Baltic Dry Index. 981 +40
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Politics is the art of looking for trouble, finding it
everywhere, diagnosing it incorrectly, and applying the wrong remedies."
Groucho Marx
But all accounts of the US media pundits,
President Obama won the second debate, but weakly on points. But is it likely
to make much difference with the US voters? Can either candidate really get
America off QE forever? What happens in the rump Congress?
We open today with EU paymaster Germany demanding a
pound of flesh from all of the Eurozone underlings. I believe Germany has a
word for such lesser peoples. In collateral damage yesterday, Germany embarrassingly
trashed the EU’s joke President Herman Van Rompuy. If it wasn’t for the money,
he probably wouldn’t turn up for tomorrows fight. Tomorrow’s grand punch up in
Brussels promises to be more interesting than usual, albeit completely
irrelevant to saving Club Med and the euro. Developments in France and Italy have changed
the game. Stay long physical precious metals, the euro’s going down no matter
who wins at the Battle of Brussels. The only open question is how much of
continental Europe’s wealth will get destroyed before Europe’s Clown Princes
face up to reality. The euro isn’t working for most Europeans anymore. Forcing
euro-serfs into Germanic slave state is never going to work, no matter how hard
the Clown Princes try.
"A politician needs the ability to foretell what is
going to happen tomorrow, next week, next month, and next year. And to have the
ability afterwards to explain why it didn't happen."
Winston Churchill.
Germany shocks EU with fiscal overlord demand
Germany has stated its exorbitant price for keeping Greece in the euro and agreeing to mass bond purchases by the European Central Bank.
There must be an EU “currency commissioner” with sweeping powers to strike down national budgets; a “large step towards fiscal union”; and yet another EU treaty.Finance minister Wolfgang Schaeuble dropped his bombshell in talks with German journalists on a flight from Asia, and apparently had the blessing of Angela Merkel, the chancellor. “When I put forward such proposals, you can take it as a given that the chancellor agrees,” he said.
Officials in Brussels reacted with horror. “If that is the demand, they are not going to get it. Nobody in the Council wants a new treaty right now,” said one EU diplomat.
“We’ve got the fiscal compact and quite enough fiscal discipline. Not even the Dutch want a commissioner telling them how to tax and spend,” he said.
The new demands risk another stormy summit in Brussels on Thursday, pitting Germany against the Latin bloc. The last summit in June ended with an acrimonious deal in the small hours on a banking union that began to unravel within days.
Mr
Schaeuble said the currency chief should have powers similar to those of the
EU’s competition commissioner, a man “feared around the world”.
The
competition Tsar is the arch-enforcer of the EU machine, with powers to launch
dawn raids, deploy SWAT teams, and block mergers on his own authority.
----Mr Schaeuble poured scorn on counter-proposals by EU president Herman Van Rompuy, including a first step towards debt pooling through joint “eurobills”. The term “Fiskalunion” in Berlin has a specific meaning: more power to police the affairs of debtor states. It does not mean debt mutualisation or a joint EU treasury. Germany has so far refused to cross this Rubicon.
Michael Link, the country’s Europe minister, said Mr Van Rompuy’s plans are dead on arrival. “When you make proposals that are simply unacceptable for certain members, this will only give the impression of division. You can phrase it any way you like, 'treasury bills’, 'debt-redemption funds’ or 'eurobonds’, this type of debt issuance will not fly with our government. We have always said this very clearly.”
The comment invited a barbed retort from his French counterpart, Bernard Cazeneuve. “Well, for us, it is 'yes’, just as clearly,” he said. Such an open rift between Germany and France on the eve of a summit is rare.
October 16, 2012, 9:42 p.m. ET
Greek Coalition Duo Reject Labor Moves Proposed by Troika
ATHENS—The
two junior partners in Greece's coalition government vowed Tuesday to vote down
labor changes demanded by a troika of international inspectors, indicating a
fresh delay could arise in finalizing a multibillion-euro austerity plan needed
to open the path for the country's next aid-tranche payment.
Democratic
Left party chief Fotis Kouvelis said after a three-hour meeting of leaders of
the three parties constituting the government that changes demanded by
international inspectors will "flatten labor rights" and
"further feed the recession." "Democratic Left categorically
rejects and won't vote for any measures that the troika is demanding in
connection with labor relations and rights," Mr Kouvelis said.
An
official of the socialist Pasok party, the other junior partner in the
coalition with the conservative New Democracy party, said that Mr. Kouvelis'
support was a precondition for his party to back the labor reforms.
