Baltic Dry Index. 718 -06
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Today Germany’s Austerity Chancellor, “the Hammer
of the Greeks,” heads to China, “as the head of the largest German business
delegation ever to visit the country,” writes the Wall Street Journal. Increasingly,
Germany’s economic interests lie to the east. But has Mrs Merkel, “the Torquemada of Club Med,” left it too late? Is China
already in a hard landing? For more on that, scroll down to Crooks Corner,
where today we focus on a very wobbly Chinese economy.
Before Chancellor
Merkel, “the Attila of Italy” left for the east, she put the German jackboot into
Italy’s unelected, ex-Goldmanite “three card Monti.” If the never ending Eurozone
crisis wasn’t so serious, this would all
be hilarious in a film. Europe is descending into an all against all tragedy.
Stay long physical precious metals and plenty of cash against the coming
weekend. The ECB’s top Italian has ducked out of the Fed’s Jackson Hole junket.
Debt crisis: Merkel and Monti clash over ESM role
Europe's politicial and economic leaders clashed today over debt crisis resolutions, underscoring the sense of chaos and disunity between Brussels and the key eurozone economies.
At a
summit in Berlin, Angela Merkel and Mario Monti publicly stated they disagreed
over the role of Europe’s new big bazooka bail-out fund. The Italian prime
minister said the European Stability Mechanism (ESM) should have a bank license
to be able to properly bring down Club Med borrowing costs. The German
Chancellor said the plan was “incompatible” with EU treaties - and that she was
backed by Mario Draghi, president of the European Central Bank,
Meanwhile
Mr Draghi launched an attack on Germany: in an article for Die Welt, he argued
that the ECB would need "exceptional measures" to curb the crisis and
that Berlin’s interpretation of the bank’s mandate was too narrow.
Baffled
traders turned their hopes for solutions on the Federal Reserve’s meeting
gathering in Jackson Hole, as the crisis in Spain and Greece advanced.
The small
Spanish region of Murcia said it would need to claim €700m from Madrid’s
emergency bail-out fund while officials in Valencia said the region would need
more than €3.5bn. The forecasts backed fears that Madrid would be swamped by
requests for aid from its €18bn fund, after Catalonia said it needed €5bn of
support.
In Athens
leaders met for more talks on how to achieve €11.5bn savings needed to unlock
the next tranche of its bail-out. Prime minister Antonis Samaras faces an
up-hill battle to convince his coalition partners to agree to cuts to pensions,
pay and benefits for army and police staff.
August 29, 2012, 7:27 p.m. ET
Merkel Nods to China's Clout
German Leader's Visit as Trade Ties Grow Expected to Play Down Thorny Issues
BERLIN—German
Chancellor Angela Merkel arrives in China on Thursday as the head of the
largest German business delegation ever to visit the country, underscoring Germany's
growing economic dependence on the world's most populous nation amid Europe's
economic stagnation.
Ms.
Merkel's second trip to China this year, and the sixth since she became
chancellor, will revolve mostly around economic ties, German officials said, a
sign of Ms. Merkel's willingness to play down thorny issues such as human
rights and patent protection.
"The
theme is business as usual," said Eberhard Sandschneider, director of the
German Council on Foreign Relations. "Don't expect much progress in terms
of intellectual-property rights from this visit."
While
Germany still exports more to the U.S., and far more to the European Union,
than to China, the Chinese market has been one of the fastest sources of growth
for German companies in recent years, helping to offset weak growth in advanced
economies since the global financial crisis.
German
exports to China were 206% higher in 2011 than in 2005, compared with only a
24% increase in exports to the rest of the European Union and 6.3% to the U.S.,
according to German government data.
"It is the greenback which is unstable, and not the bullion."
It took the United States government over 200
years to accumulate its first trillion dollars of debt. It took only 286 days to accumulate
the most recent trillion dollars of debt. 200 years vs. 286 days.
November 16, 2011 was a historic date: that's when the US officially surpassed $15 trillion in debt for the first time since World War 2. We celebrated it by cheering $15,OOO,OOO,OOO,OOOBAMA. Today, August 28, 2012, is when we can unofficially celebrate again, because 286 days after the last major milestone was surpassed with disturbing ease, total US debt following today's $35 billion auction of 2 Year bonds is, well, in a word: $16,OOO,OOO,OOO,OOOBAMA!
---- But wait. You aint's seen nothing yet. At this rate of growth, total US debt will surpass:
- $17 trillion on June 10, 2013;
- $18 trillion on March 23, 2014;
- $19 trillion on January 3, 2015; and
- $20 trillion on October 16, 2015
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories Tuesday final figures were: Registered 36.44
Moz,
Eligible 103.76 Moz, Total 140.20 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
As the Great German
Hun peddles Mercs and Beamers to the inscrutable Han, more and more seems to be
going awry in the Han economy. Stay long physical gold and silver. If China
sneezes, America and Europe are about to get flu.
Dark clouds gather over China's once-booming solar industry
China's push into solar energy was supposed to be a proud example of how the country was advancing into hi-tech manufacturing. But now the whole sector is on the brink of bankruptcy.
Two years
ago, LDK Solar, one of China's largest solar panel makers, built a new, state-of-the-art
factory in the central city of Hefei.
