Baltic Dry Index. 812 +14
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Europe's handling of Greece has guaranteed that global funds will rush for Club Med exits at the first sign of trouble. The next spasm of the debt crisis will that much dangerous if it ever comes. As the saying goes: Hell hath no fury like an abused bondholder.
Ambrose Evans-Pritchard. 08 Mar 2012
This just in. Greece has been saved (again) by the voluntary private debt swap of about 177 billion euros in Greek sovereign debt in return for unlimited used Greek railway tickets, toothpaste coupons, free flights on the Greek spaceship program, and other considerations yet to be announced. In return, Germany gets 8 million austerity serfs, who promise to learn German immediately and become “guest workers” at the disposal of “the Americans of Europe.” The “United States of Europe” looks more like a German run Roman Empire this morning, with the German financial war machine now set to take Portugal and Spain to the Greek cleaners. Stay long physical gold and silver, and euro notes marked with an “X”.
With nothing actually fixed for Greece in terms of competitiveness within the European Monetary Slavery Union, I suspect that this is just the end of one chapter of the decline and fall of Greece, and that we will be back in a new chapter in a matter of weeks or months. The way the Greek railway runs and costs, it’s cheaper for Greece to close it and send the relatively few passengers by taxi, especially if the new taxis needed were to be supplied second hand by Germany. More will come out over the day and the weekend.
"The gold standard makes the money's purchasing power independent of the changing, ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence."
Ludwig von Mises
March 9, 2012, 1:34 a.m. EST
Greece says 85.8% bondholders accept swap offer
HONG KONG (MarketWatch) -- Greece said on Friday that bondholders with 85.8% of private sector debt have accepted its bond swap offer. The country will also activate collective action clauses in its bond agreements, which would effectively force all private bondholders to participate in the swap. Of the roughly €177 billion of bonds issued by Greece and subject to the offer, it has received tenders for exchange from holders of around €152 billion. The participation rate after the CAC activation is 95.7% End.
Greece may have been saved for a few weeks at the price of German vassalage forever, but the Bundesbank’s Panzers are now lining up Portugal. The only difference between Portugal and Greece is about a year.
"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
Legal skull-duggery in Greece may doom Portugal
Europe has ring-fenced Greece's debt crisis for now but its escalating recourse to legal legerdemain has shattered the trust of global bond markets and may ultimately expose Portugal, Spain, and Italy to greater danger
"The rule of law has been treated with contempt," said Marc Ostwald from Monument Securities. "This will lead to litigation for the next ten years. It has become a massive impediment for long-term investors, and people will now be very wary about Portugal."
At the start of the crisis EU leaders declared it unthinkable that any eurozone state should require debt relief, let alone default. Each pledge was breached, and the haircut imposed on banks, insurers, and pension funds ratcheted up to 75pc.
Last month the European Central Bank exercised its droit du seigneur, exempting itself from loses on Greek bonds. The instant effect was to concentrate more loss on other bondholders. "This has set a major precedent," said Marchel Alexandrivich from Jefferies Fixed Income. "It does not matter how often the EU authorities repeat that Greece is a 'one-off' case, nobody in the markets believes them."
The ECB holds €220bn (£185bn) of Greek, Portuguese, Irish, Spanish, and Italian bonds. Its handling of Greece implicitly subordinates private creditors in each country. All have slipped a notch down the pecking order.
The Greek parliament's retroactive law last month to insert collective action clauses (CACs) into its bonds to coerce creditor hold-outs has added a fresh twist. These CAC's are likely to be activated over coming days. Use of retroactive laws to change contracts is anathema in credit markets.
This might not matter too much if Greece were really a "one-off" case but markets are afraid that Portugal will tip into the same downward spiral as austerity starts to bite.
Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.
EU leaders said last June that "Greece is unique" and promises that haircuts would "not be replicated in Portugal". They have since pledged that the EU's new bail-out (ESM) fund will not have protected status.
Portugal has been praised by the International Monetary Fund for grasping the nettle of reform, but the IMF's own figures show that public debt may reach 118pc of GDP next year. The debts of state-owned bodies add another 10pc.
Combined public and private debt is 360pc of GDP, 100 percentage points above Greece. This is a huge burden on a shrinking economic base. Its current account deficit was still 8pc of GDP last year, much like Greece. Both countries are overvalued by 20pc on a real effective exchange rate, though Portugal has barely begun to cut unit labour costs.
