Thursday, 24 February 2011

Libya – What Next?

Baltic Dry Index. 1253 -26

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

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

With the end near for the regime of Gaddafi, the big question is what next? Will whoever takes power be able to keep the oil flowing, now that tens of thousands of foreign engineers have fled? How many will return and how soon? About half the Libyan population relied on state salaries and handouts in one form or another, what happens to them? The Libyan dinar is a fiat currency, just like the dollar, Pound and Euro, what value have the savings of most of the Libyan people? Is a great wave of mass migration north, next? Can Italy survive without Gaddafi, given its dependence on Libyan oil and Gaddafi’s recycled dollars? If a repressive regime like Gaddafi’s can fall to people power, how long can a repressive monarchy last in Saudi Arabia? Can the remaining pro-west monarchies in the Middle East reform into constitutional monarchies in the face of mounting people power, or is it already too late? Yes, from our western and Chinese perspective, it’s all about oil. Without cheap, free flowing oil, the global economy as we know it comes to a slump. No one can see the future, but suddenly our future has never looked more iffy, our politicians never looked so irrelevant. Below, this morning’s coverage of the Libyan crisis.

FEBRUARY 24, 2011

Gadhafi Flails as Libya Splinters

----The chaos that has consumed Libya since protesters last week began pushing for Col. Gadhafi's ouster has spawned an array of security concerns—over oil supplies, the safety of tens of thousands of foreign workers there and the risks posed by the weapons in Col. Gadhafi's remaining arsenal.

Oil prices surged over fears about the security of supplies from Libya, a major oil producer. Prices for light, sweet crude for April delivery—the main U.S. oil contract—at one point in the trading day hit $100 a barrel for the first time in more than two years.

The U.S., China, Turkey and several European nations struggled to bring home citizens stranded in Libya, where an estimated 100,000 foreigners work in industries including oil and construction. Airplanes sent from France and the Netherlands circled Tripoli's airport but had no clearance to land and turned back.


Libya: civil war breaks out as Gaddafi mounts rearguard fight

Forces loyal to Col Muammar Gaddafi made good on threats to trigger a civil war in Libya on Wednesday night, by taking up positions across the capital, Tripoli and launching a rearguard fight against rebels in major cities.

By Richard Spencer, Middle East Correspondent 9:17PM GMT 23 Feb 2011

Residents of parts of the capital were trapped in their homes as "thousands" of soldiers patrolled the streets accompanied by African mercenaries.

Tanks took up positions around public buildings including government offices, while sandbag defences were also being built.

"We will fight until death," a pro-Gaddafi soldier in his early 20s said outside a military compound close to Tripoli's Green Square, which had been cleared of demonstrators by yesterday morning.

"The country needs stability at a time like this, and this is what we are providing. The people are on our side."

Residents said bodies were still piling up in hospitals from the shootings of the previous two days.


Tripoli: a city in the shadow of death

Gunfire in the suburbs – and fear, hunger and rumour in the capital Thousands race for last tickets out of a city sinking into anarchy
Robert Fisk, with the first dispatch from Libya's war-torn capital, reports

Thursday, 24 February 2011

Up to 15,000 men, women and children besieged Tripoli's international airport last night, shouting and screaming for seats on the few airliners still prepared to fly to Muammar Gaddafi's rump state, paying Libyan police bribe after bribe to reach the ticket desks in a rain-soaked mob of hungry, desperate families. Many were trampled as Libyan security men savagely beat those who pushed their way to the front.

Among them were Gaddafi's fellow Arabs, thousands of them Egyptians, some of whom had been living at the airport for two days without food or sanitation. The place stank of faeces and urine and fear. Yet a 45-minute visit into the city for a new airline ticket to another destination is the only chance to see Gaddafi's capital if you are a "dog" of the international press.

There was little sign of opposition to the Great Leader. Squads of young men with Kalashnikov rifles stood on the side roads next to barricades of upturned chairs and wooden doors. But these were pro-Gaddafi vigilantes – a faint echo of the armed Egyptian "neighbourhood guard" I saw in Cairo a month ago – and had pinned photographs of their leader's infamous Green Book to their checkpoint signs.

