Baltic Dry Index. 755 +33 Possible double bottom.
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“How can you be expected to govern a country that has 246 kinds
of cheese?”
Charles
de Gaulle,
It’s over! The great Bilderberger, top down, notion of a
United States of Europe, imposed on the hapless serfs, and held together by a
one size fits all single currency, run by a combination of unelected Brussels
bureaucrats and unelected ECB technocrats, is now dead. Catalonia now wants to
exit from Spain. If it does, the Basques will quickly follow. The rump of Spain
goes bust.
If Catalonia doesn’t exit from Spain it wants a new deal
in charge of its own finances. Spain goes bust either way. Any ECB bailout for
Spain now is doomed to fail. It’s all a question of how much Spanish sovereign debt
get dumped on the ECB as everyone else uses “whatever it takes” to take the
emergency exit. Stay long physical precious metals. Other regions across Europe
have similar claims to want to split. Italy from Sicily. Northern Italy from
the south. Bavaria from Germany’s Prussian north. Belgium wants to split in
two. France ?
“Independence
for Catalunya? Over my dead body. Spain is not Yugoslavia or Belgium. Even if
the lion is sleeping, don’t provoke the lion, because he will show the ferocity
proven over centuries”
General
Francisco Franco
Spain risks break-up as Mariano Rajoy stirs Catalan fury
The ruling parties of Catalonia have sought guidance from Brussels on the legality of secession from Spain, requesting a “route map” for membership of the European Union and the euro as an independent state.
It is the
latest move in a fast-escalating clash between Catalan nationalists and Spanish
nationalists, the latter backed by King Juan Carlos and the Spanish military.
Jose-Manuel
Garcia-Margallo, the foreign minister, threw down the gauntlet, calling Catalan
secession “illegal and lethal”. He warned that Spain would use its veto to stop
the region
of Catalonia becoming
an EU member “indefinitely”.
The
constitutional crisis has eclipsed the parallel drama of a Spanish bail-out
request from the European Stability Mechanism. It is no longer clear whether
premier Mariano Rajoy can
deliver on any austerity deal with Brussels.
Catalan
leader Artur Mas held high-stakes talks with Mr Rajoy in Madrid on Thursday,
armed with a mandate from the Catalan parliament and with charged emotions left
from an unprecedented protest by 1.5m people in Barcelona 10 days ago.
He
demanded an independent treasury for the rich Catalan region, with control over
its own tax base akin to the model already enjoyed by Basques. The 9m Catalans
have an economy the size of Austria’s.
----The newspaper Confidencial reported that his Convergència i Unió (CiU) party and coalition partners have asked the European Commission whether Spain can prevent Catalans exercising democratic self-determination, and whether a sovereign Catalonia could remain part of the EU’s single market and the euro.
The speed
of events has caught almost everybody by surprise, including Mr Mas himself.
His CiU has, until now, pursued a policy of calculated ambiguity over
secession. Mr Mas has pivoted quickly, embracing what he calls the “popular
outcry” as his own.
The
antagonisms date back to the Franco era and, above all, to 1714 when Philip V
abolished all Catalan institutions, and imposed Castilian laws and absolutism
by right of conquest.
Diplomats
say Mr Rajoy’s Partido Popular has provoked the latest eruption of fury by
exploiting the economic crisis to break the power of the regions. This came to
a head over the summer when Catalonia was forced to request a €5bn rescue from
Madrid, though it is a net contributor to the Spanish state.
One Europe, Many Tribes
By Peter Coy on September 19, 2012
Italy, unified in 1870, is newer than
Nevada. Spain was split down the middle by a civil war as recently as the
1930s. And reunited Germany, dating back only to 1990, is younger than two of
the Jonas Brothers. Just a reminder that, for all their claims to antiquity,
many of the nations of Europe have been nations for only the briefest of times.
For most of history they were rivalrous territories, kingdoms, duchies, principalities,
and city-states. They were bound by language and culture—and riven by
tribalism.
As Europe’s financial crisis drags on,
the tribes have returned with a vengeance. It’s not just Greece vs. Germany.
Today it’s Sicily vs. Lombardy, Berlin vs. Bavaria, Andalusia vs. Catalonia.
Keep this in mind as optimists point to the successes of the campaign for “more
Europe,” such as the European Central Bank’s agreement on Sept. 6 to
support the bonds of hard-pressed countries that comply with deficit reduction
agreements. Europe is boiling over with regional grievances. Money is the
issue—who gives it and who gets it. The 1999 launch of the euro has forced an
unwanted intimacy on Europeans in flagrant disregard for Robert Frost’s poetic
dictum: “Good fences make good neighbors.” And the euro entices separatists to
strike out on their own, figuring even small nations can survive if they share
a currency. (Malta, a euro-zone nation, has fewer people than Dublin or
Dresden.)
