Friday 31 May 2013

Germany Tells France to Shape Up

Baltic Dry Index. 811 -07 

LIR Gold Target by 2019: $30,000.  Revised due to QE programs.

“There is no need for European recommendations; what’s needed is obvious. It’s not for the commission to dictate what we have to do.”

Fran├žois Hollande.

Ahead of the upcoming “Great Leaders” EU summit next month, some of the “Great Leaders” are getting grumpy. Yesterday France’s “Great Leader” told the European Commission what it could do with its recommendations, while according to the Financial Times, important members of Chancellor Merkel’s political party accused President Hollande and France of shaking the foundations of the European Union.” “Vehement criticism of the European Commission’s reform proposals...contradicts the spirit and letter of European agreements and treaties, said Andreas Schockenhoff, a deputy chairman and foreign policy spokesman of the CDU in the German parliament. Someone who talks like that is shaking the foundations of the EU.” France, know thy place, say the arrogant German paymasters.  The upcoming Great Leader’s summit is shaping up to be an all against Germany car crash.

Below East Germany’s Chancellor Merkel orders old socialist Hollande to jump and sets the height. Long gone are the days of De Gaulle’s French run Europe, or even the junior partner in “Merkozy.” Since the great crash of 2008-2009, it’s the German paymaster way, for continental Europe or the highway. Europe’s troughing politicians being what they are, few if any on the other side of the Channel will walk away from the EU’s trough.

"We can stand here like the French, or we can do something about it."

Marge Simpson

Merkel tells Hollande - France must implement reforms

PARIS | Thu May 30, 2013 6:08pm BST
(Reuters) - France has an obligation to press ahead with structural reforms now that the European Commission has granted it two extra years to reduce its budget deficit, German Chancellor Angela Merkel said on Thursday.

Speaking at a joint news conference with French President Francois Hollande after talks on reforming Europe, Merkel listed countries, including Spain and Greece, that have enacted tough structural reforms while slashing their budget deficits but did not include France.

"We agreed to give France two more years to cut its deficit to 3.0 percent (of gross domestic product)... and coupled with that is the expectation that reforms will be implemented. These go hand in hand," Merkel said.

Germans irked as Hollande says EU cannot dictate French reforms

ARIS/BERLIN | Thu May 30, 2013 8:18pm BST
(Reuters) - President Francois Hollande pledged on Thursday to carry out long overdue reforms of France's pension system and labour markets but said it was up to Paris, not the European Commission, to determine how they are implemented.

At a joint news conference with visiting German Chancellor Angela Merkel, Hollande defended his comment that the EU executive cannot "dictate" reforms to member states - a defiant, nationalist tone that angered Germany's ruling conservatives.

French jobless claims hit new record in April - paper

ARIS | Thu May 30, 2013 3:32pm BST
(Reuters) - The number of people out of work in France hit a record high in April, the daily Les Echos said on Thursday, casting more doubt on President Francois Hollande's pledge to reverse a long-running rise in unemployment.

The number of registered jobseekers rose by about 40,000 in April from March's previous high, the financial daily reported ahead of the official publication of the figures later on Thursday. It did not quote its sources.
The data was widely expected to show another increase, marking two straight years of monthly rises and the worst level since records began in January 1996.

3.26 million jobless in France in April: Labor Ministry

he French Labor Ministry says the number of unemployed people reached a record high of 3.26 million in April.

The ministry said on Thursday that the number of registered jobseekers in the eurozone's second-largest economy increased by 39,800 last month, marking the 24th consecutive monthly rise.

The increase is equivalent to 1,326 new jobseekers per day and represented a 12.5 percent rise over a year ago.

The previous jobless record in the country was in January 1997, when 3.195 million people were unemployed.

The figures are considered as a major challenge for Socialist President Francois Hollande, who has pledged to curb the unemployment rate from the current level of more than 10 percent to a single-digit figure by December this year.

Hollande's popularity, which had already been affected by the poor performance of the economy, is shrinking to record lows. In March, only 30 percent of the 1,000 people surveyed by the polling company TNS Sofres said they were satisfied with the president, down from the 35 percent recorded the previous month.

