Thursday, 10 February 2011

The World Turned Upside Down.

Baltic Dry Index. 1092 +28

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

Listen to me and you shall hear, news hath not been this thousand year:

Since Herod, Caesar, and many more, you never heard the like before.

Holy-dayes are despis'd, new fashions are devis'd.

Old Christmas is kicked out of Tow

Yet let's be content, and the times lament, you see the world turn'd upside down.

The World Turned Upside Down 1646. After the Battle of Naseby.

One day after the London Stock Exchange agreed to merge with the Toronto Stock Exchange, come new that the German Stock Exchange is about to buy the once prestigious New York Stock Exchange. A world turned upside down, and another unintended consequence of a world operating on fiat money. Fiat dollars are being return to America for what’s perceived as assets of value. Does anyone really think that a German run NYSE will be run for the benefit of America, rather than for the view in Frankfurt and Berlin? Below, the WSJ covers another sign of American implosion. The Great Nixonian Error of fiat currency rolls on.

I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.

Richard M. Nixon 1971.

FEBRUARY 10, 2011

Germans in Talks to Buy Big Board

NYSE, Deutsche Börse Near $25 Billion Tie-Up; Deal Would Symbolize a Diminished Role for New York in Finance

After 219 years as the citadel of American capitalism, the New York Stock Exchange was near an agreement to be acquired by Deutsche Börse AG in a deal that would create the world's largest financial exchange.

If a deal is reached and regulators approve, the combined company would trade more stocks and futures than any rival in the world and more options than any U.S. exchange. The takeover would culminate a decade of tie-ups by exchanges around the world eager to find new sources of growth and catch up with smaller rivals that have been quicker to embrace new and lucrative kinds of trading.

For New York, the move is symbolic of the city's fading dominance on the world stage as other countries are drawing investors directly to their markets. The move also is a recognition that securities trading today goes on at all hours and in all time zones, making the actual bricks and mortar of Wall Street far less important than before.

"New York is going to be important, but it's not the financial center. Capital markets are everywhere now," said Michael LaBranche, CEO of LaBranche & Co, the family-run firm that traded on the floor of the New York Stock Exchange for 87 years before it sold that part of its business to Britain's Barclays Capital in 2010.


Back across the Atlantic, it’s nearly time to serve up the Portuguese starter. The main course of Spain, will shortly follow. In ever more wobbly Euroland, Portugal is Bear Stearns to Spain’s Lehman Brothers. Euros anyone.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

Soaring debt pushes Portugal towards bail-out

By David Oakley Published: February 9 2011 17:58 | Last updated: February 9 2011 17:58

Portugal’s cost of borrowing hit a euro-era high on Wednesday amid growing concerns that Lisbon will have to turn to bail-out funds to revive its stagnating economy.

Hedge funds were selling Portuguese debt after purchasing bonds at a syndication of five-year bonds just 24 hours earlier, brokers said.

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Investor worries are also rising that policymakers will fail to introduce the necessary reforms to beef up the eurozone bail-out fund.

Portuguese 10-year bond yields jumped to 7.35 per cent – the highest since the launch of the euro in January 1999 and a level regarded as unsustainable for Lisbon’s struggling economy.

Richard McGuire, rates strategist at Rabobank, said: “Once again we’re back into this lull where they [EU policymakers] have promised something and they haven’t given details. I think the market will become increasingly concerned about this, exactly as they did about packages for Greece and Ireland.”

A leading investor said: “Portuguese debt costs are in danger of rising further and further as there are no buyers of the country’s debt.”

Some European policymakers would like to see Portugal opt for bail-out loans, which offer rates of about 6 per cent and are considered the best way to deal with the country’s banking and economic problems. There are also hopes among some strategists that the rates offered on bail-out loans will be reduced to encourage Lisbon to accept financial help.

The country’s problems are highlighted by fund managers, such as Pimco, which are no longer prepared to buy the country’s bonds because of fears over high debt levels.,s01=1.html#axzz1DXGC0M3e

On the other end of the Eur-Asian land mass, China is accumulating gold while the west disgorges gold. Stay long gold and silver. As America wracks up unlimited 1.5 trillion dollar deficits forever, I know which side of gold policy which will win out in the long run.

"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."

Hans F. Sennholz

China may increase gold reserves beyond Fort Knox level – Hale

By: Martin Creamer 9th February 2011

CAPE TOWN ( – China’s central bank is being advised to increase its gold holdings nearly ten fold to a level greater than the world’s biggest bullion depository, the US’s Fort Knox.

Global economist David Hale, who addressed the packed Mining Indaba in Cape Town attended by a record 5 700 people, says that China’s gold reserves are currently at 1 050 t – only $30-billion to $40-billion compared with the country’s total assets of $2,8-trillion.

Various officials in China have proposed the central bank should increase its gold reserves to 10 000 t, which would give China larger gold reserves than Fort Knox.

“This would be a huge development for the gold market,” he says, with global mining output of gold only at 2 500 t a year.

