Baltic Dry Index. 738 -09
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“Our future begins on
January 1 1999. The euro is Europe’s key to the 21st century. The era of solo
national fiscal and economic policy is over.”
German Chancellor Gerhard Schröder, December 31, 1998
After the debacle of the fiat euro over the last
few years, China has lost confidence in the United States of Europe, writes
Ambrose Evans-Pritchard of the UK’s Telegraph. “The dollar’s global dominance will continue,” said
Jin Zhongxia, head of the central bank’s research institute. The American
century is back on, apparently.
While The Telegraph might be willing to swallow the new China line at
face value, to me it’s more likely to be just another shot in our new currency
war. If the new G-20 line ex Japan and the UK, is not to deliberately devalue
their currency, the next best thing is to talk up the other fellow’s currency
effectively weakening one’s own. America for now, it seems is going to have to
get used to a flood of cheap imports and a dearth of exports. I doubt that this
makes for an American decade, let alone a century, no matter how low the price
of natural gas gets driven down to by aggressive fracking.
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel
China loves the US dollar again as America roars back
China’s central bank has radically revised its view of US economic and strategic power, predicting that the dollar will remain the world’s paramount reserve currency for decades to come.
Jin
Zhongxia, head of the central bank’s research institute, said America’s energy
revolution and export revival had shaken up the global landscape and would lead
to a stronger dollar over time. “The dollar’s global dominance will continue,”
he said.
Dr Jin
said the world was moving to a “1+4” system, with the greenback serving as the
anchor of global payments, supplemented by “four smaller reserve currencies” –
the euro, sterling, yen and yuan.
“Compared
with the euro area, the dollar zone has much greater resilience to shocks. The
debt crisis in the euro area has demonstrated the structural weakness of this
currency,” he wrote in a paper for the February bulletin of the Official
Monetary and Financial Institutions Forum.
The
comments suggest a profound shift in thinking about the US since the financial
crisis five years ago, when premier Wen Jiabao questioned if Chinese holdings
of US Treasuries were “safe”, and the central bank issued a paper calling for a
“global currency” run by the International Monetary Fund.
The
prevailing view in Beijing was that America had been toppled as a great power
and was crippled by debt.
China has
since begun to face its own problems as it grapples with the hangover of $14
trillion (£9 trillion) of credit growth since 2009 and surging wage costs.
The
advantage is shifting back to the US. A so-called “manufacturing renaissance”
is under way as US companies bring home plants to exploit cheap shale gas and
lower transport costs.
A report
by Citigroup said the explosive growth of US oil and gas output over the past
year had exceeded the “wildest dreams of energy analysts”. The US has halved
its oil imports since 2005 and is moving “rapidly towards self-sufficiency”,
turning global geo-politics on its head.
Citigroup
said lower energy imports and the revival of chemical industries would cut the
US current account deficit by three quarters, eliminating a key cause of dollar
weakness.
More
But….
China January FDI falls, reflects global firms' caution, cheaper rivals
BEIJING |(Reuters) - China's foreign direct investment inflows fell at their fastest rate in more than three years in January, highlighting the challenges it faces competing for funds with cheaper rivals in a sluggish global growth environment.
China Commerce Ministry data on Wednesday showed the world's second-biggest economy drew in $9.3 billion of foreign direct investment (FDI) in January, down 7.3 percent on a year ago.
The fall was the steepest in year-to-date inflows since a 9.9 percent drop in November 2009, and it was the worst January performance in four years.
January
FDI was down from December's $11.7 billion, with inflows from key Asian
economies and the United States down in the latest period, reflecting what
analysts say are foreign perceptions of a decline in China's near term growth
prospects.
Zhang
Zhiwei, chief China economist at Nomura in Hong Kong, said the continuing fall
in FDI - the longest consecutive run since the global financial crisis - was
indicative of the rising competitive challenges facing the world's biggest
manufacturer of exports.
More
Below, veteran China watcher Andy Xie, issues yet
another warning on China. China’s game has changed and now the property bubble
dead cat bounce is about to reverse. My take, with the Chinese New Year
celebrations coming to an end it might be a good time to step up the spat with
Japan over the Daioyu Islands.
Feb. 19, 2013, 11:37 p.m. EST
China waiting for a crisis: Andy Xie
Government must cut spending or wake up to a messy reckoning
BEIJING (Caixin Online) — Bank loans and
money supply rose sharply in January. The timing of the Spring Festival may
have distorted the data. Still, there are signs that many local governments
with new leaders want to try an old trick, pushing fixed-asset investment (FAI)
to create gross domestic product and fiscal revenue.
