Monday, 11 April 2011

Fukushima +30.

Baltic Dry Index. 1376 -25

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

"There are about three hundred economists in the world who are against gold, and they think that gold is a barbarous relic - and they might be right. Unfortunately, there are three billion inhabitants of the world who believe in gold."

Janos Fekete

For more on Fukushima, scroll down to “Crooks and Scoundrels corner. We open today with China, where signs continue suggesting that the Chinese bubble might be nearing its end. China has just published figures showing it ran its first quarterly trade deficit in seven years. Today’s WSJ reports on copper inventories piling up in China rather than being used. The country is awash in unused residential and commercial real estate, and now inflation is surging again, unofficially believed to be running close to 15% per annum. Below, a picture of a sickening China. Worryingly, the Baltic Dry Index is dropping again, and it’s not all down to the arrival of new ships contracted at the height of the Greenspan Bubble.

"I cannot forecast to you the action of China. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is China’s national interest."

With apologies to Winston Churchill, 1939.

China Reports First Quarterly Trade Deficit in Seven Years

By Bloomberg News - Apr 10, 2011 6:19 AM GMT+0100

China’s first quarterly trade deficit in seven years may ease pressure on the world’s biggest exporter to allow faster appreciation of the yuan.

Asia’s largest economy had a deficit of $1.02 billion in the first three months of the year compared with a surplus of $13.9 billion a year earlier, the customs bureau said on its website today. Imports jumped 32.6 percent to a quarterly record of $400.7 billion, helped by stronger domestic demand and higher global commodity prices, the bureau said.

China’s trading partners, including the U.S., say faster yuan appreciation is needed to help address global imbalances that contributed to the financial crisis. Premier Wen Jiabao said last month exchange-rate reform must be gradual to maintain social stability, and that boosting domestic demand is the best way the nation can contribute.

“This is a sign that China’s rebalancing efforts are advancing more rapidly than many had thought and it will take some heat off the pressure for faster yuan gains,” said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. He expects the trade surplus to drop to below $150 billion this year from $183 billion last year.

The trade surplus was $196 billion in 2009, down from a record $295 billion in 2008, customs data show. The gap will decline this year as exporters come under pressure from rising labor and raw material costs and imports are supported by strong domestic demand, Shen said.

Imports Surge

The surge in commodity prices, which contributed to the first-quarter trade deficit, is adding to inflationary pressure. That may prompt the government to allow faster yuan appreciation.

Inbound crude oil shipments in the first quarter rose 12 percent by volume and 39 percent by value to $43.7 billion, according to today’s customs data. The cost of iron ore imports jumped 82.5 percent to $27.7 billion while the amount of metal climbed 14.4 percent.

China Inflation ‘Somewhat Out of Control,’ George Soros Says

By John Detrixhe - Apr 11, 2011 5:02 AM GMT+0100

China’s decision to keep its currency weak has caused the government to lose control of inflation and risks fuelling wage-price gains, billionaire investor George Soros said.

While the policy helped insulate China from the financial crisis in 2008, the world’s second-biggest economy has missed its chance to allow the yuan to appreciate to tame inflation, Soros, chairman of Soros Fund Management LLC, said yesterday at a conference in Bretton Woods, New Hampshire.

“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”

The yuan gained 4.6 percent against the U.S. dollar in the past two years, the second-smallest gain of 10 Asian currencies tracked by Bloomberg, even as economic growth rebounded and foreign-exchange reserves jumped to a record. Inflation accelerated to 5.2 percent in March, exceeding government targets for a ninth month, according to the median estimate in a Bloomberg News survey.

---- The yuan’s gain since April 2009 compares with a 31 percent advance for the Indonesian rupiah, a 22 percent climb by the South Korean won and a 21 percent jump by the Singapore dollar. Only the Hong Kong dollar, which is pegged to the U.S. currency, has appreciated less than the yuan.

APRIL 11, 2011

Warning Signs for Copper Market

As analysts and investors seek clues to the strength of the recent rally in commodity prices, some are taking a closer look at the copper market, where warning signs are emerging.

