Baltic Dry Index. 1961 -24
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
A permanent Governor of the Bank of England would be one of the
greatest men in England. He would be a little 'monarch' in the City; he would
be far greater than the 'Lord Mayor.' He would be the personal embodiment of
the Bank of England; he would be constantly clothed with an almost indefinite prestige.
Everybody in business would bow down before him and try to stand well with him,
for he might in a panic be able to save almost anyone he liked, and to ruin
almost anyone he liked. A day might come when his favour might mean prosperity,
and his distrust might mean ruin. A position with so much real power and so
much apparent dignity would be intensely coveted.
Walter Bagehot. Lombard Street. 1873.
Today we are spoiled for choice. It’s “deal or no
deal” time in Washington, with everyone betting on “deal” and a Republican
wipe-out. In Euroland, in France the political party now topping the polls is
committed to dumping the unloved Bilderberger Euro. In Asia the growing wobble,
grows. But first this.
When is it OK to rig markets? Answer: when you’re
the world’s leading central bankster desperately trying to keep from falling
apart a fiat currency regime that underpins world trade, and the casino
gambling economy that the Great Nixonian Error of fiat currency spawned. With
capitalism long ago history, welcome to the uncertain world of Fedsterism. Of
course Fedsterism, unlike capitalism, only works for American interests, something
starting to grate on much of the rest of the world outside of North America and
Europe. In Europe, most are mad at the calamity that the Bilderberger euro
turned into. For the south and Ireland, a youth generation sold out by the aged
non entities in Brussels.
Below, the Fedster’s move further towards a command
economy. At some point ahead, the tide keeps rolling in no matter what the
Fedster’s King Rat orders.
Fed Gets Bigger in Markets as QE Prompts New Tools
By Caroline Salas Gage & Liz Capo McCormick - Oct 15, 2013 12:32 AM GMT
The Federal
Reserve is getting more involved in debt markets as it tries to compensate
for the impact of its almost $4 trillion balance sheet on short-term interest rates.
Policy makers are testing a new tool intended to improve their control of near-term borrowing costs. The facility would allow banks, broker-dealers, money-market funds and some government-sponsored enterprises to lend the Fed unlimited amounts of cash overnight at a fixed rate in exchange for borrowing Treasuries in so-called reverse repo transactions.
----The new tool -- called the fixed-rate, full-allotment overnight reverse repo facility -- also is aimed at helping Fed officials address distortions in the market caused by their securities purchases.
“It will serve to put whatever floor they want under rates,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. “You’re providing pretty broad-based access to Fed balances as an investment option.”
While the Fed gained the ability in 2008 to pay interest on cash it holds in the form of excess bank reserves, that tool has limited effect in anchoring borrowing costs because only banks could park their funds at the central bank, Crandall said. By now offering to pay a fixed rate to a wider range of counterparties for their cash overnight, policy makers should be able to improve their control of near-term rates, he said.
More
http://www.bloomberg.com/news/2013-10-14/fed-gets-bigger-in-markets-as-qe-prompts-new-tools.html
The third, that with the greatest vigor he commanded that his chair should be set on the shore, when the tide
began to rise. And then he spoke to the rising sea saying “You are part of my
dominion, and the ground that I am seated upon is mine, nor has anyone
disobeyed my orders with impunity. Therefore, I order you not to rise onto my
land, nor to wet the clothes or body of your Lord”. But the sea carried on
rising as usual without any reverence for his person, and soaked his feet and
legs. Then he moving away said: “All the inhabitants of the world should
know that the power of kings is vain and trivial, and that none is worthy the
name of king but He whose command the heaven, earth and sea obey by eternal
laws”. Therefore King Cnut never afterwards placed the crown on his head, but
above a picture of the Lord nailed to the cross, turning it forever into a
means to praise God, the great king.
Henry of Huntingdon's twelfth-century Chronicle of the history
of England.
The sun is setting on dollar supremacy, and with it, American power
A serious alternative to the dollar is still a long way off, but the latest shenanigans on Capitol Hill have given the search for them renewed momentum
All great
empires – from the Greek, to the Roman, the Spanish and the British - have at
their heart a dominant means of exchange which is very much part of their
political and social hegemony. Once upon a time, it was Roman coinage which was
the world's pre-eminent currency. In more recent times it was the British
pound. Today, it's the US dollar to which international investors flock as a
safe haven for their money. Highly liquid and apparently reliable – until
recently at least – nothing else comes even remotely close to the greenback's
dominant position in the international monetary system.
That this
position – what Giscard d'Estaing referred to as America's "exorbitant
privilege" – could so casually be put at risk by politicians on Capitol
Hill is an extraordinary spectacle that may be indicative of a great power
already seriously on the wane.
With the
pound, the fall from grace was swift. Britain emerged from the devastation of
the First World War an irreparably damaged economic and military power, with
crushing debts and a deeply impaired manufacturing sector.
----Lack of any
credible alternative means it won't happen so quickly with the dollar. For all
the progress of the last 30 years, China for now remains a much smaller economy
than the US and in any case is nowhere near ready financially to assume such a
role. As for the euro, the dollar needn't trouble itself much about this
one-time pretender to the throne.
