Thursday, 17 October 2013

And He Marched Them Down Again.

Baltic Dry Index. 1965 +02

LIR Gold Target by 2019: $30,000.  Revised due to QE programs.

"the rise of the South is unprecedented in its speed and scale." For the first time in 150 years, the combined output of the developing world's three leading economies -- Brazil, China and India -- is about equal to the combined GDP of the longstanding industrial powers of the North -- Canada, France, Germany, Italy, United Kingdom and the United States. In addition, this year Beijing will, for the first time, import more oil from the OPEC countries than the United States.

Der Spiegel. 16/10/13

In America, peace broke out yesterday. The GOP, aka the Republican Party, aka nutcases, lunatics and flakes, surrendered to an armistice, and whoever is in charge of the Grand Old Party’s troops, marched them back down the hill again, promising to renew hostilities after the Christmas recess, in the depth of January’s winter. Whether the GOP foot soldiers will have any stomach then for another bout of marching up and down the hill to a final surrender, is an open question. My own guess is that they won’t unless “Obamacare” by then is turning into a giant fiasco.

And so everyone lived happily ever after in the land of the NSA spies between the once shining seas. The Fed is stuck with ZIRP and QE forever, forever, never mind that neither policy is working as intended anymore, merely impoverishing the downwardly mobile American middle class and pensioners. The NY Fedster’s can resume the old practise of goosing stocks for the benefit of Wall Street’s great vampire squids, not that they ever really stopped. Gold silver and power will continue shifting from west to east. The “Bernank” can get to slip out of Dodge next January, emulating Homer Simpson’s third principle as he leaves. Sadly, we are indeed living in interesting times.

I want to share something with you -- the three little sentences that will
get you through life. Number one, `Cover for me.' Number two, `Oh, good
idea, boss.' Number three, `It was like that when I got here.'

Bernocchio, with apologies to Homer Simpson

Congress Sets New Deadlines as Votes Will Open Government

By Terry Atlas, Roxana Tiron & Kathleen Hunter - Oct 17, 2013 6:15 AM GMT
After the partisan passions and heated rhetoric, the disruptions of a government shutdown and displays of dysfunction, Congress did what it could have done weeks ago: voted to fund the government and lift the debt limit.

The passage last night by wide margins -- an 81-18 vote in the Democratic-led Senate, followed by a 285-144 vote in the Republican-controlled House -- allows the U.S. to avoid default and ends the shutdown that began Oct. 1 and has taken $24 billion out of the economy.

President Barack Obama signed the bill just after midnight, according to a White House statement. The measure puts government workers back on the job as soon as today and permits the U.S. to continue paying its debts, benefits and salaries.

----Lawmakers didn’t show they’re any closer to resolving the underlying issues of spending priorities and deficit-reduction measures, particularly in the House where a shrinking political middle makes compromise elusive as the latest events show.

The focus now shifts to a new series of deadlines -- the first for budget negotiations with a Dec. 13 target -- that set up more rounds of political combat over taxes and spending on programs including Social Security and Medicare. The deal funds the government at Republican-backed spending levels through Jan. 15, 2014, and suspends the debt limit through Feb. 7.

----The votes conclude a four-week fiscal standoff that began with Republicans demanding defunding the Patient Protection and Affordable Care Act, and objecting to raising the debt limit and funding the government without policy conditions.

They achieved almost none of those goals. Obama and the uncharacteristically unified congressional Democrats stared down Republicans, particularly those allied with the Tea Party movement, who had sought to use the shutdown and debt ceiling as leverage even as more experienced lawmakers realized they didn’t have the votes

BlackRock With Pimco See Fed Taper Delay as Treasuries Hold Gain

By Wes Goodman - Oct 17, 2013 7:09 AM GMT
BlackRock (BLK) Inc. and Pacific Investment Management Co. said the Federal Reserve will postpone tapering its bond purchases as a result of the debt-ceiling debate, helping support Treasuries after a rally yesterday.

U.S. government securities held gains as lawmakers agreed on a plan to end the federal shutdown that started Oct. 1 and to raise the borrowing limit, avoiding a default. Congress produced the accord a day after Fitch Ratings said it may cut the U.S. AAA credit grade, citing the government’s inability to increase the ceiling in a timely manner.

“Because of the disruption, because of the uncertainty, what’s likely to happen is a slower pace of tapering by the Fed,” said Russ Koesterich, the chief investment strategist at BlackRock Inc., the world’s largest money manager with $4.1 trillion in assets as of Sept. 30. Falling consumer confidence will depress gross domestic product growth in the fourth quarter, New York-based Koesterich said today on Bloomberg Television’s “First Up” with Susan Li.

