Baltic Dry Index. 1146 -05
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
My psychiatrist told me I
was crazy and I said I want a second opinion. He said okay, you're ugly too.
Rodney Dangerfield.
Our planet is getting very ugly, not that you
would know it from the Great Disconnect in global stock markets from reality.
Yesterday the once great motor city of Detroit went bust, fling a chapter 9
bankruptcy in America. I suspect that there will be many more to come in the
decade ahead. China’s ratings agencies began preparing for a coming wave of
corporate bond defaults as China’s slowdown deepens. The Bank for International Settlements in
Basel, began preparing for a wave of insurance company collapses, once interest
rates start rising again, leaving insurance companies with declining collateral
to cover liabilities. Germany’s imperious finance minister flew down to effete
Greece and read them the Riot Act. German banks and banksters take precedent
over any additional Greek sovereign bond relief. Greece hammered yet again, began
seriously considering hitting the Merkel successor state to Nazi Germany with a
reparations suit for second world war damage and atrocities.
Offsetting all that was yet more happy talk
from Mammon’s man at the Fed. In our upside down, complacent world of the summer
2013, the Gospel of Mammon trumped everything else. All news, no matter how
disturbing is now good news. The Fed’s final bubble grows on, pardon the weak
pun. The Great Disconnect widens until one day, just like deficits didn’t
matter, reality crashes in. Apparently
blissfully unaware of the financial disaster in Michigan’s largest city, Michigan
is still a part of the land between the shinning seas, US Treasury Secretary
Jacob Lew flew into Moscow for the weekend’s G-20 finance ministers meeting,
scattering pixie dust on the dying European nations attending. You must grow
your way out just like America, he pontificated to the moribund Europeans.
Seemingly unaware that almost none have their own sovereign currency and that
the ECB is now run from Berlin for Germania.
I was so ugly my mother used to feed me with a sling shot.
Rodney Dangerfield.
Detroit Slides From Industrial Might to Bankruptcy
By Steven Church, Dawn
McCarty & Margaret Cronin Fisk - Jul 19, 2013 5:00 AM GMT
Detroit, the cradle of the
automobile assembly line and a symbol of industrial might, filed the biggest
U.S. municipal bankruptcy after decades of decline left it too poor to pay
billions of dollars owed bondholders, retired cops and current city workers.
----Michigan’s largest city joins Jefferson County, Alabama, and the California cities of San Bernardino and Stockton in bankruptcy. The filing shattered the presumption of many bondholders that local governments, eager to continue borrowing at reasonable rates, would do whatever it took, including raise taxes, to come up with the money to meet bond obligations. Kevyn Orr, the city’s emergency manager, said the debt is $18 billion.
While under court protection, Detroit can stop paying some debts, is temporarily immune from most lawsuits and may be able to ask a judge to cancel contracts, including union agreements. Under Chapter 9 of the U.S. Bankruptcy Code, the first step is likely to be a court fight over whether the city was entitled to bankruptcy protection, a challenge that would ask if the city was truly insolvent and it had no alternative to filing.
----Its population, which peaked at 1.85
million in 1950, has declined to about 700,000, according to U.S. Census data.
Manufacturing jobs fell from about 296,000 in 1950 to fewer than 27,000 in
2011. About 60,000 properties in the city, or 15 percent of all parcels, were
barren and at least 78,000 buildings were vacant, including 38,000 deemed
potentially dangerous, Orr said in a report this year.
More
U.S. Automakers Thrive as Detroit Goes Bankrupt
By Jeff Green & Mark Clothier - Jul 19, 2013 5:00 AM GMT
The Motor City was the car capital of the world when David Cole
graduated from a Detroit
high school in 1955 and headed off to college to study auto engineering. Six
decades later, the “motor” has mostly moved out, he said. Many of the factories that used to dot the city and employ thousands moved to suburbs, other U.S. states or to China and Brazil as the auto industry became global and manufacturing focused on getting faster and less expensive, said Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan, and son of a General Motors Co. (GM) president.
“The auto industry was forced to change, driven by industry pressure, and it evolved,” Cole said. “Detroit did not. It’s sad to see. We just took it all for granted.”
Detroit, hamstrung by $18 billion in debt, was forced to file the largest bankruptcy for a U.S. municipality yesterday. GM, Ford Motor Co. (F) and Chrysler Group LLC, the automakers that call the region home, are profitable and thriving.
----It isn’t likely that Detroit’s recovery will be as quick and easy as the turnaround of the U.S. automakers, said Steven Rattner, a New York financier who headed President Barack Obama’s auto-industry task force in 2009 that ultimately put GM and Chrysler into bankruptcy.
GM and Chrysler were scrubbed clean of debt by U.S.-backed bankruptcies that lasted about six weeks. Ford suffered through a painful restructuring on its own that cut debt and labor costs.
“This will be much messier than the auto companies,” Rattner said in an interview. “This will go on for a long time.”
