Baltic Dry Index. 1400 -12
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"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
Will Greece default this month? Stay long precious metals in case they do. More and more, it looks like Greek politicians are finally wising up to the fact that pushing the country into a 1930s style depression just to bailout French and German banks, makes little sense. Sooner or later Ireland’s politicians will discover the same reality. The only “solution” for Greece and Ireland is to restructure the debt down to a level that their economies can cover, and to extend the maturity to reflect the new “normal” growth level of the global economy post 2007-2009. Both should also leave the idiotic, one size fits all, European Monetary Union. My guess is that one more muddled “fix” will emerge this month but that later this year both Greece and Ireland will see the beacon of Iceland.
Below, the latest on the sinking of the SS Greece. Yet another general strike is due today, which of course only makes a bad situation worse.
Greece, you tried your best and you failed miserably. The lesson is, never try.
Homer Simpson.
George Soros blames officials as Greek crisis escalates
Billionaire investor George Soros has criticised international authorities for "not providing a solution" for the European debt crisis as Greek sovereign bond yields were pushed to record levels again
By Louise Armitstead 10:13PM BST 14 Jun 2011
Mr Soros, who spoke out as European finance ministers met today to discuss the crisis, said the officials were "basically buying time" rather than tackling the problems. He added: "This is the normal thing for authorities to do. In this case, I'm afraid they are making a mistake."
Credit markets were thrown into fresh turmoil as Greek debt became the lowest rated in the world following a savage downgrade by Standard & Poor's on Monday.
The yield on 10-year Greek government bonds spiked to a record high of more than 17pc as investors demanded a higher return to cover the risks of holding the debt.
Greek debt is now the lowest rated in the world – below Ecuador and Grenada – with many investors now expecting an uncontrolled default.
The emergency meeting of eurozone finance ministers was called by Jean-Claude Juncker, chairman of the group, and comes ahead of a summit in Brussels next week. The group has set a deadline of June 20 to agree a new aid package for Greece, the country's second in 14 months.
More
June 14, 2011, 5:41 p.m. EDT
How to profit from the coming Greek default
Commentary: Five trades to make before the euro implodes
By Matthew Lynn
LONDON (MarketWatch) — You don’t exactly need a crystal ball to know what the biggest event in the financial markets of the next 12 months is going to be: Greece defaulting on its debts.
This week Standard & Poor’s cut its rating on the country to CCC, the lowest of any nation in the world. Only last week we learned that Greek industrial production was down 11% year-on-year. Unemployment has risen 40% over the past year, and now stands above 16% nationally. A year on from the European Union and International Monetary Fund “rescue,” Greece is slipping into 1930s-style depression.
A country in that kind of a fix doesn’t pay back debt. Nor does it get its deficit under control. It isn’t a question of whether Greece defaults anymore. Everyone accepts that. It is simply an issue of when, by how much, on what terms — and, perhaps most crucially of all, who gets stuck with paying the bill.
More.
http://www.marketwatch.com/story/how-to-profit-from-the-coming-greek-default-2011-06-14
15 June 2011 Last updated at 05:16
Greeks set to strike as MPs debate austerity measures
Workers in Greece are due to stage a general strike, as the parliament meets to debate new austerity measures.
Demonstrators say they will encircle the parliament building in an attempt to prevent MPs from taking part.
Prime Minister George Papandreou is trying to push through fresh policies as part of the conditions for the EU and IMF's bail-out package.
----Activists and unionists plan to gather at Syntagma Square on the front steps of the assembly in central Athens on Wednesday.
Mr Papandreou faces the risk of a backbench revolt over the plans.
One MP defected from Mr Papandreou's PASOK party defected on Tuesday, leaving it with only 155 of the chamber's 300 seats.
"You have to be as cruel as a tiger to vote for these measures. I am not," George Lianis, a former sports minister, said in a letter to parliament's speaker announcing his departure from the parliamentary group.
At least one other Socialist MP has threatened to vote against the new programme of cuts and privatisation of state assets.
The government has appealed for consensus over its proposals, which would see 6.5bn euros (£5.7bn; $9.4bn) worth of tax rises and spending cuts this year.
