Baltic Dry Index. 995 +33
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“Wall
street is the only place that people ride to in a Rolls Royce to get advice
from those who take the subway.”
Warren
Buffett.
“Screw you Ebenezer Squid,” said Bernanke
yesterday, and Ebenezer and the squids promptly tanked the Fed’s final bubble.
The next Lehman began struggling out of the woodwork. Even as “the Bernank”
said “screw you,” he tried via weasel words to hedge his bets. “Our policy is in no way predetermined,” Bernanke said.
“Our policies are tied to what’s going on in the economy.” For now the great vampire squids still
doubt that Bernanke has the balls to pull a 1981 Volker on them. Once they ever
think Bernanke is telling the truth, and the great 1982 -2013 lower interest
rate bubble has ended, it’s the Fed’s final bubble that’s screwed.
A mass movement out of bonds and stocks will
commence and a mass movement into next Lehman’s will surface. Stay long physical
gold and silver. With QE3 no longer effective, the Fed admitted yesterday that
it’s run out of bullets. In the 1987-2013 game of Fed serial bubbles, getting
out early has always trumped getting out late. Once the new religion takes hold
on Wall Street, the old order becomes so yesterday’s news. For now few believe
in the Fed’s reformation, but all hell breaks out if Wall Street comes to
believe.
The Great Nixonian Error of fiat money is deep in
the end game. If the Fed really has found the new religion, the earliest set of
losers will likely be the BRICs. In 1982, few realised that Volker had changed
the game, myself included, setting off the era of ever lower interest rates.
The initial boom lasted until the stock market blew up, early on fallen guru Greenspan’s
watch in 1987. It’s been all smoke and mirrors and bubbles and casino
capitalism since. Dr. Bernanke is saying that he can’t keep that fraud on the
road anymore. We are entering the new age of higher interest rates. In the words
of the USA’s top archaeologist, Ric Savage, “Boom baby!”
“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
June 19, 2013, 5:30 p.m. EDT
Fed tapering could begin later this year
Talk of bond-purchase tapering slams financial markets
WASHINGTON
(MarketWatch) — Federal Reserve Chairman Ben Bernanke said on Wednesday that
the central bank may start to scale back its asset purchases later this year if
the economy continues to strengthen, as the central bank expects.
The Fed,
which kept monetary policy on hold after a two-day meeting, signaled greater
optimism about the economy, forecasting that the unemployment rate could fall
to 6.5% by 2014, one year sooner than the central bank had previously
estimated.
The
Fed’s newly revised forecast and Bernanke’s comments slammed U.S. financial
markets. Stocks
on Wall Street ended sharply lower and the 10-year
Treasury yield 10_YEAR
+0.55% surged
to 2.33%, its highest level since March 2012.
The
central bank’s $85-billion-a-month bond-buying program has helped prop up stock
prices and keep U.S. interest rates ultralow.
----Dean
Maki, chief U.S. economist at Barclays, said he now thinks the Fed will reduce
the pace of asset purchases to $70 billion-per-month at its meeting in
mid-September. The purchases would end by march, he added.
More
June 19, 2013, 7:08 p.m. EDT
U.S. stocks sink, yields rise after Fed move
Benchmark
indexes initially cleared their losses after the Fed’s policy statement, then
fell hard as Bernanke said the Federal Open Market Committee currently
anticipates moderating the monthly pace of purchases later this year, so long
as incoming data support the Fed’s forecast.
More
Below, “If You Can Keep Your Head When All About You Are Losing Theirs, Then You Just Don't Understand The Problem.” “Ultimately the tapering should be positive for equities because it’s predicated on a stronger economy, which is good for earnings.” Well maybe, but in the immortal words of Mencken.
It is hard to believe that a man is telling the truth when you
know that you would lie if you were in his place.
