Thursday, 14 April 2011

Wall Street Goes For Main Street.

Baltic Dry Index. 1324 -18

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

"The secret of life is honesty and fair dealing. If you can fake that, you've got it made."

Groucho Marx

Today I must travel to early meetings, so this morning’s update reflects my haste. Today’s focus is on our unraveling western centric world. The dollar reserve standard world of 1945 – 2005 is now in terminal decline. But as is all too apparent in our rapidly changing world, there is nothing credible to replace it. The euro in its present form looks doomed. No one would trust a Rouble standard or a Yuan standard. A Yen standard is out of the question. An IMF standard? It would effectively be a dollar standard by another name with a different set of meddling bureaucrats ever ready to mess it all up. Stay long precious metals. At some point ahead, even the doziest central bankster will realize that at the core of the global settlement system we must return to gold, or just possibly a gold and silver bi-metalic system.

Up first, the strong euro sinks the Euro’s PIIGS. How long before the Irish, Greeks and Ports, wise up and leave the Germanic euro?

APRIL 14, 2011

Strong Currency Threatens Ireland, Portugal

As currency hits 15-month high against the dollar, Ireland, Portugal are seen most vulnerable to a hit to exports

FRANKFURT—Europe's struggling periphery is bracing for another blow to its already grim economic growth prospects, this time from the soaring euro, which touched a 15-month high against the dollar on Wednesday.

The euro's rise, which makes products from the single-currency zone more expensive in global markets, will affect exporters throughout the 17-member currency bloc—particularly with global trade set to slow dramatically this year.

The euro is almost 10% higher against the U.S. dollar since the start of the year, and 4% higher against the British pound. The euro briefly hit $1.4521 Wednesday before receding. On Tuesday it had breached the $1.45 mark for the first time since January 2010.

Exporters can usually withstand a higher exchange rate when trade volumes are rising, as was the case last year when global trade boomed, led by fast-growing emerging markets such as China, India and Brazil.

But global trade is expected to grow 7.4% this year, well below the 12.4% pace in 2010, the International Monetary Fund said this week, removing a key source of demand for the euro zone, which is struggling to generate growth within its own borders.

Seen as among the most vulnerable to the rising euro are Ireland, which has heavy exposure to trade outside the euro zone, and Portugal, which exports low-value, labor-intensive products such as textiles.

That could widen an already large gap between prosperous northern countries such as Germany and the weaker periphery in Southern Europe and Ireland, which already face a crushing mix of high unemployment, collapsed debt bubbles and growth-sapping fiscal austerity.

----According to Mr. Peruzzo, if the euro remains near its current level, it could slice 2.3% from Irish gross domestic product over the next year and 1.2% from Portuguese economic output.

Spain would also take a big hit, though less than Portugal and Ireland, according to Mr. Peruzzo.


Elsewhere they have noticed the impending failure of the dollar too. While Washington fiddles the US currency burns. With the Fed promising to end Quantitative Easing no later than the end of June, a debacle in US Treasuries looms if they do. If the Fed is serious about ending QE, quite quickly the very event it was implemented to prevent, occurs. Once on QE is it ever possible to stop?

"God, no, we don't club baby seals. We club babies."

Goldmanite, quoted in The Times of London. November 8 2009.

April 11, 2011, 7:08 a.m. EDT

U.S. Treasuries 'Ponzi scheme': ex-PBOC Official

HONG KONG (MarketWatch) -- A former adviser to China's central bank said on Monday that China should have retreated from the U.S. government-bond market and instead allowed the yuan to appreciate more freely, warning that U.S. sovereign debt was akin to a giant Ponzi scheme, according to a newswire report that cited an editorial on Caixin Media Group's website.

Yu Yongding, a former member of the People's Bank of China monetary-policy committee and now a member of a state-run policy group, said allowing appreciation of the yuan against the U.S. dollar under a free-floating currency regime would have reduced China's need to acquire U.S. Treasuries. He likened the U.S. Treasury market to a "giant Ponzi scheme," arguing that Federal Reserve buying of Treasuries has artificially kept bond prices high, but that they would eventually fall to levels which reflected fundamentals of the U.S. economy.

In other news, it looks like they organized a summit and didn’t invite the G-1 and the six dwarfs. A certain sign of the demise of the western centric model. Not quite dead yet but ailing fast. Stay long precious metals. At some point this decade we will witness a real run into precious metals.

“Poverty is not socialism. To be rich is glorious.”

Deng Qiaopeng

Medvedev in China for BRIC summit

09:31 13/04/2011

Russia's president, Dmitry Medvedev, arrived in China on Wednesday for a four-day visit that will see him attend a BRIC summit and push for Russia's economic integration into the Asia Pacific region.

Ahead of Wednesday's BRIC summit, Medvedev will meet separately with the leaders of the other member nations - China, Brazil, India and South Africa, which recently joined the organization.

Trade ties and closer cooperation in energy, space and high technology are expected to be the main topics for discussion in the bilateral talks.

The summit itself will focus on the situation in the Middle East and North Africa, as well as the consequences for the future of nuclear power generation after the disaster at Japan's Fukushima Daiichi nuclear plant.

Medvedev will then attend the Boao Forum for Asia (BFA) Annual Conference on April 14-16 in Boao, Hainan.

Medvedev's participation is "designed to expand the economic cooperation agenda for the BRIC partners," and "will expedite Russia's economic integration into the integration processes unfolding in the Asia Pacific region," presidential aide Sergei Prikhodko said on Monday.

