Baltic Dry Index. 1148 +11
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Too bad ninety percent of
the politicians give the other ten percent a bad reputation."
Henry Kissinger
Henry Kissinger
Earlier in the week we asked “Europe, what else
could go wrong?” Yesterday we found out. S&P cut Spain’s sovereign debt
rating to BBB+ from A, prompting the question why was it still at A? Then last
night on French TV, the man very likely to become the next French President
declared that Germany can’t make decisions for all of Europe. As paymaster of
Europe, Germans are probably choking on their breakfast schnapps this morning,
has France never heard that he who pays the piper calls the tune?
Generally, France does poorly in wars with Germany,
and this new financial war is likely to be no different. This Friday, as seen
from April showery London, Euroland is a house divided and about to declare war
on the Holy Roman Emperor in Berlin. Can Europe’s triple Presidents in the new
EU Vatican in Brussels save Europe from a new 30 years war? I wouldn’t bet much on that outcome. Stay
long physical precious metals and euros bearing a German “X”. Euroland’s number one and number two
economies look set to clash, blowing up Club Med on the process.
The Great Bilderberger project to enslave Europe is
now entering its death throes. Its passing is a good thing, if it also destroys
the dead hand of Brussels bureaucracy and corruption, and liberates Euroland
the way Britain was economically liberated after getting forced out of the
earlier Exchange Rate Mechanism. Sadly much European wealth will get destroyed
first, and those feeding at Europe’s public trough fight to preserve their
elite privilege.
"The secret of life is
honesty and fair dealing. If you can fake that, you've got it made."
Groucho Marx
Groucho Marx
S&P cuts Spain's credit rating by two notches to BBB+
Standard & Poor's cut Spain's sovereign debt rating Thursday by two notches, warning that the government's budget situation is worsening and that is likely to have to prop up its banks.
AFP 11:15PM
BST 26 Apr 2012
S&P
cut the country's rating to BBB-plus and added a negative outlook, saying it
expected the Spanish economy to shrink both this year and next, raising more
challenges for the government.
Esther
Barranco, a spokeswoman for the Economy Ministry, told Reuters: "They
haven't taken into consideration the reforms put forward by the Spanish
government, which will have a strong impact on Spain's economic
situation."
S&P
also said that eurozone-wide polices were failing to boost confidence and
stabilize capital flows, and that the region needed to find ways to directly
support banks so that governments were not forced to take on those burdens
themselves.
"We
believe that the Kingdom of Spain's budget trajectory will likely deteriorate
against a background of economic contraction in contrast with our previous
projections," it said in a statement.
"At
the same time, we see an increasing likelihood that Spain's government will
need to provide further fiscal support to the banking sector."
"As
a consequence, we believe there are heightened risks that Spain's net general
government debt could rise further."
S&P
forecast that the economy would contract by 1.5pc this year, instead of its
previous forecast of slight growth, and predicted that the contraction will
continue in 2013 by about 0.5pc.
More
Hollande Says Germany Can’t Make Decisions for All of Europe
By Mark Deen and Helene
Fouquet - Apr 26, 2012 11:07 PM GMT
Francois Hollande, the frontrunner in the French presidential race, said
Germany can’t decide for all of Europe, stepping up his opposition to
Chancellor Angela Merkel’s belt-tightening solution to the region’s crisis. “It’s not for Germany to decide for the rest of Europe,” Hollande said late yesterday on France 2 television.
“I’m getting a lot of signals, direct and indirect, from other governments, even if they’re conservative.
The comment from Hollande, who wants to renegotiate the fiscal pact agreed to by leaders of 25 European nations, comes after Merkel reiterated her budget-cutting message in the face of rising criticism of Germany’s focus on austerity. The remarks put the two politicians at Europe’s two largest economies on a collision course over how to counter the region’s sovereign debt crisis.
Since beating President Nicolas Sarkozy in the first round of France’s presidential election on April 22, Hollande has stepped up his push against austerity in favor of growth. Hollande said this week that France won’t ratify the fiscal pact in its current form if he is elected.
Hollande is leading a chorus of politicians and economists to take issue with Germany’s debt focus. European Central Bank President Mario Draghi this week called for a “growth compact” to follow the fiscal pact.
