Baltic Dry Index. 1006 +17
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors - often by the back-door - that will saddle Germans with ruinous losses one day.
It is showdown day in Washington for Europe’s beggars. The Eurozone has arrived in Washington waving its begging bowl at the IMF, largely because Germany seems now to have declared war against the ECB. Adding to the sense of Europe in confusion and turmoil, the French presidential election, according to the current polls, still show the likely outcome as the election of a socialist with an agenda of raising taxes, reducing austerity and renegotiating the Merkozy deal that was vetoed by Prime Minister Cameron. The German press is going loony over Germany’s back door exposure to capital flight from Club Med. If the Germans think capital flight is bad now, just wait until France elects a president from the loony left. All in all, if you were the IMF, would you pour money into the Eurozone rat hole?
Happily for the Eurozone, the IMF is run by a French woman crony of President Sarkozy. Europe’s beggars are likely to get another round of cash shortly to be lost in the great wealth destruction process once the European Monetary Union collapses. Stay long physical precious metals. It’s now a question of when not if, and just a question of how much European and global wealth gets evaporated in the process.
Below, where we stand going into day one of the Battle of Washington.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig von Mises.
Europe Urged to Fix Crisis as G-20 Warns of More Stress
By Meera Louis and Simon Kennedy - Apr 20, 2012 12:23 AM GMT
Europe’s governments were told the onus for fixing their debt woes lies with them as the Group of 20 warned the two-year crisis still threatens global growth.
With finance chiefs from the G-20 meeting today in Washington, those from Canada and Australia joined the IMF and U.S. in pressing Europe to intensify efforts to quell the turmoil as it spreads to Spain. The G-20 cited “the situation in Europe” first in a list of drags on the world economy, according to a draft statement obtained by Bloomberg News.
As she welcomed pledges of about $320 billion for the IMF’s crisis-fighting coffers, IMF Managing Director Christine Lagarde said the lender serves as an emergency backstop and that Europe must protect itself, boost economic growth and cut debt. Italian and Spanish bonds fell yesterday on speculation the crisis is worsening.
---- Euro-area policy makers are counting on a beefed-up IMF to placate investors who have propelled yields on Spain’s 10-year bonds toward levels which trigged bailouts for Greece, Ireland and Portugal. They already agreed last month to boost their own defenses to 800 billion euros ($1 trillion.)
That still falls short, said Canadian Finance Minister Jim Flaherty, who like U.S. Treasury Secretary Timothy F. Geithner has declined to give more money to the IMF on the basis it has enough and Europe should do more. He proposed non-European countries be handed a veto over the role the lender can play assisting Europe.
“They need to build up a firewall with their own resources more than they have done so far,” Flaherty said in an interview.
Australian Treasurer Wayne Swan echoed that message, saying in a statement that “important reforms are still needed to minimize the risk of contagion from instability in Europe.”
More
German tempers boil over back-door euro rescues
Controversy is raging in Germany over soaring "payments" by the Bundesbank to shore up Europe's monetary system and cope with a tidal wave of capital flight from southern Europe.
Professor Hans-Werner Sinn, head of Germany's IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. "The euro-system is near explosion," he told Austria's Economics Academy on Thursday.
Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors - often by the back-door - that will saddle Germans with ruinous losses one day.
"It is a horror scenario," he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.
Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.
The furore follows a sharp jump in the Bundesbank's "Target2" claims within the European Central Bank's internal payment network from €547bn in February to €616bn in March. Bundesbank claims have risen sixfold since 2008, a rise mirrored in Holland and Luxembourg.
Target2 transfers are automatic credits to fellow central banks in the ECB family, chiefly in Italy, Spain, Greece and Ireland. They offset capital flight from the eurozone's core, reflecting extreme stress in the system.
There has been a dramatic rise in outflows from Spain, despite the ECB's €1 trillion blast of three-year liquidity. The exodus indicates that the ECB action has so far failed to restore basic trust in Spain's banks.
Critics say Target2 allows the vast sums to pile up for ever, unlike the US "FEDwire" that mandates the settlement of regional imbalances within months.
The Target2 saga has become a daily theme in the German press, with Dr Sinn emerging as a television superstar. The coverage is eroding confidence in the euro. The latest poll shows that 56pc of Germans want a return to the D-Mark.
---- Professor Karl Whelan from University College Dublin said the debate is absurd, whipped up by populists and the German media. "If the euro breaks up, there are still assets to go along with the liabilities. The likely outcome would be a 'Bretton Woods weekend' with a gentleman's agreement to carve up the losses."
"Even if countries told each other to go to Hell, the euro would simply cease to exist and the Bundesbank could write a cheque to itself. There would be no inflation and no loss to the German taxpayer," he said.
"We live in a world of fiat currencies, not the Gold Standard. People making these claims don't understand how a central bank works," he said. His views are shared by ECB experts.
George Soros and the Bundesbank’s Patriotic Putsch
Last updated: April 19th, 2012
George Soros has launched all-out war against the Bundesbank.
In his latest Le Monde interview he said that if he were still an active investor, he would now "bet against the euro", at least until there is a change in European leadership or policy.
The euro threatens to destroy the European Union and, with the best of intentions, the leaders are leading Europe to its ruin by trying to impose inappropriate rules.
The introduction of the euro has led to divergence instead of bringing about convergence. The most fragile countries of the eurozone have discovered that they are in a Third World situation, as if they were indebted in a foreign currency, with a crucial effect that there is a real risk of default. Trying to make them respect rules that don’t work just makes matters worse. Sadly, the authorities don’t understand this.