The party
leaders' meeting follows a day of difficult talks between Greece and the troika
that included at least two separate negotiating sessions as each side took time
off to confer with their respective chiefs. Although talks appear to have
stumbled, negotiations will continue late Tuesday in an attempt bridge the gaps
ahead of Thursday's European summit.
The
statement by Mr. Kouvelis is seen as reflecting the hard bargaining of the
newly elected government that came to power in June.
International
inspectors are pushing for a fresh round of hugely unpopular labor reforms,
such as the reduction of compensation paid to sacked private-sector workers and
dropping automatic pay rises after three years of employment.
Greece
has been locked in negotiations with a delegation of inspectors from the
European Commission, the International Monetary Fund and the European Central
Bank—known as the troika—since early September over the two-year austerity
plan.
Oct. 17, 2012, 2:41 a.m. EDT
Spain faces diplomatic hurdles over aid: WSJ
MADRID (MarketWatch) -- A day after a Spanish official said
the country was considering asking for a new credit line that would open up the
path for European Central Bank purchases of its bonds, German officials
reportedly said they see no signs the country is closer to asking for aid, The
Wall Street Journal reported Wednesday. Spanish Prime Minister Mariano Rajoy
reportedly reassured German Chancellor Angela Merkel in a phone call on Tuesday
that Spain isn't close to making the request, the newspaper said, citing
persons familiar with the matter. As well, diplomatic tangles are complex, the
paper said. While Italy continues to urge Spain to apply in the hopes that it
will ease market pressure on its bonds, Germany is worried it might have the
opposite effect. On Tuesday, Moody's Investors Service kept Spain's
sovereign-bond rating at investment grade, [Baa3] but assigned a negative
outlook to the rating.
Link.
Oct. 17, 2012, 1:02 a.m. EDT
The next euro storm is in Italy
Commentary: Berlusconi may campaign on anti-euro platform
LONDON
(MarketWatch) — One thing should have been learned for certain during the
almost three years the euro has been in crisis. While the markets are getting
worked up over one issue, the real trouble is usually brewing somewhere else.
Right
now, Spain and Greece are occupying everyone’s attention. Investors want to
know when Greece will be bailed out yet again, and whether Spain will finally
call on its partners in the euro zone for help.
But the
next storm will be in Italy.
Why?
Because the People for Freedom party of former Prime Minister Silvio Berlusconi
is taking an increasingly strident anti-euro position. If it goes into next
year’s elections campaigning against the single currency, it could cause a
meltdown in the financial markets.
Italy
has the third largest sovereign bond market in the world. It will only take a
hint of the country coming out of the euro EURUSD +0.45% for that market to go into panic mode — and that
will create vast losses right across the financial system.
It
would be very hard to describe the euro as a lucky currency.
-----But in one respect at least it has led a charmed life. In none of the 17 member states has there been a credible political party campaigning for its break up.
True,
there have been anti-euro parties. In Finland, the nationalist True Finns have
campaigned against the currency. In France, the far-right National Front has
argued for the return of the franc. In Ireland, Sinn Fein has gained in the
polls by opposing the austerity program, while not actually rejecting the euro.
But none of those are parties that most people would ever consider voting for.
There have not been any politicians fighting for support from mainstream voters
fed up with the euro.
But that
is starting to change — and that may be the most significant thing happening to
the euro zone right now.
Interestingly,
the challenges are coming from billionaires —perhaps because they are outside
mainstream politics, and their wealth gives them an authority on economic
issues that other politicians find hard to match. In Austria, the
Canadian-Austrian auto-parts billionaire Frank Stronach has launched a campaign
for next year’s elections. He is campaigning on a platform of restoring
national currencies and is already scoring up to 10% in the polls.
But the
more dramatic developments are in Italy. Elections are due to be held by April
next year after Berlusconi was removed last year and replaced by the unelected
technocrat Mario Monti.
Italians
are likely to go to the polls in an angry volatile mood. The economy will
shrink by 2.5% in 2012 as the austerity demand by the euro bites. Italy had
scarcely grown in the decade since it joined the single currency
More
http://www.marketwatch.com/story/the-next-euro-storm-is-in-italy-2012-10-17
While we await tomorrow’s highly charged gathering of Europe’s elite, we end for the day with a glimpse behind the scenes at Goldman Loots and Sacks. A preview of the must buy book for any Muppet who was Goldman client in the decade of the noughties.
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
A culture of bullying and greed: Wanted - interns for Goldman Sachs...
