Baltic Dry Index. 900 -37
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"We shouldn't pour cold water on everything. We, the eight or nine players in global investment banking, have a very good future."
Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.
It is Fed Day 2, and everyone expects the Fed to
announce yet another QE program to replace “operation twist” which ends at the
end of the month. 85 billion here, 85 billion there, and pretty soon you’re talking
a trillion dollars of newly created electronic money. So while we await the
Lords of the Universe to descend from Olympus to tell us mere mortals how much
more it’s going to cost us all to live, today we take a long look at some
worrying developments in Europe and Asia. Stay long physical precious metals,
the antidote to 2013.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
Analysis: Euro zone ponders best path to "GEMU"
PARIS |(Reuters) - In the rich lexicon of Brussels acronyms, a new treasure has entered the vocabulary since June: GEMU.
It stands for Genuine Economic and Monetary Union, a term used in the conclusions of the last two European Union summits in a tacit acknowledgement that the single currency created by the 1992 Maastricht Treaty was flawed and woefully incomplete.
It also signals that Europe's leaders are starting to shift their focus from fingers-in-the-dike crisis management to save the euro to a longer-term process of building a more robust, storm-resistant architecture for the currency area.
The aim is to bolt onto the existing governance structures more binding fiscal discipline, common banking supervision and resolution, more effective economic policy coordination and greater democratic oversight of euro zone policymaking.
The battle over the nature of a revamped GEMU will be a long and incremental affair.
----At least three competing visions of the future are in play and the central battleground is the trade-off between more financial burden-sharing and more pooling of sovereignty.
For the
sake of simplicity, let's call the alternatives NOMU, OLDMU and NEWMU, although
in typical EU style, the outcome is likely to be a muddled combination of all
the options.
----German Chancellor Angela Merkel, Europe's most powerful leader, wants more central control over national budgets and economic reforms, with a small new euro zone "solidarity fund" to reward compliance and cushion the impact of painful changes.
Merkel
has doggedly opposed any sharing of the debts and liabilities of euro zone
governments or their banks, whether by a debt redemption fund, common euro zone
bond issuance, a common bank deposit
guarantee or retroactive direct recapitalization of bailed-out banks by the
euro zone's rescue fund.
Her
public position on the euro's future can best be described as NOMU - no
mutualisation. It is shared by the Dutch and Finns, fellow AAA-rated north
European creditor countries.
More
Peugeot to Cut Added 1,500 Jobs as European Sales Plunge
By Mathieu Rosemain - Dec 12, 2012 8:42 AM GMT
PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, will eliminate
an additional 1,500 jobs by 2014, deepening its workforce reduction as auto
sales in the region plunge to a 17-year low. The cuts, which come on top of 8,000 announced in July, will be made by not replacing people who leave, Jonathan Goodman, a spokesman for the Paris-based company, said in a telephone interview. The shares gained the most in three months.
With voluntary redundancies, “you are losing those people who can leave and you are left with the underachievers,” said Erich Hauser, an analyst at Credit Suisse Group AG in London who estimates eliminating that many jobs would save 70 million euros ($91 million) per year.
Peugeot in total is now aiming to shrink its French automotive operations by 11,200 positions, or 17 percent, over the next two years. The automaker is also closing a factory on the outskirts of Paris, selling assets and negotiating a strategic alliance with General Motors Co. (GM) as Europe’s auto market drops this year to the lowest sales volume since 1995.
----Peugeot, which has been depleting cash reserves in the last year at a rate of 200 million euros per month, said in October that net debt at the end of 2012 will total about 3 billion euros, versus a prediction in July of 2.5 billion euros. Moody’s Investors Service cut Peugeot’s long-term debt rating to three levels below investment-grade on Oct. 10, adding pressure on its banking unit, Banque PSA Finance.
France’s government stepped in on Oct. 24 to bail out Peugeot, guaranteeing as much as 7 billion euros in new bonds in exchange for greater influence over company strategy. France’s National Assembly late yesterday voted in favor of the guarantees and the measure should be fully adopted on Dec. 19, according to the parliament’s website.
More
France's Jean-Marc Ayrault slams flight of the 'greedy rich'
France's prime minister has slammed wealthy citizens fleeing the country's punitive tax on high incomes as greedy profiteers seeking to "become even richer".
