Monday 26 November 2012

Goodbye Catalonia.



Baltic Dry Index. 1090  +06

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

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise." "The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

The long suicide of Europe continues. Stay long precious metals. Catalans on Sunday, essentially voted in a coalition government dedicated to holding an independence from Spain referendum within the next 4 years. As Spain’s richest region contributing far more to Madrid than they get back, the vote shouldn’t be very surprising, but it greatly complicates any EU bailout for Spain. Stay long physical precious metals, the euro can’t survive in its present form. The Catalans also voted against the austerity imposers, reducing the ruling centre-right party from 62 seats down to 50. Something of a message across the rest of the European Union. By my rough reckoning, in addition to Catalonia seeking to split, about seven other regions across Europe are flirting with splitting, including Scotland, Lombardy, Corsica and Bavaria, though none are as advanced as Catalonia. 2013 might change all that.

Catalonia poll: Spain's unity put to the test as voters take step towards independence

Catalans have set their region on the road to independence, voting in pro-separatist parties that will push for a referendum on breaking away from Spain.

By Fiona Govan, Barcelona 8:53PM GMT 25 Nov 2012
The incumbent regional president Artur Mas secured a second term and with it a mandate to seek secession from Spain in defiance of Prime Minister Mariano Rajoy.

But his centre right Convergence and Union (CIU) party fell short of the absolute majority they hoped for, winning only 50 of the 62 seats they secured in the 135 seat assembly at the last election two years ago.
The separatist left wing ERC party, which also strongly supports self-rule, doubled its share of the vote, securing 21 seats, however.

Acknowledging that his support fell in favour of leftist parties, Mr Mas said alliances would have to be sought.

----Overall, with 97 per cent of the vote counted Sunday, pro-independence parties secured 74 seats, making it likely that a Scottish style referendum would be held within four years.

The election results set the stage for a showdown with Madrid, threatening Spain’s conservative Prime Minister Mariano Rajoy with the biggest political crisis since the nation’s transition to democracy.

Mr Mas called the snap elections two years early, centring his campaign on the promise of a referendum on independence for Spain’s wealthy northeastern region.

Polls show up to 57 per cent of Catalans would vote yes to independence, a figure that has nearly doubled since the start of Spain’s economic crisis in 2008.
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In other Spanish news, Europe’s cash for bankrupt Spanish banks, comes with massive layoffs at the start of the new year. Austerity fatigue is already running high in Spain. The latest figure for Spanish unemployment is already at 25.02%, rising to 52.34% for the lost generation between 16-24 years old. Spain, like Greece desperately needs to exit the Euro, with or without Catalonia, then default, restructure and rebuild the economy. One in every two young people unemployed is unsustainable. A generation is being written off before they ever had a chance.

Spain to get EU bank aid in exchange for job cuts

Some €35bn will be pumped into Spain's bank rescue fund in December in return for thousands of job losses, say reports
Sunday 25 November 2012 15.29 GMT
European authorities will transfer €35bn (£28bn) to Spain's state bank rescue fund on 15 December in exchange for massive layoffs at the country's four nationalised banks, including the state-rescued Bankia, according to reports.

The cash injection from European bailout funds will be disbursed to troubled Spanish banks two weeks after it is paid into Spain's orderly bank restructuring fund, according to El País.

Bankia, which sought a €23.5bn bailout from the state in May, is expected to be forced to axe up to 6,000 of its 20,000 staff, while Novagalicia bank must shed 2,000 jobs from of its workforce of 5,800, said the newspaper, citing European and banking sources.

Bankia and Novagalicia declined to comment on the report, which also revealed the banks would have to close a total of 1,000 branches.

CatalunyaCaixa and Banco de Valencia, the other two nationalised lenders, are being sold off, and conditions would be imposed on the buyers, the paper said.
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Another Monday, and a Europe’s useless finance ministers troop off again to Brussels for yet another attempt to fix Greece. Any fix announced may or may not last until Christmas, yet more meetings will be required. Will Greece use Christmas as cover for exiting the Euro? I don’t know, but that last week of the year seems  a very opportune time to try.

Euro zone, IMF to seek Greece deal, debt write-off main problem

BRUSSELS | Mon Nov 26, 2012 12:59am EST
(Reuters) - Euro zone finance ministers and the International Monetary Fund will seek to unfreeze the second bailout package for Greece on Monday, but they first need to agree if some of the official loans to Athens might eventually be forgiven to cut Greek debt.

Euro zone ministers and their deputies have held numerous meetings and conference calls over the last two weeks to decide how Greek debt, seen at almost 190 percent of GDP next year, could be cut to a more sustainable 120 percent in 8-10 years.

Without agreement on how to reduce the debt, euro zone ministers and the IMF do not want to resume payments of loan tranches to Athens -- even though Greece has met all the conditions -- because they have no guarantee on whether the need for emergency financing will ever end.
More

We close for today with China. For more on China scroll down to Crooks Corner.  Here the China v Japan clash over the Diaoyu/Senkaku islands in the East China Sea just got a little more difficult for a belligerent Japan. Would the US Navy really be willing to take out China’s only aircraft carrier for Japan, over 3 uninhabited islands in the East China Sea that should have been returned to Taiwan after World War Two? If they did, European firms would gain at the expense of American and Japanese firms, as Chine would probably boycott US products for the rest of the century.

China now capable to deploy jets on aircraft carrier: Navy

LIAONING AIRCRAFT-CARRIER, Nov. 25 (Xinhua) -- Successful aircraft landing exercises on China's first aircraft carrier mean the country is now capable to deploy fighter jets on the carrier, a senior navy officer said Sunday.

