Thursday 30 June 2011

Forget Greece!

Baltic Dry Index. 1420 -18

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

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

While all attention is focused on Greece and the likelihood of a Greek default within two years, yesterday’s austerity vote is merely intended to buy time for Europe’s banks and delay the Greek default as long as possible, pouring good taxpayer money after bad, on the other side of the Atlantic a similar drama is in play. Partisan politics for the spoils of the next presidency risk Uncle Sam defaulting on its debts on August 2. Unlike a Greek default, which would trigger a slow motion rolling contagion across Europe’s PIIGS, and probably blow up Belgium as well, any US default would trigger an instantaneous contagion, right around the world, probably taking down the fiat currency financial system as we know it. You’ve got to think that US politicians couldn’t be that stupid. Even so, the IMF, now under new French feminine friendly management, is starting to panic that they might be. In a hard left v hard right fight, tinged with implicit racism for the spoils of the next presidency, all seem to have lost sight of the bigger picture. Dollar suicide is looming into view.

Stay long physical gold and silver. An 18 month guerilla war is underway in America for the presidency. Below, what panic looks like in the ever so diplomatic world of the banksters.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith

US risks "severe shock" over debt talks

America will cause a "severe shock" to world financial markets should Congress fail to agree an increase in the country's debt ceiling in a month's time, the International Monetary Fund (IMF) has warned.

By Richard Blackden, US Business Editor 11:38PM BST 29 Jun 2011

The fund used its annual healthcheck on the world's biggest economy to spell out the dangers of failure, which would likely include the US government defaulting on its debt for the first time in its history.

"It should be self-evident a debt default by the US government would have very serious, far-reaching and dramatic repercussions," said John Lipsky, the IMF's acting managing director. "That's why were are confident it will be avoided."

Republicans and Democrats have been locked in tense negotiations for the past month on how to raise the country's $14.3 trillion (£8.9 trillion) debt ceiling, which the Treasury has said will be reached on August 2.

The talks, which Republicans walked out of last week, are widely seen as a forerunner of the battle over the deficit that will be central to next year's presidential election.

President Barack Obama, who stepped into the talks this week, said that "we don't know how capital markets will react" should an agreement not be struck. Ratings agency S&P said yesterday that the US would have its AAA credit rating slashed if it missed an interest payment on its debts after the deadline.


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Wednesday 29 June 2011

High Noon.

Baltic Dry Index. 1438 -04

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

There's no time for a lesson in civics, my boy. In the 5th century B.C., the citizens of Athens, having suffered grievously under a tyrant, managed to depose and banish him. However, when he returned after some years, with an army of mercenaries, those same citizens not only opened the gates to him, but stood by while he executed members of the Legal Government.
High Noon. 1952.

It is High Noon. The day the hapless Greek MPs get to vote on debt slavery for their fellow Greeks, just like the hapless Irish MPs before them, or get a little Icelandic backbone, and tell their Berlin, Brussels and Paris based would be overlords to take an Ottoman hike. According to most of the media, modern Greek MPs aren’t made of Icelandic stock, and the MPs will vote through the Bilderberger plan for debt slavery and a fire sale of Greek national assets. Sadly all too soon, Greek hairdressers will have to give up retiring at 50, and slave away like fanatical Germans until they reach 62 or 65, or whatever other age limit Merkel-Sarkozy decide to impose. Who knew, deficits do matter after all. Today’s FT headline sums it all up for the tax and work shy Greeks, “Greece faces suicide vote on austerity”. Below, the EU turns the screw some more.

“The secret of business is to know something nobody else knows”

Aristotle Onassis.

EU commissioner Olli Rehn warns Greek austerity package must be approved

The European Union's top economic official has warned Greek politicians there is "no Plan B" and the austerity package must be approved, regardless of the violent protests rocking Athens.

By Louise Armitstead 7:31AM BST 29 Jun 2011

Ahead of Wednesday's crucial vote on a €28bn (£25bn) austerity package, Olli Rehn, the commissioner responsible for economic and monetary affairs, said: "To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default."

He added: "The future of the country and financial stability in Europe are at stake. I trust that the Greek political leaders are fully aware of the responsibility that lies on their shoulders to avoid default."


While we wait for the Greek turkeys to vote in Christmas for French and German banksters, we turn today to some other less reported news. Up first, China caught in a “smiling face” lie of their own making. China can’t be trusted it seems.

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Tuesday 28 June 2011

Italy Next?

Baltic Dry Index. 1442 +18

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

Last Thursday, Moody’s Investors Service placed the long-term debt and deposit ratings of 16 Italian banks and the long-term issuer ratings of two Italian government-related financial institutions on review for possible downgrade. That followed its June 17 move to place Italy’s Aa2 sovereign bond rating on review for possible downgrade.


While Greece begins another 48 hour general strike, (except for the Athens metro, the unions want the public to travel to the parliament building to put pressure on the MPs ahead of the latest austerity vote. Not to worry, as we learnt yesterday in Crooks and Scoundrels corner, no one actually pays to ride on the Athens metro,) the market is moving on from Greece, moving on as well from little Portugal and giant Spain, the market is now starting to focus on to big too save, Italy. Italy faces many of the same problems as Greece compounded by giant cross investment with Gaddafi’s Libya.

But first this from America, America’s economy has taken a giant wobble again. Everything now seems to rest on a continued decline in gasoline prices reviving US consumers other consumption. Alarmingly we now have wobbles in America and China, and a full blown crisis in the near to failing European Monetary Union. Bunker time if not panic time. Stay long physical precious metals.

"You can observe a lot by just watching."

Yogi Berra.

US consumer spending weakest for a year

US consumer spending has slumped to its weakest in almost a year, underscoring the slowdown the economy has endured in 2011.

By Richard Blackden, US Business Editor 6:32PM BST 27 Jun 2011

Spending was flat in May, the Commerce Department said on Monday, and, once adjusted for inflation, showed a decline of 1pc.

Hopes that 2011 would see the US recovery strengthen have so far been dashed as higher gasoline and food prices erode the spending power of millions of Americans.

The Commerce Department also said that average incomes climbed 0.3pc in May, which, alongside the recent decline in gasoline prices, provides some optimism for the second half of the year.

Average prices have dropped just over 10pc since reaching a three-year high of $3.99 at the start of May.

"Consumer spending and confidence has soured," said Chris Christopher, an analyst at IHS Global Insight. "The one piece of good news is that gasoline prices have started to fall offering some relief to a very fatigued consumer."


Now back to Berlusconi and Gaddafi’s Italy. Does any part of Club Med actually work?

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Monday 27 June 2011

“A Poor Country Full of Rich People.”

"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."

Charles De Gaulle

This week, like last week, it’s all about Greece again. For more on the work and tax shy Greek lifestyle, “a poor country full of rich people”, scroll down to crooks and scoundrels corner. We open with hard working, China, a nation still struggling to raise the majority of its population’s standard of living up to an acceptable 21st century level, now proposing to bailout the Greeks, where the dead beats can retire at 50 on 95% of the state pension. Is fiat money great or what. Will Greek MPs vote for Christmas this week? Christmas for European banksters and politicians. Can premier Wen deliver on his noble words? All will be revealed later this week.

