Baltic Dry Index. 1963 +02
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“How good one feels when one is full -- how satisfied with
ourselves and with the world! People who have tried it, tell me that a clear
conscience makes you very happy and contented; but a full stomach does the
business quite as well, and is cheaper, and more easily obtained.”
Jerome K. Jerome. Three Men in a Boat. 1889.
They may not be panicking on the great ship USS
America, although Fitch Ratings and US leading economist Kenneth Rogoff are managing
a pretty good impression, but over on the nearby liner the SS Middle Kingdom panic
seems to have broken out at the prospect of a massive reduction in their wealth
holdings, as America’s Republican Party seems to be about to force Uncle Scam
onto a regime of issuing scrip and possibly Disney dollars. Stay long fully
paid up physical precious metals.
Even if this suicide disaster is somehow avoided in
October 2013, it seems everyone in the insane asylum of Washington DC, wants to
do it all again in mid-January 2014. If that is the outcome, major holders of
US debt will try to reduce holdings during the pause.
Below, this morning’s update on the continuing
turmoil in the land of the spied on and not so free, between the once shinning
seas.
“Everything
has its drawbacks, as the man said when his mother-in-law died, and they came
down upon him for the funeral expenses.”
Jerome K. Jerome. Three Men in a Boat. 1889.
China Presses U.S. to Lift Debt Limit as Tea Party Says Butt Out
By Ian Katz & Michael C. Bender - Oct 15, 2013 11:37 PM GMT
China, the U.S.’s largest
creditor abroad, urged American lawmakers opposed to raising the debt limit by
tomorrow to get out of the way. Tea Party Republicans’ response: mind your own
business. The U.S. must “shoulder its responsibility” as the world’s biggest economy and holder of the main reserve currency and “take concrete measures before Oct. 17 to avoid a default,” Deputy Finance Minister Zhu Guangyao said at a briefing with reporters yesterday in Beijing in which he referred to “the attitude of the Tea Party.”
Lawmakers
tied to the Tea Party didn’t appreciate the advice, even from a nation that
holds almost a quarter of foreign-owned Treasuries -- $1.28 trillion as of
July.
“They
need to stay out of our politics,” Representative Blake Farenthold, a Tea
Party-backed Texas Republican, said in an interview. China’s criticism “almost
sounds like a threat,” said Representative Ted Yoho, a Florida Republican. “For
them to say something derogatory about the Tea Party, I take offense to that.”
The
appeal from China, the world’s second-largest economy, underscores the
importance of U.S. Treasuries to global financial markets. Treasuries are
viewed as a safe haven for countries trying to reduce risk, and any doubt about
U.S. ability to pay its debt could rattle investors.
More
October 15, 2013 6:57 pm
Beijing should cut back its lending to Washington
By David L
China is America’s single largest foreign
creditor , holding about 8 per cent of the stock of US Treasuries. Most Chinese
netizens and opinion makers are not knowledgeable about the country’s budget
dispute. But almost all Chinese people understand that the US government has
been playing the world economic game to its advantage.The US issues, at rates of almost zero, Treasuries that are bought by investors all over the world. So long as the federal government increases the debt stock at a pace slower than the US gross domestic product growth rate (usually 2-4 per cent a year) minus the real interest rate (zero, or even negative in recent years), it can roll over the debt almost for ever, never worrying about paying it back.
What is equally difficult to understand, from the perspective of many academic economists, is the Chinese government’s attitude and behaviour regarding the American debt issue. For many years, economists in China have argued that the government should diversify away from Treasuries, anticipating the US government’s continued high large primary budget deficit and political disputes.
But Beijing has actually increased its exposure. Many argue that this is because of a lack of alternative ways to manage China’s large foreign currency reserves. This is an incorrect supposition.
One alternative – although it might not be easy – is to sell half of its Treasuries (about $1.2tn) and to allocate the funds among three categories of financial asset.
First it could buy up to 5 per cent of the shares of all multinationals that have been operating in the Chinese market and are listed on global stock exchanges. Buying shares in these companies is like investing in China itself.
More
http://www.ft.com/cms/s/0/2d7f44ec-3585-11e3-b539-00144feab7de.html#axzz2hrVDQgQd
Senate Leaders Resume Fiscal Talks as House Scraps Vote
By Richard Rubin, Kathleen
Hunter & Roxana Tiron - Oct 16, 2013 5:33 AM GMT
U.S. Senate leaders are rushing to lock down an agreement to end the fiscal
impasse, stepping in after House
Republicans’ last-minute plan to avert a U.S. government default collapsed.
The emerging Senate accord may be announced as early as this morning, though passage in the Republican-led House is far from assured and one ratings company yesterday placed the U.S.’s AAA credit rating on a negative watch.
The framework being negotiated by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell presents the clearest path to ending the 16-day-old government shutdown and extending U.S. borrowing authority, which lapses tomorrow. It would fund the government through Jan. 15, 2014, and suspend the debt limit until Feb. 7.
“Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,” Adam Jentleson, Reid’s spokesman, said in a statement last night.
Whether the U.S. misses promised payments, including benefits, salaries or interest, may depend on two Republican lawmakers.
In the Senate, Texas Republican Ted Cruz, who has led a campaign against President Barack Obama’s signature health law, has left open the possibility of delaying the debt-ceiling measure. If any of the 100 senators chose to delay it, a vote could be pushed to as late as next week.
In the House, Representative John Boehner of Ohio will face one of the most important decisions of his tenure as speaker: whether to allow a Senate agreement to come to the House floor unimpeded, or try to amend it. Democrats say they could pass a Senate deal in the House, with a handful of Republicans, if Boehner would allow a vote.
More
Oct. 15,
2013, 4:59 p.m. EDT
Fitch: U.S. AAA rating on watch over debt debate
NEW
YORK (MarketWatch) -- Fitch
Ratings put its AAA credit rating of the U.S. on negative watch
Tuesday, citing the prolonged congressional negotiations over a hike to the
borrowing limit. The U.S. is set to hit its debt
ceiling on Thursday without a deal to increase its ability to
borrow. "The prolonged negotiations over raising the debt ceiling
(following the episode in August 2011) risks undermining confidence in the role
of the U.S.dollar as the preeminent global reserve currency, by casting doubt
over the full faith and credit of the U.S," the agency said in a
statement. Senate Majority Leader Harry Reid
had warned that a rating downgrade could come as soon as Tuesday.
Below, will America be forced to issue scrip? For
more on Scrip and Disney dollars see “Scrip.” http://londonirvinereport.blogspot.co.uk/2013/10/scrip.html
America faces 'financial armageddon', says Kenneth Rogoff
Former IMF chief economist compares President Barack Obama’s position to the 1962 Cuban missile crisis
America
faces “constitutional breakdown” or “financial armageddon,” one of the
country’s leading economists has warned, as talks to end the political
stand-off in Washington fell apart.
Professor
Kenneth Rogoff, a former chief economist of the International Monetary Fund,
compared President Barack Obama’s position to the 1962 Cuban missile crisis,
when the Kennedy administration refused to negotiate with Cuba and the Soviet
Union despite the threat of potential nuclear destruction.
“It's
very hard to see a silver lining to this. It's a constitutional breakdown [but]
threatening financial armageddon is blackmail," Mr Rogoff, who is now a
professor of economics and public policy at Harvard, told the Telegraph.
“President
Obama should push them [the Republicans] to the brink. This has implications
beyond the moment. There is a danger of weakening the presidency on a long-term
basis.”
Professor
Rogoff said it was increasingly likely that the US government would have to resort
to making social security payments with “scrip”, or IOUs, following the
breakdown in talks. However, it remains very unlikely that there will be a much
more serious “CDO event”, where America defaults on paying interest on its
bonds, he added.
More
In equally dismal news from the other side of the
Atlantic, Portugal and Italy set out to impoverish even more of their slaves,
in the cause of the new German Austerity Reich. With Italy proposing to fire
civil servants from no show jobs, and cut the salaries of those who do show up,
all in the cause of tax breaks for others; it will be interesting to see what
follows. Of course it could all work out like good model modern German
Europeans, but my money’s on a different outcome. Italians simply aren’t good
model modern German Europeans.
“It
takes 3 girls to tow always; two to hold the rope, and the other one runs round
and round, and giggles.”
Jerome K. Jerome. Three Men in a Boat. 1889.
Portugal Plans 3.2 Billion Euros of Spending Cuts for Next Year
By Joao Lima & Henrique Almeida - Oct 16, 2013 12:17 AM GMT
Portugal plans to cut spending by 3.2 billion euros ($4.3 billion) next year
to meet budget deficit targets as it tries to exit its bailout program. The 2014 budget was handed in to parliament yesterday and includes 1.3 billion euros of cuts to personnel costs, Finance Minister Maria Luis Albuquerque told reporters in Lisbon last night. Salaries of state workers earning more than 600 euros a month will be cut by between 2.5 percent and 12 percent.
“About 86 percent of the permanent adjustment effort introduced by this budget is on the spending side,” Albuquerque said.
Prime Minister Pedro Passos Coelho has to trim spending in 2014 after relying mainly on tax increases this year to meet targets set in the aid program from the European Union and International Monetary Fund. Portugal is trying to regain full access to debt markets with the end of the 78 billion-euro rescue plan approaching in June.
The country’s net financing needs in 2014 will be 11.7 billion euros, Secretary of State for Treasury Isabel Castelo Branco said. The government plans gross bond issuance of 10.5 billion euros next year, when financing from the so-called EU and IMF troika will be 7.9 billion euros, she said.
