Baltic Dry Index. 847 +22
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Heaven
goes by favour. If it went by merit, you would stay out and your dog would go
in.
Mark
Twain.
Over the top was what the unfortunate troop of World War
One called the order to attack the enemy. It referred originally to going over
the top of the protective trench and on into unprotected no-man’s land and mass
slaughter from machine gun fire and shelling. Eventually over the top took on
the meaning of an outrageous unjustifiable thing. In our case today it refers
to our Great Disconnected stock market bubble, which seems to have gone over
the top from Asia to America. The probable cause it that the Fed has burst its
own final bubble, with a deliberately leaked story to their favourite hack at
the Wall Street Journal. The ran up the trial balloon of the end of QE via a
taper, with the complete end to follow that. As part of the great lie, the US
economy had healed and had reached the Davos Spring velocity, agreed all the
way back in January. With a few loose lip speeches by Fed members suggesting it
was time for a QE taper, the Fed had inadvertently reintroduced volatility back
into the Great Disconnect.
Quickly recognising their error, the Fed made a clumsy
U-turn, suggesting that QE could be expanded as well as tapered off, if the
conditions required it. But the psychological damage was done. Traders at first,
began to think of the aftermath, the day after tomorrow when the Fed really
does signal the end of QE forever. Stocks faltered and volatility moved back
into bonds. The Great Disconnect began to reconnect. The Fed’s final bubble is
now headed towards its pin.
Below, the morning’s ominous news. The Davos Spring is
about to meet the Davos winter.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
Japanese stocks lead rout in Asia, dollar slumps on Fed uncertainty
TOKYO |(Reuters) - Japanese stocks dived into bear market territory and Asian shares hit new 2013 lows on Thursday as the prospect of reduced stimulus from central banks rattled investors, triggering a broad sell-off from riskier assets.
The tumult in global markets also sent the dollar skidding as uncertainty about whether the Federal Reserve would scale back its massive stimulus and the slide in Japanese shares forced a clean-out of long-dollar positions.
More
Asian Stocks Slip on World Bank as Kiwi Drops; Yen Gains
By Glenys Sim & Adam Haigh - Jun 13, 2013 5:53 AM GMT
Asian equities tumbled, with the region’s benchmark index headed
toward a correction, and the yen rose to the strongest in two months against
the dollar after the World Bank cut its global growth forecast amid concern
central banks may pare monetary stimulus. New Zealand’s currency fell. The MSCI Asia Pacific Index dropped 2.3 percent to 128.92 at 1:52 p.m. in Tokyo, erasing this year’s gains. Japan’s Topix Index sank 3.8 percent while the Shanghai Composite Index lost 3.1 percent after a three-day break. Standard & Poor’s 500 Index futures slipped 0.4 percent, indicating the gauge may extend declines for a fourth day. FTSE 100 Index contracts slumped 1.2 percent. The yen gained at least 1 percent against its 16 major peers, reaching 94.45 per dollar, the strongest since April. The so-called kiwi weakened 0.9 percent. Oil and wheat fell more than 0.4 percent, dragging the S&P GSCI Index of commodities down 0.5 percent. Bond risk in Asia rose.
The
global economy will expand 2.2 percent in 2013, the World Bank said yesterday,
paring a January
forecast of 2.4 percent. The Federal Open Market Committee meets next week
after the Bank of Japan
this week left its lending program unchanged. Global stocks have plunged 5.2
percent from their May 21 peak this year on speculation the Fed may ease
stimulus.
More
Insight: The big money bails on Argentina - again
BUENOS AIRES |(Reuters) - More than a decade after Argentina's epic financial collapse of 2001-02, many investors are rushing for the door once again.
From big Chinese and Brazilian companies like miner Vale do Rio Doce SA, to small-business owners and savers, the fear of a new crisis has led to canceled investments and suitcases of cash leaving the country.
The mass exodus, which has been limited only by leftist President Cristina Fernandez's capital controls, is threatening to undermine Latin America's No. 3 economy even further by leaving it short of hard currency and new jobs.
The
underlying problems range from Fernandez's hostile treatment of the private
sector, to severe financial distortions such as a parallel exchange rate, to
the general feeling that Argentina is due for one
of the periodic spasms that have racked the country every 10 years or so going
back to the 1930s.
---- By relying on short-term fixes such as price controls and bans on Argentines buying dollars, Fernandez may just be delaying the inevitable while piling up even more problems.
"The
longer they try to delay things, the worse they will be," said Lavagna,
who worked for Fernandez's late husband and predecessor, Nestor Kirchner,
before falling out over what he saw as the couple's increasingly anti-business
agenda.
