Baltic Dry Index. 1274 -17
LIR Gold Target by 2019: $30,000. Revised due to QE.
The money supply? It used to be there was a physical limit, in pieces of paper. Now with computers and numerical exponents, even that is gone. The enormity of the money expansion of late has simply been huge. From 1984 to 2007, the US monetary base grew at 6.6% per year, a shade more than the nominal rate of the economy. Since then, as our economy has stagnated, the monetary base has tripled – a 200% increase in three years.
Forbes. The Core Inflation Fudge. May 16, 2011.
Predictably after weeks of the usual EU denials that Greece would be forced into a sovereign debt default, always now referred to as a restructuring, Luxembourg’s top professional liar, now says that Greece may need to “reprofile” its debts. A “soft restructuring” might now be necessary. Next week we might learn that Greece is after all considering leaving the unfortunate European Monetary Union. One size was never going to fit all, and realistically the fit was always going to fit Germany and accommodate France. The other nations are mere extras in this German financial morality play. Below, the latest in the continuing soap opera of as tortured Greece turns in the wind. Sooner or later, even the dumbest Greek politician will figure out that leaving the monetary union makes sense. Greece is never in a million years going to turn itself into Germany. Let Greece go and be Greece. As Greece, the Greeks were pretty good at it.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and president of the Euro Group of Finance Ministers. Confessed liar. Luxembourger.
Greek debt restructure on the cards to stave off euro crisis
European officials have conceded that Greece may have to restructure its debt as part of a second bail-out package to shore up the Mediterranean nation and stave off a crisis in the euro.
By Philip Aldrick 7:47PM BST 17 May 2011
A "reprofiling" or "soft restructuring" of bonds held by private investors, defined as a voluntary loan "extension", was floated by Jean-Claude Juncker, Luxembourg's prime minister and president of the eurozone finance ministers, after a Brussels meeting.
However, he stressed that Greece would have to implement further painful welfare and labour reforms, alongside more privatisations, before European leaders would contemplate such drastic action.
"Greece will have to implement huge reforms ... to rapidly privatise many public entities... then we'll have to see whether we can't proceed to a soft restructuring," Mr Juncker said. "I am strictly opposed to a large restructuring."
His comments exposed deep divisions in Europe over a second Greek bail-out, on top of the original €110bn package. German Chancellor Angela Merkel indicated on Monday she would oppose any "reprofiling", saying: "It would raise doubts about our credibility if we simply were to change the rules in the middle of the first programme." French finance minister Christine Lagarde added: "Restructuring, reprofiling – off the table."
Greek deputy foreign minister Spyros Kouvelis, though, told Reuters his country is willing to engage in talks on a "soft" restructuring. Irish finance minister Michael Noonan went further and called for rates on the bail-out loans to Ireland, Portugal and Greece to be reduced or risk the programmes' "failure".
More.
"Never believe anything in politics until it has been officially denied."
Otto von Bismarck.
Up next, the wisdom and wit of Scots economics genius Gordon Brown, the man “who saved the world” and who together with Cool Britannia “I’m a straight sorta guy” Tony Blair, made modern Britain into what it is today, the land of bankrupt banks, QE programs, falling real estate, and 4.5% and rising inflation. There is a whole lot more but why beat a dead horse.
Set in Camelot Worcestershire, Arthur and Guinevere have a daughter. At the Blessing of Princess Aurora, Gordon Brown arrives and sets an evil curse on the child, forcing the child into paying off the national debt forever ….
World on course for next crisis, warns Gordon Brown
The global economy is heading towards another meltdown despite the lessons of the last financial crisis, Gordon Brown has warned.
By Emma Rowley 6:51PM BST 16 May 2011
The former prime minister said that unless leaders take more action, the recent credit crunch could prove just the "trailer" to a string of crises.
"In 2008, when we were hours away from ATMs running out of money, small businesses being unable to pay their staffs, and schools and hospitals closing down through lack of cash flow, it felt as if the crisis of the century was upon us," he wrote in US magazine Newsweek.
"But if the world continues on its current path, the historians of the future will say that the great financial collapse of three years ago was simply the trailer for a succession of avoidable crises that eroded popular consent for globalisation itself.
"Those who believe that the world has learned from the mistakes that led to the crash are mistaken."
Mr Brown said the "resolve" to act seen immediately after the crisis has been replaced by indecision and vested interest. He urged politicians at the next G20 summit, which takes place in Cannes in November, to take control of a globalised financial system which is still "perilously" unregulated.
Mr Brown's comments come amid repeated warnings by European policy-makers that the debt crisis surrounding the eurozone's weaker nations could have a worse systemic effect on global markets than the collapse of the investment bank Lehman Brothers in 2008, which precipitated the last crisis.
