Friday, 11 February 2011

The End of Empire.

Baltic Dry Index. 1136 +44

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

"Can't anybody here play this game?"

Casey Stengel.

Yesterday will go down in history as the day the CIA and President Obama goofed so badly, that it publicly confirmed that Pax Americana is in full retreat. President Bush will go down in history as the man who lost Latin America, especially South America, if he ever knew it existed. President Obama will now likely go down in history as the man whose dithering over the Egypt crisis, unraveled the middle east from the west’s perspective. Are the Saudis next? What’s the point of the sixth fleet, and 1.4 billion a year in military subsidy, if the CIA can get it so wrong and a US president can be so publicly humiliated. Caesar has morphed into Homer Simpson. Below, yesterday’s events that wrong footed the west.

Conceit is God's gift to little men.

Harry S. Truman

Egypt crisis: Hosni Mubarak refuses to quit

Hosni Mubarak has provoked fury among Egypt's protesters by handing over some powers to his deputy but pledging once again to stay in office

By Adrian Blomfield, Nick Meo in Cairo 10:23PM GMT 10 Feb 2011

At the end of a dramatic day which saw the powerful army pledge to give Egypts protest movement all it wanted and and so fired expectations that the president would end his 30 year rule, Mr Mubarak instead said on tv again that he would stay on till September.

The protesters were chanting in dismay even midway through the speech as they realised they had been feeding on false hopes all afternoon.

Earlier in the day, the army appeared to be enacting a military coup and announced that the people’s wishes would be met. The main demand of the crowds, however, has been the departure of Mr Mubarak.

When they gathered around the television in Tahrir Square not long before midnight, the democracy protesters were sure Mr Mubarak was about to step down. Most had been celebrating for hours, and many had brought their children to witness history being made.

Arabic television had already told them that the army would step in to provide an interim president.

But in a long statement the president ceded unspecified control to his vice-president and repeated that he would remain in his post until elections could be organised in September.

The Egyptian ambassador to the United States said Omar Suleiman is now the "de facto head of state".

Western powers were once again caught off guard by rapidly changing events in Egypt.

FEBRUARY 11, 2011

Crisis Puts White House in Disarray

Egyptian President Mubarak's Refusal to Step Down Signals a Loss of Western Influence; Sense of 'Disbelief' After Speech

WASHINGTON—The defiant tone taken by Egyptian President Hosni Mubarak—and widespread confusion about the meaning of his speech—had White House officials stumbling for their next step in a crisis that was spinning out of their control.

Egyptian officials said Mr. Mubarak gave the Obama administration much of what it wanted: the delegation of presidential powers to the vice president, Omar Suleiman.

They said Mr. Mubarak had all but been rendered a figurehead leader, precisely the formulation set out by U.S. officials over the weekend.

But Mr. Mubarak's language and refusal to yield to what he called the intervention of foreigners left protesters furious, the scene in Cairo precarious and the White House seemingly unable to influence events.

After a extended meeting with his national security team, President Barack Obama released the longest statement of the Egyptian crisis, making it clear the appearances of Messrs. Mubarak and Suleiman on Egyptian state television had muddled the transition process, not clarified it.

"The Egyptian people have been told that there was a transition of authority, but it is not yet clear that this transition is immediate, meaningful or sufficient," Mr. Obama said.

All day, as rumors swirled Mr. Mubarak would step down, administration officials struggled to understand what was happening, and even U.S. intelligence officials appeared baffled at one point. At a Capitol Hill hearing, Leon Panetta, director of the Central Intelligence Agency, told lawmakers there was "a strong likelihood that Mubarak may step down this evening."

Mr. Panetta clarified later in the hearing that the CIA had received reports that Mr. Mubarak would "possibly" resign but said he saw a transition scenario under which Mr. Mubarak would shift powers to Mr. Suleiman, something closer to what appears to have happened.

A senior intelligence official defended Mr. Panetta, saying he was referring to press reports in his comments rather than to CIA intelligence reports.

"The agency has been tracking developments very closely, and there were very real and rapidly unfolding changes over the course of the day in what has been—by any measure—an extremely fluid situation," the official said. "That's the nature of the intelligence business."

After Mr. Mubarak's speech, the White House was consumed with a sense of "disbelief," one U.S. official said.

Obama Tested on Whether to Break With Mubarak

By MARK LANDLER and MARK MAZZETTI Published: February 10, 2011

WASHINGTON — President Hosni Mubarak’s refusal to step down on Thursday, after a day of rumors galvanized the crowds in Cairo, confronts the Obama administration with a stark choice: break decisively with Mr. Mubarak or stick to its call for an “orderly transition” that may no longer be tenable.