More
http://www.bbc.co.uk/news/world-europe-13773148
Next the WSJ tackles the wrong problem, reaches a wrong conclusion, and pins its faith on the banksters who generated the near collapse coming up with a way to fix it. Goldman really is going to do “God’s work”. Does a leopard change its spots. No mention of unrestricted fiat currency, Wall Street fraud, 600 trillion of derivatives gambling off a 60 trillion global GDP base. No mention that on fiat money, growth must be exponential, an impossibility in a fixed resource global world. No mention that fiat currency is self destructive, and always ends in a fiat currency revulsion. Other than that Mrs. Lincoln, what did you think of the play?
"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."
Leonard Read
JUNE 15, 2011
Fixing Problem Economies Is Like Wrestling a Balloon
Why do economies find it so hard to grow their way out of financial crises? Analytical work on historical banking disasters by Harvard's Carmen Reinhart and Kenneth Rogoff shows that post-collapse growth tends to be far slower than in the wake of common or garden-variety business-cycle recessions.
The history of America and Europe in the 1930s and Japan in the 1990s suggests that what really turns a financial crisis into a slump is the rapid deleveraging of the banking system; an economy can't grow if it's starved of credit. The risk now is that this is happening again.
What has become particularly apparent from the current crisis is that dealing with the banking system is the hardest part of the policy response. Economic theory has plenty to say on how to calibrate monetary and fiscal policy, but little to offer on how best to police the banking system to strike the right balance between maintaining financial stability, minimizing moral hazard and ensuring adequate growth. But in the context of an economy groaning under excessive debt, this may be the most important issue.
Banks play a vital role in the economy, performing the vital but highly risky task of turning short-term deposits into long-term loans and allocating scarce capital to productive businesses. Following a financial crisis caused by imprudent lending, there is inevitably intense political pressure to punish bankers and reform the system to prevent such a crisis ever occurring again. But since no other organizations can do what banks do, society is left in the uncomfortable position of having to rely on the people who got it into the mess to get it out again.
The trick is to control the pace of deleveraging. A highly leveraged economy is like an over-inflated balloon. If you try to squeeze the risk off the government balance sheet by raising taxes and cutting spending, the risk simply pops up in the financial sector and real economy in the form of slower growth, lower profits and reduced spending. Similarly, force banks to deleverage too fast and financial sector risks are merely passed on to the sovereign and real economy.
More.
We close for today with a warning on UK inflation. As austerity increasingly starts kicking in, the UK’s Bolshevik unions are starting to call a wave of strikes. They won’t help in the UK anymore than they help in Greece, but they do give the Brits another reason to get long some physical gold and silver. Our world is well on its way to currency perdition.
Facts are meaningless. You could use facts to prove anything that’s even remotely true!
Homer Simpson.
High inflation could have 'diastrous consequences' for UK, economists warn
Unleashing high inflation on the economy in the hope that it will afford a painless route to slashing the nation's £910bn sovereign debt burden could have "disastrous consequences", Capital Economics warns.
By Philip Aldrick, Economics Editor 6:00AM BST 15 Jun 2011
A number of prominent economists have claimed inflation could be an easy path to fiscal sustainability by trimming the debt pile without inflicting extreme spending cuts on the country and by letting house prices normalise without triggering a damaging crash.
Some even believe that the Bank of England is operating a tacit high-inflation policy, having overshot its 2pc target for 51 of the past 60 months.
The warning that high inflation could be without beneficial effects, from Capital Economics, came as the Office for National Statistics published the latest data for May. The consumer prices index (CPI) was unchanged at 4.5pc – its highest level since September 2008 and the 17th consecutive month the rate was more than a percentage point above the Bank's target.
May's unchanged figure masked big annual rises in food prices as transport costs fell sharply month-on-month due to the timing of the Easter holidays.
Fish prices rose 11.4pc, sugar and confectionary 7.5pc, bread 5.8pc, fruit 5.4pc, meat 5.1pc and vegetables 5.1pcas the squeeze on households showed no signs of letting up.
At the same time, alcohol and tobacco prices rose at their fastest pace since records began in 1997 – at 9.8pc.
Michael Saunders at Citi warned inflation is now becoming broadly based, with 80pc of the items measured in the CPI rising by more than 2pc year on year.
Alliance Trust added inflation is hitting the elderly hardest, due to the soaring costs of food and domestic utilities such as water and heating – the price of which rose 4.3pc. "The 65-74 year-old age group now faces the highest rate of inflation, at 5.2pc," it said.