Enter the dragon 'to save the euro’

It is in the interest of cash-rich China to help resolve the eurozone debt crisis, but Chinese premier Wen Jiabao, who is visiting Britain and Continental Europe, will want a share of the West’s buying power in return .

By Malcolm Moore, in Shanghai, Peter Foster in Beijing and Andrew Cave in London

10:00PM BST 25 Jun 2011

As Wen Jiabao, the Chinese premier, stepped off his plane in Birmingham on Saturday, it was difficult to avoid the feeling that the UK, and Europe, have never looked weaker in Chinese eyes.

In private, senior Chinese diplomats are now openly scornful of Britain’s economic prospects and have even asked why Mr Wen should grace such a weak trading partner with three days of his time.

Indeed, it is telling that the first stop on Mr Wen’s tour is Longbridge, the old MG Rover car factory that passed into Chinese hands in 2005. Once a byword for poor productivity, wildcat strikes and trade union power in its British Leyland and Austin Rover days, the plant is now host to China’s biggest industrial presence in the UK. Owned by Shanghai Automobile Industry Corporation, the factory designs and assembles MG cars in the UK made from car parts manufactured in China.

However, the Longbridge site remains the only major example of Sino-British co-operation, something that the Prime Minister, David Cameron, whose advisers have helped co-ordinate the visit, is determined to change.

On Mr Cameron’s visit to China last year, a target was announced for increasing bilateral UK-China trade to $100bn by 2015, from its 2010 total of $63bn and Number 10 sources said yesterday that they believe that “progress has been made” on hitting that figure.


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Thursday 23 June 2011

After 10 years or so, the LIR is updating.

"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."

Hans F. Sennholz

First my deep thanks to all my loyal readers many of whom have stayed with me for all of the last 10 western wealth destructive years. My thanks also for sending along so many links and items of interest. Please keep them coming along. Due to the fiat currencies entering their final destructive phase, I am pleased to announce a new partnership with Currency Countdown. As such, the London Irvine Report will move from this address to Please update your browser bookmarks.

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“And how is education supposed to make me feel smarter? Besides, every time I learn something new, it pushes some old stuff out of my brain. Remember when I took that home winemaking course, and I forgot how to drive?”

Homer Simpson

More QE To Come.

Baltic Dry Index. 1406 -03

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

"Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Charles Dickens. David Copperfield.

For once we don’t open with Greece, basket case of the ill fated European Monetary Union. Greece will be saved by a European Union leaders junket, as the EU’s Lords of the Universe gather in Brussels for sumptuous feast this evening, to celebrate the survival of Brussels man in Athens, and a new round of crushing austerity to be imposed on the tax and work shy Greeks. Would the last Greek out turn off the lights and hand the keys over to Chancellor Merkel.

No, this morning we open with quantitative easing, which the Fed and the Old Lady of Threadneedle Street, seem to be conditioning the market for another round of QE later in the Autumn.

“Damn the inflation, full QE speed ahead”.

With apologies to Admiral David Farragut.

Federal Reserve admits US economy is struggling

The Federal Reserve has again cut its growth forecasts for the US economy and admitted that "longer-lasting" factors may help explain the current slowing in the recovery.

By Richard Blackden, US Business Editor 10:51PM BST 22 Jun 2011

The central bank took a red pen to its projections for this year and next, as well as to the unemployment rate. The world's biggest economy will expand between 2.7pc and 2.9pc this year, weaker than it expected just two months ago.

Unemployment, meanwhile, will stay above 8pc throughout next year in a prediction that will depress President Barack Obama, who is already on the back foot over the sluggish economy.

The new forecasts come as the Fed confirmed that its second, controverisal round of quantitative easing – or money printing – will end this month and as it pledged to keep the US interest rates at between 0pc and 0.25pc for an extended period.

The latest evidence from manufacturing, the housing market and the consumer – still the engine of the economy – all suggest the deterioration that started in the first quarter of this year has extended into the second.

"Part of the slowdown is temporary, part of it may be longer lasting," said Fed chairman Ben Bernanke. "We don't have a precise reading on why this slower pace of growth is persisting."

The Fed chief reiterated a view, first voiced in April, that a third round of quantitative easing is not currently needed but added: "We'd be prepared to take additional action, obviously, if conditions warranted."

However, the Fed also reiterated its expectation that higher energy prices will prove short-lived and the recovery is self-sustaining. The bank cut its forecast for headline inflation this year to a range of between 2.3pc and 2.5pc from an April forecast of 2.1pc to 2.8pc.


Quantitative easing back on Bank of England's agenda

Another round of money printing may be necessary to keep the recovery on track, Bank of England policymakers have warned.

By Philip Aldrick, Economics Editor 5:45AM BST 23 Jun 2011

In its most pessimistic outlook for months, the Bank's rate-setting Monetary Policy Committee (MPC) "judged that the downside risks to the prospects for medium-term inflation had increased", according to the minutes for this month's meeting.

Seven members voted to hold rates at 0.5pc, with two calling for an immediate quarter-point rise to counter soaring inflation of 4.5pc – twice the MPC's 2pc target.

The vote, and the minutes, "struck a distinctly dovish tone", KPMG chief economist Andrew Smith said after four months in which the vote has been 6-3.

The change was caused by the departure last month of Andrew Sentance, who wanted a half-point rise. His successor, Ben Broadbent, voted for policy to remain unchanged.

Economists were struck that "for some of these members [voting for unchanged policy], it was possible that further asset purchases might become warranted if the downside risks to medium-term inflation materialised".

Adam Posen again called for the £200bn of quantitative easing (QE) to be increased by £50bn, as he has since October.

"This confirms that the die is cast – for good or ill, the strategy is to ignore rising inflation and wait for the recovery to strengthen," Mr Smith said.


With nothing much to do in Brussels, other than blame the Germans for everything, including the weather, the EU’s out of touch arrogant leaders are getting down to what they do best, talking, wining and dining. Not to worry, all the first class travel, rest and recreation is fully funded by austerity stricken European taxpayers. No banksters were asked to contribute to picking up the cost. Rumour has it that Germany is going to suggest that the hapless Greeks have to dress like country Bavarians in lederhosen, until they payoff all their debts to Europe’s near insolvent banksters. Other’s say it’s just dark arts spin from the tax and work shy Greeks. In the battle of the Gs, the northern Europeans hold all the cards, except the trump card of Greece declaring default and dropping out of the insane German euro. With Brussels’ man in charge in Athens, there’s no chance of this trump getting played anytime soon.

“Politicians fascinate because they constitute such a paradox; they are an elite that accomplishes mediocrity for the public good.”

George Will on US politicians. Europe’s only aspire to mediocrity.

EU leaders await new Greece vote

Thursday, 23 June 2011

Europe's leaders are due to gather in Brussels with the Greek economic crisis on a knife-edge and nothing - for the moment - that they can do about it.

The long-arranged summit comes just after the Greek Prime Minister George Papandreou survived a confidence vote and just before the Greek parliament votes next week on more austerity measures being demanded by the EU and IMF in return for more bailout money, due to be paid next month.

"It's down to the Greeks now to approve austerity measures and then we can see about further assistance" said one EU official. "In the meantime there can be no developments at this summit, and there will be pressure on leaders to say as little as possible at this delicate time".