Copper prices have almost quadrupled after a two-year rally, largely driven by the belief that China, the world's largest copper user, has an insatiable appetite for the metal.

But Chinese buyers are now facing the double whammy of higher copper prices and the government's aggressive moves to tighten credit. Moreover, evidence has recently surfaced of previously unreported copper stockpiles, a sign that much of the purchased copper hasn't been ...


In other news, brave Icelanders again stood up for principle against heavy bullying by the UK, Holland, the ECB and IMF, and voted down the second attempt to force all Icelanders into debt slavery to bailout their collapsed banks. The losses they say, rightly belong with those banks and lenders who were foolish enough to rashly lend outrageous sums to Icelandic banks as they chased extra yield. The losses should rightly fall on those banks shareholders and bondholders. It’s up to their country of registration to bail them out if they wish, although the smart Icelanders think that a very bad idea. If only poor Ireland’s voters were given the same chance.

APRIL 11, 2011

Icelanders Reject Deal to Repay U.K., Netherlands

For the second time, Icelanders voted down a deal to repay Britain and the Netherlands billions of euros lost in the island nation's 2008 financial collapse—at once a bold popular rejection of the notion that taxpayers must bear the burden for bankers' woes and a risky outcome that will complicate Iceland's efforts to rejoin global markets.

The money in question, about €4 billion ($5.8 billion), was placed by British and Dutch depositors in an Icelandic Internet bank called Icesave, and then lost when Icesave's operator, Landsbanki Islands, collapsed along with the rest of Iceland's big banks in October 2008.

Nearly 60% of 175,000 voters rejected a plan to compensate the British and the Dutch governments, who had stepped in to pay their own Icesave depositors when Iceland's deposit-insurance scheme ran out of money

The deal was the result of months of negotiation that saw Iceland win far better terms for the repayment. An earlier agreement was demolished—93% of voters said no—in a another referendum, in March 2010.

But Iceland's president, Ólafur Ragnar Grímsson, in February vetoed a Parliamentary bill that would have sealed the new deal. That triggered Saturday's referendum. Mr. Grímsson's role is largely ceremonial and vetoes are extremely rare.

Both Britain and the Netherlands expressed disappointment and indicated they would fight it out with Iceland in court. "The time for negotiations is over," said Jan Kees de Jager, the Dutch finance minister.

Sunday, Mr. Grímsson said Iceland had, again, spoken clearly. "The leaders of other states and international institutions will have to respect this expression of the national will," he said. He pointed out that the U.K. and the Netherlands would, despite the rejection, receive "immense sums" from Iceland because the countries hold claims to Landsbanki's estate.

Iceland is a member of the European Economic Area, which means it has signed up to many of the European Union's financial and trade rules—among them a requirement that countries maintain deposit-insurance systems.

The EFTA Surveillance Authority, a body that polices the EEA agreements in Iceland, Norway and Liechtenstein, has already started legal proceedings against Iceland. The authority says Iceland violated rules by not backing Icesave depositors—and by reimbursing domestic depositors before foreigners.

The dispute will be heard by the Luxembourg-based EFTA Court.

Every bullying tactic possible will now be brought to bear against Iceland, but realistically, every bank that lent money to the 3 Icelandic banks knew that it was all a scam. Icelandic voters should keep voting down EU, UK and Dutch extortion. After all, we’re all on a fiat money international system, where all macro financial decisions are political. If other countries with massive populations and economies want to bail out their banks stuck with Icelandic losses, they are quite free to make that political decision.

"You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability and intelligence of the members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."

George Bernard Shaw. Unreformed, irreligionist, socialist. Realist.

At the Comex silver depositories Friday, final figures were: Registered 41.30 Moz, Eligible 63.37 Moz, Total 104.68 Moz.


Crooks and Scoundrels Corner.

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

No crooks today, just an update from Japan one month on from the devastating earthquake, tsunami, and continuing nuclear disaster.