H. L. Mencken.
Asian Stocks Drop on Fed Statement, China Flash PMI
By Jonathan Burgos & Adam Haigh - Jun 20, 2013 5:22 AM GMT
Asian stocks slumped the most in almost two years amid
concerns a credit crunch in China is worsening and the Federal
Reserve will reduce stimulus should the U.S.
economy continue to the improve. Industrial & Commercial Bank of China Ltd. dropped 3 percent in Hong Kong, pacing declines among Chinese lenders as interbank interest rates climbed and a preliminary survey showed China’s manufacturing is shrinking. Samsung Electronics Co. (005930), the world’s No. 1 smartphone maker, slipped 2.5 percent in Seoul. BHP Billiton Ltd., Australia’s top oil producer and the world’s biggest mining company, sank 3.2 percent as oil and metal futures decreased.
----Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy achieves the sustainable growth the Fed has sought since the recession ended in 2009.
“Markets expected asset purchases to continue unabated through at least the end of this year given the recent employment and inflation data,” Keith Poore, Wellington-based head of investment strategy at AMP Capital, which has about $126 billion in assets under management, said by telephone. “That doesn’t look to be the case at the moment, so equities are coming off. Ultimately the tapering should be positive for equities because it’s predicated on a stronger economy, which is good for earnings.”
More
China Money Rates Jump to Records as PBOC Lets Cash Crunch Build
By Bloomberg News - Jun 20, 2013 6:15 AM GMT
China’s
benchmark money-market rates climbed to records as the central bank refrained
from using reverse-repurchase agreements to address a cash crunch in the world’s
second-biggest economy.
The
People’s Bank of China didn’t conduct open-market operations to add or drain
funds today and sold 2 billion yuan ($326 million) of three-month bills.
Maturing notes added a net 28 billion yuan to the financial system this week,
after increases totaling 252 billion in the last two weeks. Chinese banks need
to step up efforts to support economic reforms and do more to contain financial
risks, the central government said yesterday after a meeting led by Premier Li
Keqiang
The
seven-day repurchase
rate, which measures interbank funding availability, rose 270 basis points,
or 2.70 percentage points, to 10.77 percent in Shanghai, according to a daily
fixing announced by the National Interbank Funding Center. That was the highest
in data going back to March 2003. The one-day rate
rose by an unprecedented 527 basis points to an all-time high of 12.85 percent,
a separate fixing showed. An intra-day gauge of
the one-day rate touched a record 25 percent.
More
China factory activity hits nine month low, policy action eyed
BEIJING |(Reuters) - China's factory activity weakened to a nine-month low in June as demand faltered, a preliminary survey showed, heightening the risk of a sharper second quarter slowdown and increasing the heat on the central bank to loosen policy.
China's economy grew at its slowest pace for 13 years in 2012 and so far this year data has been weaker than expected, bringing warnings the country could miss its growth target of 7.5 percent for this year, though possibly not by much.
And as the economy shows signs of faltering, a squeeze in Chinese money markets over the past two weeks has sharply tightened monetary conditions, adding to the pressure on the People's Bank of China to take steps to ease policy.
More
In currency war
news, Russia is about to join in Japan’s war. Taking a leaf from Japan’s
playbook, "The Finance Ministry would accept a certain weakening of the
rouble's exchange rate, but only as long as it is driven by the market and not
by administrative methods," Siluanov told Reuters. So that’s alright then,
still “market driven” aren’t the policies at the Fed, ECB, BOE, BOJ, PBOC. Why
should Russia be different?
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
Russia backs weaker rouble to boost budget and growth
* FinMin would welcome market-driven weakening
* Real appreciation has hurt competitiveness - Siluanov
* Weaker rouble would boost budget revenues
* Risk that inflation would become entrenched
By Maya Dyakina
MOSCOW, June 18 (Reuters) - Russia's Finance Minister said on Tuesday he would welcome a weaker rouble to revive flagging economic growth, but while the approach may boost fiscal revenues there is a risk that inflation could become entrenched.