More
Elsewhere in the great wasteland of Germania, once
known as Europe, it wasn’t meant to be like this. The European Monetary Union
was supposed to lead Europe’s huddled masses into the promised land of
unlimited milk and honey for all. Two chickens in every pot. We would all get
to adopt a Club Med lifestyle, except the Germans, who would have to keep
working to pay for it all. But no one told the Germans it seems. Far from being
good little model Europeans, all for one and one for all, the German politicians
reverted to type when the Greeks spoiled the party by getting outrageously
drunk on Germany’s credit card. It has
all been downhill since then, with an ever more convoluted plot to “fix” the
euro, rather than letting either Germany or Club Mad out of the monetary union.
Under the latest iteration of the
Berlin-Brussels-Frankfurt Axis plan, Europe’s youth has been ordered to
emigrate or die. Go east, west, south,
anywhere but north. Greece has been thoroughly trashed by Vandals and Goths.
They will likely be told to stop using Greek next. Cyprus looted and sacked by
banksters. The Iberian peninsula devastated. Italy set back two generations.
And still it isn’t fixed and working, for the euro as we know it has never looked
more deathly. Never been more destructive to the wealth of nations. Stay long physical precious metals swapped for
pictures of fictitious European buildings. Paper money only goes the way of all
paper.
A
game theory study by Bank of America found that Italy would benefit most among
big EMU states from a euro exit. It has a primary surplus, so it would not face
an instant funding crisis. It has fat gold reserves, providing bond collateral
that could be used to raise €400bn in a crisis. Italian household wealth is
€275,200, compared with €195,200 for Germany.
Italian showdown with Germany over euro looms closer
Italy’s simmering revolt against Germany, austerity and its own ultra-European elites is coming to a head again, in a reminder that the deep clash of interests between the euro’s north and south remains as bitter as ever.
Something
snapped in the Italian psyche last week after the European Central Bank offered
nothing to combat the credit crunch asphyxiating small business, and more
broadly washed its hands of Euroland’s incipient deflation crisis and
catastrophic wastage of its youth.
The next
day ex-premier Silvio Berlusconi called for a showdown, or “Braccio di Ferro”,
with northern powers before it loses it chemical, car and steel industries
altogether.
Mr
Berlusconi told Il Foglio that Italy’s government - which his Liberty
Party keeps in office - is complicitly serving forces that are destroying
Italy. It must instead confront the north, “and particularly Angela Merkel’s
Germany”, with a stark choice: either they call a halt to fiscal and monetary
contraction, and opt instead for full-blown reflation; or they must expect the
victims to snatch back their own destinies.
The
battle must be waged quietly, but implacably. Italy cannot let its productive
base atrophy further, or allow itself to be sidelined by the “hegemonic
methods” of those with the upper hand. “That is what I mean by a showdown. We
must find our own national or regional solutions, breaking up euro
mechanisms."
The
business lobby Confindustria is no longer so far from this belligerent
position. “We have shown our willingness to sacrifice, but we must say no to
austerity that reduces our companies to their knees and lets others snap up our
prize assets at bargain prices,” said Giorgio Squinzi, the group’s president.
----The EU’s prescriptions have been
self-defeating even on their own terms, leaving aside the
"hysteresis" damage of a youth jobless rate near 41pc. He said fiscal
overkill that was intended to bring debt under control has instead caused the
debt-to-GDP ratio to soar under Mario Monti from 117pc to 127pc, and 132pc this
year.
----Internal
demand collapsed 5.3pc in a single year, and is still collapsing. Fixed
investment in machinery plunged by 9.9pc. Business loans dropped 6pc and house
sales are in freefall. Nominal GDP fell 1.2pc, which means a shrinking base
must carry a rising debt load. This is the absurdity of internal devaluation in
high debt states: it pushes ratios yet higher as the “denominator effect” kicks
in. Like Spain, Italy is damned if it does, and damned it if doesn’t.
----A
game theory study by Bank of America found that Italy would benefit most among
big EMU states from a euro exit. It has a primary surplus, so it would not face
an instant funding crisis. It has fat gold reserves, providing bond collateral
that could be used to raise €400bn in a crisis. Italian household wealth is
€275,200, compared with €195,200 for Germany.
More
In more European asylum madness, the EU sets out to
bankrupt its airlines. Greece sets out
to exit the Germanic monetary union.
Let
us be thankful for the fools. But for them the rest of us could not succeed.
Mark
Twain.
EU to levy 4.7 percent duty on jet fuel imports from Mideast
LONDON |(Reuters) - The European Union will impose a 4.7 percent duty on jet fuel imports from the Middle East starting next year, officials said on Wednesday, in a move that could significantly increase costs for the EU's embattled airlines.
Last month, EU officials said jet fuel imports could dodge the new tariff thanks to a waiver known as airworthiness certificates or EASA Form 1 certificates.
After reviewing the system, however, the officials concluded that jet fuel cannot benefit from the waiver, which applies mostly to airplane parts.
