Baltic Dry Index. 662 -01
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket."
Michael Belkin
Europe’s boost from “whatever it takes”, is
about to clash with a nasty dose of reality. Those lying, stealing, cheating,
tax and work shy, idlers of Club Med, have had all the German austerity they
can take. Club Med is now being asked to undertake politically suicidal austerity
measures just for the dubious honour of staying in the dysfunctional euro to
bailout German and French banks. Europe’s worm is turning it seems this morning
from London. More and more of Club Med’s population are beginning to sense that
they’re better off out of the monetary union, and back in command over their
own destiny. The ECB is soon to find out that “whatever it takes” doesn’t
include more austerity, and that existing austerity targets need to be relaxed.
Club Med’s workers are about to call the Austerity Chancellor’s bluff.
“Bailouts on our terms, or we leave the union”. Spain, Italy and France make
for a pretty powerful voting bloc, even if they’re bust, nearly bust, and in
France’s case, deliberately setting out to go bust. Meanwhile Germany is
leading the fight against a European banking authority, or at least an
effective one.
Europe’s best solution is for Germany to lead
a Germanic bloc out of the disastrous European Monetary Union, but in typical
European fashion, that’s not on anyone’s agenda at present.
"Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories."
Richard Russell
European Squabbling on Currency Crisis Solution May Test Rally
By Patrick Donahue - Sep 16, 2012 11:01 PM GMT
Squabbling among European governments over the next steps needed to overcome
the region’s sovereign debt crisis raised the specter of renewed turmoil as
last week’s market rally eased pressure to forge a common path. A Sept. 14 European Union finance ministers meeting in the Cypriot capital of Nicosia deadlocked over the timetable for a more unified EU banking sector, with a German-led coalition pushing back against a more ambitious plan sought by France, Spain and Italy. The ministers also bickered over the terms of bailout requests and the role of the European Central Bank.
“Experience suggests that just as day gives way to night, improvement gives way to policy complacency, which is then followed by renewed crisis,” Joachim Fels, chief economist at Morgan Stanley in London, wrote in a note yesterday.
The euro area’s ability to overcome differences will determine whether a market revival prompted by increased ECB intervention and a German high-court ruling on bailout funding will mark a turning point in the three-year-old crisis or just the latest European bid for more time.
----The sharpest EU disagreement in Nicosia was over a European Commission plan to establish joint banking supervision from the beginning of next year. German Finance Minister Wolfgang Schaeuble, backed by colleagues from Sweden, the Netherlands and Poland, urged the meeting to agree on a more cautious approach when assigning new duties to the ECB.
More
http://www.bloomberg.com/news/2012-09-16/european-squabbling-on-currency-crisis-solution-may-test-rally.html
September 16, 2012, 4:59 p.m. ET
Spain Is Reluctant to Make More Cuts
MADRID—Spain's
government is facing an autumn of angry street protests by a recession-weary
public, even after telling its European partners that its next steps to
overhaul the economy would avoid further cuts in public spending.
Finance Minister Luis de Guindos laid out Spain's
position during weekend talks in Cyprus with his European colleagues, as tens
of thousands of singing, chanting Spaniards converged Saturday on Madrid from
all over the country to demand a popular referendum on the government's crisis
measures
As battle
lines shaped up over the terms of a possible bailout for one of the euro zone's
largest ailing economies, European leaders were divided over how much austerity
to demand of the Spanish leadership.
Spaniards are already reeling from a July round of
cuts that eliminated Christmas bonus pay for public employees, lowered
unemployment benefits and raised sales taxes, bringing new pain to wage earners
hit by public-sector pay reductions two years ago.
----The marchers, mobilized by Spain's two main labor federations and nearly 200 smaller groups, included firemen in red helmets, teachers in matching green outfits and health-care workers in white. They beat drums, blew whistles and waved banners while marching from 10 Madrid gathering points to the Plaza Colón.
Cándido Méndez, head of the General Workers' Union,
one of Spain's larger union federations, told the crowds the rally was the
start of an autumn campaign to force a popular referendum on austerity measures
that weren't part of Prime Minister Mariano Rajoy's electoral program when he
won office last November as head of the conservative Popular Party.
If the government doesn't give voters a say on the
measures, Mr. Méndez said, labor leaders would consider calling a general
strike.
