Baltic Dry Index. 1145 +30
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Increasingly, the wealth of the modern world has come to be represented by financial assets rather than real assets, and this to me is a very unhealthy situation, because financial assets are inherently unstable. Financial assets (currencies, bonds, mortgages, stocks, bank credit, etc.) can be quickly and violently reduced in value, or destroyed completely by either inflation or deflation."
Donald J. Hoppe
We have reached America’s voodoo economics day,
when Mammon’s lads and ladettes at the Fed in Washington, release the minutes
of their last coven and inform the lower serfs just how many angels can dance
on the head of a pin, and whether to taper or not to taper their voodoo
quantitative easing program, aka monetisation. Since old loose lips “helicopter”
Bernanke first leaked his intention to taper to the Wall Street Journal back in
June, setting off shock and awe on Wall Street, and a whole lot more in the
Indian economy, the Fed has been spinning like a banshee in an effort to
U-turn.
"Were we to be directed from Washington when to sow and when to reap, we should soon want bread."
Thomas Jefferson
So far Mr. Market doesn’t believe them. Marketeer’s
everywhere and their dog think the Fed will begin scaling back their 85 billion
a month of voodoo QE, after their meeting next month. I don’t believe QE can ever be ended without
triggering the collapse it was started to prevent, but we are about to find out
next month if I’m wrong if the Fed does actually decide to taper. If the Fed
does decide in favour of a great reconnect in stocks and bonds, October’s
coming crash season should rival 1907, 1929, and 1987. Among the prominent global
wreckage, Greece, Club Med, India and Japan. Stay long physical precious
metals. Over the next six months we are possibly about to embark on the
greatest miscalculation since Hitler ordered the German Army to take Moscow.
"Benny, you're doing
a heck of a job."
President
Richard M. Obama with apologies to George W. Bush.
Treasury Loss Matched in Mortgage Market as Home-Loan Rates Rise
By Wes Goodman & Masaki Kondo - Aug 21, 2013 6:50 AM GMT
Treasury losses are being matched this month by declines in mortgage-backed
securities as the Federal Reserve prepares to reduce purchases of both
securities as soon as September. U.S. sovereign and mortgage bonds have fallen 0.9 percent in August as of yesterday, according to Bank of America Merrill Lynch indexes. While both declined in May, June and July, Treasuries dropped more each time. Thirty-year fixed mortgage rates rose to 4.59 percent this week, approaching the highest level since May 2011, according to Bankrate.com. The Fed is scheduled to issue the minutes of its most recent meeting today.
“The market consensus is that tapering will kick in in September, and I can’t see any strong argument against that,” said Hajime Nagata, who helps oversee the equivalent of $120.3 billion as an investor in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co. “Prospects the Fed will cut bond purchases have resulted in the sluggish MBS performance.”
----Treasuries have fallen 3.6 percent in 2013, set for the steepest loss since 2009, Bank of America figures show. Mortgage-backed securities have dropped 2.9 percent, poised for the biggest slide based on indexes that go back to 1976.
Mortgage securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are tumbling as the Fed considers how to pare its debt purchases.
U.S. commercial banks reduced their holdings of so-called agency mortgage backed securities by $16.6 billion in July, the most based on Fed data that go back to 2009. Banks owned $1.33 trillion of the securities as of Aug. 7, the smallest amount since November.
The Fed is currently buying $45 billion of Treasuries and $40 billion of mortgage-backed securities each month. Policy makers will probably vote at their Sept. 17-18 meeting to reduce the program, according to 65 percent of economists surveyed by Bloomberg Aug. 9-13
More
In the never ending crisis of Euroland, despite Germany
impoverishing most ordinary tax and work shy, swimming pool loving Greeks, and
making 65% of Greek “youths” unemployed and unemployable, Greece needs yet
another German bailout, says none other than Germany’s finance minister, just
to keep the unfortunate Greeks living in the same wretched condition of debt
slavery to Europe’s bankster master class. It’s a funny old world in the wealth
destroying European Monetary Union. Just wait until after Chancellor Merkel’s
re-election next month and when interest rates start rising if the Fed tapers.
"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.
