Baltic Dry Index. 1292 +23
LIR Gold Target by 2019: $30,000. Revised due to QE.
"The paper standard is self-destructive."
Hans F. Sennholz
Yesterday, Portugal, who in the best EU tradition denied that it needed a bailout right up until the day that it did, reached a bailout agreement with the EU and the IMF. Another 78 billion euro or so is about to be shifted from the hard working, tax paying Germans and Finns, and poured into the sands of another the tax avoiding, work shy, party loving member of Club Med. It ought to be enough to tide them over to a default in 2013.
I can resist everything except temptation.
Oscar Wilde.
Portugal reaches bail-out agreement
José Sócrates, Portugal's caretaker prime minister, said on Tuesday night that he has reached agreement on a bail-out from the EU and the International Monetary Fund.
By James Hall 12:01AM BST 04 May 2011
No figure was disclosed regarding the value of the loan. However, it is thought to be valued at around €78bn (£70bn).
Mr Sócrates said in a televised address that the three-year loan was a "good agreement". He added that Portugal would be given more time to reach its budget deficit targets than had previously been expected.
Last month - and after months of resisting having to ask for a bail-out - Mr Sócrates asked for financial help.
At the time he said: "I have always said that asking for aid would be the final way to go, but we have reached the moment."
Portugal became the third country to request emergency money from the EU, following the bail-outs of Greece and Ireland.
http://www.telegraph.co.uk/finance/financialcrisis/8491455/Portugal-reaches-bail-out-agreement.html
In next door Club Med member Spain, who also officially doesn’t need a bailout under any circumstances, and certainly not this year, it’s time to peddle Spain’s excess property bubble to the unsuspecting dupes of cold northern Europe. This time round, lucky Russians are to be included in the pitch. Below, Bloomberg points out why this might something of a very hard sell. Beware of Spanish socialists suddenly peddling home ownership in Spain.
A little sincerity is a dangerous thing, and a great deal of it is absolutely fatal.
Oscar Wilde.
Spain’s Illegal Homes Overshadow Minister’s U.K. Sales Pitch
By Sharon Smyth - May 3, 2011 11:00 PM GMT+0100
Jose Blanco, Spain’s development minster, will try to persuade U.K. investors today to purchase unsold vacation homes in a country where more than 50,000 home buyers have lost the legal rights to their properties.
Blanco, 49, plans to promote the “strength” of Spain’s economy, the “transparency” of its housing market, and the “soundness” of its property legislation, according to an April 14 statement from the Ministry of Transport and Development. He will then deliver the same message during presentations in France, Germany, Switzerland, the Netherlands and Russia.
The campaign follows renewed calls from European Parliament members including Marta Andreasen, Roger Helmer and Michael Cashman to freeze some of the funds the European Union gives Spain until it resolves legal shortcomings that have stripped once-legal buyers of ownership rights. A non-binding 2009 report by the parliament’s petitions committee criticized the country for applying restrictions on coastal property retroactively and showing “judicial laxity” toward corruption and speculation.
“It’s inconceivable that anyone would want to invest in property in a country that has shown itself to be lawless when it comes to property rights,” Andreasen, a member of the U.K. Independence Party, said in a telephone interview. “Andalusia has 300,000 illegal homes alone. If we extrapolate that to the rest of Spain, a million homes is a conservative number.”
----Marisa del Valle, a spokeswoman for the public prosecutor responsible for cases involving town planning and the environment, said there’s no way of knowing how many homes have been built illegally in Spain. Eva Santiago, a spokeswoman for the transport and development ministry, said her department doesn’t have an estimate.
About 50,000 owners of beachside properties have lost rights to their homes after Spain’s coastal law was amended and applied retroactively, according to PNALC, a group representing owners affected by the coastal law. As many as 500,000 could eventually be affected by the law, the organization said.
More.
Just last month, UK TV was showing pictures of some hapless Brits home being demolished as friends and family struggled to salvage the furniture. Jose Blanco better have a very good sales pitch. Even if the homes he’s peddling are legit, when Spain files for a bailout austerity and higher interest rates are in store for potential buyers, better prices for buyers likely lie ahead.
Staying with Europe and bailouts, Dutch owned, Swedish car maker Saab, just got a bailout of sorts from 3 trillion dollar rich China.
Saab gets €150m lifeline from China's Hawtai Motor Group
Swedish car maker Saab appears to have secured a cash injection after Hawtai Motor Group, a Chinese company, agreed to invest €150m (£135m) to rescue the business.
By Graham Ruddick 8:30PM BST 03 May 2011
The investment means Sweden's two most famous automotive brands are now backed by China after Geely bought Volvo from Ford last year.
An ailing Saab was acquired from General Motors for $400m (£243m) by Dutch car maker Spyker, but its turnaround plan has been hindered by disappointing sales. This sparked a liquidity crisis that led to Saab halting production on April 6 as unpaid suppliers stopped deliveries.
Victor Muller, chief executive of Spyker, said the deal with Hawtai secured a "medium term" funding solution for the company. Under the deal, Hawtai will invest €120m for a 29.9pc stake in Spyker and provide a €30m convertible loan. The partnership also involves the sharing of technology and Hawtai building Saab cars in China.