They fear "with good cause" that if Greece has to restructure its debt - effectively default - it could unravel a chain of trades based on the problematic debt and lay bare the interconnectedness of institutions around the world, said Stephen Lewis, an analyst at Monument Securities.
Next, more on the unloved, unbacked, fiat Euro currency. Will the Euro fall with the spectacular demise of the arrogant socialist head of the IMF? Is the fiat euro fit for purpose? History says all currency unions end in breakup. This latest top down, political attempt to impose a fiat currency union on a largely unwilling European public, will eventually end no different. Only the timing of the ending is uncertain, and how much of European’s wealth will get destroyed in the process.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Is the Downfall of Dominique Strauss-Kahn Also the Downfall of the Euro?
Tuesday May 17, 2011, 12:58 pm EDT
A lot of ink has been spilled on the arrest of Dominique Strauss-Kahn for allegedly attempting to rape a chambermaid at his hotel. What's a little surprising is how much of that ink has been spilled on the financial details of his trip: the $3,000 a night hotel room, the special show-up-and-fly-first class deal he apparently had with Air France. Why does this seem to be the lead story?
I suspect it's because the World Bank and the IMF are the last bastions of the sort of privileges that used to be enjoyed more routinely by the upper middle class.
---- But there's a much more important story: what this means for the European financial crisis. The IMF is playing an important co-ordinating role in resolving the crisis, and Strauss-Kahn's political skills were a big part of that:
Mr Strauss-Kahn was respected by both Angela Merkel (whom he had planned to visit on the weekend when he was arraigned) and by George Papandreou, the Greek prime minister. He supported the view, also held by the European Central Bank, that a eurozone member should not rush into default. The eurozone clearly needed the IMF's technical competences in dealing with its sovereign debt crises - a set of skills largely absent in the European institutions. It also needed the IMF's co-financing. But the IMF's single most important influence in eurozone crisis resolution has been political. In a situation marked by a lack of political leadership, the IMF filled a vacuum.
Having a power-vacuum at the major multi-lateral institution charged with assisting its resolution will make things much more difficult. There's a plausible argument to be made that the untimely death of 1920s fed chief Benjamin Strong left a weakness at the center of the Federal Reserve that considerably frustrated both domestic and international attempts to cope with the monetary collapse of the early 1930s. Could this be a similar incident?
More.
http://finance.yahoo.com/news/Is-Downfall-Dominique-Strauss-atlantic-1405629225.html?x=0
We end for today with the arrogance on display of the European political class. Time to wind up this IMF boondoggle for Europe’s elitist clique of duffers, muddlers, and wealth destroyers. Would you really want to join a club once lead by DSK?
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.
Cary Grant. To Catch A Thief.
Christine Lagarde and Axel Weber front runners for Dominique Strauss-Kahn's IMF role
European leaders have dropped strong hints that they would not tolerate a new head of the International Monetary Fund (IMF) from outside the continent, as the scandal engulfing Dominique Strauss-Kahn sparked speculation about his potential successor.
6:11PM BST 16 May 2011
Germany and Belgium said they would prefer another European as IMF managing director if Mr Strauss-Kahn is replaced after his arrest for alleged sexual assault. German Chancellor Angela Merkel said there are "good reasons" for Europe to keep the post amid the euro debt crisis.
Belgian Finance Minister Didier Reynders echoed her stance, reminding observers of the unspoken rule that an American heads the World Bank while a European is in charge at the IMF.
Christine Lagarde, the French Finance Minister, is considered the front-runner after an accomplished handling of the financial crisis – and would be the first woman in the job. However, she may face objections as four of the IMF's 10 managing directors have been French and her appointment would be the second time the post was held by successive French politicians.
Germany's Axel Weber may also be a strong contender. An arch-hawk, he was considered favourite for President of the European Central Bank until his surprise resignation as President of the Bundesbank in February and is believed to be favoured by Chancellor Merkel.
Gordon Brown wants the $521,000-a-year job, but David Cameron has made it clear he will not put the former Prime Minister forward.
Other contenders are Angel Gurria, the former Mexican finance minister; and Kemal Dervis, a former minister of economic affairs in Turkey. John Lipsky, the IMF's deputy managing director and acting head, announced his intention to retire in August last week.
"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.
At the Comex silver depositories Tuesday, final figures were: Registered 32.66 Moz, Eligible 68.52 Moz, Total 101.18 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today from the Wall Street Journal, how Japan’s Keystone Kops of nuclear power lost the battle of Fukushima on day one. Not to worry though, Japan is about to tell the G-8 that all’s now well and they’re sticking to their plan to produce half their electricity needs from nuclear power by 2030. The rest of East Asia can only be highly alarmed.
