Baltic Dry Index. 885 -05
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.
Walter Bagehot.
Euroland is already deep in crisis with
despair setting in all across Club Med. While China grows at 7.5%, if you
believe the official figures, and America has turned the corner into a self-sustainable
economic recovery helped by the boost from low natural gas prices due to
fracking, if you believe they hype, Euroland
ex-Germany slips ever deeper into recession, or in Club Med towards a
depression. But first this off message news from Reuters.
China April factory output disappoints, clouds outlook
BEIJING |
Mon May 13, 2013 2:19am EDT
(Reuters)
- China's factory output growth was surprisingly muted in April, darkening the
outlook for the Chinese economic recovery and feeding expectations that the
government may take policy action to support activity.
Annual
industrial output grew 9.3 percent in April, up from a seven-month low of 8.9
percent hit in March but still missing market expectations for a 9.5 percent
expansion, data showed on Monday.
More
Now back to Europe on the rocks. On the free
side of the English Channel, recent revisions now suggest that the UK never
even double dipped into recession let alone triple dipped. But the Eurozone is
on the verge of disintegration this summer, yet our world is widely distracted
by a central banks fuelled stock market bubble of epic proportions.
The final bubble, when it all goes wrong, and
it all goes wrong if the US economy really has reached self-sustainable growth,
requiring the Fed to start tapering off QE3 or is it QE4, and the 30+ year US bond
bull market to come to a long overdue end.
Endings when they come, sometimes are orderly, controlled, and taken at a
polite stroll. More usually they quickly degenerate into a massive free for
all, as greed and fear take over, and a rush takes place to exit the old “best
trade” and get in on the start of the new best thing. But if US interest rates
start to rise later this year, it’s the end of the road for the dying Eurozone.
Run do not walk for the euro exit. Stay long physical precious metals.
Below, yet more reason to fear that the great
euro car crash is underway. The great summer raid on Europe’s bank accounts
looks to be the next instalment in the Great European Error of the Euro. Today’s
eurozone finance ministers meeting in Brussels, is probably the last chance
Club Med has of getting enough of a Eurozone wealth transfer to head off
disintegration later this year. My guess
is that it will all be too little to late.
Euro Recession Seen Persisting to Longest in Bloc’s Era
By Stefan Riecher - May 13, 2013 12:00 AM GMT
Euro-area data this week will probably reveal economic scars of the
sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation. Gross domestic product in the 17-nation economy fell 0.1 percent in the first three months of 2013, a sixth straight quarterly decline, according to the median of 39 economists’ forecasts in a Bloomberg News survey. That would exceed the 15-month long contraction in 2008-2009 during the financial crisis.The data to be released on May 15 follow a series of national GDP reports that day showing the legacy of the sentiment shock and austerity measures since the crisis began. While a European Central Bank pledge to backstop the euro has eased financial-market tensions, economic confidence at a four-month low in April at a time of record unemployment highlight the risk that the slump will persist.
“We are at a very critical stage at the moment and there are indicators that uncertainty is on the rise again,” said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. “It is essential for the euro area to find the right mix between necessary austerity and measures to support economic growth as soon as possible.”
Euro-zone finance ministers gather in Brussels at 3 p.m. today to discuss the economic situation in the region after the European Commission revised its forecast for 2013 down to a 0.4 percent contraction. They will review bailout programs in Cyprus and Spain, and may sign off on aid payments to Greece.
More
Spain is officially insolvent: get your money out while you still can
Jeremy Warner Economics Last updated: May 10th, 2013I'd not noticed this until someone drew my attention to it, but the latest IMF Fiscal Monitor, published last month, comes about as close to declaring Spain insolvent as you are ever likely to see in official analysis of this sort. Of course, it doesn't actually say this outright. The IMF is far too diplomatic for such language. But that's the plain meaning of its latest forecasts, which at last have an air of realism about them, rather than being the usual dose of wishful thinking.
Let's
take the projected budget deficit first. This is expected to decline quite
steeply this year to 6.6 per cent of GDP, but that's mainly because the cost of
bailing out the banking sector fell substantially on last year's budget. On a
like-for-like basis, there has in fact been very little fall in the underlying
deficit. And nor on the present policy mix is there ever likely to be, for
that's where the deficit is projected to remain until the end of the IMF's
forecasting horizon in 2018.
Next
year, the deficit is expected to be 6.9 per cent, the year after 6.6 per cent,
and so on with very little further progress thereafter. Remember, all these
projections are made on the basis of everything we know about policy so far, so
they take account of the latest package of austerity measures announced by the
Spanish Government.
