Baltic Dry Index. 1348 +08
LIR Gold Target by 2019: $30,000. Revised due to QE.
"We are not discussing the exit of Greece from the euro area. This is a stupid idea and an avenue we would never take."
Jean-Claude Juncker. Luxembourg Prime Minister and president of the Euro Group of Finance Ministers.
Has the EU slipped up on Greece? It increasingly looks like it’s curtains for Europe’s PIIGS. There was never much reason other than European political vanity and latent anti-Americanism, to want to put together a European currency union stretching from the Atlantic to the Baltic, from Asia Minor to Lapland. Including in the currency union countries like Greece, Portugal, Italy and Spain, was always going to set the tax and work shy south, against the hard working, tax paying, panzer driving north of Europe. A leopard doesn’t change its spots, and six hundred years of not paying taxes to Turkish overlords, Spanish rulers of southern Italy, and the wastrel nobility of the Iberian peninsula was not about to change just because Germany had reinvented itself as a neighbourly friendly, guilt ridden, cash cow. 66 years on from the end of WW2, and 20 years on from the end of the evil empire of the Soviet Union, the guilt is gone, and the neighbourly friendliness now stops at France and Poland and there seems to be some doubt about Poland. If you want help, sell us the Acropolis and Rhodes, Capri, Majorca, and the Algarve. After all, that’s got to be cheaper than selling the entire population into decades of debt slavery if not forever.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and president of the Euro Group of Finance Ministers. Serial liar.
MAY 10, 2011
Greek Woes Fuel Fresh Fears
S&P Cuts Struggling Nation's Credit Rating, Renewing European Debt Crisis Worries
A cut to Greece's credit rating sparked a selloff in the bonds of highly indebted euro-zone countries, fueling concerns that Europe's debt crisis is coming to the boil once more.
Ratings company Standard & Poor's Corp. cut the Greek government's long-term credit rating to single-B from double-B-minus, thereby ranking Greece as less creditworthy than several developing nations. S&P said the risk is rising that Greece will push its bondholders to accept a delay in the repayment of its bonds.
The downgrade comes as European governments struggle to nurse the currency bloc's weakest economies back to health, and doubts are growing about Greece's ability to stabilize its finances and escape a crushing debt burden. While investors are increasingly shunning Greek debt, other countries that use the euro are facing the prospect of having to finance the stricken nation for years to come, despite mounting political resistance in Germany and other frugal northern European countries to bailouts of other euro-zone members.
Europe's debt crisis has returned full-circle to where it seemed to have peaked almost a year ago, when the euro zone agreed to a €110 billion ($158 billion) bailout of Greece and the creation, together with the International Monetary Fund, of a €750 billion safety net for other struggling euro nations.
Portugal is currently negotiating the third such aid package, following Ireland's bailout agreement last fall. But Greece's deepening woes show that weaning countries off aid, and restoring investors' trust in them, is proving far harder than expected.
The euro zone's southern fringe could remain financially fragile "for decades," leading German economist Hans-Werner Sinn said Monday. But Europe needs the euro, he said, adding: "The difficulties that we have can be overcome."
But some economists said the declining confidence in Greece's ability to regain financial health could usher in a new chapter of the euro-zone debt crisis. "The official line that Greece has a liquidity and not a solvency problem is showing its cracks, putting into question the whole framework of financial support," BNP Paribas analysts said in a research note on Monday.
More.
Europe Considers a New Bailout Package for Athens
05/09/2011
Greece insists that there is no scenario under which it will exit the euro zone. But one German economist thinks such a move might be the lesser of two evils. Europe, meanwhile, may have to come to the country's aid with a second bailout package.
The denial from Greek Prime Minister George Papandreou was prompt and vehement. Reports that Athens was considering a withdrawal from the European common currency zone, he said, "are borderline criminal. No such scenario has been discussed even in our unofficial contacts." He then said that Greece should be left alone "to do its job in peace."
Papandreou was referring to a report in SPIEGEL ONLINE about a meeting held in Luxembourg on Friday night to discuss Greece's ongoing debt crisis. In the immediate wake of the report, several euro-zone governments denied that such a meeting was taking place, but later said that the gathering was one of several informal -- though confidential -- meetings on debt problems within the common currency area.
The story also noted that German government sources told SPIEGEL ONLINE that Papandreou was looking into the possibility of an exit from the euro zone.