The new duty comes after the European Union removed the Gulf states from its generalized scheme of preferences (GSP), which offers preferential trade status to developing economies, because they are now classified as upper-middle income economies by the World Bank.
---- The tariff could have a significant impact on Europe's jet fuel prices and on Middle East refineries, which could lose a major market.
"There
will be chaos. Europe will be stuck, they are short on jet fuel," a senior
official at a Middle East producer said.
"At
the end of the day, the consumer will have to pay for this. There is no way we
will," he added.
More
June 12, 2013, 2:16 p.m. ET
Strikes Called in Greece to Protest Closure of Public Broadcaster
The
government moved Wednesday to calm protests over its abrupt decision to shut
Greece's public broadcaster while promising again that operations would resume
in a few weeks—albeit most likely with a much smaller staff and budget.
The
decision to radically revamp Greek Radio and Television, known as ERT, is the
boldest move yet by Greece to slash its bloated public sector workforce, after
dragging its feet for years in complying with demands by international lenders.
But it
was also a political gamble that could threaten the fragile unity of the
governing coalition—although the junior partners said Wednesday that they would
not try to topple the government.
The
political fallout depends in part on how the public reacts to the temporary
shutdown of both ERT's television and radio broadcasts.
Greece's
two largest union groups, representing public and private sector workers,
called a 24-hour general strike for Thursday. The journalists' unions also
declared an open-ended, nationwide news blackout starting Thursday across all
media outlets.
Defying
government orders, workers at ERT continued streaming programming over the
Internet throughout the day—special reports related to its shutdown rather than
regular shows, however.
More
Long term readers of the LIR will already know that
somewhere along the way of life, I came into possession of an old USSR 5 Rouble
banknote. Appropriately, almost worthless when first issued, it is about a
cigarette paper long and double the width. Apart from novelty value, it has a
value of about zero now. Along the way I also came into possession of an old
defunct “FUNF MARK DEUTSCHES REICH 1903” silver coin issued by Wilhelm II
Koenig Von Wuertemberg, an underboss of Capo di
tutti capi, long defunct Kaiser Bill in
Berlin. It is large and thick, impressive and still has a value of about 20 to
30 euros today, thanks to the nearly 28 grams of 900 silver it contains. No one,
especially the middle wealthy, should keep all their wealth in fiat paper or
bank accounts likely to be hit when the euro finally dies.
At the Comex silver depositories Wednesday final figures were: Registered 41.76
Moz, Eligible 122.72 Moz, Total 164.48 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today we take a break from Big Brother America,
where President Obama seems to have morphed into Richard Nixon lite. Ahead of
this weekend’s G-8 summit, sure to be eavesdropped by Obama’s NSA and the UK’s
GCHQ, helping feed the poor and corporate tax dodging, we present NSA partner
Google, Friend or Foe?
Only the little people pay taxes.
Leona Helmsley, herald of our new
lawless age. A posthumous pardon surely.
Politicians accuse Google of operating 'highly contrived tax arrangement'
Google stands accused of operating a “highly contrived tax arrangement” which has no purpose other than to avoid paying UK corporation tax.
In a
stinging indictment of the American search engine giant’s financial affairs,
the House of Commons Public Accounts Committee (PAC) accused the company of
“aggressive tax avoidance” and said it should pay “its fair share of tax” in
the country where it earns profits.
The
committee, chaired by Margaret Hodge MP, dismissed Google’s defence that it pays
so little tax in the UK – a total of $16m (£10.2m) between 2006 and 2011
despite generating revenues of $18bn – because its sales are actually conducted
in the Republic of Ireland, claiming its argument was “deeply unconvincing.”
The
comments, in a PAC report, come a month after Ms Hodge told Google’s northern
Europe vice-president Matt Brittin that his company’s behaviour was “devious,
calculated and… unethical.”
The
report also draws into question the role of HM Revenue and Customs (HMRC),
warning that the Government needs to strengthen the role of the taxman “and to
simplify the tax code so that there are fewer loopholes.”
The PAC,
the Commons’ key spending watchdog, shot down Google’s repeated plea that it
pays little UK corporation tax because its European headquarters are in Dublin
and that it does not trade in the UK.
But Ms
Hodge said: “Google brazenly argued before this committee that its tax
arrangements in the UK are defensible and lawful. It claimed that its
advertising sales take place in Ireland, not in the UK.
“This
argument is deeply unconvincing… The staff in Ireland simply process the
bills.”
She said
that Google’s reputation has been damaged and the only way to repair it would
be to pay tax in the country where it “earns the profits from the business it
conducts.”
----The report also said that HM Treasury should push for an “international commitment to improve tax transparency”.
Its
publication comes ahead of this weekend's G8 summit in Northern Ireland at
which international tax will be high on the agenda.
More
I am opposed to millionaires, but it would be dangerous to offer
me the position.
Mark Twain.
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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