Baltic Dry Index. 981 +03
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"
Douglas McWilliams, chief executive of the Centre of Economics and Business Research.
Stay long physical precious metals, the end of the
euro as we know it approaches. One day before the start of the EU leaders
summit in Rome to save the Euro, Chancellor Merkel is to dine with President
Hollande in Paris, in a last ditch attempt to save the coming summit. To this
commentator watching from London, it seems the unmovable object is about to
meet up with the unstoppable force. My money is on the unmovable object
remaining unmovable. A crisis weekend is a high probability. Time to take out
some cash against a European banking “event.” In view of Chancellor Nein’s
reported comments, she might want to take a food tester along when she dines in
Paris.
Adding to the sense of impending doom, there are
rumours that Italy’s ex-Goldmanite, unelected technocrat Prime Minister Mario
Monti, has threatened to resign if Chancellor Nein doesn’t back down on
Eurobonds. My money’s on him still remaining in office next week, not that
Chancellor Nein cares one bit which technocrat monkey pulls the strings and
pushes the levers in Italy, provided they do it to Berlin’s plan.
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
Angela Merkel rules out eurobonds for 'as long as I live'
Angela Merkel has firmly rejected the use of eurobonds ahead of a crucial summit in Brussels this week, ruling out jointly guaranteed eurozone debt for "as long as I live".
The
German Chancellor's comments were met with applause as she briefed MPs from the
Free Democrats party, her junior coalition partner, at a private meeting on
Tuesday.
One
official told AP that the crowd "reacted with applause to hearing
that the Chancellor does not want a joint debt liability," while one
participant reportedly shouted: "We wish you a long life!"
Several
eurozone leaders, including French President Francois Hollande and Italian
Prime Minister Mario Monti have called for the 17-nation bloc to draw-up plans
to issue jointly-guaranteed debt in order to reduce borrowing costs for
struggling eurozone nations.
Yields on
benchmark 10-year government debt are currently at 6.8pc in Spain, and 6.15pc
in Italy. Long term borrowing costs above 6pc are widely viewed as
unsustainable in the long term.
Ms Merkel
this week played down expectations of a major shift in policy from Germany at
the EU summit, which starts on Thursday, and repeated that eurozone bonds would
be "economically wrong and counterproductive".
A hopelessly misconceived blue print for Europe
Economics Last updated: June 26th, 2012
Ambitious
plans to be put before this week's EU summit – yes indeed, yet another crisis
summit – to turn the eurozone into something much closer to a fiscal union make
for easy analysis. On almost any level you care to take, they won't work.
Here's
the plan. In return for debt pooling, Brussels would be given far reaching
powers to rewrite national budgets for member states that breach debt and
deficit rules.
Under the
previously agreed fiscal compact, Brussels already has the powers to vet
budgets before they are submitted to national parliaments, but this goes much
further, allowing the EU in effect to over-rule national governments and impose
its own diktats on member states.
Fiscal
sovereignty as we know it would be dead, and I guess large elements of commonly
understood democratic accountability too. If countries want to pump prime their
economies with unfunded tax cuts or public spending, they won't be allowed to
under this plan.
----To permanently lock any country into a framework as rigid as this is to believe that governments are unable and therefore should not try to achieve any of the traditional goals of economic policy, such as growth and full employment, but should instead be confined only to the accountant's role of balancing the budget. Once sovereign governments would be reduced to the function of mere local authority or colonial administration. Their choices would be confined to marginal decisions on where to focus educational and infrastructure spending.
You
thought that monetary union was a daft enough folly, but this is a deadlier
proposal altogether, a likely fatal attempt to impose political union on a
Continent which down the centuries has fought countless wars avoiding just such
an outcome.
Nobody in
Europe voted for this, still less does anyone with any sense think it
politically achievable, least of all the Germans, ridiculously depicted in some
quarters as attempting to use the crisis to recreate the Third Reich in modern
form. Rather, it is proposed in desperation as the price that would need to be
paid to save dysfunctional monetary union.
