Baltic Dry Index. 1067 +39
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
So EMU grinds on, a contraction machine for half a dozen
countries, with France sliding slowly into this assembly of Miserables. To
impose net fiscal tightening of 3pc a year or more on the South at this stage –
without offsetting monetary stimulus or demand growth in the North – can lead
only to a downward spiral that engulfs everybody in the end.
It is St George’s Day, the patron Saint of
England, and in a delicious irony, a day for the French president to reflect on
his humiliation in yesterday’s first stage of the presidential election.
Everything how hinges on whether the 20% who voted for Ms Marine Le Pen can
bring themselves to vote for President Sarkozy and relative sanity, or will
stand aside and return France back to the policies of the loony left socialists.
Big trouble lies ahead for France and Euroland, if “the Dutchman” Hollande gets
to become president of France. I suspect that
the National Front voters will hold their noses and vote for Sarkozy,
but it’s time to add to gold and silver hedges in case they don’t. In any event
“Merkozy” is dead. A resurrected President Sarkozy dependent for a second term
on the far right, can’t be seen continuously kowtowing to Merkel anymore.
Europe’s economic crisis just got a whole lot more complicated. Euros anyone,
even if they carry Germany’s “X” rather than a French “U”, Spanish “V”, Italian
“S”, or soon to be retired Greek “Y”.
“Given these results, Sarkozy is finished,” said
Gerard Grunberg, a political analyst. “His fate is in the hands of Marine Le
Pen and she will do nothing to help him, on the contrary.”
Despite finishing second, Mr Sarkozy last night
said the race was closer than previously suggested and invited those who “love
their country to join me”.
In other European news, the Bilderberger “United States
of Europe” project is comatose on ECB and IMF life support, with the Dutch trying
to turn off the switch. Sadly much more of Europe’s wealth has yet to be
destroyed, before the Eurocrat’s vanity project the euro, is put out of its
misery in its present form.
Dutch crisis puts eurozone debt rescue plans at risk
The Dutch prime minister will on Monday launch a bid to salvage his austerity budget amid political chaos that could cost the country its AAA credit rating and plunge Europe’s debt rescue plans into disarray.
Mark
Rutte, who is a key ally of Germany and the eurozone’s “hardliners” on
financial discipline, has called an emergency cabinet meeting after budget
talks collapsed at the weekend.
He is
expected to resign today and announce snap elections, pushing yet another
“core” eurozone country into political and economic uncertainty.
In
France, early polls pointed to a victory of Francois Hollande in the first
round of the presidential elections setting the stage for a run-off between the
socialist challenger and incumbent Nicolas Sarkozy on May 6th. Mr Hollande has
pledged to renegotiate the European fiscal pact that binds countries to a 3pc
deficit limit by next year.
The
“non-negotiable” fiscal pact, which was vetoed by David Cameron, triggered the
collapse of the coalition government in the Netherlands.
Geert
Wilders, the far-right leader, said he could not support the €16bn (£13bn) of
cuts needed to meet the 3pc target. He wouldn’t allow Dutch citizens to “pay
out of their pockets for the senseless demands of Brussels” he said.
“We don’t
want to follow Brussels’ orders. We don’t want to make our retirees bleed for
Brussels’ diktats,” he said.
Last week
Fitch warned that the Netherlands faces a credit downgrade if it failed to
deliver its austerity cuts or let political conflict disrupt economic
management.
Traders
are braced for another volatile week as uncertainty over debt reduction plans
spreads to the eurozone’s northern core.
Hopes
that the European Central Bank (ECB) will intervene and re-start its bond
buying programme were doused by officials’ comments at the International
Monetary Fund (IMF) meeting in Washington.
More
http://www.telegraph.co.uk/finance/financialcrisis/9219903/Dutch-crisis-puts-eurozone-debt-rescue-plans-at-risk.html
So
all hope of saving the dying euro folly now lies with the French run,
Washington based, IMF. The IMF will soon be rebranded the EMF on current
policies, and it will lose most of its reserves when the Euro disintegrates. “Faced with the choice between changing one's mind and proving that
there is no need to do so, almost everyone gets busy on the proof.” John Kenneth Galbraith.
“Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff”
Professor Paul Krugman.
IMF encourages Europe's economic suicide
China, Japan, America, the oil powers, and the rising economies of Latin America had a chance to pull Europe back from suicide through IMF pressure, but the world dropped the ball.
Another
vast pledge to save the euro, another chance lost to break the hold of Europe’s
austerity mystics and force a shift in strategic direction.
“We’re
north of a trillion dollars,” said Christine Lagarde, the International
Monetary Fund’s queen bee. Kudos to her for netting such sums in her Louis
Vuitton handbag but what exactly does this achieve, given that Europe remains
bent on committing “economic suicide” -- in the words of Nobel laureate Paul
Krugman?
Big
language from world officialdom had traction in the early phases of this saga,
when episodic spasms of angst caused “sudden stops” in capital to the South –
each quickly reversed by bazookas, firewalls, and solemn incantations.
Europe
has by now progressed to the tertiary phase of its currency disease. A large
chunk of global funding for EMU deficit states has been cut off indefinitely.
