Baltic Dry Index. 986 -14
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Remember, remember the fifth of November
Gunpowder, treason and plot
I see no reason why gunpowder treason
Should ever be forgot
more
It is an interesting week to say the least. Today
we in the UK commemorate the man who tried to blow up Parliament. Where are
such men now? The G-20 finance ministers and central bankers have gathered in
Mexico to do no one knows what. In Laos, all the other odds and sods of the EU
are gathered to try to work out a trade deal with Asia. Tomorrow, American
voters must decide if they want 4 more years of the same, or want to elect
instead a man whose only definite promise seems to be to want to start a trade
war with China’s incoming new leaders “from day one of his presidency.” While that terrifies many non-voting Europeans
outside of America, it’s of little interest inside America where, as usual,
voters tend to vote for their own perception of who will do most for their own wellbeing
and security. As seen from faraway London, two vampire squids are running for
the post.
Two days after they vote in what is believed to be
a very close election, China’s Communist Party elite assemble to begin the
process of a generational power transfer to younger, though still unelected
leaders. According to the article below, China’s old guard has staged something
of a right wing coup, in recent weeks. If true, China’s new conservative
leadership will be up for any US led trade war, “from day one,” and ready too
to set about reversing Japanese administration of the Diaoyu/Senkaku Islands.
At just about the same time as China’s unaccountable
communist party meets, a new cold storm system is forecast to sweep into
America’s Hurricane Sandy damaged northeast. A week long suffering north-eastern
population is likely to be severely tested again, though thankfully not to the
same extreme.
History proves that all dictatorships, all authoritarian forms
of government are transient. Only democratic systems are not transient.
Whatever the shortcomings, mankind has not devised anything superior.
President Putin.
China's economic destiny in doubt after leadership shock
The forces of reaction and economic folly threaten to prevail in China. The long political arm of Jiang Zemin has reached out from the shadows to thwart reform, with huge implications for Asia and the world.
If reports from the Hong Kong press and China's blogosphere are correct, a remarkable upset has occurred on the eve of the ten-year power shift next week -- the greatest turn-over of top cadres since Mao's revolution.The South China Morning Post says the new line-up of the Politburo's Standing Committee is "packed with conservatives". The succession deal agreed over the summer has been scuppered.
The 86-year Mr Jiang -- who rose to supreme leader on the bones of Muxidi and Tiananmen in 1989 -- has placed his accolytes in charge of the economy, propaganda, as well as the Shanghai party machine.
The hardliners seem poised to snatch control of the seven-man Committee, tying the hands of incoming president Xi Xinping and premier Li Keqiang. If confirmed, long-term investors may have to rethink their core assumption about the future course of China.
This power struggle going into the 18th Party Congress matters more in the sweep of history than the run-off two days earlier between a centrist Barack Obama or the centrist Mitt Romney, though the stage drama is less compelling.
-----The
contours of China's excess are by now well-known. Investment reached a world
record 49pc of GDP last year, a level unseen in other Pacific tigers during
their growth spurts. Consumption has fallen to 37pc of GDP, from an already
very low 48pc a decade ago.
Negative
real interest rates and restrictions on investing abroad forced savings into a
housing bubble, pushing home to income ratios to 16 to 18 or even higher in
Beijing, Shanghai, Tianjin, and Shenzhen.
As
premier Wen Jiabao likes to put it, China's economy is "unstable,
unbalanced, uncoordinated and ultimately unsustainable." It is why his
allies in China's Development Research Centre (DRC) joined forces earlier this
year with the World Bank to warn that the export-led growth model launched
thirty years ago by Deng Xiaoping's is now obsolete.
The
low-hanging fruit of state-driven industrialisation has been picked. Stagnation
lies in wait if the country clings to the dirigiste model. "China has
reached another turning point in its development path when a second strategic,
and no less fundamental, shift is called for," they said,
"The
forces supporting China’s continued rapid progress are gradually fading. The
government’s dominance in key sectors, while earlier an advantage, is in the
future likely to act as a constraint on creativity."
Their
report said the country risks hitting the sort of "invisible ceiling"
that blighted Latin America in the 1960s and 1970s. Remarkably few states have
managed to break out of the middle income trap and jump -- as Japan, Korea, and
now Chile have done -- to the vastly higher per capita income levels of the OECD
bloc.