Anton Siluanov's call for a weaker currency follows a series of meetings chaired by President Vladimir Putin, who has pressed the government to meet spending promises made on his return to the Kremlin in May 2012 in the search for more growth.
The $2 trillion economy, the world's ninth largest, grew by 1.6 percent year-on-year in the first quarter of this year - its slowest since 2009. Weakness ran into May, with industry output shrinking by 1.4 percent from a year earlier.
"The Finance Ministry would accept a certain weakening of the rouble's exchange rate, but only as long as it is driven by the market and not by administrative methods," Siluanov told Reuters.
More
Up next we revisit
the insane asylum aka Germania, formerly known as continental Europe. Welcome back
to the EUSSR. Boom baby!
EU strikes deal on long-term budget, but approval in doubt
BRUSSELS
| Wed Jun 19, 2013 10:30pm BST
(Reuters)
- Negotiators reached a provisional deal on Wednesday to finalise the European
Union's 960 billion euro (824 billion pounds) long-term budget, but
ratification of the deal was immediately thrown into doubt by a leading
socialist lawmaker in the talks.
The deal
between representatives of EU member states and the European Parliament on a
seven-year spending package needs majority support from the parliament to come
into force as planned at the start of 2014.
But the
head negotiator for the Socialist group in the parliament - the second largest
group - said he was not satisfied with the outcome.
"Negotiations
concluded. Not satisfactory to all. We cannot confirm agreement tonight,"
Bulgarian socialist MEP Ivailo Kalfin tweeted after the talks.
Without
the support of the socialist group, it is unclear whether the deal will pass a
parliamentary vote scheduled for early July. Further talks among MEPs and
governments may be needed to secure majority backing, EU officials said.
That
could delay the start of EU development funding for poorer regions hit by
recession, as well as a new initiative to combat rising youth unemployment in
parts of the 27-nation bloc.
More
Euro zone wrangling may cost Greece 2 billion euros in 2013 - sources
BRUSSELS/ATHENS |(Reuters) - European foot-dragging could leave Greece short of 2.0 billion euros (1.7 billion pounds) this year as some euro zone creditors are reluctant to roll over their Greek debt holdings, Greek and euro zone sources involved in the matter told Reuters.
Greece's creditors - euro zone countries, the European Central Bank and the International Monetary Fund - agreed last December that the bloc's 17 national central banks would replace some of the Greek bonds they hold with new Greek paper as the debt matures.
This measure, called the "rollover of ANFA holdings", was expected to spare Greece from having to redeem 3.7 billion euros of debt in 2013-2014 and 1.9 billion euros in 2015-2016.
But the bond rollover has hit a snag because some central bankers are worried that it might be seen as direct financing of the Greek government, Greek officials said. The law governing the ECB forbids it from such direct financing.
"The main issue is that ANFA is considered by some central bankers as direct government financing from the ECB," a senior Greek finance ministry official told Reuters.
"We have kept our pledges, now our lenders must do the same," another Greek official said.
Senior euro zone officials with direct knowledge of the matter confirmed that a gap could open up in the bond rollovers.
----The shortfall is a threat to Greece's bailout programme because International Monetary Fund rules require the country to be fully financed at least 12 months in advance in order to continue the programme of support for Athens.
More
German Bonds Face Selloff at Denmark’s ATP on Trading Tax
By Matthew Winkler, Peter
Levring & Maud van Gaal - Jun 19, 2013 11:01 PM GMT
Denmark’s
biggest pension fund, which holds $36 billion of long-term German bonds, says
it may have to sell the debt unless Chancellor Angela Merkel moves to block a
tax on financial transactions. Such a levy “would instantly destroy our business model and would force us to invest differently,” Carsten Stendevad, chief executive officer of the $140 billion ATP fund, said in an interview at his office in Copenhagen. “The moment they would do this, many investors would start looking for other safe havens.”
More
In other news this morning, just because you’re
paranoid doesn’t mean they’re not out to get you. With the NSA, IRS and the CIA
at your disposal, we have ways of making you comply. Thank God for bank
bailouts, hand-outs and charity begins at home for US billionaires.