Yet
rarely before has international dissatisfaction with the dollar's role as
reserve currency to the world been as great as it is now. The most visible
anger comes from China, with more than $3 trillion of dollar foreign exchange
reserves, $1.3 trillion of them held in US Treasuries. For ordinary Chinese, it
has come as a revelation to discover they own so much American debt. That they
own it in a country which because of political brinkmanship may actually
default has provoked understandable fury.
"It
is perhaps a good time for the befuddled world to start considering building a
de-Americanised world", China's official government news agency has said
More
Below the reason China’s worried. Can Uncle Scam really resist the urge to screw the Middle Kingdom by devaluing the dollar? With some $3.66 trillion of George Washington’s pretty pictures in China’s Treasury, and the Old Scamster backing Japan in the coming war over the Diaoyu Islands, they must be getting close to paranoid in Beijing.
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."F. A. von Hayek
China’s Biggest Reserves Jump Since 2011 Shows Inflow
By Bloomberg News - Oct 15, 2013 3:15 AM GMT
China’s foreign-exchange reserves rose last quarter by the most in more than two years,
a sign the government’s efforts to protect growth attracted money even as
developing nations from India to Indonesia saw capital exit. Reserves were a record $3.66 trillion at the end of September, the People’s Bank of China said yesterday in Beijing, up from $3.5 trillion in June. The median projection was $3.52 trillion in a Bloomberg News survey of seven economists
The data suggest Premier Li Keqiang’s efforts to boost expansion stoked capital inflows while emerging markets suffered outflows on concern the U.S. Federal Reserve would taper monetary stimulus. The yuan strengthened by the least in five quarters in the July-September period, signaling central bank intervention to slow gains in the currency.
“The foreign-exchange data probably reflects China’s safe-haven status and suggests hot money came into the country during the period of market turmoil,” said Timothy Condon, ING Groep NV head of Asia research in Singapore.
More
Meanwhile with all eyes focused on “Deal or No Deal”
in Washington, events in Asia might make any Obama victory Pyrrhic. Any Fed
filled relief rally on news of the “Deal”
might quickly turn into “sell the fact.”
The consequences of a “no deal” ending in Washington will likely result in
America ending its peculiar love affair with geriatric politicians. Below, add
the Wizard of Oz’s banks to the wobble worry list. The Fedster’s King Rat may
get his feet wet after all.
The paper standard is self-destructive."
Hans F. Sennholz
China-to-India Price Jump Risks Growth as World Outlook Dims
By Shamim Adam - Oct 14, 2013 1:51 PM GMT
Higher food costs from China to India
are raising prices for a third of the world’s people, adding to the challenge
of sustaining the global economic recovery as the growth outlook dims. Consumer prices in China rose 3.1 percent last month as food costs advanced the most since May 2012, statistics bureau figures showed today in Beijing, while India’s Commerce Ministry said inflation unexpectedly accelerated to a seven-month high. Both gauges increased more than economists had estimated.
“In both countries, in recent months, food seems to be the primary driver of the increase in inflation,” said Robert Prior-Wandesforde, a Singapore-based economist at Credit Suisse Group AG, who added that it’s “not the ideal combination” when prices accelerate as growth slows. “It complicates the life of the policy makers.”
The reports signal threats to growth in two of Asia’s three biggest economies as a partial shutdown of the U.S. government risks leading to a default that would roil financial markets and cause recession. The International Monetary Fund cut its global growth outlook last week as capital outflows further weaken emerging markets.
More
Coal Slump Leaves Australia Port Half-Used, Lenders at Risk
By Elisabeth Behrmann & Paulina Duran - Oct 15, 2013 4:50 AM GMT
Australia
& New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corp. (WBC) are among lenders risking
losses on $3 billion of loans backing a coal port in Australia that
will be twice its required size. Wiggins Island Coal Export Terminal Pty, the group comprising the unfinished project’s owners, including
Glencore Xstrata Plc (GLEN) and Wesfarmers Ltd. (WES), in 2011 borrowed the debt from 19 banks, according to data compiled by Bloomberg. When the port in the state of Queensland begins shipping in early 2015, only about half of its 27 million metric tons of initial annual export capacity will be used after a slump in coal demand, forecaster Wood Mackenzie Ltd. estimates.
“There will be more capacity than mines available to utilize it,” Daniel Morgan, a Sydney-based analyst at UBS AG said in a phone interview. “It may result in the banking syndicate having to renegotiate the terms or the price, or taking a writedown on their position.”
To secure the funding, Wiggins Island’s coal company owners committed to take-or-pay contracts, which oblige them to still pay for any of their unused export allocation. The junior owners may struggle to meet those contractual obligations after falling coal prices delayed new projects, said Morgan. The owners also had to provide bank guarantees that covered them for a year if they couldn’t make payment.