7:08PM GMT 11 Dec 2012
Jean-Marc Ayrault's outburst came after France's best-known actor, Gerard
Dépardieu, took up legal residence in a small village just over the
border in Belgium, alongside hundreds of other wealthy French
nationals seeking lower taxes. "Those who are seeking exile abroad are not those who are scared of becoming poor," the prime minister declared after unveiling sweeping anti-poverty measures to help those hit by the economic crisis.
These individuals are leaving "because they want to get even richer," he said. "We cannot fight poverty if those with the most, and sometimes with a lot, do not show solidarity and a bit of generosity," he added.
"Thankfully, few are seeking exile to exempt themselves from being in solidarity with fellow Frenchmen."
----France's Socialist President Francois Hollande, who famously once declared "I don't like the rich", has pledged to tax annual income of more than one million euros per year at 75 percent.
David
Cameron controversially pledged to "roll out the red carpet" for any
French residents trying to flee the massive tax hike.
Mr
Hollande has since introduced other hefty new charges on capital gains and
inheritance, while increasing France's wealth tax and an exit tax for
entrepreneurs selling their companies.
More
EU and the euro rewarded with Nobel Peace Prize
The Nobel peace prize is recognition of the euro as a symbol of unity and rewards the European Union's "federalist vision" that will triumph over the current crisis, the bloc's leaders have declared
The
prestigious peace prize was collected in Oslo on Monday by Herman Van Rompuy,
Jose Manuel Barroso and Martin Schulz, the EU's three "presidents"
after a bitter Brussels fight over which one of them should take the trophy.
Despite a
year marked by riots in many European capitals and the real prospect of break
up caused by the euro crisis, Mr Barroso hailed the EU as "a remarkable
journey which is leading us to an 'ever closer Union'".
"Today
one of the most visible symbols of our unity is in everyone's hands. It is the
euro, the currency of our European Union. We will stand by it," he said.
Mr
Van Rompuy insisted that the EU deserved the award despite deep divisions
between Northern and Southern countries, soaring unemployment and popular anger
against austerity programmes imposed by Brussels.
----The
three EU presidents awkwardly collected a Nobel peace prize traditionally
collected by one individual laureate to the sound of trumpet fanfares but only
20 - out of 27 - EU leaders showed up to share the glory.
More
Chinese Shoppers Overtake U.S. as Top Luxury Buyers
By Vinicy Chan - Dec 12, 2012 7:00 AM GMT
Chinese consumers have overtaken U.S. shoppers this year to become the
world’s biggest buyers of luxury goods, accounting for 25 percent of global
sales through purchases at home and overseas, consultancy firm Bain & Co.
said. U.S. consumers now account for one-fifth of the world’s luxury sales, followed by the Japanese shoppers at 14 percent, according to a report released by Bain today.
The increasing affluence of Chinese consumer, who shop for luxury brands at home and overseas, has
encouraged companies from Burberry Group Plc. (BRBY) to Prada SpA. (1913) to boost their Asian presence. Chinese shoppers spend over 60 percent of their total outlay outside the mainland, Bain found.
China’s domestic luxury sales, estimated to be worth 106 billion yuan ($17 billion) in 2011, are expected to grow 7 percent this year. That is a slowdown from 30 percent growth in 2011, as the expansion in the world’s second-largest economy weakens and more Chinese buy abroad.
Mainland Chinese tourists often shop in Europe, where they can save as much as 40 percent on luxury watches because of the weaker euro and on differences in tax or duties, according to the report.
More
Hong Kong to Increase Minimum Wage by 7.1% as Inflation Bites
By Sandi Liu & Billy Chan - Dec 12, 2012 8:34 AM GMT
Hong Kong’s government plans to raise the city’s minimum wage by 7.1
percent, helping residents squeezed by inflation and the world’s highest home prices. Hourly salaries will gain to HK$30 ($3.9) from May 1, Labor Secretary Matthew Cheung said today at a press conference.
Chief Executive Leung Chun-ying, who has been buffeted by student protests and low popularity since taking office on July 1, has pledged to tackle Asia’s biggest wealth gap as the division between poor and rich widened to its worst level since at least 1971. The proposal will bolster the wages of about 327,200 employees, or a tenth of the city’s workers, according to a earlier report by a government commission.