More
Barcelona Warns Madrid: Pay Up, or Catalonia Leaves Spain
Hundreds of thousands march for Catalan independence as
economic pressure boosts secessionist sentiment
September 11, 2012
Sept. 11 always brings Barcelonans into the streets to dance the sardana,
sing for their enemies’ blood in the anthem “Els Segadors” and chant political
slogans in celebration of their national holiday, the Diada de Catalunya. But
this year, a new intensity colored the Catalans’ nationalist fervor. The
independence movement’s flag bearing a white star against a blue triangle
outnumbered the region’s official yellow-and-red-striped standard. A
pro-independence march, which in the past has never drawn more than 50,000
people, pulled in a crowd estimated by city police at 1.5 million. And every
newspaper in the city carried the results of a poll released this week that
reveals a once unimaginable transformation: half the population of Catalonia
supports secession from Spain.“We have no other option since our will has been totally ignored” says Soledat Balaguer, a member of the secretariat of the Catalan National Assembly, organizers of the demonstration that shut down the city center. “Catalonia needs to be its own state.”
----But the recent surge in secessionist
support is closely tied to Spain’s economic crisis. Although Catalonia is the
wealthiest region in Spain, it is also the most heavily in debt, running a
fiscal deficit of 8%. Two weeks ago, it requested a 5 billion euro bailout
from Spain’s central government, a request that prompted the president of the
Extremadura region to complain that those funds would come “from the pockets of
all Spaniards.” But in the minds of many Catalans, the region was simply asking
for its own money to be fairly returned.
moreDiscontent threatens Portugal’s fiscal progress
By Peter Wise in Lisbon September 16, 2012
7:06 pm
An unexpectedly strong backlash to Portugal’s increasingly tough austerity
measures has triggered an upsurge of public discontent and political
skirmishing, threatening to undermine the fiscal progress Lisbon has made with
its €78bn bailout programme.President Aníbal Cavaco Silva has convened a meeting of the state council, his top advisory body, later this week in an effort to ward off a political crisis, while hundreds of thousands of demonstrators took to the streets on Saturday in the country’s biggest anti-austerity protest to date.
The sudden breakdown in the broad political consensus over Lisbon’s adjustment programme and the threat of a potential split within the ruling centre-right coalition is an indication of the political risks still facing some struggling eurozone governments despite a September rally in sovereign debt markets.
---- A change in public mood was evident among
protesters who marched through city centres across Portugal on Saturday.
Co-ordinated on the internet by independent organisers rather than political
parties or trade unions, the largely incident-free protests attracted many
participants who said they had never previously demonstrated.
More
In
Asia, the China v Japan dispute over the Diaoyu/Senkaku islands got worse over
the weekend, with China’s public, state encouraged or not, starting to attack
and boycott Japanese products. Japan is
in danger of generating long term damage to its trade with China. Meanwhile
election year politics has America launching a trade complaint against Chinese
autos. The only good news that is that it will take about two years to reach an
appealable conclusion.
Protests to Hurt Japanese Car Sales in China, Dealer Group Says
By Bloomberg News - Sep 17, 2012 6:02 AM GMT
Violent anti-Japan protests that erupted in China over the weekend may cause
more damage to Japanese automakers in the world’s largest vehicle market than
natural disasters last year, according to the state-backed dealership group. Many dealerships in China that sell Japanese cars have shut for now after some outlets were attacked and vandalized, according to Luo Lei, deputy secretary general of the China Automobile Dealers Association. Besides those boycotting Japanese goods, most Chinese citizens won’t dare to buy Japanese-brand cars due to concerns over safety, Luo said.
“The impact caused by natural disasters can be fixed quickly, while it takes a longer time and efforts to make hostile sentiment against Japanese cars go away,” Luo said in a phone interview today, declining to quantify the damage as losses are still being tallied. “I have worked at the association for 10 years and this round of losses suffered by Japanese car dealers is the worst I’ve seen.”
A territorial dispute between China and Japan worsened as thousands protested in Chinese cities over the weekend in the worst flare-up of tensions between Asia’s two largest economies since 2005. Toyota Motor Corp. (7203) and Panasonic Corp. (6752) reported damage to their operations from fire, a Honda Civic was set ablaze in front of a dealership in Shanghai, while demonstrators handed out flyers listing names of Japanese brands to boycott.
“The
longer the conflict between China and Japan lasts, the more this anti-Japanese
sentiment will spread among ordinary consumers,” said Klaus Paur,
Shanghai-based global head of automotive at researcher Ipsos. “In this
politically sensitive situation, Japanese manufacturers have to reduce
marketing as well as communication activities, which in turn, significantly
weakens their brands and leaves the field for competitors.”
