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.
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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.
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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.
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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.
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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 (miningweekly.com) – 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.
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“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!!!
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