Baltic Dry Index. 866 -11
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
In a fractionally reserved
banking system, there are occasions when being the first to panic can be
decidedly advantageous.
Cyprus is not a
template, said fallen superstar central bankster Mario Draghi yesterday, though
many in the room noticed his nose growing larger with every utterance. It now
turns out this form of deposit theft has been official G-20 policy since the
bankster’s central bank, the Bank for International Settlements, proposed it in
October 2011 and the G-20 adopted it with little fanfare the following month.
If you’re banking with a G-20 bank, whether within or above the supposed bank
deposit guarantee, your hard earned deposits are now subject to legalised theft
the moment some jumped up embezzler says theft of your money is needed for some
alleged greater good. Stay long precious
metals and keep a goodish supply of ready cash in the mattress. Before the
madness of the Great Nixonian Error of fiat money ends, thanks to a quadrillion
dollars of derivatives gambling contracts, every country in the G-20 will have
resorted to bank deposit theft. Even then that will not be enough to cover the
bank losses that arise in the next bust. Nixon broke the monetary system back
in 1971, effectively putting the west on the same fiat system as the old USSR.
Forty years on,
thanks to the financialisation of the west’s economies, casino capitalism has
crashed and is on central bankster life support. But now nations are failing as
a direct result. With Japan launching a new beggar thy neighbour currency war
yesterday, against among others Europe’s paymaster Germany, Euroland is now
doomed to eventual failure. When the next bank starts to hit trouble anywhere
in the G-20, depositors large and small will race to try to get out their hard
earned money.
"Liquidation
sometimes is orderly, but more frequently degenerates into panic as the realization
spreads that there is only so much money, not enough to enable everyone to get out
before the bail-in."
With
apologies to Charles P. Kindleberger, author of Manias, Panics and Crashes.
Danger in bank accounts
By
Alasdair Macleod, on 3 April 13
It has
been obvious for some time that banks in many jurisdictions are insolvent and
that they are simply too big for governments to rescue. Furthermore, while some
governments feel they have a reasonable chance of muddling through, they are
all aware that a crisis in one major nation, such as Spain or Italy would most
probably lead to a chain of defaults beyond anyone’s control. It should come as
no surprise that central bankers have been considering how to deal with this
problem and that they have resolved a solution.
That
solution, as we saw clumsily applied in Cyprus, is for central banks to use
creditors’ funds to rescue banks in difficulty, which includes uninsured
deposits, instead of taxpayers’ money. What this means is that if you have
deposits greater than the level guaranteed by your government, the unguaranteed
portion (in the eurozone, over €100,000) is free to be used to recapitalise the
bank.
This is a
major departure from past assumptions, that central banks would do their utmost
to rescue banks without raiding any deposits. As many ordinary savers in Cyprus
found to their cost, this is no longer true. The new approach has been agreed
at the highest levels, at the Bank for International Settlements, the central
bankers’ central bank. It has been a topic under consideration since the
publication by the Financial Stability Board (a BIS committee) of a paper, Key Attributes of Effective
Resolution Regimes for Financial Institutions in October 2011, which was
endorsed at the Cannes G20 summit the following month. This was followed by a
consultative document in November 2012, Recovery and Resolution Planning:
Making the Key Attributes Requirements Operational. In this latter document it is
stated in the introduction that “Reforms are now underway in many jurisdictions
to align national resolution frameworks more closely with the Key
Attributes (i.e. the October 2011 paper). In other words any changes
to law have been or are being made.
This
confirms that G20 members are ensuring that they can legally override the
rights of creditors, including uninsured depositors. This outcome is not
difficult to achieve when the alternative in almost all cases of bank failure
is for uninsured deposits to be wiped out completely.
---- There are however three broad classes of deposit to consider:
- Insured deposits, guaranteed by a government or government agency. These protect smaller deposits up to a limit set by government;
- Uninsured deposits owed to non-monetary and non-financial institutions (non-MFIs); and
- Wholesale deposits owed to monetary and financial institutions (MFIs).
The BIS
proposals being enacted throughout the G20 allow for different treatment for
these deposit classes in a bank rescue. The government or its agency is going
to have to pay out for insured deposits anyway, so it makes sense for them to
remain untouched. Wholesale deposits, which are not the focus of the BIS
proposal, are unlikely to be touched except in the case of very small bank
failures, because of the risks spreading to other banks and financial
institutions. This leaves the full burden of depositor contributions to a bank
rescue falling on the shoulders of uninsured non-MFIs. In other words any
deposit in excess of the insured amount owned by individuals, companies,
trusts, pension funds and other savings vehicles, and any segregated client
accounts operated by business lawyers and brokers acting as agents for its
customers is likely to be raided where there is a risk of bank failure. Any
business receiving payments into its bank account in excess of the insured
limit is similarly at risk.