----September 18 is the anniversary of the Mukden Incident, also known as the Manchurian Incident, which took place in 1931 near what is now the Chinese city of Shenyang and led to the Japanese invasion of the northeastern portions of China.
Over the weekend, television news footage showed Japanese cars being overturned and window shields smashed by demonstrators in some cities. Photos posted on online forums showed Toyota cars with the brand badges covered with logos of Chinese carmakers such as BYD Co. (1211), while some Japanese car dealerships hung Chinese flags and banners proclaiming patriotism for China. A Toyota dealership was set on fire in the eastern city of Qingdao, the company said.
More
Obama to launch auto trade case against China: official
(Reuters) - President Barack Obama will launch a trade complaint against China over what his administration says is Beijing's unfair government backing of its auto industry, a White House official said on Sunday.Obama will announce during a campaign tour of Ohio on Monday that he is initiating a case against China at the World Trade Organization over allegedly illegal subsidies for automobiles and auto parts, the official said.
The move allows Obama to take a stand on China and advance the interests of a major job-providing industry in a state that could tip the balance in a close election. His opponent, Mitt Romney, has attacked Obama for what he says is an overly cautious approach to pressuring China into observing international norms for trade, foreign exchange, and patents and trademarks.
Ohio relies heavily on the auto industry and is a politically important swing state.
"Increasingly, the wealth of the modern world has come to be represented by financial assets rather than real assets, and this to me is a very unhealthy situation, because financial assets are inherently unstable. Financial assets (currencies, bonds, mortgages, stocks, bank credit, etc.) can be quickly and violently reduced in value, or destroyed completely by either inflation or deflation."
Donald J. Hoppe
At the Comex silver depositories Friday final figures were: Registered 39.46 Moz,
Eligible 102.20 Moz, Total 141.66 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
Today more on slowing
China. Even with all the new infrastructure programs announced in the last few
weeks, China’s economy is in deep trouble, according to a growing chorus of
China watchers.
The End of China's Easy Growth
The more we learn about China’s vast stimulus plans, the more far-fetched they seem.
Caixin magazine reports - with
disbelief - that the wish-list for industrial parks and mega-projects unveiled
by all echelons of the Chinese system has reached 15 trillion yuan by some
estimates.
This is
over $2.3 trillion or nearly four times the blitz of extra spending after the
Lehman crisis in 2008, a policy that pushed investment to a world record 49pc
of GDP and is now deemed to have been a mistake.
But as Caixin
also reports, the authorities are running out of easy money. Land transfer fees
for the 300 largest cities have fallen 38pc over the last year.
The
central government’s tax revenues have grown 8pc, but spending has risen 37pc.
"The good days of overflowing government coffers are over," it said.
Mark
Williams from Capital Economics said the fiscal blitz is a mirage. Most of the
road and urban rail plans were already in the pipeline. Spending will be spread
over years. "We can see no sign of a fresh stimulus. The project approvals
are interesting solely because the government chose to publicise them," he
said.
China may
have to muddle through the downturn after all with less extra juice than hoped.
This will be sobering. The country’s cost advantage over America - and others -
has vanished.
A new
report by PricewaterhouseCoopers entitled "A Homecoming for US
Manufacturing" claims it is now cheaper for whole clusters of US industry
to produce at home, close to their markets. Firms are "re-shoring" --
to use the vogue term -- to cut transport and inventory costs and take
advantage of cheap shale gas. The weaker dollar has iced the cake.
----The group studied 50 fast-growing companies -- among them Sany, as it happens -- concluding that they are at an "historical turning point". Either they make the changes needed to break through in the global big league as Brazil’s Vale, Mexico’s Cemex, or India’s Wipro have all done, or they risk languishing as also-rans.
The World
Bank made much the same argument for the country as a whole earlier this year
in a joint report with Beijing’s Development Research Centre. It said the
export-led growth model launched by Deng Xiaoping over thirty years ago is
obsolete. China risks a drift into the "middle income trap" unless it
abandons its top-down strategies and grasps the nettle of free-market reform.
----I missed the World Economic Forum in Tianjin last week but Jamil Anderlini from the Financial Times reported a pervasive tone of "despondency and cynicism" from Chinese officials and economists, in marked contrast to the bullish certainties -- or naïveté? -- of foreigners at the event.
"At a minimum, gold will rise to $3,000. A more likely scenario, however, is that the world's financial system will break down completely. (The basis of that system is the U.S. dollar.) In that case, gold will rise as high as $10,000 to $40,000 - a point at which all credit - paper will be backed by gold."
Steve Puetz
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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