Baltic Dry Index. 834 +14
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“How long will it be necessary to pay City men so entirely out
of proportion to what other servants of society commonly receive for performing
social services not less useful or difficult?”
John Maynard Keynes
Stay long physical gold and silver. When the next
Lehman hits US banks alone will crater almost half a trillion dollars says the
Fed. That’s trillion with a “T,” as in 490,000,000,000 paper pictures of George
Washington. Of course the Fed will monetise it, socialising the loss onto the
hapless US taxpayer, turning them into the new world’s Greeks overnight. It’s a
funny old, scary world, on the casino derivatives gambling world, of the Great
Nixonian Error of fiat money.
“Banks "have continued to
improve their ability to withstand an extremely adverse hypothetical economic
scenario and are collectively in a much stronger capital position than before
the financial crisis," the Fed said last night.”
If you believe that, have I got a bridge to sell
you in New York. You only have to look
at the Fed’s key economic disaster, zero interest rate to see that the Fed
doesn’t believe that either. On a Zero Interest Rate Policy, the Fed’s internal
numbers must suggest that the banks are still bust and unable to operate in a
normal world. Fallen guru Greenspan broke the whole Nixonian fiat money system,
and the fix he put in place after the great stock market crash of 1987, only
led deep into moral hazard and the great bust of 2007-2009. The crash of
2007-2009 is a mere walk in the park compared to the next bust which will
result in the revulsion of the fiat currencies.
“I
find economics increasingly satisfactory, and I think I am rather good at it. I
want to manage a railroad or organise a Trust or at least swindle the investing
public.”
John
Maynard Keynes, mentor to the Madoff Brothers.
Fed 'stress test': banks would lose $460bn if crisis struck again
America's biggest banks would face losses of almost half a trillion dollars should a deep financial crisis and recession hit the US again, regulators said.
The
losses of $462bn (£308bn) for the country's biggest 18 banks were projected by
the Federal Reserve's 'stress test', an annual exercise the central bank now
conducts to monitor the resilience of the financial system.
The
losses would be racked up under the Fed's most extreme scenario in which
unemployment climbs to 12pc, house prices tumble 21pc and stock markets halve
in value over the next two years. Overall, the Fed said that just one of the
banks it tested, Ally Financial, failed to maintain a 5pc Tier 1 common equity
ratio - a key measure of a lender's health - under the most extreme scenario.
Banks
"have continued to improve their ability to withstand an extremely adverse
hypothetical economic scenario and are collectively in a much stronger capital
position than before the financial crisis," the Fed said last night.
However,
the tests also showed that both Goldman Sachs and Morgan Stanley's key ratio
was the weakest of all the banks after Ally Financial, which is still owned by
the US taxpayer. Goldman's ratio dropped to 5.8pc, with the investment bank
facing a loss of $20.5bn under the most extreme scenario. Morgan Stanley's
ratio slid to 5.7pc, leaving it with a loss of $19.4bn under the same scenario,
while the Bank of New York Mellon had the highest Tier 1 equity ratio of
13.2pc.
Citigroup,
which failed the stress test last year, had a much higher ratio of 8.3pc.
More
Nor need the next Lehman triggering event
necessarily happen in America. Unlike the Great Greenspan-Bernanke Crash of
2007-2009, which was entirely a made in America product peddled to willing
dupes all around the planet, the next Lehman is highly likely to be a made in
Asia or Europe affair. Unfortunately it doesn’t really matter. Our fiat
currency, derivatives gambling world, is now so far inter-linked and out of
anyone’s control, that it’s a hair trigger, nuclear event when it happens.
Non-entity but bankrupt Cyprus, now threatens to bring down the whole European
Monetary Union if it isn’t bailed out by in essence Germany. An uncontrolled
bust of the monetary union would certainly be the next Lehman. Stay long physical
gold and silver against the certainty that the derivatives gambling hair
trigger will get tripped, and we all find ourselves to be the equivalent of duped M F Global clients whose “segregated funds”
were all hypothecated and gambled away.
The
best way to destroy the capitalist system is to debauch the currency.
Richard
Nixon, with apologies to Vladimir Lenin.
March 7, 2013, 9:56 p.m. EST
China central-bank chief warns on money supply
BEIJING--The
high ratio of money supply to gross domestic product in China means risks are
excessively concentrated in the banking sector, according to a top official.
This
demonstrates the need for financial reform, People's Bank of China Gov. Zhou
Xiaochuan was quoted as saying in the China Business News on Friday.
The
comparatively high level of M2 is the result of China's high savings rate, Mr.
Zhou said in an interview with the newspaper. Other East Asian countries with
high savings rates also have high ratios of M2 to GDP, he said in the report.
M2 is China's broadest measure of money supply and includes various kinds of
bank deposits.
But at
the same time the M2 level shows that China remains reliant on "indirect
finance"--bank lending as opposed to forms of "direct finance"
such as equity and bond issuance, Mr. Zhou said in the report.
