Baltic Dry Index. 1418 -10
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Paper money has had the effect in your state [Rhode Island] that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”
George Washington 1787.
From east to west, from north to south it is all increasingly going wrong, yet no one is yet connecting the world’s economic ills to the scourge of fiat money. Fiat money is the ultimate Ponzi Scheme, requiring ever more tranches of new cash to keep, what has by now become malinvestment growth running, in a world now operating on unrepayable debt. Stay long physical precious metals. The whole fiat money system is broken and unfixable, but for now we go on with the pretense that it isn’t. For now, we continue on with massive global fiat currency creation, and act surprised when unlimited currency creation shows up in the very finite commodities markets as a commodity price bubble. Those not in the financialised gambling economy, find that their salaries and savings can’t keep up. Discontent and worse, lurk in most countries, with a few like Greece and North Africa experiencing more than mere discontent.
Below, a set of worrying articles that need little commentary from me. Sufficient to say that this is now a most unstable investment environment, probably since the 1930s, with safety now in cash or better yet 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
JUNE 14, 2011
Wave of Unrest Rocks China
Threats to Social Order Increasingly Hit Cities, Bringing Iron-Fist Response
BEIJING—A wave of violent unrest in urban areas of China over the past three weeks is testing the Communist Party's efforts to maintain control over an increasingly complex and fractious society, forcing it to repeatedly deploy its massive security forces to contain public anger over economic and political grievances.
The simultaneous challenge to social order in several cities from the industrial north to the export-oriented south represents a new threat for China's leaders in the politically sensitive run-up to a once-a-decade leadership change next year, even though for now the violence doesn't appear to be coordinated.
In the latest disturbance, armed police were struggling to restore order in a manufacturing town in southern China Monday after deploying tear gas and armored vehicles against hundreds of migrant workers who overturned police cars, smashed windows and torched government buildings there the night before.
The protests, which began Friday night in Zengcheng, in the southern province of Guangdong, followed serious rioting in another city in central China last week, plus bomb attacks on government facilities in two other cities in the past three weeks, and ethnic unrest in the northern region of Inner Mongolia last month.
Antigovernment protests have become increasingly common in China in recent years, according to the government's own figures, but they have been mainly confined to rural areas, often where farmers have been thrown off their land by property developers and local officials.
The latest unrest, by contrast, involves violent protests from individuals and large crowds in China's cities, where public anger is growing over issues including corruption and police abuses.
There is no evidence to suggest the recent violence is part of a coordinated movement—the party's greatest fear—nor do the events threaten its grip on power given the strength of China's security apparatus, and its booming economy, analysts say. They are nonetheless troubling for China's government which, unnerved by unrest in the Arab world, has detained dozens of dissidents since appeals for a "Jasmine Revolution" in China began circulating online in February. The Mideast uprisings so far haven't inspired similar mass protests in China.
More.
China’s Inflation Accelerates to 5.5%
By Bloomberg News - Jun 14, 2011
China’s inflation accelerated to the fastest pace in almost three years in May and industrial production rose more than estimates, sustaining pressure for a further interest-rate increase.
The 5.5 percent annual gain in consumer prices matched the median forecast in a Bloomberg News survey of economists. Production rose 13.3 percent, exceeding a median 13.1 percent forecast. Fixed-asset investment quickened, according to statistics bureau data released in Beijing today.
---- Policy makers face “some difficult decisions, to tighten, to loosen, or to pause,” Chang Jian, an economist at Barclays Capital in Hong Kong, told Bloomberg Television.
Food prices rose 11.7 percent from a year earlier as pork and vegetable costs surged. Low-income nations from India to Algeria are struggling with food prices that climbed to a record in February according to a United Nations gauge. The Food and Agricultural Organization index was up 37 percent in May from a year earlier.
Inflation has exceeded the Chinese government’s 4 percent target each month this year as companies including McDonald’s Corp. boost prices. Still, the pace remains the slowest of the so-called BRIC nations, with the latest data showing annual rates of 6.6 percent for Brazil, 9.6 percent for Russia and 8.7 percent for India. China’s peak this year may be “slightly above” 6 percent in June, Bank of America Merrill Lynch said.
More
http://www.bloomberg.com/news/2011-06-14/china-s-inflation-accelerates-to-5-5-.html
US Is in Even Worse Shape Financially Than Greece: Gross
Monday, 13 Jun 2011
When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.
Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.
"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."
More
http://www.cnbc.com/id/43378973
Greece's credit rating cut again on higher risk of default
Greece's recovery plans have suffered another hammer blow after Standard & Poor's cut the country's credit rating because of "a significantly higher likelihood of one or more defaults".
By Louise Armitstead 9:37PM BST 13 Jun 2011
The rating agency reduced the long-term rating on Greek sovereign debt from B to CCC – only four notches above default. It added that in its view the country's credit outlook was "negative".
The yield on 10-year bonds issued by Greece has soared to 16.9pc and the country's sovereign debt is now the lowest rated in the world, ranking below Ecuador, Jamaica and Grenada. The move also impacted Portuguese and Irish bonds, which are also experiencing similar problems to the Hellenic nation.
The downgrade triggered an angry response from the Greek finance ministry which claimed Standard & Poor's decision was made on the back of "rumours and statements by representatives of the European Commission and European Central Bank".
The ministry said: "However, the decision ignores the intense consultations taking place between the same institutions and the International Monetary Fund aimed at designing a viable solution that will cover the financing needs of Greece in the coming years."
----The statement came as the euro fell again amid fears that European leaders would not be able to agree terms for Greece's new bail-out – its second in 14 months.
Traders are alarmed by the division between Wolfgang Schaeuble, Germany's finance minister, who wants Greek bondholders to extend the maturities on the seven year debt, and Jean-Claude Trichet, president of the ECB, who has argued that any restructuring is the same as a default.
European and international officials are scrambling to agree a plan to stem Greece's debt crisis by the end of June.
More
JUNE 14, 2011
Italians Vote to Abandon Nuclear Energy
ROME—Italians voted to abandon nuclear power for the foreseeable future, turning out in droves to cast ballots in a packet of referenda whose outcome is a sign of growing popular discontent toward Prime Minister Silvio Berlusconi's conservative government.
Mr. Berlusconi's administration had in past weeks urged people not to vote in the four referenda, which were organized by center-left opposition parties and which asked voters whether they wanted to overturn government laws on reviving nuclear energy, privatizing Italy's water supply and giving top government officials partial immunity from prosecution.
Instead, 57% of Italians went to the polls—a number well above the 50% of the voting population needed to make a referendum valid, a threshold last reached in 1995. More than 95% of those who cast their ballots voted "yes" in each referendum, overturning the four laws in question.
"This was a vote against nuclear energy. But by urging people not to go to the polls, Berlusconi turned this into a vote against himself," said Giovanni Sartori, professor emeritus of political science at the University of Florence.
Mr. Berlusconi had made restarting nuclear energy in Italy one of his government's priorities. The immunity law also had been one of the government's key planks. The law allows the prime minister and other top officials not to show up in court for criminal trials, if busy governing schedules are cited. Critics, however, have long characterized the law as a tailor-made measure aimed at shielding Mr. Berlusconi from the four criminal trials he is currently facing.
---- Monday's outcome is notable not just for the lopsided vote but also because it comes just weeks after Mr. Berlusconi's conservative coalition was badly defeated in local elections. Though the premier still has the majority in Parliament he needs to govern, his popularity has been falling in recent months.
---- Italy's chronically feeble economy, however, is weighing heavily on young people in particular, and many here are fed up with the premier's legal woes, including most recently his trial on charges of paying for sex with an underage woman and abusing his power to cover it up—charges the premier denies.
----- Italy abandoned nuclear energy in 1987—shortly after the Chernobyl nuclear accident—by voting against it in a referendum similar to Monday's. In the current vote, the Fukushima Daiichi nuclear crisis in Japan drew people to the polls. As in other European countries, Italy earlier this year imposed a moratorium on its nuclear plans, but Mr. Berlusconi's government was hoping to resurrect them longer term by building several plants across the country. Early on Monday, as the results were coming in, Mr. Berlusconi said that without the possibility of nuclear plants, Italy would have to "strongly commit" to renewable energy.
More
We end for the day with Scotland setting out to be the new Iceland or Greece. Debt free Scotland, except to the extent it is partly responsible for the UK’s national debt, is proposing to go into debt in its sole right. Don’t worry, we’ve got North Sea oil, I suppose is the warped logic, ignoring the fact that the oil already supports the UK taxation base and is already in steep decline. Adam Smith must be spinning in his grave.