Prime Minister David Cameron is joining the summit dinner after a day of talks in Prague with the Czech prime minister and president.

When he gets to Brussels he is expected to repeat his insistence that the UK - which did not contribute to the first Greek 110 billion-euro (£96.5 billion) bailout last year - should not be involved in a second, similar, deal likely to be concluded later this year.

The final summit declaration is likely to be restricted to emphasising that efforts remain on track to stabilise the Greek economy and restore confidence in the embattled euro.

An extra meeting of EU finance ministers has already been scheduled for July 3 to assess the situation after the Greek parliament vote next week, when anything less than approval of more austerity will be seen as a political as well as economic catastrophe for the euro.


In other alarming news today, yet more sign of Asia slowing. It’s probably why the Baltic Dry Index has become stalled in the doldrums around a weak 1400. Sounds like another job for the miracle of fiat currency QE.

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

June 22, 2011, 11:54 p.m. EDT

China data show almost flat growth: HSBC

Bank’s advance PMI hits lowest in 11 months

HONG KONG (MarketWatch) — China’s manufacturing activity eased in June to its slowest rate of expansion in 11 months, barely above the level indicating no growth at all, according to preliminary results from a key survey published Thursday.

The HSBC flash Purchasing Managers’ Index (PMI) eased to 50.1 in June, down from 51.6 in May.

The new export orders component indicated contraction at an accelerating rate, while new orders remained expansionary, although at a slower rate.

Meanwhile the employment subindex showed conditions were now contracting, reversing from an expansion.


SK Shipbuilders just starting to feel 2008 downturn

The 2008 global downturn is only now hitting South Korea's shipbuilders, the world's largest. As they complete orders placed before the downturn, they face a gap created by virtually no orders in 2009

We end for the day awaiting the crumbs of knowledge from our betters in Brussels, with a telling article from the press of the great white north. Our days on fiat currency are numbered, as on fiat currency debt has gone out of control. My thanks to reader Ian for sending it along. Stay long physical precious metals.

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

Adam Smith

A debt disaster by whatever measure you use

Last updated Wednesday, Jun. 22, 2011 8:34AM EDT Neil Reynolds

The U.S. federal government spent $30,000 per household last year, an increase of $5,000 in two years. State and local governments spent $25,000 per household. Total government spending thus reached $55,000 per household – in a country with 114,825,421 households.

To provide this exceptional largesse, the federal government borrowed $12,600 per household. Without this loan, these various levels of governments would have spent only $17,400 per household – or precisely the spending (adjusted for inflation) that federal, state and local governments required four decades ago.

Economists usually speak in trillions when discussing U.S. government debt. The household economy provides a different perspective. Does the United States really need to spend $55,000 a year per household? Surely it could get by with $42,400 per household, the spending that doesn’t require credit cards. But debt spending is now deeply entrenched. People expect $5 in government services for $4 in taxes as a fundamental (and, in some instances, constitutional) right.

The $55,000 in per-household spending, however, doesn’t begin to convey the full cost of federal, state and local government. For example, the U.S. Small Business Administration, a federal agency, reports that the cost of complying with federal regulations last year equalled $15,000 per household; and California reports that compliance with state regulations equalled $13,000. But these kinds of spending involve some degree of double-counting. In this analysis, we’ll ignore them.

Federal, state and local debt obligations, however, must be counted. For starters, the average household owes $80,000 as its share of the country’s “national debt,” the U.S. federal debt held by people, companies and governments around the world. It owes another $44,800 as its share of state and local debt – even though most states are prohibited by law from running deficits. It owes another $534,000 per household as its share of unfunded liabilities (legally binding promises) to Social Security, Medicare and pension plan recipients.

The per-household share of government debt thus rises to more than $650,000 – or six times as much government debt as personal debt (in mortgages, credit cards and loans). This number closely tracks the lifetime cost of the average U.S. federal public service pension: $700,000.

A precise calculation of per-household government debt is difficult because governments are not required to report fully on unfunded liabilities. (The CEO of a private company would risk jail time for not doing so). But, by some tough-minded calculations, U.S. unfunded liability, per household, now exceeds $1,000,000. Boston University economist Laurence Kotlikoff, who puts unfunded liabilities at $200-trillion, says the U.S. would have to double permanently all of its taxes to eliminate the country’s “fiscal gap” – the difference between probable revenue and probable spending. (He uses this fiscal gap, rather than accumulated deficits, to define debt.)


"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

At the Comex silver depositories Wednesday, final figures were: Registered 27.72 Moz, Eligible 72.39 Moz, Total 100.11 Moz.


Crooks and Scoundrels Corner.

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

Following Mrs. Thatcher’s dispatch, and after two decades of kowtowing to Europe and the Franco-German envy of establishing a United States of Europe to best America, the UK media finally seem to have figured out, just like German media before them, that it’s time to put self interest foremost again. Self delusion about building some sort of Utopia among the polyglot nations of Christendom, is dragging continental Europe towards a wealth destroying breakup of the European Monetary Union. It’s time for H.M.G.’s Great Britain to move on.

At least once each century continental Europe gets swept up in a collective madness, be it wars, socialism, or currency unions. The early 21st century version is a snake bit currency union. Like all currency unions before it this one too will not last. The strong will always abuse the weak, and this Emu is no exception as we see daily in Greece and Ireland and soon to see in Portugal and Spain. The Emu abuses the PIGS.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

Britain should save the euro – and then cash in

Full fiscal union would allow us to profit from Europe, even as we sat on the sidelines, says Jeremy Warner.

7:21PM BST 22 Jun 2011

For many in Britain, the apparent death throes of the single currency allow a smug sense of “we told you so”. The present crisis was as predictable as it is familiar. In every particular, it provides validation for the view Britain adopted nearly 20 years ago when it was ignominiously forced out of the ERM – namely that it’s tough, if not impossible, to sustain a currency union with Germany.

----Britain couldn’t stand the heat and got out. Now the same choice – only a much worse one, because leaving the euro is far more difficult and disruptive than simply abandoning a currency peg – confronts the single currency’s peripheral nations.

Yet break-up is not the only option open to Europe. There is another, which is that the solvent North agrees to bail out the stricken South on a more or less permanent basis. Although the politicians dare not admit it in public, this is in fact what’s being progressively forced upon them.

For the moment, however, the rhetoric continues to be that of denial. In Germany’s insistence that the euro cannot be allowed to fail, because it would destroy the European Union itself, and in its coincidental refusal to contemplate the only thing that will ultimately save the single currency in its current form – a permanent transfer union – we see the irresistible force meeting the immovable object.

----A year ago, the idea of a second bail-out for Greece would have been regarded as completely unthinkable. But now, here we are with every prospect of the unthinkable happening. Policymakers have convinced themselves that the collateral damage inflicted by a break-up of the eurozone would be infinitely greater than the cost of coughing up. The transfer union has, in practice, all but arrived.

By the way, the debt forgiveness and restructuring urged by some is not a viable third option. You could wipe out Greece’s entire stock of national debt and it still wouldn’t make any difference to the country’s underlying lack of competitiveness relative to Germany. The build-up of external indebtedness would begin anew and we’d soon be back to where we started. No, it’s either kick out the euro fringe, or the political challenge of persuading Germans to subsidise Greeks.