On a day of dashed hopes in Egypt, the administration’s attempts to balance the democratic aspirations of the protesters against a fear of contributing to broader instability in the Middle East collided head-on with Mr. Mubarak’s defiant refusal to relinquish his office.

To some extent, Mr. Mubarak opened the door for President Obama to appeal even more directly to the protesters, some of whom have felt betrayed by the administration’s cautious approach, saying it placed strategic interests ahead of democratic values. In his speech, Mr. Mubarak said he would not brook foreign interference, suggesting that he was digging in his heels after days of prodding by the United States for “immediate, irreversible” change.

Mr. Obama’s remarks earlier in the day, in which he celebrated the hopes of a “young generation” of Egyptians, were broadcast in Cairo, drawing cheers from the protesters.

“The administration has to put everything on the line now,” said Thomas Malinowski, the Washington director of Human Rights Watch, who has been among several outside experts advising the White House on Egypt in recent days. “Whatever cards they have, this is the time to play them.”

In its first reaction, the administration offered few overt signs of a change in policy. While criticizing the move as insufficient, it made no direct call for Mr. Mubarak’s resignation. But in a statement, the White House called on his government to explain “in clear and unambiguous language” how a transition of power would take place.


To all intents, US leadership is dead, it’s every nation for itself in a rapidly changing world of still increasing middle east oil dependency. The error of Eisenhower in 1956 is now coming home with a vengeance. Germany must look east to work with Russia and the Ukraine. China west to work with Eur-Asia. Britain and France seek a closer entente. Japan, Taiwan, South Korea must be reeling from yesterday’s historic miscalculation.

Below, can this deployment keep the Suez canal and the Sumed pipeline open?

"Don't cut my throat, I may want to do that later myself."

Casey Stengel.

US Aircraft Carrier Deployment Update - February 9

Submitted by Tyler Durden on 02/10/2011 18:49 -0500

For all wondering just how prepared for an escalation in the middle east conflict the US is, we present the most recent deployment map of US aircraft carriers across the world, as of February 9. It appears that there is a material concentration of naval capacity in the Middle-east region since last week, as CVN 65 Enterprise, CVN 70 Vinson and CVN 72 Lincoln are all in immediate proximity to Egypt and the Middle-East theater, as is the LHD 3 Kearsarge amphibious warfare ship which is lodged smack in the middle of the Red Sea.


Stay long precious metals. A very dangerous weekend now lies ahead

Below, yesterday’s oil news in reaction to the WikiLeaks US cables suggesting that Saudi Arabia’s oil reserves are overstated by a massive 40%. But can OPEC really achieve a sustained production increase. Given the middle east uncertainty and the fiat dollar’s vulnerability to QE2, oil hoarding is a more likely event among nations.

Opec raises oil production to tackle $100 prices

Oil prices above $100 (£62) per barrel have finally forced the world's cartel of energy producers to raise their output, as demand looks set to hit a world record this year
By Rowena Mason 8:19PM GMT 10 Feb 2011

The Organisation of the Petroleum Exporting Countries (Opec), whose members include Iran and Saudi Arabia, raised production by 400,000 barrels per day to 29.7m barrels.

Demand for Opec crude was revised up by around 400,000 barrels per day to 29.8m but the group said higher prices would dampen this in the coming weeks.

"The down risk for the total world oil demand forecast lies with international oil prices," Opec said. "Should strong prices remain, this will lead to a reduction in the use of transportation fuels."

Opec members have been reluctant to call an emergency meeting to deal with prices of more than $100.

However, on Thursday Brent crude fell almost $1 to around $101.

It came as Gunther Oettinger, the European commissioner, said Europe could cope with oil at $100, but expressed concern for world prices in the long term given that Saudi Arabian reserves could be overstated by up to 40pc.

We end for the day with the IMF recognizing the end of Pax Ameicana. The era of the fiat dollar reserve standard is coming to its end. Stay long precious metals. Does anyone really think that an IMF administered, fiat Special Drawing Right is an improvement that would make much difference.

International Monetary Fund director Dominique Strauss-Kahn calls for new world currency

Dominique Strauss-Kahn, managing director of the International Monetary Fund, has called for a new world currency that would challenge the dominance of the dollar and protect against future financial instability.

By Andrew Trotman 5:14PM GMT 10 Feb 2011

“Global imbalances are back, with issues that worried us before the crisis - large and volatile capital flows, exchange rate pressures, rapidly growing excess reserves - on the front burner once again,” Strauss-Kahn said. “Left unresolved, these problems could even sow the seeds of the next crisis.”

“When we worry about the deficiencies of the international monetary system, we are mostly worrying about volatility,” he added. There is “a sense that money sometimes flows around the globe in too-volatile a fashion and that countries need a more stable, more predictable external environment in order to prosper”, he said.

