Baltic Dry Index. 1352 +73
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Socialism is a philosophy of failure, the
creed of ignorance, and the gospel of envy, its inherent virtue is the equal
sharing of misery.
Churchill. Sounds like the EU.
Below, Der Spiegel sums up the results of the
failed G-20 meeting in St Petersburg. No
progress on economic issues. There it’s every man and nation for itself. On
Syria, the G-20 split in favour of
America’s bombing campaign 11-9, although none of the 10 who supported
America actually promised to join in, with Britain prevented from joining in by
a vote of the House of Commons. The result of Prime Minister Tony Blair
previously lying Britain into the last decade’s war on Iraq. Once bitten twice
shy in play. In America, backed into a corner entirely of his own making,
President Obama risks becoming a lame duck president this week and, short of
starting a new war, largely an
irrelevance in the rest of the world.
Failure On All Fronts: No Progress from G-20 Leaders
The G-20 summit ended worse
than expected on Friday -- with acrimony, division and name-calling over Syria.
The conference, which was originally conceived as an economic forum, also
failed to deliver results on global recovery.
In
the end, even a meeting between Barack Obama and Vladimir Putin failed to
deliver results. Participants at the G-20 summit in St. Petersburg couldn't
manage to find a common position on Syria. The American president demanded that
punitive action be taken against Syria, but his Russian counterpart stood
between Obama and his allies. Now any decision on a possible military strike
against Damascus will be up to the US Congress.
Washington
has left no doubt that, from this point on, it will prepare an intervention
without a United Nations mandate.
----The
failure at the G-20 summit to reach an agreement that would have enabled a
Security Council deal was expected. The meeting of the world's 20 most
important industrialized and emerging nations was originally conceived as an
economic forum. Its limits are quickly reached when it is used to discuss
issues of foreign policy.
----It is largely the Western nations, who view themselves as champions of universal values and norms, that are pushing for an intervention in Syria on humanitarian grounds. When it comes to emerging nations, however, foreign policy tends to be more pragmatic. The best example of that is China, which has warned that a military strike against Syria could jeopardize the global economy.
One can
certainly debate whether it makes sense to conduct a military strike. Critics
correctly note that a limited bombing attack would do little change the
situation in Syria. Besides, the European Union hasn't even been able to agree to
a common position. Countries like France and Britain support military efforts,
even if the British will not be participating themselves now that the House of
Commons rejected a direct role in Syria. And other European countries oppose
any attempt by the United States to go it alone. A third group, which includes
Germany, doesn't want to commit.
----The intended focus of the G-20 meeting had been the global economy, but those discussions were overshadowed by the Syria crisis. The Europeans had sought to push for deeper efforts to combat shadow banks and tax evasion. In principle, the G-20 countries had already agreed that all financial centers around the world would be subjected to supervisory authorities. But things fell apart when it got down to the details. Many emerging countries, but also the United States, don't believe they should have to sacrifice domestic advantages for the sake of greater competition for international capital.
That's
why summit participants didn't agree to any concrete measures in the fight
against tax tricks used by large corporations. Nor were they able to reach any
agreement on tighter regulations for shadow banks, including hedge funds,
private equity and money market funds. For now, they have merely agreed to a
timeframe: They plan to revisit the issue in November.
More
Now back to the real world as we enter crash
season. Stay long physical precious metals for the coming fiscal anarchy that
will break out if the Fed actually tries to taper.
Russia to Brazil Intervention Adds to U.S. Debt Distress
By Wes Goodman & Candice Zachariahs - Sep 9, 2013 5:05 AM GMT
Investors suffering the worst losses in Treasuries since at least 1978 can
add dollar sales by emerging-market central banks to their list of challenges. Speculation that the Federal Reserve, the biggest buyer of Treasuries, will reduce its purchases sent U.S. debt down 4.1 percent this year and boosted the dollar against developing-nation currencies for four straight months, matching the longest streak since 2001, according to Bloomberg data. India, Brazil, Russia and Indonesia have intervened in foreign-exchange markets, and dollar sales mean liquidating Treasuries, according to bond traders at Scotiabank and Bank of America Corp
While the $48 billion drop in foreign central bank holdings at the Fed since a record in June is less than half of the $113 billion in withdrawals from U.S. bond funds in the past three months, they mark a change in trend. Foreign ownership of Treasuries fell 0.6 percent in the first half of 2013, poised for the first full-year decline in data going back to 2000 and a departure from the 10 percent annual gains seen since 2006.
----Developing country currencies are tumbling amid capital flight from their equity and bond markets because the Fed plans to reduce stimulus that has debased the dollar. The JPMorgan Emerging Markets Currency Index has plunged 9.1 since April, and its four-month drop through August hasn’t been exceeded since a 10-month losing streak in 2001.