Back on the saner, non-German  side of the English Channel, the UK’s taxpayers are about to get hosed for hosting the planets Lords of the Universe at Hertfordshire’s 5 star luxury Grove Hotel. Since the Grove is “a Leading Hotel of The World, The Grove is unstuffy and open to all. Come here, breathe, relax and have enormous fun!” I suggest that Europe’s unemployed youth drop in June 6-9th, to breathe, relax and have enormous fun. Why not, the hapless UK taxpayer is making sure that you will be safe from Moslem fanatics and dissident IRA murderers.

“Our tolerance is part of what makes Britain, Britain. So conform to it, or don't come here.”

Tony Blair

British taxpayers to pay 'millions' towards secretive Bilderberg meeting security

Taxpayers are likely to have to pay millions towards the cost of policing the secretive Bilderberg meeting of the global elite due to gather in Hertfordshire next week.

By Rowena Mason, Political correspondent 3:31PM BST 30 May 2013
The clandestine meeting of royalty, prime ministers and business chiefs is taking place in Britain for the first time since 1998, sparking fears of "violence and disturbance" by protesters.

The Bilderberg organisers, who include Tory Cabinet minister Ken Clarke, do not release a guest list but a roll-call of luminaries are expected to descend on a luxury Watford hotel from June 6, forcing police to step up security.

Hertfordshire police have refused to release the cost of security for the event, which has previously drawn anti-capitalist demonstrators in other locations around the world.

However, they are in talks with the Home Office about a grant for "unexpected or exceptional costs" that is only given out if it threatens the stability of the force's policing budget. The final bill would have to total more than one per cent of the police force's overall spend - or about £1.8 million - for the grant to be successful.

The invitation-only Bilderberg meetings are attended by around 140 members of the international elite.

----The cloak of secrecy surrounding the meetings, which ban journalists from attending, has fuelled conspiracy theories that so-called Bilderbergers are planning global domination and world unification.

However, the event is most often likened to a political version of the World Economic Forum in Davos, Switzerland, which draws members of high society to discuss business and the economy.

Its steering commitee includes Mr Clarke, Cabinet minister without portfolio, Thomas Enders, chief executive of defence company EADS, and Peter Sutherland, the chairman of Goldman Sachs.

---The last time the Bilderberg Group met in Britain was in Turnberry in Scotland in 1998. This year's event will be at the Grove Hotel in Watford, which has been booked out for the duration of the conference from 6th to 9th June.

The Grove 5 star hotel resort Hertfordshire England

Welcome to London's cosmopolitan country estate. You won't believe we're 30 mins from Heathrow, 17 mins from London Euston, 3 mins from the M25... we're so nearby, you can switch off sooner.
Time's precious and every moment feels longer at The Grove. You're surrounded by nature and there's so much to do that you can spend days here and never do the same thing twice.

Play on our Championship golf course, enjoy our award-winning  Sequoia Spa, dine in three restaurants and waste time in our lounges, bars, Walled Garden and woods. A very special luxury hotel resort and a Leading Hotel of The World, The Grove is unstuffy and open to all.Come here, breathe, relax and have enormous fun!

The French complain of everything, and always.

 Napoleon Bonaparte

At the Comex silver depositories Thursday final figures were: Registered 42.81 Moz, Eligible 122.48 Moz, Total 165.29 Moz.  

Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.

Today, a Frankenfood disaster that we were all assured could never happen. An unapproved genetically modified Monsanto wheat turns up on an 80 acre farm in Oregon. “Monsanto said there’s reason to believe the incident is highly isolated and should not concern consumers or trading partners.” But they would say that wouldn’t they.  They also said that such a release couldn’t happen at all. If it’s happened once, why not twice, thrice, or many more times? But why should we be believing Monsanto assurances at all? Oregon wheat anyone?

"When the waitress asked if I wanted my pizza cut into four or eight slices, I said, 'Four. I don’t think I can eat eight.'"

Yogi Berra

Monsanto Modified Wheat Not Approved by USDA in Field

By Alan Bjerga - May 30, 2013 11:04 AM GMT
Genetically modified wheat created by Monsanto Co. (MON) that wasn’t approved for use turned up on an 80-acre farm in Oregon last month, threatening the outlook for U.S. exports of the grain that are the world’s largest.

