Baltic Dry Index. 837 +17
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Monetary
policy is far too important to be left to central bankers".
Georges
Clemenceau.
Today we take a break from watching the slow death of
Euroland or the new civil war going on in the USA, today we take a long look at
East Asia. Stay long physical precious metals. Japan is about to bet the ranch
on triggering inflation.
The Bank of Japan meets today to adopt a new government
imposed inflation target of 2 percent. Japan’s new pro-inflation government is
launching this week the latest campaign in our new world order of currency wars.
In the race to the bottom in competitive devaluation, Japan’s new government is
determined to be the big winner. Japan’s exporters are determined to steal
global sales from the rest of the world. My guess is that the rest of the world,
led by America and the EU, will eventually retaliate if Japan’s policy
succeeds.
Below, the latest from East Asia this morning.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
Revolutionary Japan is suddenly the centre of world affairs
So Japan may not slide into genteel oblivion after all. To the surprise of the Japanese people, their country is smack in the middle of two riveting dramas that threaten to upturn the global strategic landscape in short order.
Newspapers
may soon have to re-open their Tokyo bureaux, shut down long ago when the
investment bubble burst and one Lost Decade stretched into another.
We all
watch with disbelief as China and Japan rattle sabres over the Senkaku/Diaoyu
islands, so like the seemingly minor events that drew Europe's alliance systems
into conflict from 1911 onwards.
Both
graduated to fighter jets last week: Japan sending in F-15s; China deploying
J-10s, and mobilising the East China Sea fleet for live ammo drills.
China's
purpose is clear. It is testing the US security umbrella, and Washington's
willingness to risk conflict to back Asian allies. There is a minority in
Beijing who think America is a busted flush, a mistake made repeatedly by
different powers over the last hundred years.
The
possibility that the world's three largest economies could come to blows -- as
feared by US defense secretary Leon Panetta -- is a sobering thought.
Against
this, Japan's economic policy revolution seems tame. Yet forces are being
unleashed that could have powerful effects through the world's asset markets
and trading system.
Premier
Shinzo Abe has vowed an all-out assault on deflation, going for broke on
multiple fronts with fiscal, monetary, and exchange stimulus.
This is a
near copy of the remarkable experiment in the early 1930s under Korekiyo
Takahasi, described by Ben Bernanke as the man who "brilliantly
rescued" his country from the Great Depression.
Takahasi
was the first of his era to tear up rule book completely. He took Japan off
gold in December 1931. He ran "Keynesian" budget deficits
deliberately, launching a New Deal blitz before Franklin Roosevelt took office.
He
compelled the Bank of Japan to monetise debt until the economy was back on its
feet. The bonds were later sold to banks to drain liquidity.
He
devalued the yen by 60pc against the dollar, and 40pc on a trade-weighted
basis. Japan's textile, machinery, and chemical exports swept Asia, ultimately
causing the British Empire and India to retaliate with Imperial Preference and
all that was to follow -- and there lies the rub, you might say.
Takahasi
was assassinated by army officers in 1936 when he tried to tighten by cutting
military costs. Policy degenerated. Japan later lurched into hyperinflation.
---- Leaks suggest that the BoJ will set an inflation target of 2pc this week, to be achieved by unlimited bond purchases.
The liquidity effects of this by the world's top external creditor could be large enough to leak into everything from New Zealand bonds, Brazilian equities, and Chelsea property, a sort of `carry trade' on steroids.
More
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9814218/Revolutionary-Japan-is-suddenly-the-centre-of-world-affairs.html
Abe’s Japanese Stimulus Seen Boosting Southeast Asia
By Karl Lester M. Yap - Jan 21, 2013 1:54 AM GMT
Japan’s drive to revive growth may boost Southeast Asian nations as rising
demand in the world’s No. 3 economy spurs orders and Japanese companies take
advantage of cheap funding to invest in the region. Indonesia, Thailand and Malaysia are identified by HSBC Holdings Plc and Credit Suisse Group AG to be among the biggest beneficiaries of Japanese monetary easing and a 10.3 trillion yen ($115 billion) stimulus plan by Prime Minister Shinzo Abe, who wrapped up a tour of Southeast Asia on Jan. 18. In contrast, South Korea may suffer as a weakening yen makes its rival’s automotive and electronics exports more competitive, say Credit Suisse and Australia & New Zealand Banking Group Ltd.
