Baltic Dry Index. 703 -04
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Up first, unelected EC President Barroso makes his
power grab. Using the all too familiar
scare tactic so loved by bureaucrats on the prowl for yet more power, POTEC
Barroso says the EU is at a “make-or-break moment.” With the failed euro
experiment not working for all of Club Med any more, millions of hapless Euro
serfs must be hoping it breaks. It will be interesting to see if this tactless
scare tactic affects the coming Dutch general election.
Below from the WSJ article. How many Euro
Presidents is one too many? How many Euro presidents does it take to change a
Euro light bulb?
“Mr. Barroso, European Council President Herman Van
Rompuy, European Central Bank President Mario Draghi and Jean-Claude Juncker,
president of the euro-zone finance ministers group, have been charged with
developing a blueprint by the end of the year for deeper regional integration.”
Germany is getting hustled and rolled into paying for a United States of
Europe. The UK should take this last opportunity to opt out. Stay long physical
precious metals, if it really is “make-or-break” point, break is less European wealth
destroying than make.
If at first you don't succeed, try again. Then quit. There's no use being a damn fool about it.
W. C. Fields
September 2, 2012, 6:52 p.m. ET
Barroso: Europe Reaches 'Make-or-Break' Point, Calls for New EU Treaties
BRUSSELS—European
Commission President José Manuel Barroso made his clearest call yet for
fundamental change to the European Union treaties, saying Saturday the region
needs "a leap in quality" in terms of integration.
In a
speech at a Yale Law School conference in The Hague, Mr. Barroso said the EU
was facing a "make-or-break moment" because of the economic crisis,
which has "shown the limits of individual action by nation states."
"Europe
and the principles of the Treaty need to be renewed. We need more integration,
and the corollary of more integration has to be more democracy. This European
renewal must represent a leap in quality and enable Europe to rise to the
challenges of the world today," he said
Mr.
Barroso, European Council President Herman Van Rompuy, European Central Bank
President Mario Draghi and Jean-Claude Juncker, president of the euro-zone
finance ministers group, have been charged with developing a blueprint by the
end of the year for deeper regional integration.
However,
until now many in Brussels, including at the EU's executive, were reluctant to
dive into a contentious debate about changing the EU's basic treaties. Previous
attempts at treaty changes, which need approval by each of the EU's 27 member
states, have taken years and have distracted from efforts to improve the
region's economy.
However,
in his first major speech since returning from the summer break, Mr. Barroso
said it was clear that the monetary union can only be protected if member
states agree to a much greater pooling of sovereignty.
"The
crisis has made it clear that we must not only complete the economic and
monetary union, but also pursue greater economic integration and deeper
political and democratic union with appropriate mechanisms of accountability,"
he said.
More
Elsewhere in the snake bit European Monetary Union,
contagion has struck in the heart of the union. Add France to the growing list
of European countries heading for a EU bailout.
"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.
September 2, 2012, 4:24 p.m. ET
France Bails Out Housing Lender
PARIS—The
French government rushed to bail out a small, liquidity-starved lender, putting
the country's capacity to support its financial sector to the test as Paris
attempts to pare its budget deficit in an increasingly stagnant economy.
Over the
weekend, France's Finance Ministry said it would guarantee the debt of Caisse
Centrale du Crédit Immobilier de France, or CCCIF, after the bank, which
specializes in loans to housing programs, sought emergency assistance.
The
government will underwrite nearly €5 billion ($6.3 billion) in immediate
financing for the bank, a government official said. The bank needs the cash to
pay down bonds falling due on Monday, but was effectively unable to raise the
funds on its own after Moody's Investors Service downgraded its debt rating
last week.
The
Finance Ministry said it would seek approvals from both the European Union and
the French Parliament to extend state guarantees to the bank. The government
stopped short of saying whether it would aim to wind down CCCIF operations or
try to find a buyer. The bank has about €30 billion in outstanding loans.
CCCIF's
woes illustrate the difficulties of banks that relied on markets to raise funds
and have struggled to adapt to the tougher environment born out of the global
financial crisis.
Recent
efforts by the bank to link up with a bigger partner have failed. It has 300
branches in France and about 2,500 employees.
