Baltic Dry Index. 926 +23
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
By means of glasses, hotbeds, and hotwalls, very good grapes can
be raised in Scotland, and very good wine too can be made of them at about
thirty times the expense for which at least equally good can be brought from
foreign countries. Would it be a reasonable law to prohibit the importation of
all foreign wines, merely to encourage the making of claret and burgundy in
Scotland?
Adam Smith. The Wealth of Nations.
More on the IMF's acrimonious shambles in Tokyo later,
first this “good news” from China. On an official figures basis, China’s
inflation rate fell back below 2% last month after the price of pork fell,
allowing China to stimulate their economy again, according to western pundits desperately
searching for hopium news. Worryingly, if the official figures are to be believed,
China’s imports rose 2.4% year on year, while exports surged nearly 4 times as
fast rising 9.9%.
China Inflation Cools Amid Signs Growth Is Stabilizing: Economy
By Bloomberg News - Oct 15, 2012 5:08 AM GMT
China’s inflation was close to the slowest pace in two
years in September, giving the government room to ease policies should the
economy deteriorate. Consumer prices rose 1.9 percent from a year earlier while the producer-price index dropped 3.6 percent, the National Bureau of Statistics said on its website today. China’s imports increased 2.4 percent from a year earlier while overseas shipments climbed 9.9 percent, the customs administration said on Oct. 13.
----China’s food-price gains slowed to 2.5 percent in September from 3.4 percent in August as pork costs slid, today’s report showed. Non-food inflation accelerated to 1.7 percent from 1.4 percent. Producer prices fell 3.6 percent, the seventh straight decline.
Credit
Agricole CIB says the increase in consumer prices could quicken to 4 percent by
year-end on food costs, while Standard Chartered Plc projects a pace as high as
5 percent next year.
Morehttp://www.bloomberg.com/news/2012-10-15/china-inflation-close-to-slowest-pace-in-two-years-at-1-9-1-.html
Now back to the shambles of the now passed IMF meeting in Tokyo. The IMF called for everyone to back off on austerity, especially the UK Chancellor and Governor King at the BOE, in the face of a markedly slowing global economy, and a negative correlation multiplier of between 0.9% to 1.7% rather than the IMF’s original guess of 0.6%. The dismal science gets more dismal in every way. For more on that scroll down to Crooks Corner. China’s top banker stayed away to show China’s displeasure with Japan over the Diaoyu Islands dispute. Brazil, Russia and China berated America’s renewed currency war against the BRIC countries. “Helicopter Ben” told them the equivalent of Washington’s “Drop Dead” response to New York City’s 1970s bankruptcy. It was left to Bank of Israel’s Stanley Fischer to deliver Helicopter Ben’s real QE3 message to the IMF, due to the US election being only 3 weeks away. The world is “awfully close” to a new recession, according to guru Fischer despite all of the actions taken by combined central banksters so far, so the new nuke option of QE3 carpet bombing is now the order of the day. Get on with it. Other than that, Mrs Lincoln, what did you think of the play.
Europe’s preening, pouting, political “leaders” plus their bag carriers, meet in conclave yet again in Brussels October 18-19, to wreak their usual mischief, in never ending,
Europe’s never ending crisis. The odds are not good of anything helpful coming out of this umpteenth summit of the vainglorious great and not quite so good.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
Adam Smith. The Wealth of Nations.
Fischer Backs Fed QE3 as World ‘Awfully Close’ to Recession
By Sara
Eisen and Shamim Adam - Oct 15, 2012 3:26 AM GMT
Bank of Israel Governor Stanley Fischer
said the world is “awfully close” to a recession, and backed the Federal
Reserve’s increase in quantitative easing as strengthening its policy
credibility. While there has been “a lot of progress made” to improve the global economy, its impact hasn’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing today. He signalled that by deciding not to set an end date or total amount to its third program of bond buying, the Fed is easing worries it will run out of ammunition before achieving its goals.
Fischer’s take on global growth added to concern raised at annual meetings of the International Monetary Fund, with the IMF cutting its forecasts on Oct. 9 and warning of more weakness unless the U.S. and Europe address threats to their economies. As the euro crisis drags on, fiscal tightening and muted demand in wealthy nations hurts emerging countries from China to Brazil.
“We’re awfully close” to a global recession, said Fischer, 69, who served as the IMF’s No. 2 official from 1994 to 2001 and was thesis adviser to Fed Chairman Ben S. Bernanke at the Massachusetts Institute of Technology. “It’s pretty slow right now. Europe is technically in a recession, the U.S. is predicting less than 2 percent growth for the next few months.”
More
Global Economy Distress 3.0 Looms as Emerging Markets Falter
By Simon Kennedy - Oct 15, 2012 1:03 AM GMT
The global economy is facing its third major brake on expansion
in five years as emerging markets slow from China to Brazil, provoking debate
about how much policy makers should respond.
Three years after industrializing nations led the world out of the U.S. mortgage meltdown-induced recession, the reliability of the power source is waning as Europe’s debt crisis persists. The International Monetary Fund sees them growing an average 5.8 percent in the half-decade through 2016, almost two percentage points less than the five years before the 2009 slump.
