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.
More.
http://www.spiegel.de/international/europe/0,1518,769329,00.html#ref=nlint

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!)
http://www.zerohedge.com/

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.

More
http://www.telegraph.co.uk/news/politics/8588047/Treasury-plans-for-Greece-to-go-bust.html

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.

More
http://www.telegraph.co.uk/finance/economics/8587974/EU-must-act-on-Greece-or-trigger-global-spill-over-of-financial-turmoil-IMF-warns.html

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...
More
http://boombustblog.com/BoomBustBlog/With-Greek-Debt-Yielding-20%2B-and-Trading-at-Half-Par-Value-European-Banks-Are-Trapped.html

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.
More
http://www.marketwatch.com/story/inflation-worry-as-floods-cut-china-vegetable-crop-2011-06-20

"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.
More.
http://www.abc.net.au/news/stories/2011/06/21/3249697.htm?section=justin

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.
More
http://search.japantimes.co.jp/cgi-bin/nb20110621a4.html

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.

More
http://www.marketwatch.com/story/japan-disaster-recovery-confronts-funding-dilemma-2011-06-20

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.
More
http://www.washingtonsblog.com/

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.
More.

http://www.dailymail.co.uk/news/article-2005977/Standards-nuclear-power-plants-question-radioactive-leaks-cracked-foundations-unpunished.html#ixzz1PtETf7dQ

"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!!!