More
However many Presidents Europe can come up with,
events elsewhere are rapidly making Europe’s never ending crisis unsolvable. Break
now looks far more likely than make.
Chinese manufacturing shows shock slump
Surprise figures from Beijing show that activity at Chinese factories contracted for the first time in nine months.
China
offered fresh evidence of its slowing growth as official figures showed
manufacturing activity unexpectedly shrunk for the first time in nine months.
The
state-backed China Federation of Logistics and Purchasing said its purchasing
managers index (PMI) survey fell to 49.2 in August from July's 50.1, where any
reading under 50 marks a drop in the sector's activity. Economists polled by
Bloomberg had expected the survey to show a reading of 50, meaning that activity
was flat.
New
orders fell as exports kept weakening, while output from the sector increased
at a slower pace, the survey showed. The figures confirm the economic slowdown
in China, where growth fell to a three-year low of 7.6pc in the quarter ending
in June.
----However
authorities have resisted calls for more aggressive stimulus measures, after
huge spending in response to the 2008 crisis stoked spiralling inflation and a
risky building boom.
Wen
Jiabao, the Chinese premier, said on Saturday it was too early to loosen curbs
on speculative property investment. "The controls over the real estate
market are still in a critical period," he said.
Forecasters
expect growth to rebound late this year or in early 2013, but say a recovery
will be too weak to drive global growth without improvement in the US and
Europe.
China Deterioration Raises Risk of Wen Missing Target: Economy
By Bloomberg News - Sep 3, 2012 3:59 AM GMT
China’s economy is showing mounting signs of deterioration from
manufacturers to banks, raising the risk that outgoing Premier Wen Jiabao will
miss his growth target for the first time since taking office in 2003. Manufacturing slowed further in August, surveys of purchasing managers showed Sept. 1 and today, with one gauge at the lowest level since March 2009. The readings added to evidence of weakness after a surfeit of unsold goods left near- record rubber stocks at China’s main hub for the commodity and financial strains saw a 27 percent jump in overdue loans at the five biggest banks in the first half.
More
http://www.bloomberg.com/news/2012-09-02/china-economy-s-deterioration-raises-risk-of-wen-missing-target.html
Will Mario Draghi deliver on his promise to buy bonds?
With Ben Bernanke's deeply inconclusive Jackson Hole missive now behind us, all eyes are firmly fixed on European Central Bank president, Mario Draghi.
---- The eurozone economy continues to deteriorate. Unemployment hit a record-high of 18m in July, we learnt on Friday, as another 88,000 people lost their jobs. Surveys of business confidence are flashing red, indicating that even Germany itself could be on the brink of recession. Eurozone inflation, meanwhile, is refusing to abate, jumping to 2.6pc year-on-year in August, from 2.4pc the previous month. That could dash any remaining hope of Draghi conjuring up an interest rate cut next week, to go alongside his "exceptional measures".
Even the
Chinese are now putting the thumb screws on Merkel. Premier Wen Jiabao last
week told the German chancellor that China and the broader international
community are "worried" about the prospect of contagion from the
single-currency area, in the aftermath of a systemic collapse. Wen has asked
Berlin for clarification over whether Italy and Spain would adopt the
"comprehensive rescue measures" needed to unlock the EU bail-out
machinery, so opening the door to bond purchases by the ECB.
While
Merkel replied by insisting that euro-denominated sovereign debt remains a
"safe investment", it is clear that unless Beijing sees some ECB
money-printing, and fast, it could soon become a net seller of eurozone
government bonds. This is truly alarming. Until now, China has been propping up
bond prices with net debt purchases within the eurozone. All the eurocrats'
assumptions about funding for future bail-out packages also include a big chunk
of money from Beijing. By breaking its silence, China seems to be putting a gun
to the Iron Frau's head.
More
Technicals flash amber as ECB and Fed struggle to validate rhetoric
Louise Yamada clinched her reputation as America’s oracle of technical analysis with an emphatic sell warning at the top of the Wall Street boom in 2007.
She is
watching the torrid rise on US and European bourses with mounting unease.