The
situation looks even worse on a cyclically adjusted basis. What is sometimes
called the "structural deficit", or the bit of government borrowing
that doesn't go away even after the economy returns to growth (if indeed it
ever does), actually deteriorates from an expected 4.2 per cent of GDP this
year to 5.7 per cent in 2018. By 2018, Spain has far and away the worst
structural deficit of any advanced economy, including other such well known
fiscal basket cases as the UK and the US.
So what
happens when you carry on borrowing at that sort of rate, year in, year out?
Your overall indebtedness rockets, of course, and that's what's going to happen
to Spain, where general government gross debt is forecast to rise from 84.1 per
cent of GDP last year to 110.6 per cent in 2018. No other advanced economy has
such a dramatically worsening outlook.
----All this leads to the conclusion that a big Spanish debt restructuring is inevitable. Spanish sovereign bond yields have fallen sharply since announcement of the European Central Bank's "outright monetary transactions" programme. The ECB has promised to print money without limit to counter the speculators. But in the end, no amount of liquidity can cover up for an underlying problem with solvency.
Europe
said that Greece was the first and last such restructuring, but then there was
Cyprus. Spain is holding off further recapitalisation of its banks in
anticipation of the arrival of Europe's banking union, which it hopes will do
the job instead. But if the Cypriot precedent is anything to go by, a heavy
price will be demanded by way of recompense. Bank creditors will be widely
bailed in. Confiscation of deposits looks all too possible.
Morehttp://blogs.telegraph.co.uk/finance/jeremywarner/100024476/spain-is-officially-insolvent-get-your-money-out-while-you-still-can/
Spanish prelate fears 'mutual hatred' over euro crisis
The Catholic Primate of Spain has called for a profound shift in Europe's debt crisis policy to avert social collapse, warning that soaring unemployment in Spain and across southern Europe has become "very dangerous".
"We
have to change direction, otherwise this is going to bring down whole political
systems," said Braulio Rodriguez, the Archbishop of Toledo.
"It
is very dangerous. Unemployment has reached tremendous levels and austerity
cuts don't seem to be producing results," he told The Telegraph.
"There
is deep unease across the whole society, and it is not just in Spain. We have
to give people some hope or this is going to foment conflict and mutual
hatred."
Europe's
Catholic bishops have been careful not to stray into the political debate or
criticise EU economic strategy but the Archbishop said the current course is
untenable.
"The
Vatican has always been an enthusiast for Europe, but a Europe of solidarity
where we help each other, not a Europe of coal and steel. Whether this is possible
depends on Germany and Chancellor Angela Merkel," he said
Unemployment
in Spain has reached 6.2m, or 27pc, despite a growing diaspora of young
Spaniards seeking work in Britain, Germany, Brazil, or the Gulf, and an exodus
of immigrants returning home. Spain's population fell by 0.7pc last year.
The
jobless rate in the Toledo region of Castilla-La Mancha is 31pc. The rate for youth
has jumped to 64pc from 14pc at the peak of the credit bubble
----Yet the authority of the state is eroding. A new Metroscopia poll shows that 87pc of voters have lost confidence in premier Mariano Rajoy.
El Mundo
fears a slow-fermenting 'crisis of the regime', with almost every institution
-- including the monarchy -- in disrepute. It likens the mood to
"pre-revolutionary" France in the late 1780s.
Europe Seeks Realism as Slump Prompts Pressure From U.S.
By Simon Kennedy & Patrick Donahue - May 12, 2013 11:00 PM GMT
European policy makers expressed a willingness to consider new ways to
revive their ailing economy as they confronted fresh U.S. pressure to take
action. The bloc’s finance ministers and central bankers left weekend talks of the Group of Seven signaling that they’re poised to scale back austerity, are open to increased monetary aid and looking to unfreeze bank lending. European officials will meet in Brussels today to discuss the economy and review aid payments for crisis-struck nations from Greece to Spain.
----Euro-area governments are already easing up on fiscal consolidation, with countries including France and Spain poised to receive more time to meet European Union budget-deficit goals. That means less pressure to take tax and spending steps to plug fiscal shortfalls caused by economic weakness.
Italy’s new government is trying to reverse some of its predecessor’s policies such as a pending sales-tax increase. Spain has introduced plans to support the creation of new businesses and invest in research and development
German finance minister against idea of ECB buying ABS: magazine
BERLIN |(Reuters) - Germany's finance minister has signaled his opposition to any move by the European Central Bank to buy asset-backed securities to help indebted states, telling his party it would amount to "covert state financing", according to German magazine Spiegel.
