Baltic Dry Index. 902 +06
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Ireland is often held up as a success story among high deficit euro area countries, but in practice current policies probably will not succeed in returning the economy to fiscal sustainability."
Citigroup.
The Goldmanites are apparently scanning their email records looking for “muppets.” For more on the search for Goldman’s “muppets” scroll down to Crooks and Scoundrels Corner. It will be interesting to see how many muppets the Goldmanites find. We look forward to see them publishing a list as to who made it to muppet status, as opposed to mere denigration like “Herman the German” another apparent term of contempt of a Goldman “client” presumably because he was a German and foolish enough to try to trade with God’s workers.
“Muppets. Bring out your Muppets. Muppets wanted.”
Ebenezer Squid.
Now back to the global slowdown. Up first the Eurozone and Ireland. Poor Ireland should follow Iceland’s lead, renegotiate their banks debt instead of guaranteeing it 100%, and leave the euro before Greece does. Sold out by their politicians for German cash, Ireland will do no such thing. Ireland’s serfs must continue to suffer repeated bouts of Berlin austerity.
March 22, 2012, 11:06 a.m. ET
Euro-Zone Business Activity Shrinks
LONDON—Euro-zone business activity shrank further in March, suffering its biggest contraction in three months and cementing fears the region is officially in recession.
Markit Economics said Thursday that its composite purchasing managers' index for the 17 nations that use the euro fell to 48.7 in March from 49.3 in February. That was under the 50 threshold that indicates growth, and means output fell during the first quarter as a whole, Markit said.
The euro-zone economy shrank 0.3% in the fourth quarter of 2011. A further contraction in the first quarter, as the PMIs suggest, would mean the bloc is now in recession.
Chris Williamson, chief economist at Markit, calculated the downturn in the euro zone economy "is only very mild at the moment," with the PMI pointing to a drop in gross domestic product of about 0.1%-0.2%. But the loss of momentum at the end of the first quarter will heighten fears that the slowdown will be more severe.
"Over the past few months, financial markets have been heralding a recovery in the euro zone. That seems to have been premature," said Peter Vanden Houte, economist at ING Bank. A worsening economy "increases the danger that the debt crisis could come back with a vengeance," he said.
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Eurozone 'poster child' Ireland slumps back into recession
Ireland tumbled back into recession at the end of last year, dousing political claims that the "Celtic Tiger" has benefited from its tough austerity programme.
The Central Statistics Office (CSO) said that Irish gross domestic product (GDP) shrank 0.2pc in the fourth quarter after a contraction of 1.1pc in the third quarter, putting the country back into a technical recession.
Worse, the Irish gross national product (GNP) plunged 2.2pc in the fourth quarter after a 1.9pc decline in the previous three months. GNP is regarded by the Irish government as a more accurate barometer of the country's economic performance as it strips out substantial profits earned by multi-national companies in Ireland that are then taken out of the country. The CSO said the Irish economy grew by 0.7pc for the whole of 2011. But it shrank by 2.2pc in GNP terms.
Ireland, which received an €85bn (£71bn) international bailout in 2010, has won plaudits from eurozone members for its implementation of tough spending cuts and austerity measures.
European leaders, including Angela Merkel, the German Chancellor, have held up the country as a poster child for other "sinner states" to copy. At the World Economic Forum in Davos in January, Jyrki Tapani Katainen, the prime minister of Finland, said: "The Irish model [of recovery] is the one we all need. I don't see that we have any choice… there is no short cut to heaven."
By cutting public sector jobs and pay and increasing the state pension age, Ireland turned 10 years of budget deficits into a surplus last year.
