Baltic Dry Index. 1151 -01
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."
Leonard Read
“All’s well, be happy. We know what we’re doing, we
really do! We’ll end QE forever, at the appropriate time and in the appropriate
way. Trust us, we’re central banksters. We got you into this mess without
knowing how, and we’ll get you out of it exactly the same way. Fiat currency and Anglo-American hegemony forever.”
That was roughly the message yesterday on both
sides of the Atlantic from the Fed, and the Bank of England, now under new
Canadian management. Markets everywhere
seemed underwhelmed. The 30 something bond bull market has ended, and everyone
knows that interest rates only rise from here for decades to come. But the same
old record plays on at the banksters ball. “We’re still dancing,” said
Bernocchio yesterday, apparently unaware of the fate that befell Citi’s twinkle
toes Chuckie Prince. As the British Open commences at men only, Muirfield today, (the Honourable Company of Edinburgh
Golfers,) Dr. Bernanke gets to do a do
over in Washington before the Senators. We can only hope his Mulligan impresses
better than his first try yesterday. The
news out of Asia suggests that Bernocchio’s dancing in the chance saloon on
borrowed time. “Trust me I’m a central bankster,” has long passed its sell-by
date.
We all know that hurricane Sandy is coming, we would like a little detail
on how the Fed’s Costa Concordia is proposing to survive it.
"As
long as the music is playing, you’ve got to get up and dance."
Bernocchio,
with apologies to CDO and MBS maestro, Chuck Prince.
End of QE looms on signals from UK and US
The end of quantitative easing in the Western world loomed closer after both the UK and the US signalled a potential retreat from the controversial crisis policy.
By Philip
Aldrick, and Emma Rowley 9:48AM BST 17 Jul 2013
In the
UK, Bank of England rate-setters voted unanimously to leave QE unchanged at
£375bn for the first time since October last year and, in the US, Federal
reserve chairman Ben Bernanke again hinted that money printing would be slowwed
later this year if the economy remains strong.
However,
both central banks were clear that the end of QE would not mean the end of
monetary stimulus. Minutes to the Bank’s July rate-setting meeting showed that
alternatives to QE are likely to be launched as early as August, prompting
specuation that rates could be low until 2016.
At the
Fed, Mr Bernanke stressed that “a highly accommodative monetary policy will
remain appropriate for the foreseeable future” even if QE is tapered off.
Jittery
stock markets reacted calmly to the news, in contrast with the wild reaction
when the Fed first hinted at “tapering” in June. On Wall Street, the Dow Jones
Industrial Average edged 0.2pc higher after Mr Bernanke’s testimony. In London,
the FTSE 100 closed up 0.2pc at 6,571.93 points.
Traders
and economists expect the US to begin winding down its $85bn-a-month QE
programme in September and halt it completely in the middle of next year. But,
Mr Bernanke was careful to say that the Fed will respond to the data, and could
accelerate the programme if the economy weakened.
More
http://www.telegraph.co.uk/finance/economics/10184505/End-of-QE-looms-on-signals-from-UK-and-US.html
China defies IMF on mounting credit risk and need for urgent reform
If you think China's Communist Party fully understands the mess it has created by ramping credit to 200pc of GDP and running the greatest investment bubble know to man, read its shockingly complacent response to warnings from the International Monetary Fund.
The IMF's
Article IV report on China states - as clearly as the IMF dares - that excess
credit has been pushed to the outer limits of sanity, and that there is a
growing risk of an "adverse feedback loop" as the financial system
and the economy take each other down in a mutually reinforcing spiral.
As you
can see from the first chart, total credit has jumped from 129pc to 195pc of
GDP since 2008, and has completely departed from its historic trend. The great
mistake, plainly, was to keep the foot on the floor in 2010 and 2011, long
after the Lehman crisis had subsided.
The deeper
thrust of the IMF report is that the growth model of the past 30 years is
exhausted. The low-hanging fruit has been picked. If the Communist Party fails
to take radical action, it will soon be caught in the middle income trap.
Charlene
Chu at Fitch has a slightly higher credit ratio because she includes a broader
range of shadow banking, but the IMF paints much the same picture. Loans have
jumped from $9 trillion to $23 trillion since 2008, a faster pace of debt
build-up than in any major episode of the past century.
----The Fund said wealth products (WMP) and trusts - a disguised second balance sheet of banks, worth $2 trillion - "could over time evolve into a systemic threat to financial stability". A sudden loss of confidence could "trigger a run" and set off "a severe credit crunch".
----Beijing's
replied dismissively that "vulnerabilities were well under control".
It said the fast growth of wealth products and trusts were a healthy sign of
"market-based intermediation". Any risks were "manageable".
Bad loans in the banking system "remained low and Chinese banks had some
of the highest capital and provisioning ratios in the world". Do you laugh
or cry?
