Baltic Dry Index. 972 +18
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
H. L. Mencken.
More on Germany in a moment, first this worrying
news from China. Contagion from Euroland seems to have struck China’s
manufacturing sector. According to HSBC chief China economist
Hongbin Qu, employment in China is likely to weaken and with it the level of
demand in China. Unlike 2009-2010, China it seems will not be decoupled from
the G-7 economies.
June 21,
2012, 12:16 a.m. EDT
China manufacturing weakens further: HSBC
HONG KONG
(MarketWatch) — China’s manufacturing activity deteriorated in June, according
to preliminary HSBC data released Thursday which registered a seven-month low,
indicating that global problems were taking a mounting toll on China’s
export-dependant industries.
The
inital or “flash” version of the manufacturing Purchasing Managers’ Index dropped
to 48.1 for the month on a 100-point scale, compared with the final reading of
48.4 in May, HSBC said.
A reading
below 50 indicates a weakening in business conditions at factories, while one
above 50 shows an improvement.
HSBC
chief China economist Hongbin Qu said the data suggested exports are likely to
weaken further in coming months.
He also
flagged employment as the next economic pillar that could be weakened by the
faltering global economy, saying subindexes showing a sharp fall in prices and
a moderation in new orders suggested weak demand at home in China.
More
There was bad news across the Atlantic in America
too. A slowing economy has forced the Fed to extend “Operation Twist” to the
year end, although they had already seemingly reached “Twist and a half,” with
a hint of more QE to come. The Fed is
probably reluctant to do more outright QE until after the presidential
election, unless the US economy dramatically slows.
"Too bad ninety percent of
the central banksters give the other ten percent a bad reputation."
Ebenezer Squid, with apologies to Henry Kissinger
Ebenezer Squid, with apologies to Henry Kissinger
US Fed slashes growth forecasts and extends 'Operation Twist' by $267bn
America's central bank has slashed its US economic growth forecasts for the next three years, as it stepped up efforts to rescue the flagging US recovery by extending “Operation Twist”, a diluted version of quantitative easing.
Painting
a bleaker picture of economic prospects than at its last meeting two months
ago, the Federal Reserve said growth would “remain moderate over coming
quarters”, that “employment has slowed”, and “household spending appears to be
rising at a somewhat slower pace than earlier in the year”.
It now
predicts the US economy will expand by between 1.9pc and 2.4pc this year,
compared with previous estimates of between 2.4pc and 2.9pc. The forecast also projected that unemployment
will remain stubbornly close to 8pc until the end of 2013.
Speaking
at a press conference on Wednesday, Ben Bernanke, Fed chairman, said that
Europe was "slowing US economic growth"
"Certainly
many countries are in recession and that affects our trade with Europe and the
demand for our products. More broadly, the effects of European concerns on
financial markets have added to volatility, have brought down stock prices,
have increased credit spreads and generally have been a negative for economic
growth," he said.
Responding
to the weaker conditions, the Fed said it would extend Operation Twist to the
end of the year and hinted at the prospect of a third round of QE, on top of
the $2.6 trillion already completed. It said it was “prepared to take further
action as appropriate to promote a stronger economic recovery and sustain
improvement in labour market conditions”.
Now back to business as usual in German run
Euroland. Germany zigs as Club Med zags.
Is Italy the new Greece?
If at first you don't succeed, try again. Then quit. There's no use being a damn fool about it.
Silvio Berlusconi, with apologies to W.C. Fields
Debt crisis: bond buying plan to ease euro debts only 'theoretical' says Angela Merkel
Angela Merkel put Germany on a collision course with its European neighbours by insisting an idea to allow bail-out funds to buy Spanish and Italian debt was "purely theoretical".
The
German Chancellor agreed that the European Financial Stability Facility (EFSF)
and the European Stability Mechanism (ESM) had the "possibility of buying
bonds" but said no discussions were being held about such a move.
Her
comments came as a top European Central Bank policymaker publicly backed the
idea. Benoît Cœuré said that the action could ease the “very severe strain” on
Spain and Italy.
"Certainly
it's a mystery why the EFSF was allowed almost a year ago to undertake
secondary market interventions and governments have not yet chosen to use that
possibility," he told the Financial Times in an interview.
François
Hollande, the French president, told reporters that the idea had been raised at
the G20 meeting in Mexico and would be discussed at tomorrow's summit of
Europe's big four nations – Italy, Germany, France and Spain.
"Italy
has floated an idea which deserves consideration, we'll speak about it at
Rome," said Mr Hollande.
"We are looking for ways to use the ESM for
this. At the moment it is just an idea, not a decision. It is part of the
discussion," he said.
In
Mexico, Christine Lagarde, managing director of the IMF, declared that
"the seeds of a pan-European recovery plan were planted". However,
the European Commission said the plan was little more than "financial
paracetamol".
Amadeu
Altafaj, an EC spokesman, said unleashing the bail-out funds could "soothe
tension, pain and malaise but it does not heal the root causes, the structural
problems of the economies of Italy, Spain and others."
However,
Mrs Merkel appeared to crush hopes of a breakthrough. "It is true that
both the EFSF and the ESM do include the possibility of buying bonds in the
secondary market, but this is not in discussion at the moment," she said.
More
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