----Central bankers will have to reassess how the government shutdown affected the economy, according to Mohamed El-Erian, the chief executive officer at Pimco, which runs the world’s biggest bond fund and is based in Newport Beach, California.

 “The Fed may now have no choice but to stay longer in its intense policy experimental mode -- due both to the likelihood of weaker data and to a perceived need to take out insurance for the economy against future political dysfunction,” El-Erian wrote yesterday on the CNBC website.

Elsewhere, it was more of the same sense of rising global concern.

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

BOJ Vet Sees JGB Rout If Abe’s Third Arrow Misses: Japan Credit

By Toru Fujioka & Masahiro Hidaka - Oct 17, 2013 4:09 AM GMT
Investors will lose confidence in Japan’s economic revival unless Prime Minister Shinzo Abe adds substance to his growth strategy and relies less on stimulus measures, said a former senior central bank official.

“The situation will turn extremely dangerous if Abenomics doesn’t take a new direction,” Hideo Hayakawa, who previously served as executive director at the Bank of Japan, said in an interview in Tokyo on Oct. 15. Instead of laying the foundation for a sustained expansion, “Abe is just putting pressure on the BOJ to buy bonds and increasing fiscal spending by continuously compiling economic packages.”

The so-called third arrow of Abe’s economic strategy entered a key stage with the start this week of an extraordinary Diet session where he aims to push through measures to boost investment and industrial competitiveness. While the Topix Index of shares has soared 39 percent this year, government debt is more than double gross domestic product and the BOJ’s unprecedented easing is causing dangerous distortions in the bond market, according to Hayakawa.

“Much of the market is clearly numb to the risks,” said Hayakawa, now a senior executive fellow at the Fujitsu Research Institute. “Plainly stated, the situation in the government bond market is becoming considerably dangerous.”

BlackRock Cuts Hong Kong Investment, Sees Prices Drop

By Kana Nishizawa - Oct 17, 2013 4:11 AM GMT
BlackRock Inc. (BLK) is reducing its investment in Hong Kong, betting the city’s equity and property markets will trail other Asian countries as growth slows in the world’s two biggest economies.

Hong Kong stocks may underperform as the U.S. pares stimulus and China tightens credit, said Andrew Swan, head of Asian equities at BlackRock, which managed $3.86 trillion as of June 30. Home values in the city may fall more than 10 percent into 2014 amid government measures to curb prices and rising U.S. interest rates, he said.

“Hong Kong is in a challenging position at the moment,” Swan said in an interview on Oct. 10, adding that the firm had sold shares of companies based there in the last 12 months. “You’ve had very strong liquidity as China leveraged up and you’ve had very low cost of credit because of the currency situation. Now both of those things are changing.”

Beijing-Tokyo ties 'unlikely to recover soon'

09:03, October 16, 2013
Sino-Japanese relations are unlikely to improve anytime soon if Japanese Prime Minister Shinzo Abe's speech to his country's parliament on Tuesday is any indication, a Chinese expert said.

In a speech opening the Japanese parliament's extra session, Abe pledged to push forward with his plans to bolster Japan's defense in the face of what he called an "increasingly insecure environment".

Abe said he will establish a security council within his office that will be a diplomatic and defense command center, a move lawmakers are expected to approve during the 53-day session.

Abe said Japanese coast guard officers and Self-Defense Forces deployed around the Diaoyu Islands are "facing 'reality' in this instant of time and we must not look away from this 'reality', which shows the security environment is growing increasingly severe," Kyodo News reported.

Hu Jiping, director of the Institute of Japanese Studies at the China Institutes of Contemporary International Relations, said the Abe administration is using China as an excuse to justify its military buildup.

"Abe's aggressive stance on security issues will do no good to ties with China," Hu said. "I don't see that Abe has a desire to mend Japan's relationship with China."

"The gold standard, in one form or another, will prevail long after the present rash of national fiats is forgotten or remembered only in currency museums."

Hans F. Sennholz

At the Comex silver depositories Wednesday final figures were: Registered 43.53 Moz, Eligible 121.29 Moz, Total 164.82 Moz.  

Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.

Today, more on the new reality of our 21st century lawless age. John Bull kow-tows to Beijing. Pounds sterling anyone? Stay long physical gold and silver.

How horrible, fantastic, incredible it is that we should be giving up deals and trying on sack cloth here because of a quarrel in a far-away country between people of whom we know nothing.

David Cameron, with apologies to Neville Chamberlin,  1938.