Retail investors have not taken part. America’s mutual funds haemorrhaged a
further $12.7bn in July, the fifth consecutive monthly outflow.
“A lot of
this rally is just short-covering by hedge funds. There is underlying weakness
creeping into the markets. Volume is low, and going down. You could call it a
vacuum rally. New highs against new lows have been deteriorating.”
The US
index of transport stocks have lagged the Dow Jones industrials, a
time-honoured warning sign. “There is no question that we have a Dow Theory
sell signal in place. This is rare and needs to be watched carefully. It tends
to accurate, eventually,” she said.
Morgan
Stanley’s equity team says stocks are still cheap in historic terms but many of
their “sentiment” indicators are nevertheless flashing amber to red. It is as
if the great debt hangover has sapped our strength. Europe’s stocks cannot seem
to claw their way above a 12-month forward price to earnings (P/E) ratio of 11.
Both the
VIX volatility index and the "put/call" ratio on the options market
are signalling the sort of
complacency levels seen at past peaks.
---- “From a valuation standpoint, we are now close to peak levels seen over the past couple of years,” said Graham Secker, the bank’s chief European equity strategist.
It has
been a heady summer rally. America’s S&P 500 index is up 10pc since early
June. France’s CAC has risen 16pc, and Germany’s DAX 15pc, though both
countries are flirting with double-dip recessions.
Italy is
up 20pc and Spain up 24pc since mid-July in the face of full-blown depression.
The 10-year sovereign bond yield remains more than 400 basis points higher than
the growth rate of nominal GDP in both countries, a formula for suffocation.
For this
equity melt-up we can thank the "Draghi Put" and the "Bernanke
Put", the promise of largesse from the world’s two superpower central
banks. Neither "Put" is actually in the bag.
As for
China’s "Politburo Put" - the semi-fictional fiscal blitz by the
regions - it is for now more believed abroad than at home. The Shanghai
composite has continued its relentless slide. It is down 16pc since May.
“The EU government has a technology, called a printing press
(or, today, its electronic equivalent), that allows it to produce as many Euros
as it wishes at essentially no cost…We conclude that under a paper-money
system, a determined government can always generate higher spending and hence
positive inflation.”
“Super Mario,” with apologies to Dr. Ben Bernanke
At the Comex silver depositories Friday final figures were: Registered 39.26
Moz, Eligible 101.69 Moz, Total 140.95 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
Today, Japan v
China once again. Someone in Japan clearly wants to force a dispute with China
ahead of the coming leadership change in the Chinese Communist Party in October
or November. We will shortly see China’s response.
"Anytime you don't want anything, you get it."
Calvin Coolidge, 30th President of the United
States of America.
September 3, 2012, 10:48 AM
HKT
Journey to Disputed Waters: Tokyo Surveys the Senkakus
NOTE: This is the most recent dispatch from WSJ’s Eleanor Warnock, who is embedded with a survey team sent by the Tokyo Metropolitan Government to survey the Senkaku Islands,a disputed island at the heart of a recent diplomatic flare up between Japan and China. Her earlier dispatches, filed for CRT’s sister blog Japan Real Time, are available here.When the earliest risers on the Koyo Maru, the boat carrying the survey group from the Tokyo metropolitan government to a disputed island chain in the East China Sea, stepped out on deck at 5 o’clock in the morning, one of the islands already loomed ahead like a black pyramid. As the boat swayed gently in the calm water, others appeared in the dark, some from the Japanese Coast Guard, others fishing boats.
The
island ahead of the Koyo Maru was Uotsuri Island, the first island in the
survey of three islands in a chain claimed by Japan, China and Taiwan. The
islands, currently under Japanese control, are known as Senkaku in Japanese and
Diaoyu in Chinese.
Uotsuri
Island was so close that as dawn broke it was possible to pick out a Japanese
flag painted on a rock, but no one on the trip would be able to touch any of
the islands. Tokyo is in negotiations to buy three of them from their private
owners, but did not get permission to land from the central government, which
currently leases them.
As the
sky lightened, the crew readied the two smaller boats that would be carrying
surveyors closer to the island.
More
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
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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