A farmer attempting to kill wheat with Monsanto’s Roundup herbicide found several plants survived the weedkiller, the U.S. Department of Agriculture said yesterday in a statement. Scientists found the wheat was a strain field-tested from 1998 to 2005 and deemed safe before St. Louis-based Monsanto, the world’s largest seedmaker, pulled Roundup Ready wheat from the regulatory approval process on concern that importers would avoid the crop.

I would imagine even the perception that GM wheat is out there would have some impact on our exports” with so many countries “putting their foot down on not accepting” gene-altered crops, Ryan Larsen, an assistant professor of agribusiness and applied economics at North Dakota State University in Fargo, said by telephone. “This continues that bad persona that GM crops have. It allows people to say ‘See, it’s out there and we’re not being told it’s out there.’ ”

Wheat futures fell 0.5 percent to $6.99 a bushel by 4:58 a.m. on the Chicago Board of Trade. Japan suspended imports of western-white wheat and feed wheat from the U.S., and canceled an order, said Hiromi Iwahama, director for grain trade and operation at the Ministry of Agriculture, Forestry and Fisheries. The European Union will recommend countries test imported U.S. wheat.

Government investigators are tracking the origin of the plants and consulting with trade partners to assure them the exposure is limited and poses no threat to human health, according to Michael Firko, acting deputy administrator at the USDA’s Animal and Plant Health Inspection Service. No evidence exists that the never-approved wheat has entered the commercial food or feed supply, he said. Monsanto said there’s reason to believe the incident is highly isolated and should not concern consumers or trading partners.

We end for the week pondering Global Cooling. We are deep into the new “Dalton Minimum” in sunspot cycles, and perhaps this is our future for this decade and next.

Spring to be coldest for 50 years

The UK is on track for its coldest spring for more than 50 years following another fortnight of below average temperatures, according to provisional figures from the Met Office.

By Press Association 3:07PM BST 30 May 2013
The average temperature for the three spring months of March, April and May is 6C (43F), making it the fifth coldest spring in records dating back for more than a century to 1910, and the chilliest since 1962.

Earlier figures up to mid-May had suggested this spring was on track to be the 6th coldest on record, and the coldest since 1979, but another cooler than average period in the second half of the month has pushed the spring temperatures down.

The main reason for the cold spring was the exceptionally cold March which registered average temperatures of 2.2C (36F), some 3.3C (38F) below the long-term average, making it the coldest March since 1962, the Met Office said.

This May has also had lower than average temperatures at times, and if there is no change once figures for the last three days have been included, it will be the coldest May since 1996.

Spring 2013 bucks the trend of recent years, which has seen eight of the last 10 springs recording warmer than normal seasons, with temperatures above the 7.7C (46F) long-term average.

All UK regions saw colder than average temperatures this year, with England and Wales experiencing their coldest spring since 1962 and Scotland and Northern Ireland registering the coolest spring since 1979.

"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

Have a great weekend everyone. Time to shop for winter goods.

The monthly Coppock Indicators finished April:
DJIA: +133 Up. NASDAQ: +139 Up. SP500: +170 Up.  Another Fed bubble underway. But when to jump off before it ends?

Thursday 30 May 2013

The End Nears.

Baltic Dry Index. 818 -04 

LIR Gold Target by 2019: $30,000.  Revised due to QE programs.

The Federated Republic of Europe - the United States of Europe - that is what must be. National autonomy no longer suffices. Economic evolution demands the abolition of national frontiers. If Europe is to remain split into national groups, then Imperialism will recommence its work. Only a Federated Republic of Europe can give peace to the world.

Leon Trotsky 30/10/1917

Sadly we are living in the last bubble. The deception of a free lunch under the Great Nixonian Error of fiat money is coming towards its end. The Fed’s greatest bubble of all, bonds and now stocks, is racing towards its pin. When this last bubble bursts, all the other Lehman’s come pouring out of the woodwork, with the Fed, the BOE, ECB, BOJ, BOC, largely powerless to repeat 2008-2009. Stay long physical precious metals held safely outside of the banking system and corrupt brokerage houses like MF Global. When we hit reset later this year or next, a precious metals clearing system will become a large part of the return to true capitalism. Though for a while we will all experience a little of Greece’s pain without the sunshine.