Anyone in
this position is simply being negligent if he or she assumes deposits are safe.
The smaller a bank’s uninsured non-MFI depositor base is relative to the other
depositor classes the greater the amount these depositors will lose in a bank
rescue. Therefore non-insured deposits are particularly vulnerable in retail
and high street banks targeting small savers, such as mortgage and savings
banks, as well as banks with a large element of wholesale funding.
More
In European news, the band plays on as the great SS
Europa flounders. In the race to the bottom Europe wins, unless North Korea
starts a suicidal, going out of business war in the east. Europe shouldn’t count
on that Hail Mary ending.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Numbness gives way to anger in Cyprus over bailout
NICOSIA |(Reuters) - Public shock in Cyprus about the tough terms of an international bailout is turning into anger as millions of euros remain locked in the country's banks.
Cypriots were stunned by last month's collapse of its second-biggest lender, Popular Bank, and a decision to slap losses on large deposits at the Bank of Cyprus in return for financial aid from the European Union and IMF.
They are now demanding answers after allegations earlier this week that a company connected to the family of President Nicos Anastasiades shifted money out of one of the distressed lenders just before the banking system was effectively locked down on March 15.
Anger and impatience is rising as the results of an official inquiry into what caused the crisis, and exactly who knew what and when, is unlikely to be ready for weeks.
Banks reopened last week but Cypriots can withdraw only 300 euros ($390) a day under a range of controls imposed to prevent panicked residents from emptying their accounts or moving all their savings abroad. Anxiety is being deepened by confusion over how the hastily-imposed rules should operate.
Hundreds of bank workers protested outside parliament on Thursday, worried that they could lose much of their pension savings under the terms of the bailout deal. This stipulates that some depositors have to bear part of the rescue's cost if their accounts hold more than 100,000 euros (84,340 pounds).
----One company in Nicosia which has several offices abroad has been caught in limbo as the central bank now has to approve transfers out of Cyprus over 25,000 euros. As part of the company's payroll is managed from the island, payments to employees abroad are being delayed because of the vetting process and currency controls to avoid a bank run.
"We
have held clients' money for certain pre-paid jobs, and we have a cash flow
issue now," the owner of the services company said, on condition of
anonymity. "We have to make payments of more than 1 million euros on
behalf of our clients, and now we can only use 100,000."
Morehttp://uk.reuters.com/article/2013/04/04/uk-cyprus-bailout-idUKBRE93310W20130404
German March Car Sales Drop 17% on Europe Economy Concern
By Dorothee Tschampa - Apr 3, 2013 2:41 PM GMT
German new car sales fell the most in almost 2 1/2 years last month as
renewed skepticism over the handling of the sovereign-debt crisis in Europe discouraged consumers
from making large purchases. Registrations in March dropped 17 percent from a year earlier to 281,184 autos, the German Federal Motor Vehicle Office, or KBA, said today in a statement. The drop was the biggest since October 2010, a spokeswoman for the Flensburg- based KBA said in an e-mail. First-quarter sales fell 13 percent to 673,957 vehicles.
German unemployment rose while business confidence and an index in consumers’ willingness to buy fell in March as a botched bank bailout in Cyprus increased concerns the euro region’s recovery will falter. The economy of the 17 countries using the euro has contracted for five consecutive quarters, and Germany’s gross domestic product shrank in the final three months of 2012.
---- PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, posted the steepest drop in German sales last month among the region’s top five auto manufacturers, with a 41 percent plunge at the Peugeot brand and a 36 percent slide at the Citroen marque, according to the KBA figures.
German sales by the namesake division of Volkswagen AG (VOW), Europe’s biggest carmaker, fell 21 percent, and its Audi luxury brand posted a 9.7 percent decline, the KBA said. Registrations gained at VW’s Seat and Skoda divisions
More
We end with yet more reason to think that the great
Bilderberger EUSSR project is
doomed to fail. As austerity bites and morphs
into a death spiral, Europe is heading towards a future of oil fuel dependency
on imports. Euro madness continues without limit.
Europe to Shut 10 Refineries as Profits Tumble
By Konstantin Rozhnov - Apr 5, 2013 12:01 AM GMT
Oil refiners in Europe will shut 10 percent of their plants this decade as
fuel demand falls to a 19-year low. Of the region’s 104 facilities, 10 will shut permanently by 2020 from France to Italy to the Czech Republic, a Bloomberg survey of six European refinery executives showed. Oil consumption is headed for a fifth year of declines to the lowest level since 1994, the International Energy Agency estimates. Two-thirds of European refineries lost money in 2011, according to Essar Energy Plc (ESSR), owner of the U.K.’s second-largest plant.