Greece needs third bail-out, admits German finance minister
Wolfgang Schaeuble, Germany's finance minister, has made an unexpected admission that Greece will need a third bail-out, just weeks before German national elections.
By Denise
Roland 5:53PM BST 20 Aug 2013
His
comments mark a surprise departure from those of his government colleagues, who
have been careful to play down the deeply unpopular prospect in the run-up to
German elections in September.
"There
will have to be another programme in Greece," said Mr Schaeuble,
addressing a campaign audience in northern Germany. However he maintained that,
despite this, there would be no further debt haircut for Athens.
Just
hours before Mr Schaeuble spoke, German Chancellor Angela Merkel was quoted in
a regional newspaper dismissing questions about further aid for Greece, saying
there was no point in discussing the matter until its second package expires at
the end of next year.
However,
economists have long predicted a third rescue package for Greece, which is
struggling to control its mounting debt burden as the economy shrinks under
tough austerity measures.
Opposition
leaders, who have relentlessly accused the government of hiding the truth about
Greece, pounced on the finance minister's comments. Peer Steinbrueck, leader of
Germany's Social Democrat Party, declared it was "time that Frau Merkel
tells people the truth". Juergen Tritten, head of the country's Green
party, also seized the opportunity to hit out at the Chancellor.
More
In Asia, bad news from the Indian economy continues
to mount. Despite intervention from the
Reserve Bank of India yesterday “India’s
macroeconomic situation appears to be nothing short of a train wreck,” (said) Tirthankar Patnaik, a strategist in
Mumbai at Religare Capital Markets Ltd. Who am I to disagree. With a collapsing
Rupee and rising inflation, social instability probably comes next. Exactly why
does India have a space program intent on sending a man to the moon? Another
unintended consequence of the error of fiat money. India’s fate is no longer in
India’s hands, if the Fed’s Guru’s decide on tapering and higher interest rates.
Rupees anyone or physical gold and silver?
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
Asia’s Biggest Yield Jump Threatens Singh Goals: India Credit
By Shikhar Balwani & Kartik Goyal - Aug 21, 2013 3:35 AM GMT
Asia’s biggest increase in sovereign debt costs is threatening Indian Prime
Minister Manmohan Singh’s plan to cut the budget deficit and fueling the fastest surge in credit risk since
2008. Ten-year yields rose 72 basis points this month to 8.92 percent, the most among 14 regional markets tracked by Bloomberg. The Reserve Bank of India said yesterday it will buy long-dated notes after the rate surged to a 12-year high of 9.48 percent, imperiling economic growth. Government debt in Indonesia added 66 basis points to 8.49 percent.
Singh’s pledge to reduce the shortfall in public finances to a six-year low of 4.8 percent looks more difficult to keep as borrowing costs soar amid an economic slowdown that would erode revenue. The rising costs of India’s 6.3 trillion rupee ($100 billion) borrowing program for the year through March 2014 will be apparent when the government sells 150 billion rupees of notes at an auction on Aug. 23.
“India’s macroeconomic situation appears to be nothing short of a train wreck,” Tirthankar Patnaik, a strategist in Mumbai at Religare Capital Markets Ltd., said in an interview yesterday. “Higher yields will make incremental borrowing expensive at a time when we expect a significant drop in tax revenue due to slow economic growth. The government might be forced to raise its borrowing target.”
Indian bonds are headed for a third monthly loss, with 10-year yields rising 168 basis points since May, as the prospect of the U.S. cutting stimulus fueled a plunge in the rupee.
More
We end for the day with finally some good news for
the global nuclear power industry, sort off. While thanks to Japan’s TEPCO and
their 100 year Fukushima nuclear power calamity, uranium nuclear power plants
are virtually un-financeable anywhere on the planet outside of communist run
China and North Korea, much safer Thorium nuclear power looks likely to be
making a come back.
Thorium put to the test as policymakers rethink nuclear
Scientists are turning their attention to thorium, a cleaner and cheaper alternative to uranium.
Two years
after the Fukushima disaster rocked the nuclear industry, the jury is still out
in many countries on the role of atomic fuels.
