Baltic Dry Index. 2084 +37
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"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
We are just 10 days away from a potential US
default. Of course the USA won’t default on its Treasury debts, it will pay off
expiring US Treasury obligations, even if it has to print yet more dollars to
do so, defaulting domestically to retirees, government workers and ultimately
the military industrial complex, but you get the picture. It won’t be life in
the global economy as we knew it. For a large part of the global economy, those
without savings and deep in debt, the Great Recession of 2007-2009 will be
looked on as a mere blip compared to what comes next if the US government turns
itself overnight into Argentina. Like Argentina, the USA could always seize
private pension funds, issuing IOUs almost as good as dollars.
Below, US Treasury Secretary Lew warns of a US
government running out of an ability to pay off its bills. The Treasuries will
get paid, but domestically, everyone else may get script, a promise to pay
something at some time off in the future. For now, everyone is continuing to bet
that nothing will happen. All ends well if they’re right. It’s Costa Concordia time
in 10 days’ time if they’re wrong.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
U.S. to Default If Debt Ceiling Not Raised, Lew Says
By Kasia
Klimasinska & Ian Katz - Oct 6, 2013 4:51 PM GMT
Treasury Secretary Jacob J. Lew said Congress needs to pass a debt-ceiling
increase by Oct. 17 or the U.S. will be “dangerously low” on cash and risk
defaulting on its payments. “On the 17th, we run out of our ability to borrow, and Congress is playing with fire,” Lew said on CNN’s “State of the Union” today. “If they don’t extend the debt limit, we have a very, very short window of time before those scenarios start to be played out.”
“If the
United States government, for the first time in its history, chooses not to pay
its bills on time, we will be in default,” Lew said. “There is no option that
prevents us from being in default if we don’t have enough cash to pay our
bills.”
In
response to Obama administration calls for a debt-limit increase without policy
conditions, House Speaker John Boehner said today he doesn’t have votes to pass
such a bill.
More
A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall
By Yalman Onaran - Oct 7, 2013 4:55 AM GMT
Anyone
who remembers the collapse of Lehman Brothers Holdings Inc. little more than
five years ago knows what a global financial disaster is. A U.S. government
default, just weeks away if Congress fails to raise the debt ceiling as it now
threatens to do, will be an economic calamity like none the world has ever
seen.
Failure
by the world’s largest borrower to pay its debt -- unprecedented in modern
history -- will devastate stock markets from Brazil to Zurich, halt a $5
trillion lending mechanism for investors who rely on Treasuries, blow up
borrowing costs for billions of people and companies, ravage the dollar and
throw the U.S. and world economies into a recession that probably would become
a depression. Among the dozens of money managers, economists, bankers, traders
and former government officials interviewed for this story, few view a U.S.
default as anything but a financial apocalypse.
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“If it were to occur -- and it’s a big if -- one would expect a series of legal triggers, potentially transmitting the default to many other markets,” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s largest fixed-income manager. “All this would add to the headwinds facing economic growth. It would also undermine the role of the U.S. in the world economy.”
More
Elsewhere there’s rising economic trouble too. China’s
wobbling again, while India looks like it’s already passed into an inflationary
recession. A depression, if and when the US Fed starts raising global interest
rates by tapering its QE program.
"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
World Bank Cuts Developing East Asia GDP Forecasts on China
By Sharon Chen - Oct 7, 2013 5:45 AM GMT
The World
Bank lowered its forecasts for East Asia’s developing nations this year and
next, and said the region must boost efforts to ensure financial stability
ahead of interest-rate increases in advanced economies. Developing East Asia will probably expand 7.1 percent in 2013 and 7.2 percent in 2014, the Washington-based lender said in a report today, down from April predictions of 7.8 percent and 7.6 percent respectively. China may grow 7.5 percent in 2013, lower than an April forecast of 8.3 percent, it said.
The
Asian
Development Bank cut its forecasts for emerging Asia this year and next
last week, as a slowdown in China and India is compounded by concern that the Federal
Reserve’s impending reduction of its record stimulus will drive away
investors.
More
Caviar Off Indian Officials’ Menu as Junk Rating Looms: Economy
By Unni Krishnan & Kartik Goyal - Oct 7, 2013 6:52 AM GMT
For Arvind Mayaram, India’s push to avoid having its credit rating
cut to junk means he’ll have to forgo caviar and a two-meter-long flat bed in
first class on his flight from New Delhi to Washington D.C. this week. Mayaram, India’s Economic Affairs Secretary, will fly business class instead to the annual World Bank and International Monetary Fund meetings, saving taxpayers at least $3,000. The change is part of moves to narrow a budget deficit that reached almost 75 percent of the 5.4 trillion-rupee ($88 billion) target in the first five months of the fiscal year, imperiling efforts to limit the widest shortfall in major emerging nations.
Prime Minister Manmohan Singh faces a slump in economic expansion that’s hurting tax revenues as rupee weakness raises the cost of oil imports and fuel subsidies. He’ll likely scale back spending on areas such as research and development while maintaining energy, food and fertilizer aid to court support before elections due by May, Religare Capital Markets Ltd. said.
“A spending slowdown may well further sap growth,” said Tirthankar Patnaik, a strategist at Religare Capital in Mumbai. “But revenues are meaningfully below budget forecasts, so the government has little choice.”
