Baltic Dry Index. 994 +06
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"All
for one!" "One for all!" "Every man for himself!"
Larry,
Moe and Curly. Restless Nights, 1935.
No, not how Barclays Bank and the other 40 thieves
stitched up Liebor for almost a decade, generating massive profits and bonus
payments along the way, (for more on that scroll down to Crooks Corner,) today’s
big fix is the one in Europe that saw Germany totally defeated in the EU summit,
undone by the threat from Spain and Italy to use the De Gaulle nuclear option
of blocking business as usual in Brussels if they didn’t get immediate access
to Germany’s credit card. In a typical EU fiasco, Germany’s politicians caved
in faster that their football team to Club Med blackmail, and reversed their
policy stance of the last few months. Nothing good will come to Euroland by Germany
caving in to Club Med blackmail, as the previous deals with Ireland and Greece
will now have to be quietly renegotiated, although probably rebranded as a
growth package. If this was to be the outcome, why did Merkel drag the crisis
out these last 6 months? The immovable object was moved by the unstoppable force.
Below, Moe, Larry and Curly takeover running
Euroland, just in time to dress up the month end and half year figures. Will
the big fix work? Time will tell but I doubt it. The euro is still in the ICU, until Germany’s
credit card runs out. I suspect that after Canada returns from celebrating Canada
Day next week and after the USA gets back from celebrating Independence Day
next week, the markets will begin questioning just how likely the big fix is to
work.
"Now
when the music plays The Gates of Hell Are Open, that's where you walk
in."
Moe. Plane Nuts, 1933.
Debt crisis: Germany caves in over bond buying, bank aid after Italy and Spain threaten to block 'everything'
Germany has today caved into demands made by Italy and Spain for immediate eurozone aid to bring down their soaring borrowing costs.
On
Thursday night, Italy and Spain plunged an EU summit into disarray by
threatening to block “everything” unless Germany and other eurozone countries
backed their demands for help.
Mario
Monti, the Italian Prime Minister, celebrated the agreement, reached in the
early hours of Friday, as a “very important deal for the future of the EU and
the eurozone”.
He could
not resist reminding Angela Merkel, the German Chancellor, that Italy had also
won on the football pitch, by defeating Germany two goals to one for a place in
the finals of the European Championship.
“It is a
double satisfaction for Italy,” he said.
Under the
deal, Spanish banks will be recapitalised directly by allowing a €100 billion EU
bailout to transferred off Spain’s balance sheet after the European Central
Bank takes over as the single currency’s banking supervisor at the end of the
year.
The
decision, taken by a meeting of eurozone leaders in the early hours of Friday
morning, will be based on a move to put the ECB at the centre of a “effective
single supervisory mechanism” for banks after an EU summit in December.
“We
affirm that it is imperative to break the vicious circle between banks and
sovereigns,” said a summit statement.
Relief
for Spain was accompanied by a pledge to begin purchases of Italian bonds using
EU bailout funds to reduce Italy’s borrowing costs with a lighter set of
conditions, based on meeting Brussels fiscal targets rather than intrusive IMF
oversight.
A promise
was also made to “examine the situation of the Irish financial sector” offering
possible relief to Ireland by relieving the government balance sheet debt
burden.
The
Spanish bank bailout, to be agreed on 9 July, will initially use the euro’s
European Financial Stability Facility (EFSF) before it is transferred into a
new permanent fund later this year.
When the
transfer takes place to the European Stability Mechanism the new loans will not
be given seniority, giving extra security to Spain’s creditors.
After the
ECB takes over eurozone banking supervision next year then the Spanish bailout
will “very rapidly taken off balance sheet” and directly loaned to banks
reducing Spain’s debt burden and borrowing costs.
More
Below, some other news from slowing Europe. Germany’s
credit card isn’t all that it’s cracked up to be.
German Retail Sales Unexpectedly Drop as Crisis Bites
By Joseph de Weck - Jun 29, 2012 7:00 AM GMT
German retail sales unexpectedly fell for a second month in May as the
sovereign debt crisis worsened, damping the economic outlook. Sales, adjusted for inflation and seasonal swings, dropped 0.3 percent from April, when they declined 0.2 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 0.2 percent, the median of 13 estimates in a Bloomberg News survey shows. Sales dropped 1.1 percent from a year ago.
Unemployment at a two-decade low, falling energy costs and rising wages have bolstered consumer spending this year, helping to shield the German economy from Europe’s turmoil. With at least seven euro nations in recession and budget cuts across the region eroding demand for German exports, investors and executives are growing more pessimistic.
More
http://www.bloomberg.com/news/2012-06-29/german-retail-sales-unexpectedly-fell-for-a-second-month-in-may.html
UK recession is deeper than first thought says ONS
Friday 29
June 2012
The UK's
recession is deeper than first estimated, the Office for National Statistics
revealed yesterday.
The ONS
confirmed that the economy shrank by 0.3 per cent in the first quarter, pushing
Britain into its first double-dip recession since the 1970s. But it also
revised up the contraction of the economy in the final quarter of 2011 from 0.3
per cent to 0.4 per cent, deepening the downturn.
