Wednesday, 6 April 2011

The Truth About Currency Unions.

Baltic Dry Index. 1462 -36

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

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

Thomas Jefferson

We open with terrible news (again) from Japan. For a nation that eats so much fish, nuclear polluted fish are now showing up. Worse it now looks like there might be nowhere to take the thousands of tons of highly radioactive water. If this is state of the art Japanese damage control, what happens in India or China when something goes wrong?

APRIL 6, 2011

Tiny Fish Spur Widening Worry

Japan Discovers High Radiation Levels in One Species, Stoking Environmental and Safety Concerns

Japanese authorities said Tuesday they had discovered for the first time fish swimming off the country's Pacific coast carrying high levels of radioactive materials. The finding, the latest blow from the nuclear crisis, is stoking concerns about environmental damage to local marine life, the safety of the nation's food supply, and the viability of Japan's iconic seafood industry, which was already struggling following the tsunami.

The two separate samples of tiny fish were caught before Tokyo Electric Power Co., the operator of the crippled Fukushima Daiichi reactors, began the process Monday night of dumping 11,500 tons of contaminated water into the sea, raising fears that the problem could spread significantly in coming days. Tepco has said that, before the authorized unloading of water, there was an uncontrolled leak of an uncertain quantity of highly radioactive water from the reactors into the sea.

Efforts to end the release of more highly radioactive water at the Fukushima Daiichi plant finally met with some success Tuesday, Tepco said, as the injection of what it called "liquid glass" gel around a damaged pipe managed to reduce the toxic flow by half. Workers poured 3,000 liters, or 780 gallons, of gel-like sodium silicate onto the rocks supporting the pipe. Authorities said the substance would continue to harden over time and could continue to slow the flow of water.

Workers have tried a variety of methods to reduce the flow since it was discovered Saturday. The water is thought to be from the highly damaged No. 2 reactor. A water sample taken just outside the water intake for the No. 2 unit showed the level of radioactive iodine-131 at 7.5 million times the allowable limit, the most dangerous level of radiation so far detected.

-----One sample of konago caught Friday contained twice the permissible level of radioactive iodine-131, which has a half-life of eight days and which can accumulate in the thyroid in humans, possibly raising the risk of thyroid cancer. The other konago sample, caught Monday, had just over the permissible limit for cesium, an element with an uncertain impact on human health. Three different types of cesium were discovered, one of which has a half-life of 30 years.


Fukushima’s fallout looks like claiming another casualty. Siemens must think nuclear is dead in Europe for another 30 years.

Siemens Said to Consider a Retreat from Nuclear Power


Siemens, the German engineering giant, may have no room in its portfolio for nuclear projects following the Fukushima disaster, according to media reports. It would mean a loss of revenue -- and a serious reconsideration of what "sustainable energy" means.

The German engineering firm Siemens may reconsider its involvement in nuclear power, according to a report on Tuesday by the Süddeutsche Zeitung.

Just two years ago the Munich-based conglomerate announced a deal with the Russian firm Rosatom to form a new venture to build up to 400 nuclear plants by 2030. Siemens planned to invest heavily in all forms of energy, from coal to renewables, but the partnership with Rosatom would help "enlarge our footprint in nuclear business," CEO Peter Löscher said at the time, because nuclear was "an essential part of a sustainable energy mix."

But the Fukushima disaster in Japan seems to have changed the corporate mood. Last week the Süddeutsche Zeitung reported plans already underway by Siemens to pursue business in a fourth major sector, called "Green City" -- after industry, energy, and health care -- to revamp its image. "Green City" would be a category for environmentally-minded projects now ranked under energy and industry, according to the paper.

The question within Siemens now is evidently how to reconcile its nuclear interests with the desire to profile itself as "green." Since Fukushima, all possibilities are on the table, according to the Süddeutsche Zeitung -- including a complete divestment from nuclear power.


In other news, the steady flight to precious metals continued yesterday, fuelled by fears that politics as usual in Washington might actually shut down parts of the US government next week, plus a downgrade of Portugal’s debt that virtually guarantees that Portugal will soon need yet another EU bailout. All currency unions end in failure, the Euro will be no different. Stay long precious metals. We don’t know when the Euro flies apart in recrimination, but fly apart it will.

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster

April 5, 2011, 2:52 p.m. EDT

Gold settles at record, pushes past $1,455

SAN FRANCISCO (MarketWatch) — Gold futures rose to a record high Tuesday, shaking off early weakness to find firmer footing in fears of a potential U.S. government shutdown, conflict in the Middle East and North Africa, and Europe’s sovereign debt crisis.

Gold for June delivery rose $19.50, or 1.4%, to $1,452.50 an ounce on the Comex division of the New York Mercantile Exchange.

---In addition to all the overseas reasons to seek safety in gold, investors also flocked to the metal on fears that the U.S. government may run out of money by Friday if parties don’t reach an agreement about the federal budget, said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.

----Moody’s Investors Service pegging Portugal’s bailout as “inevitable” fueled the rally in both gold and silver, said Jeffrey Clark, an analyst with Casey Research.

----Moody’s downgraded Portugal on concerns the country will have difficulties reaching debt-reducing goals. Portugal is widely expected to seek a bailout, the third after the European Union rescued Greece and Ireland.

Moody's cuts Portuguese rating on debt concerns

Moody's has cut its rating on Portuguese sovereign debt by a notch – warning the country's next government will need to seek support from the European Union as a matter of urgency.

By Jamie Dunkley 6:13PM BST 05 Apr 2011

The ratings agency cut Portugal's long-term rating to Baa1 from A3 - two notches higher than rival Standard & Poor's, but a notch lower that Fitch. It warned the debt was still under negative review, with further downgrades dependent on the country's ability to secure medium-term funding.