APRIL 9, 2011

The Man Who Predicted the Tsunami

After studying ancient rocks, a Japanese geologist warned that a disaster was imminent—to no avail

The giant tsunami that assaulted northern Japan's coast surprised just about everyone. But Masanobu Shishikura was expecting it. The thought that came to mind, he says, was "yappari," a Japanese word meaning roughly, "Sure enough, it happened."

"It was the phenomenon just as I had envisioned it," says the 41-year-old geologist, who has now become the Japanese Cassandra.

Dr. Shishikura's studies of ancient earth layers persuaded him that every 450 to 800 years, colliding plates in the Pacific triggered waves that devastated areas around the modern city of Sendai, in Miyagi Prefecture, as well as in Fukushima Prefecture.

One early tsunami was known to historians. Caused by the 869 Jogan quake, its waves, according to one chronicle, killed 1,000 people. Dr. Shishikura had found strong evidence of a later tsunami in the same region, which probably took place between 1300 and 1600.

"We cannot deny the possibility that [such a tsunami] will occur again in the near future," he and colleagues wrote in August 2010. That article appeared in a journal published by the Active Fault and Earthquake Research Center in Tsukuba, the government-funded institute where Dr. Shishikura works.

He was beginning to spread the word. Plans were under way at his center to hand out maps so people would understand which areas were at risk. Dr. Shishikura had an appointment on March 23 to explain his research to officials in Fukushima.

Dr. Shishikura's boss at the center, Yukinobu Okamura, had even mentioned the results at a 2009 meeting of an official committee discussing the safety of nuclear-power plants. Dr. Okamura says the idea of beefing up tsunami preparedness didn't go anywhere.

At Dr. Shishikura's eighth-floor office, bookshelves and televisions crashed to the floor during the quake on March 11. He has found temporary office quarters one story below, where he discussed his unheeded warning. "It's unfortunate that it wasn't in time," he said. But he also felt vindicated after past slights, remembering the local official who didn't want to help him dig holes in the earth for research and who called the endeavor a "nuisance."


Search for Japan tsunami victims continues

Thousands of troops conduct searches, with less than half those killed in disaster thought to have been found

Sunday 10 April 2011 15.31 BST

The search is continuing for victims of the tsunami that struck Japan's north-east coast almost a month ago, while officials said they hoped to stop pumping radioactive water from the Fukushima Daiichi nuclear plant into the sea.

More than 20,000 Japanese troops and 110 from the US conducted land, sea and air searches for the thousands of victims whose bodies have yet to be recovered.

One month since the 11 March disaster, fewer than 13,000 of the estimated 28,000 who died have been found. The likelihood of finding more is fading because many have probably been swept out to sea. A similar search last week recovered only 70 bodies.

---- The operation to stabilise the Fukushima plant, meanwhile, is about to enter its fifth week, with no end in sight to the world's worst nuclear crisis since the Chernobyl disaster in 1986.

Nuclear officials said they hoped to stop pumping contaminated water into the sea amid criticism from neighbouring China and South Korea, which have accused Tokyo of incompetence in its handling of the crisis.

Engineers said the buildup of radioactive water during recent attempts to cool Fukushima's overheating reactors left them with little choice but to pump it into the ocean, where it quickly dissipates.

---- Workers have been struggling to dispose of 60,000 tonnes of radioactive water that have built up beneath some of the plant's six reactors. "We cannot say what the outlook is for the next stage," Hidehiko Nishiyama, the deputy director-general of Japan's nuclear and industrial safety agency, said. "As soon as possible, we would like to achieve stable cooling and set a course towards controlling radiation."

What do you have when 100 banksters buried up to their neck in

Not enough sand

With apologies to lawyers everywhere.

The monthly Coppock Indicators finished March:

DJIA: +160 UP 06. NASDAQ: +216 Down 01. SP500: +163 UP 6.

The Dow and SP 500 have reversed albeit by tiny margins, while the NASDAQ barely moved down. The Fed’s rigging of the indicators seems to have worked. Note: like all indicators, they were devised for normal markets not markets where the central bank is flooding the economy with new cash. In current conditions where risk is suspended by too big to fail, I doubt any indicators are showing more that where the Fed’s new cash is flowing in our world of casino capitalism.

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