Friday, 28 June 2013

QE Forever, Forever.

Baltic Dry Index. 1151 +26.

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

“The creatures outside looked from America to Russia, and from Russia to America, and from America to Russia again; but already it was impossible to say which was which.”

With apologies to Animal Farm.

More on the Fed’s panic later, first this bad news from Asia. Japan’s new beggar thy neighbour trade war has beggared southeast Asia’s Vietnam. In response, Vietnam has devalued the Dong to regain competitiveness against Japan and all comers. The currency wars continue, though nothing good will come from them. This morning  Asia is leading the world towards a full scale currency crisis, the central banksters have now totally lost control over coming events.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

Vietnam Devalues Dong for First Time Since ’11 to Boost Reserves

By Bloomberg News - Jun 28, 2013 3:35 AM GMT
Vietnam’s central bank devalued its currency for the first time since 2011 and cut the interest-rate cap on dollar deposits to help “improve” the balance of payments and boost foreign-exchange reserves.

The State Bank of Vietnam weakened its reference rate by 1 percent to 21,036 dong per dollar, effective today, according to a statement released late yesterday. The currency, which is allowed to trade up to 1 percent on either side of the fixing, fell 0.8 percent to 21,180 as of 9:06 a.m. in Hanoi, prices compiled by Bloomberg show. The reference rate had been kept at 20,828 since 2011 and the spot rate sank to a record 21,036 most days this month, the lower limit of the trading band.

“The trade balance has swung back into deficit,” Tim Condon, head of Asian research at ING Groep NV in Singapore, wrote in a note today. “Devaluation is the standard policy response when this happens.”

Indian media: Concerns over rupee's fall

27 June 2013Last updated at 08:32
Media in India are expressing concerns over the sharp decline in the value of the rupee against the US dollar.
On Wednesday, the rupee touched a "historic low" of 60.72 against the dollar, sparking worries of rise in the prices of essential commodities.

The Hindustan Times says the depreciation "is threatening to blow a bigger hole in household budgets and dashing hopes that the Reserve Bank of India will make loans cheaper".

"Over 11% fall in two months is extremely alarming which, in turn, pushes up the prices of commodities, especially oil and coal," The Hindu quotes financial analyst KN Dey as saying.

The Pioneer feels the sharp fall "clearly indicates tough days ahead for the economy and the common man alike".

China Bad-Loan Alarm Sounded by Record Bank Spread Jump

By Bloomberg News - Jun 28, 2013 5:18 AM GMT
Borrowing costs for Chinese banks have surged the most in at least six years this month as rating companies say a cash crunch threatens to swell bad loans.

The yield spread for one-year AAA bank bonds over similar-maturity sovereign notes jumped 56 basis points so far this month to 163 basis points, the most in ChinaBond records going back to 2007. The similar AA gap widened 59 basis points to 188. Even as China Construction Bank Corp. (939) President Zhang Jianguo said yesterday cash conditions have normalized, the benchmark seven-day repurchase rate was fixed at 6.85 percent, almost twice the 3.84 percent average for this year.

Money-market rates touched the highest level last week since at least 2003, prompting three of the largest rating agencies to warn banks may run out of cash to pay investors in their wealth management products and to extend new loans, increasing the risk their customers will default. The People’s Bank of China is seeking to wring speculative lending out of the system after total credit approached 200 percent of gross domestic product, according to Fitch Ratings.

----Bad loans at banks including Industrial & Commercial Bank of China Ltd. have increased for six straight quarters through March 31, the longest streak in at least nine years.

Chinese commercial banks’ outstanding non-performing loans rose 20 percent to 526.5 billion yuan ($86 billion) at the end of the first quarter from a year earlier, accounting for 0.96 percent of total lending, according to data from the China Banking Regulatory Commission.

Those figures don’t reflect the real amount of debt because of the ways banks move loans off their books, Charlene Chu, Fitch’s Beijing-based head of China financial institutions, said in April. Some loans are bundled and sold to savers as wealth-management products, which pay more than regulated deposits, she said. Other assets are sold to non-bank institutions, including trusts, to lower bad-debt levels.

