Baltic Dry Index. 889 +11
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
In Europe, the unthinkable has happened.
Breaking up the euro has gone mainstream. In Germany, a new anti-euro political
party has just launched, with the ability to bring down Chancellor Merkel’s
weak coalition government. In the UK, always semi-detached from continental
Europe and used more or less as milch cow by the EU, now has a mainstream
debate on its hands over the issue of leaving the dysfunctional ever growing
bureaucracy of the EUSSR, and becoming once again a global trading nation. The
remaining 26 would then have to pick up the UK’s net contribution of 10
billion. The UK’s Bilderberger set, have long tried to keep such a prospect
from arriving. Last week the UK’s voters shot down the clique that took over
the old Tory Party last decade, turning it into the despised “heir to Blair.”
Stay long physical gold and silver. France,
Italy and Spain have just declared war against Germany’s hated austerity
regimes. The Brussels bureaucracy is forcing the UK out of the EU. Europe just
might have a future once again.
End is near: 'Catastrophic' euro should be abolished, says its architect
Published time: May 06, 2013 13:30
The same man who called for a united Europe and spearheaded
the euro currency in 1999 , Germany’s former finance minister Oskar LaFontaine
has formally retracted his support for the troubled currency, and is calling
for its abandonment.
Consistently weak data and little upward momentum in recovery has caused severe doubts about the shared financial responsibility that comes along with the continent-wide currency.
The current trajectory of the euro, LaFontaine argues, is ‘leading to disaster’. Lafontaine wrote his remarks on Germany’s Left Party website, and urged the jettisoning of the euro.
"The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt," he said.
LaFontaine took particular aim at Chancellor Angela Merkel, writing that she will only "awake from her self-righteous slumber" after Germany itself becomes a victim of the crisis.
The dichotomy of the financial crisis dialogue borders along Germany’s severe austerity measures, and the rest of the EU’s general rejection. Germany’s efforts to ‘re-balance’ the euro zone aren’t working.
The southern economies, including France, Italy, and Spain, are shrinking. Unemployment has risen to 12.1%, according to Eurostat’s data released on May 1. In Greece and Spain, the numbers are sobering: 3 out of every 5 people under the age of 25 are unemployed.
LaFontaine chastised Germany’s strong-handed tactics in carrying out internal devaluations in Spain, Portugal, and Greece, labeling such efforts as a ‘catastrophe’. The wage ‘squeezes’, according to LaFontaine, are actually just self-serving tactics to improve their own export niche.
"The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later," he wrote.
More
Sketch: Lord Lawson gently clobbers Clegg
Michael Deacon follows a day of disagreement over the EU, featuring Lord Lawson, Nick Clegg and David Cameron.
Lord Lawson is a politician of the old school. Today he described Nick Clegg as a “charming young man”. You knew a putdown of the iciest severity was coming next.It duly arrived. “I don’t suppose Nick Clegg, who is a charming young man, would purport to know the first thing about economics,” the former Chancellor told Radio 4's World at One. He delivered the blow with an air of such amiable innocence that he might just as well have been complimenting Mr Clegg on his taste in ties.
The subject that had prompted Lord Lawson’s outwardly gentle ire was the EU. In the morning he had written a newspaper article (£) urging Britain to leave. The Deputy Prime Minister immediately went on a tour of the TV and radio studios, urging Britain to do no such thing.
Mr Clegg said the EU helped us “stand tall in our own back yard”, so it was vital we didn’t “pull up the drawbridge”. If Mr Clegg thinks most people’s back yards have drawbridges, this Government may be even further out of touch with ordinary life than its critics imagine.
The public were left to decide for themselves which of the two men, if either, was right about the consequences of leaving the EU. According to Lord Lawson, the cost of leaving would be “really very small”. According to Mr Clegg, it would mean the loss of “up to three million jobs”.
No, that was “poppycock”, said Lord Lawson, again with that
air of amiable innocence, as if inviting Mr Clegg to try one of these splendid
jam scones. As well as “poppycock” he also deployed “piffling” and “wicked”,
demonstrating that his vocabulary is as gently old-fashioned as his manner.