More
Europeans will never accept a federal banking system
Hope springs eternal when it comes to efforts to save the euro.
The
latest crackpot idea for shoring up Europe's monetary union, much discussed at
last week's spring meeting of the International Monetary Fund and now widely
promoted by eurocrats, is the establishment of a federal banking system, with a
single framework for regulation, bailouts, deposit insurance, supervision and
resolution.
There is,
of course, nothing particularly new in the proposal; for many economists, it's
long been seen as an
essential precondition for successful monetary union, at
least as important as the federalisation of fiscal and political systems. The
one cannot work without the others.
The
dollar, for instance, couldn't function effectively without a federal banking
system, if only for this rather obvious reason; many US banks are of a size
that would overwhelm the ability of the individual states in which they are
based to underwrite them. Take the example of Citigroup, with assets at the
last count of nearly $2 trillion. If it had been solely Citi's home state of
New York that had been responsible, Citi would have taken New York down with it
when it went bust in the sub-prime banking crisis three years ago as surely as
the Irish banks have sunk Ireland, and Spanish banks are now bankrupting Spain.
The fact
that Citi was regarded as a federal responsibility, not a state one, saved New
York from a ruin as otherwise certain as that of Iceland. Citi was the
collective responsibility of the US as a whole. Yet in the eurozone, banks are
deemed to be a sovereign liability, not a federal one.
----So
why do I say that the formation of a federal banking system in euroland is
another crackpot idea? It's because as things stand, there is virtually no
chance of it happening. To the contrary, all the pressures right now seem to be
the other way around, towards disintegration of the eurozone banking system
rather than further integration. It is as if in progressively retreating behind
national borders, finance is subconsciously preparing for the eventual break-up
of the euro back into its constituent sovereign currencies.
“Egol and Fabrice were way ahead of their time,” said one of the former Goldman workers.
“They saw the writing on the wall in this market as early as 2005.”
April 26, 2012, 8:39 p.m. ET
Gulf States Keep Oil Dollars Home
Booming
oil prices are flooding Arab countries with money, but where the lion's share
of that wealth would once have been pumped into the world's financial markets,
much of it is now being spent at home.
Gulf
states are embarking on their biggest spending spree on record as they lavish
funds on domestic projects—from new housing and hospitals to mosque restoration
and job creation—largely as a defensive response to the Arab Spring uprisings that
toppled other Middle East governments last year. Government outlays in the
region are set to reach $488.6 billion this year, according to recent Institute
of International Finance estimates, up 35% from 2009's figure.
The
domestic focus hasn't yet eaten away at the region's external investments—net
foreign assets in the Gulf region are expected to rise by around $300 billion
this year alone—but the domestic focus has meant less oil money is being
funneled into global capital markets than otherwise might have been. New
patterns of spending are also pushing government budgets through the roof and
sending money once set aside for things like increases to oil production
capacity and military upgrades to social projects instead.
"When
the Arab Spring happened, many governments discovered that the enemy was within
and not without," said Mustafa Alani, a senior adviser at the Geneva-based
Gulf Research Center and an expert on regional security issues.
In all,
governments in the Gulf—including Saudi Arabia, the United Arab Emirates and
Kuwait—have pledged $157 billion in additional spending directly following the
Arab Spring uprisings, according to a Bank of America Merrill Lynch report from
last year. That amounts to about 13.4% of the region's 2011 GDP. To stave off
any potential unrest, Gulf monarchies splurged on population-pleasing projects
such as spending on higher salaries, bonuses for government employees and new
houses.
More
We end today’s shortened update with Japan. Twenty something years in to
fighting a losing battle against deflation, and the Bank of Japan tries one
more dose of the medicine that hasn’t worked so far. Now as Japan’s
demographics turn against it, Japan must shortly enter the global market for
sovereign finance. Yen holders now also need the safety og precious metals,
though most in Japan don’t realize it yet.
Insanity: doing the same thing over and over again and expecting
different results.
