Baltic Dry Index. 699
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Suppose you were an idiot, and suppose you were a member of
Congress; but I repeat myself.
Mark Twain.
The big news this morning is the total
victory in the USA of America’s blue team over what turned out to be a wimpy
red team. America is saved from going over its “fiscal cliff,” at least for now,
with the can kicked safely down the road for another few weeks. Why this
outcome couldn’t have happened in a civilised way in November or early
December, is only known to the inmates running America’s Washington asylum, but
America’s leadership role in the world diminishes as a result. Sadly there is
no other viable leader to replace a divided America, so for at least the next
four years we can expect more of the same. It’s “risk on” time again in the
global markets, with equities, oil, and gold the likely early winners. With
nothing fixed and a massive new round of monetisation again underway, in time
all tangible assets will rise against the fiat currencies. The public isn’t
fooled by monetisation as it was in the middle of the last century.
There is no distinctly American criminal class - except
Congress.
Mark Twain.
United States avoids calamity in "fiscal cliff" drama
WASHINGTON |(Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and into recession.
The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.
The deal also resolves, for now, the question of whether Washington can overcome deep ideological differences to avoid harming an economy that is only now beginning to pick up steam after the deepest recession in 80 years.
Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.
More
Stocks to soar as world money catches fire, Calvinst Europe left behind
Bears beware. A monetary revolution is underway.
The US,
Japan, Britain, as well as the Swiss, Scandies, and a string of states around
the world, are actively driving down their currencies or imposing caps.
They are
tearing up the script, embracing the new creed of nominal GDP targeting (NGDP),
a licence for yet more radical action.
The
side-effects of this currency warfare -- or "beggar-thy-neighbour’ policy
as it was known in the 1930s -- is an escalating leakage of monetary stimulus
into the global system.
So don’t
fight the Fed, and never fight the world’s central banks on multiple fronts.
Stock
markets have already sensed this, up to a point, lifting Tokyo’s Nikkei by 23pc
and Wall Street by 10pc since June.
----The more that investors come to think another cycle of global growth is safely under way, the riskier it will be to hold corporate bonds, $8 trillion in the US alone. With yields priced for deflation, that bubble is dangerous to own on 10-year maturities. The money will rotate into equities and bullion, with China’s central bank driving gold through $2,000 at last.
As a
polar bear, I doubt that such a happy cycle is upon us. We merely have a rally
within a structural trade depression.
The
headwinds of deleveraging will return with gale force. The glut of excess
global savings that lay behind the great crisis of 2008-2009 -- and that has
kept us stuck in the Long Slump ever since -- is still getting worse. The
international trading system remains badly out of kilter.
There is
chronic overcapacity across global industry and not enough demand to carry a
full cycle of economic expansion, or to reach "escape velocity" as
they say these days.
Until
that changes, every global rebound is doomed to disappoint within a few
quarters, and that includes the cyclical upswing of 2013.
More
Gold Extends Longest Streak Since 1920 on Central-Bank Stimulus
By Nicholas Larkin & Debarati Roy - Dec 31, 2012 8:08 PM GMT
Gold rose, capping the longest annual gain since at least 1920, on renewed
concern that central banks from Europe to China will take steps to spur
economic growth and as U.S. leaders near a budget deal. Gold futures for February delivery gained 1.2 percent to settle at $1,675.80 at 1:41 p.m. on the Comex in New York, while prices for immediate delivery jumped as much as 1.5 percent. Through Dec. 28, the metal had slumped for five straight weeks as the deadline for the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect tomorrow loomed. President Obama said today at a White House event that an agreement was “within sight.”
Investors from John Paulson to George Soros have a $140.6 billion bet via near-record holdings in gold-backed exchange- traded products after the Federal Reserve said Dec. 12 it would buy $45 billion of Treasury securities a month as of January, adding to $40 billion a month of mortgage-debt purchases. Gold will probably peak in 2013 because of improving U.S. growth, even as the Fed expands stimulus, Goldman Sachs Group Inc. said Dec. 5. Morgan Stanley said a day later bullion will be among next year’s best-performing commodities.