---=In the afternoon David Cameron was due to hold a joint press conference with the visiting president of Somalia. Waiting hacks brainstormed ways to make their questions segue subtly from Somalia to the EU. (“Prime Minister, there remains great tension in Somalia following two decades of appalling internal conflict. Speaking of great tension following two decades of appalling internal conflict: the Tory party’s position on Europe…”)
In the end, the man from the BBC just came out and said it: wasn’t it another great day for Ukip, with Lord Lawson supporting their calls to leave the EU? Mr Cameron frowned. Actually, he said, it had been “a good day for the pledge that I have made that if re-elected I will hold an in-out referendum”. Indeed, he added stoutly, “I welcome the attention placed on the key pledge I’ve made.”
It was an almost heart-breakingly valiant effort to make bad news sound good. I expect Lord Lawson thinks him the most charming young man.
Nigel Lawson calls time on the three-pint Eurosceptic heroes
The former Tory chancellor is right about leaving the EU, and closet sceptics will have to accept it, says Ukip's leader
It’s a lot less lonely now. When a group of unknown political players set up Ukip in 1993, the idea that the UK might someday re-establish its independence and leave the European Union was at best a minority pursuit. Now, no less a man than Lord Lawson advocates the idea, and validates Ukip’s arguments. Clearly nobody now doubts that it is a valid position. The reaction to Lord Lawson’s view has been to ask what damage it will do internally, to David Cameron’s embattled Conservative Party, and there has been speculation about the timing of the statement.Famously, “Dave” told his troops that they shouldn’t “bang on about Europe”. He was trying to defang an issue that had bedevilled the Tory party since the Maastricht days. But now, with this intervention, and the last week or so of headlines, the genie is well and truly out of the bottle. He might not be banging on about Europe, but everybody else decidedly is. Lord Lawson’s intervention has just added to the legitimisation of the debate and has highlighted the historic split.
Rarely has such a chasm opened up in British political history. The Europe divide has echoes of earlier times; it is Big Politics, writ in a digital age. Its ability to tear apart the political consensus must be compared with the way in which the Corn Laws and Irish Home Rule changed the game for the establishments of the day.
----The problem for these three-pint heroes and for Mr Cameron is that Lord Lawson has got to the very quick of the matter. When he says, with the weight of his enormous experience, that any negotiations with Brussels will produce nothing but “inconsequential concessions”, he is speaking a dark truth. What we will see is nothing more than the Wilson renegotiations in the Seventies that will be trumpeted and applauded by the establishment as a great victory for the Prime Minister and Britain, as these things always are. Nothing of any substance was achieved in the Seventies, nor will it be today. A concession – such as being allowed to catch herring in the Solent – doesn’t wash
----When we look at this European Union of ours and see Pierre Moscovici, the French finance minister, demanding that EU has its own central treasury and a common tax base, when we see the imposition of iron austerity via the ministrations of Chancellor Merkel, the very idea that Mr Cameron can come back with anything other than window dressing is nigh on laughable. He cannot: that is not how Europe works.
More
The European Community is one manifestation of that
European identity, but it is not the only one. We must never forget that east
of the Iron Curtain, peoples who once enjoyed a full share of European culture,
freedom and identity have been cut off from their roots. We shall always look
on Warsaw, Prague and Budapest as great European cities...To try to suppress
nationhood and concentrate power at the centre of a European conglomerate would
be highly damaging and would jeopardise the objectives we seek to achieve.
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...it is ironic that just when those countries such as the Soviet
Union, which have tried to run everything from the centre, are learning that
success depends on dispersing power and decisions away from the centre, there
are some in the Community who seem to want to move in the opposite direction. We have not successfully rolled back the
frontiers of the state in Britain, only to see them re-imposed at a European
level with a European super-state exercising a new dominance from Brussels.
Margaret Thatcher.
At the Comex silver depositories Tuesday final figures were: Registered 45.21
Moz, Eligible 119.67 Moz, Total 164.88 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Greed, thanks to Boomer Bernanke, is back. Greed is good, it’s “God’s
work,” on Wall Street, it seems. Those Great Vampire Squids that brought
America the Savings and Loan crisis of the late 80s and 90s via the dishonest
junk bond scam, and later brought the world to the edge of financial collapse
via the great Greenspan US real estate bubble, that Wall Street pyramided into
the Great Triple-A securities fraud perpetrated on a foolish rest of the world,
is resetting for a replay of the 80s and
90s. Stay long physical precious metals held outside of the western banking
system. The next Lehman is out there and building, and we all know how this
reality show ends.