It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine.
P.G. Wodehouse.
Scotland to issue its own bonds
Just when European credit traders felt they could no longer be shocked, the Government has announced that Scotland will soon be able to issue its own sovereign bonds.
By Louise Armitstead 7:00AM BST 14 Jun 2011
The launch of the 'Braveheart bonds' was sanctioned as part of the Scotland Bill which includes the biggest transfer of fiscal powers from Westminster to Edinburgh in the Union's 300-year history.
The Treasury insisted that the bonds, which can be issued without further primary legislation, would be guaranteed by Scotland and not the UK Government.
As part of the package, Edinburgh has also been given extra tax-raising powers. Overall amendments to the Scottish Bill will hand a extra £12bn of spending to Scotland which currently has an annual budget of £30bn to spend on health, education and other public services.
At the moment, Scotland can borrow £500m to cover short-term spending gaps. It will now have the ability to borrow up to £2.2bn to finance long-term infrastructure projects. Capital borrowing will be capped at £230m a year.
More
http://www.telegraph.co.uk/finance/economics/8573653/Scotland-to-issue-its-own-bonds.html
I don't owe a penny to a single soul--not counting tradesmen, of course.
P.G. Wodehouse.
At the Comex silver depositories Monday, final figures were: Registered 28.70 Moz, Eligible 72.12 Moz, Total 100.82 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Once again more on the ever growing scandal of TEPCO. Who gave them a license to start fooling around with nuclear power?
“And Lord, we are especially thankful for nuclear power, the cleanest, safest energy source there is. Except for solar, which is just a pipe dream.”
Homer Simpson.
JUNE 14, 2011
Japanese Nuclear Cleanup Workers Detail Lax Safety Practices at Plant
OGAKI, Japan—When Masayuki Sakamoto stepped onto the grounds of the world's most dangerous nuclear power plant in March, he had little preparation other than a half-hour briefing on protective gear.
The 56-year-old owner of a 30-person construction firm from central Japan had been hired to clear debris and shovel dirt at the Fukushima Daiichi plant at a time when its reactors were belching smoke and oozing gamma rays. He had never worn a hazmat suit or used a dosimeter. He still doesn't have the proper paperwork that, in normal times, would be needed to work in a radioactive environment.
Mr. Sakamoto's rare and detailed description of daily conditions at the plant reveals the extent of worker-safety concerns there. On Monday, plant operator Tokyo Electric Power Co., or Tepco, said six more workers—bringing the total to eight—have likely received larger doses of radiation than allowed, even under Japan's loosened exposure limits.
----To clean up the plant, Tepco is leaning heavily on people like Mr. Sakamoto: an underclass of subcontractors and laborers who often have little education, training or understanding of the hazards they face.
The issues he described were compounded by the chaos inside the plant during the first few months of the crisis. After the quake and tsunami, normal systems for monitoring radiation and overseeing workers broke down, and Tepco was slow in implementing alternatives, interviews with Mr. Sakamoto and half-dozen other workers indicate.
Tepco acknowledges the issue. "Our top priority was cooling the reactors, so people might say that our response is slow,'' said Tepco spokesman Takeo Iwamoto, discussing radiation management. "We are working on it as quickly as possible."
Some workers weren't properly registered for working in radioactive environments, Tepco said in a May report. Many didn't get dosimeters to monitor radiation exposure when equipment was short in the early weeks.
A few workers employed by a major construction company, who asked not to be named, say they weren't told when they were recruited that they would be going to the plant, where radiation levels can still be many thousands of times higher than normal.
Spokesmen for Tepco said they believe workers are trained properly. They also said Tepco isn't responsible for the employees and subcontractors of other firms working inside Daiichi.
----A Tepco probe a month or so ago into puzzlingly high levels of radiation exposure recorded by people in Daiichi's command center revealed that the center was likely contaminated, and potentially thousands of workers ingested radioactive particles.
Tepco says it has tested more than 2,300 workers for exposure to inhaled radioactive particles and has found elevated levels in hundreds of people.
More
“Sometimes the only way you can feel good about yourself is by making someone else look bad. And I'm tired of making other people feel good about themselves.”
TEPCO, with apologies to Homer Simpson.
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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