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Elsewhere, Japan is turning on China safe in the notion that they are in the company of Uncle Sam and German lead Europe. Given Japan’s past history against China and their apparent lack of remorse, an unwise move it seems to me in faraway London. A quick glance at the Atlas confirms to me that both America and Europe are far separated from all of China. Japan on the other hand is right next door. An equally bad idea is getting embolden to tackle China right before a generational leadership change is underway in China. The incoming team are unlikely to meekly roll-over as their first act in power. A few acts of Japan thumping might be in store for the early part of 2013 by China. Our dumbed down modern world seems devoid of what used to be called “statesmen.” Stay long precious metals. We appear headed for interesting times.
March 22, 2012, 12:28 p.m. ET
Japan Turns Bolder on China
TOKYO—Japan's decision to join an international trade action last week against China over rare-earth minerals marks a shift by Tokyo to more openly questioning Beijing and joining hands with allies to counter its influence.
The rare-earth complaint with the World Trade Organization, spearheaded by the U.S., and joined by both Japan and the European Union, is the first time Japan has taken its neighbor and largest trading partner to the international arbiter, a stark contrast with the multiple matters raised by the U.S. and the EU since China joined the WTO in 2001.
Fearing confrontation and retaliation, Tokyo has until now opted to use bilateral channels to settle disputes with China. "We are beginning to feel bilateral talks don't work in some cases," one Japanese government official involved in the filing said. "They have to be dealt with multilaterally." Reflecting the sensitivity Japan feels about the matter, the official spoke only on condition that neither his name nor his government affiliation be identified.
In the U.S., China trade bashing has become mainstream politics. Both Democratic President Barack Obama and Mitt Romney, the Republican frontrunner to challenge him this fall, have made tough talk against Beijing a key plank in their platforms. But Japan has long been more hesitant to tangle openly with China, for a variety of cultural, diplomatic, and economic reasons. As China becomes increasingly assertive in flexing its economic and military might around the region, Japan has slowly become more willing to challenge Beijing and encourage Chinese reforms.
The rare-earth case symbolizes many of those shifting dynamics between Asia's two largest economies.
Global tensions over the matter first emerged in 2010 when China, which produces more than 95% of the world's rare-earth supply, abruptly stepped up its curbs on exports of the minerals. The move raised alarms in Japan, where the minerals have a high symbolic importance as key components in the manufacturing of electronics as well as hybrid-car batteries.
China cited the environmental impact of mining as a reason for limiting exports. But the clampdown intensified at the same time that China and Japan were locked in a diplomatic tiff over an island chain claimed by both countries, and Japanese companies and government officials saw it as retaliation for that dispute. Japanese officials also say they believe the export curb was aimed at encouraging foreign users to shift production to China, thus transferring precious technology as well.
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In UK news, the soon to be replaced for incompetence FSA, has woken up to the fact that client money went missing on their watch, and that Lehman Brothers blew up on their watch to their total surprise. The outgoing FSA is now about to investigate how UK financial firms handle client money. It seems pretty obvious to me that they handle it until it’s all gone.
"I want us to do even more to encourage the risk takers"
Gordon Brown. 2004.
“Prime Minister Gordon Brown called yesterday for the Financial Services Authority to start an inquiry, saying he was “shocked” at the “moral bankruptcy” indicated in the suit.”
Gordon Brown. 2010.
FSA to review handling of client monies after MF Global collapse
The Financial Services Authority (FSA) is to review how companies handle client money following the collapse of MF Global, Lehman Brothers and WorldSpreads.
By Jonathan Russell and Jamie Dunkley 9:43PM GMT 22 Mar 2012
The City watchdog said it would look at the “inadequate records, ineffective segregation of client assets and low level of awareness of requirements in this area” as part of its current business plan.
It is also examining options to prohibit former bosses of failed banks from taking other well paid jobs in the City.
The collapse of Lehman Brothers and MF Global have led to questions about which clients should have their funds classed as segregated. The failure of WorldSpreads, put into administration last weekend, is thought to be a separate issue as its collapse has already been referred to City of London Police.
Although MF Global went under with hundreds of millions of funds in segregated client accounts, many of them continued to be held by the administrator until months after its collapse.