U.K. Pledge on Tibet Fostered China Deals, People’s Daily Says

By Bloomberg News - Oct 17, 2013 2:41 AM GMT
A U.K. admission that it mishandled the issue of Tibet paved the way for economic and financial agreements this week, a People’s Daily commentary said.

The U.K. also pledged to respect China’s sovereignty, reviving relations that had been at a low ebb during the past year, the Communist Party’s official newspaper said in a commentary by Zhong Sheng. The name is a homonym in Chinese for “voice of China.”

China and Britain agreed during a visit by U.K. Chancellor of the Exchequer George Osborne to establish direct trading between the yuan and the British pound, helping London in its race with Frankfurt and Paris to become Europe’s hub for trade in the Chinese currency. London financial institutions will be allowed to invest as much as 80 billion yuan ($13 billion) in Chinese domestic securities, Osborne said Oct. 15.

At a briefing after meeting Osborne that day, Vice Chinese Finance Minister Zhu Guangyao said the relationship “has seen a turnaround” thanks to efforts from both sides.

“Without a sound foundation of political relations, economic and trade relations cannot have a solid footing,” Zhu said.

U.K. Prime Minister David Cameron acknowledged in May that his 2012 meeting with the Dalai Lama, the Tibetan spiritual leader, had caused tension. China accuses the Nobel Peace Prize winner of waging a campaign for independence, while he says he is seeking autonomy for Tibet.

John Gallagher, a spokesman for the British Embassy in Beijing, didn’t immediately respond to requests for comment by phone and e-mail.

In better China news, this story speaks for itself.

This burden speaks volumes

08:28, October 17, 2013
After 70 years, Shanghai family unable to locate Jewish book owner

After storing 2,000 books for a Jewish school principal for 70 years, the Lin family from Shanghai asked for help from the Shanghai Jewish Refugees Museum on Wednesday to look for the books' owner as the family's current residential neighborhood will soon be demolished.

"My family has waited for Carl Anger to return to get back his precious books," said Pan Lu, 65, whose father-in-law Lin Daozhi promised to keep the books in 1943.

"We may not be able to wait anymore because we'll move next week, and we want to find the books an ideal home."

Lin Daozhi was principal of the Shanghai Hebrew Mission Paul School on East Changzhi Road in Hongkou district in the 1930s and 1940s. Many Jewish children also went to the school as Shanghai received around 25,000 Jewish refugees as an open harbor in the 1930s.

Anger, a Jewish school principal, gave thousands of books, including some bibles in Hebrew, English and German and some for children's education, to Lin to take care of.

"Carl told my father-in-law he would be back for the books, but they never met again after their farewell and the books have experienced dramatic ups and downs," Pan said.

The Lin family moved to Taizhou, Zhejiang province, with many who fled Shanghai for safety during the War of Resistance against Japanese Aggression (1937-45), and Lin insisted on taking the books to keep his promise.

"They employed a dozen porters to carry the books packed in wooden boxes to Zhejiang. The home in Shanghai was razed to the ground by bombing, but the books survived," Pan said.

----During the "cultural revolution" (1966-76), the Red Guards confiscated the books and intended to burn them, but the fire was canceled because of sudden gales and a rainstorm and the books were saved.

Lin died in 1981 at the age of 93, and his children cared for the books and looked forward to Anger's return.

----Two months ago, she found a card Anger sent from Germany to her parents-in-law dated September 1947.

"We arrived safely ... and were happy to be reunited with our relatives," the letter read.

Pan was overjoyed to see the names of the Jewish man and his wife, Paula, and their address on the envelope. She asked friends to write a letter in German and send it to the address.

"But the letter was returned. Maybe he has passed away," Pan said.

When packing to prepare for the move over the weekend, Pan found a postcard sent by Anger to Lin in 1947 expressing Christmas greetings, which included a picture of the couple.

The family had never opened the drawer where she found the card before as it was on the back of a table, which was placed against the wall.

Chen Jian, curator of the Shanghai Jewish Refugees Museum, said he had contacted Wolfgang Roehr, Germany's consul-general in Shanghai.

"He promised to look for Anger's next of kin with the assistance of the population registration department in Germany," he said.

“Hold faithfulness and sincerity as first principles.”


The monthly Coppock Indicators finished September:
DJIA: +167 Up. NASDAQ: +213 Up. SP500: +203 Up. All three are back positive again, thanks to continued Fed QE.  High risk speculators will now use any stocks sell-off to go long. After the last Fed meeting and QE U-turn, the Bernocchio put is back on.

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