----I was told that at least 30,000 Turks, who make up the bulk of the Libyan construction and engineering industry, have now fled the capital, along with tens of thousands of other foreign workers. On my own aircraft out of Tripoli, an evacuation flight to Europe, there were Polish, German, Japanese and Italian businessmen, all of whom told me they had closed down major companies in the past week. Worse still for Gaddafi, the oil, chemical and uranium fields of Libya lie to the south of "liberated" Benghazi. Gaddafi's hungry capital controls only water resources, so a temporary division of Libya, which may have entered Gaddafi's mind, would not be sustainable. Libyans and expatriates I spoke to yesterday said they thought he was clinically insane, but they expressed more anger at his son, Saif al-Islam. "We thought Saif was the new light, the 'liberal'", a Libyan businessman sad to me. "Now we realise he is crazier and more cruel than his father."


Libya: Middle East airports turn away Gaddafi planes

Airports around the Middle East were on Wednesday night turning away planes carrying members of Col. Muammar Gaddafi's family.

An official at Beirut Airport in Lebanon said it had denied a request to allow a plane belonging to the Gaddafi family to land. On board was Aline Skaff, the wife of one of the dictator's sons, Hannibal Gaddafi.

A Libyan Arab Airlines aircraft carrying 14 people made an unscheduled appearance in Maltese airspace and was also refused permission to land after failing to supply full details. Al-Jazeera said it was carrying Gaddafi's daughter, Ayesha.

It was not clear whether Gaddafi's family were defecting or being sent to safety. Gaddafi's sons are said to be leading the effort to defend his regime.

Other senior figures were actively going over to the rebels. Questions were still being asked about the statement read from his office in Benghazi by the former public security minister, Abdul Fattah Younis, that he had changed sides. The government claimed he had been kidnapped and was making his statement under duress.

The justice minister, Mustafa Abdel-Jalil, was among the first to stand down. He is now saying he has evidence that Col. Gaddafi personally ordered the Lockerbie bombing.


Libya: Italy fears 300,000 refugees

Italy fears that up to 300,000 Libyans could try to reach Italian soil as a result of the chaos in the North African country.

Feb. 23, 2011, 12:01 p.m. EST

Italy’s ties to Libya in spotlight amid unrest

Libya turmoil could hurt Italian companies, Eni in focus

LONDON (MarketWatch) — Few European countries have closer ties to Moammar Gadhafi’s Libya than Italy.

It’s little surprise then that the Italian stock market fell sharply this week, as a popular uprising against the 42-year regime of Gadhafi escalated, leading to violent turmoil and uncertainty about the path ahead for the oil-rich North African nation.

Libya, which was once an Italian colony, is a key supplier of oil and natural gas to Italy. Prime Minister Silvio Berlusconi’s government has spent years wooing Gadhafi, leading to considerable cross-border investment.


Stay tuned for what the fall of Libya means for the west. While Europe can always drop fuel taxes to soften the economic blow from rising oil prices, in North America that’s not really an option given their low fuel taxes. If Libyan oil exports drop to any significant extent, first Italy and Germany will scramble for replacement oil, followed quite quickly by all the rest of the world.

In other news, Ireland goes to vote tomorrow. To vote to be German and ECB serfs forever, or to vote to be brave Icelanders and take back their lives. Out of the news due to events in Libya, as Ireland votes probably determines how long the Euro has left. Still if Italy falls with the regime in Libya, the great one size fits all, fiat Euro experiment will come to an end, possibly triggering then end of the great Nixonian blunder of fiat currency.

FEBRUARY 24, 2011

Irish Remedy for Hard Times: Leaving

CARLOW, Ireland—The people of Ireland go to the polls Friday to deliver what's expected to be a knock-out blow to the governing party. But many are choosing to vote in a traditional Irish fashion: with their feet. Tens of thousands are joining in a new wave of emigration, turning their backs on a country mired in economic malaise.


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

Richard M. Ebeling

At the Comex silver depositories Wednesday, final figures were: Registered 41.91 Moz, Eligible 60.45 Moz, Total 102.36 Moz.


Crooks and Scoundrels Corner.

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

No crooks today. With momentous events happening in Libya and Ireland about to vote out the Euro, who needs an update on Wall Street’s crooks. A failure of Libyan oil supply or a failure of Italy and the Euro, are quite enough to bring down the banksters of Wall Street. “God’s work” on Wall Street might be coming to an end.

"Were we to be directed from Washington when to sow and when to reap, we should soon want bread."

Thomas Jefferson

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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