The wave of cheap funds “will drive Japanese companies and banks to raise investments and expand in Southeast Asia,” Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong, said in an interview. “This will spur asset prices, investment, consumption and could single handedly help these economies sustain high levels of growth in 2013.
More
Analysis: China upturn underscores need to rebalance economy
BEIJING |(Reuters) - China's recovery from its longest slowdown in growth since the global financial crisis is being driven by the two forces posing the biggest risks to the economy's increasingly urgent need to rebalance - investment and property.
The central government wants to raise consumption's share in the economy as the cornerstone effort to close one of the world's widest gaps between rich and poor and quell the discontent among those Chinese who feel they missed out on the country's blistering expansion of the past three decades.
The economy picked up in the fourth quarter as a spurt of infrastructure spending orchestrated by Beijing broke seven straight quarters of a slowdown. Consumption's contribution to growth fell in the fourth quarter for the third straight quarter even though retail sales were rising in each of the last three months.
Short-term policies to drive the recovery may well explain that because the biggest improvements were real estate-related, casting doubt on whether Xi Jinping and Li Keqiang - President- and Premier-in-waiting, respectively - can really rebalance the economy and lever its giant size to deliver widespread wealth.
"While the recent turn in the economy is real, the true test for China's new leadership is not whether they can manage the cycle, but whether they can put longer-term growth on a stronger footing," Janet Zhang, an analyst at consultancy, GK Dragonomics, wrote in a note to clients.
Dependence on investment spending - now at around 50 percent of GDP - for three decades of development has created huge industrial overcapacity in China, eroding economic efficiency despite some of the world's lowest labor costs and requiring increasing amounts of capital to deliver diminishing returns.
That worries investors and makes the International Monetary Fund fret about the risk of a capacity glut that could have global consequences.
More
China plans emergency measures to control Beijing air pollution
BEIJING |(Reuters) - Beijing is to unveil unprecedented new rules governing how China's capital reacts to hazardous air pollution, the official Xinhua news agency said, as deteriorating air quality threatens to become a rallying point for wider political dissatisfaction.
The rules will formalize previous ad-hoc measures, including shutting down factories, cutting back on burning coal and taking certain vehicle classes off the roads on days when pollution hits unacceptable levels.
Air quality in Beijing, on many days degrees of magnitude below minimum international health standards for breathability, is of increasing concern to China's leadership because it plays into popular resentment over political privilege and rising inequality in the world's second-largest economy.
Domestic media have run stories describing the expensive air purifiers government officials enjoy in their homes and offices, alongside reports of special organic farms so cadres need not risk suffering from recurring food safety scandals.
Smog blanketed most of the city from late Friday, prompting the government to warn people to reduce outdoor activities.
On Saturday, an index measuring PM2.5, or particulate matter with a diameter of 2.5 micrometers (PM2.5), rose as high as 400 in some parts in the city. A level above 300 is considered hazardous, while the World Health Organization recommends a daily level of no more than 20.
The reading was still lower than last weekend, when it hit a staggering 755.
More
We end for today in sad South Korea.
South Koreans face lonely deaths as Confucian traditions fade
SEOUL |(Reuters) - When South Korean widow Yoon Sook-hee, 62, died after a bout of pneumonia in mid-January, she joined a growing number of old people in this Asian country who die alone and was cremated only thanks to the charity of people who never knew her.
Once a country where filial duty and a strong Confucian tradition saw parents revered, modern day South Korea, with a population of 50 million, has grown economically richer, but family ties have fragmented. Nowadays 1.2 million elderly South Koreans, just over 20 percent of the elderly population, live - and increasingly die - alone.
Yoon's former husband, whom she divorced 40 years ago, relinquished responsibility after being contacted by the hospital and told of her death. Her only son was unreachable as he had long broken off all contact with his parents.
"There are many elderly people who are incredibly depressed because they don't have a place to put their bodies after they die," said Kang Bong-hee, representative of a federation of funeral directors that manages funerals free of charge for those who are unable to afford their own.
"They collect what little money they have and they come and ask us what to do (with their bodies) after they die."
Kang was one of the volunteers who put together a makeshift funeral for Yoon, with most of the funds coming out of his own pocket.
South Korea is ageing at the fastest pace of all industrial nations, with the proportion of elderly rising to 11.8 percent of the population in 2012, up from 7.2 percent in 2002 and just 3.8 percent in 1980.