Meanwhile 2013s great disconnect continues. Deliberately mispriced money has mispriced stock markets from reality, in the central bankster’s last desperate roll of the dice to make the Davos Spring happen. From the Baltic Dry Index to Dr. Copper, to the HSBC global index of the business cycle, everything suggests the Davos Spring is just a hyped up illusion. But an illusion is never reality. Before this bubble ends, the UK’s next magician has yet to take the stage arriving in July from Canada. The UK will then enter the game of competitive devaluation. The UK’s serfs need gold and dumbed down by their “betters” they mostly don’t even know it. No one at the BBC will ever say it’s time to own some precious metals. No one in Britain’s sick joke of a coalition government will ever say to hedge off some Sterling risk.

We open this morning with the biggest red flag of all. Telescopes up to the blind eye, most pundits, stock spivs, and vampire squids will pretend not to see it. Our last bubble still has a summer off illusion to get through.

No saviour in sight as world credit cycle rolls over

This may be as good as it gets for the world economy. The HSBC index for the global business cycle hit a three-year high around Easter, and has since rolled over.

Any country that has failed to lock in a self-sustaining recovery by now must expect to pay the price for the failings of its policy establishment, and some risk a slide into outright deflation.

“We see building evidence of a cyclical downturn,” said Fredrik Nerbrand, HSBC’s global asset guru. “We find it highly troubling that the eurozone is still marred in a recession at the same time as our cyclical indicators appear to have peaked.”

The bank said there is a market “disconnect” between the world’s gloomy outlook and talk of tapering by the US Federal Reserve, the supposed moment when it starts to wind down its $85bn of monthly bond purchases.

It is surprising to me that HSBC’s leading indicator has taken so long to buckle, since commodities topped in September and the Dutch CPB index of world trade contracted over the February-March period. Rarely has there ever been such an equity boom on such quicksand.

Mr Nerbrand said slowing momentum “should send shivers down the spine of any investors that are long risk”. Yet markets are betting that central banks will come to the rescue yet again if need be. This may be so, but only after they have first struck a blow against moral hazard and demonstrated their distaste for asset bubbles. The central banks take their time. Mr Nerbrand says they will not act until the markets have already priced in a “sub-optimal outcome”, Canary Wharf dialect for a nasty sell-off.

HSBC said it is cutting its holdings of high yield credit, emerging market debt, gold and real estate REITs. It is plumping instead for US Treasuries, the “least rotten apple in the barrow”. An astonishing 42pc of its tactical portfolio is now in US Treasuries.

We have been through these episodes of putative Fed tightening twice since the Lehman crisis. Markets tanked in 2010 and again in 2012 after the Fed turned off the spigot.

New BoE chief Carney will devalue sterling, Pimco warns

Mark Carney will try to devalue the pound by as much as 15pc after he takes over as Bank of England Governor in July in a last ditch attempt to cement the UK recovery, Pimco, the world’s largest bond house, has warned.

Growth in Britain is going to remain “challenged” for the next three to five years as the Government continues to shrink the public sector and cut the budget deficit.

As banks and households also grapple with their excessive debts, “that leaves one policy tool outstanding, which is basically the currency”, Pimco managing director and sterling bond head Mike Amey said.

George Osborne has pinned his hopes for the economy on Mr Carney, Canada’s central bank boss until the end of the week, living up to his reputation as a monetary “activist” to help ease the transition to an export-focused economy less dependant on consumer spending.

Although economists reckon there is little more central banks can do, Mr Carney has insisted policy is not “maxed out”.

“I think a lot of what Mark Carney is going to do – clearly he’s not going to state this upfront – is to try and keep sterling certainly from going up and, probably, he’s going to want to see it go lower,” Mr Amey said.
“On a trade weighted basis I think another 10pc to 15pc is manageable. Against the dollar we’re trading at $1.50 now. The low in 2009 was $1.37. I think that’s eminently achievable. I don’t think $1.37 is a big ask.”