Singh
seeks a deficit of 4.8 percent of gross domestic product in the year through
March 2014, down from 4.9 percent the prior year. Standard
& Poor’s reiterated on Sept. 3 it may lower India to junk on risks
including budget and current-account imbalances. S&P last classified India
as non-investment grade in 2007.
More
We end for the day with gloom, even in the business
of supplying our new 21st century never ending war. All good things must come to an end it seems.
With more than 50 percent of revenues coming from Afghanistan, it was probably
cheaper to have use the old British Raj colonial policy of just paying the
Afghans not to make war.
Supreme Owner Made a Billionaire Feeding U.S. War Machine
By David de Jong - Oct 7, 2013 12:00 AM GMT
Chemical warfare and car bombings are just a few of the hazards working in
war-torn countries such as Iraq and Syria. For Supreme Group BV, it’s the cost of doing
business. Dubai-based Supreme delivers fuel and food -- 100,000 meals a day -- to troops stationed in some of the most inhospitable parts of the world, including Liberia, Mali and Sudan. The perilous business, where contractors dodge bullets fired by the Taliban and explosives set by insurgents, has made the company’s majority owner, Stephen Orenstein, a billionaire.
“Our mantra is to provide the same quality of service in Rwanda or Somalia as we do for restaurant chains in Germany,” Orenstein, 49, said in a phone interview from his office in Dubai. “We took a developed world standard and brought it to the developing world.”
Orenstein’s biggest business has been supplying military personnel in Afghanistan. Since the start of the war there in 2001, Supreme’s revenue has increased more than 50-fold to $5.5 billion in 2011. According to Supreme’s chief financial officer, Mike Thorne, more than 90 percent of the company’s revenue is derived from its Afghanistan operations.
That’s about to change. With the withdrawal of NATO and American troops and the impending loss of a $10 billion food contract with the U.S. military, the company is projecting it will lose more than 75 percent of its sales by the end of 2014.
“We’re still a financially sound company, so I don’t view it as a collapse,” Thorne said by phone. “But we’re going to be a much smaller company.”
The company’s largest contract -- an exclusive deal to distribute food to U.S. military personnel in Afghanistan -- has been riddled with lawsuits and accusations, including the Department of Defense’s assertion that Supreme overcharged it by $757 million.
“The Pentagon lost control of this contract from the beginning and even today may be unable to recover hundreds of millions of dollars in potential overpayments,” said U.S. Representative John Tierney, the ranking Democratic member on the House Government Reform & Oversight Subcommittee on National Security, in a statement to Bloomberg News. “By keeping the money flowing to Supreme through noncompetitive contract extensions, the Defense Department unwisely and unnecessarily put U.S. taxpayers on the hook.”
The bickering has spilled over to new business. In April, Supreme sued the U.S. government in the Court of Federal Claims in Washington after the Defense Logistics Agency awarded a new five-year, $10 billion food contract in June 2011 to Dubai-based competitor Anham FZCO LLC, which also supplies food to the U.S. military in Iraq, Kuwait and Jordan.
Orenstein disputes the U.S. overpaid for Supreme’s services. The company said it’s owed an additional $1.8 billion.
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 43.32 Moz,
Eligible 123.03 Moz, Total 166.35 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, a glimpse of the future as the fiat dollar
and the fiat euro unravel. On our present course, soon we will all be Argentina
on our way to Zimbabwe. In the weak coalition led UK, the near Marxist party
most likely to form the next government, is already talking about price fixing
by capping energy prices and expropriating unused land from its rightful
owners. Theft. Sadly in dumbed down modern Britain, few see the link to failed
1920s Soviet bolshevism. Stay long fully paid up physical precious metals held
outside of the UK and USA. Pounds sterling anyone?
"The paper standard is self-destructive."
Hans F. Sennholz
Algerians Cry Currency as Euro Black-Market Thrives
By Salah Slimani & Caroline Alexander - Oct 7, 2013 7:03 AM GMT
Across
the street from the parliament, courthouse and main police station in central
Algiers is the country’s biggest illegal market for foreign exchange.
“Currency,
currency!” Nadir, 28, shouts out to passing cars from his spot on the curb of
Port Said Square in the Algerian capital. “Come here for your currency!” He’s
among dozens of money changers milling around the gardens of the sunbaked
esplanade overlooking the Mediterranean, chatting on mobile phones and counting
crisp dinar notes. Last week, their going rate was a record 150 dinars ($1.84)
per euro, almost 40 percent more than the official price.
Underlying the increased demand for black-market money is the concern regional conflagration may spread. Revolts in nearby countries have left President Abdelaziz Bouteflika as North Africa’s longest-serving leader, while reviving memories of Algeria’s own civil war in the 1990s. His government has ramped up spending to ward off unrest, helping drive inflation to a 15-year high last year, and pushing Algerians into the currency and real-estate markets as they seek to shield savings.
“To protect themselves against inflation, and therefore the devaluation of the dinar, Algerians are investing in property, gold and foreign currencies,” Abderrahmane Mebtoul, a professor of economics at the University of Algiers, said in an interview. “It is a way of looking for security.”
More
"Increasingly, the wealth of the modern world has come to be represented by financial assets rather than real assets, and this to me is a very unhealthy situation, because financial assets are inherently unstable. Financial assets (currencies, bonds, mortgages, stocks, bank credit, etc.) can be quickly and violently reduced in value, or destroyed completely by either inflation or deflation."
Donald J. Hoppe
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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