Baltic Dry Index. 708 -12
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and president of the Euro Group of Finance Ministers. Confessed liar.
More on the good news later, first this. The
Telegraph’s Brussels’s super sleuth, sums up the year just passed by the
Eurozone drinking in the last chance saloon. My guess is that the euro doesn’t
make it out of 2013 in its present form. Forget Greece, Portugal, and Cyprus all
blowing up in 2013, though they probably will. In the year ahead, I think that
Belgium, France, Italy and Spain will all blow up, but it will be France Italy
and Belgium that really do the major damage ending the Eurozone. Which will be
first is hard to predict, but my guess is on France trapped into 1960s old
socialist policies, probably around May. Stay long physical precious metals as
the antidote to 2013. Of course if America is actually foolish enough to
implement its “fiscal cliff” and then stay gridlocked in a take no prisoners
war, the resulting chaos and fear might
bring May forward to March.
Europe in 2012: disaster averted but future uncertain
It was a tumultuous year but Europe did not plunge over the cliff of a eurozone break-up, writes Bruno Waterfield.
Disaster averted but only just, was the verdict on 2012. In a year described as "existential crisis" by many of Europe's leaders the European Union's single currency went to the brink.Greece appeared as if it was headed for 1930s-style political and economic collapse as a technocrat "national unity" government headed for collapse in early 2012.
Amid a bank run and growing opposition to an EU-IMF austerity programme, imposed as the condition of a bail-out, it looked as if Greece would default, bringing down the euro.
Elections in May took place amid boiling social conflict and returned a radical Left-wing party Syriza, opposed to the EU and IMF, as the main opposition party.
Greece's fate hung in the balance for a month without a clear parliamentary majority and market contagion threatened to lay waste to Italy and Spain.
----A key moment came in July after Mario Draghi, the president of the European Central Bank, pledged to do "all it takes" to save the euro. By the end of the summer market turmoil abated as details emerged of his plan for unlimited bond purchases to help struggling countries such as Spain with the cost of borrowing.
----But while the euro was saved from a sudden death, the European economy continued its grim descent into recession and high unemployment.
Eurozone unemployment reached record levels of 12 per cent by the end of the year. Over 26 million Europeans were without work as Christmas approached. The euro remained intact but without any respite in economic misery.
Youth joblessness in Greece and Spain rocketed to levels of over 50 per cent, raising longer-term questions over stability in Europe as the political order in many countries, and the EU, still appeared fragile.
The growth of Basque and Catalan nationalist movements, fuelled by economic crisis, in Spain meant that the year ended with real doubts over the future of the Spanish state.
----Perhaps, most worrying for the eurozone, the political relationship between Chancellor Merkel and President Hollande deteriorated to the worst levels seen since German reunification. By December, it was clear that the Franco-German motor had stalled preventing rapid agreement on implementing a new banking supervisory regime and new eurozone powers to police national budgets.
----As 2012 ended with the resignation of Mr Monti and the return of Silvio Berlusconi to Italian politics, real questions remained as to whether Europe had averted a crisis only for it to return next year.
More
http://www.telegraph.co.uk/news/worldnews/europe/9755655/Europe-in-2012-disaster-averted-but-future-uncertain.html
Doubts remain over Spain's austerity miracle
Spain has made dramatic strides in cutting labour costs and reviving exports since the debt crisis erupted, turning the country into the new poster-child of Europe’s austerity regime.
Fresh data from the OECD show that Spain has narrowed the gap in “unit labour costs” with Germany by 5.5pc over the past year alone. It has clawed back 4.6pc against France and 6.6pc against Austria since late 2011, as it slashes pay and pursues a scorched-earth policy of “internal devaluation”.Luis Maria Linde, the Bank of Spain’s governor, says that within two years the country will have recovered “almost all” the ground lost during the first disastrous years of euro membership. The total gain in competitiveness against the EMU bloc since 2008 has been 10pc.
Yet economists say it is far from clear whether Spain is chasing the right target or even whether it can recover within EMU. Deflation has pushed the numbers out of work to 26.2pc, with 55.9pc youth unemployment.
“This has come at a massive cost. If you put a whole generation out of work, you damage your trend growth rate for a long time,” said Marchel Alexandrovich from Jefferies Fixed Income.
“There will be more and more calls for drastic solutions if this drags on, with people asking whether the euro is fundamentally the right currency for Spain.”
----Prof Wyplosz said the contractionary
policies across the eurozone are making the task much harder.
“There may be a
miracle but it is more likely that Europe’s recession will continue through
2013 and 2014 and who knows how long after that,” he said.
----The contrast with Italy is striking. The OECD data show that Italy’s labour costs have continued to ratchet up despite perma-slump and drastic fiscal tightening, falling even further behind Germany over the past two years.
