Baltic Dry Index. 707 -11
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
German
unemployment has been creeping up for five months. Carsten Brzeski from ING
said August job data has been the worst since 1993. "The resilience of the
German labour market is cracking up," he said.
The
Telegraph 30/08/12.
Today, as we await the wisdom of the Great Deceiver, Helicopter
Ben Bernanke, winner of the Jackson Hole
Bernie Madoff Award, your dinosaur writer, who remembers the great heyday of
honest merchant banking of the 1960s and 1970s, must travel to attend a
funeral. I have reached that time in life where funerals start to replace
marriages and baptisms as a reason for family gatherings. As a result, today’s
update is more in the nature of articles of interest that I think reflect our
global economy in deepening distress. While US Presidential hopeful Mr Romney may have a
plan for getting American’s back to work again next year, it would be better to
hear from the Great Deceiver today how he intends to keep more of them employed
through the rest of this year.
What I took most from Moses Romney’s “we’re in the wilderness,
but I have a map speech,” was his direct threat to start a trade war with China
and an unspecified threat to Mr Putin. I can only hope neither Beijing nor
Moscow was paying attention. There is nothing like being forewarned.
Up first China, where events are making moot a Club Med euro
rescue, and they already have a beef against their leading debtor.
Aug. 31, 2012, 12:02 a.m. EDT
China’s new leaders won’t go big on stimulus
HONG KONG
(MarketWatch) — China’s incoming leaders will likely focus on economic reforms
and avoid the bazooka-style fiscal stimulus used to ward off slowdowns in the
past, analysts say.
Société
Générale economist Yao Wei in Hong Kong said perceptions about big
infrastructure-focused stimulus packages, such as the one unveiled in 2008,
have shifted recently, with many in Beijing now of the view that “it’s
dangerous to do more than they [central government] should.”
China is
set for a once-in-a-decade change of its most senior leaders, with new faces
expected to take the helm of the Communist Party this year and formally take
the top ranks of government early next year.
“The
signs I’ve seen so far seem to suggest that the new leaders are pro-reform and
more comfortable with slow growth than the current ones,” Yao said.
Concerns
over the public backlash against wasteful government projects, including some
apparently ill-conceived projects funded by the government’s prior stimulus
package, could be another reason officials are adopting a different tone about
the need for more stimulus.
These
concerns were back in focus last week after a section of an elevated concrete
roadway collapsed in the northern Chinese city of Harbin, resulting in several
deaths, and fueling doubts about the construction quality and engineering of
the newly opened transport link.
More
China’s fears grow over eurozone crisis
China has expressed deep alarm at the escalating crisis in Europe and warned against austerity overkill as Europe's crumbling demand sends shock waves through Asia.
Premier
Wen Jiabao told German Chancellor Angela Merkel that Europe must "strike a
balance" between fiscal tightening and measures to promote growth.
"Europe's debt crisis has continued to worsen, giving rise to serious
concerns in the international community. Frankly, I am also worried," he
said.
His
comments mark a shift in Chinese policy. Beijing has until now backed austerity
across Euroland, but the severity of China's own downturn has begun to rattle
policymakers.
Exports
of electronic goods to Italy crashed 43pc in July from a year earlier, and
sales to Germany fell 11pc. Caixin reported that processing trade to
Europe fell 21pc.
The
country's two largest shipping groups COSCO and China Shipping both reported a
drastic losses today. The Shanghai composite index of stocks threatened to
break below 2000 today, the lowest since the Lehman crisis.
Mr Wen
asked for clarification over whether Italy and Spain would adopt
"comprehensive rescue measures" needed to unlock the EU bail-out
machinery - and open the door to bond purchases by the European Central Bank.
Mrs Merkel
said eurozone debt remains a "safe investment". Yet it is far from
clear whether China can come to the rescue. Simon Derrick from BNY Mellon said
China's foreign reserves peaked at $3.31 trillion in February, and have since
fallen by over $100bn. "China is no longer in the market to buy
bonds," he said.
Morgan
Stanley said there are signs of incipient capital flight from China. The yuan
has fallen almost 1pc since April, and off-shore markets are pricing in further
falls over the next year. The risk for Europe is that China could become a net
seller of European bonds if forced to run down reserves to shore up the yuan.
Commentary: U.S. should stop playing double game.