This would turn bank loans
into GDP and fiscal revenue.
Local
governments are already heavily in debt. Pushing FAI would keep them liquid
through new loans. It is essentially a pyramid scheme and can go on as long as
the banks are willing and able to lend. But constraints have appeared.
Joining
the World Trade Organization (WTO) and demographic dividends have sustained
China’s FAI push for so long.
When an
economy has underemployed factors of production like labor and natural
resources, FAI, even though it isn’t profitable, can generate a positive return
for the economy as a whole.
The
increased income leads to more bank deposits that can sustain loans to
loss-making FAI. Over the past two decades, this has been the case for China.
After
China joined the World Trade Organization, foreign direct investment rushed in
to take advantage of its labor surplus. It has built up the country’s export
sector to the biggest in the world.
The
export success has supported bank loans through increasing bank deposits within
and supporting the exchange rate value without. The loans could support more
FAI that would help expand export capacity. It is a virtuous cycle as long as
the factors of production are still under-utilized and the export market
healthy.
The
virtuous cycle has come to a stop in the past few years.
----
In the
past three months, the property market has recovered in tier-one cities. It has
led to spreading market optimism that the bubble is intact. I disagree. This is
just a bounce in a multiyear slide.
My view
is based on the constraints to money supply growth. Any acceleration in
monetary growth, as is the case now, is short-lived. The inflation and
devaluation pressure will trigger money to flow offshore.
Recent
corruption cases exposed on the Internet suggest that the vast amount of
corruption income is mainly in the property market. This explains the size of
the bubble.
While the
price-to-income ratio is similar to what Hong Kong experienced in the mid-1990s
and Japan in the 1980s, China’s market volume is unprecedented. The bubble
could be so big due to the tendency for money supply to become corruption
income and the latter to become property demand.
More
http://www.marketwatch.com/story/china-waiting-for-a-crisis-andy-xie-2013-02-19
In Europe, home of the horsemeat burger, abandon hope all ye who opt for the life of an austerity serf here. Will Chancellor Merkel’s hated Berlusconi return to power to thwart her re-election in September. Will Italy’s next government form a rock solid anti-austerity front with France and the collapsed Iberians? Will European “beef” sicken the Euroland economy. Is there any real beef in any manufactured beef product in Europe? The hungry unemployed masses in Greece probably no longer care.
“We must go back to teach Europeans to love Europe.”
Jean-Claude Juncker. Luxembourg Prime Minister and president of the Euro Group of Finance Ministers. Confessed liar.Anti-austerity strike brings Greece to a standstill
ATHENS |(Reuters) - Greek workers walked off the job on Wednesday in a nationwide protest against wage cuts and high taxes, keeping ferries docked in ports, shutting state schools and leaving hospitals working with emergency staff.
Greece's two biggest labor unions brought much of the near-bankrupt country to a standstill during a 24-hour strike over the cuts, which they say only deepen the plight of a people struggling to get through the country's worst peacetime downturn.
Representing about 2.5 million workers, the unions have gone on strike repeatedly since Europe's debt crisis erupted in late 2009, testing the government's will to implement necessary reforms in the face of growing public anger.
"The (strike) is our answer to the dead-end policies that have squeezed the life out of workers, impoverished society and plunged the economy into recession and crisis," said the private sector union GSEE, which is organizing the walkout with its public sector sister union ADEDY.
"Our struggle will continue for as long as these policies are implemented," it said.
---- Strikes have picked up in recent weeks, underscoring Greeks' anger at record high unemployment and poverty levels. A one-day visit by French President Francois Hollande in Athens on Tuesday went largely uncovered as Greek journalists were on strike.
In northern and central Greece, farmers have been protesting at high production costs and fuel prices for nearly a month, occasionally blocking the country's main north-south highway.
Most business and public sector activity came to a halt during Wednesday's strike, with school teachers, train and bus employees and bankers among various groups joining the walkout.
---- "We are on our knees. The country has been destroyed, the young people have been destroyed," said Nikos Papageorgiou, 56, a civil servant.
"I'm
outraged with the Europeans and our politicians as well. They should all go to
jail."
More
http://www.reuters.com/article/2013/02/20/us-greece-strike-idUSBRE91I1D520130220
Insight: Rome will burn, regardless of Italian election result
ROME |(Reuters) - Regardless of who wins next weekend's parliamentary election, Italy's long economic decline is likely to continue because the next government won't be strong enough to pursue the tough reforms needed to make its economy competitive again.
