Baltic Dry Index. 1349 +20
LIR Gold Target by 2019: $30,000. Revised due to QE.
O'Leary, O'Reilly, O'Hare and O'Hara.
There's no one as Irish as Barack O'Bama
Move over Spain, make way for Italy. Can even Germany bailout Gadaffi’s sinking Italy? As President Obama starts out on his grand European tour starting today in Ireland, we can only hope that he hasn’t bought too many euro for the week ahead. Club Med increasingly looks finished with the Germanic euro. Staying with the euro and stepping up austerity programs, has already set off economic death spirals in Greece and Ireland, now Spain proposes to join them. I think, the populations of Club Mad and Ireland will force their governments to abandon the insane one-sided, outside dictated, austerity packages merely designed to bailout Europe’s brain dead bankers. Stay long gold and silver. Arab spring revolutions will soon be coming to Europe, it seems. Elsewhere, unfathomably, Canadians are taking the day off in honour of Queen Victoria’s birthday! Plus Icelander’s are seeking more revenge on Europe’s airspace.
'If money isn't loosened up, this sucker could go down.'
President George W. Bush.
Italy Outlook Revised to Negative by S&P; Ratings Affirmed
By Ian Katz - May 21, 2011 12:36 AM GMT+0100
Italy had its credit-rating outlook lowered to negative from stable by Standard & Poor’s, which cited the nation’s slowing economic growth and “diminished” prospects for a reduction of government debt.
S&P affirmed the country’s A+ long-term rating, the fifth highest, and its top-ranked A-1+ short-term rating, the company said in a statement today.
“Italy’s current growth prospects are weak, and the political commitment for productivity-enhancing reforms appears to be faltering,” S&P said. “Potential political gridlock could contribute to fiscal slippage. As a result, we believe Italy’s prospects for reducing its general government debt have diminished.”
The Italian economy expanded 0.1 percent in the first quarter, less than economists forecast, as gains in exports failed to offset weak domestic demand. The euro region’s third- biggest economy won’t return to its pre-recession level for at least another two years, and the $2.3 trillion economy needs to raise productivity, the Organization for Economic Cooperation and Development said this month in a report.
Fitch Ratings today cut Greece’s long-term debt rating to B+, four notches below investment grade, and placed it on rating watch negative. Even a voluntary extension of the country’s bond maturities would be considered “a default event,” the rating company said in a statement. Greek 10-year bond yields surged to a record 16.6 percent.
----In Italy, “diminished growth prospects stem from what we consider to be a lack of political commitment to deregulating the labor market and introducing reforms to boost productivity,” S&P said. “We believe measures to reduce the bottlenecks and rigidities in Italy’s economy are especially important in light of Italy’s limited monetary flexibility.”
The negative outlook implies a one-in-three chance that Italy’s ratings could be lowered within the next 24 months.
More
In the disunited states of Europe, confusion and muddle rule over the issue of a coming Greek default. There will be no Greek default, says Prime Minister Papandreou, or yes there will say 80 percent of the Greeks. My monies on the tax and work shy Greeks, they’ve had centuries of perfecting thwarting dodgy rulers and governments.
Never believe anything in politics until it has been officially denied.
Count Otto von Bismarck.
MAY 21, 2011
France Signals a Shift on Greece
Lagarde Suggests That a Rescheduling of Debt Is an Option if Banks Agree
PARIS—French Finance Minister Christine Lagarde signaled Paris might support a rescheduling of Greek debt, warning that Greece is at risk of default if it doesn't do more to bring its public finances into order.
The comments mark a shift in France's position in a debate that has pitted Germany and other euro-zone governments against the European Central Bank, which opposes any form of restructuring of Greek debt.
French support for proposals to extend the maturities of Greek debt—a so-called soft restructuring—would leave the ECB isolated in its opposition.
and possibly force it to accept a compromise.
"What we certainly don't want is a state bankruptcy, a default, in Europe," Ms. Lagarde said in an interview published Friday in Austria's Der Standard newspaper. "You can use a lot of words—reprofiling, restructuring, re-this, re-that—but what there won't be is a restructuring of Greek debt." At the same time, she said: "We would accept anything that is based on a voluntary accommodation by banks."
"If the banks decided unilaterally after contacting the Greek authorities to offer a lengthening of the repayment time frame, she wouldn't be against it," Ms. Lagarde's spokesman said.
