Baltic Dry Index. 1671 Friday
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
We open today with more on the insane asylum of
Euroland. While the serfs of the south are crushed under the heel of German
austerity, in the great halls of the Elite New German Empire, no expense is too
much for these disciples of Germany’s Bishop of Bling. In 21st
century modern model Germany, where building projects go wrong more often than
they go right, the Bishop of Bling is a rank amateur compared to the Kaisers of
the Italian run ECB. Does anyone in
Britain or Club Med, still think they are better off inside the wealth
destroying Bilderberger EU? No egos were hurt in the building of this monumental
blunder, the new German version of the Palace of Versailles.
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
H. L. Mencken.
ECB Headquarters: Skyrocketing Costs for Skyscraper Project
By Andreas Wassermann
Estimated costs for the
European Central Bank's new headquarters in Frankfurt have more than doubled.
As has been happening with so many major projects in Germany, its construction
has been plagued by poor planning, oversight and execution -- and endless
delays.
---- It was
May 19, 2010. Jean-Claude Trichet, the ECB's president at the time, had invited
his guests to a dicey part of the city for the groundbreaking ceremony. They
gathered in front of the building pit, from which a futuristic tower was to
arise: an architecturally thrilling, 45-story skyscraper, a symbol of the power
of Europe's shared currency.
A few
euros were ceremoniously buried with the cornerstone. Trichet declared that his
bank's policy of carefully managing its money would also apply to the
construction of the new headquarters. "We must ensure that construction
costs remain within the estimated budget," Trichet said.
Three-and-a-half
years later, in the fall of 2013, there is a different reality in Frankfurt's
Ostend district. Instead of the original estimated cost of €500 million ($690
million), the entire project will now cost at least €1.15 billion and could
even eventually climb to €1.3 billion. The ECB has also had to postpone its
move. Originally scheduled for completion in 2011, the building is now not
expected to be ready for occupancy until at least the end of 2014.
Once again, a major German construction project is spinning out of control -- like the new airport in Berlin and Hamburg's Elbphilharmonie concert hall. And, once again, the owner of the property, a public body, is trying to blame the delays and cost overruns on external factors. At last year's topping out ceremony, Jörg Asmussen, a German member of the ECB's executive board, said that general "price increases for building materials and services" were at fault.
In truth, the delays and cost overruns for the ambitious new headquarters building result from the fact that former ECB President Trichet and his staff set budgets that were far too low -- and therefore unrealistic -- and from their decision to oversee the project themselves rather than hiring a general contractor. In an audit performed before construction began, the European Court of Auditors concluded that there were cost-control problems and little transparency in the awarding of contracts.
The demands of the project's European managers were apparently as sky-high as the new tower. Vienna-based architect Wolf Prix and his firm, Coop Himmelb(l)au, had designed the building as two twisted towers connected by hanging gardens, made almost entirely of glass and steel. The skyscraper looks more like a giant sculpture than an office building.
---- When the monetary watchdogs move into their new home, their offices are likely to be among the most expensive in the euro zone. As the complex will house about 2,000 employees and cost more than €1 billion to build, each workspace will be worth about €600,000, or as much as a very comfortable single-family home. In commercial real estate, €30,000 per desk space is usually considered "upscale."
A virtual tour of the future headquarters, which can be found on the bank's website, offers a look into the ECB's beautiful new world. A visitor approaching the building from the banks of the Main River enters a tall atrium made of steel, glass and pale stone surfaces. People shrink to the size of mice within the atrium.
----This is where the animation ends, and the president's offices on the top floors are not depicted. Nor is the gourmet restaurant on the 45th floor, which will be reserved for the ECB's top executives as well as the finance ministers and leaders of the euro-zone countries. An ECB spokeswoman describes the top floors as "functional premises where meetings and dinner discussions will be held."
----Prix, the architect, was initially working under ideal conditions. When he began developing his designs, the Europeans were still proud of the euro and dreamed that it could one day supplant the US dollar as world's reserve currency of choice. There was still plenty of money and ambition to go around. Prix was thrilled that his client had not made any attempts to trim his plans. "This will be a symbol of the European Union," he raved in 2009.
More
Below, an unhappy reminder that Europe’s problems
are far from fixed. If America’s Fedsters’ ever reneg on their promise of QE
Forever, to infinity and beyond, stocks and bonds crash, and banks, countries,
fiat currencies all come crashing down, as a quadrillion dollars of derivatives
bets go wrong. Of course derivatives gambling is a zero sum game, the losing
side is supposed to pay out to the winning side. But there we come to the
distressing reality, the losers don’t have anything like a half quadrillion of
money or assets to back up the bets. Very few winners will get paid anything at
all. The world hits the biggest global reset in its history.