----- It follows a Süddeutsche Zeitung interview last Friday in which he accused "Bundesbank bureaucrats" of standing ready to smash the euro, exceeding their constitutional and political authority.
Mr Soros has some expertise in this field. His cue for launching a speculative attack – with others – on Sterling and the Lira in September 1992 came after Bundesbank chief Helmut Schlesinger told Handelsblatt that the two currencies were overvalued within the ERM peg. There would have to be a realignment.
It was a clear signal that the Bundesbank did not intend to intervene in the markets to defend the ERM pegs – as it later did for France. Mr Soros already had a $1.5bn short position on sterling. He upped the ante massively the next morning. "Go for the jugular," he told his partner Stanley Druckenmiller.
---- The current situation is more ambiguous, and much more dangerous.
Jens Weidmann, the current Buba chief, gave an ultra-hawkish interview to Reuters on Wednesday that borders on caricature. He seems to suggest that the fast-escalating crisis in Spain and Italy is not his responsibility in any way, that it has nothing to do with the Bundesbank or the European Central Bank.
"We shouldn’t always proclaim the end of the world if a country’s long-term interest rates temporarily go above 6%," he said.
More
April 19, 2012, 8:53 p.m. ET
Sarkozy in Hot Seat as Election Nears
With Voting at Hand, Incumbent Struggles to Close Gap With Front-Runner Hollande in Race Focused on Fiscal Crisis
PARIS—After a sometimes testy campaign that laid bare the poor state of France's public finances and the ugly choices facing its next president, voters on Sunday will start the process of choosing who that person will be—with incumbent Nicolas Sarkozy on the ropes.
The 57-year-old center-right president has been trailing Socialist Party candidate François Hollande for months, despite some gains in popularity after a string of shootings in Toulouse last month that terrorized France. If he loses, Mr. Sarkozy would be the 11th euro-zone leader swept away since the sovereign-debt crisis began.
A victory for Mr. Hollande, meanwhile, could portend strains with Germany and might rattle financial markets.
Mr. Sarkozy has been campaigning fiercely in the election's final days, toughening his rhetoric as he promises to cut immigration and overhaul unemployment benefits.
Mr. Hollande has largely stuck to his lower-key approach, though he has spoken of raising France's minimum wage in a bid to tip voters on Sunday.
Though both men are polling roughly even in the first round, surveys show Mr. Hollande potentially securing a landslide victory in the second round.
More
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel. !!!!
At the Comex silver depositories Thursday final figures were: Registered 28.87 Moz, Eligible 109.14 Moz, Total 138.01 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, more on the Chinese scandal that grows more intriguing with each new revelation. Do we really want a world led by China?
Bo Xilai 'responsible for two more deaths'
In a bid to quash an investigation into his wife for the murder of Neil Heywood, Bo Xilai had at least seven people seized and tortured two to death, according to a document read out to Chinese government officials.
Two former officials in Chongqing said a meeting of the city's Communist party cadres had been called on April 10, the day that the formal charges were announced against Mr Bo and his wife, Gu Kailai.
"Officials were told not to bring their mobile phones into the room, not to make any notes, just to listen," said one former official, who asked not to be named.
They were then read a description of how Mr Bo, the powerful party secretary of Chongqing, had quarrelled with his police chief, Wang Lijun, after he heard that his wife might be implicated in the death of the 41-year-old British businessman.
Apparently fearing for his life, Mr Wang fled to the United States consulate in the city of Chengdu a few days later.
When he heard the news that Mr Wang had fled, Mr Bo was on a trip to Yunnan province, but ordered his personal security team to chase Mr Wang and his associates down.
While the US consulate shielded Mr Wang himself from officers loyal to Mr Bo, the police chief's associates, and other members of the investigation team were captured.
"At least seven of Wang's associates, including his driver, were arrested by Bo, and at least two were tortured to death," said the document that was read out, according to the former official.
As one of the 350 or so members of the Communist party's Central Committee, Mr Bo was entitled to a personal security detail.
He also lived on a military camp in Bagongli, a suburb of Chongqing, and had close ties to the People's Liberation Army.
The former official said the details had been read to all officials and party members above county level in order to consolidate support for the party's decision to remove Mr Bo from power.
Since Mr Bo's downfall, the China's state media has printed a stream of editorials calling for stability and loyalty to Hu Jintao, the Chinese president.
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.
Bo Xilai, with apologies to Cary Grant. To Catch A Thief.
Another weekend, and the outcome of the Battle of Washington is eagerly awaited. Not to worry too much over the outcome, only great egos risk getting damaged. The outcome too of the first stage of the French presidential election. Whatever its outcome, the days of Merkozy look to be over. Germany has emerged victorious in Euroland, and no longer needs an erratic junior partner. If the “Dutchman” wins in round two, it looks like financial war will commence between France and Germany over austerity. Euroland’s financial crisis will take another turn for the worse. On the better news front, it’s highly unlikely Greece will bolt from the monetary union while there’s still the prospect of free IMF cash down the road. Here in the drought stricken UK, you wouldn’t know it from the great rains of April so far. 2012 is a strange year all round. I suspect that 2012 will be one of those years that stand out in history. Have a great weekend everyone.
Italy is not technically part of the Third World, but no one has told the Italians.
P. J. O’Rourke
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.
To continue reading subscribe to the LIR at Currency Countdown.
http://www.proedgenet.com/Subscribe/Subscription.php?id=LIR2
No comments:
Post a Comment