China calls Xinjiang unrest a 'terrorist attack', ups death toll to 35

BEIJING | Fri Jun 28, 2013 2:09am EDT
(Reuters) - China's state media has raised to 35 the death toll from unrest this week in far western Xinjiang region, and denounced the clashes, the deadliest in four years, as a "terrorist attack".

Xinjiang is home to a large Muslim Uighur community and violence focusing on its discontent had been confined recently to southern districts. The altercations in Shanshan county on Wednesday marked a return of unrest to Xinjiang's north.

Many Uighurs, Muslims who speak a Turkic language, chafe at what they call Chinese government restrictions on their culture, language and religion. China says it grants Uighurs wide-ranging freedoms and accuses extremists of separatism.

On Wednesday, gangs with knives attacked a police station and a government building and set fire to police cars. Twenty-four people died in clashes with police, including 16 Uighurs, state news agency Xinhua said.

According to Xinhua's latest dispatch on Thursday night, eight more died in the police response. It called the incident a "violent terrorist attack" and said the overall situation was now "on the whole, stable".

An officer at Shanshan county's public security, or police, bureau told Reuters by telephone that the cause of the riots and the ethnic origin of the attackers remained unclear.

Xinjiang government officials could not be reached.

Now back to the full on panic at the Fed following the Bernank’s Great Miscalculation. Forget any idea of a taper, let alone the death of QE forever. Three top Fed officials are now so panicked at the relatively minor move in interest rates, that it’s back to QE forever, forever. Stay long physical precious metals. The end of the Great Nixonian Error of fiat currency began in 2008, we will likely see its death this decade. Meanwhile it’s “dress up the end of quarter and half year time, in the markets. No chance of any Liebor style rigging I suppose?

June 27, 2013, 4:01 p.m. EDT

3 more Fed officials chastise ‘feral hogs’

WASHINGTON (MarketWatch) — Three top Federal Reserve officials on Thursday took issue with the jump in interest rates since the central bank’s meeting last week, saying that they were not based on anything policy makers had intended.

Markets are now pricing in more rate hikes than had been assumed before last week’s policy meeting and news conference by Federal Reserve Chairman Ben Bernanke. Fed fund futures imply at least three quarter-point rate hikes, and possibly four, by the end of 2015.

Earlier this week, Dallas Fed President Richard Fisher likened market participants to “feral hogs” for pushing bond yields higher.

On Thursday, William Dudley, the president of the New York Fed, Fed Gov.Jerome Powell and Atlanta Fed President Dennis Lockhart were less colorful but more pointed.

Dudley said expectations of an earlier rate hike were “quite out of sync” with both FOMC statements and the expectations of most FOMC participants.”

Any rise in short-term rates “is very likely to be a long way off,” he stressed.

Powell, in a separate appearance, said the spike in bond yields over the past month is“larger” than would be justified by any “reasonable reassessment” of the path of Fed policy.

----In a speech in Marietta, Ga., Lockhart said that some in the markets appeared to mishear what Bernanke said.

Lockhart compared the market to someone who has to give up smoking.

“I don’t want to be too cute about a serious matter, but to make an analogy, it seems to me [Bernanke] said we’ll use the patch, and use it flexibly, and some in the markets reacted as if he said ‘cold turkey’,” Lockhart said.

While I think that its time to start buying physical precious metals again, and that the great correction is over, others think that gold has entered a new bear market. I think that gold has much further to rise as the central bankster trash the fiat currencies. But there are other reasons to be a buyer of gold below about $1,400 a troy ounce. It doesn’t pay to produce gold in many South African mines below roughly 1400, and costs are about to take a massive jump down there later this year. There is every prospect of major labour unrest, and a major decline from next year in South Africa’s gold output. It’s a funny old world on fiat money and manipulated markets. One that threatens to put South Africa’s working poor out of work and into destitution.

