Baltic Dry Index. 1489 +04
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
The strain circulating in Germany and nine other European countries produces a toxin not usually seen in E. coli that can damage the kidneys and other organs. Germany alone has reported 470 cases of the kidney ailment and officials advised against eating raw tomatoes, cucumbers and leafy salads.
“We usually consider that a rare complication, and to have 470 is absolutely extraordinary,” said Robert Tauxe, deputy director of food-borne illnesses at the U.S. Centers for Disease Control and Prevention in Atlanta, in a telephone interview. “This is a new public health problem.”
We end the week with yet more food inflation and a German E.coli outbreak. It may seem strange to be forecasting food inflation at a time that much Spanish market garden produce is being destroyed in the fields due to a lack of buyers thanks to an E.coli outbreak wrongly attributed to Spanish organic cucumbers, but that is what is all too likely to happen if the Pheu Thai party wins next month’s election in Thailand. Below, Bloomberg covers the off the radar election.
Rice Soaring 50% in Thailand as Thaksin Seeks Votes in World’s Top Shipper
By Supunnabul Suwannakij and Daniel Ten Kate - Jun 2, 2011 11:58 AM GMT+0100
Rice prices in Thailand, the biggest exporter, may jump 50 percent by the end of the year under a plan by the party favored to win the July 3 election to buy the grain directly from farmers, said millers and traders.
Yingluck Shinawatra’s Pheu Thai party plans to reinstate a policy introduced by her brother, fugitive former leader Thaksin Shinawatra, to buy unmilled rice at 15,000 baht ($496) per metric ton, twice the current level. That would raise costs for exporters and boost the price of shipments to about $750 per ton from $500, according to a survey of eight millers and traders.
Rice has lagged behind gains in foodstuffs such as corn and wheat over the past year and the grain may be “the commodity which is separating us from a food crisis,” the United Nations Food and Agriculture Organization said in March. A jump in prices in Thailand may boost demand for cheaper grain from Vietnam, the second-biggest shipper, and India.
“If this measure is taken, world prices will definitely increase as Thailand represents one-third of world trade and cannot be ignored,” said Mamadou Ciss, chief executive officer of Singapore-based broker Hermes Investments Pte, who correctly predicted in 2006 that prices would double. “In the past, these programs had a direct effect on the market. Of course there will be resistance from the buyers, but at the end of the day it’s rice or no rice.”
More.
With drought wracking western Europe and a large rice growing part of China, the northern hemisphere grain crop is already below average. In north America, production has also been hit by drought in the winter wheat growing regions and excess moisture and floods in the spring wheat and corn (maize) growing regions. Normally, as we get closer to the northern hemisphere harvest season, just starting in Texas, grain prices fall in response to the incoming harvest. This year food price inflation looks set to get worse, even as Russia returns as a wheat and barley exporter following last year’s terrible drought. Bad things tend to happen when food gets priced out of the range of the masses at the bottom of society, and in the second half of this year we appear to be headed for yet more trouble. We appear to be weeks away from a global scramble to lock up supply.
In continuing Greek news, the EU and IMF today must decide how much more German cash to lend to Greece and on what terms. Good money poured after bad until finally Greece defaults.
"There are about three hundred economists in the world who are against gold, and they think that gold is a barbarous relic - and they might be right. Unfortunately, there are three billion inhabitants of the world who believe in gold."
Janos Fekete
EU, IMF Wind Up Greek Economy Review as Bailout Readied
By Maria Petrakis and Marcus Bensasson - Jun 3, 2011
European Union and International Monetary Fund officials will today complete a review of Greece’s plan for 78 billion euros ($113 billion) in asset sales and austerity measures as they prepare the nation’s second bailout in little more than a year.
The assessment caps a week when Greece’s fiscal crisis worsened enough for Moody’s Investors Service to raise the probability of a default to 50 percent. Greek Prime Minister George Papandreou will discuss the findings at 3 p.m. on a visit to his Luxembourg counterpart Jean-Claude Juncker, who leads the group of euro-area finance ministers.
“The medium-term plan is largely completed and some technical details remain,” George Petalotis, Papandreou’s spokesman, said yesterday. “There were no major hiccups.”
Papandreou is promising 6.4 billion euros of spending cuts this year, another 22 billion euros up to 2015, and 50 billion euros in sales of assets including Hellenic Telecommunications Organization SA (HTO) and Public Power Corp SA. The pledges are key to securing a fifth payment of loans under last year’s 110 billion- euro EU-led rescue as well as more financing over the next two years as borrowing costs lock Greece out of markets.
Moody’s downgraded Greece to Caa1, on a par with Cuba, and raised the nation’s risk of default on June 1 after policy makers considered asking investors to reinvest in new Greek debt when existing bonds mature. The move prompted Greek 10-year bonds to fall to the lowest since January.
More.
Ever ready to promote French socialism, the ECB has come up with the Lords of the Universe solution. Below, what would be funny if it wasn’t so serious. Perhaps DSK might head it up between stays in 5 star hotels and jails. Stay long gold and silver, this ever more remote dysfunctional bankster system is headed for disaster. It’s long past time for the UK to pull out of this bureaucratic elitist club of losers and liars. The UK needs to fast distance itself from a EU that’s intent on becoming the EUSSR.
"Start buying gold now, regardless of the price. By acting now, you will not have to react when it's too late. Too late will be when the majority of the public finally figures out what is happening to paper money and frantically tries to get aboard. Remember, if you're one of the ones holding paper in the end, you will have given away your products and services for nothing."
Robert Ringer
ECB's Trichet pushes for a European finance ministry
Jean Claude Trichet has called for the creation of a European finance ministry whose powers to intervene in national economic policy would be "well over and above the reinforced surveillance that is presently envisaged".