Germany and other euro-area states have warmed to the idea of extending maturities—which is technically considered a default by the credit-ratings agencies—given the size of Greece's debt burden and its bleak economic prospects. France previously sided with the ECB in opposing any form of restructuring, but Ms. Lagarde's comments suggest Paris is softening.
The standoff between the ECB and euro-area governments reflects how intractable the Greek crisis has become. A year after extending Athens a bailout, it has become clear the €110 billion ($157 billion) Greece was promised by its euro-zone neighbors and the International Monetary Fund won't be enough to solve its financial crisis. Europe must now decide whether and how to keep Greece from defaulting.
http://online.wsj.com/article/SB10001424052748704816604576335361278895404.html#articleTabs%3Darticle
Greek Prime Minister rules out any restructuring of debt
A tougher austerity programme with bigger cuts in public sector wages, along with tax increases and the privatisation of state assets is being prepared by the Greek government to meet the terms of its $110bn (£68bn) bail-out.
By Roland Gribben 6:32PM BST 22 May 2011
Prime Minister George Papandreou has ruled out debt restructuring ahead of a Cabinet meeting called for Monday to reach agreement on a more draconian economic package.
He was supported by two leading members of the European Central Bank (ECB) who made it clear there was no prospect of support for a debt restructuring to ease the pain.
But the Papandreou programme risks further civil unrest. A poll published on Sunday showed 80pc of Greeks would refuse to make any further sacrifices to ensure continued EU and IMF support for the bail-out.
More.
This morning, Spain still officially doesn’t need a bailout. But will that still be true by next weekend? Sooner or later a Spanish bailout is coming, but how much more damage will be inflicted before then by a Spanish socialist government deep in denial? Spain’s long suffering voters will be outraged if the government continues on its present policies.
People never lie so much as after a hunt, during a war or before an election.
Count Otto von Bismarck.
MAY 20, 2011
Spain Vote Threatens to Uncover Debt
As Socialists Risk Losing Key Areas, Economists Fear 'Hidden' Bills
MADRID—Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.
Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt" owed to health clinics and other suppliers.
Economists, analysts and anecdotal reports from companies that supply local governments suggest there is widespread, unrecorded debt among once-free-spending local governments. Some companies are complaining that fiscally frail administrations are pressuring them to do business off the books and not immediately bill for goods and services, said Fernando Eguidazu, vice president of the Circulo de Empresarios business lobby group in Madrid.
Such bills could add tens of billions of euros to the official debt figures reported by local and regional governments. If such skeletons come out of the closet in coming weeks, Spain's cost of funding could continue to rise—throwing the country back into the limelight after it has struggled to demonstrate it doesn't need to be bailed out like Greece, Ireland and Portugal.
Spanish socialists suffer heavy election losses
23 May 2011 Last updated at 02:23
Spain's governing Socialist party has suffered heavy losses in local and regional elections.
With 91% of municipal votes counted, the centre-right Popular Party (PP) had almost a 10-percentage point lead, the interior ministry said.
Prime Minister Jose Luis Rodriguez Zapatero conceded defeat but ruled out early general elections.
Voting took place amid mass protests against high unemployment and the government's handling of the economy.
Young demonstrators holding sit-ins in Madrid and other cities said rallies would continue for another week.
Mr Zapatero said three years of economic crisis had taken their toll.
"It destroyed thousands of jobs. It is a crisis that had profound effects on citizens' morale. I know that many Spaniards suffer great hardship and fear for their futures," he said.
"Today, without doubt, they expressed their discontent," he added.
However, he vowed to pursue job-creating reforms until the end of his mandate. At this point, a general election must be held by March of next year.
http://www.bbc.co.uk/news/world-europe-13496038
We end with the revolting Germans. Now even Europe’s paymasters are voting out the bankster bailers. It is ludicrous to keep pretending the EMU isn’t heading to the default and probable exit of some of the members. Without a devaluation, much of Club Med can never recover.
"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."
Henry Hazlitt
Merkel’s Party Slumps to Third in Bremen
By Alan Crawford - May 22, 2011 11:00 PM GMT+0100
German Chancellor Angela Merkel’s party slumped to third place in a state election in Bremen and blamed the result on having to shoulder Europe’s debt crisis, as the main opposition Social Democrats were re-elected.