Morehttp://blogs.telegraph.co.uk/finance/jeremywarner/100018189/a-hopelessly-misconceived-blue-print-for-europe/
Fiscal union blueprint fails to calm financial markets
Spanish and Italian borrowing costs soar despite EU proposals for eurobonds
Wednesday
27 June 2012
Alarmed
investors continued to push up the borrowing costs of Spain and Italy yesterday
to dangerous levels, despite leaks of an official blueprint for closer fiscal
union in the eurozone.
A draft
of a report prepared by the presidents of the European Council, Commission, the
Central Bank and the Eurogroup suggested eurozone nations should adopt
eurobonds and a common treasury in the medium term. It also said Europe should
move to a banking union.
Investors
have been calling for European leaders to adopt these measures and make it
clear they are willing to use their collective resources to ensure the single
currency's survival.
But
markets drew no comfort from the draft report yesterday. Spain's short-term
borrowing costs nearly tripled at auction, with Madrid forced to pay 2.362 per
cent to borrow for three months. Italy's short-term borrowing costs also
spiked, with Rome forced to pay 4.712 per cent to offload two-year debt, the
higher price since December.
The two
nations' longer-term borrowing costs were also up, with 10-year Spanish bond
yields shooting back up to 6.85 per cent and Italian 10-year yields over 6.17
per cent.
Morehttp://www.independent.co.uk/news/business/news/fiscal-union-blueprint-fails-to-calm-financial-markets-7888949.html
Not to worry though, according to the NY Times, Germany is forced by self-interest to cave in and bailout Club Med. Maybe, but I think the Times writer ignores the reality of the constitutional change in Germany that caving in requires. Even if German voters approved constitutional change in a referendum, highly unlikely at present, it would all happen too slowly for saving Club Med. Stay long precious metals, the end of the monetary union as we know it approaches.
A newspaper is a device for making the ignorant more ignorant and the crazy crazier.
H. L. Mencken.
Why Germany Will Pay Up to Save the Euro
By EDUARDO PORTER Published: June 26, 2012
German voters are even more skeptical than their leaders about financing their “slothful” and “profligate” neighbors. Though most still tell pollsters they want to keep the single currency, almost four-fifths want Greece to leave — oblivious to the chain reaction that Greek departure would unleash against Portugal, Spain and even Italy.
Yet it would be wrong to kiss the euro goodbye just
yet. For all of Berlin’s neins, shooting down every serious proposal to address
its woes, the German government knows it must ultimately cave and open its
wallet to save the single currency.
Berlin’s wall of hostility against bailouts of Europe’s
south will be on display this week, when European leaders will again try to
cobble together a plan to address their debt crisis. They will discuss Greece’s
request to ease the terms of its $217 billion rescue package, as well as
proposals to create a regional banking union and Spain’s request for $125
billion to shore up its failing banks.
Berlin will drag its feet as long as it can before
offering help, as has been its wont throughout the crisis. It will demand
assorted quid pro quos.
----But Ms. Merkel knows that Germany must ultimately underwrite the euro’s rescue, pretty much regardless of whether its conditions are satisfied. There are three good reasons. First, the euro has been very good to Germany. Second, the bailout costs are likely to be much lower than most Germans believe. Third, and perhaps most important, the cost to Germany of euro dismemberment would be incalculably high — far more than that of keeping the currency together.
More
We seem headed for High Noon in the Euro summit,
with Chancellor Merkel in the role of Gary Cooper, “the story of a man who was
too proud to run.” At best we can expect some minor German adjustment on the
Greek serfdom terms, and some off in the future pious talk of economic
stimulation. At worst, an acrimonious summit that drags on into the weekend
with meaningful decisions put off until the next summit later in the autumn. It
is hard to see how Chancellor Nein can back down with any credibility.
The trouble with socialism is that eventually you run out of other people’s money.
Margaret Thatcher.
At the Comex silver depositories Tuesday final figures were: Registered 35.89 Moz,
Eligible 110.05 Moz, Total 145.94 Moz.
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