Still, the host of Friday's meeting, Luxembourg Prime Minister Jean-Claude Juncker -- who is also president of the Euro Group and drew criticism for initially disputing that the gathering was taking place -- insisted that "we are not discussing the exit of Greece from the euro area. This is a stupid idea and an avenue we would never take."
Not all economists, however, share that opinion. Hans-Werner Sinn, head of Germany's influential Ifo Business Climate Index, said in an interview with the Sunday edition of the Frankfurter Allgemeine Zeitung that "withdrawal from the euro would be the lesser of two evils."
More.
http://www.spiegel.de/international/europe/0,1518,761435,00.html#ref=nlint
“Well, fancy giving money to the Government! Might as well have put it down the drain.”
A.P. Herbert. Misleading Cases.
As for Ireland, all they need do is follow the example of Iceland. They did not put a gun to the head of Europe’s idiotic banksters who lent unrepayable money to Ireland’s banks, who then spent it on an orgy of self dealing and an unwise Irish property bubble of historic proportions. The Irish taxpayers should not be paying for European banksters’ follies. Let the banks go bust, leave the insane monetary union, reissue the Punt, and insure the bank depositors in Punts. Europe’s great wise men will quickly figure out that a new Euro backed by gold is a great part of the answer, with a membership restricted to only those who really qualify. Until then, vast quantities of electronic entries will be poured down the drain with the consequences bourn by Europe’s downwardly mobile middle and lowest classes. With no friends in high office nor at the central bank, unlike the banksters and squids, the BS are reversing Robin Hood.
Elsewhere, China’s back on mercantilist track again. With an undervalued fiat Yuan against the fiat dollar, communist, repressive China has mastered the fiat currency fraud, and is eating everyone else’s lunch. The Great Nixonian Error steamrolls on. By now it doesn’t take a genius to see that this all ends badly, which is why NAFTA member Mexico just bought 90 tonnes of gold for its reserves in the first quarter of 2011. Put into perspective, silver rich Mexico now has 100 tonnes of gold to back up its rich deposits of mineable silver.
"It is the greenback which is unstable, and not the bullion."
Dr. Franz Pick
May 9, 2011, 11:40 p.m. EDT
China’s trade surplus widens sharply
HONG KONG (MarketWatch) –- China’s trade surplus for April widens to $11.4 billion, expanding sharply from $139 million in March and far exceeding analysts’ expectations, as export growth outpaced import growth by a large margin, according to customs’ data released Tuesday.
Exports for the month grew 29.9% from a year earlier, while imports expanded 21.8% year-on-year, according to customs’ bureau data released on its Web site Tuesday.
A Reuters’ survey found median expectations were for a 29.4% surge in exports and a 28% rise in imports, leading to a monthly trade surplus of $3 billion.
A Dow Jones Newswires survey of 13 analysts found median expectations for $1 billion trade surplus in April.
http://www.marketwatch.com/story/chinas-trade-surplus-widens-sharply-2011-05-09
In other news, the Great Greenspan US housing bubble has gone into collapse again. Extend and pretend clearly didn’t work, since the pretend part has gone from any new buyers. America’s insolvent banks, still on pretend balance sheets and smoke and mirror accounting, have all just boosted “profits” by reducing loan loss reserves. Well somehow they had to get real cash to pay out the bankster bonuses. Welcome to the age of Laurel and Hardy central banking.
May 9, 2011, 12:01 a.m. EDT
Housing crash is getting worse: report
Commentary: But all this bearish news makes me bullish
BOSTON (MarketWatch) — If you thought the housing crisis was bad, think again.
It’s worse.
New data just out from Zillow, the real-estate information company, show house prices are falling at their fastest rate since the Lehman collapse.
Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow.
And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high.
Zillow now predicts prices will fall about 8% this year and says it no longer expects the market to bottom before 2012.
“There’s no way we can get to flat, from these depreciation levels, in the last nine months of the year,” says Zillow economist Stan Humphries. “Demand is a lot more anemic than we had previously thought.”
When in 2012 does Zillow see the market bottoming out? Humphries won’t say.
What a foolish boondoggle those tax breaks for home buyers have turned out to be. The government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. All it achieved was a brief suckers’ rally that ended last summer.
More.
http://www.marketwatch.com/story/housing-crash-is-getting-worse-2011-05-09?link=MW_story_popular
Greece's battered bonds suffered a further selloff, and the prices of other indebted euro-zone nations, including Ireland, Portugal, Spain and Italy, also fell.
