Baltic Dry Index. 1077 -09
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.
Walter Bagehot.
The news from Europe just continues on unrelentingly
bad. In France, the eurozone’s second largest economy, car sales crashed last
month as the French middle class are increasingly squeezed by a poor economy
and a dismal outlook. France is the new
Spain. But France is too big to fail or bail. The Eurozone faces an existential
crisis next year, no matter what the outcome of any Greek rescue or debt
write-off. Stay long physical precious metals, the end is not far off for the
euro as we know it.
French economy buckles as car sales collapse
France’s industrial woes deepened last month as car sales crashed 19pc and French brands lost market share at an dramatic pace, raising fears of a serious economic crisis next year once austerity hits.
Markit’s
purchasing managers’ index (PMI) for French manufacturing remained stuck in
slump in November at 44.5 and is now the weakest in the eurozone after Greece.
"The
figures are shocking," said sovereign debt strategist Nicholas Spiro.
"France has been sailing dangerously close to the wind for some time but
is now tipping into outright contraction."
The
Committee of French Automobile Producers (CCFA) said this has been the worst
year for the French car industry since 1997 - and for almost half a century in
total volume - with little chance of recovery next year as Paris pushes through
scorched-earth fiscal tightening of 2pc of GDP to meet EU deficit targets.
Sales of
French cars fell 28pc in November from a year earlier, with Citroen down 26pc
and state-owned Renault down 33pc. Foreign brands fell just 7.9pc. "The
middle class, which tends to buy standard French cars of between €10,000 and
€20,000, has been particularly badly hit by the crisis," said the CFFA’s
François Roudier
The
severity of the decline stunned analysts and suggests that France has at last
been engulfed by the festering crisis across the Mediterranean region.
The
country has been bouncing along at near zero growth for a year and half but has
managed to keep out of technical recession, partly because it has been cocooned
by a Leviathan state and has put off hard decisions.
The
economy seems to have buckled abruptly over the Autumn, sheding more than
40,000 jobs a month. Unemployment has risen to a euro-era high of 10.7pc.
In Spain, a dithering government finally pulled the
trigger to ask for a bank bailout, but continued dithering over a national
rescue. A rescue delayed, is more costly rescue for all involved. With Europe’s
decline accelerating again, there is a high probability the euro dies next year
no matter how many rescue summits, the EU holds.
Spain requests €39.5bn bank bail-out, but no state rescue
Spain formally requested €39.5bn of European funds to recapitalise its struggling banks, while its prime minister held back from ruling out a bail-out for the state also.
Spain's economy ministry said it had requested the disbursement of
€39.5bn (£32bn) of European funds for its banking sector, as agreed under a
June rescue deal.
The money
represents €37bn for its four nationalised banks - Bankia, Catalunya Banc, NCG
Banco and Banco de Valencia - and €2.5bn for a so-called “bad bank”. It should
be paid to the state’s banking fund by mid-December, the ministry said.
Despite
the bail-out for its stricken banking sector, Spain faces speculation that it
will require a sovereign rescue also. So far, its prime minister Mariano Rajoy
has resisted making a decision on that count, although in an interview over the
weekend he did not rule out the possibility of a rescue by the European Central
Bank (ECB).
Spain is
trying to reduce its deficit to 6.4pc of its gross domestic product (GDP) for
this year, but could struggle to hit that target as its economic downturn
shrinks tax revenues.
One in
four of the work force is jobless in Spain, which is suffering its second
recession in three years.
More
In Ireland, often held out as a “success story” of
EU intervention and rescue, the other shoe is about to drop in the aftermath of
the wrecked housing bubble. After 3 years of delay and pretend, a massive
mountain of unrepayable debt is about to be recognised for what it is. As
Europe slides deeper into recession, Ireland will come to regret that it
delayed so long.
Ex-IRA Man Losing Home Shows Ireland’s Banking Future: Mortgages
By Joe Brennan & Dara Doyle - Dec 4, 2012 12:00 AM GMT
Few people represent the extremes of Ireland’s recent history more than
Thomas McFeely. By 2008, the 63-year-old had transformed himself from Irish Republican Army hunger striker in Belfast to millionaire property developer in Dublin. Then the real estate bubble popped. Now bankrupt and facing criticism after residents of one of the properties he developed were forced to move because of fire-safety concerns, McFeely last month lost a battle to keep his home in one of the Irish capital’s most affluent areas.
“It is the latest episode of the unfortunate situation that has befallen the country,” Justice John Hedigan told the Dublin courtroom as the Irish government seized the property. “There’s nothing I can do.”
Such rulings will become increasingly familiar in Ireland as one of the biggest property bubbles in European history unwinds, a crisis masked this year by falling bond yields as investors bet that the worst is over. Yet for Irish banks, whose losses forced the government to follow Greece in seeking a bailout, the true cost of the debacle is about to hit.
----Lenders that were bailed out by taxpayers and are owned by the state are looking at a previously unthinkable mix of repossessions and debt forgiveness as they confront the specter of loans that will never be repaid.
They face
the following conundrum: Move too quickly and aggressively in dealing with bad
loans and risk cratering the banking system again and imperiling any recovery
in real-estate prices, at least in Dublin. Move too slowly, and a debt-laden
economy will struggle to grow as borrowers rein in spending.
----Four years since the collapse, about 30 percent of Irish home loans by value, including so-called buy-to-let mortgages for rental properties, are in arrears or have been modified.
-----“Banks have been playing a waiting game, hoping things improve,” Lars Frisell, chief economist at Ireland’s central bank, told reporters in Dublin on Nov. 28. “That’s not happened. It’s time to stop procrastinating, to find out where the losses are and crystalize them. Take the losses.”