The illegal we do immediately. The unconstitutional takes a
little longer.
Henry Kissinger.
Dotcom decries 'largest data massacre' after company deletes files
WELLINGTON |(Reuters) - The founder of the outlawed Megaupload file-sharing site denounced on Thursday "the largest data massacre in the history of the internet", after a European firm wiped out private photos, videos and documents stored on servers used by the site.
Dutch firm LeaseWeb said it had in February erased 630 servers rented by Megaupload, about a year after U.S. authorities closed the site and charged its operators with facilitating online piracy, racketeering and money laundering.
"Our lawyers have repeatedly asked LeaseWeb not to delete Megaupload servers while court proceedings are pending in the U.S.," Kim Dotcom said on Twitter.
"We were never warned about the deletion," Dotcom said, adding that the loss of the files had reduced him to tears.
Dotcom, who also goes by the name Kim Schmitz, has New Zealand residency. He and his colleagues are fighting extradition to the United States.
He argues that Megaupload was merely a storage facility for online files, and should not be held accountable for the content of those files.
LeaseWeb said it had been maintaining the servers at its own expense since Megaupload was shuttered in January 2012. After the servers sat inactive for a year, and with no requests to access them, it said it had informed Megaupload that it would delete them.
----The deleted servers represent a fraction of servers Megaupload had leased around the world to provide storage space for users who uploaded everything from family photos to pirated Hollywood films onto the file sharing site.
In North America alone, Megaupload leases 1,100 servers from Carpathia Hosting, while Cogent Communications Group Inc also provides servers.
Dotcom said he still had the support of the two companies in maintaining files on their respective servers.
U.S. internet rights groups have been fighting to preserve Megaupload files to enable users to try to regain access to content which do not contain illegally downloaded material.
Dotcom's extradition hearing has been pushed back as far as April 2014 as the case has faced multiple delays after a police raid on the flamboyant entrepreneur's mansion was deemed illegal by a New Zealand court. Dotcom is free on bail.
There
are worse situations than drowning in cash and sitting, sitting, sitting. I
remember when I wasn’t awash in cash — and I don’t want to go back.
Proper
Charlie Munger.
Munger Says `Thank God' U.S. Opted for Bailouts Over Handouts
By Andrew Frye - Sep 20, 2010 4:11 PM GMT
Charles Munger, the billionaire vice chairman of Berkshire
Hathaway Inc., defended the U.S. financial-company rescues of 2008 and told
students that people in economic distress should “suck it in and cope.” “You should thank God” for bank bailouts, Munger said in a discussion at the University of Michigan on Sept. 14, according to a video posted on the Internet. “Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.”
---- “Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens,” Munger said. “So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”
More
http://www.bloomberg.com/news/2010-09-20/berkshire-s-munger-says-cash-strapped-should-suck-it-in-not-get-bailout.html
“Of
the billionaires I have known, money just brings out the basic traits in them.
If they were jerks before they had money, they are simply jerks with a billion
dollars.”
Warren
Buffett. So how do you really feel about partner Proper Charlie Munger.
At the Comex silver depositories Wednesday final figures were: Registered 41.76
Moz, Eligible 122.62 Moz, Total 164.38 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the decline (and fall) of the free born
English, (and everyone else in Cameronite, “heir of Blair,” Great Britain. In today’s old socialist, anti-Christian,
anti-Israeli, anti-American BBC dumbed down stub of Great Britain, no party
dared tell the electorate what they were facing before the last General
Election. All three major parties plus the nationalists promised Easy Street,
with just some mild fiddling around the edges. No party now dares tell the truth on the
increasing implosion of Continental Europe, nor the collapse coming to America
if ever the heroin of QE programs are really ended. The Fed’s final bubble bursts and with it the
Great Volker Bond Bubble of 1982-2013, when he first started cutting the Fed
funds rate back from 20% in June 1981. We are at the interest rate lows and
everyone knows it. The next interest rate move from here is up, with all the
devastation that will bring. Stay long physical gold and silver for our rocky
future.