It may be
that the barrage of criticism lately from the IMF, Fitch and others has nettled
Beijing more than it lets on, hence the violent "stress test" of the
banking system in late June. If it was indeed a stress test, one wonders what
they learnt as the interbank market seized up in a Lehmanesque moment and
intra-day Shibor rates exploded to 30pc.
Xia Bin
from China's Development Research Center (DRC), home of reformers, says it is
time to end happy talk and brace for condign punishment. "We need to find
ways to let the bubble burst and write off the losses we already have as soon
as possible to avoid an even bigger crisis. It means hard days, it means the
bankruptcy of some companies and financial institutions, above all it means
reform," he said. Mr Xia said the debate over China's growth rate -
allegedly 7.5pc - is surreal since the country is already in the grip of an
unprecedented financial crisis.
More
China’s Richest Man Sees Economic Growth Slowing in Second Half
By Bloomberg News - Jul 17, 2013 5:00 PM GMT
China’s richest man Zong Qinghou said the nation’s growth will slide further in
the second half of the year and proposed cutting taxes and breaking up
monopolies to drive an economic recovery. “People will only invest if there is prospect of making a profit,” Zong, chairman of food and beverage conglomerate Hangzhou Wahaha Group Co. (HWGZ), said in an interview in Beijing yesterday. “Medium and small companies are not willing to take loans. If they can’t make a profit, why bother taking a loan?”
The government’s pledge to limit additional stimulus is adding to the risk of a deeper slowdown in an economy jolted by a cash crunch and weakened by faltering global demand for exports. China’s economy grew 7.5 percent in the second quarter from a year earlier, slowing for a second straight period.
“Economic growth will slow down again in the second half because there have been no major economic policies rolling out,” he said.
----Zong, who has a net worth of $11.3 billion, was
pessimistic about the world outlook, saying “the global economy is declining.”
China will recover faster than other countries, he predicted.
More
China’s Easy Money Flows Abroad as Credit Squeeze Hurts at Home
By Bloomberg News - Jul 18, 2013 12:00 AM GMT
As China’s
cash squeeze claims victims across the nation -- from a bailout-seeking
shipyard to a solar-panel maker missing a bond payment -- there are places
where Chinese money remains cheap and plentiful. Like Nigeria. China Development Bank Corp. and Export-Import Bank of China are lending billions of yuan to some of the world’s riskiest regimes at interest rates hundreds of basis points below the cheapest commercial loans available at home. That lending in turn generates overseas contracts to build airports, roads and shopping malls for state-owned Chinese companies that are mired in debt.
----CDB, with a loan book more than three times the size
of the World
Bank’s, and China Eximbank are wholly owned by the state with a mandate to
support Chinese foreign policy. Officials from the lenders accompany the
nation’s leaders across the globe dispensing funds to forge ties from Costa Rica to
Russia, helping secure supplies of oil, gas and minerals and creating work for
some of China’s biggest state-owned enterprises.
Last
month in Latin America, President Xi Jinping
pledged to lend $3 billion to 10 Caribbean nations, CDB offered a $900 million
loan to build a refinery in Costa Rica, and Mexican oil company Petroleos
Mexicanos received a $1 billion line of credit from China Eximbank.
Separately, China Development Bank made a $4.02 billion loan to Venezuela’s
state-owned oil producer.
More
U.S. blames China for breakdown of trade talks
WASHINGTON |(Reuters) - The United States blamed China on Wednesday for a breakdown in trade talks aimed at eliminating tariffs on a new generation of technology products and everyday consumer electronics like speakers and flat-panel displays.
"The United States is extremely disappointed that it became necessary today to suspend negotiations to expand the Information Technology Agreement (ITA)," U.S. Trade Representative Michael Froman said in a statement.
"Unfortunately, a diverse group of members participating in the negotiations determined that China's current position makes progress impossible at this stage," Froman said.
China is one of 20 World Trade Organization members, along with the United States and the 28-nation European Union, that have been negotiating for months to expand the 1996 Information Technology Agreement to eliminate tariffs on additional goods.
Negotiators had hoped to finish the deal this week, working from a draft list of 256 technology products targeted for tariff elimination. But apparently under pressure to protect domestic industries and preserve tariff revenues, China identified 148 "sensitive" products that it either wanted to exclude from tariff cuts or reserve for long tariff phase-outs.
More
China media accuses Japan PM of dangerous politics
BEIJING/TOKYO |(Reuters) - Two of China's top newspapers accused Japanese Prime Minister Shinzo Abe on Thursday of dangerous politics that could threaten regional security, as Tokyo warned Beijing not to expand gas exploration in disputed waters of the East China Sea.
The People's Liberation Army Daily said Abe was trying to play the "China threat" angle, to win votes in July 21 elections, with a visit on Wednesday to Japan's southern island of Ishigaki, near islets claimed by both China and Japan.