“China will probably start to buy gold in the near future, but they won’t report it for two or three years,” Hale says.

When China increased its gold reserves from 600 t to 1 050 t in April 2009, the country only acknowledged doing so much later.

“The odds very much favour China making, over five years, very large gold purchases, and this in turn makes me bullish on the gold price,” he adds.

In addition to the central bank purchases of gold, preliminary data suggests that the Chinese private sector has bought 300 t of gold in the last year, compared with zero three to four years ago.

We end for the day with Egypt, where events from a western perspective go from bad to worse. America’s Israel’s and the west’s man, is rapidly becoming an international pariah. He’s already achieved that status internally. In its ever more desperate attempt to cling on to power, it’s breaking the link to any possible western support. Below, Mubarak goes off reservation like Noriega before him. Nothing good for the west comes from a Mubarak Haitian style dictatorship.

“No foreign policy - no matter how ingenious - has any chance of success if it is born in the minds of a few and carried in the hearts of none.”

Henry Kissinger.

28 hours in the dark heart of Egypt's torture machine

A blindfolded Robert Tait could only listen as fellow captives were electrocuted and beaten by Mubarak's security services

Robert Tait Wednesday 9 February 2011 21.30 GMT

----Cuffed and blindfolded, like my fellow detainees, I lay transfixed. My palms sweated and my heart raced. I felt myself shaking. Would it be my turn next? Or would my outsider status, conferred by holding a British passport, save me? I suspected – hoped – that it would be the latter and, thankfully, it was. But I could never be sure.

I had "disappeared", along with countless Egyptians, inside the bowels of the Mukhabarat, President Hosni Mubarak's vast security-intelligence apparatus and an organisation headed, until recently, by his vice-president and former intelligence chief, Omar Suleiman, the man trusted to negotiate an "orderly transition" to democratic rule.

Judging by what I witnessed, that seems a forlorn hope.

----The brutality continued until, suddenly, I was ordered to stand and pushed towards a room, where I was told I was being taken to the airport. I received my possessions and looked at my watch. It was 5pm. I had been in captivity for 28 hours.

The ordeal was almost over – save for another 16 hours waiting at an airport deportation facility. It had been nightmarish but it was nothing to what my Egyptian fellow-captives had endured.

Later, I learned that Ahmed, the fixer, had been released at the same time as Abdelilah and me. He told friends we had been "treated very well" but that he had bruises "from sleeping on the floor". I had flown to Cairo to find out what was ailing so many Egyptians. I did not expect to learn the answer so graphically.

Robert Tait is a senior correspondent with RFE/RL. He was formerly the Guardian's correspondent in Tehran and Istanbul

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

Michael Belkin

At the Comex silver depositories Wednesday, final figures were: Registered 42.17 Moz, Eligible 61.05 Moz, Total 103.23 Moz.


Crooks and Scoundrels Corner.

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

Today, sad Ireland. Sold out to Germany after only 89 years free. Somehow, I think brave Irish voters know what to do in the coming election. Europe’s banks Irish bondholders are about to get a lesson in national sovereignty. If the ECB doesn’t relent look for the new Irish government to really print up Euro.

"God save Ireland!" said the heroes;

"God save Ireland" said they all.

Whether on the scaffold high

Or the battlefield we die,

Oh, what matter when for Erin dear we fall!

When Irish Eyes Are Crying

First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country—from one another. After which their banks and government really screwed them. So where’s the rage?

By Michael Lewis•Photograph by Jonas Fredwall Karlsson March 2011

When I flew to Dublin in early November, the Irish government was busy helping the Irish people come to terms with their loss. It had been two years since a handful of Irish politicians and bankers decided to guarantee all the debts of the country’s biggest banks, but the people were only now getting their minds around what that meant for them. The numbers were breathtaking. A single bank, Anglo Irish, which, two years before, the Irish government had claimed was merely suffering from a “liquidity problem,” faced losses of up to 34 billion euros. To get some sense of how “34 billion euros” sounds to Irish ears, an American thinking in dollars needs to multiply it by roughly one hundred: $3.4 trillion. And that was for a single bank. As the sum total of loans made by Anglo Irish, most of it to Irish property developers, was only 72 billion euros, the bank had lost nearly half of every dollar it invested.

The two other big Irish banks, Bank of Ireland and, especially, Allied Irish Banks (A.I.B.), remained Ireland’s dirty little secrets. Both older than Ireland itself (the Bank of Ireland was founded back in 1783; A.I.B. is made up of three banks founded in the 19th century), both were now also obviously bust. The Irish government owned big chunks of the two ancient banks but revealed less about them. As they had lent vast sums not only to Irish property developers but also to Irish homebuyers, their losses were also obviously vast—and similar in spirit to the losses at the upstart Anglo Irish.

Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction. Theo Phanos, a London hedge-fund manager with interests in Ireland, says that “Anglo Irish was probably the world’s worst bank. Even worse than the Icelandic banks.”


"The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day, and serving political goals and ambitions. This difference alone sounds the alarm to all perceptive observers."

Hans F. Sennholz

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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