Modern Model Europeans.

Baltic Dry Index. 1051  -37

LIR Gold Target by 2019: $30,000.  Revised due to QE programs.

But the age of chivalry is gone. That of sophisters, economists, and calculators has succeeded; and the glory of Europe is extinguished forever.

Edmund Burke.

We end for the week awaiting the latest GDP figure from America. The last before American voters get to vote up or out for President Obama. Next week’s news is all likely to be highly American centric. So today we cover some of the other dismal news from the rest of the world. As usual the news from Euroland just continues getting worse. Greece and Portugal have entered death spirals, with Portugal’s about to get seriously worse. Spain is next, once it applies for a bailout. Tiny Cyprus seems to be in the process of selling itself to Russia and China. Italy and France are about to become the big European story for 2013, all the more so if a severe winter aggravates Europe’s growing recession.

Up first, yet another red flag and blaring klaxon. Euroland’s money supply is contracting again, with private credit falling at an accelerated place. Time for most cheating Europeans to panic. For more on lying, cheating, stealing modern Europeans, scroll down to Crooks Corner. Sounds like another job for Super-Mario over at the ECB. Stay long physical precious metals. Sooner or later Euroland will have to face up to the breakup of the European Monetary Union, which was probably only held together through 2012 just to get past America’s election. Apres it, le deluge.

In America, there's a failure to appreciate Europe's leading role in the world.

President Obama.

Eurozone nears Japan-style trap as money and credit contract again

All key measures of the eurozone money supply contracted in September and private credit fell at an accelerating pace, dashing hopes of a quick recovery from recession.

By Ambrose Evans-Pritchard, International business editor 8:00PM BST 25 Oct 2012

Data from the European Central Bank show that the tentative rebound in the money supply over the summer may have stalled again in September.

The broad M3 gauge -- watched by experts as an early warning signal for the economy a year or so ahead -- shrank by €30bn and is now down by €143bn since April. This is highly unusual.

The narrow M1 gauge watched for signals of activity six months head has held up better but also contracted in September, falling by €16bn.

"The message is clear," said Lars Christensen from Danske Bank. "The ECB needs to stop obsessing about fiscal issues and do real quantitative easing (QE) if it wants to stop the eurozone going the way of Japan."

Loans to firms and households fell 1.3pc as banks continue to shrink their balance sheet to meet tougher rules. Private bank lending has been falling almost continuously since April.

The ECB’s €1 trillion lending blitz to banks last Winter helped shore up Spain, Italy, and other sovereign states but has not filtered through into private lending as originally hoped.

"This credit contraction is what happened in Japan in the early 1990 and we have to be careful not get into deflationary spiral," said Prof Richard Werner from Southampton University, a Japan expert. "They to need to launch true QE or an expansion in broad credit creation, and it can’t be done easily."

The disappointing ECB data came as the International Monetary Fund said Portugal faces "increasingly difficult" choices and may have to push through another round of austerity cuts.

The IMF approved the next €1.5bn tranche of rescue loans for Portugal but warned that "adjustment fatigue" has become a serious problem.

----The eurozone's credit contraction helps explain the shift in rhetoric on Wednesday by the ECB’s president, Mario Draghi, who told the Bundestag that Euroland risks sliding into deflation.

He said the ECB’s plan for unlimited bond purchases -- known as Outright Monetary Transactions (OMTs) -- was necessary to stop a destructive dynamic taking hold in the crisis-stricken economies.

More

http://www.telegraph.co.uk/finance/financialcrisis/9634326/Eurozone-nears-Japan-style-trap-as-money-and-credit-contract-again.html

On the other end of Eurasia, China’s slump rolls on. You can’t really call an economy growing officially at 7.6% a slump, but no one believes the government figures least of all Chinese officials. It’s anyone’s guess as to the reality, but the Chinese stock market suggests closer to zero than 7.6%.

China’s Stocks Decline Most in Five Weeks on Earnings Concerns

By Bloomberg News - Oct 26, 2012 6:34 AM GMT

China’s stocks fell, dragging the benchmark index down by the most in five weeks, as companies from Maanshan Iron & Steel (323) Co. to ZTE Corp. reported losses.

Maanshan Steel tumbled the most in two years after its third-quarter loss was wider than analysts estimated. ZTE, China’s second-largest maker of telephone equipment, retreated 2.6 percent to its lowest level since 2008. Hisense Electric Co. (600060), China’s biggest manufacturer of flat-panel televisions, plunged by the 10 percent maximum limit after profit dropped. The National Bureau of Statistics is due to release industrial companies’ September profits tomorrow. Profits fell 6.2 percent from a year earlier in August, a fifth month of losses.

---- Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111), China’s biggest producer of rare earth, tumbled 6.4 percent to 29.09 yuan for a sixth straight day of declines. Fortune CLSA Securities Ltd. cut its rating to sell from underperform and lowered the share-price estimate to 25 yuan, citing concerns over “destocking pressure” and caution over future prices.

The rare-earth producer said this week it halted output at some of its smelting units for one month as prices declined.

More

http://www.bloomberg.com/news/2012-10-26/china-s-stocks-head-for-weekly-loss-as-companies-report-earnings.html

In a now forgotten scandal that entertained us back in high summer, nine more banks were added to the list of alleged manipulators of London’s crooked London Interbank Offered Rate, bringing the total accused up to 16. Only one, Barclays was ill advised enough to confess, they can sue their attorneys later for ineffectual assistance and downright incompetence. After seeing what happened to Barclays, all of the others are likely to play hardball.

Besides, unpleasant as it might be to Adam Smith purists, there’s a defence that can be mounted that you can’t really rig a theoretical interest rate, you can only game it, and that was within the existing rules and ethics of the time. Was LIBOR fraudulently held out by the British Banking Association and others to be something other than what it really was,  yes. But all the banksters knew that, however, most of their clients weren’t so informed. London’s tort bar will live high on the hog for a decade as losing clients seek redress for deception, misrepresentation and outright fraud. What client would buy a LIBOR based bank CDS, knowing in advance that the bank could game the CDS.

RBC, SocGen Said to Be Among Banks Subpoenaed in Probe

By David McLaughlin - Oct 26, 2012 4:36 AM GMT

Societe Generale SA (GLE), Royal Bank of Canada, and Bank of America Corp. are among nine additional banks that were subpoenaed in New York and Connecticut’s probe of alleged manipulation of Libor, a person familiar with the matter said.

The subpoenas, issued by New York Attorney General Eric Schneiderman starting in August, bring to 16 the total number of banks that have been subpoenaed in the states’ investigation, said the person, who asked not to be identified because there wasn’t authorization to speak publicly.

---- The same person said in August that seven banks were subpoenaed in their investigation, including JPMorgan Chase & Co. (JPM) and Barclays Plc. (BARC)

The states are coordinating with “a much larger group of attorneys general,” Susan Kinsman, a spokeswoman for the Connecticut attorney general, said in September. Florida Attorney General Pam Bondi has also issued subpoenas to more than a dozen financial institutions, including UBS AG (UBSN), Deutsche Bank AG (DB) and HSBC Holdings Plc. (HSBA)

Besides Societe Generale, Royal Bank of Canada and Bank of America, the other six banks to receive subpoenas from New York are: Credit Suisse Group AG (CS), Bank of Tokyo Mitsubishi UFJ Ltd., Norinchukin Bank, Rabobank, Lloyd’s Banking Group Plc, and West LB AG, a German lender that ceased operations.

Representatives of those banks couldn’t be reached for comment or declined to comment on the subpoenas.

More

http://www.bloomberg.com/news/2012-10-26/rbc-socgen-said-to-be-among-banks-subpoenaed-in-probe.html

We end for the week with Japan. So you still think that nuclear is viable? A year and a half on from the tsunami-Fukushima nuclear disaster, and nothing has changed. Fukushima is still leaking new contaminants into the sea. Japan’s fish from the area are as unfit for human consumption as ever. Unsurprisingly, the clean up cost, now transferred to the unfortunate Japanese taxpayer, continues to rise.

Fish Caught in Fukushima as Tainted as a Year Ago, Study Says

By Kanoko Matsuyama - Oct 25, 2012 7:00 PM GMT

Fish caught in waters off the coast of northern Japan, where an earthquake triggered a radiation leak at the Fukushima power plant, are still as contaminated today as a year ago, a study found.

Contamination levels were particularly high among species dwelling at the bottom of the ocean, as sinking radioactive materials tainted the seafood, the research showed. The findings, published today in the journal Science, suggest there is a continued source of radiation from the seafloor that will have a lasting impact, said Ken Buesseler, the study’s author.

“This means that even if these sources were to be shut off completely, the sediments would remain contaminated for decades to come,” said Buesseler, a senior scientist at Woods Hole Oceanographic Institution in Woods Hole, Massachusetts.

In waters off Fukushima, where there is a ban on fishing for bottom-dwelling species, 40 percent of fish are above the limit for human consumption based on Japanese regulatory limits, Buesseler said.

----More than 80 percent of the radioactivity from the nuclear plant was released offshore or into the ocean from waters used for cooling, according to the study.

Radioactive cesium levels in seafood haven’t dropped as of August, except perhaps in fish that live near the surface, Buesseler said. Two greenlings caught in August closer to shore off Fukushima contained more than 25,000 becquerels per kilogram, compared with the maximum permissible level of 100 bq/kg set by the Japanese government, the author said.

