Thursday, 31 March 2011

A US Debt Default!!!

Baltic Dry Index. 1545 -27

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

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

We open this morning with America’s top private sector banker worrying about a US debt default, assumed until now to be highly unlikely as US politicians play DC politics over extending the debt ceiling. What does JP Morgan’s Jamie Dimon know that the rest of us don’t? Stay long precious metals. Maybe he thinks the Republican leadership is daft enough to toss a machine jamming spanner into the already fragile global economy. My prediction. If the US defaults on its debt, even temporarily, the next Lehman(s) will come flying out of the woodwork the same day. The G-20 finance ministers meeting going on in Nanjing China looks irrelevant if a US debt default is only days away.

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

March 30, 2011, 4:09 p.m.

Dimon: U.S. debt default would be ‘catastrophic’

Top GOP lawmaker, consumer advocate Warren spar on new bureau

WASHINGTON (MarketWatch) — If the U.S. were to default on its debt, it would be catastrophic occurrence that would snowball, a top U.S. banker said Wednesday.

“If anybody wants to push that button, which would be catastrophic and unpredictable, I think they are crazy,” J.P. Morgan & Chase Co. Chief Executive Jamie Dimon told a U.S. Chamber of Commerce gathering.

Dimon’s comments come as the Treasury Department is warning that the government could hit its $14.3 trillion borrowing limit as early as April 15. The White House and both parties on Capitol Hill are under pressure to rein in the deficit and the U.S. debt. But lawmakers are far apart on where to trim spending or increase revenue. See related story about budget talks.

In addition to fielding questions about the U.S. borrowing limit, Dimon targeted aspects of the Dodd-Frank bank-reform statute that he felt were hurting the U.S.’s economic competitiveness.

----Dimon also took issue with some of the derivatives rules that are being adopted based on the Dodd-Frank Act, focusing his comments on concerns that commercial companies may be forced to hold collateral, or margin, when conducting hedging derivatives transactions with big banks.

Back in inscrutable China, the US and France try a tag team approach to forcing the Yuan higher by dangling a carrot before the Chinese Panda. China is unlikely to swallow the tainted carrot. Stay long gold and silver. If China is now accumulating precious metals, which they are, like Jamie Dimon China now sees a US default ahead at some point.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise."

Jerome F. Smith

U.S., France Signal Openness to Greater Role for Yuan at G-20 China Talks

By Bloomberg News - Mar 31, 2011 6:49 AM

The U.S. and France signaled openness to a greater role for China’s currency while stressing the importance of exchange-rate flexibility as Group of 20 officials met to discuss the international monetary system.

French President Nicolas Sarkozy said the yuan should be in the International Monetary Fund’s Special Drawing Rights, a unit of account derived from the value of the dollar, yen, pound and euro. U.S. Treasury Secretary Timothy F. Geithner said world powers’ currencies should be included “over time” so long as they have flexible currencies and free capital flows.

Chinese officials said that the value of its currency wouldn’t be a topic at today’s seminar and Geithner didn’t refer to the yuan directly in remarks prepared for the event in Nanjing, China. At the same time, he said the mismatch between flexible currencies and the “tightly managed” exchange rates of some emerging economies is the most important problem to solve in the international monetary system.

China will continue to proceed with currency reform at its own pace” and regardless of Sarkozy and Geithner’s comments, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., who formerly worked for the International Monetary Fund and the European Central Bank.

----G-20 finance chiefs, central bankers and private economists are meeting for a seminar initiated by Sarkozy on altering the global monetary system to prevent future crises. The French president said today that the IMF should have a bigger role in supervising nations’ balance of payments and reserves to help limit risks.

The meeting, attended by economists including Nobel laureate Robert Mundell and Jim O’Neill, chairman of Global Sachs Asset Management, is intended to lay the groundwork for an agreement at the G-20 summit in Cannes, France, in November that would lead to a more “stable and resilient” monetary order, said the French leader, who is up for re-election next year.


We end for the day with Europe’s banks being lined up for an Irish haircut. Can Greece and Portugal be far behind? If it happens, Germany’s banks will likely need a Bundesbank bailout. Is casino “too big to fail” banksterism great or what? Poor Ireland has already invested a quarter of Irish GDP in propping up its banks. It simply wasn’t enough. Time to get serious and free the poor Irish population from German debt slavery. The only difference between Iceland and Ireland is a single letter. That and the fact that tiny Iceland was smart enough not to try to guarantee its banks to bailout Europe.