He suggested adding emerging market countries' currencies, such as the yuan, to a basket of currencies that the IMF administers could add stability to the global system.

China, which holds much of its $2.85 trillion mountain of reserves in US Treasury bonds, has repeatedly expressed unease about the value of the dollar, while American politicians have complained that Beijing gains an unfair advantage by keeping its own currency cheap.

Strauss-Kahn saw a greater role for the IMF's Special Drawing Rights, which is currently composed of the dollar, sterling, euro and yen, over time but said it will take a great deal of international cooperation to make that work.

"Using the SDR to price global trade and denominate financial assets would provide a buffer from exchange rate volatility," Strauss-Kahn said, while "issuing SDR-denominated bonds could create a potentially new class of reserve assets".

Russian President Dmitry Medvedev last month said the currencies of Brazil, Russia, India and China should be included in the SDR valuation basket. The same month, Sarkozy said that the yuan should be included, and US President Barack Obama’s administration said it supports such a transition “over time”.

However, among the yuan's drawbacks is that it is not freely traded and China's capital markets are largely closed.

Strauss-Kahn said: "Increasing the role of the SDR would clearly require a major leap in international policy coordination. For this reason, I expect the global reserve asset system to evolve only gradually, and along with changes in the global economy."

Strauss-Kahn's views come a week before finance ministers from the Group of 20 developed and developing nations meet in Paris to discuss proposals by French president Nicolas Sarkozy for changes to global economic governance.

A president either is constantly on top of events or, if he hesitates, events will soon be on top of him. I never felt that I could let up for a moment.

Harry S. Truman

At the Comex silver depositories Thursday, final figures were: Registered 42.17 Moz, Eligible 60.67 Moz, Total 102.84 Moz.


Crooks and Scoundrels Corner.

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

Today, skullduggery in the Kazakhstan mining sector. Should ENRC even be listed in London?

Always do right - this will gratify some and astonish the rest.

Mark Twain

MPs urge tighter rules after ENRC's Africa mine deal

MPS have expressed concern about the FTSE 100 mining group ENRC's deal to buy an expropriated African copper mine, calling for new rules on transparency in the oil, gas and mining industries.
By Rowena Mason, in London and Richard Orange in Astana 6:15AM GMT 11 Feb 2011

An early day motion filed by Eric Joyce, backed by two other MPs, draws attention to the controversial deal done by ENRC in the Democratic Republic of Congo (DRC) last year. The £13bn Kazakh company bought a mine that was seized from a competitor, First Quantum Minerals. The government then sold the mine to a company linked to a friend of the DRC's president for $20m (£13m), which was sold shortly afterwards to ENRC for $175m.

The MPs say they note "with concern the involvement of UK-listed companies now in possession of the Kolwezi mine". They then call in the motion to force UK-listed energy and mining companies to "report their payments to foreign governments to create a new standard of global extractive industry transparency".

Separately, the motion recognises that a new standard of transparency will "reduce opportunities for embezzlement" and "help shelter companies from the costs of bribery and corruption".

ENRC, which is being sued for $1bn by First Quantum, declined to comment on the MPs' motion.

The controversy comes at a fraught time for ENRC, following the resignation of Felix Vulis, the company's chief executive, "for personal reasons" last Friday. In addition, The Telegraph has learned that Alexander Mashkevitch, the billionaire founder of ENRC, has relocated to Israel.

Mr Mashekvitch received his Israeli papers on Monday in a discreet ceremony inside Israel's Ministry of Immigrant Absorption. "I never ceased to be an Israeli," Mr Mashkevitch told Izrus, a news site for Russian-speaking Israelis. "My whole family is spending more and more time here. I love Israel and I am happy here."

However, Forbes Magazine described him as a resident of Kazakhstan, in its 2010 list of world billionaires, ranking him the Central Asian country's second-richest person. He shared the position with ENRC co-founders Patokh Chodiev and Alijan Ibragimov, as each holds a 14.6pc stake worth £1.9bn.

Analysts have recently been worrying about a potential turf war in the Kazakh mining sector. The chief executive of ENRC last Friday announced he was resigning for "personal reasons", because he wanted to spend less time at ENRC's London headquarters following his marriage to a Kazakh.

Another weekend, and an interesting one to say the least. Time to keep the cars fully fuelled as a precaution. Long overdue, some joined up government in Washington DC. President Obama is making President Carter look good. Have a great weekend everyone. In the midst of this Egyptian crisis on the EU’s bac lawn, anyone heard from Gordon Brown’s joke on Europe, EU Foreign Minister Baroness Who?

Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.

Mark Twain.

The monthly Coppock Indicators finished January:

DJIA: +161 Down 10. NASDAQ: +228 Down 10. SP500: +161 Down 4.

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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