Finance chiefs at the IMF and World Bank annual meetings left Tokyo this weekend at odds over how to address the issue, with South Korea’s central bank chief urging Asia to add stimulus as Russia and Brazil called on rich nations to fix their own challenges.
----The IMF meetings ended yesterday with both expressions of optimism that Europe now has a policy infrastructure to quell its turmoil, and a clash between Germany and the fund over what lies next for cash-strapped nations such as Greece.
Developed
economies including Switzerland and Japan joined Brazil in sounding the alert
on excess currency strength, while delegates disagreed over the right degree of
budget austerity as they pushed the U.S. to avoid tumbling over its fiscal
cliff.
“Ministers
discussed a short-term response for the global economy, but their opinions
weren’t harmonized in one direction,” South Korean Finance Minister Bahk Jae
Wan told reporters in Tokyo. “The world has a leadership problem.”
More
Bernanke defends Federal Reserve stimulus measures
14 October 2012
Federal Reserve chairman Ben Bernanke has defended the
central bank's measures to bolster the US economy.
Brazil has said US monetary easing to keep interest rates low and weaken the dollar has hurt emerging economies.
And International Monetary Fund chief Christine Lagarde warned on Sunday of consequent asset bubbles developing in emerging nations.
But Mr Bernanke said that measures taken by the Fed and other central banks boosted global growth.
The Fed has maintained a low interest rate policy for several years, pumping about $2.3 trillion into the US economy to bolster growth.
There have also been huge stimulus measures in Europe and Japan.
Critics say such moves, especially by the US, drive down the value of the dollar and spark capital flows into emerging nations.
Speaking in Tokyo, where the International Monetary Fund and World Bank are holding annual meetings, Mr Bernanke said: "The linkage between advanced-economy monetary policies and international capital flows is looser than is sometimes asserted."
----On Friday, Brazil's finance minister, Guido Mantega, warned that his country would take "whatever measures it deems necessary" to fight the problem.
"Emerging
markets can't passively endure large and volatile capital flows and currency
fluctuations caused by rich countries' policies," Mr Mantega said in
Tokyo.
'Diverging
views'
"Advanced
countries cannot count on exporting their way out of the crisis at the expense
of emerging-market economies," he said. "Currency wars will only
compound the world's economic difficulties."
More
Ease off on austerity, IMF warns Chancellor George Osborne
George Osborne has been warned by the International Monetary Fund that he risks further damaging the economy unless the pace of austerity slows and he faces up to the country’s “growth challenge”.
By Philip
Aldrick, Emma Rowley and Roland Gribben 9:12PM BST 14 Oct 2012
David
Lipton, the IMF’s deputy managing director, suggested the Chancellor may have
to take bolder measures to ease the pain of cuts to spending and instead give
higher priority to rescuing the flagging economy.
“Our view
has been that doing nothing is not a good answer given the problems that could
arise when very, very low growth becomes entrenched,” Mr Lipton told The
Daily Telegraph as the IMF and World Bank annual meetings in Tokyo wound down.
He also
said the Bank of England should look at being more inventive in the way it used
quantitative easing to aid recovery by buying assets other than gilt-edged
securities.
His
strictures reflect a more critical IMF view about the government’s debt
reduction programme. The tone has recently changed and is being echoed in a
loss of confidence among Britain’s business leaders.
But
inside the Treasury there is irritation that the IMF has been slow to recognise
policy shifts to stimulate growth. Last year the Chancellor extended the £123bn
deficit reduction programme by two years to 2017 and Mr Lipton expects Mr
Osborne will be forced to repeat the exercise and lengthen the extension.
----Last
week the IMF slashed this year’s growth forecast for Britain by 0.6 percentage
points – the biggest downgrade for rich nations – and said the economy would
contract by 0.4pc. Next year’s growth prediction has been cut from 1.4pc to
1pc.
More
Rounding out this mid-October Monday morning, Belgium’s Dutch speaking
Flemish province and Antwerp seem to have voted in separatists adding Belgium to
the ever growing list of European countries possibly heading for a Czechoslovakia
style split. Lithuanian voters voted out
the austerity crazed conservative government. Stay long precious metals. The
United States of Europe gets less likely with each election.
Belgium: A country
invented by the British to annoy the French.
Charles de
Gaulle.
Belgian Flemish separatists make gains at polls
15 October 2012 Last updated at 00:15
Local elections in Belgium have resulted in widespread
gains for the Flemish Nationalist Party (NVA), which wants to divide the
country.
Early indications suggest that the party is now the biggest political force in Flanders, the Flemish-speaking region of Belgium.
Its leader, Bart de Wever, also won the race to become mayor of Antwerp, Europe's second-biggest port city.
The NVA's victory comes amid a growing separatist trend in Europe.
There have been growing calls for independence from nationalists in Catalonia in Spain and Scotland in the United Kingdom, as the eurozone crisis tests loyalties across the European Union.