Gold Bear Market Hits Hardest in South Africa Mines: Commodities

By Kevin Crowley & Andre Janse van Vuuren - Jun 26, 2013 8:36 AM GMT
No one has more to lose from gold’s bear market than South African producers as workers digging in the world’s deepest, costliest mines threaten to bring them to a standstill unless pay is more than doubled.

Today the metal slipped to as low as $1,245 an ounce, a record quarterly drop and below production and capital spending expenses at Sibanye Gold Ltd. (SGL), Harmony Gold Mining Co. and Gold Fields Ltd. (GFI), figures compiled by Bloomberg show. Harmony’s South African output costs are the highest of the world’s 12 biggest producers by volume, according to Bloomberg Industries.

“Anything below $1,400 an ounce is sort of a red line” for South African gold producers, said David Davis, a Johannesburg-based analyst at SBG Securities. “There’s a vast difference between what labor unions are demanding and what South African mines can afford. It points towards long drawn out negotiations that could end in dispute.”

Surging militancy among workers threatens to erupt into violence in the run-up to wage talks in mid-July as labor unions dig in for increases that could overwhelm companies’ profit. Strikes and related violence at mines last year that left at least 44 dead knocked 0.5 percentage point off economic growth, according to the National Treasury, and led to pay gains for some of about double the pace of inflation.

Violence extended into this year with three workers killed in the past six weeks including members of the rival National Union of Mineworkers and Association of Mineworkers and Construction Union.

We end for yet another chaotic week with the decline and impending fall of the EUSSR. With yet another “Great Leaders” meeting ending, I have every confidence in their infallible ability to make matters worse. There never was a problem a bent politician and a crooked central bankster, and their bureaucrats couldn’t make worse.

Tempers fray in France as drastic cuts loom

France's budget watchdog has called for another round of drastic cuts and an immediate freeze in public sector pay and benefits, warning that public finances are badly off track as deep recession eats into tax revenues.

The country's Cour des Comptes said the budget is likely to breach EU targets by a wide margin yet again this year, perhaps reaching 4.1pc of GDP, risking a fresh showdown with Europe a time when French support for the EU Project is already in freefall.

The watchdog called for €28bn in extra belt-tightening over the next two years to prevent a debacle, demanding a "particularly vigourous effort" to rein in unemployment benefits, housing aide, pensions and help for families.

President Francois Hollande has already angered much of his own Socialist base with plans to cut spending next year in absolute terms for the first time since 1958, but this may be just start of the battle. The Cour des Comptes said France is not even "halfway" through its fiscal squeeze.

The warnings came as a blizzard of grim news dashed hopes for a rapid recovery from two years of slump. The data office INSEE said consumer confidence fell to 82 in June, the lowest since the series began 40 years ago.

A new report on French competitiveness country by Ernst & Young entitled "Last Chance" confirmed the worst fears of business leaders, concluding that the country is being left behind as foreign investment migrates to Germany and Britain.

The number of new industrial plants created by foreigners fell 25pc last year, and new job creation fell 53pc, with the emerging BRICS powers avoiding the country altogether. Ernst & Young said France's anti-market body language had become almost "repulsive" for outside investors, not helped by a series of bitter labour disputes.

"France is drifting away. Like a receeding wave, it is retreating little by little from the global economy, imperceptibly in the past, but visibly so today," said Jean-Pierre Letartre, Ernst & Young's chief in France.
Mr Letartre said France still has world class companies in technolgy, transport and information services but is succumbing to a "generalised depression" that is feeding itself in a destructive dynamic.

----Officials in Brussels are watching with alarm as French leaders whip up a concerted campaign against European Commission president Jose Barroso, who in a loose moment described French Socialists as "extreme reactionaries" for clinging to cultural protection for France's film industry and arts.

Parliament president Claude Bartolone, who called for showdown over austerity policies with Germany in April, said Mr Barroso is a relic of the last century. "He is a man past his time. His behaviour is insufferable. He incarnates a Europe of markets, capital and a forced march towards austerity," he said.