Must be prepared for dawn interrogations and ritual humiliations. Bring your own stool (chairs not provided). And don't, whatever you do, get the boss's lunch order wrong
Wednesday 17 October 2012
Back on 12 June 2000, as the dot-com bubble was deflating, young Greg Smith
was all puffed up, clutching his "extra-large coffee" and looking up
"at the formidable tower that housed Goldman Sach's equities trading
headquarters" in New York. "Holy shit," he thought, as he
arrived for the first day of his summer internship at the Wall Street bank.More than a decade later, on 14 March 2012, not long after a different financial bubble had burst, the remark may well have risen in a hush over the Goldman dealing room as wide-eyed traders poured over an opinion piece in The New York Times. Title? "Why I'm Leaving Goldman Sachs". Author? Greg Smith.
"Today is my last day at Goldman Sachs," Mr Smith proclaimed. Over 12 years, he said, he had understood what made the bank tick. "And I can honestly say that the environment is now as toxic and destructive as I have ever seen it."
Now, Mr Smith, who had risen to become a Goldman executive director and head of the firm's US equity derivatives business in Europe, the Middle East and Africa before quitting, is preparing tell us the full story. According to reports, his biting commentary on Goldman won him a book deal and a cool $1.5m (£930,000) advance, with the product of his labours, imaginatively titled Why I Left Goldman Sachs, set to hit the shelves on 22 October.
----With a toe in the door, Mr Smith was issued with a folding stool and a "big orange ID badge" on a "bright orange lanyard" – status markers to remind an intern that he or she was mere "plebe, a newbie, a punk-kid". "It was innately demeaning," he says, recounting how interns had to carry around the stools "at all times because there were no extra chairs at the trading desks".
The internship itself was demanding. "You came to work at 5:45 or 6:00 or 6:30 in the morning," Mr Smith recalls. Goldman interns were put through two "Open Meetings" a week, where "a partner would stand at the front of the room with a list of names and call on people at will with questions on the firm's storied culture, its history, on the stock market".
----Smith also recalls the treatment handed out to an intern after a managing director ordered a cheddar cheese sandwich and was presented with a cheddar cheese salad. The boss "opened the container, looked at the salad, looked up at the kid, closed the container and threw it in the trash". "It was a bit harsh, but it was also a teaching moment," Mr Smith writes.
More
http://www.independent.co.uk/news/world/americas/a-culture-of-bullying-and-greed-wanted--interns-for-goldman-sachs-8214070.html
One of the queries Quakers are asked to consider, is: "Do
you maintain strict integrity in your business transactions and in your
relations with individuals and organizations? Are you personally scrupulous and
responsible in the use of money entrusted to you, and are you careful not to
defraud the public revenue?"
Probably why there a no Quakers on Wall Street.
At the Comex silver depositories Tuesday final figures were: Registered 38.02 Moz,
Eligible 104.14 Moz, Total 142.16 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
Today, Citigroup. Though
the stock rose after the abrupt surprise departure of the two top corporate
officers at the extend and pretend bank, history suggests that there’s nothing
good about such forced exits. I won’t pretend that I follow Citi closely or
that I have any insight into why yesterday and why in such melodramatic
fashion, but my instinct tells me that somewhere in Citi a very large out of
control fire is burning, one that was probably soon to go public. When a
mega-bank board suddenly hits the panic button, you can pretty much bet that it
isn’t a stock to buy. Americans have yet another reason to stay long precious
metals for the foreseeable future.
Oct. 16, 2012, 11:30 a.m. EDT
Pandit quits Citigroup, shocks Wall Street
A day after the bank reported earnings, the CEO abruptly resigns
NEW YORK (MarketWatch) — Vikram Pandit’s stormy tenure at
Citigroup Inc. ended with perhaps the biggest shock of all.
Pandit took Wall Street by surprise early Tuesday, announcing he would
immediately step down as chief executive officer, as well as leave Citi’s board.
Pandit’s
deputy John Havens, who was president and chief operating officer at Citi, also
departed.
Havens
said he had planned to retire at year-end, but Pandit’s resignation brought his
decision forward.
Both
the timing and the manner of the departures puzzled observers.
The
announcement came just after 8 a.m. Eastern in the middle of bank earnings
season, only a day after Citi announced positive third-quarter results. Though
its profit fell due to one-time charges, its underlying earnings were
considered good; the stock closed up 5.5% Monday and buoyed the financial
sector. Though Pandit was on Citi’s earnings call, there were no comments that
hinted of his coming departure.
Such was
the secrecy of the move that despite Pandit’s and Citi’s high profiles, no
media organization got the scoop on the announcement either. In early August,
The Wall Street Journal reported that Michael Corbat was “a lead contender”
among candidates who could one day replace Pandit. On Tuesday, Corbat was named
as Pandit’s successor.
More
"Finance
is the art of passing customer segregated funds from hypothecation to hypothecation
until it finally disappears."
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 tofail.
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