Baltic Dry Index. 784 -15
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
As expected Japan yesterday voted in Shizo
Abe and the China bashing Liberal Democratic Party, though they will likely
form a coalition with the hard right New Komeito Party. Stay long physical precious metals. A clash
between China and Japan is a virtual certainty in 2013. How America reacts will
probably determine if there is to be a great east Asian war starting in
2013. Anticipating the LDP victory,
China seems to have struck the first blow at the UN on Friday.
On Friday China’s State Oceanic
Administration filed with the United Nations, China’s demarcation proposal of
the outer limits of its continental shelf in the East China Sea. To comply with “the United Nations
Convention on the Law of the Sea (UNCLOS) and its relevant provisions, if the
continental shelf of a coastal state extends beyond 200 nautical miles from the
baselines from which the width of the territorial sea is measured, information
on the limits of the continental shelf beyond 200 nautical miles shall be
submitted by the coastal state to the Commission on the Limits of the
Continental Shelf under the UNCLOS.”
Effectively, China is attempting to push
Japan all the way back to the Okinawa Trough, and has filed a claim under
UNCLOS, of an economic zone extending beyond the more usual 200 nautical miles.
Below, the
state of play in East Asia this morning.
Japan's next PM Abe must deliver on economy, cope with China
TOKYO |(Reuters) - Japan's hawkish ex-premier Shinzo Abe will get a second chance to run the country after his conservative Liberal Democratic Party (LDP) surged to power in Sunday's election, but must swiftly move to bolster the sagging economy while managing strained ties with China.
Abe, whose party won by a landslide just three years after a crushing defeat, was expected on Monday to meet Natsuo Yamaguchi, the leader of the small New Komeito party, to cement their alliance and confirm economic steps to boost an economy now in its fourth recession since 2000.
The victory by the LDP, which had ruled Japan for most of the past 50 years before it was ousted in 2009, will usher in a government pledged to a tough stance in a territorial row with China, a pro-nuclear energy policy despite the 2011 Fukushima disaster and a potentially risky recipe for hyper-easy monetary policy and big fiscal spending to boost growth.
Projections by TV broadcasters showed that the LDP had won at least 291 seats in the 480-member lower house, while the New Komeito party took at least 29 seats.
That gives the two parties the two-thirds majority needed to overrule parliament's upper house in most matters, where they lack a majority and which can block bills. The "super majority" could help to break a policy deadlock that has plagued the world's third biggest economy since 2007.
----LDP leader Abe, 58, who quit as premier in 2007 citing ill health, has been talking tough in a row with China over uninhabited isles in the East China Sea, although some experts say he may temper his hard line with pragmatism once in office.
The
soft-spoken grandson of a prime minister, who will become Japan's seventh
premier in six years, Abe also wants to loosen the limits of a 1947 pacifist
constitution on the military, so Japan can play a bigger global security role.
----Abe has called
for "unlimited" monetary easing and big spending on public works to
rescue the economy. Such policies, a centerpiece of the LDP's platform for
decades, have been criticized by many as wasteful pork-barrel politics.
More
Disputes over small islands pose big conundrum for U.S
WASHINGTON |(Reuters) - Far away from the United States and usually far down the list of things Washington worries about, the obscure islets at the center of bitter spats between China and its neighbors have become a flashpoint that could get hotter and embroil America.
This week served up fresh evidence that 2013 likely will bring no pause in tensions rippling the seas around China. Japan on Thursday scrambled fighter jets after a Chinese government plane entered what Japan considers its airspace over disputed islets in the East China Sea, just one of many contested sites.
Even as conflicts in the Middle East dominate the U.S. government's foreign policy concerns, the State Department believes that the multilateral territorial dispute in the South China Sea is one of the most difficult issues globally.
But it has been relying largely on private diplomacy and broad statements of principle rather than public arm-twisting to try to head off potentially violent miscalculations over the disputes. Underscoring this concern is the so-called pivot of U.S. attention to Asia, which has involved more rhetoric and consultations than deployment of American military force.
However, hardly a week passes without incidents over fishing rights or oil exploration activities, and Washington's approach, while it may have helped avoid outright conflict, does not appear to be dissuading an increasingly assertive China.
Recent
moves by Beijing "in part mean China has not been deterred by the
increased U.S. commitment," said M. Taylor Fravel, a scholar at the MIT
Security Studies Program.
China has
taken de facto control of the Scarborough Shoal, a reef that falls inside the
Philippines' exclusive economic zone, and now frequently challenges Japan's
control of islands it calls the Senkakus.
----Washington has longstanding security treaties with two of China's adversaries in the dispute, Japan and the Philippines.