German Inflation Probably Accelerated for a Second Month

By Stefan Riecher - Jun 28, 2013 12:01 AM GMT
German inflation (ECCPEST) probably accelerated for a second month in June after falling to the lowest level since 2010 in April.

The consumer price index in Europe’s largest economy, calculated using a harmonized European Union method, rose 1.8 percent from a year ago, compared with 1.6 percent in May, according to the median of 24 estimates in a Bloomberg News survey. Prices probably climbed 0.1 percent on the month, the survey shows. German states are scheduled to report inflation data throughout today before the Federal Statistics Office in Wiesbaden publishes national figures at 2 p.m.

Denmark Commits to Toughest Bail-Ins as EU Deal Readings Vary

By Peter Levring - Jun 28, 2013 6:18 AM GMT
Denmark isn’t planning to soften its stance on bail-ins after the European Union struck a deal on bank resolution that leaves room for national interpretation.

The first EU nation to enforce losses on senior creditors in bank failures won’t back down from a law passed in 2010 that ensures taxpayer funds aren’t tapped to aid failing banks, Economy Minister Margrethe Vestager said.

“The EU proposal will not change Denmark’s bank resolution legislation or the conditions for bail-ins in Denmark,” Vestager said yesterday in a phone interview after returning from all-night talks in Brussels. “It will not make the road to receiving a bailout any easier in Denmark.”

EU finance ministers reached a compromise deal yesterday setting guidelines for assigning losses to private bank creditors. The text of the agreement still gives governments the option to nationalize banks to preserve financial stability. Danish banks, led by Danske Bank A/S (DANSKE), have argued the country’s bail-in legislation puts them at a disadvantage to competitors in neighboring Sweden, where creditors can expect state backing.


“...out from the door of the farmhouse came a long file of pigs, all walking on their hind legs...out came Obama himself, majestically upright, casting haughty glances from side to side, and with his dogs gambolling round him.

He carried a whip in his trotter.”

With apologies to Animal Farm.

At the Comex silver depositories Thursday final figures were: Registered 41.40 Moz, Eligible 123.05 Moz, Total 164.45 Moz.  

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

The USA may have a very fine written constitution full of lofty aspirations and checks and balances, but what difference does that make in our 21st century lawless age. If you’re in power and control the NSA and the IRS, no one is going to hold you to account out of fear of the consequences. Whoever gets the spoils of the Presidency in the new lawless era, gets both the carrot and a very big stick.

“All animals are equal, but some animals are more equal than others.”

Animal Farm.

Treasury: IRS targeted 292 Tea Party groups, just 6 progressive groups

By PAUL BEDARD | JUNE 27, 2013 AT 9:50 AM
Refuting Democratic suggestions that progressive groups were also swept up in the IRS probe of the tax status of Tea Party organizations, the Treasury Department's inspector general has revealed that just six progressive groups were targeted compared to 292 conservative groups.

In a letter to congressional Democrats, the inspector general also said that 100 percent of Tea Party groups seeking special tax status were put under IRS review, while only 30 percent of the progressive groups felt the same pressure.

The Wednesday letter to the top Democrat on the House Ways and Means Committee punched a huge hole in Democratic claims that progressive groups were targeted as much as the Tea Party groups from May 2010-May 2012, the height of the Tea Party movement.

The letter from the Treasury Department Inspector General for Tax Administration revealed that there just weren't many progressive groups who even sought special tax exempt status. A total of 20 sought it, and six were probed. All 292 Tea Party groups, meanwhile, were part of the IRS witchhunt.

"At this point, the evidence shows us that conservative groups were not only flagged, but targeted and abused by the IRS," said Sarah Swinehart spokeswoman for the Ways and Means Committee.

"As we gather the facts, we will follow them wherever they lead us. Chairman [Rep. David] Camp encourages all groups, regardless of political affiliation, that feel they may have been targeted to come forward and share their story."

Democrats had noticed that the word "progressives" was on the so-called Be On The Lookout, or BOLO, list. But the Treasury IG suggested that the list wasn't used.