Elsewhere in austerity racked Europe, protest and social instability is rising. Continental Europe, as seen from dreary, cool, London, seems to be heading for another “Springtime of Nations,” 1848. “Sell in May” may finally have arrived.

ECB Targeted as Blockupy Protesters Descend on Frankfurt

By Jonathan Morgan - May 29, 2013 11:00 PM GMT
Frankfurt, Germany’s financial capital and the seat of the European Central Bank, is bracing for as many as 30,000 demonstrators to descend on the city for four days of protests against European leaders’ handling of the sovereign-debt crisis.

Activists have set up camp on the outskirts of the trade fair grounds to the west of the city, awaiting the arrival of busloads of people from all over the country as well as from abroad, according to Blockupy, an international group that is organizing the blockades. The biggest action is planned for May 31, when the demonstrators plan to “visibly disturb the usual business of the ECB as well as other actors of the crisis regime,” Blockupy said in a statement on its website.

At the far end of EurAsia there are giant red flags too, and not just the ones China’s cowed masses must wave before their unelected communist leaders.

China Failure to Grow With $1 Trillion Is Warning to Li: Economy

By Bloomberg News - May 30, 2013 5:01 AM GMT
China’s economy is proving less responsive to credit, escalating pressure on Premier Li Keqiang to strengthen the role of private enterprise.

The government’s broadest measure of credit rose 58 percent to a record 6.16 trillion yuan ($1 trillion) in January-to-March, when gross domestic product gained 7.7 percent, compared with 8.1 percent a year earlier. Each $1 in credit firepower added the equivalent of 17 cents in GDP, down from 29 cents last year and 83 cents in 2007, when global money markets began to freeze, according to data compiled by Bloomberg.

The diminishing returns to lending heighten focus on the need for what the International Monetary Fund said yesterday are “decisive” policy changes in the world’s second-largest economy. Without a refocus away from state-approved projects, Li and President Xi Jinping risk overseeing both a further slowdown in growth and an increase in non-performing loans.

Ending with China, we note what just might be the first food deal of many still to come. China’s fiat currency is just as good as Uncle Sam’s. But in the land of the free and the pink slime beef burger,  not all are best pleased by China swapping 4.7 billion pictures of George Washington for something with intrinsic value.

China's appetite for pork spurs $4.7 billion Smithfield deal

HONG KONG/NEW YORK | Wed May 29, 2013 5:22pm EDT
(Reuters) - China's Shuanghui International plans to buy Smithfield Foods Inc (SFD.N) for $4.7 billion to feed a growing Chinese appetite for U.S. pork, but the proposed takeover of the world's No. 1 producer has stirred concern in the United States.

The transaction, announced on Wednesday, would rank as the largest Chinese takeover of a U.S. company, with an enterprise value of $7.1 billion, including debt assumption.

As it stands. the deal is the biggest Chinese play for a U.S. company since CNOOC Ltd offered to buy Unocal for about $18 billion in 2005. The state-controlled energy company later withdrew that bid under U.S. political pressure.

Like similar foreign transactions, the Smithfield deal will face the scrutiny of the Committee on Foreign Investment in the United States, or CFIUS, a government panel that assesses national security risks.

And at least one member of Congress said the deal raised alarms about food safety, noting Shuanghui was forced to recall tainted pork in the past.

----In the town of Smithfield, which the local visitors bureau describes as rich in "hams, history and hospitality," officials said they were shocked by the news.

"It was a total shock to us," said Smithfield Mayor T. Carter Williams, who noted that his wife has worked for the company for a decade. "Right now, I don't think anybody here knows what's going to happen...the people in China say nothing is going to change. We would hope so."

The agreement comes after Continental Grain Co, Smithfield's largest shareholder with a 5.8 percent stake, agitated for change, including a call to break up the company. Continental, could not be reached to comment on Shuanghui's proposal.