In the
case of Japan, Washington explicitly has said the islands Tokyo administers and
calls the Senkakus - and which China claims as the Diaoyu islands - would be
covered by their 1951 security treaty in the event of attack.
The
Philippines has not received such U.S. assurances over its disputed islets, but
is getting American help improving its tiny navy in the face of increased
Chinese pressure.
Morehttp://www.reuters.com/article/2012/12/16/us-usa-asia-maritime-idUSBRE8BF0I020121216
China reports to UN outer limits of continental shelf in East China Sea
China on Friday presented to the UN Secretariat its
Partial Submission Concerning the Outer Limits of the Continental Shelf beyond
200 Nautical Miles in the East China Sea.
Physiognomy and geological characteristics show
that the continental shelf in the East China Sea is the natural prolongation of
China's land territory, according to the document.
The natural prolongation of the continental shelf
of China in the East China Sea extends to the Okinawa Trough, which is an
important geographical unit featuring remarkable partition, it says.
The width of the continental shelf of China in the
East China Sea, the document says, is measured more than 200 nautical miles
from the baselines of the territorial sea of China.
It also points out that its issuance shall not
affect the Chinese government in presenting other demarcation submissions
concerning outer continental shelves in the East China Sea and other waters.
moreCross-Straits trade totals $554 billion
Xinhua, December 17, 2012
Trade between the Chinese mainland and Taiwan grew
to 554.27 billion U.S. dollars in October from December 2008 when the two sides
opened direct mail, transport and trade links, the latest customs figures have
shown.
During the period, the Chinese mainland's imports
from Taiwan totaled 438.4 billion U.S. dollars, while its exports to Taiwan
reached 115.87 billion U.S. dollars, figures from the General Administration of
Customs showed.
The Chinese mainland approved 87,000
Taiwanese-funded programs and received 56.53 billion U.S. dollars in Taiwanese
investments from December 2008 to October 2012, the figures showed.
In the smae period, 133 enterprises from the
Chinese mainland set up subsidiaries or offices in Taiwan, with total
investment reaching 722 million U.S. dollars.
We end today with Europe. We let the pro Europe
Economist magazine sum up last week’s failed Great Leaders’ summit. Essentially
everything is now on hold until after Mrs Merkel get re-elected next September.
And then there is the growing Eurozone nightmare of France. Too big to fail but too big to bail France, is
about to become Euroland’s biggest crisis in 2013. Abandon hope all ye who enter
the asylum called Europe. Europe and the euro isn’t working anymore. It’s all
going to end badly.
EU summit and the euro crisis
Step by step, with a ripped map
Dec 14th 2012, 18:22 by by Charlemagne¦Brussels
IN
JUNE this year, when Spain seemed to be close to succumbing to the crisis,
European leaders appeared to make an important conceptual leap. The euro’s
agony could not be ended simply through ever-tougher enforcement of the fiscal
rules, deficit-cutting and economic reforms by individual countries and, in
extremis, bailout loans. Instead, the euro zone would have to start moving
towards greater pooling of sovereignty and sharing of liabilities.
Six
months on, the European summit (December 13th-14th) that was supposed to decide
how to move towards a greater degree of fiscal federalism has just ended with a
demonstration of how far European leaders have retreated from such notions.
Instead of approving a road-map to create what Eurocrats call “a genuine
economic and monetary union” (an implicit admission that the existing currency
zone is rather fake) over the coming decade, they agreed some limited steps for
the coming 18 months. Beyond that, there is silence. Only fragments remain of
the “specific and time-bound roadmap”, as it is called, remain. The destination
is unknown
----This
is not to say that leaders have done nothing. On the eve of the summit
governments agreed the creation of a new supervisor for euro-zone banks. The
clean-up of Spain’s banks using euro-zone loans is proceeding. And the prospect
of a Greek default and exit for the euro zone has been pushed back by a real
softening of its bailout terms and, in hidden manner, the beginning of a debt
write-off for Greece. But the idea of repairing once and for all the many
underlying flaws in the design of the currency zone has faded away.
----This tendency to go slow is exacerbated by a third factor, the German general election in September next year, which now colours ever-more euro-zone business.
And even
if Mrs Merkel were willing to push towards deep integration, she knows she
would quickly run into the fourth obstacle: France’s reluctance to contemplate
moves that would lead to yet another revision of the treaties.
So the
ranks of Eurocrats are experiencing the soldier’s life of “rush-and-wait”.
Apart from some maintenance, the wait is likely to go on until the German
election – or until the next crisis forces them to rush around again.
More
Unemployment and Poverty Young French Losing Hope as Prospects Fade
By Julia Amalia Heyer 12/14/2012
----Beyond
France's ailing economy, there is another disastrous statistic at play. Some 23
percent of the country's 18- to 24-year-olds live in poverty, according to a
study by the National Institute for Youth and Community Education (INJEP).