Another weekend and still no sign of Snowy, supposedly holed up in a no go area of Moscow’s international airport. My guess is that the FSB has whisked him off to some safe location, possibly within the airport, much like Mossad’s zone at Schiphol in Amsterdam, or more likely somewhere outside Moscow. Snowy was allegedly travelling with 4 encrypted laptops and an unknown number of flash drives, all now very likely copied by both the FSB and Ministry of State Security in China. If so, both the NSA and UK’s GCHQ,  will soon go blind, or merely be detecting a stream of Chinese and Russian disinformation. Not to worry though, both will still have the dirt on the US and UK serfs, all the better to keep them onside. Have a great weekend everyone, but be careful what you say and write.

“No one believes more firmly than Comrade Obama that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?”

With apologies to Animal Farm.

The monthly Coppock Indicators finished May:
DJIA: +142 Up. NASDAQ: +144 Up. SP500: +177 Up.  The  Fed’s Final Bubble continues. But hurricanes and tornadoes appear. Getting out first beats getting out last.

Thursday, 27 June 2013

The Fed Blinks.

Baltic Dry Index. 1125 +35.

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

“The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market.”

Ludwig von Mises.

Great Vampire Squids 10 Bernocchio 0. In a rout for Wall Street and stock  marketeers  globally, the Fed blinked when faced with a stock market slam down by the pros, in response to the bond market selloff, that arose from Dr. Bernanke’s Great Miscaculation. More proof again that once on QE forever, it really is forever until the cows come home. Stepping in to end it merely adds more proof to Von Mises assertion. Stay long physical precious metals, the great correction is probably over and it’s time to start buying the dips again.

“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.

Risk of 1937 relapse as Fed gives up fight against deflation

The US Federal Reserve has jumped the gun. It has mishandled its exit strategy from quantitative easing, triggering a global bond rout that it did not anticipate, and is struggling to control.

It has set off an emerging market shock and risks "blowback" from a fresh spasm of the eurozone debt crisis, and it is letting all this happen at the same time, before the US economy is safely out of the woods.

It has violated its own counter-deflation strategy, tightening monetary policy even though core PCE inflation has fallen to the lowest levels in living memory and below levels deemed dangerous enough in the past to warrant a blast of emergency stimulus. It is doing so even though the revival of bank lending has faded.

The entire pivot by the Federal Open Market Committee is mystifying, almost amateurish, and risks repeating the errors made by the Bank of Japan a decade ago, and perhaps repeating a mini-1937 when the Fed lost its nerve and tipped the US economy into a second leg of the Great Depression. "It’s all about tighter policy," was the lonely lament by St Louis Fed chief James Bullard.

The Fed seems to be acting in the belief that the US economy will shake off this year's fiscal tightening - 2pc to 3pc of GDP - and that a housing recovery is now entrenched. The sharp fall of Wall Street's homebuilders index would suggest caution. Unlike the surging Case-Shiller index of house prices, it looks forward, not three months backwards.

Severely frightened by May-June’s market action, the Fed is now back to Voodoo actions again. One day QE will end in a rout of the Great Nixonian Error of fiat money. Deficits didn’t matter until one day suddenly they did. And so it will be for QE forever. Buzz Lightyear is back in control at the Fed.

“The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost…We conclude that under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

Dr. Ben Bernanke

US growth revised down to 1.8pc

The US economy grew only 1.8pc in the first quarter, the Commerce Department, in a sharp downward revision from the previous estimate of 2.4pc.

It said personal spending was lower than previously estimated, and that both exports and imports actually declined in the January-March period. The rate was still higher than the 0.4pc rate in the October-December quarter.

The third and final estimate for the quarter suggested that the payroll tax increases that kicked in at the start of the year, and fears about government spending cuts introduced in March, encouraged US households and businesses to hold back.

Consumer spending grew only 2.6pc in the quarter, compared to the previous estimate of 3.4pc.
Exports shrank 1.1pc in the quarter, and imports - which act to lower growth in GDP calculations - contracted 0.4pc.