It sits
in one of the city's industrial parks, a big LDK Solar logo on its wall, with
the New York-listed company's slogan underneath: "Lighting the
Future".
"It
cost 2.5 billion yuan (£250m) to build, the majority of the equipment was
imported from Germany, and it hired 5,000 staff," said Jie Xiaoming, a
30-year-old who works at the plant's quality control and packaging department.
Last
month, however, 4,500 of the staff were put on gardening leave. They receive
700 yuan a month to stay at home. The factory has shut down 24 of its 32
production lines.
"There
do not seem to be any orders. People are still turning up for work, but mostly
just sleeping. The management has not said much, just that the United States
has a new policy that is stopping our exports," said Mr Jie.
Since it
was set up in 2005, LDK Solar, along with several other Chinese solar panel
makers, has enjoyed heady growth. Solar power, along with biotechnology and
aerospace, was declared a "strategic emerging industry" and was given
grants and low-cost loans.
It
funnelled the cheap credit into an aggressive expansion, hoping to provide an
entire industry chain of products and services.
Meanwhile,
in Europe and the US, governments provided subsidies to buy Chinese-made panels
as part of commitments to boost renewable energy.
But the
incentives created a glut of suppliers, and since 2010, the price of
polysilicon wafers has fallen by nearly three-quarters. The price is now below
the production cost - in the latest quarter, LDK Solar's gross margin was
-65.5pc.
Meanwhile,
the debt crisis in Europe has cut government subsidies to the sector and the US
imposed a 31pc tariff in May on Chinese wafers, complaining that manufacturers
were being underwritten by the government.
In July a
group of 25 European solar companies followed suit, filing an anti-dumping
complaint with the European Union.
At the
same time, the quality of the solar equipment being made by Chinese companies,
even by the biggest companies, is often not export-grade.
Port in a financial storm: China's export hub hit
In the capital of Chinese exports, falling orders are starting to bite, but some hope that imports will soon make up the gap.
It is
peak season at Yantian, as containers of Christmas presents begin their journey
from this South China port to the other side of the world.
The
port's five miles of waterfront are in operation 24 hours a day, its gargantuan
cranes able to load or unload a ship carrying 10,000 containers within half an
hour.
When we
visit, there are roughly 350,000 containers stacked up, full of the
electronics, clothes, toys and furniture that China manufactures so briskly.
One of the world's biggest ships is also in port, the 1,302ft-long, 183ft-wide
Maersk Elba standing in a bay.
But for
its busiest time of year, Yantian is unusually quiet. And indeed Maersk, the
Danish shipping giant that operates the Elba, has scrapped plans to build an
even bigger class of ships: in 2011, it lost $75 (£47.50) on each 40ft
container it shipped as demand for goods dropped in the US and Europe. It says
its losses will continue this year.
One agent
who arranges the permits for lorries to collect containers said the
year-to-date had been poor.
“Today, I have about 100 permits to hand out. Last
year, we did between 200 to 300 a day,” he said.
“Business
is ******* bad, maybe 50pc down,” said one lorry driver. “I usually haul 15 to
16 containers a month, now it is more like seven to eight,” said another,
adding that factories in Shantou, one of his usual destinations, have had
problems staffing their production lines.
Other
drivers gave more modest estimates of between a 15pc and 20pc fall. “Now we are
at peak season there is some work,” said one. “But in May, the port was very
quiet. You could simply drive straight in”.
Nissan Cars Head Home as Yen Erodes Century of Made-in-Japan
By Andy Sharp - Aug 30, 2012 7:47 AM GMT
Japan Inc. has a new export market: Japan. For the first time, companies including Nissan Motor Co. (7201) are building products abroad to ship home as a stronger yen, aging workforce and improved skills overseas erode a century-old mantra that what’s sold in Japan should be made there.
Nissan’s decision to import foreign-made vehicles in 2010 paved the way for some of Japan’s biggest companies, including cosmetics company Shiseido Co. (4911) and electronics maker Toshiba Corp. (6502) Shipments home from Japanese producers’ overseas plants have more than doubled in a decade to a record, including a 31 percent jump in the past two years, compared with a 61 percent gain in total imports over the 10 years, government data show.
Aug. 30, 2012, 2:59 a.m. EDT
Moody's cuts growth view for emerging economies
MADRID (MarketWatch) -- Moody's Investors Service on
Thursday downwardly revised growth forecasts for Group of 20 emerging
economies, citing a troubled external environment and weaker domestic demand.
In an update to forecasts released in April, Moody's cut its forecasts for
growth in emerging economies to 5.2% in 2012, versus a prior projection of 5.8%
growth. For 2013, growth is seen at 5.7%, versus 6% expected in April. "We
continue to expect that the slowdown in advanced economies and volatile capital
flows will suppress growth in emerging markets," said Elena Duggar,
Moody's group credit officer for sovereign risk. Moody's said G-20 developed
countries will see growth of 1.4% in 2012 and 2% in 2013, no change to April
forecasts. Moody's said risks have risen for global economies largely due to a
deeper-than-expected euro-zone recession, potential for a hard landing in
emerging economies, an oil-price supply-side shock resulting from the
re-emergence of geopolitical risks and sudden and sharp fiscal tightening in
the U.S. in 2013.
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
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. Last
week’s ECB relief rally probably made the difference.
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