More
Letta Reshapes Italian Austerity With Tax Cut, Spending Curbs
By Andrew Frye & Lorenzo Totaro - Oct 15, 2013 11:09 PM GMT
Italian Prime Minister Enrico Letta reshaped the country’s two-year
commitment to austerity by approving a labor-tax cut and relying on 3.5 billion
euros ($4.7 billion) of spending reductions to meet 2014 deficit targets. The central government will bear 2.5 billion euros of the expense cuts and regional administrations will deliver 1 billion euros, Letta said in a press conference in Rome after his cabinet approved next year’s budget yesterday. The labor-tax cut will give an extra 1.5 billion euros to workers next year and a total of 5 billion euros through 2016, he said. Companies will get tax breaks of 5.6 billion euros in that span, he said
Letta,
Italy’s third
premier since 2011, is shifting the burden from taxpayers to government
bureaucracy in a bid to spur the stagnant economy as deficit-cutting continues. Public
administration spending rose 0.6 percent in nominal terms last
year to 801 billion euros as Letta’s predecessor, Mario Monti, counted mainly
on tax increases to strengthen the budget and shield Italy from bond market
speculation.
More
The great trade plunges 5% and says the VAT rise is "catastrophic"
Sales
at department stores fell by 7.2% until August
The great trade sinks in Spain after the last increase in VAT in
September last year. The
large distribution companies grouped in Anged-El Corte Ingles, Carrefour,
Auchan, Tesco, Ikea, Media Markt, Leroy Merlin and Toys R'Us, among others in
2012 suffered the biggest drop in sales since the crisis began and practically,
since no statistical series. Was a decrease of 4.9%, which reduced their income
to 36.979 million euros.
Of
particular concern is a sector that has already accumulated a fall since 2008
more than 10%, but worse, he assured the president of the employer, Alfonso
Merry del Val, is that the effect that caused the increase in VAT "is
being catastrophic. " This means that this year, the situation could have
been even worse. Merry del Val said it is too early to give figures, but data
from the National Statistics Institute (INE) show that sales in supermarkets
accumulate until August fell by 7.2%, which would mean that the problem
away to improve, is deepening.
More
“I
don't understand German myself. I learned it at school, but forgot every word
of it two years after I had left, and have felt much better ever since.”
Jerome K. Jerome. Three Men in a Boat. 1889.
At the Comex silver depositories Tuesday final figures were: Registered 43.53 Moz,
Eligible 122.12 Moz, Total 165.65 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
While Europe transforms itself into the EUSSR and
America into Argentina, Russia seeks to transform EurAsia into a massive 21st
century trading block. Who needs to tangle with America’s massive navy at choke
points, or fool around with whoever’s running the Suez canal this month, when
there’s the super-efficient Russian railway network at your disposal. Looks
like another job for Uncle Sam’s drones, although I wouldn’t bet on most of
them not getting shot out of the sky. Whose idea was the “Orange revolution”
anyway?
“You
can always tell the old river hand by the way in which he stretches himself out
upon the cushions at the bottom of the boat, and encourages the rowers by
telling them anecdotes about the marvellous feats he performed last season.”
Jerome K. Jerome. Three Men in a Boat. 1889.
Putin Builds North Korea Rail to Circumvent Suez Canal
By Ekaterina Shatalova & Nicholas Brautlecht
- Oct 15, 2013 9:00 PM GMT
Vladimir Putin is inching closer to his goal of turning
Russia into a major transit route for trade between eastern Asia and Europe by
prying open North Korea, a nuclear-capable dictatorship isolated for half a
century. Russia last month completed the first land link that North Korea’s Stalinist regime has allowed to the outside world since 2003. Running between Khasan in Russia’s southeastern corner and North Korea’s rebuilt port of Rajin, the 54-kilometer rail link is part of a project President Putin is pushing that would reunite the railway systems of the two Koreas and tie them to the Trans-Siberian Railway.
----OAO Mechel, Russia’s biggest supplier of steel-making coal, will be among the customers in the first stage of the North Korea project, sending shipments eastward to Asian consumers, according to Moscow-based Russian Railways. The Rajin facility also can be refitted to move Asian goods westward to Europe. Mechel’s press service in Moscow declined to comment.
Shipments to and from western Europe and Rajin will be delivered in just 14 days, compared with 45 days by ship, OAO Russian Railways Chief Executive Officer Vladimir Yakunin told reporters in North Korea Sept. 22.
----“Russia’s position is to get North Korea involved in profitable projects to make them realize that cooperation is better than isolation,” Lukyanov said by phone from the Russian capital.
More
http://www.bloomberg.com/news/2013-10-15/putin-builds-north-korea-rail-to-circumvent-suez-canal.html
“In the church is a memorial to Mrs. Sarah Hill, who bequeathed 1 pound annually, to be divided at Easter, between two boys and two girls who "have never been undutiful to their parents; who have never been known to swear or to tell untruths, to steal, or to break windows." Fancy giving up all that for five shillings a year! It is not worth it!”
Jerome K. Jerome. Three Men in a Boat. 1889.
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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