There has been an almost irreversible collapse of investor confidence in the
policy mix and governing machinery of monetary union. It is a “permanent stop”.
Firewall can do nothing for this condition.
The IMF’s
trillion talk merely encourages EMU and German elites to persist in their
belief/dogma that the essence of this crisis is a speculative attack on the
euro, and that defensive firepower on a crushing scale is therefore the
solution.
Such
thinking allows Berlin in particular to continue evading the uncomfortable
truth that this mess is home-grown, stemming from massive trade and capital
imbalances between North and South, compounded by the world’s most leveraged
banking system with loan-to-deposit ratios of 1.3 – the same as Japan at top of
the Nikkei bubble. (America is a sober 0.7).
There is
little point rehearsing the stale debate over whether Club Med states are to
blame for living beyond their means, or whether Germany is as much to blame for
beggar-thy-neighbour mercantilism, and for flooding the South with excess
capital. Both played a role, and much else besides.
What is
clear is that these imbalances have built up to such a degree that the
Greco-Latin bloc is now trapped in debt-deflation – like victims of the 1930s
Gold Standard – with wage costs out of kilter by 20pc or more.
Equally
clear is that Germany cannot cling to a structural trade surplus with all
southern Europe in perpetuity, at least on this scale. The system has to
balance over time. Germany must either give up its intra-EMU surplus, or
furnish offsetting funds through capital flows or fiscal transfers, if it
wishes to preserve the euro. It is the complete refusal of Germany’s governing
class to face up to this dilemma that is now destroying monetary union.
Firewalls are a decoy.
April 22, 2012, 2:53 p.m. ET
Spain Steps Up Argentina Pressure
MADRID—Spain's foreign minister on Sunday called on European and other global leaders to enact concrete sanctions against Argentina in a bid to prod the country to fully compensate Spanish oil firm Repsol YPF SAfor the expropriation of its Argentine unit.Speaking ahead of a meeting in Luxembourg on Monday with other European Union foreign ministers, José Manuel García-Margallo said in an interview at his private apartment in central Madrid that Spain would push the region to impose sanctions on the Latin American country that include removing its preferential trade treatment. The EU is Argentina's second-largest export market after the South American trading block Mercosur.
Mr. García-Margallo also said Spain would seek help from multilateral organizations such as the World Bank, the International Monetary Fund and the World Trade Organization to pressure Argentina to rejoin negotiations with Repsol, Spain's largest oil company, over proper compensation for forcefully taking control of YPF, Argentina's leading oil-and-gas company.
The intervention in YPF "isn't just a problem for Spain," Mr. García-Margallo said. "It affects everyone." Europe accounts for more than 50% of foreign investment in Argentina, and he said "foreign investment in a country can't be subject to the emotional whims of a country's political leaders."
Mr. García-Margallo's comments come as Spain strives to marshal international pressure against Argentina after the former colony, under President Cristina Kirchner, issued plans last week to expropriate 51% of YPF, leaving Repsol with a 6.4% stake.
----While declining to provide specific details, Mr. García-Margallo said additional unilateral reprisals would follow Spain's decision on Friday to effectively restrict imports of Argentine biodiesel, valued at about €750 million ($990 million) in 2011, according to Spain's Renewable Energy Producers Association.
April 22, 2012, 2:40 p.m. ET
Hungary Plans to Press EU on Aid
BRUSSELS—Hungarian
Prime Minister Viktor Orban starts a two-day visit here Monday, hoping to
unblock talks over an aid package from the European Union and International
Monetary Fund held up by a series of fierce disputes between Budapest and
Brussels.
Mr. Orban
hopes to nudge the European Commission, the EU's executive body, into resuming
talks over a new assistance program expected to be worth between €15 billion
and €20 billion ($26.45 billion).
But the
visit could be hard going. Tensions, never far from the surface since Mr. Orban
took power in April 2010, have soared in the last few months. The EU has frozen
nearly half a billion euro worth of funds earmarked for Hungary and started
several legal actions that could see Hungary taken to court over some key
government policies.
Investors
are skeptical that Mr. Orban's trip will succeed in unblocking the aid talks.
"We're as far away as ever from discussing a backstop," said Nomura
analyst Peter Attard Montalto.
Mr. Orban
is ostensibly here to attend a meeting of the center-right European People's
Party and make a speech at the European Policy Centre, a Brussels think tank.
But on Tuesday, he will meet with commission President José Manuel Barroso and
sit down with European Council President Herman Van Rompuy.
With its
currency plummeting to a record low against the euro and Hungarian government
bond yields rising above 11% at the turn of the year, Budapest sought talks on
a precautionary loan to help shore up investor confidence.
But
discussions haven't started because of EU and IMF concerns about Hungary's
policies, including a central-bank law passed in December that limits the bank
governor's salary and changes the makeup of the interest-rate- setting board,
among other things. The EU and IMF have said the law could undermine the bank's
independence.
Talks
have also been complicated by two other probes of Hungary's policies from the
commission, which is concerned about laws that could infringe judicial
independence and privacy rights.
“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” aka George Goodman. The Money Game.
At the Comex silver depositories Friday final
figures were: Registered 29.01 Moz, Eligible 109.72 Moz, Total 138.74 Moz.
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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