Thursday 23 May 2013

The BRIC Wall.



Baltic Dry Index. 829 - 01

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

“But it (the boom) could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.”

Ludwig Von Mises

Today the Fed’s Great Disconnect ran into the BRIC wall. While the Fed floods the USA banksters with cash to gamble on US stocks, and Japan floods the world with Yen to devalue the yen and steal exports from everyone, China’s manufacturing unexpectedly starting contracting again in May. Probably the first real sign that Japan’s new beggar thy neighbour policy is working, at least for Japan. With China’s economy contracting, China needs less iron ore from Brazil and Australia. Less copper from Africa and South America. 

Less coal from Australia and South Africa. Less Beamers and Benzes from Germany. 
Sustaining the Fed’s final bubble looks like it might now need more than a mere 85 billion a month in new dollar bills, which probably explains why the Fed just flip flopped. Stay long physical precious metals for our very dodgy decade.  The Fed’s entire strategy is in triggering a 1980s stock bubble but without a 1987. Quite how this final bubble is supposed to help Main Street is beyond me, but I suspect that this isn’t the aim. The Fed is well aware that all bubbles end badly, and my suspicion is that this final bubble is the payoff to the bankster, vampire squid set. The final bit of looting in the new lawless age.

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

China Manufacturing Unexpectedly Contracts in Blow to Growth

By Bloomberg News - May 23, 2013 5:33 AM GMT
China’s manufacturing is contracting in May for the first time in seven months, adding to signs that economic growth is losing steam for a second quarter.

The preliminary reading of 49.6 for a Purchasing Managers’ Index (EC11FLAS) released today by HSBC Holdings Plc and Markit Economics compares with a final 50.4 for April. The number was also below the 50.4 median estimate in a Bloomberg News survey of 13 analysts. A reading above 50 indicates expansion.

Asian stocks slumped after the data, which may test the new government’s commitment to tolerate slower growth after Premier Li Keqiang last week signaled reluctance to add stimulus. Investors soured on China’s outlook in a Bloomberg global poll this month, with the share of respondents who see the economy deteriorating doubling from January.

“The slowdown is really bad,” said Ken Peng, a BNP Paribas SA economist based in Beijing. “It’s a big probability now that China’s GDP growth rate in the second quarter will be lower than in the first quarter,” he said, referring to gross domestic product.
More

BRICS risk 'sudden stop' as dollar rally builds

The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa.

Much of the money has gone into debt, with falling economic returns. This is the next shoe to drop in the festering saga of global imbalances. All it will take is a gear-shift by the US Federal Reserve and the inevitable dollar surge that follows. It was the Volcker Fed that set off Latin America's defaults in the early 1980s. It was the mighty dollar that set off Mexico's Tequila crisis, and then the East Asian chain-reaction in the 1990s.

"Every emerging market blow-up that I have seen was preceded by a rise in the dollar," said Albert Edwards for Societe Generale.

"Investors overlook how vulnerable these countries are to a dollar shock. The whole process of excess liquidity and foreign reserve build-up goes into reverse. It acts like monetary tightening and turns into a vicious circle. Markets look for the weak link with the worst current account deficit, and then the dominoes start to fall," he said.

Fed chairman Ben Bernanke told Congress on Wednesday that "premature tightening" could abort the US recovery. There will be no "tapering" of quantitative easing until the fourth quarter. But passive tightening has begun. America's broad M3 money supply has been flat for months.

Former IMF official Stephen Jen, now at SLJ Macro Partners, foresees a "sudden stop", the moment when funding for emerging markets dries up abruptly and investors run for the exits

Mr Jen said the flow of money before 2007 was "pulled in" by a genuine growth story, but what has happened since is different. Money has been "pushed out" of the West by QE in the US and Britain, or by the emergency stimulus in Europe, with liquidity washing through the global system.

It is of "inferior quality", "fickle", and likely to be "fully reversed" as the Fed hoovers up excess money. The timing is in the hands of Bernanke, but the screws are already tightening for some in Asia, Latin America and the Mid-East as commodities deflate.
More

The Wall Street Journal got it wrong, Dr. Bernanke said yesterday, we are not now [or ever, GI] going to stop or taper our money printing programs, aka QE forever.  So who at the Fed dumped disinformation to the WSJ’s former star reporter, the now hapless and duped Jon Hilsenrath, and why?  Did anyone in the Fed or its circle of friends and cronies trade on the spin and make a killing? Happily for the regular hacks covering the Fed beat, the WSJ’s unofficial Fed mouthpiece, is now just another fallen Street hack. The next time the Hilsenrath writes, is it real or more Bernanke trial balloons?

The bankster in his mansion,
The taxpayer at his gate,
Bernanke made them High or lowly,
He disordered their estate.

With apologies to All things bright and beautiful.

Bernanke Says Premature Tightening Would Endanger Recovery

By Craig Torres - May 23, 2013 12:23 AM GMT
Federal Reserve Chairman Ben S. Bernanke defended the central bank’s record stimulus program under questioning from lawmakers, telling them that ending it prematurely would endanger a recovery hampered by high unemployment and government spending cuts.

----Bernanke lamented the human and economic costs of an unemployment rate at 7.5 percent nearly four years into the recovery from the deepest recession since the Great Depression, and said the Fed’s easing is providing “significant benefits.” His comments echoed remarks by William C. Dudley, president of the Federal Reserve Bank of New York, who said in an interview that it would take three to four months before policy makers will know whether a sustainable recovery is in place.
More

May 10, 2013, 7:18 p.m. EDT

Fed maps exit from stimulus

By Jon Hilsenrath
Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy -- an effort to preserve flexibility and manage highly unpredictable market expectations.

Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.
More

We end for the day, as we head for a holiday weekend in America and the UK, with yet more farce in Continental Europe. Would anyone really want to be a member of the 21st century version of the Bilderberger EU? Sounds like another job for the ECB’s super Mario. Time to impose yet another unelected “technocrat” government, and hope it does better for Bulgaria than the last lot did for Italy and Greece.  Time to transfer all money out of Bulgaria’s banks.

Bulgaria's largest party seeks to annul election results

SOFIA | Wed May 22, 2013 5:44pm BST
(Reuters) - Bulgaria's largest political party sought to annul the results of a May 12 election on Wednesday, threatening further uncertainty in the European Union's poorest country where street protests against austerity measures toppled the last government.

The centre-right GERB party, which was forced to resign by mass demonstrations in February, won 97 seats in the 240-strong parliament, but in its complaint it said its rivals campaigned illegally the day before the vote.

Legal experts said the complaint had little chance of success because GERB would have to demonstrate its support was definitely affected, and it was unclear how it could do that.

"GERB's request for cancellation of the election has no precedent in the European Union," said Pascal Perrineau, head of the Paris-based Centre for Political Research. "You just cannot urge people to vote again if you don't like the results."

However, the weeks it may take the Constitutional Court to decide could deepen the political stalemate at a time when Bulgaria needs to draft a 2014 budget and negotiate EU funds to 2021 - key to reviving the economy and creating new jobs.

"We believe there are substantial violations on the day campaigning was banned and on election day too," said GERB member Krasimir Tsipov after lodging a claim to annul the vote.

GERB said its support was dented by an announcement by state prosecutors on the eve of the poll that 350,000 illegal ballots were found at a printing shop owned by one of its councillors.
More

I know what you're thinking. "Did Bernanke fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is the worst recession since the 1930s, the most powerful credit shock in the world, and would blow your savings clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

With apologies to Harry Callahan, Dirty Harry

At the Comex silver depositories Wednesday final figures were: Registered 43.55 Moz, Eligible 120.69 Moz, Total 164.24 Moz.  


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

Today, Interpol. More on our new lawless age. Not quite the benevolent international police force for good, toiling away to protect us from international crime. These days it’s more “Big Brother,” toiling away for the forces of evil.

“The world is a place that’s gone from being flat to round to crooked.”

Mad Magazine.

Is Interpol fighting for truth and justice, or helping the villains?

This famous police force is being used by vicious despots to pursue their political enemies

Most of us take an entirely positive view of Interpol, the cross-border crime-busting organisation, even though we have only the haziest view of what it actually does. This is at least partly thanks to the influence of Biggles, hero of schoolboy fiction, who used to go on perilous missions for Interpol to track down international felons. Agatha Christie was another powerful influence. Her Belgian detective Hercule Poirot might have a discrete word with well-placed Interpol friends when he wanted information on some master criminal.

So far, so good. Unfortunately, Interpol is no longer the virtuous force it was. These days it doesn’t just chase villains. It aids and abets them. Its former president, Jackie Selebi, was recently found guilty of taking bribes from a drugs baron.

More worrying by far, there is now overwhelming evidence that Interpol’s channels are happy to assist secret police from some of the world’s most vicious regimes as they target and then persecute internal dissidents. It may once have been the case that it was the sort of organisation that helped honest citizens sleep more soundly at night. But many of the things Interpol has done over the past few years ought to wake us up at night, screaming.

Let us consider the appalling case of Bill Browder, the former chief executive of Hermitage Capital Management, whose colleague Sergei Magnitsky died four years ago in a Russian prison, almost certainly tortured to death on the orders of the FSB state security service.

Ever since then, Mr Browder, a man of courage and high principle, has demanded posthumous justice for Mr Magnitsky. In return the Russian authorities accuse the financier of corporate theft. Earlier this month, the FSB took its latest retaliatory action. It demanded that Interpol issue an “all points bulletin” to help locate Mr Browder – a move which is presumably intended to lead to his arrest and extradition. Any decent organisation would have dismissed this outrageous demand out of hand. Not Interpol, which is expected to decide whether to comply with the Russian request at a meeting today at its Lyon headquarters. There is every chance it will, if precedent is anything to go by.

Let’s turn our attention to Petr Silaev, a young political activist who was forced to flee Russia after taking part in a demonstration against the destruction of the Khimki Forest outside Moscow three years ago. He was wise to do so. Dark and sinister forces are behind the Khimki development, as I discovered when I visited the forest soon afterwards. My companions and I were trailed by plain-clothes police after we left, and we learnt that several journalists who exposed irregularities in the project have been brutally assaulted.
One of them, Mikhail Beketov, recently died of his injuries.

To return to Mr Silaev: after escaping from Russia he made his way to Spain, where he was seized by counter-terrorism police, acting on instructions from Moscow which had been circulated thanks to Interpol. Let’s be clear: Mr Silaev is guiltless of any crime except offending the FSB. He was nevertheless held in a high-security jail for eight days, and cannot move outside Spain without the risk of being arrested again.

----Here are just a few examples. Chandima Withanaarachchi is a Sri Lankan blogger who delights in exposing government corruption and human rights abuses. Since there is no shortage of either in his native land, his website was banned, he lives in exile, and he is the subject of an Interpol Red Notice.

Napoleon Gomez is a Mexican trade union official who campaigned for the truth after a terrible mining disaster, which he labelled an “industrial homicide”. The Mexican authorities responded by accusing him of corruption. Mr Gomez fled abroad, and lived under the menace of a Red Notice until March 29, even though as far as could be discovered no court had ever found him guilty of anything. He could scarcely move without being arrested, and could no longer do his work as an international trade union leader.
More

"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."

Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008

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?

No comments:

Post a Comment