More
Lithuania election: Voters 'dump austerity government'
15 October 2012 Last updated at 01:13
Lithuanians have voted out their conservative government
after one of the world's deepest recessions, early results suggest.
Two leftist parties, Labour and the Social Democrats, are currently placed first and second.
They hinted they would be prepared to form a coalition together, possibly with a third party involved.
Correspondents said PM Andrius Kubilius' government had been punished for cutting pensions and public wages.
He came to power in 2008, just as the global financial crisis was bringing a dramatic end to an extended Lithuanian boom fuelled by cheap Scandinavian credit.
More
Yet if he [King Robert] should give up what he has
begun, and agree to make us or our kingdom subject to the King of England or
the English, we should exert ourselves at once to drive him out as our enemy
and a subverter of his own rights and ours, and make some other man who was
well able to defend us our King; for, as long as but a hundred of us remain
alive, never will we on any conditions be brought under English rule. It is in
truth not for glory, nor riches, nor honours that we are fighting, but for
freedom -- for that alone, which no honest man gives up but with life itself.
The Declaration of Arbroath. 6th April 1320.
At the Comex silver depositories Friday final figures were: Registered 38.03 Moz,
Eligible 103.91 Moz, Total 141.94 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
“We wus wrong on
austerity,” says the IMF, and how! “Reverse austerity, immediately,” although
it may be too late for Club Med’ s hapless peons.
Euroland's debt strategy is an economic and moral disgrace
The International Monetary Fund has demolished the intellectual foundations of Europe's debt crisis strategy.
Drastic
fiscal tightening in a string of interlinked countries does two to three times
more damage than assumed, especially if there is no offsetting monetary
stimulus.
Pushed
beyond the therapeutic dose, it is self-defeating. At a certain point it
becomes pain for pain's sake.
The error
has long been obvious in Greece. The EU-IMF Troika originally said the economy
would rebound quickly, growing 1.1pc in 2011, and 2.1pc in 2012, and on from
there to sunlit uplands.
In fact,
Greek GDP contracted by 4.5pc in 2010, 6.9pc in 2011, and is expected to shrink
a further 6pc this year, and 4pc next year. If the Troika were a doctor, it
would face manslaughter charges.
The IMF
now admits -- or rather those in the IMF who always feared this outcome are at
last able to say -- that this misjudgement goes far beyond Greece. Tightening
by 1pc of GDP in rich countries does not lead to a 0.5pc loss of output over
two years as thought.
The
"fiscal multiplier" is not the hallowed 0.5 assumed by every finance
ministry in Europe. The awful evidence since the global bubble burst in 2008-2009
is that the multiplier is between 0.9 and 1.7, or even higher for EMU's
crucifixion belt.
The model
constructed over the long boom years -- and largely drawn from isolated cases,
each able to export its way out of trouble -- is dangerously wrong in a
1930s-style excess savings crisis with much of the world is slump.
Steen
Jakobsen from Saxo Bank says the IMF's mea culpa is the "biggest financial
story of the year". Indeed it is. The authorities have repeated the
blunders of the Great Depression, but with fewer excuses.
The IMF
has now called for a change of course. The Greco-Latins should be given more
time to cut their deficits. The AAA creditor bloc should stop cutting
altogether until the eurozone is off the reefs.
"Reducing
public debt is incredibly difficult without growth," said the IMF's
Christine Lagarde. "Instead of frontloading heavily, it is sometimes
better to have a bit more time."
One might
expect a flicker of recognition from Germany's Wolfgang Schauble that something
must change. But no, with half Europe sliding into a second and more menacing
leg of depression, and with unemployment already at 25.1pc in Greece and Spain,
and 15.9pc in Portugal, he refuses to brook deviation.
"Increasing
public debt doesn't create growth, it destroys growth," he snapped back.
There is "no alternative" to debt reduction. Always the same
pedantry.
----The Latins will have to bear the full burden of adjustment. They alone must continue closing the North-South chasm in competiveness through an "internal devaluation", a posh term for a policy that works chiefly by throwing enough people onto the dole to break labour resistance to pay cuts. It redoubles the contractionary bias of the whole EMU system in the process.
Whether
or not the Schauble plan shatters on the barricades of civic revolt is the
great unknown. Growth forecasts are all over the place.
Is the
Spanish government right to pencil in a fall just 0.5pc next year, with
recovery starting by the summer, or is the the Spanish employers group right at
-1.6pc, or Citigroup at -3.2pc (and -5.7pc in Portugal), or Nomura at -3pc and
-1.5pc again in 2014?
Madhur
Jha from HSBC fears that a further 1.5m people in Spain could lose their jobs
by the end on 2013, pushing unemployment to over 31pc. His optimistic scenario
is 28pc.
The monthly
Coppock Indicators finished September:
DJIA: +66 Up. NASDAQ: +88 DOWN. SP500: +85 Up. All
three indicators had reversed from down to up, but now the NASDAQ has reversed
again to down. While not unprecedented, it is a warning sign a that the July
reversal from up to down is about to fail.
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