By Louise Armitstead 6:00AM BST 03 Jun 2011
The boss of the European Central Bank (ECB) said that "strengthening the institutions of economic union" was vital to Europe's future success, in a radical speech that is likely to alarm the UK Government. David Cameron has pledged to halt the creep of European powers.
Mr Trichet, who was speaking after being awarded the annual Charlemagne prize for services to European unity, said that the European Union (EU) needed tougher tools – including the ability to veto national economic decisions – to deal with imprudent member states.
He criticised the system whereby countries are effectively able to ignore EU fiscal austerity measures, "even if this attitude triggers major difficulties for other member countries". In his vision "it would be not only possible, but in some cases compulsory, for the European authorities... to take themselves decisions applicable in the economy concerned."
He added that the authorities could have "the right to veto some national economic policy decisions. The remit could include in particular major fiscal spending items and elements essential for the country's competitiveness."
During his speech, Mr Trichet did not distinguish between the 17-member eurozone and the 27-member EU. So far, the UK has kept a distance from the discussions on the European debt crises.
More.
On the other side of the Atlantic, another credit rating warning to spendthrift Uncle Sam. It is not likely to make much difference. In America there is simply no consensus for addressing the trillion and a half dollar budget deficit, nor for raising new taxes or meaningfully cutting expenditure. A two year war for the spoils of the next presidency is underway. Stay long precious metals. Without serious change, America is on course for a serious dollar devaluation if not national bankruptcy. Of course nations don’t really go bankrupt, they just default and suffer a significant drop in most living standards. There is no sign yet that US politicians are ready to address US issues ahead of the 2012 presidential election. We are living through the end of the dollar reserve standard, although no other fiat currency is in a position to replace it.
"You have to choose between trusting to the natural stability of gold and the natural stability and intelligence of the members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."
George Bernard Shaw. Socialist.
US faces credit-rating review from Moody's
A second credit rating agency has threatened to put the US under review for a possible downgrade unless politicians put their squabbles aside and agree to raise the statutory debt limit.
By Philip Aldrick, Economics Editor 11:10PM BST 02 Jun 2011
Moody's said the world's biggest economy's AAA-rating is under threat because the country will run out of money unless policymakers agree to increase the limit on the national debt above the current $14.3 trillion.
The US treasury department has warned that the government risks default if Congress does not authorise more borrowing by August.
President Barack Obama attempted to pass a bill that would have allowed the US to increase its debt limit by $2.4 trillion, but it was rejected on May 31 after Republicans lined up against it.
Republicans are demanding spending cuts be brought into line with tax revenues as a condition of raising the limit, in the face of President Obama's pledge to protect costly social programmes.
"The heightened polarization over the debt limit has increased the odds of a short-lived default," Moody's said in a statement. "If this situation remains unchanged in coming weeks, Moody's will place the rating under review."
The AAA rating will be kept if the debt limit is raised, Moody's said, and a "credible agreement" on substantial deficit cuts would support a continued stable outlook.
In April, Standard & Poor's put the US government on notice that it risks losing its AAA-rating unless policymakers agree on a plan by 2013 to reduce budget deficits and the national debt. The deficit is currently roughly $1.5 trillion.
Treasury Secretary Timothy Geithner has warned that a failure to raise the debt ceiling by August 2, the date he now projects borrowing authority would be exhausted, may have catastrophic effects on the economy by sharply raising borrowing costs.
More.
http://www.telegraph.co.uk/finance/economics/8553761/US-faces-credit-rating-review-from-Moodys.html
"There can be no doubt that the international gold standard, as it evolved in the 19th century, provided the growing industrial world with the most efficient system of adjustment for balance of payments which it was ever to have, either by accident or by conscious planning."
W. M. Scammell
At the Comex silver depositories Thursday, final figures were: Registered 29.63 Moz, Eligible 71.00 Moz, Total 100.63 Moz. Deliverable silver has now fallen below 30% of the available Comex silver.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, more on the Madoff fraudster ring.
Ex-Madoff Employee Lipkin to Plead Guilty to Bank Fraud, Falsifying Books
By Patricia Hurtado - Jun 2, 2011 7:40 PM GMT+0100
Former Bernard Madoff employee Eric Lipkin will plead guilty to federal criminal charges including falsifying books and records of a broker-dealer and bank fraud.
Lipkin will plead guilty to six separate crimes, Assistant Manhattan U.S. Attorneys Lisa Baroni and Julian Moore said in a letter to U.S. District Judge Laura Taylor Swain, who is presiding over the case. Lipkin is set to plead on June 6, Baroni said.
In addition to two counts of falsifying records and one count of bank fraud, Lipkin will also plead guilty to two counts of conspiracy and one count of making a false statement. He faces as long as 70 years in prison.
“The parties anticipate that, at the conference, Eric Lipkin, a former employee in the investment advisory business of Bernard L. Madoff Investment Securities LLC, will plead guilty to the information pursuant” to an agreement with the government, prosecutors said in the June 1 letter that was made public today.
James Filan, a lawyer for Lipkin, declined to comment.
Five former employees have been charged by Manhattan U.S. Attorney Preet Bharara’s office in the case and are awaiting trial before Swain in connection with the money manager’s multibillion-dollar Ponzi scheme. All have pleaded not guilty.
Annette Bongiorno, who recruited investors and helped run Madoff’s investment advisory office and Joann Crupi, of Westfield, New Jersey, were arrested and charged by the U.S. in November.
The U.S. previously charged Daniel Bonventre, Madoff’s ex- operations chief, and Jerome O’Hara and George Perez, both former programmers who worked at Madoff’s investment business. No trial date has been set.
"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
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!!!
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