But let’s not worry about which of these options – break-up or fiscal union – is in the best interests of the periphery. That’s ultimately for them to decide. The key question for Britain is which is best for us. The perhaps surprising answer to this question is very much the latter, for what it would do is crystallise a separate choice for the UK – whether we want to be a part of a Europe bounding headlong into full political union or not. Since it is impossible to imagine the UK ever abandoning its fiscal sovereignty to European bureaucrats and political grandstanders, there is no doubt which way we’d swing.

In time, the European Union and its political institutions would become one and the same thing as the eurozone, allowing Britain to retreat to its historic position on the sidelines of Europe, free from the tyranny of majority voting and the insanities of the European Parliament. Like Switzerland and Norway, both of which enjoy something close to free trade with the EU, we could reap the fruits of the single market without being a part of it.


"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."

Elgin Groseclose

The monthly Coppock Indicators finished May:

DJIA: +196 Up. NASDAQ: +249 Up. SP500: +200 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.

Wednesday 22 June 2011

Bring In The Wrack.

Baltic Dry Index. 1409 -09

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

"I therefore trust that Greece's elected representatives will back these [new austerity] measures next week in a spirit of national and indeed European responsibility"

European Commission President Jose Manuel Barroso. June 20, 2011.

Stay long physical precious metals. In Athens last night, all 155 socialist MPs lined up behind their Quisling like Prime Minister, and he won the confidence vote 155 to 143. It wasn’t exactly unexpected. If he lost the vote, in the ensuing election to follow, many of the 155 could expect to be voted out of office. This is not a good time to be seeking a job in Greece, especially with “former austerity MP” on the resume. And so the drama moves on to the next act, the Parliament must now pass a new wave of austerity and privatizations, on the hapless Greek serfs. The latest dodge to get the turkeys to vote for Christmas, is for the government to hint that it’s safe to vote for Christmas, because the government has no intention of implementing much of the new austerity package. Welcome to Europe, 2011 style. Who would want to be a member of this asylum club?

“The world is a place that’s gone from being flat to round to crooked.”

Mad Magazine.

EU urged to block Greece bail-out

European leaders have been urged to scrap plans for a second Greek bail-out – as the Athens government wins a critical vote of confidence in parliament.

By Louise Armitstead 7:17AM BST 22 Jun 2011

Leading London-based think tank Open Europe has claimed that a fresh bail-out, expected to be around €120bn (£106bn), will almost triple taxpayers’ existing exposure to Greek debt.

“Despite a second Greek bail-out being EU leaders’ preferred option, it is only likely to increase the economic and political cost of the eurozone crisis,” said Open Europe in a report.

----The Chinese Foreign Ministry said it was willing to talk about ways it could help stabilise the European financial system during its visit to Britain, Germany and Hungary this week.

Ahead of the visit by Premier Wen Jiabao, a spokesman said: “The Chinese government has already taken a series of proactive measures to push Sino-Europe trade and economic cooperation, such as buying euro bonds … China is willing to continue helping European countries realise economic growth.”

Power supplies across Greece and some of its islands were again disrupted following strikes by workers at Public Power Corp, a state electricity provider which is facing privatisation.

The power cuts have impacted a raft of firms from transport groups to restaurants, which have been struggling in the high temperatures.

Separately, European banks may be forced to quantify and publish their exposure to Greek debt as part of regulatory stress tests set for July 13. The European Banking Authority (EBA) is analysing each bank’s ability to handle a sovereign default or severe downgrade.


Of course the ECB, IMF, and EU bureau-rats aren’t fools, they will simply tie the new cash releases to targets in implementing the new austerity. In an already failing economy, taxes are to be raised, government spending to be drastically cut, a large part of the bloated 1 million public sector workers fired, and privatizations attempted at fire sale prices. Maybe the Chinese sovereign wealth fund will show up and buy what’s left of the Elgin Marbles. And all so the Greek government can go into another 100 billion euros or so of new debt, to bail out Europe’s banksters who foolishly lent 400 billion euros to Greece based on some of Goldman’s “creative” accounting. God’s work seems different in the 21st century.

While that might be a good thing in boom times, further bloodletting the patient in current conditions, practically guarantees a depression in Greece, and an eventual default at some point ahead. Sensible Greeks will quickly move all of their savings out of Greek banks ahead of the coming turmoil and default. I suspect that most Greeks will quickly find ways to nullify any tax increases, while Greek unions will do their best to nullify any fire sale privatizations. The brave people of Iceland are reconfirmed in their correctness in refusing to bail out Europe’s banksters. Unemployed and futureless Greeks, will probably seek the solution of the French Revolution.

Too late will the Greeks decide it’s far better to leave the doomed European Currency Union sooner rather than later, and leave the other central banks of Europe to deal with their insolvent banks, ala Iceland. Hopefully Irish MPs are watching and coming to the same conclusion. Ireland is in far better shape than either Greece or Iceland to rebound quickly.

With the next act in Greece still to take place, we turn this morning to yet another warning on China. It seems to me at least, this might be a good time to try to win a lottery.

June 21, 2011, 8:00 p.m. EDT

China growth to cool as credit, trade ebb: Duncan

HONG KONG (MarketWatch) — China’s era of rapid economic growth is drawing to a close, with a great moderation now inevitable, according to economist and author Richard Duncan.

“I don’t think [China] will be able to achieve their current rates of growth in the next five years,” Duncan told MarketWatch in a telephone interview from Bangkok.

Among reasons for the changes, he said, Beijing won’t be able crank up credit growth further without inflicting self-damage, nor is its export-led growth model viable as the taps tighten on worldwide easy money.

Duncan believes it’s only government life-support in the form of deficit spending that’s kept the global economy from falling into a depression since the 2008 credit crisis, and if the slowdown spreads as he expects, China won’t have an easy time shielding its economy from a slump in consumer demand.

“The whole story of the global economy is that there’s too much supply of everything and insufficient global demand,” said Duncan.

China managed to avoid a recession thanks largely to rapid credit growth, as its state-controlled banks expanded their loan books by 60% over a 24-month period.

Meanwhile, millions of Chinese factory workers who were laid off during the crisis were eventually hired back as global trade slowly normalized.

Duncan isn’t so sure that China can look to rapid credit growth this time if there’s a another serious slowdown, or that global trade will recover without a protectionist backlash, as economies such as the U.S. and Europe suffer high unemployment.

China “will be singled out by the U.S. and forced to stop growing its trade surplus ... and that will be the death blow to China’s era of rapid economic growth,” Duncan said.


Later today, the Fed is widely expected to leave their key interest rate unchanged, but all will want to know what follows the end of QE2. The Fed is expected to say that there won’t be a QE3, but once on QE programs is it ever really possible to stop them without triggering the event they were brought in to prevent. In this case that was to stop the Great Recession from becoming the first Great Depression of the 21st century. In the months ahead, we are about to find out if QE1 and QE2 worked or merely delayed the transition. If it starts to look like it merely delayed the transition, QE3, QE4, QE infinity, will surely come. More tomorrow, it’s time to watch some Wimbledon while we wait.

I know what you're thinking. "Did Bernanke fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is the worst recession since the 1930s, the most powerful credit shock in the world, and would blow your savings clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

With apologies to Harry Callahan, Dirty Harry.