Other heads of state and government due to attend the BFA conference include Chinese President Hu Jintao, Brazilian President Dilma Rousseff, South African President Jacob Zuma, South Korean Prime Minister Kim Hwang-sik, Spanish Prime Minister Jose Luis Rodriguez Zapatero, and Ukrainian Prime Minister Mykola Azarov.

BRICS Take Aim at Dollar.
The five BRICS nations took another step towards cementing their global influence on Thursday, calling for a broad-based international reserve currency system "providing stability and certainty".

In a statement released at a summit on the southern island of Hainan, the leaders of Brazil, Russia, India, China and South Africa said the recent financial crisis had exposed the inadequacies and deficiencies of the current monetary order, which has the dollar as its linchpin.
"The era demands that the BRICS countries strengthen dialogue and cooperation," Chinese President Hu Jintao said.

The BRICS are worried about the long-term fate of the dollar because of America's large trade and budget deficits. They also begrudge In a statement released at a summit on the southern island of Hainan, the leaders of Brazil, Russia, India, China and South Africa said the recent financial crisis had exposed the inadequacies and deficiencies of the current monetary order, which has the dollar as its linchpin.

In another dig at the dollar, the development banks of the five BRICS nations agreed in principle to establish mutual credit lines denominated in their local the privileges that come with being the leading reserve currency - hence the call for a revamped system that is more stable.

Very few things happen at the right time and the rest don't happen at all. The conscientious historian will correct these defects.


At the Comex silver depositories Wednesday, final figures were: Registered 41.03 Moz, Eligible 62.11 Moz, Total 103.14 Moz.


Crooks and Scoundrels Corner.

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

Today, the Wall Street scamsters again. When Wall Street calls, hang up.

"I'm doing God's Work."

Lloyd Blankfein. CEO Goldman Sachs. November 8 2009.

April 13, 2011, 10:00 p.m. EDT

Senate probe alleges Goldman mortgage deception

Investigation panel head calls Goldman Sachs tactics ‘disgraceful’

WASHINGTON (MarketWatch) — A Senate subcommittee has accused Goldman Sachs of selling poor quality mortgage securities it bet against and is pushing the Justice Department to investigate Goldman CEO Lloyd Blankfein’s testimony before Congress.

The explosive allegations — which are related but expand on the case Goldman /quotes/comstock/13*!gs/quotes/nls/gs (GS 158.52, -1.65, -1.03%) has already paid $550 million to the Securities and Exchange Commission to settle — are contained in a 635-page, bipartisan congressional report revealing new details about Wall Street’s role in the financial crisis released late Wednesday.

The two-year examination by the Senate Permanent Subcommittee on Investigations makes similar allegations against Deutsche Bank /quotes/comstock/13*!db/quotes/nls/db (DB 61.05, -0.33, -0.54%) and found that Washington Mutual knowingly underwrote mortgages of questionable value despite warnings from their chief credit officer.

But the Goldman accusations are likely to provoke the biggest uproar, as the bank is again accused of assembling and aggressively marketing billions of dollars in poor quality mortgage securities called collateralized debt obligations that it bet against and purportedly deceived its investor clients.

The subcommittee released new documents showing how Goldman recommended four CDOs, Hudson, Anderson, Timberwolf, and Abacus, to its clients without “fully disclosing key information about those products,” or Goldman’s own views of the securities.

“Their incentives were not aligned. Their investment in the long side, risk side, the portion of the equity, amounted to $6 million, they were secretly short $2 billion in Hudson. In other words their opposite position was 300 times the size of their aligning position,” said the panel’s chairman, Sen. Carl Levin, Democrat of Michigan, at a press conference.


Deutsche Bank Sold ‘Pigs’ as Market Buckled, Lawmakers Say

By Bob Ivry, Jody Shenn and Michael J. Moore - Apr 14, 2011 1:42 AM GMT+0100

Deutsche Bank AG (DBK), whose bets against subprime mortgages helped it weather the financial crisis, pressed to sell a $1.1 billion collateralized debt obligation to clients in 2007 as the co-head of its CDO team foresaw a market slump, a U.S. Senate panel found.

“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” Michael Lamont, the group’s co-head, said in a Feb. 8, 2007, e-mail about Deutsche Bank’s Gemstone CDO VII Ltd., according to a report released yesterday by the Permanent Subcommittee on Investigations. The Frankfurt-based firm sold $700 million of the instruments, which lost most of their value within 17 months.

The bi-partisan panel, led by Michigan Democrat Carl Levin, placed Germany’s biggest bank in a spotlight alongside Goldman Sachs Group Inc. (GS), saying that the firms’ creation and sales of mortgage-backed investments “illustrate a variety of troubling and sometimes abusive practices.” The “case study” also focuses on Greg Lippmann, Deutsche Bank’s then-top CDO trader, who led its bets against subprime home loans and described some Gemstone VII collateral as “pigs” and “crap.”

“The bank sold poor quality assets from its own inventory to the CDO,” according to the report. Then “the bank aggressively marketed the CDO securities to clients despite the negative views of its most senior CDO trader, falling values, and the deteriorating market.”


“Overheard at Goldman Sachs”:
“We assume that you know what you’re doing,
In this ill-advised trade you’re pursuing,
But the opposite bet
That we place on your debt
May eventually hasten your ruin.”

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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