China's
ratio of M2 to GDP rose to 188% of GDP last year--up from 154% in 2002,
according to the report.
More
In the never ending comic opera crisis of Euroland,
Italy is slowly coalescing around a strategy of blackmailing Chancellor Merkel
or leaving the monetary union. A tough choice for an anything-but-iron Chancellor
facing an election in September. Just
wait until Italy tag teams with France and Spain.
"Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket."
Michael Belkin
Italy’s Bersani on collision course with Germany and ECB over austerity
Italy’s Pier Luigi Bersani vowed to break free of the country’s austerity regime as he laid out plans for a centre-Left government, risking a serious clash with Germany and the European Central Bank.
“We must
leave the austerity cage,” he told leaders of his Democrat Party (Pd),
responding to Italy’s electoral earthquake by tearing up his pre-election
programme.
“A change
of course is absolutely necessary given that five years of austerity and
attacks on workers have pushed up public debt levels across Europe,” he said.
“The
vicious circle between belt-tightening and recession is putting representative
government at risk and making it impossible to govern. The immediate emergency
is the real economy and joblessness,” he said.
The
pledge puts Mr Bersani on a collision course with the ECB, which is constrained
from helping to shore up the Italian bond market unless Rome complies with
Europe’s austerity agenda.
“Italian
voters may have effectively voted away the ECB safety net,” said Christian
Schulz from Berenberg Bank. The central bank cannot activate its bond purchase
programme (OMT) unless Italy requests a rescue from the EMU bail-out fund, and
that in turn requires a vote in Germany’s Bundestag.
“The ECB
cannot – and will not want to – do anything to help Italy after the
inconclusive election result, even if borrowing costs spiral out of control,”
he said.
Mr Bersani’s
Democrats (Pd) and its allies control the lower house but failed to win the
senate. He is hoping for tacit support on a law-by-law basis from the Five Star
Movement of comedian Beppe Grillo.
Mr Grillo
has responded with a volley of anathemas, calling Mr Bersani a relic from a
defunct political order that must be swept away by civic revolution. Yet many
of his 163 senators and deputies say the movement should seek common ground
with the Pd.
Mr
Bersani said Italy should mobilize its EU voting weight to push for an EU-wide
change of course. He has natural allies in Paris.
French
finance minister Pierre Moscovici warned EMU colleagues on Monday that current
policies “risk a loss of social and political confidence across Europe. We must
not pile austerity on top of recession”.
Mr
Moscovici said France would need an extra year to meet its deficit target of
3pc of GDP and called for action to tackle the root of the crisis with an
EMU-wide growth strategy.
French
officials are deeply alarmed by the relentless upward rise in France’s
unemployment rate to 10.6pc, or 26.9pc for youth. President Francois Hollande’s
popularity ratings have crashed from 55pc to 30pc since his election in May,
the fastest decline ever recorded for a French leader.
More
Italian Banks’ Bad Loans Seen Rising as Gridlock Hampers Growth
By Sonia Sirletti & Fabio Benedetti-Valentini
- Mar 7, 2013 11:01 PM GMT
UniCredit
SpA (UCG) and Intesa Sanpaolo SpA (ISP), Italy’s biggest
banks, may struggle to boost profit as political gridlock threatens to increase
borrowing costs, worsen an economic contraction and drive up bad loans. The Italian benchmark 10-year bond yield climbed as much as 0.44 percentage point and an index of the country’s financial shares dropped as much as 11 percent after last week’s general election left Italy’s largest political parties groping to form a government amid a four-way parliamentary split.
The disarray may impede economic growth as the longest recession in 20 years and tougher rules from regulators, including the Bank of Italy, are already forcing banks to set aside more money against doubtful loans, said Jacopo Ceccatelli, a partner at JC & Associati SIM, a Milan-based financial advisory firm. Banco Popolare SC (BP), Italy’s No. 4 bank by assets, said March 4 it will report a bigger loss for 2012 than analysts estimated because of higher losses at its consumer credit unit.
---- UniCredit may post a fourth-quarter net loss of 173 million euros ($227 million) when the Milan-based bank publishes results on March 15, according to the average of 25 analysts surveyed by the bank, after a profit of 114 million euros in the year- earlier period. Loan-loss provisions are seen rising 48 percent to 2.2 billion euros, the survey found.
Intesa, also based in Milan, will probably report a quarterly loss of 70.3 million euros on March 12, according to a Bloomberg News survey of seven analysts. The lender posted a 10.1 billion-euro loss in the final three months of 2011, after writing down goodwill on acquisitions.
---- Italian corporate and household non-performing loans rose to a record in December, reaching 125 billion euros, according to data from the Italian Banking Association. Banks’ gross non- performing loans as a proportion of total lending increased to 6.3 percent from 5.4 percent a year earlier.
France’s BNP Paribas SA (BNP), which owns a retail bank and consumer credit unit in Italy, and Credit Agricole SA (ACA) reported higher bad-loan provisions from their Italian branch networks in the fourth quarter.