“His next thought was that the plant still had an eight-hour window to restore power before things really turned bad. That's how long the plant's backup batteries, its final line of defense, were supposed to last, cooling the reactor fuel rods and powering key instruments.
Tepco engineers now believe the tsunami knocked out most, if not all, of the batteries, according to documents from Tepco on Monday”.
MAY 18, 2011
Fresh Tales of Chaos Emerge From Early in Nuclear Crisis
FUKUSHIMA PREFECTURE, Japan—The Fukushima Daiichi nuclear plant deteriorated in the crucial first 24 hours far more rapidly than previously understood, a Wall Street Journal reconstruction of the disaster shows.
So helpless were the plant's engineers that, as dusk fell after Japan's devastating March 11 quake and tsunami, they were forced to scavenge flashlights from nearby homes. They pulled batteries from cars not washed away by the tsunami in a desperate effort to revive reactor gauges that weren't working properly. The plant's complete power loss contributed to a failure of relief vents on a dangerously overheating reactor, forcing workers to open valves by hand.
And in a significant miscalculation: At first, engineers weren't aware that the plant's emergency batteries were barely working, the investigation found—giving them a false impression that they had more time to make repairs. As a result, nuclear fuel began melting down hours earlier than previously assumed. This week Tokyo Electric Power Co., or Tepco, confirmed that one of the plant's six reactors suffered a substantial meltdown early in Day 1.
Late Monday in Japan, Tepco released more than 2,000 pages of documents, dubbed reactor "diaries," which also provide new glimpses of the early hours. Soon after the quake, but before the tsunami struck, workers at one reactor actually shut down valves in a backup cooling system—one that, critically, didn't rely on electrical power to keep functioning—thinking it wasn't essential. That decision likely contributed to the rapid meltdown of nuclear fuel, experts say.
The Journal's reconstruction is based on examination of Tepco and government documents, along with dozens of interviews with administration officials, corporate executives, lawmakers and regulators. It uncovered new details on how Tepco executives delayed for seven hours before formally deciding to vent a dangerous pressure buildup in one reactor, despite an unusual face-to-face clash between Japanese Prime Minister Naoto Kan and Tepco top brass.
Tepco executives have acknowledged they weren't aware for hours of the severity of the crisis. By the time Tepco decided to vent its reactor, radiation levels were so high that the man who volunteered to hand-crank the relief valve open was exposed, in a few minutes, to 100 times the radiation an average person gets in a year.
The government itself, despite Mr. Kan's hands-on involvement, failed to come up with a unified early response of its own. Not only were officials tripped up by overly optimistic assessments of the situation, but their own emergency-response building was without electricity and phones.
More.
Tepco Misleading Public Over Nuclear Crisis
By Tsuyoshi Inajima and Yuji Okada - May 18, 2011 6:41 AM GMT+0100
Tokyo Electric Power Co. has made misleading statements about when it will stabilize its nuclear reactors crippled by the March 11 earthquake and tsunami, said Tetsuo Ito, head of the Atomic Energy Research Institute at Kinki University in western Japan.
The company, known as Tepco, yesterday reiterated the schedule on its so-called road map announced a month ago to achieve cold shutdown of the three radiation-leaking reactors as early as October. Setting a timetable without knowing the condition of the reactor cores doesn’t make sense, Ito said in a phone interview from Osaka.
“Only after understanding what’s going on inside the buildings and reactors, will it be clear what parts of the timetable are achievable,” Ito said. “Devising a road map without that will give the public a false sense of security.”
More.
http://www.bloomberg.com/news/2011-05-18/tepco-misleading-public-over-nuclear-crisis.html
May 17, 2011, 7:49 p.m. EDT
Japan to stand by nuclear power at G-8: report
SAN FRANCISCO (MarketWatch) -- Japanese Prime Minister Naoto Kan is expected to use the occasion of the upcoming summit of the Group of Eight leading economic powers to "confirm that Japan intends to continue using nuclear energy while improving plant safety," according to a report Wednesday. The Nikkei business daily reported that Kan will use the May 26-27 summit in France to discuss the current situation at the Fukushima Daiichi power plant, and to outline steps being taken to contain the disaster there that followed the massive earthquake that struck Japan in March. Japan's future energy policy has nuclear set to account for half the total electricity supply by 2030, up from the present 30%, according to the report.
http://www.marketwatch.com/story/japan-to-stand-by-nuclear-power-at-g-8-report-2011-05-17
“What me worry?”
TEPCO, with apologies to Mad Magazine.
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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