While weaker exchange rates typically make a country’s exports more competitive, the speed of the decline for nations like India and Indonesia threatens to increase inflation and discourages investment, according to Westpac Banking Corp.
More
Unemployment Falling for Wrong Reason Creates Fed Predicament
By Rich Miller - Sep 9, 2013 5:00 AM GMT
The good news may be bad news for the Federal
Reserve as it considers when to begin scaling back its stimulus. While unemployment dropped last month to 7.3 percent, the lowest level since December 2008, the decline occurred because of contraction in the workforce, not because more people got jobs. Labor-force participation -- the share of working-age people either holding a job or looking for one -- stands at a 35-year low.
The reduced workforce “poses a problem for the Fed,” said Roberto Perli, a former central bank official who is now a partner at Cornerstone Macro LP in Washington. “The unemployment rate is coming down faster than the Fed thought, but it’s not declining for the right reason.”
The jobless rate is important because Chairman Ben S. Bernanke and his colleagues have established it as the lodestar for policy. Bernanke has said he expects the Fed to complete its asset-purchase program in the middle of next year when unemployment is around 7 percent.
----A key question facing policy makers is how much of the decline in the participation rate is structural and long-lasting and how much is cyclical and temporary.
If the drop is mainly driven by demographics -- aging baby boomers retiring -- then the lower unemployment rate gives a true picture of the amount of slack left in the labor market. If the contraction instead is caused by discouraged job-seekers giving up their search, then the jobless rate doesn’t reflect the true state of the market.
Both alternatives have implications for bond investors.
More
Below, if the Fed tries to taper QE, forcing up
global interest rates, say goodnight to Spain and the rest of Club Med. From
Portugal to Greece, from Belgium down to Sicily, higher interest rates are a
killer for those in the intensive care ward. And as firms fail across the
coming winter stiffing banks, Club Med’s bank depositors are on the line Cyprus
style. Not that the Fed cares of course, as we know from their “FED to ROW:
Drop Dead,” message at their recent Jackson Hole junket. In less than two week’s time we are about to
find out if that message was real or merely a called bluff. But can the Fed
really do a massive U-turn at this late stage, bowing before Club Med and the
rest of the world? The downside of running the world’s fiat reserve currency
has finally caught up with the bankster Fed.
Cash-Starved Spanish Companies Run Out of Time
By Angeline Benoit - Sep 9, 2013 12:01 AM GMT
----While
Spanish manufacturing and services expanded in August for the first time in
more than two years, falling bank lending threatens small companies in a
country where only 2 percent of businesses employ more than 20 people. That is
overshadowing the recovery Prime Minister Mariano Rajoy forecasts after a
two-year recession. “Spanish companies are most often small family-run operations,” said Nathalie Gianese, director of studies at Informa D&B, the research arm of Spanish risk insurer CESCE S.A. “Between the slump in revenue and their limited means, these small firms are disadvantaged at a time when banks are seeking to reduce risk as much as possible.”
The number of companies seeking protection from creditors increased by 26 percent through August compared with the same period a year earlier, according to a report published last week by Informa D&B. In the second quarter, 73 percent of businesses in such a predicament employed fewer than 20 people, Spain’s national statistics institute said last month.
Lending by banks to non-financial corporations fell 1.3 percent in July from June in Spain, more than in Portugal, Ireland and Greece, while it rose in Italy, according to data compiled by the European Central Bank. Since January, it has declined almost 10 percent in Spain.
More
We end for the day with toe good news and it’s all
Asian. It’s speculative boom time again for China and Japan. Will the Fed
really pull the plug on them later this month? What could possibly go wrong?
Time will tell if Japan can live up to its pledge to make Fukushima a thing of
the past by the time of the 2020 Olympic games.
China’s Stocks Rise as Financial Gauge Rallies Most Since 2009
By Weiyi Lim - Sep 9, 2013 6:47 AM GMT
China’s
stocks rose, led by the biggest rally in financial companies since 2009, as
investors speculated banks will be allowed to issue preferred shares to boost
capital and data showed exports grew more than estimated. Shanghai Pudong Development Bank (600000) rallied 10 percent while an index of financial companies surged 7.3 percent, the biggest gain among industry groups. Shanghai Pudong and Agricultural Bank of China Ltd. may participate in a trial allowing lenders to raise funds through preferred shares, Moneyweek reported. Cosco Shipping Co. and Shanghai International Port Group Co. surged more than 7 percent on prospects the Shanghai free-trade zone will help the city become a global trade and shipping hub.