Barcelona
is the latest flash point. Each year on Sept. 11, Catalonia commemorates
the 1714 defeat of its troops at the hands of the Spanish king, Philip V.
This year more than a million Catalans flooded the boulevards and medieval
alleyways of Barcelona, some waving or wearing the striped flag of Catalonian
independence, others carrying signs with slogans like, “Catalonia Is Not
Spain.” They blame redistribution of their wealth to poor regions for
Catalonia’s financial stress, which has forced it to seek a €5 billion
($6.5 billion) loan. Catalonian President Artur Mas said he would push for
independence from Spain unless the central government allocated it a bigger
share of tax revenue. “If we cannot reach a financial agreement, the road to
freedom for Catalonia is open,” he vowed.
The
secession threat may not be a bluff. Even if it’s averted and Mas succeeds in
reducing what Catalonia pays to Madrid, Spain’s financial squeeze will worsen
and it will need even more help from the rest of Europe. That will intensify
the anger toward Spain in the contributing nations, such as Germany, the
Netherlands, and Finland, undercutting the efforts of European leaders to keep
the 17-nation euro area intact.
More
Italy, Spain Won’t Seek Aid Unless Yields Surge, Official Says
By Chiara Vasarri and Lorenzo
Totaro - Sep 21, 2012 7:03 AM GMT
Italy and Spain won’t request bailouts unless a new surge in bond yields
leaves them shut out of markets as no government will voluntarily accept
conditions imposed for the aid, a senior Italian government official said. “There won’t be any nation that voluntarily, with a preemptive move, even if rationally justified, would go to an international body and say -- ‘I give up my national sovereignty,’ ” Gianfranco Polillo, undersecretary of finance, said in an interview in Rome late yesterday. “I rule it out for Italy and for any other country.”
Italian and Spanish 10-year bond yields have dropped more than 1 percentage point since European Central Bank President Mario Draghi first signaled on Aug. 2 that the bank would buy debt of distressed euro-region nations in tandem with the European Union’s bailout funds. While Italian Prime Minister Mario Monti championed the EU bond-buying plan, Draghi’s insistence on imposing conditions on any aid has left Monti and Spanish Prime Minister Mariano Rajoy reluctant to make a request.
The program “will be activated only when the single countries have the water up to their necks,” Polillo said.
---- Should a country hit the aid button, the related “procedures would be very heavy from both a political and economic point of view” and any conditionality would carry uncertainties, Polillo, who serves as a deputy to Finance Minister Vittorio Grilli, said.
An increase in political risk in the run-up to general elections due by the end of April, could also increase the chance that Italy would be forced to seek support, Polillo said. Polls suggest that the vote may fail to produce a stable majority or may lead to a government that’s not committed to Monti’s reforms. The risk of a hung parliament would also increase if politicians don’t succeed in reaching an agreement on a new election law that ensures governability, Polillo said. Monti won’t run in the election
More
http://www.bloomberg.com/news/2012-09-21/italy-spain-won-t-seek-aid-unless-yields-surge-official-says.html
Greek Leaders Struggle With Spending Reductions
By Marcus Bensasson, Natalie
Weeks and Maria Petrakis - Sep 21, 2012 12:45 AM GMT
Greek Prime Minister Antonis Samaras struggled to clinch agreement with his
coalition partners on an 11.5 billion-euro ($14.9 billion) budget-cut package
that’s key to receiving international aid funds. Samaras was handed the third refusal in less than two weeks yesterday from Democratic Left leader Fotis Kouvelis and Pasok leader Evangelos Venizelos, the junior partners in the coalition who met to discuss proposed cuts to wages, pensions and benefits. Finance Minister Yannis Stournaras and the “troika” of inspectors from the European Commission, the European Central Bank and the International Monetary Fund have been locked in talks for two weeks on carving out savings.
“The troika must stop attacking Greek society,” said Kouvelis after conferring with Venizelos. “The troika must understand there are limits.”
The troika, representing the international lenders in Greece’s bailout package, have already said some of the reductions don’t go far enough, forcing all parties back to the negotiating table repeatedly over the past two weeks.
The standoff leaves Samaras heading to meetings in Rome today with his Italian, Spanish and Irish counterparts without solid domestic political backing on the package he has said is necessary to restore Greece’s credibility and keep the country in the euro. Euro area finance ministers are expected to rule on the budget measures on Oct. 8.
---- The government is seeking to agree with the troika on most of the spending cuts by Sept. 23. The mission is due to leave Athens at the end of the week if agreement is not secured by then and will only return in early October, said the official. A lower-level technical team will remain in Athens.