BEIJING,
Aug. 30 (Xinhua) -- An awkward moment was seen Tuesday when a U.S. State
Department spokeswoman shunned a question from a Xinhua reporter regarding the
territorial belonging of the Diaoyu Islands.
At a
regular briefing, Victoria Nuland ignited a controversy by saying that the U.S.
official name for the Diaoyu Islands is the Senkakus, the Japan's naming for
the uninhabited islands in the East China Sea.
She then
moved hastily to the next question without explaining the contradiction between
Washington's self-proclaimed neutrality and its commitment to Japan of
necessary security support for the islands, should they are under attack.
It is the
double game the United States plays that puts Nuland into no words.
Though
asserting it does not take a position on the question of the ultimate
sovereignty of the Diaoyu Islands, Washington has never ceased to employ
gamesmanship to roil the waters in the region.
Take the
naming of the islands for example. It is a normal practice and a show of neutrality
for a third party to simultaneously mention the names used by all the claimants
when it comes to a disputed territory, but Washington refuses to follow.
Though
the choice of name carries no legal effect, it does have political connotation,
which is explained by Washington's series of moves.
As
tensions between China and Japan continued to rise and opened a huge rift
within the region, Washington staged a 37-day joint drill with Tokyo, stirring
up the already volatile waters.
What's
more, the U.S. Secretary of State Hillary Clinton, who would discuss tensions
in the South China Sea during a coming trip to China, suggested the Diaoyu
Islands fall within the scope of the Japan-U.S. security pact, lending a veiled
support to Tokyo's claim over the islands.
More
August
30, 2012, 14:50
Residential property prices fall 13.6% in year to July
Residential
property prices nationally fell by 13.6 per cent in the year to July but rose
by 0.2 per cent in the month, new figures show.
This
compares with an annual rate of decline of 14.4 per cent in June and a decline
of 12. 5 per cent in the 12 months to July of last year.
The
slight rise in prices in the month of July compares with a drop of 1.1 per cent
in June and a decline of 0.8 per cent in July 2011, according to the
Residential Property Price Index published by the Central Statistics Office.
In
Dublin, residential prices fell by 0.3 per cent in July and were 16.6 per cent
lower than a year ago.
House
prices in the capital were down 0.2 per cent in the month and were 16.7 per
lower than a year earlier.
Apartment
prices were 19.6 per cent lower compared with July 2011.
Residential
property prices in the rest of Ireland (excluding Dublin) were up 0.3 per cent
in July compared with a drop of 1.3 per cent in July of last year. Prices were
12.1 per cent lower than in that month.
House
prices in the capital are now 56 per cent lower than at their highest level in
early 2007, while apartment prices are some 63 per cent lower.
Residential
property prices in Dublin are 57 per cent lower than at their highest level in
February 2007.
In the
rest of Ireland, the decline in the price of residential property since that
time is 47 per cent, and overall the national index is 50 per cent lower than
at its height in 2007.
More
France says ECB debt buying would be justified
High borrowing costs for some European countries compared with Germany's may justify market intervention by the European Central Bank, Francois Hollande said on Thursday.
5:42PM BST 30 Aug 2012
High
borrowing costs for some European countries compared with Germany's may justify
market intervention by the European Central Bank, French President Francois
Hollande said on Thursday.
"The
ECB's mandate include price stability and monetary policy. When you see such
wide gaps in yields, that could be a justification for an intervention in the
name of monetary policy," Hollande told a news conference after meeting
with Spanish Prime Minister Mariano Rajoy in Madrid.
European
Central Bank President Mario Draghi is expected to flesh out his plans next
week for a bond-buying programme he announced in August, conditioned on
countries first applying for aid to the eurozone's rescue fund.
On
Wednesday he wrote in an opinion piece in a German magazine that the ECB must
employ "exceptional measures" at times.
Rajoy, of
the centre-right People's Party, reiterated after his meeting with Hollande, a
Socialist, that he is waiting to hear more about the programme before deciding
whether his country will apply for European aid.
---- Both leaders expressed their backing for Greece as it struggles to implement tough measures that were conditions for its sovereign bailout, the first one in theeuro zone.
European
leaders should show support for Greece at an EU summit on October 19 if the
crisis-hit country's conservative government shows commitment to move ahead
with economic reforms, Hollande said.