I am not a destroyer of companies. I am a
liberator of them! The point is, ladies and gentleman, that greed, for lack of
a better word, is good. Greed is right, greed works. Greed clarifies, cuts
through, and captures the essence of the evolutionary spirit. Greed, in all of
its forms; greed for life, for money, for love, knowledge has marked the upward
surge of mankind.
Gordon Gekko. Wall Street 1987.
Updated
May 6, 2013, 8:51 p.m. ET
Reaping Wisdom On 'Junk'
In
1977, a band of Los Angeles-based traders led by Michael Milken helped Texas
International, an oil company, raise the first "junk" bond. The small
issue—$30 million—opened a chapter in the history of finance. From then on,
companies with less-than-pristine balance sheets were able to tap capital
markets, while investors had the option of betting on securities with higher
risks, and potentially higher returns, than traditional corporate bonds.
Last
week, one of those traders, Leon Black, returned to L.A. and surveyed the
landscape 36 years on. "The financing market is as good as we have ever
seen it," Mr. Black, now the head of the private-equity firm Apollo Global Management LLC, APO +2.42% said at a conference organized
by his old boss at Drexel Burnham Lambert Inc.
----Facts first, worries later. Mr. Black's comments stand to reason—with central banks keeping rates low around the world, investors crave returns from riskier assets like "junk" bonds and equities.
Issuance of high-yield bonds, the more polite moniker for "junk," hit records in both the U.S. and Europe in 2012, according to Dealogic. This year has started in the same vein, with high-yield volumes rising at the fastest-ever clip. That is great news for companies such as cable television operator Charter Communications Inc., CHTR +4.44% which just saved a bundle by selling $1 billion of bonds to replace more-expensive debt.
----The euphoria is such that Jeff Cohen, co-head of U.S. syndicated loan capital markets at Credit Suisse AG, CSGN.VX +2.37% recently told The Wall Street Journal: "Junk is a misnomer."
I wouldn't rush to change the name just yet. Behind the hype and investors' understandable desire to make money, bad habits are creeping back in.
As a veteran of the 2007-2008 turmoil, I am focused on one in particular: "covenant-lite" loans. "Cov-lite" borrowers are the financial equivalent of people with commitment problems. These loans provide the borrower—usually private-equity firms or junk-rated companies—with plenty of opportunities to delay paying back the full amount.
Issuance of these loans exploded just before the crisis, as buyout firms launched ever-larger takeovers and banks engaged in a destructive race to the bottom, ceding a huge amount of power to borrowers and ending up with large losses. Cov-lites are now coming back. Last year saw the biggest issuance since 2007 and this year is on course to beat 2012.
That is worrisome, even for some users of risky paper. Ironically for a conference bearing the name of the father of junk-bond market, the Milken jamboree was overflowing with financiers expressing concern about cheap debt.
At one panel, I listened as two big-time property developers—Starwood Capital Group's Barry Sternlicht and Equity International's Sam Zell—were almost apologetic for how easy it is to raise money in the current environment.
Mr. Black himself sounded a gloomy note. Asked whether Apollo would take advantage of the wave of cheap capital to go on an acquisition spree, Mr. Black said that rising stock markets actually made it a great time to sell or list companies.
Rivals seem to agree. High valuations and the reluctance on the part of cash-rich corporations to dispose of assets have offset the wave of cheap money, leaving private-equity firms more willing to sell than to buy.
Last year, U.S. private-equity "exits"—sales, initial public offerings and other divestments—reached the highest level since 2007. "It's almost biblical: There's a time to reap and there's a time to sow. We are harvesting now," Mr. Black said.
For investors' sake, let's hope the Old Testament parallels stop there. A few verses later, the Bible reads: "All go unto one place; all are of the dust, and all turn to dust again."
Gordon Gekko: The richest
one percent of this country owns half our country's wealth, five trillion
dollars. One third of that comes from hard work, two thirds comes from
inheritance, interest on interest accumulating to widows and idiot sons and
what I do, stock and real estate speculation. It's bullshit. You got ninety
percent of the American public out there with little or no net worth. I create
nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval,
the price per paper clip. We pick that rabbit out of the hat while everybody
sits out there wondering how the hell we did it. Now you're not naive enough to
think we're living in a democracy, are you buddy? It's the free market. And
you're a part of it. You've got that killer instinct. Stick around pal, I've
still got a lot to teach you.
The monthly Coppock Indicators finished April:
DJIA: +133 Up. NASDAQ: +139 Up. SP500: +170 Up. Another Fed bubble underway. But how high is
high enough?
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