Albert Einstein
April 27,
2012, 1:20 a.m. EDT
Bank of Japan adds ¥5 trillion to monetary easing
Keeps rates on hold; but moves seen as not enough to end deflation
HONG KONG
(MarketWatch) — The Bank of Japan on Friday increased the size of its asset
purchase program by about 5 trillion yen ($61.7 billion), meeting some
analysts’ expectations but falling short of the aggressive action that
economists say is required to end the nation’s deflation.
The
central bank, which also left its policy interest rates unchanged in the range
of 0% to 0.1%, said it will increase the size of its asset purchases to ¥70
trillion from about ¥65 trillion at present.
In its
policy statement, the central bank said its latest decision was in keeping with
the “powerful monetary easing” that it has been pursuing of late.
But some
analysts remained unimpressed with such claims.
“[Our] overall assessment is that while it is positive that
BOJ acted today, what they did today isn’t sufficient for the BOJ to recover
its long-lost credibility as a deflation fighter,” Takuji Okubo, chief Japan
economist at Societe Generale, wrote in a note to clients.
More
"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
At the Comex silver depositories Thursday final
figures were: Registered 29.05 Moz, Eligible 111.60 Moz, Total 140.65 Moz.
Crooks and
Scoundrels Corner.
The bent,
the seriously bent, and the totally doubled over.
Yes, Goldie
again, you didn’t really think they could stay out of this section for long.
This time, God’s work involves stiffing the Muppets at Her Majesty’s Revenue
and Customs.
“We’re all in it together” except Goldie. Time for a tax audit, except Goldie’s vampire
squids even win at that.
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
Goldman Sachs pays £4.1m tax on £1.9bn profit
Wall Street giant attacked for deferring 99 per cent of its tax bill
Friday 27
April 2012
The
London arm of Goldman Sachs paid only £4.1m in corporation tax to the Treasury
last year despite making pre-tax profits of £1.92bn, annual accounts have
revealed.
Goldman
Sachs International (GSI) had a corporation tax bill of £422.3m but it deferred
£418.2m – or more than 99 per cent of the amount – that it had to pay
immediately in "current tax". The Wall Street giant, presided over by
Lloyd Blankfein, was able to postpone payment because of "timing
differences", according to the accounts.
Goldman's
decision will be a blow to the Treasury's coffers as the Chancellor George
Osborne battles to reduce the Government's deficit. There is no suggestion that
GSI is seeking to avoid corporation tax by deferring payment. However GSI's tax
activities have come under scrutiny after it emerged last year that the Inland
Revenue boss Dave Hartnett had "let off" the bank to the tune of
£10m.
Mr
Hartnett insisted to MPs that "a mistake had been made" and he is
retiring early this summer.
The
bank's UK corporation tax bill fluctuates yearly as it can be skewed by the
value of its bankers' share options, which oscillate in tandem with the stock
market.
The £4.1
m GSI has paid in "current" corporation tax in 2011 is in stark
contrast to the £336m it paid in the previous financial year.
The
accounts showed revenues slumped 31 per cent to £3.19 bn last year because of
eurzone jitters and "lower global equity prices". But profits jumped,
partly because the "paper" value of share options paid to staff fell
by more than £1.1 bn, thus cutting the bank's wage bill.
Labour MP
John Mann, a member of the Commons Treasury select committee, said Goldman
Sachs should not defer tax payments when it could hand over the cash now.
"It's
morally and ethically wrong. These are people who are at the heart of the
problem in the financial world who've paid extraordinary bonuses to their
partners and aren't prepared to pay a fair amount of tax. It's pure
unadulterated greed."
More
"Finance
is the art of passing customer currency from hypothecation to hypothecation until
it finally disappears."
Another weekend,
and nothing fixed in Euroland. If anything the crisis keeps escalating. Now we
have rising tension in East Asia. In America, the “recovery” if it is a
recovery, looks to need more QE life support, according to a big hint from
Helicopter Ben. We are living through the end times of fiat currency. We are
one “next Lehman” away from the end of the Great Nixonian Error. Will Greece
bolt this month or next? Time to put all that aside for the weekend. Time to
enjoy God’s spring filled woods and fields. Have a great weekend everyone.
The monthly
Coppock Indicators finished March:
DJIA: +97 Down. NASDAQ: +103 Down. SP500: +70 Down.
All three indicators remain down but downward momentum is stalling.
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