Households'
disposable incomes fell again in the first three months of this year emphasising
the financial squeeze on families, official figures showed. Incomes were down
0.9 per cent in the quarter from the previous three months of the year, after
falling by the same amount in the final quarter of last year.
Morehttp://www.independent.co.uk/news/business/news/uk-recession-is-deeper-than-first-thought-says-ons-7897294.html
"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.
At the Comex silver depositories Thursday final figures were: Registered 35.89
Moz, Eligible 109.90 Moz, Total 145.79 Moz.
Crooks and
Scoundrels Corner.
The bent,
the seriously bent, and the totally doubled over.
Today, more
on Ali Diamond and the 40 bankster thieves. My word is a CDO “triple-A” bond.
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.
Barclays, with apologies to Cary Grant. To Catch A Thief.
Bob Diamond: Barclays falsified Libor to protect bank during financial crisis
Barclays chief executive Bob Diamond has admitted for the first time that the bank made a conscious decision to falsify Libor rates in order to protect the bank at the height of the financial crisis.
The revelation in a
letter to the Treasury Select Committee will put increasing pressure on Mr
Diamond to reveal whether the decision was taken at board level.
“Even
taking account of the abnormal market conditions at the height of the financial
crisis, and that the motivation was to protect the bank, not to influence the
ultimate rate, I accept that the decision to lower submissions was wrong,” he
stated.
In the
most detailed account so far on how the Libor rates were manipulated, Mr
Diamond said fixing of Libor rates was carried out by individual trades and,
separately, by the bank itself.
He said
traders attempted to influence the rate in order to benefit their own desks’
trading positions. The bank made the decision in order to protect shareholders’
interests, he said.
The Libor
scandal saw £3.2bn wiped off the bank’s value on Thursday in the biggest one
day fall in its share price for more than three years.
After Barclays, the golden age of finance is dead
Retribution and regulation are sure to follow the Barclays scandal, but if the City is shackled, Britain as a whole will suffer
Just when
you thought bankers could sink no lower in public regard, they’ve done it. News
that Barclays has been found guilty of repeatedly falsifying the interbank rate
– sometimes for the personal gain of traders, sometimes to make the bank itself
seem more creditworthy than it really was – tops off another calamitous week in
the seemingly never-ending litany of banking misdemeanours.
Coming
hard on the heels of the chaos surrounding an IT breakdown at Royal Bank of
Scotland, it is as if bankers are actively out to confirm their reputation for
recklessness, incompetence and self-enriching disregard for the interests of
customers and the wider economy.
At a time
when the political and regulatory backlash against finance is already at fever
pitch, much of it ill-thought out, counterproductive and economically harmful,
there could scarcely have been a more spectacular own goal. And it doesn’t end
there. Banking faces a whole new raft of separate regulatory strictures over
the mis-selling of interest rate swaps to business customers.
A year
ago, Bob Diamond, chief executive of Barclays, told a committee of MPs that it
was time to put the crisis behind us, move on and stop apologising for the
failings of the past. He should be so lucky. Not since the Thirties has finance
been so much in the dock. On and on the combination of retribution and
regulatory crackdown will go until banking is once again thought sufficiently
imprisoned to be safe. European policymakers will delight in the ammunition
they have been given to rein in the Anglo-Saxon bankers and make them subject
to the rule of Brussels and Frankfurt.
Many have
already said it, but it is one of those observations that bears constant
repetition: in all my years as a financial journalist, it’s hard to recall a
case quite as shameful as this – and I’ve certainly seen a few.
----Now, it may well be unfair to single out Barclays. We already know that at least 20 other banks are under investigation for alleged manipulation of interbank interest rates, including most of the other UK high street banks. It could be that others are equally at fault. We know about Barclays only because in a practice that City lawyers sometimes call “rowing for the shore”, it has decided to abandon the flotilla of co-defendants and settle with regulators.
In so doing,
it may have succeeded in winning both a lower fine and immunity from criminal
prosecution, as a corporate entity at least, though the individuals involved
may not escape. The downside of such plea bargains is that they involve
admission of guilt. The regulator gets free rein to be as critical as it likes,
while the mitigation of any defence there might have been is lost.
That
these practices appear to have been endemic, not just at Barclays, but across a
wide range of international banks, neither excuses nor explains what happened.
More
Another
weekend and a holiday weekend in Canada. It feels like a holiday weekend in
Club Med too, where Italy knocked out Germany’s hated football team from the Euro
2012 final due to be played against Spain. Northern Europeans 0, Club Med 2.
With Germany’s surrender in Brussels, the bank cash machines will operate
across Club Med this weekend too, a big plus for tourists heading to Spain,
Italy and Greece. Backed by Germany’s credit card, it’s “too infinity and
beyond,” for Club Med. With the euro now headed for the scrap heap, stay long
physical precious metals. 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 May:
DJIA: +71 Down. NASDAQ: +79 Down. SP500: +46 Down. All
three indicators remain down but downward momentum is accelerating again after
stalling earlier in the year.
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