Baltic Dry Index. 885 -04
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“Mankind has existed for many
thousands of years and has always lived off income. Only in the last hundred
years has man forcibly broken into nature’s larder and is now emptying it out
at breath-taking speed which increase from year to year”.
E.F.
Schumacher German economist.
More on the end of growth and what it might mean for us
all later first this. Japan’s new currency war is already paying off. In the
example below, beggar thy neighbour beggared Italy trapped in the one size fits
all euro and unable to devalue to keep level with Japan. It’s a funny old world
on fiat money. Having nothing of real value, it’s almost impossible to make
long range pension plans. Who knows what value the currency will have in the
future. Who knows which gambling banks will be the next to steal the depositors
money.
Thais Flock to Japan as Weak Yen Means Bargains: Southeast Asia
By Yumi Teso & Suttinee Yuvejwattana
- Apr 24, 2013 5:07 AM GMT
The Thai baht’s biggest quarterly gain against the yen since 1998 was enough
reason for Kornkarun Cheewatrakoolpong, a 32-year-old economics lecturer in
Bangkok, to change her honeymoon destination to Japan from Italy. “It’s more affordable,” Kornkarun said in an interview from her home in the capital on April 17, after returning from a business trip to Japan. “I don’t feel it’s that expensive like in the past. I still expect that when I go for my honeymoon in November, the yen will remain weak.”
Kornkarun
followed 36,000 Thai tourists who headed to Japan in the
first two months of the year, 31 percent more than the same period of 2012 and
the largest increase among five major Southeast Asian countries, according to
data from the Japan National Tourist Organization. The baht, Asia’s
best-performing currency in 2013, strengthened 14 percent versus the yen in the
three months through March before rising a further 7.1 percent in April, making
costs for accommodation, shopping and food cheaper for visitors from Thailand.
More
Up next, Australia
starts its move away from the dollar and towards trading with China in China’s
Yuan. It also marks an Australian switch away from Japan’s Yen. In the ever
odder world of the unbacked fiat currencies, the 21st century is not
going to be like the Anglo-American centric 19th and 20th
centuries. Stay long physical precious metals. With the euro looking like it
won’t survive in its present form, our world seems to be heading for a
dollar-Yuan centric, volatile next few
decades.
RBA Set to Invest Foreign Currency Reserves in China, Lowe Says
By Michael Heath - Apr 24, 2013 5:40 AM GMT
Australia’s central
bank plans to invest part of its foreign currency holdings in China and maintain
about 5 percent of reserves in the world’s second largest economy, Deputy
Governor Philip
Lowe said. The decision “represents the first time that the RBA will have invested directly in a sovereign bond market of an Asian country other than Japan,” Lowe said in the text of a speech to be delivered today in Shanghai. “It reflects the broader economic relationship between China and Australia and our increasing financial ties.” China’s central bank has approved an initial investment quota, Lowe said.
More
Staying with Asia
one more time, China seems to be gearing up for an eventual war with Japan!
Japan seems to be trying to provoke a clash on a faster timetable. Our markets
are complacently assuming that China is about to roll over. Stay long physical
gold and hedge off most leveraged exposure. A skirmish could come as early as
tomorrow.
“There are some bored foreigners, with full stomachs, who have nothing
better to do than point fingers at us [China]. First, China doesn’t export
revolution; second, China doesn’t export hunger and poverty; third, China
doesn’t come and cause you headaches, what more is there to be said?”
First Secretary of Secretariat of the
Communist Party, Xi Jinping
China Plans Next Generation of Carriers as Sea Disputes Broaden
By Bloomberg News - Apr 24, 2013 4:44 AM GMT
China unveiled plans to
build more aircraft carriers after commissioning its first last year, as the
country extends its influence amid territorial disputes with neighbors
including Japan and Vietnam. Future aircraft carriers will carry more fighter jets than the Liaoning, Rear Admiral Song Xue told foreign military attaches yesterday in Beijing, according to the official Xinhua New Agency. The carrier was built around a Soviet-era hull and began trials at sea last year.
The remarks signal that the People’s Liberation Army will push ahead with a modernization plan under which defense spending has more than doubled since 2006. China has been more assertive in pressing sovereignty claims against Japan as well as Vietnam and the Philippines in the South China Sea.
“This only adds publicly to what many believed to be the case: that the Liaoning is a training or ‘starter’ carrier and eventually China would build larger and more capable ones,” Taylor Fravel, a professor at the Massachusetts Institute of Technology who focuses on China’s relations with its neighbors, said by e-mail. “It suggests that today’s PLA is much more confident than in the past regarding its willingness to talk about future military programs.”
More
Japan PM Abe warns China of force over islands landing
23 April 2013 Last updated at 14:29
Japan
would respond with force if any attempt is made to land on disputed islands, PM
Shinzo Abe has warned.
His
comments came as eight Chinese government ships sailed near East China Sea
islands that both nations claim.
A
flotilla of 10 fishing boats carrying Japanese activists was also reported to
be in the area, as well as the Japanese coastguard.