The Social Democratic Party took 38.3 percent in Bremen, a city-state that includes the car-exporting port of Bremerhaven, to cement their 64-year hold on Germany’s smallest state, ARD television projections showed yesterday. The Greens won 22.8 percent to take second place and continue their coalition with the SPD of the past four years. Merkel’s Christian Democratic Union slid to 20.2 percent, its worst result since 1959.
Merkel’s party has now lost support in all five state elections so far this year even as unemployment falls to a 19- year low and the economy grows a projected 3 percent for a second year. The chancellor has struggled to convince voters of her reversal on support for atomic power following Japan’s Fukushima disaster and the need to keep aiding debt-strapped euro-area countries more than a year after the crisis erupted.
----While the CDU dropped about 5 percentage points from the last election in 2007, Merkel’s Free Democratic Party coalition partner in the federal government slumped to 2.7 percent, below the 5 percent threshold needed to win seats, projections as of 7:55 p.m. showed. That’s the third state in which the party lost all its parliamentary seats this year after elections in Rhineland-Palatinate and Saxony-Anhalt. The Left Party took 5.9 percent in Bremen.
"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
At the Comex silver depositories Friday, final figures were: Registered 32.18 Moz, Eligible 68.73 Moz, Total 100.91 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, the seriously bent Europeans still in deep denial of a coming Club Med default. Below, the WSJ covers the disturbing reality. Unrepayable Greek debt, much of it abetted by the creative derivatives geniuses of Goldman Sachs, busy doing “God’s work” to make Greek debt disappear into off balance sheet fog, is just that, unrepayable. Sooner or later, that same realization will surface on Ireland, Portugal, Spain and Italy.
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
MAY 23, 2011
Waking Up to Greece's Default Position
Have I got a deal for you. You can earn close to 25% on the bonds of a sovereign country that has the support of the entire euro zone. Of course, that country is Greece, again downgraded last week, this time to four notches below investment grade, and the support is not quite rock-solid now that German Chancellor Angela Merkel says she is through playing Lady Bountiful to an unreformed Greek economy, and also wants private investors to feel her taxpayers' pain. And although you will never be at risk of a default, you might be "repositioned," or "restructured" or asked to drop in for a voluntary haircut. There is the risk that you will be paid in drachmas rather than euros, but, hey, no investment is without a bit of risk.
----Last week saw real progress in reaching a solution to the Greek, Portuguese and Irish debt crises. It is now recognized that these countries can never, ever, repay their debts, certainly not on time, and more than likely not in full. A default by any other name is a default. It might doff its name, as Juliet thought Romeo might do, and choose "repositioning," or "soft restructuring," or "voluntarism," but it remains a default. If the renaming permits banks to continue the fiction that Greek paper is worth what is inscribed in their ledgers, so be it: sooner or later reality will catch up with them just as it has with the profligate governments now at the mercy of their euro-zone benefactors.
No need to rehearse the arithmetic that has appeared in this and other columns. It is enough to point out that the bailouts assumed that the recipient governments would be able to return to the financial markets after a period of reliance for cash on the European Central Bank, the International Monetary Fund, and their euro-zone partners. In short, the eurocracy devised a plan for coping with a liquidity crisis when these countries were facing a solvency crisis. Diagnose the disease incorrectly, and the prescribed medicine will make the disease worse by prolonging the period before which a proper diagnosis is developed.
The new diagnosis is closer to reality: These countries are insolvent. Indeed, Greece is unable even to meet the short-term reform goals it agreed as a condition for its bailout. That may be the real reason that the three pillars of support are threatening to withdraw. The ECB has made it clear that it is unalterably—well, unalterably but subject to change, as is the custom in these euro-zone matters—opposed to any form of restructuring, which it sees as a diversion from the hard work of deficit reduction, and even plans to raise interest rates to make life harder for the debtors.
The ECB balance sheet is loaded down with €45 billion ($65.7 billion) of Greek bonds, plus billions more in Greek assets that it has accepted as collateral. The booked value of this paper would drop like a stone if there were any sort of restructuring of Greek debt, which even France now concedes is inevitable. Allow default, says Jürgen Stark, a member of the Bank's executive board, and we will cut off Greek banks' cash flow by refusing to accept their paper as collateral. Worse still, markets will likely assume that Portugal and Ireland will follow in Greece's footsteps. That would put a serious enough dent in the ECB's balance sheet to force the euro-zone countries to recapitalize it—embarrassing for the ECB, and costly for its member countries.
Which brings us to the IMF.
More.
"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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