In a statement, Moody's added its decision was "driven primarily by increased political, budgetary and economic uncertainty, which increase the risk that the government will be unable to achieve [its] ambitious deficit reduction targets" in the period 2011-2014.

Below, The Economist gets it wrong. Not “one in seven” but seven in seven, only when is in doubt.

'One in seven' chance that nations will abandon euro

The risk is roughly one in seven that Europe's ongoing debt crisis will push member nations to abandon the shared currency, raising the spectre of the "effective end of the euro area," the Economist Intelligence Unit has warned

By Emma Rowley 7:04PM BST 04 Apr 2011

Attempts to restore investors' confidence in debt-laden nations' ability to honour their commitments could see the weaker eurozone members grow ever wearier of the demands placed on them, according to a new report from the research body.

Meanwhile, those countries whose finances are in better shape could lose patience with propping up other member nations, in this worse case or "ultimate risk" scenario.

The pressure on politicians from voters at home to leave the shared currency could then become "irresistible", resulting in either stragglers like Portugal or Ireland or a robust economy such as Germany deciding to leave, before other members follow suit.

"This scenario posits that sooner or later, the cement that has held European countries together for decades cracks and the progression towards ever-closer union comes to a spectacular halt," said researchers, who gave it a likelihood of 15pc.

We end for today with the Qataris sovereign wealth fund, and a timely investment in US real estate. Was the tipping point recent events in Bahrain? Whatever the reason, a ticket to Qatar is now the hottest ticket for any developer in America with a project of more than $500 million.

Qataris $700m foray into biggest 'downtown development' in America

The Qatari government has made its first foray into the US property market by financing the $700m (£430m) construction of CityCentreDC in Washington.

By Louise Armitstead, Chief Business Correspondent 7:39PM BST 05 Apr 2011

Qatari Diar Real Estate, the property arm that has so far focused on investments in London, has emerged as the backer of the 10-acre project which is said to be the biggest "downtown development" in America at the moment.

The Qataris are backing Hines, the US developer, and Archstone, the residential investor and operator, which will run the mixed-use project.

According to Fadi Moussalli, a regional director of Jones Lang Lasalle, the Qataris are in talks over a string of deals in America. He told the Dubai-based paper The National that Qatar's sovereign wealth fund was "in the process of looking to gain more exposure to US real estate".

He added: "They are relatively overexposed to the UK. It doesn't mean they won't do more in the UK, but they need to balance the portfolio."

Money from the gas-rich state has helped fund some of the London's best known developments. Qatari Diar is currently financing the construction of the Shard, set to be Europe's tallest building when it is finished.

"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

At the Comex silver depositories Tuesday, final figures were: Registered 41.47 Moz, Eligible 63.68 Moz, Total 105.15 Moz.


Crooks and Scoundrels Corner.

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

Today the failings at TEPCO. If it’s this bad in Japan, does anyone seriously think it’s better in China’s nuclear power industry? India’s? Unchanged, Asia probably has several Fukushima’s to come in the decades ahead.

TEPCO Worker on Control Failures and the Culture of Silence


A Tokyo Electrical Power Company worker talks about the lack of controls on his company's nuclear power plants, its corporate culture of silence and TEPCO's reaction to the catastrophe.

A Tokyo Electrical Power Company (TEPCO) worker has spoken out over the firm's power plant control failures and culture of silence. This text is based on a phone interview conducted in Japanese. Because he distrusts the Japanese media, the TEPCO employee had spoken to a blogger, who then passed the story on to SPIEGEL. The magazine knows which department the employee works in and has verified his identity.

----The media says that TEPCO had become entrenched on nuclear power. But that's not true. Initially the state was the driving force behind the introduction and expansion of nuclear power. When the power plants were built, many of the safety regulations were not clear enough. And the state, set on the development of nuclear power, laid them out in favor of the nuclear industry.

I know that new geo-scientific knowledge on earthquakes and tsunamis were ignored. In 2009, a research institute warned of the consequences of a disaster of equal magnitude to what has happened now. But the officials of the nuclear supervisory authority, NISA, didn't take it seriously.

In any case, controls in Japan don't work. NISA falls under the control of the Ministry of Economy, Trade and Industry, which also seeks to promote nuclear power. Isn't it strange that the same authority both supervises and promotes nuclear plants?

Moreover, the nuclear scientists from industry and NISA know each other all too well. The circle of nuclear scientists is very small, and many have studied together. I have witnessed this in the workplace myself.

Tepco's 'Atomic Village'

The nuclear department at TEPCO is already a very special group, forming a closed world. Some call it the "atomic village" -- a separate company within a company. On the practical level, there is almost no exchange between the "atomic village" and other TEPCO departments.

This closed village has until now been allowed to hide data and test reports from nuclear power plants; to falsify and invent. For that reason, the president and the vice director resigned in 2002. The new head of TEPCO tried to open up the "atomic village" through transfers and restructuring, but everything is basically just the same.

The disaster in Fukushima must lead to TEPCO being cleaned up. Otherwise the company cannot survive.

Throughout the company, the mood is tense and the managers are very nervous. Their meetings used to take place once a month. Now they meet together every morning, even in the branch offices.

Every day my managing committee publishes a message on the company intranet which is meant to cheer us up.

Employees from across the company are now being sent to Fukushima, even if they do not belong to the nuclear division. They are assistants who are trying to reconnect power to the plant. Many are working in radioactive environments for the first time, with protective clothing and a breathing mask. Often there's something mentioned about them on the intranet.

Until recently, I didn't know anyone personally who had to go there, it was always acquaintances of friends. But this week, a friend of mine was sent there. He told me that he had not volunteered, that it was an order. He has no idea what he'll be doing there.,1518,755270,00.html#ref=nlint

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

Michael Belkin

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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