More
German Retail Sales Unexpectedly Fell in July as Economy Weakens
By Stefan Riecher - Aug 31, 2012 7:00 AM GMT
German retail sales unexpectedly declined in July as the sovereign debt
crisis curbed growth in Europe’s largest economy. Sales, adjusted for inflation and seasonal swings, slipped 0.9 percent from June, when they rose a revised 0.5 percent, the Federal Statistics Office in Wiesbaden said today. That’s the strongest increase since March. Economists forecast a gain of 0.2 percent, according to the median of 15 estimates in a Bloomberg News survey. Sales fell 1 percent from a year earlier.
While the jobless rate in Germany remained at 6.8 percent in August, unemployment edged higher for a fifth month as Europe’s debt crisis weighs on growth and corporate earnings. Still, Europe’s largest economy is outperforming most of its euro-region peers as rising wages bolster purchasing power and consumption.
More
Euro collapse 'would slash 10pc off German economy'
A complete collapse of the euro would shave up to 10pc off the German economy and even just the departure of Greece from the currency club bears substantial risks to business, according to German government economic adviser Lars Feld.
1:40PM BST 30 Aug 2012
Feld, one of five "wise men" economists whose views help shape the
public debate in Germany but often have little direct impact on policy, said
recent estimates by the group suggested Germany's gross claims from the
eurozone are about €3.5 trillion (£2.7 trillion). "When a good part of the claims would go in default, there would be insolvencies in small and medium-sizes firms and the economy would be hit," Feld told a Frankfurt journalist club.
"This drop could amount to 7pc to 10pc of the [German] gross domestic product."
A Greek exit could also not be achieved without substantial costs, Feld said and added that the risk of contagion via the banking system had been reduced, but there was still a strong risk that Greece's exit could prompt investors to expect other countries to follow suit.
A number of German officials have been talking up the options of pushing Greece - which is largely being kept afloat by funds from the German government - to drop out of the euro.
More
August 30, 2012, 10:41 p.m. ET
Poland's Economic Growth Slows
WARSAW—Poland's output growth slowed sharply in the second
quarter as troubles in the neighboring euro zone and declining domestic demand
weighed on an economy that has been one of Europe's most resilient.
Gross domestic product expanded 2.4% for the quarter
compared with a year earlier, the national statistics office said Thursday.
That is substantially slower than the 3.5% growth recorded in the first
quarter, and well below the 2.9% the government had expected.
---- Economic growth for the full year is still expected to end up at around 2.5%, Mr. Rostowski said.
Still,
the deceleration in output—to the lowest level recorded since mid-2009—will put
pressure on Poland's central bank to cut interest rates, just months after it
raised them in an effort to curb persistent inflation.
---- Poland was the only country in the European Union that managed to avoid a recession after the global financial crisis and had remained relatively resistant to the woes in the euro zone, even though it is the country's largest export market.
That is
changing. Exports to the euro zone fell 2.7% in the first half of the year,
compared with the same period in 2011. On top of that, domestic demand
contracted 0.2% year-on-year in the second quarter as consumers retrenched and
the state moved ahead with budget cuts.
More
Any sudden event which creates a great demand for actual cash
may cause, and will tend to cause, a panic in a country where cash is much
economised, and where debts payable on demand are large. In such a country an
immense credit rests on a small cash reserve, and an unexpected and large
diminution of that reserve may easily break up and shatter very much, if not
the whole, of that credit.
Walter Bagehot. Lombard Street, 1873.
At the Comex silver depositories Thursday final figures were: Registered 36.64
Moz, Eligible 103.75 Moz, Total 140.39 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
No crooks
today they’re nearly all in Jackson Hole Wyoming.
Another
weekend, and the last of the summer holidays in the USA. In Europe, the never
ending crisis is closer to its end. In Asia, Japan v China and Japan v South
Korea, looks like it’s about to be replaced by America v China. In America, in
a nasty no holds barred fight for the spoils of the next presidency, is about
to take off the gloves and get serious. As
entertainment to a watching rest of the world, nothing else anywhere comes
close. Two massive tribes, set out to outspend each other, for the right to
drive America into national bankruptcy.
Time to walk
the dog in the last of the summer sunshine, and enjoy the blackberries now
reaching their southern England peak. Have a great weekend everyone.
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.
The monthly
Coppock Indicators finished July:
DJIA: +65 Up. NASDAQ: +75 Up. SP500: +48 Up. All
three indicators have reversed from down to up, though only marginally.