Just two
of Japan's 54 commercial nuclear plants are currently operational, while
Germany has abandoned nuclear altogether. The price of uranium has also
plummeted, making it unviable to get new mines off the ground.
But in
the background, scientists are working on a cleaner, cheaper and safer
alternative to uranium. It's even named after a god.
Thorium
is more common in the Earth's crust than tin, mercury and silver - and three
times more abundant that uranium. In fact, thorium, which is named after Thor,
the Norse god of thunder, is so energy-dense that an individual can hold a
lifetime's supply of electricity in the palm of their hand.
----There is also
the issue of nuclear proliferation. In a traditional light-water reactor,
plutonium-239 - a radioactive isotope that can be used to make weapons - is
generated as a by-product of uranium-based nuclear reactions. However, using
thorium instead of uranium to kick-start nuclear fission produces less
long-lived waste such as plutonium, reducing the security issues associated
with nuclear plants.
----Today, it is just a by-product of rare earth mining. 3,200 tonnes of it are currently buried in the Nevada desert.
But
countries are now waking up to the benefits of thorium, and it is once again
being put to the test in Halden, a small Norwegian town with a population of
less than 30,000. Thor Energy, with the help of Britain, the US and Germany, is
testing thorium for commercial use. The company loaded its first fuel rods into
a test reactor in April as part of a five year radiation programme designed to
show the rest of the world what the company already knows: thorium is
versatile, safe, and more efficient than uranium.
"The
thermal conductivity of thorium based pellets is known to be much better to be
much better than uranium, says chief executive Øystein Asphjell. "We are
now proving that it is this way."
Mr
Asphjell believes in what he calls an "evolutionary" approach to
thorium - using the material in existing light-water reactors to generate
electricity.
More
"The international monetary order is more precarious by far
today than it was in 1929. Then, gold was international money, incorruptible,
unmanageable, and unchangeable. Today, the U.S. dollar serves as the
international medium of exchange, managed by Washington politicians and Federal
Reserve officials, manipulated from day to day, and serving political goals and
ambitions. This difference alone sounds the alarm to all perceptive observers."
Hans F. Sennholz
At the Comex silver depositories Tuesday final figures were: Registered 39.23 Moz,
Eligible 125.57 Moz, Total 164.80 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, still think the EU has a meaningful future?
More on the slow lingering suicide of the European Union. Who would want to
invest in a commercial zone with laws as daft as Denmark’s?
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Probably Denmark’s Last Draft Lager as Carlsberg Plant Is Halted
By
Katarina Gustafsson - Aug 20, 2013 10:03 AM GMT
Bars in Denmark risk
running out of draft beer after a labor dispute caused production to be halted
at a brewery operated by Carlsberg A/S. (CARLB) The brewery, located in the town of Fredericia, produces all of Carlsberg’s draft beer in Denmark, spokesman Jens Bekke said today. Carlsberg estimates it controls about 70 percent of the country’s draft beer market, he said.
Workers
in a part of the brewery where beer is transferred to kegs walked out Aug. 14
because a new hire isn’t affiliated to a union that all other employees are,
Bekke said. The 130 strikers are part of a total workforce of 800 at the site,
he said. Production of soft drinks is also affected.
Carlsberg
has a stock of draft products lasting about a week and customers usually hold
one-to-two weeks of inventory, Bekke said. The company has an option to
substitute some of the affected products with bottled beer, he said.
Labor
laws prevent Carlsberg from asking whether or not a person is part of a union
when recruiting. Such laws also prohibit the company from dismissing the
worker. The Danish labor court has ordered striking workers at the Fredericia
plant to be fined for every hour they are on strike.
“We hope
they will go back,” Bekke said. It’s difficult to see how the situation will be
resolved otherwise, he said.
Solution, close down Fredericia and open up
Fredericia UK. Ship the product back to
Denmark in ways that meet Denmark’s
Carlsberg distribution network.
The trouble with socialism is that eventually you run out of other people’s money.
Margaret Thatcher.
The monthly Coppock Indicators finished July:
DJIA: +164 Up. NASDAQ: +167 Up. SP500: +195 Up. The
Fed’s final bubble still inflates.
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