More
Record Downgrades Foreshadow First Onshore Default
By Bloomberg News - Jul 19, 2013 5:17 AM GMT
China’s rating firms cut
the most bond issuer rankings on record in June and brokerages said they are
preparing for the onshore market’s first default as the world’s second-biggest
economy slows. A total of 38 issuers were downgraded last month, according to Guotai Junan Securities Co., the most since the nation’s third-biggest brokerage started compiling the data in 2005. Some 86 firms were upgraded, down from 88 a year earlier. China Chengxin Securities Rating Co. lowered Zhuhai Zhongfu Enterprise Co. (000659)’s debt rating to AA- from AA on June 28, causing the yield on the beverage package maker’s May 2015 bonds to almost triple to 15.01 percent.
“The government can’t save everyone,”
said Xu Hanfei, a bond analyst in Shanghai at
Guotai Junan. “In the future, downgrades may spread to high-grade bonds,
especially those which rely heavily on support from the central or local
governments.”
----“Investors should no longer blindly
invest in state-owned companies with overcapacities without good credit
analysis,” said Jiang Chao, a bond analyst in Shanghai at Haitong
Securities. “China can’t restructure the economy without a bond default.”
More
Allianz Joins AIG on List of Too-Big-to-Fail Insurers
By Carolyn Bandel & Zachary Tracer - Jul 19, 2013 1:03 AM GMT
American
International Group Inc. (AIG) and Allianz
SE (ALV) are among insurers deemed systemically important by global
financial rulemakers, meaning they may face tougher capital standards and
tighter regulation. The list of nine too-big-to-fail insurers, including MetLife Inc. (MET) and Prudential Financial Inc. (PRU) in the U.S. and France’s Axa SA (CS), was published yesterday by the Financial Stability Board, the Basel, Switzerland-based body set up by the Group of 20 nations.
The FSB, led by Bank of England Governor Mark Carney, is coordinating global regulators’ response to the worst financial crisis since the Great Depression to prevent a repeat of the turmoil that followed the collapse of Lehman Brothers Holdings Inc. and bailout of AIG.
“Today marks an important step toward more broadly addressing the risks associated with systemically important financial institutions,” Carney said in a statement on the FSB’s website. “A sound capital and supervisory framework for the insurance sector is essential for supporting financial stability.”
Also on the list are Prudential Plc (PRU) and Aviva Plc (AV/) of the U.K., China’s Ping An Insurance Group Co. and Italy’s Assicurazioni Generali SpA. (G)
More
"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.
Germany refuses fresh relief for Greeks as debt ratio spirals out of control
German finance minister Wolfgang Schauble has warned Greek leaders on a heavily guarded trip to Athens not to play with fire by pressing for fresh debt-relief, and brushed aside claims that Greece’s rescue package is falling apart.
“Greece
must stop lobbying for a second restructuring of its debt. We have to stick to
what has been agreed. Anything else is not in the best interest of Greece,” he
said, during a day of political clashes in the capital. “If you take guarantees
and then you are discussing a haircut, you are a liar. You will destroy any
confidence.”
Mr
Schauble admitted that Greece may ultimately need a second bail-out package as
public debt spirals to 176pc of GDP this year, higher than when Greece first
defaulted. The privatisation plan intended to chip away at the debt has
stalled. Russia’s Gazprom has pulled out of a deal to buy Depa, the Greek gas
utility.
But Mr
Schauble insisted that talk of writing off loans from EMU bail-out funds or
imposing losses on northern eurozone taxpayers would have a devastating impact
on support for Greece.
The
warnings came a day after the Greek parliament cleared the way for 25,000 state
workers to lose their jobs over the next two years – the condition for €6.8bn
(£5.9bn) in fresh loans from the EU-IMF-ECB Troika. The lay-offs risk pushing
the unemployment rate towards 30pc.
Demonstrations
were banned on the main road to Athens airport, while Syntagma Square was
closed to prevent anti-German protesters wearing Swastikas and carrying Nazi
banners approaching parliament.
----Alexis Tsipras, leader of the opposition Syriza party, called Mr Schauble’s visit a sham that was intended to keep a lid on the crisis until after the German elections in September.
Mr
Tsipras pointedly called for a popular vote on whether to demand reparations
from Germany for its wartime occupation, which led to the death of 300,000
Greeks and the seizure of Greek assets.
The
government opened a secret inquiry into the case last year – a move seen as a
ploy to give Athens a bargaining chip. The attempt to link the two issues has
led to accusations of moral blackmail from politicians in Germany, and Mr
Schauble has said that reparations are “out of the question”.
More
Lew Urges Europeans to Spur ‘Engine of Growth’ as G-20 Convenes
By Ian Katz - Jul 19, 2013 12:00 AM GMT
Treasury Secretary Jacob J. Lew said he will press his European counterparts
at a Group of 20 meeting to spur growth, citing the U.S. economy
as an example of a successful recovery. “Europe does need to look at what it can do to get the engine of growth moving again,” Lew said in an interview yesterday in Washington with Bloomberg Television’s Peter Cook. “The world needs Europe to grow.”