At the Comex silver depositories Tuesday, final figures were: Registered 27.97 Moz, Eligible 72.47 Moz, Total 100.44 Moz.


Crooks and Scoundrels Corner.

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

Today, the seriously bent Allied Irish Bank, fails to avoid being declared in default. Will the Greek banks be very far behind?

We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable.

Alexander Solzhenitsyn

Allied Irish Bank has 'defaulted' says derivatives body

Banks that sold insurance on the debt of Allied Irish Banks will have to pay out to investors in the nationalised lender's debt despite complex legal manoeuvres by the Irish authorities to avoid putting the lender into default

By Harry Wilson, Banking Correspondent 6:00AM BST 22 Jun 2011

The International Swaps and Derivatives Association (ISDA) yesterday said that a "credit event" had occurred on Allied debt, meaning the bank has effectively defaulted on its debt, a situation the Irish government has gone to extreme lengths to avoid.

Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially, its senior debt, have been activated by the decision of the ISDA determinations committee that decides whether a borrower has defaulted.

The decision by the committee, which is made up of 10 major banks, follows the announcement earlier this month by the Irish High Court of a "subordinated liabilities order" that changed the terms under which junior debt in Allied was originally sold, forcing holders of the bonds to accept an extension in the maturity of the debt to 2035.

Allied had already missed a coupon payment on its Lower Tier 2 debt. However, changes in the law enabled the bank to avoid being forced to be formally placed in default.

For the market, ISDA's decision renders this move largely irrelevant as it means the bank will be categorised as in default in the eyes of investors.

While the Allied decision was in line with market expectations and covers only a relatively small number of bonds, it sets a precedent for upcoming decisions on Bank of Ireland debt that is likely to be more significant as the lender is the last major Irish bank not to be fully nationalised.

Of even more significance will be the read-across for CDS contracts written on Greek government debt and that of other indebted European governments.


"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."

Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008.

The monthly Coppock Indicators finished May:

DJIA: +196 Up. NASDAQ: +249 Up. SP500: +200 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. But the Fed’s QE program is supposed to end this month!!!

Tuesday 21 June 2011

Europe's Plan B.

Baltic Dry Index. 1418 -05

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

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

We are spoiled for choice today, what with the start of a 2 day Fed meeting, massive flooding in America and China, and a must win vote of confidence in Greece. But today we will stick with the death throes of the unloved, manmade Godless euro. Time for a Euro Plan B, says Germany’s Der Spiegel. But in modern day dumbed down Europe, there simply isn’t a plan B. None of the Lord’s of the Universe Bilderbergers, who imposed this ill advised currency union on a largely skeptical European population, ever envisaged that a fiat currency could fail one of its members, let alone fail 3 in quick succession, with Spain, Belgium and Italy looking increasingly likely to be next. Stay long physical precious metals. The euro is no longer fit for purpose, and all too likely to do a summer Fukushima.

"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

Time for Plan B 06/20/2011
How the Euro Became Europe's Greatest Threat
The euro is becoming an ever greater threat to Europe's common future. The currency union chains together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades. By SPIEGEL Staff

In the past 14 months, politicians in the euro-zone nations have adopted one bailout package after the next, convening for hectic summit meetings, wrangling over lazy compromises and building up risks of gigantic dimensions.

For just as long, they have been avoiding an important conclusion, namely that things cannot continue this way. The old euro no longer exists in its intended form, and the European Monetary Union isn't working. We need a Plan B.

Instead, those in responsible positions are getting bogged down in crisis management, as they seek to placate the public and sugarcoat the problems. They say that there is only a government debt crisis in a few euro countries but no euro crisis, citing as evidence the fact that the value of the European common currency has remained relatively stable against other currencies like the dollar.

But if it wasn't for the euro, Greece's debt crisis would be an isolated problem -- one that was tough for the country, but easy for Europe to bear. It is only because Greece is part of the euro zone that Athens' debts are a problem for all of its partners -- and pose a threat to the common currency.

If the rest of Europe abandons Greece, the crisis could spin out of control, spreading from one weak euro-zone country to the next. Investors would have no guarantees that Europe would not withdraw its support from Portugal or Ireland, if push came to shove, and they would sell their government bonds. The prices of these bonds would fall and risk premiums would go up. Then these countries would only be able to drum up fresh capital by paying high interest rates, which would only augment their existing budget problems. It's possible that they would no longer be able to raise any money at all, in which case they would become insolvent.

But if the current situation continues, the monetary union will invariably turn into a transfer union, a path the inventors of the euro were determined to prevent.

----The euro's founding fathers did not anticipate such a crisis, and thus did not include any provisions for it in the European Monetary Union's set of regulations. The euro welds together strong and weak countries, for better or for worse. There is no emergency exit, and there are no rules to follow in an emergency -- only the hope that everything will turn out well in the end. This is why the crises of a few euro countries are a crisis for the euro, as well as a crisis for the European Union, its governments and its institutions. And this is why the euro crisis has suddenly and expectedly mushroomed into a crisis for the political Project Europe, its future and its cohesion.

While Der Spiegel searches in vain for a fairy Godmother with a wand, H.M.G.’s Treasury is busy preparing for Greece to go bust and for the end of the euro as we know it. Europeans now need to follow the Indians into a stampede to turn part of their wealth into precious metals.

(India's heretofore "insatiable" appetite for precious metals will need to find a new adjective to describe it, after it surged by an absolutely unprecedented 500% in May MoM, and 222% compared to May of 2010, touching on a massive $8.96 billion in imports in the past month. Putting this number in perspective the yearly average Indian imports are about $22 billion: in one month the country will have imported about half its average quota for the year!)

Treasury plans for Greece to go bust
Treasury ministers have admitted that the Government is drawing up contingency plans for a Greek bankruptcy after being warned by a former foreign secretary that the euro “cannot last”.
By Robert Winnett, Deputy Political Editor 9:05PM BST 20 Jun 2011

Jack Straw, the former Labour foreign secretary, said that a “quick” end to the single currency was now better than a “slow death”.

In an emergency debate, senior MPs from all parties demanded that Britain stand aside from a new rescue package for Greece and push for the country to leave the euro.

Mark Hoban, a Treasury minister, admitted that “many scenarios were being considered”. He said it would “not be appropriate” to discuss the detail, but added he would be “guilty of not stepping up to the responsibilities of his office” if plans had not been made to cope with a default.
He said British banks had about £2.47billion in outstanding loans to Greek institutions and individuals.


In other dismal European news, the IMF, (former home of civilized society challenged, French European, DSK,) ordered the unelected EU leaders to bailout Greece at all costs. It’s as close as the IMF comes to panic.

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

EU must act on Greece or trigger 'global spill over’ of financial turmoil, IMF warns

European leaders must quickly agree a comprehensive bail-out of Greece or risk a "large global spill over" of financial turmoil, the International Monetary Fund (IMF) has warned.
By Louise Armitstead, Chief Business Correspondent 8:56PM BST 20 Jun 2011
The stark message to Europe's politicians, who held a second day of crisis talks in Luxembourg on Monday, came as markets were again rattled by uncertainty surrounding the Greek crisis.
Jean-Claude Juncker, the president of the eurozone finance ministers, announced that the group had failed to agree to release the critical €12bn (£10.5bn) aid payment to Greece.