The FSA said it would “strengthen our intensive regulatory and supervisory approach for firms holding client money and safe custody assets and increase our knowledge and oversight of the UK market”. It also warned it would increase the visits it paid to firms holding client assets and could look at the legislative framework governing the area.
The decision to examine how companies keep their money separate from their clients’ comes after the UK Supreme Court ruled earlier this month that all Lehman Brothers’ former clients should have access to recovered cash, whether or not the money was held in segregated accounts. It is understood the FSA was waiting for the decision before launching its review into the area.
The FSA warned it would “continue to take regulatory action where firm failings are identified”.
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"Finance is the art of hypothecating client money from deal to deal until it finally disappears."
With Apologies to Robert W. Sarnoff
At the Comex silver depositories Thursday final figures were: Registered 35.46 Moz, Eligible 99.18 Moz, Total 134.64 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the great Goldmanite Muppet hunt in the land of the Great Vampire Squids. Will any of the Muppets be offered compensation?
"God, no, we don't club baby seals. We club babies."
Goldmanite, quoted in The Times of London. November 8 2009
Goldman Sachs in hunt for 'muppet' email
Goldman Sachs has started scanning emails for the term "muppet" as the Wall Street bank investigates allegations made in an explosive public resignation letter by a former employee last week.
Greg Smith, who sold European equity derivatives for the bank in London, last week used the New York Times newspaper to publish a resignation letter in which he alleged he had seen managing directors refer to clients as "muppets" five times on internal email. The letter, which was published on the newspaper's opinion pages, also branded the bank's culture as "toxic".
Lloyd Blankfein, Goldman's chief executive, and Gary Cohn, Goldman's president, rejected the characterisation of the bank in a memo to Goldman's 30,000 staff last week, adding that when employees make complaints "we examine them carefully and we will be doing so in this case." The review of internal emails was disclosed to the bank's partners in a conference call this week.
The allegations by Mr Smith, a South African who had worked at Goldman for just over a decade, refocused attention on a bank that has been a lightning rod for public anger against Wall Street since the financial crisis. Goldman paid $500m (£316m) in 2010 to settle allegations from US regulator the Securities and Exchange Commission that it misled clients over the sale of a mortgage-backed security.
The chief executives of other Wall Street firms, including JP Morgan Chase and Morgan Stanley, were last week quick to rally around a bank they compete fiercely with.
Mr Smith, who spent most of his career with Goldman in New York, has gone to ground since the publication of the letter last week. Goldman Sachs has not been able to make contact with him, neither have many publishing executives who are eyeing an insider's account of life at a bank envied by competitors. Although Goldman's shares fell on the day Mr Smith resigned, wiping more than $2bn from the bank's market value, it remains unclear what damage the public relations storm has done.
So, Goldman is a serial arsonist that has turned betting against its clients' interests into a science. The Times article makes it clear that shorting subprime and luring gullible investors into the trap, was standard operating procedure. Goldman's CEO Lloyd Blankfein dismisses the criticism with a wave of the hand saying, "They were sophisticated investors," which is the same as saying "buyer beware". It's worth noting that shorting subprimes exacerbated the pain in housing by creating incentives for originators to issue more mortgages to people with poor credit. This prolonged the housing boom and deepened the recession when the bubble finally burst. The eventual downturn was largely engineered by Wall Street.
http://www.counterpunch.org/whitney04192010.html
Another weekend, and we alter our clocks forwards here in the spring like UK. Everywhere there are signs of the countryside springing back to life. It's lambing time too, here in the south of England, with the fields full of gamboling lambs and their Ewes. Time to take a break and enjoy another of God's great times of the year. Have a great weekend everyone.
The monthly Coppock Indicators finished February:
DJIA: +106 Down. NASDAQ: +108 Down. SP500: +78 Down. If I didn’t know better, I’d say the stock market was rigged. Old indicators no longer reflect the actuality in the market. High frequency front running perhaps? Ebenezer Squid taking candy from babies?
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