More
As for Europe, don’t ask. The UK Prime Minister is
out in the Arabian Gulf, trying to peddle warplanes, tanks and guns, before
flying back to London to try to reach a German initiative deal to stitch up the
coming EU leaders meeting. Gone apparently the days of the Germans being
summoned to Paris by De Gaulle to fix meetings, followed by paymaster Germany
summoning the French President to
Germany to fix meetings. A largely isolated and increasingly loathed Germany,
is now desperate enough to want to team up with the most Euro sceptical EU member of all. A Great Britain led by a weak
incompetent coalition government that seems headed for the scrap heap next
year.
You have to ask yourself, who’s running the asylum?
Stay long physical precious metals. On the present course, Greece should be out
of the EMU by Easter. Spain in bailout bankruptcy
by Christmas. France in its death throes
by mid-2013. France, too big to bail or fail, will take down all of the others,
no matter what type of half-hearted EU “rescues” are put in place for a few
days after endless rounds of leaders summits.
Below, more on the Eurozone’s deepening credit
crunch.
“Are we all clear that
we want to build something that can aspire to be a world power? In other words,
not just a trading bloc but a political entity. Do we realise that our nation
states, taken individually, would find it far more difficult to assert their
existence and their identity on the world stage.”
Commission President Romano Prodi, European
Parliament, February 13, 2001
Euro Beating World Imperiled by Biggest Loan Drop Since ’09
By Lukanyo Mnyanda and Emma
Charlton - Nov 5, 2012 5:19 AM GMT
The
euro’s three-month rally against all but one of its major peers is imperiled by
a deepening credit crunch for European companies that adds to the risk of
another recession as the region’s counterparts recover.
The
currency has weakened 2.6 percent versus the dollar from a four-month high on
Sept. 17 as small and medium-sized companies that Deutsche Bank AG says
generate as much as 70 percent of the economy are starved of credit. Loans from
European banks plunged in September by 0.8 percent from a year earlier. The
last time lending contracted that much, in October 2009, the euro fell 5.8
percent in the following three months.
---- Companies from Italian window maker Fenster Group Srl to Faustino e Ferreira, a Portuguese building materials firm, say they can’t get financing to expand.
“Draghi’s action has reduced sovereign risk but it’s not enough to improve the credit conditions in the periphery,” Athanasios Vamvakidis, the head of Group-of-10 foreign-exchange strategy at Bank of America Merrill Lynch in London, said in a Nov. 1 phone interview. “Private-sector credit growth continues to be negative and lending rates remain a problem. This will continue affecting the euro.”
More
European Crisis Seen Hindering Closer Trade Ties With Asia
By Daniel Ten Kate - Nov 5, 2012 4:27 AM GMT
European and Asian leaders will this week discuss a stalled trade agenda
between the world’s fastest and slowest-growing regions, as the debt crisis
undermines expansion of commercial ties. Europe’s economic woes may exacerbate protectionist tendencies that make it harder to expand trade with its biggest commerce partner at a time when the U.S. and Australia are forging new agreements, according to Fredrik Erixon, head of the European Centre for International Political Economy in Brussels. Apart from a trade deal with South Korea, the 27-member European Union has seen talks lag with China, Japan, India and Southeast Asian countries since 2007.
“Europe needs to improve its policy toward the entire Asian region in order to take up a greater part of Asia’s economic expansion, but we’re not really seeing it,” he said by phone. “The train is about to leave the station and Europe certainly isn’t on it.”
Europe’s leaders face pressure to boost ties with Asia after U.S. President Barack Obama declared a pivot to the region and Australian Prime Minister Julia Gillard unveiled a strategy last week to make her country “a winner in the Asian century.” At stake is safeguarding links that European economies are increasingly counting on, with the 19 Asian nations participating in a summit starting in Laos today accounting for 38 percent of the EU’s total trade last year, up from 30 percent a decade ago.
More
We end for today with more on the banksta’s. Barclay’s
new defence gambit just might have legs to stand. Of course, it has to stand up
in a US setting, which may or may not appreciate a joke, nor be very inclined to
strictly enforce impartiality. Not all great vampire squids are equal.
Old Ebenezer Squid had one-way
pockets. He would walk ten miles in the snow to chisel an orphan out of
tuppence.
With
apologies to P.G. Wodehouse and the Duke of Dunstable
Analysis: Barclays set to fight FERC over bragging, not rigging
NEW YORK
| Mon Nov 5, 2012 12:06am EST
(Reuters)
- British bank Barclays is set to fight a potentially record $470 million
penalty from U.S. energy regulators by arguing its traders were guilty of
braggadocio, not of rigging California electricity prices.