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

Thursday, March 31, 2011

Noonan to propose 'radical' bank sector restructuring

THE MINISTER for Finance will propose a ground-breaking restructuring of the banks today as the results of Central Bank stress tests will signal the virtual nationalisation of the Irish banking sector.

The results of the tests will lead Michael Noonan to undertake “a radical new approach” to fix the banks, a Government source said.

Mr Noonan will make a “watershed” argument for a EU-wide solution around passing bank losses on to bondholders in response to the tests on Bank of Ireland, AIB, Irish Life and Permanent and EBS building society. Government colleagues last night described it as the first radical policy departure from the previous Fianna Fail-led government.


"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 41.71 Moz, Eligible 62.72 Moz, Total 104.43 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, something far more important. What to do with contaminated radioactive ships coming to Europe from Japan. China already turns them away. An impending economic disaster if that becomes the rule everywhere. And now the problem seems to have taken a turn for the worse.

Consequences of Fukushima 03/30/2011

German Ports Unsure How to Deal with Contaminated Ships

In a matter of weeks, ships from Japan which may be carrying cargo contaminated by radiation will start arriving in Europe. But the authorities in ports such as Hamburg are unsure how they should deal with them.

German port operators are nervously awaiting the expected arrival of ships from Japan which may be carrying cargo contaminated with radioactivity following the Fukushima nuclear crisis.

Confusion reigns about what to do with the ships. The first such vessels are expected to arrive at German ports in mid-April, but may be turned back if they are deemed to be contaminated.

Erik van der Noordaa, the head of Germanischer Lloyd, a technical supervisory organization which conducts safety surveys on more than 7,000 ships, told the Wednesday edition of the Financial Times Deutschland that he expects European ports will "send away" ships from Japan. "In Hamburg, they will not be happy if a contaminated ship enters," he said.

But something must be done -- the ships are on their way. "This is going to be very complicated, and there is no solution yet," van der Noordaa said.

Shipowners have also been caught unawares. There is no set level, for example, above which a ship is deemed to be contaminated. "Up until now, there has been no plan," a spokesman for the German Shipowners' Association told the FTD.

----Around 300 ships come to Hamburg from Japan each year, out of a total of around 10,000 ship arrivals, but they usually stop in other European ports first, Schwertner explained. "The first ship that could actually be contaminated would not arrive before the middle of April because of the travel time."

The problem is further evidence of the consequences of the crisis in Japan, which shows no signs of abating. Attention has now turned to the seas around Fukushima, where radioactivity has been released from reactors damaged by the 9.0 magnitude earthquake and ensuing tsunami. Levels of radiation in the seawater around the power plant have reached levels 3,355 times the legal limit, according to Japan's nuclear safety agency.

Concerns about radiation have already had an impact on Japan's seaborne trade. The Japanese container ship MOL Presence, which had passed 120 kilometers (75 miles) away from Fukishima, was turned back from the Chinese port of Xiamen last week after elevated radiation levels were detected.,1518,754005,00.html#ref=nlint

Fukushima Workers Face Risk of Uncontrolled Reactions

By Jonathan Tirone, Sachiko Sakamaki and Yuriy Humber - Mar 31, 2011

Japan’s damaged nuclear plant may be in danger of emitting sudden bursts of heat and radiation, undermining efforts to cool the reactors and contain fallout.

The potential for limited, uncontrolled chain reactions, voiced yesterday by the International Atomic Energy Agency, is among the phenomena that might occur, Chief Cabinet Secretary Yukio Edano told reporters in Tokyo today. The IAEA "emphasized that the nuclear reactors won’t explode," he said.

Three workers at a separate Japanese plant received high doses of radiation in 1999 from a similar nuclear reaction, known as ‘criticality.’ Two of them died within seven months.

-----Nuclear experts call such reactions "localized criticality." They consist of a burst of heat, radiation and sometimes an "ethereal blue flash," according to the U.S. Energy Department’s Los Alamos National Laboratory website. Twenty-one workers worldwide have been killed by “criticality accidents” since 1945, the site said.

The IAEA acknowledged "they don’t have clear signs that show such a phenomenon is happening," Edano said.


"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

The monthly Coppock Indicators finished February:

DJIA: +156 Down 05. NASDAQ: +217 Down 11. SP500: +157 Down 4.

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