Tuesday, 5 April 2011

Transitory Inflation.

Baltic Dry Index. 1498 -22

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

"I think the increase in inflation will be transitory. Our expectation at this point is that in the medium term inflation, if anything, will be a bit low. We will monitor inflation and inflation expectations very closely."

Dr. Ben Bernanke. April 4, 2011.

More on Big Ben Bernanke in the crooks section. Up first, the continuing nuclear disaster at Fukushima. Japan is dumping “low level” radioactive water into the sea, supposedly to prevent high level radioactive water being dumped into the sea. Who really knows? Sushi anyone? Japanese bonds? A new nuclear power plant made in Japan? How about one designed by GE?

Japan Dumps Toxic Water in Sea, Seeks Russian Processing Ship

By Tsuyoshi Inajima - Apr 5, 2011 6:15 AM

Tokyo Electric Power Co. is pumping millions of gallons of radioactive water into the sea from its crippled Fukushima Dai-Ichi station, and Japan has asked Russia to send a ship capable of processing nuclear waste.

The company known as Tepco will discharge 10,000 tons (2.6 million gallons) of water from a treatment building until 6 p.m. local time to make room to store more highly contaminated fluids, Hidehiko Nishiyama, Japan’s main spokesman on nuclear safety, said today. Another 1,500 tons from pits outside two reactors will be drained over five days, he said.

“There was no choice but to take this step to prevent highly radioactive water from spreading into the sea,” Chief Cabinet Secretary Yukio Edano said at a media briefing in Tokyo today. “The fact that radioactive water is being deliberately dumped into the sea is very regrettable, and one we are very sorry about.”

---- Japan’s government asked Russia for help processing radioactive waste from the Fukushima Dai-Ichi station, and is specifically interested in the Landysh facility, used to dismantle nuclear submarines, Sergei Novikov, a spokesman for Russia’s state-run Rosatom Corp., said in Moscow yesterday.

Landysh is a radioactive waste treatment plant housed on a barge and was built with Japanese assistance, according to information on the website of The Nuclear Threat Initiative, a non-profit group that opposes atomic weapons proliferation.

----The United Nations nuclear watchdog said yesterday that the partial meltdown of some of the station’s six reactors was the result of “errors” from the time the March 11 quake and tsunami knocked out pumps used to cool reactors and spent fuel.

“Such an accident should not have happened,” Denis Flory, deputy director general of the International Atomic Energy Agency, said at a press briefing in Vienna. “Something was not done from the very beginning.”



In related news, the knock on effect from Fukushima and the massive earthquake and tsunami is now hitting the US economy. Whose idea was just in time inventory stocking anyway? Who let financialization drive everything and drive out common sense.

Toyota to temporarily halt U.S. output: reports

April 4, 2011, 8:07 p.m. EDT

TOKYO (MarketWatch) -- Toyota Motor Corp. will temporarily shut down all of its North American factories due to shortages of parts from Japan, according to published reports late Monday.

Spokesman Mike Goss said the shutdowns are likely to take place later this month, affecting about 25,000 workers, but no layoffs are expected, the Associated Press reported. Goss said the length of the shutdowns would depend on how fast parts factories damaged by northeastern Japan's March 11 earthquake and tsunami can return to operation.


In other US news, it’s politics as usual in Washington, as the great ship of state heads full steam for the rocks. But no one on board expects to hit the rocks. Complacency rules, and Captain Geithner and team Boehner are expected to swerve away at the last moment. Admiral Obama and his gang are all down in the war room trying to figure out what to do in Iraq, Afghanistan, Pakistan, Yemen, Egypt, and Libya, where after a two week bombing campaign, the US appears to have declared victory and turned it all over to France. President’s Truman and Eisenhower must be spinning in their graves. Stay long precious metals. Egypt’s once western favoured front runner for the vacant Presidency, El Baredi, is now running on a platform of threatening war if Israel attacks Gaza. You couldn’t make this sort of thing up.