Westpac, one of the original lenders to Wiggins Island, excluded the project’s debt from a package of loans it bought from Lloyds Banking Group Plc last week, when it acquired its Australian assets, according to a person familiar with the matter. The Sydney-based lender didn’t want any more exposure to the project, that person said.
Glencore, the world’s biggest thermal coal exporter, is trying to sell 5 million tons of a contracted 10.9 million tons of Wiggins Island capacity to other users “due to changed market circumstances,” according to Francis de Rosa, a Sydney-based spokesman. It hasn’t received any offers, he said.
More
A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.
Walter Bagehot. Lombard Street. 1873
At the Comex silver depositories Monday final figures were: Registered 43.46 Moz,
Eligible 122.50 Moz, Total 165.96 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, more on the big development in France that
we reported on yesterday. France is
moving to take back its destiny from Brussels and Berlin. The euro isn’t
working for most Europeans anymore. It went from wealth creating to wealth
destroying in little more than a decade. A nation without its own currency
isn’t a nation. It’s merely a special interest group petitioning against a
Grand Committee. If Europe’s politicians don’t move quickly to reform the EU
and EMU, Europe’s voters will move to get new politicians. It’s not just
Britain thinking about leaving the EU anymore. The unthinkable has become
thinkable to many of the serfs trapped in the hated monetary union. Stay long
fully paid up physical precious metals. Europe is heading for a “Spartacus” moment next May.
“Treaties
you see are like girls and roses; they last while they last.”
Charles de Gaulle
Time to take bets on Frexit and the French franc?
Ambrose Evans-Pritchard Politics and society Last updated: October 14th, 2013
We have a
minor earthquake in France. A party committed to withdrawal from the euro, the
restoration of French franc, and the complete destruction of monetary union has
just defeated the establishment in the Brignoles run-off election.
It is
threatening Frexit as well, which rather alters the political chemistry of
Britain's EU referendum.
Marine Le
Pen's Front National won 54pc of the vote. It was a bad defeat for the
Gaulliste UMP, a party at risk of disintegration unless it can find a leader in
short order.
President
Hollande's Socialists were knocked out in the first round, due to mass
defection to the Front National by the working-class Socialist base. The
Socialists thought the Front worked to their advantage by splitting the Right.
They have at last woken up to the enormous political danger.
The Front
National is now the most popular party in France with 24pc according to a new
Ifop poll. Both the two great governing parties of the post-War era have fallen
behind for the first time ever. The Gaullistes (UMP) are at 22pc, and the
Socialists at 21pc.
----Asked if she intended to pull France of the euro immediately, she hesitated for a second or two and then said: "Yes, because the euro blocks all economic decisions. France is not a country that can accept tutelage from Brussels."
Officials
will be told to draw up plans for the restoration of the franc. Eurozone
leaders will face a stark choice: either work with France for a "sortie
concerted" or coordinated EMU break-up: or await their fate in a
disorderly collapse.
----As I wrote in June, the Front has been scoring highest in core Socialist cantons, clear evidence that it is breaking out of its Right-wing enclaves to become the mass movement of the white working class.
Hence the
new term in the French press "Left-Le-Penism". She is outflanking the
Socialists with attacks on banks and cross-border capitalism. The party
recently recruited Anna Rosso-Roig, a candidate for the Communists in the 2012
elections.
Mrs Le
Pen's EMU withdrawal plan is based on a study by economists from l'École des
Hautes Études in Paris led by Professor Jacques Sapir. It concludes that
France, Italy, and Spain would all benefit from EMU-exit, restoring lost labour
competitiveness at a stroke without years of depression.
Their
working assumption is that the eurozone's North-South imbalances have already
gone beyond the point of no return. Attempts to reverse this by deflation and
wage cuts must entail mass unemployment and loss of the industrial core.
----I don't wish to get into a debate about whether or not the Front National has genuinely purged its anti-Semites, or whether its immigration and culture policies must inevitably lead to a drastic showdown with France's 5m-plus Muslims. This is a finance blog.
My own
impression is that she is more relaxed about gay rights and abortion than she
lets on, closer in some ways to the assassinated Dutch populist Pim Fortuyn
than to her father Jean-Marie Le Pen, who in turn complains that she picked up
"petit bourgeois" views in Paris schools.
The fact
is that her campaign of "dédiabolisation" or image detox seems
to have worked. Only a minority of voters still thinks the Front is a
"threat to democracy". Mrs Le Pen is winning over white working-class
women in droves. The feminised Front is no longer the party of the angry white
male.
----The rise of the Front National is yet another reminder that the slow-burn political crisis in Europe has yet to reach its climax. Mass unemployment and the gruelling effects of debt deflation are chipping away at the foundations of the establishment, just as they did in the early 1930s under the Gold Standard, so like EMU today.
France
endured the same slow torture then, stoically accepting the "500 deflation
decrees" of premier Pierre Laval. That dispensation seemed stable for a
while. It was not. The dam broke in 1936 with the once unthinkable of the
Leftist Front Populaire, with Communist support. The Gold Standard collapsed.
More
How can anyone govern a nation that has two hundred and forty-six
different kinds of cheese?
Charles de Gaulle
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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