He said the leaders wanted Greece to pass its tough austerity measures before being granted any aid.

Wolfgang Schauble, Germany's finance minister said: "If the Greeks can't or don't want to make the necessary decisions, then we can't move forward on this track."

John Lipsky, the acting head of the IMF, published a severe analysis of the eurozone. He said that while a "sound recovery continues" in parts of Europe, the "sovereign crisis in the periphery threatens to overwhelm this favourable outlook".

He added: "A strong core is pulling ahead of a periphery facing daunting challenges. Failure to undertake decisive action could rapidly spread the tensions to the core of the euro area and result in large global spill-overs."

Traders, who had been expecting a confirmation that the €12bn tranche would be released within two weeks, reacted with alarm amid fears of default and contagion. The euro fell on opening and the FTSE 100 shed over 1pc.

Banks were hard-hit amid fears of their exposure to a Greek default. In London, the concerns contributed to Royal Bank of Scotland falling 4.4pc to 39.3p on trading volumes that were over four times the normal daily average. Lloyds Banking Group also slid over 2.5pc.

Yields on Spanish and Italian bonds widened against German bunds as investors fled to safety.
Greece needs the latest tranche of aid – the fifth part of the €110bn bail-out programme agreed last year – or it will default on its sovereign debt in mid-July.


Below, America’s best analyst, Reggie Middleton, spells out why the IMF is panicking. There are no good solutions here, just a massive mess that successive European politicians created, as they let their egos and US jealousy, build into a flawed project called the Godless European Monetary Union.

"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

With Greek Debt Yielding 20%+ and Trading at Half Par Value, European Banks Are Trapped!
Monday, 25 April 2011

----So, anyone who doesn't think that a country that is in recession paying 20% on its debt AFTER it was just bailed out with global interest rates at cyclical low combined with the ECB raising rates is simply delusional. The next question any realist would ask is not if Greece is going to default or restructure, but what happens when they actually do?

Well, if you remember my rants concerning the EU's "Delay & Pray" strategy of classifying these sovereign junk bonds as hold to maturity assets marked at par, you realize that there are hundreds of millions of euros of losses sitting on bank balance sheets RIGHT NOW, levered much more than 10x to 15x times. These assets are also currently going down in value, not static or rising. This means that not only are their gaping holes in the balance sheets of European banks all over that everybody seems to be ignoring, those wholes are being ripped wider and wider as time goes by.

Well, if Greece does default or restructure (and the market is telling us that Reggie is right in that this is a foregone conclusion), then...

----So, anyone who doesn't think that a country that is in recession paying 20% on its debt AFTER it was just bailed out with global interest rates at cyclical low combined with the ECB raising rates is simply delusional. The next question any realist would ask is not if Greece is going to default or restructure, but what happens when they actually do?

Well, if you remember my rants concerning the EU's "Delay & Pray" strategy of classifying these sovereign junk bonds as hold to maturity assets marked at par, you realize that there are hundreds of millions of euros of losses sitting on bank balance sheets RIGHT NOW, levered much more than 10x to 15x times. These assets are also currently going down in value, not static or rising. This means that not only are their gaping holes in the balance sheets of European banks all over that everybody seems to be ignoring, those wholes are being ripped wider and wider as time goes by.

Well, if Greece does default or restructure (and the market is telling us that Reggie is right in that this is a foregone conclusion), then...

In other bad news this morning, food price inflation in China is about to get considerably worse.

June 20, 2011, 7:58 a.m. EDT
Inflation worry as floods cut China vegetable crop
HONG KONG (MarketWatch) — Vegetable production in parts of southern China has slipped 20% in recent weeks from a year earlier as torrential rains have flooded vast farmland areas, complicating government efforts to increase agricultural output in a bid to help cool the nation’s inflation.

Vegetable prices could rise for another two weeks because of the weather-related production disruptions, said Jin Changlin, an official of the Agricultural Department of Zhejiang, as quoted Saturday by the official Xinhua News Agency

Since the downpours began in June, floods have been reported in the provinces of Zhejiang, Jiangsu, Anhui, Jiangxi, Hubei, Hunan and Guangdong, according to mainland Chinese news reports.

About 432,200 hectares of crops have been destroyed in these areas, according to the Xinhua report.

About 5 million people have been displaced or otherwise affected by floods nationwide — with further devastation expected as heavy rains are forecast to continue, according to a Monday report by the Shanghai Daily.

Zhejiang is the region reportedly hit the hardest, with 2.7 million residents affected in nine cities.
Markets in Hangzhou, the provincial capital of Zhejiang, have seen prices for some fruits, vegetables and grains climb by as much as 40%, according to Xinhua.

----The floods follow on from drought conditions earlier this year, purportedly the worst in about 50 years, which affected Hubei, Anhui and Jiangsu as well as some northern provinces.

"All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity."

Irwin A. Schiff

At the Comex silver depositories Monday, final figures were: Registered 27.97 Moz, Eligible 71.90 Moz, Total 99.87 Moz.


Crooks and Scoundrels Corner.

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

Today, Fukushima and the aftermath. Is nuclear really a good idea for anything but bombs?

Australia tests imported cars for radiation
By Michael Edwards Updated 30 minutes ago
A shipment of cars from Japan will be screened by Australia's nuclear safety watchdog for contamination when it docks south of Sydney later this week.

Australian dock workers fear the cars may be contaminated by the meltdown of the Fukushima nuclear plant, and the Maritime Union of Australia (MUA) wants the testing extended to other Japanese imports.

Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) acting chief executive, Professor Peter Johnston, says it is screening the cars for the MUA.

----The MUA says the testing should cover all Japanese imports, but ARPANSA disagrees.

China qualifies food restrictions
Kyodo Tuesday, June 21, 2011
BEIJING — Chinese authorities have announced specific criteria for loosening import restrictions placed on foodstuffs from Japan because of the Fukushima nuclear crisis.

The General Administration of Quality Supervision, Inspection and Quarantine, which oversees food safety in China, issued a notice June 13 to local quarantine bureaus about the criteria, which include removing Yamagata and Yamanashi from the list of 12 prefectures banned.

Chinese Premier Wen Jiabao announced the move to loosen the restrictions in talks with Prime Minister Naoto Kan on May 22 in Japan.

Since no specific criteria were presented, imports from Japan have yet to resume.
The announced criteria also include looser requirements for attaching radiation-inspection certificates on processed and some other foods from 37 other prefectures. The requirements are now limited to dairy products, vegetables, fruits, tea leaves, fishery products and other perishable foods.

June 20, 2011, 6:00 p.m. EDT
Japan disaster recovery confronts funding dilemma
As estimates add up, political infighting slows the process down

TOKYO (MarketWatch) — More than three months after the earthquake and tsunami ravaged Japan’s Tohoku region, reconstruction moves ahead at an uneven pace, and so does the debate about how the government will fund it.

As frustration grows in Tohoku, political infighting about how the central government will pay the reconstruction bill has slowed the recovery process. The extent of the damage in some coastal cities has also affected the ability of local governments to distribute public funds and charitable donations to the people who need them most.