My first guiding principle is this: willing and active co-operation between independent sovereign states. Europe will be stronger precisely because it has France as France, Spain as Spain, Britain as Britain, each with its own customs, traditions and identity. It would be folly to try to fit them into some sort of identikit European personality.

Margaret Thatcher

At the Comex silver depositories Wednesday final figures were: Registered 42.85 Moz, Eligible 122.06 Moz, Total 164.01 Moz.  

Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.

Today, more on the madness of capitalism European style.  Would you pay £10 billion a year to stay in a German run austerity union like this?

"All animals are equal, but some animals are more equal than others"

Angela Merkel, with apologies to Napoleon, and Animal Farm.

Germany wins victory over EU Commission in VW Law case

BERLIN | Wed May 29, 2013 9:56am EDT
(Reuters) - Germany looked set to win victory over the European Commission to preserve state influence at carmaker Volkswagen (VOWG_p.DE) on Wednesday, after an adviser to the EU's highest court rejected the European Commission's bid to overturn the so-called VW Law.

While the final ruling is not expected until later this year, the preliminary advisory decision is a painful setback for the Commission. For years it has been locked in a battle with Germany over the 1960 law that gives the state of Lower Saxony a veto over fundamental decisions at VW such as mergers and acquisitions, even though it only has a 20 percent voting stake.

---Brussels dragged Berlin in front of the European Court of Justice (ECJ) for a second time in 2011, demanding that the last surviving element of the VW Law be repealed - that any shareholder with 20 percent or more of the ordinary voting shares can veto major decisions about the company's future.

But on Wednesday the ECJ's Advocate General, Nils Wahl, said in a written opinion that the judges should dismiss the Commission's demand that Germany be fined for failing to repeal the veto right following an ECJ court ruling in 2007.

That ruling had decided that the combined effect of the 20 percent blocking power in conjunction with a separate 20 percent cap on individual voting rights had violated EU laws, but did not explicitly rule on whether the veto alone was illegal.

Wahl said Germany had thus fully complied with the ECB's 2007 judgment by eliminating the voting cap and Lower Saxony's right to directly appoint two delegates to the company's board.

"The Advocate General further points out that the purpose of the present proceedings is not to determine whether the provision on the blocking minority, considered on its own, infringes EU law, but only whether Germany has complied with the 2007 judgment," the ECJ said in a statement.

Under German corporate law the veto right is usually set at 25 percent but it can be lower. In the case of VW, however, it implicitly granted a blocking minority to Lower Saxony, home to five of the six western German VW manufacturing plants.

Lower Saxony applauded Wednesday's preliminary ruling as "groundbreaking", while VW union leader Bernd Osterloh described it as "a good day for the workers of Volkswagen".

A spokeswoman for Internal Markets commissioner Michel Barnier said Brussels believes Germany still hasn't fully complied and awaits the court's final judgment.

ECJ judges are expected to rule on the case in the next few months. Wahl's opinion is not binding, though the judges follow such recommendations in a majority of cases.

Pimco warns of eurozone 'zombification'

Eurozone economies will suffer from "zombification" with growth likely to be "very weak" over the next three to five years, according to the world's largest bond fund.

Bond giant Pimco said that, in contrast to stronger growth in emerging markets and a healing US, growth in the eurozone is expected to be "very weak" over the coming horizon.

Mired in recession, regional growth is unlikely to exceed 0.5pc per year over the next three to five years, said Andrew Balls, Pimco's head of European portfolio management and brother to shadow chancellor Ed Balls.

Rather than a collapse of the eurozone, he forsees an ongoing "muddling through – or 'zombification' of the eurozone’s economies and institutions". But he added that weak growth means political and social tensions will continue to build.

The eurozone has been in recession since the end of 2011 and the region's economy shrank an additional 0.2pc in the first quarter of this year - the region's sixth straight quarterly contraction.

The future will belong to the Germans... ...when we build the House of Europe. In the next two years, we will make the process of European integration irreversible. This is a really big battle but it is worth the fight.

Helmut Kohl 10/1996

The monthly Coppock Indicators finished April:
DJIA: +133 Up. NASDAQ: +139 Up. SP500: +170 Up.  Another Fed bubble underway. But when to jump off before it ends?