"To prefer paper to gold is to prefer high risk to lower risk, instability to stability, inflation to steady long term values, a system of very low grade performance to a system of higher, though not perfect performance."
William Rees-Mogg
At the Comex silver depositories Thursday final figures were: Registered 33.84 Moz, Eligible 96.63 Moz, Total 130.47 Moz.
Crooks and Scoundrels Corner3
The bent, the seriously bent, and the totally doubled over.
Today, more on the Fukushima catastrophe by two German engineers who were there. Just follow the plan and nuclear reactors are safe seems to be the message.
Thy wee-bit housie, too, in ruin!
It's silly wa's the win's are strewin!
An' naething, now, to big a new ane,
O' foggage green!
An' bleak December's winds ensuin,
Baith snell an' keen!
Robert Burns. "To a Mouse, on Turning Her Up in Her Nest with the Plough"
'It Was Like the Reactor Was in a Shaker'
German Nuclear Inspectors Remember Fukushima 03/08/2012
When the nuclear disaster happened at Fukushima last March, two German men were working on site. They spoke with SPIEGEL about the harrowing experience and the consequences of the catastrophe.
---- On March 11, 2011, Hünies was working at Fukushima Daiichi when disaster struck. It was probably the worst experience of his life, he says.
One year after the catastrophe, Hünies and his team leader, Robert Meister, who was working with him at Fukushima, met with SPIEGEL to talk about the experience.
SPIEGEL: Your work led you to Fukushima. What did you do there?
Meister: We wanted to check the welding seams on the reactor pressure vessel. But just as we started working, the ground shook, as if someone had put the reactor in a shaker. I saw pipes as thick as trees swinging back and forth.
SPIEGEL: Were you afraid that the reactor pressure vessel would rupture?
Hünies: I was more afraid that a screwdriver would fall on my head. To be honest, it was exactly because I was in a nuclear power plant that I wasn't afraid. I know how thick the walls are. I would have been more afraid in a supermarket.
SPIEGEL: Did the plant burn, hiss, or smoke?
Meister: No, it looked good. The destruction came with the first tsunami, but we didn't know that. We climbed up on a 30-meter tall hill and went into a house. We saw the second wave.
SPIEGEL: The water destroyed the emergency power generators of the nuclear plant. The cooling system of the fuel assemblies broke down. Did you have any idea that was happening?
Meister: No.
SPIEGEL: And the Japanese?
Hünies: We speak just enough Japanese to order a pizza, so we could not follow their discussions. At 3 a.m. the Japanese told us to come into the crisis management room, because radioactivity has been detected outside.
SPIEGEL: Were you afraid?
Hünies: No, we thought they just needed to release pressure?
SPIEGEL: Just release pressure?
Hünies: We already thought that there might have been problems with the cooling of the fuel assemblies, and that pressure in the inner-part of the reactor pressure vessel would get too high.
SPIEGEL: The discharged air formed the first radioactive cloud. What was the mood like in the crisis management room?
Meister: The Japanese sat lined up at their desks in front of their computers.
Hünies: Every few minutes the boss stood up and made announcements with a red megaphone like a lifeguard.
SPIEGEL: Four hours after the earthquake the fuel rods in Reactor 1 began to melt. The Japanese must have known that.
Hünies: I can't judge that. But I did wonder a little about how quiet they all were.
More
http://www.spiegel.de/international/world/0%2c1518%2c819491%2c00.html
But Mousie, thou are no thy-lane,
In proving foresight may be vain:
The best laid schemes o' Mice an' Men,
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!
Robert Burns. "To a Mouse, on Turning Her Up in Her Nest with the Plough"
Another weekend, and Greece seems to have defaulted, but don’t tell the writers of CDS who seem adamant they haven’t. 'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.' I suspect that we will get a lot more information on this Greek default over the course of the day and over the weekend. The rules of our financialised casino are changing again, in our ever more convoluted attempt at keeping the Great Nixonian Error of fiat money working, following the collapse of the system in 2007-2008. Stay long precious metals and enjoy an early spring weekend. Ominously, Greece defaulted on the night of the Lenten Full Moon. Sackcloth and ashes next? Have a great weekend everyone.
"Whenever an overall breakdown of a monetary or financial system occurs, return to gold always restores order, revives confidence and brings back prosperity."
Donald Hoppe
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