"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

Geithner Sees ‘Severe Hardships’ If Debt Limit Isn’t Raised

By Rebecca Christie and Vincent Del Giudice - Apr 5, 2011

Treasury Secretary Timothy F. Geithner told lawmakers that a failure to raise the debt limit would bring “severe hardship” for Americans as the government is forced to suspend services such as Social Security payments.

Geithner, in a letter to members of Congress, said the U.S. will reach the $14.29 trillion limit on its ability to borrow no later than May 16 if Congress doesn’t act. Republican lawmakers, including Senator Marco Rubio of Florida, have been resisting a debt-limit increase while calling for extensive budget cuts.

“The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations,” Geithner said yesterday in a letter addressed to Senate Majority Leader Harry Reid.

Geithner’s warning came as lawmakers debated budget legislation needed to avert a government shutdown on April 8, when existing spending authority expires. While the Treasury can continue to sell debt during a shutdown caused by lack of spending authority, it has no such leeway if it runs out of borrowing room.

The debt-limit fight will be shaped by how voters and markets react to the debate over the extension of spending authority, said Stanley Collender, managing director of Qorvis Communications and a former congressional budget analyst.

---- “The government usually has some wiggle room here as a shutdown will likely result first in a temporary suspension of non-essential government services,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

By contrast, the government will have little leeway if the debt ceiling isn’t raised by May 16. In that case, the Treasury will turn to a toolkit of emergency measures that can provide as many as eight weeks of additional borrowing room, Geithner said. That extra time would end about July 8, the Treasury chief said.


The paper standard is self-destructive."

Hans F. Sennholz

At the Comex silver depositories Monday, final figures were: Registered 41.64 Moz, Eligible 63.67 Moz, Total 105.31 Moz.


Crooks and Scoundrels Corner.

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

Today the biggest crook of all, the US Federal Reserve. In its effort to maintain fiat dollar hegemony, once the Great Nixonian Error of severing the gold-dollar link in August 1971 occurred, the Fed allowed a financialised economy to predominate over all other sectors of the US economy, and has delivered serial bubbles ever since 1987 when that financialised gambling economy disintegrated in a stock market crash that threatened to take out the too big to fail crony friends of the Fed. In its misguided effort to prop up casino capitalism, the Fed has traduced all sectors of the US economy and public, in favour of an elitist narrow group of financial gamblers. Now we stand one “next Lehman” away from financial disaster, and there is not a thing that the Bernanke Fed can do about it. The next Lehman can come from China, Europe, the Middle East petro countries, Russia or even Wall Street. Extend and pretend, and deliberate false accounting are now routine in America. If quantitative easing ever stops, whether front door or back door, the US economy goes right back to 2008. Stay long precious metals. Officially according to Big Ben, QE will end in June and interest rates will be increased if inflation starts having more than a “temporary” effect. Watch what he does not what he says. Doing either brings on the crash QE was started to prevent.

Bernanke Says Fed Must Monitor Inflation ‘Extremely Closely’

By Scott Lanman and Steve Matthews - Apr 5, 2011 5:00

Federal Reserve Chairman Ben S. Bernanke said policy makers must watch inflation “extremely closely” for evidence that rising commodity costs are having more than a temporary impact on consumer prices.

“So long as inflation expectations remain stable and well anchored” and the rise in commodity prices slows, as he’s forecasting, then “the increase in inflation will be transitory,” Bernanke said yesterday in response to audience questions after a speech in Stone Mountain, Georgia.

“We have to monitor inflation and inflation expectations extremely closely because if my assumptions prove not to be correct, then we would certainly have to respond to that and ensure that we maintain price stability,” he said.

---- Responding to another question yesterday about housing, Bernanke said that the Fed expects a “very high rate” of foreclosures this year, which harms home prices and construction and creates a drag on the recovery, which he said is “not as strong as we would like it to be.”

----The FOMC, led by Bernanke, said after its last meeting that the economy is on a “firmer footing” and affirmed plans to buy $600 billion of Treasuries through June. Bernanke hasn’t said what he favors as the next move for monetary policy after that.


"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."

Leonard Read

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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