“All that money printing across the globe put a bid under gold,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “There is overall optimism about the fiscal deal so we are seeing buying across the counter.”
The
metal averaged a record $1,670.71 this year in New York even as it slid 6 percent
since September, the biggest quarterly drop since 2004. The run of annual gains
in the immediate delivery market is the longest since at least 1920.
More
Japan plans 'nationalisation' of factories to save industry
Japan's government is to take the unprecedented step of buying factories and machinery directly with taxpayer funds, the latest in a series of radical steps to lift the country out of its deep slump.
By
Ambrose Evans–Pritchard 9:02AM GMT 01 Jan 2013
Premier
Shenzo Abe is to spend up to one trillion yen (£7.1bn) buying plant in the
electronics, equipment, and carbon fibre industries to force the pace of
investment, according to Nikkei news.
The
disclosure came just a day after Mr Abe vowed to revive Japan's nuclear
industry with a fresh generation of reactors, insisting that they would be
"completely different" from the Fukishima Daiichi technology.
The
industrial shake–up shows the ferment of fresh thinking in the third–largest
economy after years of paralysis. Output shrank 0.9pc in the third quarter and industrial production has
fallen 3.3pc over the past two months, made worse by a boycott of Japanese
goods in China over the Diaoyu/Senkaku islands row. Exports to China fell 38pc
in November.
Mr Abe's
Liberal Democrats have already lambasted the central bank, threatening a new
bank law unless it adopts radical measures to pull Japan out of deflation –
including a growth target of 3pc for nominal GDP, implying massive monetary
stimulus.
He has
set an implicit exchange range target of 90 yen to the dollar, instructing the
Bank of Japan to drive down the yen with mass purchases of foreign bonds along
lines pioneered by the Swiss.
Finance
minister Taro Aso brushed aside warnings that naked intervention would anger
trade partners and damage Japan's strategic alliance with the US. "Foreign
countries have no right to lecture us," he said, accusing the West of
failing to abide by a G20 pledge in 2009 to forgo competitive devaluations.
More
Sometimes too much to drink is barely enough.
Mark Twain.
At the Comex silver depositories Monday final figures were: Registered 40.30
Moz, Eligible 107.92 Moz, Total 148.20 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more
on the real China. Would you really want the Yuan to replace the Yankee dollar
at the core of our casino banksterism system?
Visa Issue in China Forces Out Times Reporter
By THE NEW YORK TIMES Published: December 31, 2012
BEIJING — A correspondent for The New
York Times was forced to leave mainland China on Monday after the authorities
declined to issue him a visa for 2013 by year’s end.
Chris Buckley, a 45-year-old Australian who has worked as a correspondent in China since 2000, rejoined The Times in September after working for Reuters. The Times applied for Mr. Buckley to be accredited to replace a correspondent who was reassigned, but the authorities did not act before Dec. 31, despite numerous requests. That forced Mr. Buckley, his partner and their daughter to fly to Hong Kong on Monday.
Normally, requests to transfer visas are processed in a matter of weeks or a couple of months.
The Times is also waiting for its new Beijing bureau chief, Philip P. Pan, to be accredited. Mr. Pan applied in March, but his visa has not been processed.
The visa troubles come amid government pressure on the foreign news media over investigations into the finances of senior Chinese leaders, a delicate subject. Corruption is widely reported in China, but top leaders are considered off limits.
On the day that The Times published a long investigation into the riches of the family of Prime Minister Wen Jiabao, both its English-language Web site and its new Chinese-language site were blocked within China, and they remain so.
In June, the authorities blocked the English-language site of Bloomberg News after it published a detailed investigation into the family riches of China’s new top leader, Xi Jinping. Chinese financial institutions say they have been instructed by officials not to buy Bloomberg’s computer terminals, a lucrative source of income for the company.
More
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."
F.A. von Hayek
The monthly
Coppock Indicators finished December:
DJIA: +100 Down. NASDAQ: +123 Unch. SP500: +129 Up.
All three indexes are giving different
signals, but with global monetisation the order of the day now that America has
pulled back from its fiscal cliff, equities and bullion are likely to be the
early winners in 2013.
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