Lew is to arrive in Moscow for a two-day meeting of G-20
finance ministers and central bank governors starting today. He will also visit
Athens on July
21 for meetings with Greek Prime Minister Antonis Samaras and Finance Minister
Yannis Stournaras.
Lew,
making his second trip to Europe since taking office in February, called U.S.
fiscal policy “decisive” and the Federal
Reserve’s measures “effective” in pulling the world’s largest economy out
of a recession.
More
Italian Rivalries Threaten to Undo Letta’s Volatile Coalition
By Andrew Frye & Chiara Vasarri - Jul 18, 2013 11:01 PM GMT
Italy’s ruling coalition is
fraying as Prime Minister Enrico Letta appeases adversaries while alienating
long-time allies. The pressure builds today with a no-confidence motion against Interior Minister Angelino Alfano in the Senate and the possible indictment of Silvio Berlusconi, Letta’s coalition partner, on bribery charges in Naples. Lawmaker criticism of both Berlusconi and his ally Alfano has driven a wedge between Letta and some of his oldest supporters.
The distinction between partners and rivals is increasingly obscure as tension mounts among the three parties that rallied around Letta three months ago. The competition has hurt Letta’s relationship with his own Democratic Party, or PD, as the premier defends Alfano and declines to confront Berlusconi over his growing legal problems.
----Letta won support yesterday from President Giorgio Napolitano, who urged disgruntled lawmakers to maintain backing for the government. Political instability, the 88-year-old head of state said, could weaken Italian sovereign debt, raising borrowing costs. The government is struggling to carry out a promised plan to abolish an unpopular property tax and to avoid a value-added tax increase after pledging to bring the country’s deficit below 3 percent of gross domestic product.
Italian 10-year yields have risen about 70 basis points since a 2 1/2-year low on May 2 after Letta took charge.
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Optimism - the doctrine or belief that everything is beautiful,
including what is ugly.
Ambrose Bierce.
At the Comex silver depositories Thursday final figures were: Registered 49.69
Moz, Eligible 118.21 Moz, Total 166.90 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Not your usual suspects today. Today 21st
century Romanians. Unsurprisingly, Romania is a member of the European Union. Enough
said.
What an ugly beast the Romanian, and how like us.
With apologies to Marcus Tullius Cicero and apes.
Rotterdam Art Heist: Stolen Masterpieces Likely Incinerated
The whereabouts of valuable
paintings stolen from the Rotterdam Kunsthal museum last year have
long been uncertain, despite the arrest of the alleged thieves. Now the mother
of one of the accused says she burned them in an oven.
A
high-profile art theft from a Rotterdam museum has taken a tragic turn. In one
of the most spectacular art heists to hit
Europe in decades, last October thieves stole a number of valuable paintings
from the Rotterdam Kunsthal, including works by Lucian Freud, Paul Gauguin,
Henri Matisse, Claude Monet and Pablo Picasso. Though suspects were arrested in
the case, officials had been unable to find the art. Now it
appears the works were likely destroyed.
Six
Romanians have been charged with the theft, and are currently awaiting trial.
Olga Dogaru, the mother of one of the accused, told Romanian TV last week that
she had incinerated the paintings in a stove after the arrest of her son. The
thieves had been unable to find buyers for the works and she was worried about
being discovered, she said.
Forensic
specialists have since inspected the stove and found evidence of "painting
primer, the remains of canvas and paint," Ernest Oberlander-Tarnoveanu,
director of Romania's National History Museum, told the Associated Press. Law
enforcement officials must now determine whether the ashes came from the
missing paintings in question.
The
artworks, which included Monet's "Waterloo Bridge, London" and
Picasso's "Harlequin Head," are estimated to be worth a total of
between €50 million and €100 million ($65 million and $131 million).
In a
statement given to the Rotterdam-based newspaper NRC Handelsblad, the
Cordia family, which owned the paintings and had lent them to the Dutch museum,
said: "The only statement we as a family want to give is that it's a shame
that, in all probability, these works of art no longer exist and will no longer
be viewable by us as a family or by the public. And this because of the 'greed'
of another."
Romania
highest point: Moldoveanu 2,544 m
Romania
lowest point: Black Sea 0 m
Another summer weekend, and an oddity here in the
UK where summer usually only comes about once in a decade, and only then for a few
hours. After a long cold hard winter and a long wet spring, upholding a long
tradition, summer’s arrival was a complete surprise to the UK’s Met Office.
What could possibly go wrong? Have a great weekend everyone. Will reality crash
in next week?
As millions of Britons holiday at home after that promise of a 'barbecue summer', how did the Met Office get it so wrong?
By Daily Mail Reporter UPDATED:The campers paddling between flooded tents didn't need to be told. Neither did the families huddling for shelter beside deserted beaches.
But yesterday the weathermen officially admitted that their prediction of a 'barbecue summer' had been hopelessly wrong.
And the bad news for millions of holidaymakers, many of whom had opted to stay in Britain on the strength of the optimistic forecast, is that after a soggy July, August will be no better.
More
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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