Mr Abe
was speaking in parliament hours after dozens of lawmakers visited a
controversial war-linked shrine.
A total
of 168 lawmakers paid their respects at the Yasukuni Shrine, which commemorates
Japan's war dead, including war criminals, in a move likely to anger regional
neighbours who say the shrine is a reminder of Japan's military past.
The
warning from the Japanese prime minister was the most explicit to China since
Mr Abe took power in December, the BBC's Rupert Wingfield-Hayes reports from
Tokyo.
More
No Tee Time for Japanese Shows Depth of Toyota China Slump: Cars
By Bloomberg News - Apr 23, 2013 10:01 PM GMT
Honda Motor Co. employees in the Chinese city of Wuhan need only visit the
popular Feng Bo Zhuang restaurant to see the resentment their company faces. A
sign at the door says Japanese are barred from entering. Discrimination against Japanese is common in China, according to Yasuhide Mizuno, the head of Honda’s venture in Wuhan, some 500 miles (800 kilometers) up the Yangtze River from Shanghai. Mizuno -- who has also been assigned to Thailand, Taiwan, Malaysia and Australia -- says he’s never worked in a more hostile place.
Wherever I go, like department stores or in taxis, people ask me whether I am Japanese,” Mizuno, 49, president of Dongfeng Honda (GHAJCZ), said in an interview at the Shanghai auto show. When he says yes, he said, the reception can be frosty.
Mizuno’s experiences in the city, site of one of the bloodiest battles of the Sino-Japanese war in the 1930s, illustrate why sales for Honda and Toyota Motor Corp (7203). have yet to recover since violent protests across China seven months ago. Though the riots -- triggered by a territorial dispute over uninhabited islands -- have subsided, Japanese carmakers are continuing to lose share in the world’s biggest auto market.
More
Now back to the
end of growth. While the real economy in the west stagnates at best, or
collapses in Club Med, the great global equity market bubble continues apace,
fuelled by all the money pouring out from the central banksters. Below highly
respected Satyajt Das takes up the case.
"Finance
is the art of passing customer segregated funds from hypothecation to hypothecation
until it finally disappears."
The End of Growth?
Author: Satyajit Das
· April 22nd, 2013 ·
Driven by
massive monetary stimulus from central banks, the performance of financial
markets, especially stocks, have decoupled from that of a moribund real
economy. Financiers assume that the strong rise in equity markets anticipates a
strong economic recovery. However, there are fundamental reasons why the world
may be entering a period of low or no growth. If that turns out to be the case,
then the optimism of financial markets may prove premature.
Economic
Endgame
Arthur
Miller wrote that “an era can be said to end when its basic illusions are
exhausted”. The central illusion of the age of capital -economic growth-
may be ending.
All
brands of politics and economics are deeply rooted in the idea of robust
economic growth, combined with the belief that governments and central bankers
can exert substantial control over the economy to bring this about. Economic
growth has become the universal solution for all political and economic
problems, from improving living standards, reducing poverty to now solving the
problems of over indebted individuals, businesses and nations.
----But
in nature, growth is only a temporary phase which ceases with maturity. As
academic Jay Forrestor noted: “Past civilisations have grown into overshoot
and decline. In every growth situation, growth runs its course, be it in
seconds or centuries.”
Growth is
a relatively recent phenomenon. In a deliberately provocative 2012 National
Bureau of Economic Research paper entitled Is US Economic Growth Over?
Faltering Innovation Confronts The Six Headwinds, economist Robert Gordon
found that prior to 1750 there was little or no economic growth (as measured by
increases in gross domestic product per capita).
It took
approximately five centuries (from 1300 to 1800) for the standard of living to
double in terms of
income per capita. Between 1800 and 1900, it doubled again.
The twentieth century saw rapid improvements in living standards, which
increased by between five or six times. Living standards doubled between 1929
and 1957 (28 years) and again between 1957 and 1988 (31 years).
----Gordon
controversially questions whether economic growth is a continuous process that
can persist forever. He argues that growth and improvements in living standards
will slow significantly. For “shock value”, he speculates that future
growth rates may be 0.2%, well below even the modest 1.8% between 1987 and
2007.
Low or no
growth is not necessarily a problem. It may have positive effects, for example
on the environment or conservation of scarce resources. But the current
economic, political and social system is predicated on endless economic
expansion and related improvements in living standards.
---- Global trade is built on a financial model. Sellers of goods and services, such as China, Japan and Germany, indirectly finance purchases by lending foreign exchange reserves to countries like the US and the now deeply troubled “Club Med” economies of Southern Europe.
Financialisation is borrowed money and
speculation. Debt allows society to borrow from the future. It accelerates
consumption, as debt is used to purchase something today against the promise of
paying back the borrowing in the future. Spending that would have taken place
normally over a period of years is squeezed into a relatively short period
because of the availability of cheap money. Business over invests misreading
demand, assuming that the exaggerated growth will continue indefinitely,
increasing real asset prices and building significant over-capacity.
More
We end with the Goldmanites exiting “God’s work,” in their gold short bet. But why would they tell their Muppets? Is Goldie really playing a straight bat?