Another sharp revision was business investment in buildings and other structures, which shrank by 8.3pc in the quarter, compared to the earlier estimate of just a 3.5pc contraction.

----"If we end up with three consecutive quarters of sub-2 percent growth, the Fed won't taper under those conditions. They need convincing signs of a pickup before they turn the taps," said economist Jennifer Lee of BMO Capital Markets.

Don’t Panic as Bond Market Ship Not Sinking, Pimco’s Gross Says

By Grant Clark & Rocky Swift - Jun 27, 2013 4:04 AM GMT
ond yields and risk spreads were too low two months ago and global markets that were too leveraged are now reducing risk, according to Bill Gross, manager of the world’s largest mutual fund at Pacific Investment Management Co.

Gross’s $285 billion Pimco Total Return Fund (PTTRX) led declines among the most-popular bond mutual funds earlier this month after the Federal Reserve sparked a global selloff in bonds by indicating it may start reducing asset purchases known as quantitative easing, or QE.

“In trying to be specific about which conditions would prompt a tapering of QE, the Fed tilted overrisked investors to one side of an overloaded and overlevered boat,” Gross said in his July commentary titled “The Tipping Point”, posted on Newport Beach, California-based Pimco’s website. "Don't panic," he wrote.

Asia Stocks Rise on U.S. GDP as Kospi Soars; Gold Rallies

By Emma O’Brien & Richard Frost - Jun 27, 2013 5:16 AM GMT
Asian stocks rose for a second day, extending a global rebound, as investors speculated the Federal Reserve may hold back from reducing monetary stimulus and Chinese money-market rates decreased. South Korea’s won strengthened, while gold advanced.

The MSCI Asia Pacific Index gained 1.7 percent at 12:14 p.m. in Tokyo, trimming its June decline to 4.8 percent. South Korea’s Kospi index surged the most since September. Futures on the Standard & Poor’s 500 Index (SPX) added 0.1 percent. The cost of locking in China’s interest rates fell for a fifth day. The Dollar Index halted its longest stretch of gains since May 2012, while the won rose against most of its major peers. Gold added 0.8 percent.

In China, it was blink time too. The PBOC quickly lost its nerve once the shadow financial system went into meltdown on even very modest tightening. It seems everywhere is now on a journey “to infinity and beyond.” Stay long physical precious metals. Long before we reach infinity, let alone get beyond, my money is on Mises “crack up boom” appearing out of nowhere, before the new graphene based Electric Carbon Age arrives to reset the global economy. Though the Industrial Revolution was a great success in the long run, it had little influence on downturns in the business cycle.

China Swap, Money Rates Fall for Fifth Day on PBOC Easing Signs

By Kyoungwha Kim - Jun 27, 2013 5:26 AM GMT
China’s benchmark interest-rate swap and interbank lending rate fell for a fifth day, the longest runs of declines in at least two months, on signs the central bank is adding funds selectively to ease a cash squeeze.
About 10 transactions for overnight loans in the interbank market were recorded yesterday after 3:55 p.m. in Shanghai at rates of between 3.5 percent and 4 percent, according to data compiled by Bloomberg. Those were the lowest levels of the day and compared with the daily average of 5.51 percent. The People’s Bank of China signaled this week that while it won’t let the cash crunch roil money markets, any liquidity support will be focused on banks that are lending to help the economy.

“The PBOC will remain the lender of last resort, preventing a systemic threat, and will try to improve the liquidity situation, but only gradually, leaving markets unstable,” Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong, wrote in a research note today.

The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, dropped six basis points, or 0.06 percentage point, to 3.85 percent as of 12:16 p.m. in Shanghai, data compiled by Bloomberg show. It reached an all-time high of 5.06 percent on June 20 and rose 54 basis points this month, the most since January 2011

We end for the day with the EUSSR. When the crooked EU banksters fail as they will from time to time,  thanks to banksters like Mario Draghi, who now heads up the ECB but once headed up the crooked Bank of Italy, Cyprus is the model to be followed. After wiping out the banks creditors, except those given a walk called an “exemption,” bank depositors above the guaranteed limit get “bailed in,” and after that taxpayers are on the hook. Of course this being the EUSSR, we all know only cronies will get an exemption, and the central bank cronies will be tipped off about when to move excess funds over the border into Germany, Switzerland or the UK. A typical European stitch up for those unwise enough to be outsiders keeping anything but minimal cash in an European bank.