Mr Muller said: "The partnership with Hawtai allows Saab Automobile on the one hand to continue executing its business plan since we secured the required mid-term financing subject to meeting certain conditions, whilst on the other hand it allows Saab Automobile to enter the Chinese car market and establish a technology partnership with a strong Chinese manufacturer."
More.
Next, the American pot calls the Chinese kettle black. Remind me again whose bank went bust in 2008 and nearly brought down the entire global financial system. Remind me again whose banks aren’t marking securities to market and are operating on extend and pretend. Remind me again whose banks aren’t building up shareholder capital but are still looting the banks via obscene bonuses. Remind me again whose banking system is still largely unreformed, and which still represents a threat to the global financial system. Well alright, that describes Europe’s too, but it was American banks and ratings agencies that stuffed them with phony “triple-A” securities that weren’t. My guess is that no one will be listening in China, and that tax challenged Timmy, is very likely to get a lecture back on America’s weak dollar devaluation policy, and a need to get its house in order and to balance its budget before we totally destroy the fiat currencies later this decade.
Of course Mr. Geithner was speaking in Washington for an American audience, by next week when he gets to China he may something entirely different when he meets with America’s largest creditor.
Consistency is the last refuge of the unimaginative.
Oscar Wilde.
May 3, 2011, 5:09 p.m. EDT
Geithner: U.S. to press China on bank reform
WASHINGTON (MarketWatch) -- Treasury Secretary Timothy Geithner said Tuesday that the U.S. is going to begin pressing China to move more quickly to reform its financial sector. In comments before the U.S.-China Business Council, Geithner called bank reform "the next frontier" in China's efforts to become a more balanced economy. Geithner, ahead of strategic dialogue talks next week, said the U.S. would also continue to push China to allow its currency to appreciate more rapidly and that the U.S. also was seeking evidence of China's commitment to protect intellectual property.
http://www.marketwatch.com/story/geithner-us-to-press-china-on-bank-reform-2011-05-03
We end for the day with China threatening to do what Mr. Geithner demands. With official inflation running at 5%, and outside experts suggesting anything up to 14%, China has other things to worry about besides a meddlesome US Treasury Secretary. Food and fuel inflation tend to bring in strikes and riots.
"Were we to be directed from Washington when to sow and when to reap, we should soon want bread."
Thomas Jefferson
China’s ‘Hawkish’ Central Bank May Tighten Even as Economic Growth Cools
By Bloomberg News - May 4, 2011 7:51 AM GMT+0100
China’s central bank said taming inflation is its top priority, signaling that more tightening is possible even after a manufacturing survey showed that growth may be moderating in Asia’s biggest economy.
“Stabilizing prices and managing inflation expectations are critical,” the People’s Bank of China said in a first- quarter monetary policy report published yesterday. Bank reserve requirements have no “absolute ceiling,” the report said, restating Governor Zhou Xiaochuan’s comment on April 16.
The Shanghai Composite Index fell 2.1 percent as of 2:35 p.m. local time, set for the biggest decline in two months, on concern that tightening will cut profits and growth. The central bank may boost lenders’ reserve requirements this month, the China Securities Journal said on its front page today. Separately, the Shanghai Securities News said officials may expand controls on the property market to more cities.
More.
At the Comex silver depositories Tuesday, final figures were: Registered 33.33 Moz, Eligible 68.98 Moz, Total 102.31 Moz.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, was Deutsche Bank a crook or merely a scoundrel? The US authorities don’t really care which, they accuse DB of acting recklessly and fraudulently in stuffing the Federal Housing Administration with duff mortgages. Welcome to the world of 21st century banking, American style. Poor old DB probably thought they had just met the 21st century version of the Manhattan Indians. Not to worry though, if DB hasn’t got a spare billion or two, they can quickly get it and more from their friends in BUBA, the ECB and the FED. Is this version of modern capitalism great or what? Stay long precious metals. Down this road lies national bankruptcies, sovereign defaults, and the failure of fiat currency. In fairness though, DB hasn’t been convicted merely charged.
"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
US sues Deutsche Bank for $1bn over 'reckless' mortgages
The US government is suing Deutsche Bank for more than $1bn (£605m), alleging that Germany's biggest bank lied repeatedly to secure valuable government-backed insurance for mortgages it sold.
By Richard Blackden, US Business Editor 7:27PM BST 03 May 2011
American authorities allege that Deutsche "recklessly" picked mortgages that failed to meet the criteria for a government-sponsored insurance programme and handed over fraudulent data in the process.
The lawsuit, which was filed on Tuesday in a Manhattan court, accuses the bank of choosing mortgages for the Federal Housing Administration's programme "in blatant disregard of whether borrowers could make mortgage payments".
Deutsche acquired MortgageIT, its subsidiary named in the lawsuit, for $429m in January 2007 as US house prices began the decline that is still ongoing.
"While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction, and the government has paid hundreds of millions of dollars of insurance claims," the lawsuit alleges.
US authorities say they have already paid out more than $386m in insurance claims relating to mortgages written by MortgageIT.
The claim is the latest effort by the US government to punish alleged wrongdoing in the housing market in the years leading up to the financial crisis.
In a statement, Deutsche said: "We just received the complaint and are reviewing it. We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair."
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
The monthly Coppock Indicators finished April:
DJIA: +182 Up. NASDAQ: +236 Up. SP500: +185 Up.
The Dow and SP 500 and NASDAQ have all reversed from down to up. 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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