The four
traders in question, who boasted in emails and instant messages about how
"fun" it was to "crap on" certain physical power
prices, did not actually carry out the complex
scheme they are accused of by the Federal Energy Regulatory Commission, a
source familiar with the bank's thinking said.
Last
week, the country's top cop overseeing electricity markets ordered Barclays to
demonstrate why it should not pay a $435 million civil penalty, plus $34.9
million in the repayment of ill-gotten gains, for manipulation of California
power markets between 2006 and 2008.
The
British banking giant, still reeling from an nearly equivalent fine over its
role in rigging the Libor interest rate benchmark, has already said it will
"vigorously" fight the FERC charges, likely setting up a landmark
court battle.
It
believes electricity trades on the days of the traders' messages show their
West Coast trading team was not intentionally manipulating prices for profit,
despite the "unfortunate" emails released in FERC's 73-page
regulatory filing, the source said.
---- To prevail in its case, which stems
from an investigation that began in July 2007 after an anonymous tip-off from
other market participants, FERC will have to demonstrate the traders' messages
demonstrate "intent" to manipulate markets - a tough, though not
impossible hurdle to meet, legal experts said.
More
I think the American people should express their preferences,
and we'll accept their choice.
President Putin.
At the Comex silver depositories Friday final figures were: Registered 36.16
Moz, Eligible 106.30 Moz, Total 142.46 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yes once again, the
dubious honour of appearing in this section goes to the ever more bizarre corrupt
Bilderberger EU project. Germany, “the American’s of Europe,” according to Der
Spiegel earlier in the year, now says its “CIA” says any bailout for Cyprus is
in reality a bailout of Russian oligarchs and Mafiosi. Welcome to the United
States of Europe, 2012. President Putin probably can’t believe his luck.
Anyone who doesn't regret the passing of
the Soviet Union has no heart. Anyone who wants it restored has no brains.
President Putin.
'Mafiosi' stand to gain most from EU bail-out of Cyprus
Russian oligarchs and "mafiosi" who have parked their illegal earnings inside the country stand to benefit most from an EU bail-out of Cyprus, according to a report by Germany's intelligence agency.
9:06PM GMT 04 Nov 2012
Cyprus's request for a bailout has created a political headache for German
Chancellor Angela Merkel on concerns wealthy Russians could be the chief
beneficiaries, the weekly magazine Der Spiegel said on Sunday,
citing a report prepared by Germany's intelligence agency (BND) Cyprus is in talks with international lenders on the terms of a bailout expected to total €10bn (£8bn) after its two largest banks incurred huge losses due to the Greek debt writedown earlier this year.
The scale of the aid is tiny compared to Greece and other struggling eurozone countries.
The BND report on money laundering in Cyprus has laid bare the political risks involved, Spiegel said.
"The report of the BND shows who will profit most of all from the billions in European taxpayer funds - Russian oligarchs, businesspeople and mafiosi who have parked their illegal earnings in Cyprus," the magazine said.
Cyprus is
a popular offshore tax haven for Russian businesses seeking protection from
their country's unpredictable investment climate.
But
Cyprus, which joined the European Union in 2004, says it has strengthened its
regulations over the past decade against money laundering and is in full
conformity with international rules.
Spiegel,
citing the "secret" BND report and European officials, said
significant doubts persisted over Cypriot implementation of these regulations.
The BND
report found that Russian nationals held some $26bn (£16.2bn) in Cypriot bank
accounts, Spiegel said, dwarfing both the emergency aid the eurozone is likely
to provide and the country's total national output of about €17bn.
Cypriot
authorities do not provide a breakdown of bank deposits based on nationality,
but Russians are believed to make up a large proportion of non-domiciled
accounts.
Germany,
the euro zone's largest economy, would provide more than €2bn towards the
expected Cypriot bailout. But Germans are angry about having to stump up
billions of euros to rescue Greece and other heavily indebted economies.
Carsten
Schneider of Germany's main opposition Social Democrats, which hopes to oust
Merkel's conservatives in an election due next year, said his party would only
vote in parliament in favour of aid for Cyprus on certain conditions.
He said
Cyprus must be ready to adjust its low corporate tax rate and crack down
further on money laundering.
More
Russia will not soon become, if it ever
becomes, a second copy of the United States or England - where liberal values
have deep historic roots.
President Putin.
The monthly
Coppock Indicators finished October:
DJIA:
+92 Up. NASDAQ: +99 Up. SP500: +102 Up.
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