More
We end for the week with better news for the UK.
Two very canny Yanks are betting on future inflation in the UK. Betting on the
incoming Canadian head of the BOE to do what Great Britain really does best –
inflate. Who am I to disagree. Add to physical gold and silver. QE forever, to
infinity and beyond, is the new bet.
"In the long run, the gold price has to go up in relation to paper money. There is no other way. To what price, that depends on the scale of the inflation - and we know that inflation will continue."
Nicholas L. Deak
Flowers Joins Ross Rivaling U.K. Banks for Home Loans
By Jeff St.Onge - Mar 8, 2013 12:00 AM GMT
U.S. private-equity investors Wilbur Ross
and J. Christopher Flowers, who’ve made billions of dollars turning around
industries from steel mills to Japanese banks, are lining up to finance British
homebuyers as the country’s biggest banks pull back. Five years after mortgage lender Northern Rock Plc collapsed, loan approvals are about half what they were in the boom decade that ended in 2007 and the government is pressing for more competition. Even Tesco Plc (TSCO), the nation’s biggest retailer, is stepping in to help fill a funding gap spawned by the global credit crisis and reduced bank lending as the housing market show signs of improvement after nine months of declines, according to Hometrack Ltd. data this week.
“They’re betting the market has bottomed out and there will be a recovery,” said Ray Boulger, senior technical manager at mortgage broker John Charcol Ltd. in London.
Flowers’s buyout firm, JC Flowers & Co., set up a lender offering private-equity-style terms, allowing homeowners to forgo monthly payments in exchange for sharing the profits when their home is sold. Ross, who built his fortune buying bankrupt steel, coal and textile companies, invested 350 million pounds ($526 million) for a 45 percent stake in Richard Branson’s Virgin Money Ltd.
Both investors’ firms are among bidders for 316 branches that Royal Bank of Scotland Group Plc is selling as a result of its government rescue.
---- Ross, 75, said by e-mail that “in
one recent month Virgin made more than one-third of all the single-family
mortgage loans in the entire U.K. market.”
More
Lenin
is said to have declared that the best way to destroy the capitalist system was
to debauch the currency. By a continuing process of inflation, governments can
confiscate, secretly and unobserved, an important part of the wealth of their
citizens. By this method they not only confiscate, but they confiscate
arbitrarily; and, while the process impoverishes many, it actually enriches
some. The sight of this arbitrary rearrangement of riches strikes not only at
security but [also] at confidence in the equity of the existing distribution of
wealth. Those to whom the system brings windfalls, beyond their deserts and
even beyond their expectations or desires, become "profiteers," who
are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the
proletariat. As the inflation proceeds and the real value of the currency
fluctuates wildly from month to month, all permanent relations between debtors
and creditors, which form the ultimate foundation of capitalism, become so
utterly disordered as to be almost meaningless; and the process of
wealth-getting degenerates into a gamble and a lottery. Lenin was certainly
right. There is no subtler, no surer means of overturning the existing basis of
society than to debauch the currency. The process engages all the hidden forces
of economic law on the side of destruction, and does it in a manner which not
one man in a million is able to diagnose.
John Maynard Keynes
At the Comex silver depositories Thursday final figures were: Registered 42.09
Moz, Eligible 120.85 Moz, Total 162.94 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
In the week where
the dangerous loony left is busy pouring out tributes to the man who wrecked
Venezuela and squandered the wealth of future generations, we will call a spade
for what it is. Hugo Chavez may have been Castro-lite without all the murders
and blood on the Castro brother hands, but at heart he was a communist fellow
traveller, an “enabeller” to use the words of George Bush the less.
“How can I accept the Communist doctrine, which sets up as its
bible, above and beyond criticism, an obsolete textbook which I know not only
to be scientifically erroneous but without interest or application to the
modern world? How can I adopt a creed which, preferring the mud to the fish,
exalts the boorish proletariat above the bourgeoisie and the intelligentsia,
who with all their faults, are the quality of life and surely carry the seeds
of all human achievement? Even if we need a religion, how can we find it in the
turbid rubbish of the red bookshop? It is hard for an educated, decent,
intelligent son of Western Europe to find his ideals here, unless he has first
suffered some strange and horrid process of conversion which has changed all
his values.”
John Maynard Keynes
Another weekend, and be it ever so slowly, spring is coming to the
northern hemisphere. Our usual UK seasonal rebound is about to begin from the
arrival of Easter, the urge to spring clean, plus the urge to house hunt for
those fortunate enough and able to take advantage of five years of retrenched
housing prices. Have a great weekend everyone.
The monthly Coppock Indicators finished February:
DJIA: +111 Up. NASDAQ: +129 Up. SP500: +148 Up. All three indexes are giving the same signal since
January, up, but surprisingly February’s
move in all three was weak, suggesting that the indicators are topping
out. Will sequestration turn March into a
down month? So far so good.
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