That means more scenes at the courts like those on Nov. 19 at the case of McFeely, whose bankruptcy affected more than just his own 5,100 square-foot (474 square-meter) mansion in Dublin’s leafy Ballsbridge district, the former German embassy.
The National Asset Management Agency, set up by the government to take over bad loans from banks, seized his home and put it on the market for 3 million euros.
More
http://www.bloomberg.com/news/2012-12-04/ex-ira-man-losing-home-shows-ireland-s-banking-future-mortgages.html
But Europe is probably a lost cause anyway, with America already buckling even before falling over its “fiscal cliff.” Next week the Fed meets and must come up with something to replace “operation twist” which expires at the end of the year. Operation twist pumps in 45 billion a month to the US economy holding down long interest rates, and is in addition to the Fed’s QE3 which pumps in another 40 billion a month to the mortgage market. J.P. Morgan analysts think we will get 45 billion of QE4. Stay long physical gold and silver since they are probably right. Due to the weakness in the US economy, even before any effect from the fiscal cliff, the Fed will be monetising over a trillion a year for the foreseeable future. While America’s prospects look better than Europe’s, America’s renewed weakness probably dooms Europe’s great Eurozone experiment to fail.
"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."
Lloyd Blankfein. CEO Goldman Sachs.
U.S. Manufacturing Unexpectedly Shrank as Orders Slowed
By Alex Kowalski - Dec 3, 2012 9:09 PM GMT
Manufacturing unexpectedly contracted in November for the
fourth month in the last six as factory managers grew more concerned about the
potential economic toll stemming from the so-called fiscal cliff.
The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction. Construction spending in October jumped by the most in five months, another report showed.
Weaker overseas demand, less investment in equipment and the possibility of automatic tax increases and government budget cuts in 2013 are hurdles for companies making everything from apparel to machinery.
More
Treasury Scarcity to Grow as Fed Buys 90% of New Bonds
By Liz Capo McCormick & Daniel Kruger - Dec 3, 2012 5:39 PM GMT
Even as U.S. government debt swells to more than $16 trillion, Treasuries
and other dollar fixed- income securities will be in short supply next year as
the Federal Reserve soaks up almost all the net new bonds. The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.
More
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….
With apologies to Richard Gauntlett.
At the Comex silver depositories Monday final figures were: Registered 38.83
Moz, Eligible 103.33 Moz, Total 142.16 Moz.
Looks to me like there might be large deliveries coming up in the
December contract.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, India
responds to China’s threat to start boarding ships in the South China Sea, that
it says are illegally operating in “Chinese” waters. Is India acting as a face saving proxy for
Uncle Sam? Unless China backs down, a clash with China is coming between
Vietnam, the Philippines, Malaysia, and Singapore, in addition to India, and
ultimately Japan and the USA. Stay long physical precious metals. China has
backed itself into a corner of its own making.
Indian navy ready to deploy to South China Sea as tensions climb
HANOI/NEW DELHI |(Reuters) - India has declared itself ready to deploy naval vessels to the South China Sea to protect its oil-exploration interests there, a potential new escalation of tensions in a disputed area where fears of armed conflict have been growing steadily.
India's naval chief made the statement on Monday just as Vietnam's state oil and gas company, Petrovietnam, accused Chinese boats of sabotaging an exploration operation by cutting a seismic cable being towed behind a Vietnamese vessel.
Petrovietnam said the seismic vessel, Binh Minh 02, had been operating outside the Gulf of Tonkin when the cable was severed on Friday. It had earlier been surveying the Nam Con Son basin further south -- an area where Indian state-run explorer Oil and Natural Gas Corp (ONGC) has a stake in a Vietnamese gas field.
Indian Navy Chief Admiral D.K Joshi said that, while India was not a territorial claimant in the South China Sea, it was prepared to act, if necessary, to protect its maritime and economic interests in the region.
"When the requirement is there, for example, in situations where our country's interests are involved, for example ONGC ... we will be required to go there and we are prepared for that," Joshi told a news conference.
"Now, are we preparing for it? Are we having exercises of that nature? The short answer is yes," he said.
Petrovietnam posted on its website comments made by the deputy head of exploration, Pham Viet Dung, to a journalist from Vietnam's Petrotimes that the seismic cable was quickly repaired and the survey resumed the following day.
"The blatant violation of Vietnamese waters by Chinese fishing vessels not only violates the sovereignty ... of Vietnam but also interferes in the normal operations of Vietnamese fishermen and affects the maritime activities of Petrovietnam," Dung was quoted as saying.
Tensions have simmered in the South China Sea for many years but have escalated this year as an increasingly powerful China, which sees virtually the entire sea as its territory, begins to assert its long-standing offshore claims more vigorously.
----Last week, Chinese state media said police in
southern Hainan province would board and search ships which illegally entered
what China considers its territory in the sea -- a move that immediately raised
fears for the free passage of international shipping and the possibility of a
naval clash.
----Singapore, home to the world's second-busiest container port, joined some of its neighbors on Monday in expressing concern at the Chinese reports that Hainan police would board and search ships under rules to take effect from January 1.
"We
urge all parties to the territorial disputes in the South China Sea to refrain
from provocative behavior," the Singapore government said in a statement.
Asked
about the reports of China's plan to board ships, Joshi said India had the
right to self-defense.
More
A permanent Governor of the European Central Bank would be one of the greatest men in Euroland. He would be a little `monarch` in every City; he would be far greater than the Elected Leaders. He would be the personal embodiment of the ECB; he would be constantly clothed with an almost indefinite prestige. Every nation in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.
With Apologies to Walter Bagehot. Lombard Street. 1873.
The monthly
Coppock Indicators finished November:
DJIA: +103 Up. NASDAQ: +123 Up. SP500: +125 Up. Still time for the
Santa Clause rally?
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