These are mainly high school or university dropouts who have little to no
access to health care and limited chances of improving their situations.
----Youth unemployment in France has been high for some
time, but it has now climbed to 26 percent. For decades, regardless of their
political affiliation, lawmakers have been promising to create a better
situation for young people. But exactly the opposite has happened. Labor laws
protect those who already enjoy steady jobs, while the economic crisis and
recession have limited the number of new jobs created. Meanwhile, housing has
become both scarcer and pricier.
"Something
must finally be done," says Didier Dugast, director of the Mission locale
in Moissy, who reports that the number of those seeking his assistance has been
jumping by some 10 percent each year.
A new
program from Socialist President François Hollande for the creation of
"future jobs" has been in effect since November. It targets people
much like Affram. But he just shrugs his shoulders and says: "We're used
to politicians constantly coming up with new ideas."
More
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories Friday final figures were: Registered 42.34
Moz, Eligible 105.17 Moz, Total 147.52 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today we
focus on France. Forget Spain and Italy, this year’s Euroland twin crisis
problem. In 2013 it’s going to be about trying to bailout France, the number
two economy of the Eurozone. Think old socialist France will turn its economy over
to Germany to run as the price of a German bailout? Neither do I. While America
gets to call whether it’s to be war or peace in the East China Sea next year,
in Europe it’s going to be all about how France blows up and when.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker.
Hollande's World French in Denial as Crisis Deepens
By Romain
Leick 12/13/2012
In the midst of the economic
crisis, France's Socialists are denying reality. The minister of industrial renewal
is calling for nationalization of some industries, while the
president shies away from necessary structural reforms. Business leaders
fear the clock has been turned back 30 years.
----Arnaud
Montebourg, the French minister of industrial renewal, carries his head high.
In his mind, politics is a combat sport. A shiny, decorative sword hangs on the
wall behind him in his office on the third floor of the enormous Ministry of
the Economy, Finances and Industry in Paris. The 50-year-old combative politician
tends to rush headlong into battle, but he is often left with no choice but to
carry out the maneuver he despises the most: retreat.
That was
the case last weekend, after Montebourg had become locked in a spectacular
wrestling match with the steel giant ArcelorMittal, which employs 20,000 people
at 150 sites in France. In Florange, north of the city of Metz, which sits near
the borders with Germany and Luxembourg, the company planned to permanently
shut down two blast furnaces and lay off 630 workers.
The
industrial site, in the economically depressed Lorraine region, has long been
unprofitable, and ArcelorMittal suffers from overcapacity. The plant closing
probably wouldn't have attracted much attention, but Montebourg, who sees the
preservation of industrial jobs as his primary goal, needed a success -- and
forgot the principle of proportionality.
Instead,
he brought out the biggest gun in the Socialist government's arsenal, and
threatened the company with the temporary nationalization of the Florange site,
and declared its main shareholder and CEO, Indian steel magnate Lakshmi Mittal,
to be a persona non grata because he doesn't respect France. Mittal was shocked
and requested a meeting with French President François Hollande. Prime Minister
Jean-Marc Ayrault was forced to recognize that Montebourg had set a fuse which,
if lit, could cause the government to explode.
France's
business leaders felt as if they had been set back 30 years, to a time when the
first Socialist president of the Fifth Republic, François Mitterrand, began his
term with a wave of nationalizations and, after two years, was forced to
reverse his policy. Some even drew a comparison with 1945, when the government
nationalized automaker Renault after accusing it of having collaborated with
the enemy. Wasn't Montebourg, who had always been an eloquent preacher of
deglobalization, dividing business owners into different camps, good and evil,
patriotic and unpatriotic?
"Has
the government forgotten that nationalization means expropriation?" asked
Laurence Parisot, the appalled head of MEDEF, the employers' union.
The
liberal economist Nicolas Baverez, who predicted "France's downfall"
10 years ago and has just written a book titled "Réveillez-Vous"
("Wake Up"), saw the wrangling over Florange as proof that the French
left still hasn't accepted globalization, and acts as if the country were an
economic and cultural preserve. "The idea of nationalization sends an
ominous message to all investors," Baverez said.
Even
Finance Minister Pierre Moscovici carefully distanced himself from Montebourg,
saying: "Our policy differs from the past experiences of leftists in
power."
But the
workers at the Florange site and their unions were thrilled with Montebourg's
threat. According to a snap poll, a majority of the French people and, in
particular, leftist voters, appreciate such showdowns with the patrons,
or business owners. It's no accident that France's young people see working in
the public sector as the ideal professional career. The government promises
protection and security.
More
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
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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