Baltic Dry Index. 878 -19
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Yet the picture is changing as Europe’s industrial recession
spreads north. Belgian GDP – a leading indicator for Germany – shrank by 0.6pc
in the second quarter. The eurozone’s PMI manufacturing index dropped to a
37-month low of 44.0 in July, with Ireland alone above the contraction line of
50.
Ambrose Evans-Pritchard.
Yesterday the Fed met, talked, took no
action, but promised jam tomorrow if things get worse. Today the ECB meets but
has no similar easy option. Last week the ECB’s fearless leader promised action
to save the Euro, and not just the usual wimpy European action either. Mr
Draghi hyped the coming action so much that he put himself in a corner with
only one way out. Either put the ECB’s money where his mouth is or lose all
credibility for the ECB, probably setting off the rout of Spain and Italy.
Flatfooted at not being consulted, paymaster Germany’s Bundesbank said over our
dead body.
Well aware of the coming rout, Italy’s Prime Minister, “Super
Mario,” has usurped the position of Club Med Prime Minister and gone into league
with America against Germany. The Bundesbank’s dead body is expected later
today. Killed by a dose “of whatever it takes.” Thus Euroland’s never ending
crisis rolls out another act in the tragedy “Death of a Euro.” One thing is absolutely clear, the existing
euro is unfit for purpose, and is going to be replaced. If Greece and Spain are
to remain in the “new reformed euro,” an austerity U-turn is coming up for
Europe.
Stay long physical precious metals. The ECB
either delivers on its words today, killing off the Bundesbank and saving
President Obama’s re-election chances, or the Bundesbank stops dead the
US-Italian-ECB alliance, with the fat lady due to sing at the weekend. Those of
us not on the USS America or the badly listing SS Europa, can only look on in
amazement. The Europa is proposing to make the paymaster walk the plank.
"If these countries go through adjustment processes which
result in decreases in wages and prices, then this constitutes one-off shifts
in the wage and price structure and not deflation"
Bundesbank President Jens Weidmann.
Pressure on Spain to bow to bail-out
Italy’s leader Mario Monti is to make a last-ditch effort tomorrow to persuade Spain to swallow its pride and accept a formal rescue, hoping to clear the way for double-barrelled action by bail-out funds and the European Central Bank.
The
frantic diplomacy comes as investors wait nervously to see if German-led
officials on the ECB’s governing council will stand behind the bank’s chief,
Mario Draghi, who triggered a euphoric stockmarket rally last week with hints
of intervention in the Spanish and Italian bond markets.
"The
situation is dramatic: markets will react very badly if the ECB doesn’t
deliver,” said Dmitris Drakopoulos from Nomura, ahead of the ECB’s crucial
policy meeting tomorrow. The bond markets are continuing to signal deep alarm,
with safe-haven flows into German two-year debt pushing yields to minus 0.08pc.
Former
ECB governor Athanasios Orphanides said Mr Draghi had boxed himself into a
corner.
“Expectations are now so high, the ECB will have to announce
something,” he said.
Bundesbank
chief Jens Weidmann shows no sign of relenting, warning today that the ECB must
not “overstep its mandate” or stray into fiscal rescues. He issued a blunt
reminder that the German central bank is master of the euro project, and not
“just one” bank among others. “We are the biggest and most important central
bank in the euro system,” he told the Bundesbank journal.
While the
Bundesbank does not command an ECB majority – and has been outvoted in the past
– Mr Draghi must move with extreme care. Two German members of the ECB have
already resigned in protest over bond purchases, seen as debt pooling by the
back door. EU officials fear that Mr Weidmann may leave as well if pushed too
far, risking a political storm in Germany.
----Mr Monti has emerged as the Latin bloc’s de facto “prime minister”, working hand in glove with the White House. It is an alliance that boosts his power in talks with Germany. US President Barack Obama telephoned him again on Tuesday to offer “support for decisive action”.
US
Treasury Secretary Tim Geithner piled on the pressure, saying budgetary discipline
was not enough. “They have to do more to help support growth,” he told
Bloomberg TV
More
http://www.telegraph.co.uk/finance/financialcrisis/9445456/Pressure-on-Spain-to-bow-to-bail-out.html
Debt crisis: What could the ECB do to save the euro?
The attention of world markets will be firmly fixed on the European Central Bank on Thursday, as it announces its monthly policy decision.