“The picture for Italy is horrible. They are going in the opposite direction from everybody else,” said Raoul Ruparel from Open Europe. “Mario Monti never really made any progress on labour reform.” Mr Monti’s technocrat government failed to tackle the issue that has bedevilled Italy for 60 years, the rigid structure that mandates equal pay for workers in the cutting-edge Lombardy with the sleepy Mezzogiorno.
More
Eurogroup's Juncker rules out haircut on Cypriot debt
ERLIN |(Reuters) - Outgoing Eurogroup chief Jean-Claude Juncker on Friday dismissed the possibility of writing down Cypriot sovereign debt, saying that would risk the credibility of the euro zone.
"We didn't say all Greek speaking countries, we said Greece. It is part of the credibility to stick to the signals you have sent," Juncker told German radio Deutschlandfunk.
"I expect that a haircut will not be part of the instruments that will be used with priority (in Cyprus). I want to exclude that possibility from my side," Juncker added.
More
Christmas bleak in southern Europe after years of crisis
MADRID/ATHENS |(Reuters) - Christmas is bleak this year across southern Europe, the area worst hit by the euro zone debt crisis, with many families struggling to provide even a small celebration for their children.
From Lisbon to Athens, Christmas lights are dim, gift purchases are down and suffering families are bitter at the effect of three years of crisis.
Conditions are worst in Greece, the country which sparked the debt crisis in early 2010 and has had to swallow sweeping tax rises and spending cuts in exchange for international aid.
"It will be difficult. We cannot afford to have the heating on so we will sit at home covered in blankets," said unemployed computer salesman Polihronis Sotiriou, 46, whose family is now struggling on the salary of his teacher wife.
"Of course we will have a family dinner but we sure won't be eating meat this year," he said. Comparing it to Nazi rule in World War Two, he added: "I know from my parents who lived through the occupation that this year is as bad as it was then - if not worse."
Feelings are similar in Portugal, which like Greece is kept afloat by an international bailout and is mired in its worst recession for 40 years.
More.
We end for the Christmas break with some good news
on the food price inflation front. Brazil is headed for a record soybean crop,
and that is driving grain prices lower, as China reacts. More beans puts some pressure
on corn too, although stopping making ethanol for corn would b the biggest
help. Just possibly, our world will get food price inflation relief in 2013.
Now if only we could get real relief from the sky high crude oil price, and the
international sky high price of natural gas. Perhaps Uncle Sam could lift its
ban on exports of natural gas. Probably too much to hope for in 2013.
China makes largest cancellation of US soy in 14 years
It was also the second cancellation this week. On Tuesday, the USDA said China had cancelled purchases of 300,000 tonnes, and traders said that another 120,000 tonnes that were scrapped by buyers the USDA did not specify were likely for China too.
Chicago Board of Trade soybean futures tumbled on the news, falling as much as 2.4 percent, 34-1/4 cents, to a low of $14.02-3/4 a bushel.
----Prices in the U.S. grain export market also fell sharply due to the cancellations, with basis bids sinking 10 to 18 cents per bushel for soybeans shipped to terminals at the Gulf Coast.
----Traders said the cancellations were due to a likely bumper crop in Brazil, the world's second-largest soybean exporter, where China could book supplies at much lower prices.
Brazil's government food supply agency Conab forecast the soybean crop at a record 82.6 million tonnes.
Agronomist Michael Cordonnier of Soybean and Corn Advisor consultancy said the weather in Brazil's soybean areas have generally been favorable to the crop and that he expected the harvest to kick off by early January.
----Garrett Toay, risk management consultant
at Toay Commodities Futures Group in Des Moines, Iowa, said China was likely
cancelling extra U.S. soybeans it had purchased as insurance in the event of a
poor crop in South America.
----U.S. soybean export sales in the 2012/13 marketing year (Sept/Aug) totaled more than 30.3 million tonnes as of Dec. 13 - nearly 83 percent of the USDA forecast of 36.61 million.
The majority of the sales - almost 19 million tonnes or 62 percent - were to China.
More
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
H. L. Mencken.
At the Comex silver depositories Thursday final figures were: Registered 42.54
Moz, Eligible 103.52 Moz, Total 146.06 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks
today, although we did note Bernard Madoff’s brother making a guilty plea-bargain
in the Madoff scandal.
Today it is
time to wish all a Merry Christmas or whatever holiday tradition you follow at
this time. The next update will likely be on December 26th or 27th,
when hopefully Washington will have reached some compromise to avert a
calamitous start to 2013.
Have a great
break everyone.
Set in Camelot, Arthur and Guinevere have a daughter. At the Blessing of Princess Aurora, Dr Bernanke arrives and sets an evil curse on the child, forcing the child into paying off the national debt….
Apologies to Richard Gauntlett. Panto Scripts.
The monthly
Coppock Indicators finished November:
DJIA: +103 Up. NASDAQ: +123 Up. SP500: +125 Up.
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