Pilots have mastered key skills to ensure the success of the take-off and the landing, especially under unfavorable conditions such as poor visibility and unstable airflow, said Vice-Admiral Zhang Yongyi, a deputy commander of the Chinese People's Liberation Army (PLA) Navy.

"It's like 'dancing on a knifepoint' as the aircraft have to land on a very limited space," Zhang said while commenting on the successful flight landing recently conducted on the carrier, the Liaoning.

The aircraft must land precisely over a very short and narrow runway on the carrier at a speed of several hundreds of kilometers per hour, Zhang said in an interview with Xinhua Sunday, after the J-15 fighter succeeded in the landing tests.

"We have done all these test flights from the very beginning, and finally we mastered the key skills for the landing of carrier-borne aircraft," said Zhang, who is also the commander-in-chief in charge of the tests and training program of the flight landing.

Currently, the Chinese pilots have found out the right ways to conduct the landing and they have consolidated their skills, according to the Navy officer, who himself is a meritorious pilot of the Chinese naval air force.

Zhang said the carrier-borne aircraft and special equipment for the landing flight have gone through strict tests, and fighter jets can be deployed on the aircraft carrier.
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S. Korea, China to hold high-level talks

SEOUL, Nov. 26 (Yonhap) -- South Korea and China will hold their annual vice ministerial talks on Monday to discuss security and other key issues of mutual concern, marking the first high-level meeting since Beijing entered the era of its new leader Xi Jinping, the foreign ministry here said.

   The fifth Strategic Dialogue, set to be held in Beijing later in the day for a two-day run, will be led by South Korea's First Vice Foreign Minister Ahn Ho-young and China's Vice Foreign Minister Zhang Zhijun, according to Seoul's foreign ministry.

   The two sides are expected to "exchange views on ways to further develop the bilateral strategic cooperative partnership as well as the current situation on the Korean Peninsula and international issues," the foreign ministry said.

   They are also expected to have discussions on those matters of mutual interest, including North Korean issues, according to diplomatic sources here, as the talks come amid signs showing Pyongyang is reportedly preparing for a new long-range missile at a launch pad that has been used for previous rocket launches.
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"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."

Hans F. Sennholz

At the Comex silver depositories Friday final figures were: Registered 35.05 Moz, Eligible 106.26 Moz, Total 141.31 Moz.  


Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over. 

Today, how do you compete with a country called China?

Hi-tech expansion drives China's second boom in the hinterland

By the end of this year a fifth of all computers in the world will be manufactured in Chengdu, the ancient Sichuan capital of western China.

By the end of this year a fifth of all computers in the world will be manufactured in Chengdu, the ancient Sichuan capital of western China.

The great leap forward has come with lightning speed, and spans the gamut of hi-tech industry. The three state-telecom giants -- China Mobile, China Unicom, China Telecom -- are together spending $47bn to create the world's largest cloud-computing base at the city's Tianfu software park.

Country cousins they are not in Chengdu. There is no reason why they should be. The city competes with Rome for primacy as the world's oldest metropolis (Baghdad is not quite the same as Babylon), and competes with Tuscany for food.

Foreign critics have clung too long to the 1990s narrative of a booming Eastern seaboard -- the quintarchy of Beijing, Tianjin, Shanghai, Shenzhen, and Guangzhou, some 300m people deep -- backed by a vast hinterland of ignorance, poverty, and filth.

It was never so, and is utterly wrong today as the great boom rotates West. Chengdu has been an aerospace centre since the 1950s, strategically located in the Sichuan Basin behind a ring of escarpments -- including the 25,000ft peaks of the Great Snowy Mountains, many of them still unclimbed to this day.

The 14m-strong city is now pole-vaulting up the technology ladder. Chengdu Aircraft Corporation (CAC) manufactures China's stealth fighter, the J-20 Black Eagle. Washington and Moscow were stunned when it took to the skies in 2010.

More prosaically, its aerospace industry builds nose cones for Airbus and the rudder for the 787 Dreamliner, Boeing's composite passenger jet.

Chengdu's hard-driving mayor Ge Honglin has a built a 3-D model of his city -- the size of a tennis court -- with an elaborate system of lights showing where the allocated clusters are being built. Precision machinery here, optical electronics there, automobiles off to one side, and on and on.

A kilometre-wide green belt of lakes and parks will separate the "Garden City" from the smoke stacks, to be linked to the first car-free town of 30,000 families -- designed by Chicago architects Adrian Smith and Gordon Gill as a pilot project for the nation.

----Chengdu is actually realizing its seemingly quixotic mantra of becoming
China's Silicon Valley, fed by 51 universities, graduating 200,000 scientists and engineers each year. These include the University of Electronic Science and Technology, said to host the cyber-espionage cell GhostNet known for cracking India's state secrets and the Dalai Lama's email archives.

The US semi-conductor group Intel built its first plant here on empty fields nine years ago, lured inland by the Chinese government's `Go West' incentives -- intended to keep mutinous migrant workers safely anchored to their regions. The sweeteners include 15pc corporation tax for a decade (instead of 25pc), with no tax on first two years of profits, and half tax on the next three years.

----The big names of the computer industry have followed in a sudden migration. Dell and the China's Lenovo came in 2011. Foxconn has cranked up operations from nothing to 80,000 workers in barely two years. Last month it built 80pc of Apple's worldwide output of iPads at eight cavernous galleys outside the city.

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F.A. von Hayek

The monthly Coppock Indicators finished October:

DJIA: +92 Up. NASDAQ: +99 Up. SP500: +102 Up.  Time for the Santa Clause rally?

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