----This will be the first revision to Hong Kong’s minimum wage since it was implemented in May 2011. Inflation jumped 5.3 percent last year, and may gain 3.9 percent this year, the government said Nov. 16.
On the day Leung took over on July 1, the 15th anniversary of Hong Kong’s handover to China, 112,000 people took to the streets to call for higher minimum wages, and protest against income disparity and human rights abuses in China.
More
Hong Kong at Risk of Property Price Correction, IMF Says
By Eleni Himaras - Dec 12, 2012 5:28 AM GMT
Hong Kong is at risk of an abrupt
decline in house prices after they doubled to a record in the past four years,
climbing 20 percent in 2012 even as the economy cooled, the International
Monetary Fund said.
----Hong Kong’s apartment prices have surged to become the world’s most expensive after low interest rates and limited supply fueled demand, prompting the government to tighten mortgage lending and add taxes. Since taking office in July, Chief Executive Leung Chun-ying imposed three rounds of curbs, including an extra 15 percent tax on buyers from overseas, and officials have signaled more measures are possible.
“The
sharp run-up in house prices raises the risk of an abrupt correction,” the IMF
said in the report. The property sector represents half of outstanding loans
for use in Hong Kong, with additional risks from the use of real estate as
collateral, it said.
More
“Those who don't know history are destined to repeat it.”
Edmund Burke
At the Comex silver depositories Tuesday final figures were: Registered 41.52
Moz, Eligible 105.40 Moz, Total 146.92 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Here we go again
with the banksters. Was JP Morgan just being economical with the truth or was
there something more? It’s really not their fault, you have to feel sorry for
the banksters really. While the Great Vampire Squids are busy doing “God’s
work,” all the banksters can say is “the devil made me do it.”
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
JPMorgan Pressed by SEC on Prop Trading Before Whale Loss
By Dawn
Kopecki - Dec 12, 2012 1:25 AM GMT
JPMorgan Chase & Co. (JPM) was pressed by U.S. regulators to strengthen
investor disclosures on proprietary trading almost a year before a wrong-way
bet on credit derivatives cost the bank at least $6.2 billion. The Securities and Exchange Commission asked Chief Financial Officer Douglas Braunstein to provide information about the bank’s so-called principal transactions revenue and proprietary trading, according to letters between the agency and the company from June 15 of last year through Feb. 17 that were made public yesterday. Proprietary trading, in which banks make bets with their own money, would be restricted under a Dodd- Frank Act provision known as the Volcker rule.
“It is not clear how much of this revenue was generated from your proprietary-trading business, hedge-fund activity and private-equity funds that would be affected by the Volcker rule,” Suzanne Hayes, assistant director of corporation finance at the SEC, wrote in the initial letter. JPMorgan disclosed in a previous filing that it liquidated proprietary holdings within the equities unit and “it is not clear if this was the extent of your proprietary-trading business,” she wrote.
The letters preceded JPMorgan’s assertion in May that a portfolio of credit derivatives, which bet against the creditworthiness of U.S. companies such as Wal-Mart Stores Inc. (WMT), was a hedge against a weakening economy rather than a proprietary bet. The position was amassed by trader Bruno Iksil, who came to be known as the London Whale because his wager was big enough to move the market.
JPMorgan, the biggest U.S. bank by assets, has said the trade was made through the company’s chief investment office and resulted in a loss in the first nine months of this year of more than $6.2 billion. Chief Executive Officer Jamie Dimon, 56, has said that figure could increase.
The U.S. Senate Permanent Subcommittee on Investigations is probing the loss, and the panel’s chairman, Michigan Democrat Carl Levin, called it a “textbook” example of why regulators need to tighten the Volcker rule. The Ohio Public Employees Retirement System and other pension funds are suing JPMorgan for turning the CIO into a “secret hedge fund” while claiming it was supposed to mitigate risk.
More
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
The monthly
Coppock Indicators finished November:
DJIA: +103 Up. NASDAQ: +123 Up. SP500: +125 Up. Time
is running out for the Santa Clause rally, unless there is a fiscal cliff
agreement.
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