While politicians in Tokyo clashed, survivors in the disaster zone waited for help rebuilding their lives and livelihoods.

---- Even before the March 11 natural disasters did billions of dollars’ worth of damage, left over 23,000 people dead or missing and triggered a nuclear crisis at the Fukushima Daiichi nuclear plant operated by Tokyo Electric Power Co., Japan’s national balance sheet wasn’t pretty. Its public debt was about twice the size of its $5 trillion economy, and ratings agencies were already warning that the country faced sovereign downgrades if it didn’t put its fiscal house in order. Those warnings have grown more urgent since the disaster.


Nuclear Reactor Design Chosen - Not Because It Was Safe - But Because It Worked On Navy Submarines
Monday, June 20, 2011

Virtually all of the nuclear reactors in the U.S. are of the same archaic design as those at Fukushima (Indeed, MSNBC notes that there are 23 U.S. reactors which are more or less identical to those at Fukushima.)

Called "light-water reactors", this design was not chosen for safety reasons. Rather, it was chosen because it worked in Navy submarines.

Specifically, as the Atlantic reported in March:

In the early years of atomic power, as recounted by Alvin Weinberg, head of Oak Ridge National Laboratory in his book The First Nuclear Era, there was intense competition to come up with the cheapest, safest, best nuclear reactor design.

Every variable in building an immensely complex industrial plant was up for grabs: the nature of the radioactive fuel and other substances that form the reactor's core, the safety systems, the containment buildings, the construction substances, and everything else that might go into building an immensely complex industrial plant. The light water reactor became the technological victor, but no one is quite sure whether that was a good idea.

Few of these alternatives were seriously investigated after light water reactors were selected for Navy submarines by Admiral Hyman Rickover. Once light water reactors gained government backing and the many advantages that conferred, other designs could not break into the market, even though commercial nuclear power wouldn't explode for years after Rickover's decision.

"There were lots and lots of ideas floating around, and they essentially lost when light water came to dominate," University of Strasbourg professor Robin Cowan told the Boston Globe in an excellent article on "technological lock-in" in the nuclear industry.

Fukushima USA? Dangerous radioactive leaks and cracked foundations go unpunished at American nuclear power plants
By Daily Mail Reporter Last updated at 11:36 PM on 20th June 2011
Safety has taken a back seat to cost-cutting at most of the nation's nuclear power plants, sparking fears that America could be facing its own Fukushima disaster.

An investigation by the Associated Press has revealed federal regulators are repeatedly weakening - or simply failing to impose - strict rules.

Officials at the U.S. Nuclear Regulatory Commission have frequently decided that original regulations were too strict, arguing that safety margins could be eased without peril.

The constant danger of aging reactors operating without the highest standards has resulted in rising fears the NRC is significantly undermining safety.

Such negligence is destined to to bring the plants closer to a catastrophic accident that could harm millions and jeopardize the future of nuclear power in the U.S.

Examples abound.

When valves leaked, more leakage was allowed — up to 20 times the original limit.
When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards.

Failed cables. Cracked concrete, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to aging were uncovered in the AP's year-long investigation.
Yet despite the growing problems linked to aging, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years.

"Whom the gods would destroy, they first subsidize."

George Roche

The monthly Coppock Indicators finished May:

DJIA: +196 Up. NASDAQ: +249 Up. SP500: +200 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. But the Fed’s QE program is supposed to end this month!!!

Monday 20 June 2011

Greece – Up or Down.

Baltic Dry Index. 1423 -01

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

"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"

Douglas McWilliams, chief executive of the Centre of Economics and Business Research.

Stay long physical gold and silver. The Euro as we know it, just possibly won’t last out the summer. In typical European fashion, the 17 finance ministers of the Eurozone met on Sunday to fix the Euro crisis of the looming Greek bankruptcy. They dithered leaving any decision until today’s meeting of the 27 EU finance ministers. What seems to be on offer to Greece is a 12 billion euro tranche immediately, to pay off some maturing debt held by European banksters and carrion hedge funds, provided Greek MPs vote for further cuts and speeding up the Greek death spiral. As a plan goes, no one expects it to prevent a Greek default later, probably triggering other defaults in their wake. Below, this morning’s news from Europe. Will the dithering finance ministers of Europe vote Greece up or down?

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.

Greece, with apologies to Cary Grant. To Catch A Thief.

Eurozone delay over Greek rescue risks spooking markets

Eurozone finance ministers have held off on a decision about releasing funds to stop a Greek default until Monday in a move that risks spooking financial markets.

9:44PM BST 19 Jun 2011

"There will be no agreement today," said Jean-Claude Juncker, the head of the eurogroup and the premier of Luxembourg said as finance ministers from the 17 nations using the euro began two days of crunch talks on Sunday evening.

Britain and the other nine EU states will join the discussions on Monday afternoon as European leaders seek a decision on the release of a €12bn tranche to Athens and the shape of a second bailout.

Fears of a Greek default have have heightened fears of a Lehman-style collapse has led British banks to withdraw billions of pounds of liquidity from the eurozone.

The real work for European finance ministers will revolve around sharing the burden of a new rescue package between taxpayers and the private sector tipped to be almost as much as least year's bailout of €110bn.

German Finance Minister Wolfgang Schaeuble told German television on Sunday that eurozone nations should give private creditors an incentive to take part in a new Greek rescue and as long as it is voluntary and does not trigger a credit event.

----Many economists doubt that Greece can ever repay its debts, which have reached €340bn (£300bn) or 150pc of the country's annual economic output.

Any Greek debt rollover would be complex and controversial, financially and legally, and key details have not been worked out. Eurozone finance ministers aim to find a solution, a temporary one at least, at the Luxembourg meeting.


Papandreou fights for austerity plan – and survival

By Daniel Howden in Athens Monday, 20 June 2011

Tens of thousands of Greeks descended on cental Athens last night to lay peaceful siege to parliament ahead of a confidence vote in the government due to take place tomorrow. Earlier in the day Greek Prime Minister, George Papandreou, confirmed that the country was seeking a second international bailout in order to avoid a potentially disastrous default.

In what is fast becoming a weekly ritual, Athens' Syntagma Square was transformned into a giant village fete with a broad cross-section of the population united only by their hatred of the MPs. "Greeks are always divided but now for the first time everyone is here together," said Achilleas Peklaris, the head of a volunteer group calling itself the "Calm-downers". "All Greece is here and that is something new."

----Public anger in Greece at spending cuts and tax increases has spilled over into regular riots. The Greek premier tried to draw some of that anger yesterday by offering a referendum later this year on changes to the constitution aimed at making it easier to trim the country's bloated public sector.

Adopting a more populist tone, he also railed against the media, market speculators and tax havens for destroying market confidence in Greece and driving up the cost of borrowing.

"I ask for a vote of confidence because we are at a critical juncture," Mr Papandreou told parliament yesterday the beginning of a three-day session that will end tomorrow with the confidence vote.

"The debt and deficits are national problems that have brought Greece into a state of dependence that may have protected us from bankruptcy, but which we need to get out of," he added.

However, there is little confidence among experts that a new bailout will achieve anything other than delaying an eventual default. This is because the EU-IMF prescription of austerity for loans has so far failed to impact on Greece's debt burden of 160 per cent of GDP and the country's economy is still shrinking.