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
Goldman Cuts Commodities Outlook and Exits Wager on Lower Gold
By Whitney McFerron - Apr 23, 2013 1:56 PM GMT
Goldman Sachs Group Inc. cut its “near-term” outlook for commodities and
reduced its forecasts for oil and coffee amid prospects for weak demand from China to Europe. The bank also exited a
bet on lower gold prices. Goldman Sachs lowered its three-month and 12-month return forecasts for the Standard & Poor’s GSCI gauge of 24 commodities to 2.5 percent, from 6 percent in three months and 3 percent in 12 months, according to the report dated today. The bank said it lowered its near-term commodities outlook to neutral from overweight. It exited its bet on lower gold prices, with a potential gain of 10 percent, while saying prices may fall even more.
“Commodity
returns have dropped sharply so far in April as weaker-than-expected
macroeconomic data releases in the U.S., Europe and China furthered concerns
around global economic growth,” analyst Samantha Dart said in the report. “The
negative sentiment in the market has weighed on cyclical commodity prices in
particular.”
The GSCI
gauge of 24 commodities slid as much as 1.1 percent today as a report showed
Chinese manufacturing expanded at a slower-than-expected pace, providing more
evidence of a pullback in the country’s economic growth. Commodities, which
touched a nine-month low on April 18, are down 6.4 percent this year.
More
"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
At the Comex silver depositories Tuesday final figures were: Registered 39.15
Moz, Eligible 126.66 Moz, Total 165.81 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below in the lands of the setting sun the ECB is being
urged to adopt Japan’s Abenomics. If
they don’t, it’s all over for Euroland. If they do, it’s all over for Euroland.
Stay long physical precious metals. My guess is that the Italian in Mario
Draghi will resurface, and LTROs and QE to infinity will be the ECB’s choice.
Better to be wrong with the rest, than wrong alone.
In
any great organization it is far, far safer to be wrong with the majority than
to be right alone.
J. K.
Galbraith.
Euro-Area April Manufacturing, Services Contract
By Svenja O’Donnell - Apr 23, 2013 11:24 AM GMT
Euro-area services and factory output shrank for a 15th month
in April as the currency bloc struggled to emerge from a recession, adding to
pressure on the European Central Bank to do more to boost growth. A composite index based on a survey of purchasing managers in both industries held at 46.5, London-based Markit Economics said today. That’s in line with the median of 26 economists’ forecasts in a Bloomberg News survey. A reading below 50 indicates contraction. The euro area’s woes were compounded today by concern global growth may falter after a report showed Chinese manufacturing expanding at a slower pace this month.
“Added weakness in activity indicators and continued easing in inflation indicators will raise the pressure on the ECB to provide more stimulus,” said Jonathan Loynes, an economist at Capital Economics Ltd. in London. “What form that will come in -- interest rate cuts, LTROs or even bolder steps - - remains to be seen. The hurdles to the ECB undertaking some form of QE are a lot lower than some people would suggest.”
ECB President Mario Draghi said last week that the economic situation in the 17-nation euro area hadn’t improved since the ECB’s last meeting on April 4. The euro-area economy has contracted for five quarters, and confidence has been shaken by political turmoil in Italy and the bailout of Cyprus. The International Monetary Fund last week lowered its global growth forecast and urged the ECB to pursue an “aggressive” monetary policy.
More
EU near austerity limit, says Barroso
EC president José Manuel Barroso warns public spending cuts alone will not solve European financial crisis
Monday 22 April 2013 19.06 BST
The European Union's focus
on austerity has hit the limits of public acceptance, according to the head of
the EU's executive arm, as Brussels joined the International Monetary Fund in
raising concerns over the impact of public spending cuts.José Manuel Barroso, president of the European commission, also signalled that governments would be given more leeway if they were struggling to get their budget deficits within the required ceiling of 3% of GDP.
He said the argument raging over the merits of austerity versus more public spending was a false debate – the answer was to combine the two, although public spending cuts alone would not provide the solution
----His comments follow last week's intervention on UK economic policy by the IMF. Its chief, Christine Lagarde, said the poor performance of the UK economy left her with no alternative but to urge George Osborne to revisit his austerity policy.
Barroso's
remarks were a rare admission from Brussels that its policy prescriptions,
mainly crafted by eurozone governments with Berlin in the driving seat, for
dealing with the crisis of the past three years had either been flawed or were
running out of steam. He added that in the quest to pull the eurozone back into
growth, there was no point in piling up more debt. "Growth based on debt
is unsustainable, artificial. That's the biggest lesson of the crisis," he
said.
Barroso's unusual critique of German-driven austerity policies, particularly in the eurozone and in bailed-out countries, came as one of the biggest players in the bond markets also called for a relaxation of Berlin-style fiscal rigour.
Bill Gross, manager of Pimco, the world's biggest bond fund, said: "The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not." In an interview with the Financial Times, he added: "You've got to spend money."
More
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
The monthly Coppock Indicators finished March:
DJIA: +119 Up. NASDAQ: +132 Up. SP500: +157 Up. Another Fed bubble, but now it’s challenged.
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