Baltic Dry Index. 1636 +15
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“The
boom can last only as long as the credit expansion progresses at an
ever-accelerated pace. The boom comes to an end as soon as additional
quantities of fiduciary media are no longer thrown upon the loan market...”
Ludwig Von Mises
It is time for old “loose lips” Bernanke, to taper
or not to taper the Fed’s QE Forever, free money policy, at this week’s Federal
Reserve meeting. Any mis-step by the outgoing “oldie,” risks setting off 2013’s
crash season, in bonds, stocks and commodities. Yet keeping “QE forever,”
forever, risks setting off a run out of the dollar and into tangible assets
with intrinsic value. The trick is to
come up with the “Goldilocks taper,” but no one knows if such a thing exists
outside of fairy tales. Today is already not like the pre-2008 yesterdays, and
our tomorrow’s, once the Fed really does start tapering, will not be like our
today’s. Sooner or later the Great Disconnect will come to an unpleasant end,
all the more unpleasant the longer QE forever fuels the Great Disconnect. With
Bernanke headed out the Fed door marked “Exit and odium” next January, punting
the problem off to his successor looks highly likely.
In yet more sign of rising disarray in Washington,
it became Summer’s over, in the race to take over from Bernanke in deep
mid-winter. It would all be quite comical, if it wasn’t in danger of destroying
Brazil, India, France and Club Med, as collateral damage.
Former Obama aide Summers withdraws from Fed chair consideration
WASHINGTON
| Sun Sep 15, 2013 7:24pm EDT
(Reuters)
- Lawrence Summers, a former top aide to President Barack Obama and Treasury
secretary under President Bill Clinton, withdrew on Sunday from consideration
to succeed Federal Reserve Chairman Ben Bernanke, after liberal pressure soured
his confirmation prospects.
"Earlier
today, I spoke with Larry Summers and accepted his decision to withdraw his
name from consideration for chairman of the Federal Reserve," Obama said
in a statement.
Summers,
widely regarded as a brilliant economist and a shrewd and decisive
policy-maker, was considered to be the front-runner for the position to replace
Bernanke, whose second term expires in January. However, Summers was dogged by
controversies including his support for deregulation in the 1990s and comments
he made about women's aptitude while president of Harvard.
Word that
the president was leaning toward nominating Summers over Fed Vice Chair Janet
Yellen elicited an unprecedented amount of controversy for a potential nominee
to run the U.S. central bank.
Summers
said that the storm pointed to a difficult confirmation process that could hurt
the president's economic agenda and the institution, and decided to pull back.
More
Anticipating that QE forever really can’t be
forever, no matter what the latest spin is in Washington, nor no matter which
Lord of the Universe gets the job of bursting the Fed’s final bubble too far, China
seems to be acting in anticipation by adopting an AIG defence. In a largely
command economy, enforced by old fashioned communist repression, China’s shadow
banking bubble might not respond quite the way, Beijing’s apparatchik’s expect.
If the “Bernank” this week puts the taper on the table starting in 2014, China’s
apparatchik’s may have anyway left it too late.
Analysis: China eyes private funds to tackle bad-debt buildup, avoid bailout
SHANGHAI/BEIJING |(Reuters) - Faced with a chorus of warnings that China risks choking on bad debts, Beijing is pushing banks to raise private capital in an effort to head off the need for a second government bailout in as many decades.
The hangover from a credit binge that powered China's swift recovery from the global financial crisis, combined with the economy's slowdown, has prompted expectations of a repeat of the early 2000s, when Beijing shored up its major banks with hundreds of billions of dollars.
Right now, however, authorities appear focused on pushing banks to bolster their balance sheets by aggressively enforcing new international bank capital requirements, known as Basel III.
Some analysts say warnings of an impending crisis are overdone.
----On Friday, the securities regulator said banks - and other listed firms - could also issue non-tradeable preferred shares. That offers another avenue for banks to bolster their balance sheets with funding from commercial investors, and possibly a way for the government to inject capital directly if private funds aren't enough.
In an article published last week, China's central bank governor, Zhou Xiaochuan, cited the U.S. government's rescue in the global financial crisis of American International Group Inc as a positive example of how preferred shares could be used.
Whether that will be necessary depends on how big China's bad debt pile really is. This is a matter of guesswork, given that analysts think the official non-performing loan ratio of less than 1 percent is a considerable understatement.
Most
analysts put it in the 3 to 6 percent range, but Reuters estimates based on
official data shows that their current capital and loan-loss provisions would
suffice even if more than a fifth of their loans went bad.
But much
of the potential risk lies outside of the official banking system.