The
Shanghai Composite Index (SHCOMP) rose 3.4
percent to 2,211.86 at 1:13 p.m. local time, heading for the biggest gain since
Dec. 14. The prospect of preferred share sales has eased concern that capital
shortfalls at Chinese banks will curb lending and weaken the banking system,
according to David Poh, the regional head of portfolio-management solutions at Societe
Generale’s private bank. Exports climbed 7.2 percent last month, compared
with the 5.5 percent median estimate in a Bloomberg survey.
More
Tokyo Olympic Win Seen Boosting Construction, Abe’s Recovery
By Yoshiaki Nohara & Satoshi Kawano - Sep 9, 2013 1:42 AM GMT
Tokyo’s winning bid to host
the 2020 Olympics is boosting stocks today and may give a lift to consumer
confidence, playing into Prime Minister Shinzo Abe’s plan to revive the
world’s third-biggest economy. The Topix index surged 2.3 percent to 1,174.66 as of 9:27 a.m. in Tokyo, extending its 2013 increase to 37 percent, the most among developed markets. Developers and construction companies led gains. Taisei Corp., a building company expected to benefit from Tokyo’s selection, climbed 14 percent for the biggest advance on the Nikkei 225 (NKY) Stock Average.
“Olympics-related
stocks are yet to fully price in the decision, even though they’ve already
outperformed,” Hiroshi Fujimoto, a Tokyo-based fund manager
at Shinkin Asset Management Co., which oversees 638.9 billion yen ($6.4
billion) in assets, said by phone on Sept. 3. “In the short term the entire
Japanese share market will get a boost from celebratory buying and expectations
for the event’s economic impact.”
----The government’s official estimate of the games generating an additional 0.3 percent of gross domestic product on a value-added basis is too modest, according to Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co.
“Our rough view is that the impact could be at least similar to the U.K., at around 0.7-0.8 percent of GDP (JGDPAGDP) over 7 years, or about 3-4 trillion yen on a value added basis, or about 6-8 trillion yen on a gross output basis,” he wrote in a Sept. 4 report
More
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
At the Comex silver depositories Friday final figures were: Registered 41.90 Moz,
Eligible 121.28 Moz, Total 163.18 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, more on our new lawless age. In our on again
off again race to start a new war in the greater Middle East, it’s getting
harder and harder to sort out the lies from the half lies, we wouldn’t know the
truth now if we fell over it.
We occasionally stumble over the truth but most of us pick
ourselves up and hurry off as if nothing had happened.
Winston S. Churchill.
Syria chemical weapons attack not ordered by Assad, says German press
Bild am Sonntag cites high-level German
surveillance source suggesting Syrian president was not personally behind
attacks
Sunday 8 September 2013 17.46 BST
President Bashar al-Assad did not
personally order last month's chemical weapons attack near Damascus that has
triggered calls for US military intervention, and blocked numerous requests
from his military commanders to use chemical weapons against regime opponents
in recent months, a German newspaper has reported , citing unidentified,
high-level national security sources.The intelligence findings were based on phone calls intercepted by a German surveillance ship operated by the BND, the German intelligence service, and deployed off the Syrian coast, Bild am Sonntag said. The intercepted communications suggested Assad, who is accused of war crimes by the west, including foreign secretary William Hague, was not himself involved in last month's attack or in other instances when government forces have allegedly used chemical weapons.
Assad sought to exonerate himself from the August attack in which hundreds died. "There has been no evidence that I used chemical weapons against my own people," he said in an interview with CBS.
But the intercepts tended to add weight to the claims of the Obama administration and Britain and France that elements of the Assad regime, and not renegade rebel groups, were responsible for the attack in the suburb of Ghouta, Bild said.
President Barack Obama is urging the US Congress to approve military action to deter the Syrian regime from using chemical weapons and degrade its ability to pursue the two-and-a-half-year civil war against rebel forces.
More
September 8, 2013 4:57 pm September 8, 2013
4:57 pm
A trap of the president’s making
Obama’s characteristic caution has put him in a perilous
position
Last week, was arguably the worst of Barack Obama’s presidency. If the wheels are not to come off it altogether, this coming one will need to be among his best – starting on Tuesday night with his address to the nation about Syria.
It is hard to understand how an instinctively cautious president in his fifth year could have manoeuvred himself into such a dismal corner. But his largely self-charted route lends little confidence that he can easily escape it.
In
the next 10 days or so we will find out if Mr Obama will get the chance to
recapture his presidential mojo.
That – and the fact that he would share the
fallout with Congress for whatever complications
a Syria strike would present – is the best that can be said for a “Yes”
vote. A “No” would irretrievably weaken Mr Obama both at home and abroad. It
would qualify as one of the costliest gambles in US presidential history.
More
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
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.
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