More
http://www.bloomberg.com/news/2012-09-20/greek-leaders-struggle-with-spending-reductions.html
Analysis: Italy's growth outlook still dismal after Monti reforms
ROME | Thu
Sep 20, 2012 4:34am EDT
(Reuters) - Prime Minister Mario Monti may have saved Italy
from ruinous default but the growth potential of Europe's most sluggish economy
is as weak as ever, and that means prospects for lasting debt reduction remain
fragile.Thanks to his decisive austerity measures and personal credibility, the economist and former European commissioner has put Italy back at the centre of European decision making and helped to lower its borrowing costs.
Yet only by boosting its growth potential -- the ability to grow consistently without generating inflation -- can he hope to lower a debt pile of more than 120 percent of output, second only to Greece's in the euro zone.
With the end of Monti's term just six months away, and no clarity about what sort of government will follow him let alone how committed it will be to austerity and deregulation, most economists say progress on this front has been disappointing.
"I think that Italy's growth potential is exactly what it was when Monti arrived," said Daniel Gros, head of the Brussels based Centre for European Policy Studies (CEPS).
Italy grew at an average rate of 0.25 percent per year in the decade to 2011, the worst performance not only in the EU but also among the G20 and the 34 states that make up the Organisation of Economic Cooperation and Development (OECD).
The economy is once again in steep recession, forecast by economists to contract by around 2.5 percent this year. The OECD says its growth potential is now a paltry 0.3 percent.
More
http://www.reuters.com/article/2012/09/20/us-italy-monti-reforms-idUSBRE88J0AJ20120920
“You start out giving your hat, then you give your coat, then your shirt, then your skin and finally your soul.”
Charles
de Gaulle,
At the Comex silver depositories Thursday final figures were: Registered 39.45
Moz, Eligible 101.42 Moz, Total 140.87 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
We
end for the week on easy come easy go pretzel Euroland. The ECB’s new HQ in
Frankfurt will now cost 1.2 billion euro rather than the 850 million euro
budgeted. Don’t worry, it’s only fiat money and there’s plenty more where that
comes from. The ECB is expected to move in in mid-2014, just about the time
there won’t be any need for an ECB in Frankfurt oe anywhere else. As for the “heritage”
Grossmarkthalle, an incredibly ugly 1920s monstrosity that Hitler used for
deporting Frankfurt’s Jews, it beats me why the rest of Europe should be asked
to pony up an extra 100 to 150 million euro for what ought to be a German national
embarrassment.
“Treaties
are like roses and young girls -- they last while they last”
Charles
de Gaulle,
ECB's new HQ will cost €200m more than expected
The European Central Bank's new headquarters, scheduled to be completed in 2014, will cost a lot more than expected, a top ECB official has admitted.
Originally,
the estimated cost of the spectacular new twin-tower skyscraper, being built in
the redeveloped east of Frankfurt, was put at €850m (£680m).
But ECB
executive board member Joerg Asmussen, in a speech at the building's
"topping out" ceremony here, said the final costs could amount to
€1.2bn, AFP reported.
"So
far, the ECB has spent approximately €530m in construction and other costs,
including the purchase of the site," said Asmussen, who was speaking
instead of ECB President Mario Draghi, unable to attend because of other prior
commitments.
In 2005,
the overall investment cost was estimated at €850m.
But
"it is anticipated that the increase in the price of construction
materials and construction activities from 2005 until the completion of the
project in 2014 will lead to a €200m increase in the overall investment
cost," Asmussen told hundreds of invited guests, including Frankfurt's
mayor Peter Feldmann,
On top of
this were to come unanticipated costs connected with problems with the heritage
site of the Grossmarkthalle market hall building that dated back to 1928,
Asmussen said.
"These
factors are likely to account for additional costs of around €100m to
€150m," bringing the final total to some €1.2bn.
More
Großmarkthalle
The Großmarkthalle (Wholesale Market Hall),
located in the Ostend of Frankfurt am Main, was the city's main wholesale
market, especially for fruit and vegetables. It was closed on June 4, 2004. It
is considered a major example of expressionist architecture.
More
“In
order to become the master, the politician poses as the servant.”
Charles
de Gaulle.
Another weekend, and no end in sight to Europe’s never
ending crisis. Across the Atlantic America’s Presidential election took an
unexpected turn during the week. The challenger, who’s always the underdog
given the incumbent power of the presidency, unexpectedly spotted the President
almost half of the electorate. As strategies go, it’s never been tried before.
If it works it’s a stroke of genius, if it doesn’t it’s an unbelievable
blunder. At least US elections offer Europeans wonderful entertainment and
relief from their self imposed death spiral into depression. Have a great
weekend everyone.
The monthly
Coppock Indicators finished August:
DJIA: +76 Up. NASDAQ: +97 Up. SP500: +69 Up. All
three indicators have reversed from down to up.
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