s environmentally friendly water conservation and air-pollution abatement features, to “end its fossil-fuel binge”.

The Kusile financing is similar to a recent Ex-Im loan guarantee in India, which nearly fell through on environmental grounds, but was finally granted under pressure from a Wisconsin congressional delegation and the White House.

Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity.


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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