A report from the Welfare Ministry published in May last year predicted the ratio would grow to 15.7 percent in 2020 and to 24.3 percent in 2030, thanks to a declining birthrate that has dropped from six per woman of childbearing age to just one.
More
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
At the Comex silver depositories Friday final figures were: Registered 37.97
Moz, Eligible 114.12 Moz, Total 152.09 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, an update on
the Lithium battery problems of Boeing’s grounded 787 Dreamliner. With
batteries that burn at 1000 degrees Centigrade, releasing oxygen in the process
fuelling the fire, both pilots and passengers will be reluctant to resume
flying on Dreamliners until absolutely assured that the problem is fixed.
Dreamliner probe widens after excess battery voltage ruled out
WASHINGTON |(Reuters) - U.S. safety investigators on Sunday ruled out excess voltage as the cause of a battery fire last month on a Boeing Co 787 Dreamliner jet operated by Japan Airlines Co (JAL) and said they were expanding the probe to look at the battery's charger and the jet's auxiliary power unit.
Last week, governments across the world grounded the Dreamliner while Boeing halted deliveries after a problem with a lithium-ion battery on a second 787 plane, flown by All Nippon Airways Co (ANA), forced the aircraft to make an emergency landing in western Japan.
A growing number of investigators and Boeing executives are working around the clock to determine what caused the two incidents which the U.S. Federal Aviation Administration says released flammable chemicals and could have sparked a fire in the plane's electrical compartment.
There are still no clear answers about the root cause of the battery failures, but the U.S. National Transportation Safety Board's statement eliminated one possible answer that had been raised by Japanese investigators.
It also underscored the complexity of investigating a battery system that includes manufacturers across the world, and may point to a design problem with the battery that could take longer to fix than swapping out a faulty batch of batteries.
"Examination of the flight recorder data from the JAL B-787 airplane indicates that the APU (auxiliary power unit) battery did not exceed its designed voltage of 32 volts," the NTSB said in a statement issued early Sunday.
On Friday, a Japanese safety official had told reporters that excessive electricity may have overheated the battery in the ANA-owned Dreamliner that was forced to make the emergency landing at Japan's Takamatsu airport last week.
More
GS Yuasa Searched After Boeing 787s Are Grounded
By Anna Mukai & Chris Cooper - Jan 21, 2013 6:59 AM GMT
Japan’s Transport Ministry and U.S.
regulators searched GS Yuasa Corp. (6674)’s headquarters in Kyoto in a widening
probe into battery faults that have grounded Boeing Co. (BA)’s 787 Dreamliner
fleet.
Officials entered GS Yuasa’s offices and the company will fully cooperate with the authorities, Tsutomu Nishijima, a spokesman for the lithium-ion battery supplier, said by phone today.
GS Yuasa’s batteries are the focal point of the investigation into the causes of a fire on a Japan Airlines Co. plane and an emergency landing by an All Nippon Airways Co. jet. Boeing said last week it won’t deliver more 787s until the FAA confirms the Dreamliner’s flammable lithium-ion batteries that are part of the electrical system supplied by Thales (HO) SA, are safe.
“We’re checking parts and the manufacturing process to ensure work was carried out appropriately,” said Shigeru Takano, a director for air transportation in the ministry’s Civil Aviation Bureau, told reporters in Tokyo today. “We’re not likely to finish today.”
Officials entered GS Yuasa’s offices and the company will fully cooperate with the authorities, Tsutomu Nishijima, a spokesman for the lithium-ion battery supplier, said by phone today.
GS Yuasa’s batteries are the focal point of the investigation into the causes of a fire on a Japan Airlines Co. plane and an emergency landing by an All Nippon Airways Co. jet. Boeing said last week it won’t deliver more 787s until the FAA confirms the Dreamliner’s flammable lithium-ion batteries that are part of the electrical system supplied by Thales (HO) SA, are safe.
“We’re checking parts and the manufacturing process to ensure work was carried out appropriately,” said Shigeru Takano, a director for air transportation in the ministry’s Civil Aviation Bureau, told reporters in Tokyo today. “We’re not likely to finish today.”
The search started at 11 am and the ministry sent one official, while the FAA sent two people to Kyoto, said Takano.
More
“To invent, you need a good imagination and a pile of junk.”
Thomas Alva Edison.
The monthly Coppock Indicators finished December:
DJIA: +100 Down. NASDAQ: +123 Unch. SP500: +129 Up.
All three indexes are giving different
signals. A time for caution.
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