Territorial claims by Japan and China over the uninhabited islets and resource-rich waters in both the East China Sea and South China Sea rank as one of Asia's biggest security risks.
During the visit to Ishigaki island, Abe repeated Tokyo's stand that the nearby disputed Senkaku islands, called the Diaoyu by China, are inherent Japanese territory, adding that he has no intention of conceding even one step.
"This kind of 'drinking poison to slake ones thirst' not only threatens regional stability, it gives encouragement to Japan's 'turn to the right'," said the daily.
----The ruling Communist Party's official People's Daily warned that China would never allow itself to be trampled on again, a reference to China's bitter memories of Japan's invasion of the country ahead of and during World War Two.
In a
commentary published under the pen name "Zhong Sheng", or "voice
of China", the newspaper said that Abe was looking for excuses to re-arm
Japan and that the dispute with China was a convenient way of pushing this.
"The
aim is to create tension and provoke incidents, to push Japan's military
development," it said.
Patrol
ships from both nations routinely shadow each other near the islands, raising
concerns about an unintended clash.
On
Thursday, three Chinese surveillance vessels sailed into what Japan considers
its territorial waters near the isles on what Beijing said was a routine
patrol.
The Japan
Coast Guard said the ships later left its territorial water but remain in the
contiguous area.
More
And in Dying Europe? Why ask.
“This will provide an engine, an example that will
allow Europe to go faster, further and better.”
French President Jacques Chirac on the breakdown of the Brussels Summit,
Financial Times, 14-12-2003
July 16, 2013, 6:55 p.m. ET
Euro-Zone Exports Slump in May
Imports Also Fall Indicating Bloc's Economy Contracted For Seventh Straight Quarter
LONDON—Exports
from the 17 countries that share the euro slumped in May, as did imports, an
indication that the currency area's longest postwar contraction may have
continued into a seventh straight quarter.
The
European Union's statistics agency Eurostat said Tuesday that adjusted for
seasonal factors, exports from the euro zone to the rest of the world fell 2.3%
from April, while imports were down 2.2%.
It was
the second straight month in which exports fell sharply, and the largest
month-to-month fall since June 2011.
With rising unemployment, little wage growth and government cutbacks damping domestic demand, increasing exports is essential if the euro zone is to pull out of its recession. But with many other parts of the global economy faltering, a significant pickup in overseas sales appears unlikely in the months ahead.
The euro-zone economy shrank in the first quarter of the year as exports declined. Eurostat won't release its first estimate of gross domestic product for the second quarter until mid-August, but business surveys and economic data releases suggest output may have fallen again
More
While we await more wisdom from the lips of the sage
of Mammon’s electronic Great QE Machine, below more on “colourful” Muirfield. Home
to the Gay Gordon’s perhaps. As a men
only golf club with such a “colourful history,” I wonder why they moved around
so much? As an honourable Scots company
of male golfers, banksters, unlike women, are presumably self excluded.
"I
have a tip that can take five strokes off anyone's golf game: It's called an
eraser."
Arnold
Palmer.
Muirfield. Home of the Honourable Company of Edinburgh Golfers
This web site introduces you to one of the oldest clubs in golf and its world famous course. In the pages that follow you can learn of the Club's colourful history from its first beginnings in Leith in 1744 to its later move to Musselburgh and finally in 1891 to Muirfield in East Lothian.----If you enjoy a challenge, and wish to play a classic links course, please access our Visitor Tee Time Availability facility to check what is available on our visitor days - Tuesdays and Thursdays.
We look
forward to welcoming you at Muirfield.
"I
know I am getting better at golf because I'm hitting fewer spectators."
Gerald
Ford.
At the Comex silver depositories Wednesday final figures were: Registered 49.29
Moz, Eligible 117.73 Moz, Total 167.02 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
More on our lawless age. Just who spies on who in
the land of the free?
While
I cannot take time off to name all the men in the State Department who have been named as members of the Communist Party and
members of a spy ring, I have here in my hand a list of 205
that were known to the Secretary of State as being members of the Communist
Party, and who nevertheless are still working and shaping the policy of the
State Department.
Senator
Joseph McCarthy.
Hackers turn Verizon box into spy tool
Video.
Splosh!
One of the finest sights in the world: the other man's ball dropping in the
water - preferably so that he can see it but cannot quite reach it and has
therefore to leave it there, thus rendering himself so mad that he loses the
next hole as well.
Henry Longhurst
The monthly Coppock Indicators finished June:
DJIA: +145 Up. NASDAQ: +146 Up. SP500: +177 Unch The Fed’s
Final Bubble continues, but is struggling. The S&P500 moved sideways. The Dow and Nasdaq
both barely eked out a gain. In current highly volatile conditions and
controversial uncertain policy indecision at the Fed, Speculators would stay
long, investors would exit stocks for now or get fully hedged.
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