Goldman
Sachs has said that under its worst-case scenario credit losses for the entire
system could reach $3 trillion, or a fifth of forecast GDP in 2016, though
actual losses would probably be considerably lower.
More
In Europe, next Sunday it’s time for Germany’s
voters to finally vote. A near paralysed continental Europe hopes that the vote
will free Europe’s policy makers from their policy of delaying controversial
decisions till after the election. Reuters thinks that expectation may be in
for a let-down. It may all be moot anyway if “the Bernank” takes the QE punch
bowl away this week. Even if he doesn’t the respite looks no better than a few
more months. From London it looks more likely to be crash delayed, rather than
crash averted.
Every election is a sort of advance auction sale of stolen goods.
H. L. Mencken.
Analysis: Europe, waiting for Germany, could be disappointed
PARIS |(Reuters) - European policymakers have higher hopes than expectations of change in German policies after a general election next Sunday that has kept much European business on hold for months.
From Athens to Lisbon and Paris to Rome, governments want Berlin to move forward fast with a European Union banking union and adopt a more expansion economic policy that would help drive growth and fight unemployment in a stagnant euro zone.
EU partners expect conservative Chancellor Angela Merkel to win a third term, and many hope she will have to form a grand coalition with the center-left Social Democrats (SPD), seen as more pro-European and pro-stimulus than her current center-right Free Democratic allies in government.
The potential for disappointment is large.
"Whoever is elected, the constraints that Merkel has faced will remain the same for any German government," said Sylvie Goulard, a French liberal member of the European Parliament.
The triple lock of parliamentary sovereignty, hostile public opinion and a vigilant constitutional court will continue to limit Germany's willingness to share more European liabilities.
Merkel and her SPD challenger Peer Steinbrueck barely mentioned European and foreign policy in their only television debate, except to agree that Germany should have no part in any military response to the use of chemical weapons in Syria.
Steinbrueck accused Merkel of bungling the euro zone crisis by going slow and inflicting a poisonous dose of austerity on Greece and other bailed out countries. He kept silent about SPD support for pooling some euro zone debts, sensing a vote-loser.
The chancellor noted the SPD had voted for all her euro zone bailout but she offered no personal vision of Europe's future.
With the survival of the single currency no longer under threat and financial markets calm for now, experts expect Merkel to stick to her "small steps" approach to euro zone integration unless acute crisis flares again.
The need for further financial support for Greece, Portugal and perhaps Ireland will cause much grumpy debate in Berlin. Frustration at chronic Italian political instability and French aversion to liberal economic reforms will smolder.
More
Euro-Area Bank Plan Stumbles Under German-Led Challenge
By Rebecca Christie & Jim Brunsden - Sep 16, 2013 12:00 AM GMT
European Union attempts to centralize control of failing banks stumbled
under a German-led attack that may imperil efforts to restore confidence in the
euro zone’s financial system. If the plan doesn’t move forward quickly, the European Central Bank won’t be able to count on cross-border backstops if it encounters problems at euro-area banks. The ECB is scheduled to begin supervising lenders in the currency zone as soon as October 2014, forcing the EU to grapple with who should decide when to close a bank and who will pay for it.
“There’s quite a lot to do,” German Finance Minister Wolfgang Schaeuble told reporters on Sept. 14 after two days of talks with his EU colleagues in Vilnius, Lithuania. “The path that the commission has proposed toward a resolution mechanism is a rocky one. There can be no doubt about it: we need to be on a legally certain foundation.”
Schaeuble said the European Commission’s proposal for a Single Resolution Mechanism must be overhauled because it’s on shaky legal ground and could endanger national control of budgets. In Vilnius, the German was joined by critics from Sweden to Slovakia.
At the same time, finance ministers renewed pledges to strive for an agreement quickly so financial markets won’t lose confidence that the currency zone is overcoming its crisis. Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of euro-area finance chiefs, said a deal on the resolution mechanism is needed by year-end.
More
Jean-Claude Juncker. Ex-Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
At the Comex silver depositories Friday final figures were: Registered 42.27 Moz,
Eligible 118.86 Moz, Total 161.13 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, they’re all headed for the great
pow-wow at the Fed to determine the fate of QE forever. You can be sure that
America’s NSA and Britain’s GCHQ will be listening in.
My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day’s work for an honest day’s pay; live within your means; put by a nest egg for a rainy day; pay your bills on time; support the police.
Margaret Thatcher.
Probably why she got dumped out of office by the Tory party.
The monthly Coppock Indicators finished August:
DJIA: +162 Down.
NASDAQ: +189 Up. SP500: +194 Down. Two red
flags. Only the “stock market for the next hundred years,” remains optimistic.
But will Benny and the boys really cut the stock market’s throat?
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