Below, a more sensible solution for Greece, although why it’s the Mayor of London advocating it, is a mystery. What’s it got to do with him? What next, the Mayor of Moscow suggests a fix for US profligacy?

Boris Johnson: let Greece go bankrupt and leave the euro

Britain should refuse to contribute to a second bail-out of Greece and the country should be allowed to default on its debts and leave the euro, Boris Johnson has said.

By Robert Winnett, Deputy Political Editor 10:09PM BST 19 Jun 2011

Writing in The Daily Telegraph, the Mayor of London claims that the euro's recent troubles have "exacerbated" the financial crisis and challenges George Osborne, the Chancellor, to "stop chucking good money after bad".

As Mr Osborne prepares to join European talks on agreeing a new £100 billion rescue package for Greece today, Mr Johnson says that European monetary union should be partially dismantled instead.

Ministers have promised not to underwrite the new deal, but the Government may be powerless to avoid involvement under European finance rules.

Mr Johnson joins a growing list of economists saying that Greece should be left to go bankrupt and write off many of its debts. This would probably involve it leaving the euro, or the credibility of the single currency would be undermined.

The London mayor writes: "For years, European governments have been saying that it would be insane and inconceivable for a country to leave the euro. But this second option is now all but inevitable, and the sooner it happens the better."

Mr Johnson says that Greece would do better to forge a "new economic identity with a new drachma".

He adds: "The euro has exacerbated the financial crisis by encouraging some countries to behave as recklessly as the banks themselves.


Up next, Moody’s says that anything Greece can do giant Italy can, and probably did, do too. Germany will go broke trying to bailout the bottomless pit, known as Italy, where cheating on taxes is even more entrenched than in tax shy Greece.

Italy is not technically part of the Third World, but no one has told the Italians.

P.J. O’Rourke.

Moody's threat to downgrade Italian debt raises eurozone contagion fears

Moody's has threatened to cut Italy's credit ratings on concerns over a possible rise in eurozone interest rates may derail the country's fragile economic recovery, raising more fears of contagion from the Greek debt crisis.

7:00AM BST 18 Jun 2011

Moody's announcement placing Italy's Aa2 rating on review for downgrade of the next 90 days came after European markets had closed for the weekend.

The agency said structural weaknesses such as a rigid labor market posed a challenge to growth.

Italy's potential downgrade highlights the risks facing indebted European countries as they struggle to avoid a Greece-style crisis.

Markets are worried that Italy, like Greece, will struggle to make the necessary spending cuts and other fiscal measures needed to cut its debts to affordable levels.

"The Moody's news on Italy reinforces the ECB's concern about the prospect of contagion. And contagion should not happen," said Greg Salvaggio, senior vice president at Tempus Consulting in Washington.

---- Moody's analyst Alexander Kockerbeck told Reuters: "Italy has had structural impediments to growth for some time. However, today, these challenges coexist with a scenario of rising interest rates and fragile market sentiment."

The European Central Bank held interest rates steady at 1.25pc this month but signaled that it will raise rates in July.


And so we all await today’s episode of as the euro sinks. Actually, since the euro is just yet another managed fiat currency, neither backed nor redeemable in anything except more euro paper, the political masters of the ECB, could all take a political decision to bail out Greece and allow Greece to phase in austerity over a decade. They could easily do the same for Ireland and Portugal. Generating the new euro by creating a new class of euro 30 year debt. Hell, on fiat, they could even use perpetual if they were so minded, in case Italy blows up. Each member of the EU buying-in in proportion to share of EU GDP, with those members of the Eurozone itself getting a double share. On fiat currency all decisions are political. Who gets what and why and when, is all just a function of political decisions, which is why fiat currency was not considered a good idea until President Nixon panicked.

Banks are an almost irresistible attraction for that element of our society which seeks unearned money.

J Edgar Hoover

At the Comex silver depositories Friday, final figures were: Registered 27.97 Moz, Eligible 71.99 Moz, Total 99.96 Moz.


Crooks and Scoundrels Corner.

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

Today, yet another nail in the coffin of free trade and private enterprise. Gold is gold and will find its way into commerce no matter what artificial constructs unelected bureaucrats try to put into place. If “conflict” gold is forced to trade at a discount, does anyone seriously think that the world’s spook agencies won’t exploit it to fund their darker operations?

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

World Gold Council unveils initiative to combat ‘conflict gold’

17th June 2011

JOHANNESBURG ( – The World Gold Council on Friday unveiled a draft framework of standards designed to combat gold that enables, fuels or finances armed conflict.

The unveiling follows concern over electronics giants like Apple, Intel and Motorola deciding not to use African gold at all in order to stay out of the clutches of the US’s Dodd-Frank law, which allows consumers to know if human rights atrocities have tainted their gold.

The council, which sees its draft standards as representing a “significant, industry-led response” to the conflict-gold challenge, says that it is committed to working  with the electronics and jewellery sectors to seek an integrated solution.

The proposed standards are designed to enable miners to produce a stream of newly mined gold which is certified as ‘conflict free’ on a global basis.

The ‘conflict-free gold’ and ‘chain of custody’ standards set out a framework for tracking conflict-free gold from the mine to the end of the refining process and a framework for ensuring that where gold is mined in a conflict zone, its production or transportation does not finance or benefit armed groups.

The draft standards are currently being ‘stress-tested’ by leading gold-mining companies and refineries, as part of the development process.

Interested parties including governments, nongovernmental organisations, the investment community, artisanal miners, end-users and other participants in the gold supply chain are being invited to provide their feedback by September 1.

There will also be continuing work and dialogue on related issues such as recycled gold, audit and assurance.

Council CE Aram Shishmanian makes the point that, while responsible gold mining contributes positively to economic and social development in producing countries, gold’s misuse is a reputational threat to the precious metal.

The current focus of concern is on the Democratic Republic of Congo (DRC) and adjoining countries, where the council’s standards address the situation for large-scale producers.

In addition, the world gold body is working with the Organisation for Economic Cooperation and Development and others on global guidelines for responsible gold sourcing.

The gold market is seen as uniquely complex owing to the difficulty in tracking down specific gold consignments owing to gold being easily melted down and co-mingled with gold from other sources.

Shishmanian regards the success of any certification system as being dependent on the cooperation of many in the gold supply chain.

“We are aiming for a comprehensive framework which commands confidence, credibility and broad support and we look forward to working with organisations that use gold in developing an integrated certification process that avoids duplication and meets the needs of all stakeholders,” Shishmanian says.

US Assistant Secretary of State for Economic, Energy and Business Affairs Jose Fernandez made it clear during his recent visit to Johannesburg that it was not the intention of the Dodd-Frank legislation to stop legitimate gold mining from taking place.

The US Congress enacted Dodd-Frank to address the extreme levels of brutality of warring DRC factions, which finance their operations from “conflict” gold, wolframite and cassiterite that are used in electronics, jewellery, construction tools, weapons systems and aerospace technology.


“Those who don't know history are destined to repeat it.”

Edmund Burke.

The monthly Coppock Indicators finished May:

DJIA: +196 Up. NASDAQ: +249 Up. SP500: +200 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. But the Fed’s QE program is supposed to end this month!!!