Spiegel said in its edition published on Sunday that Wolfgang Schaeuble made the comment during a meeting of his Christian Democrat (CDU) party last Wednesday, telling those present the purchase of asset-backed securities (ABS) by the European Central Bank (ECB) would infringe European rules.
German newspaper Die Welt, citing a central bank source, said last Wednesday a majority of ECB Governing Council members seemed to be in favor of the central bank buying ABS.
ECB policymaker Yves Mersch said on the same day, however, the ECB would not subsidize markets with asset purchases.
A permanent Governor of the European Central Bank would be one of the greatest men in Euroland. He would be a little `monarch` in every City; he would be far greater than the Elected Leaders. He would be the personal embodiment of the ECB; he would be constantly clothed with an almost indefinite prestige. Every nation in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.
With Apologies to Walter Bagehot. Lombard Street. 1873.
At the Comex silver depositories Friday final figures were: Registered 44.49
Moz, Eligible 121.00 Moz, Total 165.49 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, we present Goldie getting the reverse Goldmanite treatment from
Bloomberg. Needless to say the Great Vampire Squids don’t like it when they’re
on the end of the data mining. From predator to Muppet via one of Mayor
Bloomberg’s trading stations. It’s hard doing “God’s work” in the 21st
century. Still, Bloomberg ought to know better.
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
Goldman Sachs employees concerned Bloomberg news reporters are using terminals to snoop
By MARK DeCAMBRE
Last Updated: 11:23 AM, May 10, 2013
Talk
about a nanny state.
Irked
Goldman Sachs brass recently confronted Bloomberg LP over concerns reporters at
the business news service have been using the company’s ubiquitous terminals to
keep tabs on some employees of the Wall Street bank, The Post has learned.
The
ability to spy on Bloomberg terminal users came to light recently when Goldman
officials learned that at least one reporter at the news service had access to
a wide array of information about customer usage, sources said.
In one
instance, a Bloomberg reporter asked a Goldman executive if a partner at the
bank had recently left the firm — noting casually that he hadn’t logged into
his Bloomberg terminal in some time, sources added.
Goldman
later learned that Bloomberg staffers could determine not only which of its
employees had logged into Bloomberg’s proprietary terminals but also how many
times they had used particular functions, insiders said.
The
matter raised serious concerns for the firm about how secure information
exchanged through the terminals within the firm actually was — and if the
privacy of their business strategy had been compromised.
“You can
basically see how many times someone has looked up news stories or if they used
their messaging functions,” said one Goldman insider.
“It made
us think, ‘Well, what else does [Bloomberg] have access to?’ ”
Bloomberg’s
terminals have become the lifeblood of Wall Street trading shops, particularly
those that mine the terminals’ reams of data to help make daily trading
decisions.
Wall
Street firms pay about $20,000 a year to rent each terminal — allowing the
company founded by Mayor Michael Bloomberg to ring up annual revenue of more
than $6 billion.
Mayor
Bloomberg, who is worth about $25 billion, no longer oversees the day-to-day
running of Bloomberg LP but controls the privately held company.
In recent
weeks, top executives from Goldman have met face to face with Bloomberg brass
over the potentially explosive issue.
Some
Goldman traders are still skittish about how much of their terminal usage can
be gleaned from Bloomberg terminals — despite assurances from the news and data
service that within 24 hours of being alerted by Goldman it had pulled the plug
on the function that allowed its reporters to snoop.
A Goldman
spokesman confirmed that Bloomberg was addressing the issue.
----
The data trolling issue is somewhat ironic for the bank given that some on the
Street often accuse Goldman of tapping key information better than rivals.
More
Fed queries Bloomberg over reporters' access to client data
By Lauren
Tara LaCapra and Jennifer Saba
Sat May
11, 2013 7:57pm EDT
(Reuters)
- Bloomberg LP customers, including the U.S. Federal Reserve and the U.S.
Treasury, were examining on Saturday whether there could have been leaks of
confidential information, even as the media company restricted its reporters'
access to client data and created a position to oversee compliance in a bid to
assuage privacy concerns.
The
financial data and news company, whose computer terminals are widely used on
Wall Street, had allowed journalists to see some information about terminal
usage, including when customers had last logged in, and how often they used
messaging or looked up data on broad categories, such as equities or bonds.
Bloomberg
CEO Daniel Doctoroff said in a statement on Friday that the firm restricted
reporters' access last month after a client complained.
More
We end for today
with the great Goldmanite threat. What could Mayor Bloomberg have been
thinking.
"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."
Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009
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?
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