Bankers, diplomats and industrialists in Rome and Milan despair at how Italians are shifting allegiances ahead of the February 24-25 vote to favor anti-establishment upstarts and show disgust with the established parties.
That makes it more likely that no bloc will have the political strength to tackle Italy's deep-rooted economic crisis, which has made it Europe's most sluggish large economy for the past two decades.
Final opinion polls predict that the vote will deliver a working majority in both houses for a centre-left coalition governing in alliance with technocrat former prime minister Mario Monti. Political risk consultancy Eurasia assigns this scenario a 50-60 percent probability.
But Italy's election for both chambers of parliament has the potential to tip the euro zone back into instability if the outcome does not produce that result.
---- But observers in Italy are increasingly nervous that the rosy election scenario favored by investors may not work out.
A jaded electorate, angry about political corruption, economic mismanagement and a national crisis that has impoverished a once-wealthy member of the G7 club of rich nations, could produce a surprise.
---- Monti, dubbed "Rigor Montis" by one opponent for his austerity policies which critics say hurt growth, is stuck in fourth place and slipping. Detractors say he comes across poorly on the hustings and has been hurt because he formed an election alliance with two discredited centrist politicians who are emblematic of the traditional politics which Monti disavows.
More
For now complacency rules in Euroland, with
everyone expecting the Fairy Godmother to show up, and make Italians vote in
the government that the complacent bond and stock markets expect. It’s all well
and good if it happens, but if it doesn’t there could be something of an
almighty great European crash next week as Italy and Cyprus blow up all the
Davos Spring complacency. Worse, if it happens it will be happening just as
America gets back to its fiscal cliff light problem. Stay long physical gold.
With the continued build up in Comex silver inventories, now standing at 161.51
million troy ounces, I suspect that another silver manipulation is underway,
and in silver I can only suggest high risk investors consider synthetic double
options for mid year.
Italy is not technically part of the Third World, but no one has told the Italians.
P. J. O’Rourke
At the Comex silver depositories Tuesday final figures were: Registered 38.12
Moz, Eligible 123.39 Moz, Total 161.51 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, what a
difference a decade makes. To no one’s surprise the modern way of living might
be chemically killing us.
Everyday chemicals linked to diseases, warns World Health Organisation
Common chemicals found in every home may be causing cancer, asthma, birth defects and reduced fertility, the World Health Organisation has warned.
In a
landmark report, the WHO warned “synthetic chemicals” had “serious
implications” for human health.
The
global health watchdog suggested so-called “gender-bending” compounds found in
toys, PVC flooring and even credit cards should be banned in order to protect
future generations.
The study
said that more research was needed to fully understand the links between
endocrine disrupting chemicals (EDCs) – found in many household and industrial
products – and “specific diseases and disorders”.
It found
links between exposure to EDCs and health issues such as testicular problems,
breast, prostate and thyroid cancer, developmental effects on the nervous
system in children and attention deficit hyperactivity in children.
The UN
agency said the study, titled State of the Science of Endocrine Disrupting
Chemicals, was the most “comprehensive” report on EDCs to date because it has
evaluated several chemicals and related evidence rather than focusing on just
one.
The
report, published following more than two years of research, admitted it was
“reasonable to suspect” substances called phthalates – often found in
pesticides bisphenol A and other PCBs – harmed female fertility and increased
childhood illnesses such as leukaemia.
It also
flagged concerns of bisphenol A, a man-made compound found in a host of daily
items such as tin cans and sunglasses, which is thought to interfere with the
natural hormones that influence a person’s development and growth.
According
to the WHO, there was “very strong evidence” in animals they can interfere with
thyroid hormones, which could cause brain damage, decrease intelligence,
attention deficit hyperactivity disorder and autism.
In
prostate cancer, “significant evidence” existed that suggested a link with
agricultural pesticides, the team of international medical experts found. It
also said wildlife was at risk.
“The diverse
systems affected by endocrine-disrupting chemicals likely include all hormonal
systems and range from those controlling development and function of
reproductive organs to the tissues and organs regulating metabolism and
satiety,” said the report.
---- The same report
published a decade ago, found only “weak evidence” that the chemicals harmed
human health.
More
The monthly Coppock Indicators finished January:
DJIA: +106 Up. NASDAQ: +126 Up. SP500: +140 Up. All three indexes are giving the same signal,
up.
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