The pain on households is not having a counterbalancing effect on the public finances, Capital Economics warned.
----As current inflation pressures are largely commodity-based, high prices "reduce consumers' incomes and therefore demand". As a result, households' effective mortgage payments rise and economic growth may falter – leading to reduced tax revenues, Capital Economics said.
High inflation may also lead to more expensive interest rates for the private sector as markets seek to protect themselves against rising prices.
At the same time, the consultancy claimed the UK is the least well-placed of seven major developed economies – including the US, Germany, Japan and France – to take advantage of soaring prices because a fifth of all Government debt is inflation-indexed.
With welfare payments also linked to prices, high inflation makes it more difficult to cut the budget deficit.
More
“I want to share something with you: The three little sentences that will get you through life. Number 1: Cover for me. Number 2: Oh, good idea, Boss! Number 3: It was like that when I got here.”
Homer Simpson.
At the Comex silver depositories Tuesday, final figures were: Registered 27.92 Moz, Eligible 70.89 Moz, Total 98.81 Moz. Almost 2 Million ozs left the Comex depositories yesterday, with only 28 Moz available for delivery. A silver default appears to be looming.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, more on when Wall Street calls hang up. God’s work on Wall Street in the land of the blood sucking great vampire squids. And the Journal think that Ebenezer Squid & Co., are really going to fix this mess.
Old Ebenezer Squid had one-way pockets. He would walk ten miles in the snow to chisel an orphan out of tuppence.
With apologies to P.G. Wodehouse and the Duke of Dunstable.
SEC Probes $1.5 Billion Merrill CDO Sale
Tuesday, 14 Jun 2011 | 8:22 PM ET
The Securities and Exchange Commission is investigating Merrill Lynch’s sale of a complex mortgage-related security it created for Magnetar, an Illinois hedge fund, and the collateral manager involved in the deal, according to people familiar with the matter.
The investigation is one of several SEC probes into banks that helped underwrite billions of dollars of collateralized debt obligations, securities comprised of mortgages or derivatives linked to them.
It also marks a broadening of the SEC’s investigation into the role of collateral managers, institutions that help select the assets included in CDOs.
NIR Capital Management, a Roslyn, New York firm run by Corey Ribotsky, served as manager for the security under scrutiny, a $1.5 billion CDO known as Norma. Neither Mr Ribotsky nor his attorney returned calls seeking comment.
Regulators are looking at whether collateral managers, which are supposed to serve CDO investors’ interests, fulfilled their obligations, these people say.
Last year, the SEC sued another collateral manager, ICP Asset Management, and its founder Thomas Priore for allegedly defrauding investors in CDOs it managed. Mr Priore has denied wrongdoing and is fighting the charges.
The SEC, which is looking at several deals banks structured for Magnetar, is investigating whether Merrill told buyers that Magnetar helped select the assets included in the Norma CDO and bet against those same assets, these people say.
Magnetar has denied claims it selected the Norma portfolio.
Regulators are also looking into whether Merrill mispriced assets in the CDO, these people say. Bank of America which acquired Merrill Lynch, declined to comment. The bank previously said it lost $900m on the Norma CDO.
In 2009 Dutch bank Rabobank, which invested in Norma through a loan, sued Merrill in a New York state court, alleging the bank overvalued some assets by marking them at face value even though their market value had already deteriorated by 15 per cent.
The banks reached a settlement last year.
According to Rabobank’s lawsuit, Merrill allegedly created Norma as a “tailor-made way to bet against the mortgage-backed securities market”. The suit said: “Merrill Lynch hand-picked a beholden collateral manager that was willing to ignore its fiduciary duties to Norma’s investors by selecting Norma’s collateral pool at Merrill Lynch’s behest rather than on the basis of the rigorous independent analysis.”
The US Financial Crisis Inquiry Commission concluded: “Merrill failed to disclose that Magnetar was paid $4.5 million or that Magnetar was selecting collateral when it also had a short position that would benefit from losses.”
More.
http://www.cnbc.com/id/43402844
It’s morally wrong to let a sucker keep his money.
W. C. Fields. Wall Street Ethicist.
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!!!
No comments:
Post a Comment