More
http://www.bloomberg.com/news/2012-10-25/fish-caught-in-fukushima-as-tainted-as-a-year-ago-study-says.html

“There are two kinds of Europeans: The smart ones, and those who stayed behind.”

H.L. Mencken.

At the Comex silver depositories Thursday final figures were: Registered 36.97 Moz, Eligible 105.41 Moz, Total 142.38 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over. 

Today, the lying, cheating, stealing, doubled over EU again, who else. Don’t blame Greece, blame the corrupt  EU Eurorats in Brussels. Why should the rest of the world be asked to bail them out via the IMF?

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

The EU, with apologies to Cary Grant. To Catch A Thief.

Brussels bubbly for Italy's mafia and other EU waste

If Mr Cameron had real backbone, he would tell his friends across the channel that there will be no extra money, in fact, there will be a lot less

Marta Andreasen MEP  25 October 2012

Earlier this week, the European Parliament voted to push through an inflation-busting budget rise of almost 7 percent for 2013 – an extra £886 million picked from the pockets of an increasingly eurosceptic British public.

These are austere times for all of us. People are queuing at soup kitchens across Greece, Spain, and Portugal, and shocking, record numbers of young people are out of work. But for Brussels, the good times just keep on rolling.

Its money grab didn’t stop there. One of the best, if depressing, truisms in politics emerged during the spin-laden Blair years: There are good days to bury bad news. On the same day as the vote, the European Commission sneaked through a request for an extra £4.8 billion to fill the shortfall in the 2012 budget.

In February this year, the Commission claimed the 2011 budget had a shortfall of £9bn. By April, that had been revised to a surplus of £1.2bn. Both these figures were given between two and four months after the close of the 2011 accounts when you would expect them to have accurate, definitive figures. It’s accounting, but not as we know it.

Forgive me for my scepticism but I have a better idea than most about what happens to your cash after it’s been handed over to Brussels.

I used to be the European Commission’s chief accountant and I followed the money through non-existent lemon groves, past herds of imaginary cows, and along roads that had never been built. I was expected to turn a blind eye to accounts in which the opening balance bore no relation to the closing balance of the previous year.

It was more Godfather than good accounting and it’s no surprise that, as a result, the European Union’s books have never been signed off. Eighteen years and counting and the auditors are still saying 'must try harder'.

'Fraud' is not a word that's bandied about in the committee rooms of the European Parliament. These anomalies are politely referred to as simple 'errors'. In 2011, these errors amounted to £1.3bn and an estimated 1 euro in 5 is alleged to disappear into the back pocket of a corrupt official.

The worst offender is the cohesion fund - money for Europe’s poorest regions that’s supposed to boost growth and reduce inequalities across the Continent. It swallows up more than one third of the EU budget and it’s the key reason why the EU is asking for extra money in the first place.

Unelected Eurocrats think that funding major infrastructure projects like new motorways in Spain and bridges in Bulgaria will help pull the whole of Europe out of recession. Indeed, nearly all the 7 percent budget increase will be spent on “large rises on road and other infrastructure in southern and eastern Europe”.

It’s a flawed strategy. Money is given to countries to spend pretty much as they wish and there are no proper checks in place to ensure it’s being used properly or even whether the promised projects are actually being built. About two-thirds of EU ‘errors’ concerns just six countries: Bulgaria, Romania, Greece, Italy, Poland, and Spain. 

----Top of the financial ‘errors’ table is Italy that's had 80 billion euros from the fund. Earlier this month, it was revealed the mafia stole £307 million of the EU's money that had been earmarked to improve the A3 motorway south of Naples.

The EU does have an anti-fraud arm called OLAF but it has proved to be completely ineffectual. It has fewer than twenty investigators dedicated to cohesion funds and it is forced to cherry-pick cases. OLAF does not have the power to prosecute and reporting ‘errors’ falls upon the shoulders of member states.

Italy’s debt currently stands at around £1.5 trillion. As money gets tighter, the less willing they will be to report fraud. This is not me scaremongering. After the Italian motorway fiasco, Giovanni Kessler, the head of OLAF, said: “The decrease of information from public authorities is something which is worrying us.”

If you are wondering why I didn’t do anything about this when I was chief accountant – I did. But I came under huge pressure to conceal the truth. I turned whistle-blower and my principles cost me my job.

More

http://www.thecommentator.com/article/1910/brussels_bubbly_for_italy_s_mafia_and_other_eu_waste

We don't mind having sanctions banning us from Europe. We are not Europeans.

Robert Mugabe. African Dictator.

Another weekend, and a weak late Atlantic hurricane is headed for America’s north east coast. Of course there’s plenty of time for it still to move further out to sea. Click on the link for those interested in following along. Have a great weekend everyone.

http://www.nhc.noaa.gov/refresh/graphics_at3+shtml/203625.shtml?5-daynl

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.