“It
is only when the tide goes out that you can see who is swimming naked.”
Warren
Buffett
The Magna Carta – Walking in King John’s footsteps.
by Anna
Raccoon on June 19, 2013
798 years ago today, King John set his seal on the
Magna Carta. The contents of that historic document had been bitterly argued
over for four days. During those days, as the Barons struggled to wrest the
absolute power of a monarch from his grasp and extract the concessions that we
refer to today as ‘the rule of law’, the King rested in his hunting lodge,
journeying each day to the Runnymede meadows via a specially constructed
underground tunnel.
The King was unwilling to be stripped of his
sovereign right to chop off your head merely because he thought your eyes were
too close together. He needed no permission to prosecute a citizen. It was the
Barons who wished to see that sovereign right balanced by rights accorded to
the accused:”No free man shall be seized, or imprisoned, or disseised, or
outlawed, or exiled or injured in any way, nor will we enter on him or send
against him except by the lawful judgment of his peers, or by the law of the
land.”
They wanted the protection that we enjoy today –
that of being ‘innocent until proven guilty’ in a court of law. They wanted
potential accusers to stand in public and state their case, not whisper in the
King’s ear.
They wanted the opportunity to refute allegations of wrong doing,
and to have the two versions adjudicated by the calm and ”lawful judgment
of his peers”, not decided by the King and his friends.
In short, that part of the Magna Carta was centred
on the rights of the accused. We are in danger of losing those historic rights
as our Justice system, which now oversees the power of the Crown to punish
citizens, is ever nudged in the direction of achieving a ‘social justice’ on
behalf of the victim.
We no longer demand that accusers always ‘stand in
public’ and state their case. We allow ‘vulnerable victims’ to remain in the
shadows, behind a curtain or via video link. We don’t demand that their
accusations are backed by solid evidence, or rather we consider that solid
evidence consists of two or more victim’s alleging the same offence has
occurred. We don’t demand that the victim is particularly specific in their
allegation; we take into account the distress caused to them, the length of time
since the offence occurred, and say ‘roughly’ will do.
We say that even if the Crown doesn’t think it
possesses sufficient evidence to prosecute, or continue a case, that the
‘victim’ should have the right to review that decision. We encourage the victim
to make a statement to the court telling of how much distress the offence has
caused them – and that this is taken into account in the ultimate sentence.
We even say that if a man has been
acquitted of an offence, the ‘victim’s rights’ demand that he can be
prosecuted a second time – so the accused can never have absolute finality in
the matter.
Our Justice system is no longer centred on
curtailing the power of the Crown to ‘injure in any way’ the ordinary citizen,
but to deliver an outcome which is acceptable to the emotional and distressed
victim, or those who cry out on his behalf.
-----The underground tunnel to Runnymede has long
been blocked up, though the entrance is still visible. The great Hall where King
John dined with his advisors, mulling over the demands for the rights of the
accused, a staff meeting room. The chamber where he no doubt tossed and
turned in his sleep, now a bedroom in a luxury flat. But Duncroft Hall, King
John’s hunting lodge, still exists; it became Duncroft Approved School.
Perhaps it should be a national monument, the place
where justice for the accused started – and finished. Happy Birthday to the
Magna Carta. 798 years old today – what remains of it.
"I want us to do even more
to encourage the risk takers"
Gordon Brown. 2004.
“Prime Minister Gordon Brown called yesterday for the Financial Services Authority to start an inquiry, saying he was “shocked” at the “moral bankruptcy” indicated in the suit.”
Gordon Brown. 2010.
Gordon Brown. 2004.
“Prime Minister Gordon Brown called yesterday for the Financial Services Authority to start an inquiry, saying he was “shocked” at the “moral bankruptcy” indicated in the suit.”
Gordon Brown. 2010.
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.
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