The
attention of world markets will be firmly fixed on the European Central Bank on
Thursday, as it announces its monthly policy decision.
The
declaration last week by President Mario Draghi that he will do "whatever
it takes" to save the euro whipped markets into a frenzy. Investors took
it as a signal that the ECB was poised to announce dramatic intervention to
stem the eurozone crisis before policymakers take a summer break.
With
expectations so high however, anything short of major action is likely to
disappoint markets and trigger fresh panic. Here is a look at some of the
possible options open to the Bank.
Banking
licence
The ECB
could grant a banking licence for the region’s permanent bailout fund, the
European Stability Mechanism. This would allow the ESM to borrow from the
central bank and take on a “lender of last resort” role for those sovereigns in
difficulty but essentially solvent, like Spain and Italy. It would be a hugely
significant move and likely have the most dramatic impact. Italy’s Prime
Minister Mario Monti said yesterday such a move “will in due course occur”, but
strong opposition from German policymakers makes it unlikely today.
More
August 1, 2012, 7:37 p.m. ET
Bundesbank Stresses Divide on Bond Buying
A
contrarian member of the European Central Bank's governing council again
signaled his opposition to growing demands for the bank to engage in radical
policy moves to save Europe's currency union.
The ECB
"should be aware" that its independence "also requires it to
respect, and not overstep, its own mandate," Bundesbank President Jens
Weidmann said in remarks published Wednesday.
The
comments come from an interview conducted more than a month ago in an internal
Bundesbank magazine. Since then, ECB President Mario Draghi has encouraged
speculation that the ECB will resume intervention in the bond markets to keep
the borrowing costs of struggling countries down, a policy the Bundesbank
bitterly opposes.
The
Bundesbank took the unusual step of translating Mr. Weidmann's comments into
English and posting them on the home page of its website, just one day before
the ECB is set to thrash out the issue at a governing council meeting.
----Mr. Weidmann has been in an increasingly public row with Mr. Draghi over the course of ECB policy. Mr. Weidmann spoke openly about risks he sees in the ECB's current monetary-policy stance, which he views as too loose.
Most
recently, he let it be known that he is against the ECB buying more government
bonds on the secondary market, something Mr. Draghi hinted at strongly in a
speech in London last week, and something analysts say is an essential measure
to save Spain, the euro zone's fourth-largest economy, from losing access to
the capital markets.
----The Finnish premier, who has insisted his country receive collateral in exchange for bailouts funded by the EU's temporary rescue fund, said many Finns find the current situation "unfair" as they are forced to shell out cash for troubled euro-zone members that are violating the bloc's fiscal rules and at the same time must watch people at home lose their jobs amid the crisis.
"We
Finns were taught to believe that everyone followed the same rules," Mr.
Katainen said.
More
August 1, 2012, 10:07 p.m. ET
Wary Fed Is Poised to Act
Central Bank Officials Keep Powder Dry but Cite Dimming Economic Outlook
The
Federal Reserve is heading toward launching a new round of stimulus to buck up
the weak economy, but stopped short of doing so right away.
The
decision to make what amounted to a conditional promise of action came
Wednesday at the end of the central bank's two-day policy meeting. In an uncharacteristically
strong statement, the Fed said it will "closely monitor" the economy
and "will provide additional accommodation as needed to promote a stronger
economic recovery and sustained improvement in labor market conditions."
Translation: The Fed will move if growth and employment don't pick up soon on
their own.
As central bank messages go, this was a stark declaration and
helped soften disappointment among investors that the Fed didn't take such
action on Wednesday, as some had expected.
More
There are other stories worth covering today,
a new tropical depression formed in the Atlantic and likely to be next week’s
story. The Knightmare on Wall Street, where great vampire squid algo-trading
continues to make a nonsense of stock price discovery and doing God’s work. But
outside of India, nothing has the import of today’s ECB clash among “equals”.
One side or the other “wins,” although “winning” isn’t really applicable in
this never ending euro crisis. If the ECB “wins” it’s crisis deferred, pushed
out for a few weeks more. If the ECB loses, say goodbye to Greece later this
month.
"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise." "The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."
Hans F. Sennholz
At the Comex silver depositories Wednesday final figures were: Registered 38.64
Moz, Eligible 99.96 Moz, Total 138.60 Moz.
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