The recent rise in Spanish bond yields is especially worrying for Europe because the country, whose €1.1 trillion economy is far larger than Greece's, is viewed as the key battlefield in Europe's struggle to stabilize its currency union. The extra yield demanded by investors to hold Spanish 10-year bonds rather than their super-safe German equivalents rose to over 2.2 percentage points, up more than one-tenth of a point since Friday.
WSJ 10 May 2011.
At the Comex silver depositories Monday, final figures were: Registered 32.94 Moz, Eligible 69.15 Moz, Total 102.09 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, the last honest politician in the corrupt states of Europe. While Spain, who still officially doesn’t need a bailout, secretly prepares to get one, Timo Soini, leader of the victorious True Finn Party in EU peripheral Finland, uses the platform of the WSJ to tell it like it used to be. Clearly he has completely missed the fact that in today’s corrupt bankster and great vampire squid world, we operate of fiat currency, mere electronic entries that serve as markers for who’s up and who’s down. “God’s work”, according to Ebenezer Squid. When such systems go bust, the central authority has the ability to merely replace the electronic entries at will, but that creates contradictions and unrest among the lesser serfs, who don’t get such favorable treatment with their debts and personal difficulties. Instead, they get the bill for everyone else’s electronic entry losses. They pay in austerity, poverty and penury, for the casino capitalism released by fiat currency.
Which was why 19th century economists and before, of course, always argued against the imposition of fiat currency. Nothing good comes in the end from a fiat currency, as the wretched people of Ireland and Greece have found out, and the unfortunate serfs of Portugal and Spain are about to. What a shame that President Nixon and his advisors new nothing of money and the downside of fiat currency. Not to worry, on present policies, even bigger busts are coming for Japan, the UK and the USA. Sadly all too likely this decade. Stay long physical gold and silver.
"I'm sick of saying we won't" be requesting help”
Portuguese Prime Minister Jose Socrates.
MAY 9, 2011
Why I Don't Support Europe's Bailouts
Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever more money back to our governments.
Timo Soini.
When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the bailouts of euro-zone member states. Europe is suffering from the economic gangrene of insolvency—both public and private. Unless we amputate that which cannot be saved, we risk poisoning the whole body.
To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them.
At the risk of being accused of populism, we'll begin with the obvious: It is not the little guy who benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going. Meanwhile, a symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever more money back to our governments.
In a true market economy, bad choices get penalized. Instead of accepting losses on unsound investments—which would have led to the probable collapse of some banks—it was decided to transfer the losses to taxpayers via loans, guarantees and opaque constructs such as the European Financial Stability Fund.
The money did not go to help indebted economies. It flowed through the European Central Bank and recipient states to the coffers of big banks and investment funds.
Further contrary to the official wisdom, the recipient states did not want such "help," not this way. The natural option for them was to admit insolvency and let failed private lenders, wherever they were based, eat their losses.
That was not to be. Ireland was forced to take the money. The same happened to Portugal.
Why did the Brussels-Frankfurt extortion racket force these countries to accept the money along with "recovery" plans that would inevitably fail? Because they needed to please the tax-guzzling banks, which might otherwise refuse to turn up at the next Spanish, Belgian, Italian or even French bond auction.
Unfortunately for this financial and political cartel, their plan isn't working. Already under this scheme, Greece, Ireland and Portugal are ruined. They will never be able to save and grow fast enough to pay back the debts with which Brussels has saddled them in the name of saving them.
Setting up the European Stability Mechanism is no solution. It would institutionalize the system of wealth transfers from private citizens to compromised politicians and failed bankers, creating a huge moral hazard and destroying what remains of Europe's competitive banking landscape.
Fortunately, it is not too late to stop the rot. For the banks, we need honest, serious stress tests. Stop the current politically inspired farce. Instead, have parallel assessments done by regulators and independent groups including stakeholders and academics. Trust, but verify.
Insolvent banks and financial institutions must be shut down, purging insolvency from the system. We must restore the market principle of freedom to fail.
If some banks are recapitalized with taxpayer money, taxpayers should get ownership stakes in return, and the entire board should be kicked out. But before any such taxpayer participation can be contemplated, it is essential to first apply big haircuts to bondholders.
More.
http://online.wsj.com/article/SB10001424052748703864204576310851503980120.html
I could see that, if not actually disgruntled, he was far from being gruntled.
P.G. Wodehouse.
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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