“Purely from the falling European demand point of view, one bigger refinery or two smaller plants would have to shut in Europe every year,” David Wech, who helps advise oil companies and governments as managing director at researcher JBC Energy GmbH, said in a phone interview from Vienna. “And it’s not even assuming any negative impact from more competitive refining markets in other regions.”
A 50 percent jump in three years in U.S. diesel exports coupled with waning demand for imports of European fuels, as well as two recessions in five years in the euro region, have curbed profit from oil products at companies from Italy’s Eni SpA (ENI) to Royal Dutch Shell Plc. (RDSA) Refining margins dropped to $7 this month, from a peak of about $20 a barrel in 2008, according to data compiled by Bloomberg.
The losses are being compounded by the configuration of Europe’s refineries. Most of the plants, more than 50 percent of which were constructed in the wake of World War II, are geared toward gasoline production, though diesel now accounts for 75 percent of the region’s motor fuel needs.
At the same time, newer facilities in the Middle East and Asia are refining cheaper crude grades into high-value fuels. Saudi Arabia, the world’s biggest oil producer, is building three refineries each the size of Shell’s Pernis plant in the Netherlands, Europe’s largest facility with a capacity of 400,000 barrels a day.
“Brand new Middle Eastern and Indian refineries are just shiny, beautiful, latest technology,” said Volker Schultz, chief executive officer of Essar Oil U.K., the British unit of Essar Energy that runs the Stanlow plant near Liverpool, England. They are “world class, world scale, you name it,” he said.
More
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
At the Comex silver depositories Thursday final figures were: Registered 43.11
Moz, Eligible 121.37 Moz, Total 164.48 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, day 2 of
Japan’s new currency war. Below, how went the war on day 1. Stay long precious
metals. This all ends in a repeat of the 1930s.
“Those who don't know history are destined to repeat it.”
Edmund Burke
Japan’s New Stimulus May Trigger Yen Avalanche, Soros Says
By Bei Hu - Apr 5, 2013 3:35 AM GMT
The Bank of Japan (8301)’s move to expand monetary easing may
trigger “an avalanche” in the yen as Japanese put money elsewhere in
anticipation of sustained currency
depreciation, billionaire investor George Soros
said. Calling the expanded stimulus “a sensation” and “a very daring undertaking,” Soros said policy makers may not be able to arrest the fall in the yen and capital flight as the new policy was adopted after 25 years of mounting government deficits and failure to rejuvenate the economy.
“What Japan is doing is actually quite dangerous because they’re doing it after 25 years of just simply accumulating deficits and not getting the economy going,” Soros said in an interview with CNBC in Hong Kong today. “If the yen starts to fall, which it has done, and people in Japan realize that it’s liable to continue and want to put their money abroad, then the fall may become like an avalanche.”
The BOJ’s new Governor Haruhiko Kuroda laid out plans for Japan’s biggest round of quantitative easing, expanding the central bank’s balance sheet by 30 percent of gross domestic product between now and the end of 2014.
“If what they’re doing gets something started, they may not be able to stop it,” Soros said.
More
Euro, dollar soar vs. yen on ambitious BoJ policy move
NEW YORK |(Reuters) - The dollar and euro notched their largest daily percentage gains against the yen since late 2008 on Thursday after the Bank of Japan surprised markets with an ambitious plan to fight deflation in a radical overhaul of policy.
The dollar rose more than 3 percent and the euro more than 4 percent versus the yen after the BoJ unleashed the world's most intense burst of monetary stimulus, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent its bond yields to record lows.
Governor Haruhiko Kuroda, chairing his first policy meeting, committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.9 trillion) by the end of 2014.
"This is not your grandfather's BOJ," said Boris Schlossberg, managing director of FX Strategy at BK Asset Management in New York.
"The fact that they came out, doubled the size of the QE and are willing to do all these non-conventional measures suggested that they really want to take dollar/yen to 100," he said.
---- The dollar rose as high as 96.41 yen on Reuters data, near a 3-1/2-year peak of 96.71 set on March 12. It was last trading at 96.14 yen, up 3.3 percent on the day and on track for its best day since October 2008.
The euro
soared as high as 124.48 yen and last traded at 124.38, up 4.1 percent on the
day, marking its biggest one-day move since November 2008.
---- The anticipation of long-dated Japanese government bond
purchases has already caused the Japanese yield curve to collapse.
More
"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
The monthly Coppock Indicators finished March:
DJIA: +119 Up. NASDAQ: +132 Up. SP500: +157 Up. Another Fed bubble grows.
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