Below that, China opens up a new front in the EU’s unwinnable trade war with China.

EU Finance Chiefs Said to Reach Deal on Failing Banks

By Jim Brunsden, Rebecca Christie & Fred Pals - Jun 27, 2013 2:32 AM GMT
European Union finance chiefs struck an agreement on how to handle failing banks, a step they said would bolster investor confidence and help overcome the euro-area financial crisis.

In seven hours of emergency negotiations in Brussels that wrapped up at about 1:30 a.m. today, ministers settled on guidelines for assigning losses to private creditors and regulating public assistance. They also spelled out when governments can step in and established a role for the European Stability Mechanism, the euro area’s 500 billion-euro ($651 billion) firewall fund.

----The deal came hours before EU government leaders meet to take stock of the progress toward their 2012 pledge to break the cycle of contagion between banks and sovereign borrowers. The European Central Bank is due to oversee financial supervision in the euro zone next year, the first stage in a strategy combining new EU resolution procedures along with national backstops.

---- While nations endorsed the banking-union project in principle last year, Germany has indicated that it disagrees with the European Commission’s blueprint, warning that a strong central resolution authority, backed by a common bank fund, goes beyond what is possible under current treaties.

----The ministers’ agreement requires regulators to write down creditors, in order of seniority, until 8 percent of the distressed bank’s liabilities are wiped out, before they could grant exemptions and turn to national backstops instead. The deal offers some wiggle room for regulators, after notifying the European Commission, to exempt some creditors and shift the burden to others.

When government backstops are tapped, the first in line would be national resolution funds that countries finance by levies on their banks. The deal says those funds should reach the size of 1.3 percent of a nation’s insured bank deposits and says the Brussels-based commission must approve any use. Today’s agreement says these funds won’t be allowed to contribute an amount more than 5 percent of a failing bank’s liabilities unless unsecured senior bondholders are wiped out.

27 June 2013 - 07H53  

China slaps anti-dumping tax on EU chemical

AFP - China announced on Thursday it would impose anti-dumping tariffs on a chemical imported from the European Union, the latest twist in a series of bitter trade disputes between the two economic giants.
The Chinese government from Friday will collect punitive taxes of up to 36.9 percent from the EU on toluidine, an agent used to produce dyes, medicines, pesticides and other products, the commerce ministry said.

China a year ago opened an investigation into the alleged dumping -- or selling at a price below costs -- of EU toluidine in the country. The tax will be collected for five years, the ministry said in a statement.

----The ruling came as China and the EU are at loggerheads over a series of disputes covering products including solar panels, telecom equipment, wine and steel pipes.

The European Commission, the EU's executive arm, earlier this month imposed an average tariff of 11.8 percent on solar panel imports from China -- which will rise to more than 47 percent in August if negotiations fail to resolve the dispute.

China quickly hit back by launching an anti-dumping and anti-subsidy inquiry into sales of European wine, stoking fears the dispute was escalating

Toluidine on EU imports of five years imposed anti-dumping duties

[Issued by] the Ministry of Commerce [Posted symbol] Notice 2013 No. 44
[Release Date] 2013-06-27

---- For each company anti-dumping tax rate is as follows:

EU companies
1 LANXESS Deutschland limited liability company 19.6%

(LANXESS Deutschland GmbH)

(2) Other EU companies 36.9%

"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"

Douglas McWilliams, chief executive of the Centre of Economics and Business Research.

At the Comex silver depositories Wednesday final figures were: Registered 41.40 Moz, Eligible 123.45 Moz, Total 164.85 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today we take a break from the where’s Snowy saga, in favour of the shock among the UK’s nasty Notting Hill elite, that Generation X has gone Thatcherite. While U-turn Cameron, and his “heir to Blair,” accident prone, granny bashing, homosexual promoting, one termer government, move from the right to the left, leaving UKIP to become the only legitimate conservative party, Generation X is far to the right of the loony Cameroonians.  At the next UK election it’s anyone’s guess as to the outcome.

My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day’s work for an honest day’s pay; live within your means; put by a nest egg for a rainy day; pay your bills on time; support the police.

Margaret Thatcher.

Guardian robot baffled by Generation Y's embrace of Thatcherism. Does not compute. Does not compute

By Toby Young Politics Last updated: June 26th, 2013
There's a great example in the Guardian this morning of what Americans call "gee whiz" journalism, as in, a piece of news greeted as if it's jaw-droppingly sensational when, to the rest of us is, it's bleedin’ obvious. I'm talking about John Harris's belated discovery that "the yoof" don't share the values of the liberal, Guardian-reading metropolitan elite. Incredible as it may seem, they're not pro-immigration, pro-welfare or pro-redistributive taxation. According to Ipsos MORI, only 20 per cent of 18-34-year-olds agree with the statement "the creation of the welfare state is one of Britain's proudest achievements". How dare they?!?

Most amazingly of all – to Harris, anyway – is that Generation Y don't blame the "Con-Dem cuts" for youth unemployment. Haven't they been listening to Len McCluskey?

The most telling passage in the article comes at the end, when Harris meets a 27-year-old in Warrington who's just got a job after a bout of unemployment thanks to the government's Work Programme. Harris asks him whether he thinks his joblessness was his fault.

"Yeah," he says. "I do. I think I should have applied for more. I should have picked myself up in the morning, got out, come to a place like this – tried more. When you're feeling down, you start blaming the world for your mistakes – you feel the world owes you. And it doesn't. You owe the world: you have to motivate yourself, and get out there, and try."

Harris describes this reply as – wait for it – "heartbreaking". Yes, it breaks the Guardianista's heart that this young person doesn't think the world owes him a living. Instead of becoming welfare dependent, trapped for the rest of his life in poverty and despair – as any self-respecting member of the proletariat should, doncha know – he's actually gone out and found himself a job! Oh tempora! Oh mores! What's become of the client state? It's as if 13 years of New Labour never happened.

Harris blames "Thatcherism" for the proletariat's false consciousness – and the fact that Labour hasn't been a proper socialist party since Tony Blair ditched Clause IV. The "up-by-your-boot-straps Conservatism of Norman Tebbit and Margaret Thatcher" (yah, boo, sucks) went "largely unchallenged during the New Labour years" and is now accepted by millions of young people as "a simple matter of fact". Echoes here of red daiper baby Owen Jones, whom Harris singles out (alongside public schoolgirl Laurie Penny) as a beacon of hope amidst all the gloom. Owen thinks "the rightwing media" is to blame for brainwashing the lumpen proles. If only the poor sods read the Guardian or the Independent, then they'd know THE TRUTH which is that the millionaire-Tory-Bullingdon-Boys-ruling-class have a vested interest in keeping them down.

Hmmm. Call me a capitalist running dog, but I can think of another explanation for Generation Y's lack of enthusiasm for the values of John Harris, Owen Jones and public schoolgirl Laurie Penny.

Maybe – just maybe – the reason 18-34-year-olds aren't wild about the consequences of Labour's open-door immigration policy is because they noticed that nine out of ten jobs created under the last government went to foreign-born workers.

Maybe – just maybe – the young residents of towns like Warrington aren't in lockstep with John Harris and Owen Jones and public schoolgirl Laurie Penny when it comes to state hand-outs is because they've witnessed the appalling, destructive, calamitous impact of welfare dependency with their own eyes.

"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

The monthly Coppock Indicators finished May:
DJIA: +142 Up. NASDAQ: +144 Up. SP500: +177 Up.  The  Fed’s Final Bubble continues. But hurricanes and tornadoes appear. Getting out first beats getting out last.