The Fedsters’ and their fellow travellers in the
other central banks will never willingly hit that reset button, but they long
ago lost control of events with voodoo economics. Stay long fully paid up
physical precious metals. That reset will come we just don’t know when.
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises
Deutsche Bank Profit Falls 94% as Trading Revenue Slumps
By Nicholas Comfort - Oct 29, 2013 5:55 AM GMT
Deutsche
Bank AG (DBK), Europe’s
largest investment bank by revenue, said third-quarter profit fell 94 percent
as income from debt trading slumped and the company set aside funds for legal
costs. Net income in the three months through September declined to 41 million euros ($56 million) from 747 million euros in the year-earlier period, the Frankfurt-based lender said in a statement on its website today. That missed the 430 million euro average estimate of 12 analysts surveyed by Bloomberg.
More
Up next, another warning on China from one of the
best China watchers around. All fiat money being fungible, the Fed’s “taper
caper” U-turn, and the prospect of the Yellen Fed to come with its QE to
infinity and beyond, has fired up China’s shadow banking system and with it
China’s property bubble. Nothing good lies that way says Andy Xie.
The keystone of the Fascist doctrine is its conception of the State, of its essence, its functions, and its aims. For Fascism the State is absolute, individuals and groups relative.
Benito Mussolini.
Oct. 29, 2013, 12:24 a.m. EDT
Xie to China: Pick your poison
Commentary: Property-bubble burst needed for economic restructuring
BEIJING (Caixin
Online) — Gross domestic product targeting no longer serves a good purpose.
It sends a dangerous signal for resisting economic restructuring and sustaining
speculation. Continuation of GDP targeting would lead to an economic hard
landing and massive non-performing loans.
The recent upturn in GDP growth is not good news for
China. It has occurred by further increasing the economic imbalance and
prolonging speculation. It merely delays the inevitable economic restructuring
and increases its final cost
The bursting of the property bubble is a necessary step in
China’s economic restructuring. It decreases funding for investment and
increases it for consumption. Prolonging the property bubble is equivalent to
resisting economic restructuring.
Delaying tactics in prolonging the bubble are
effective for the time being. The Fed has delayed the tapering of quantitative
easing, triggering the return of hot money. It sustains China’s shadow banking
system, which is the lifeline for the property bubble. One should use the
opportunity to deflate the bubble to avoid a forced – and bigger – bursting
later. India and Indonesia have increased interest rates, despite the breathing space. China
has chosen to light up the bubble once more.
Market forces are likely to trigger China’s bubble to
deflate again, following the 2012 downturn, within six months. Liquidity will
be squeezed between demand from growing fixed-asset investment and downward
pressure due to the Fed tapering. The available liquidity for the property
bubble will decrease as a consequence.
Further, China’s credit creation increasingly depends
on the shadow banking system. The higher interest rate in its credit creation
makes the property bubble unstable. Even if the liquidity squeeze does not pop
the bubble, the breakdown in credit circulation, due to fears of underlying
asset quality, may do the bubble in anyway, just like in the United States in
2008.
China’s economy will have to go through restructuring. It
is not a choice. It will happen either under government leadership or market
pressure. In the later scenario the process could be quite chaotic.
More.
It's good to trust others but, not to do so is much better
Benito Mussolini
At the Comex silver depositories Monday final figures were: Registered 44.07 Moz,
Eligible 122.83 Moz, Total 166.90 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the story playing big in France,
Germany and Spain, although it’s only Germany that’s gone ballistic. All
parties there are playing the NSA over the top spying scandal to the hilt.
Thankfully the story broke after Germany’s general election and not before. As
the paymaster of Euroland Germany can throw its weight around to line up all
its ducks in a row. Any USA – EU free trade deal, will now come with a big
price to mollify Germany’s hurt feelings. Putin spying on everyone was bad
enough. Obama was a stab in the back.
Below, Der Spiegel adds fuel to the fire.
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel.
Embassy Espionage: The NSA's Secret Spy Hub in Berlin
By
SPIEGEL Staff
According to SPIEGEL
research, United States intelligence agencies have not only targeted Chancellor
Angela Merkel's cellphone, but they have also used the American Embassy in
Berlin as a listening station. The revelations now pose a serious threat to
German-American relations.
It's
a prime site, a diplomat's dream. Is there any better location for an embassy
than Berlin's Pariser Platz? It's just a few paces from here to the Reichstag.
When the American ambassador steps out the door, he looks directly onto the
Brandenburg Gate.
When the United States moved into the
massive embassy building in 2008, it threw a huge party. Over 4,500 guests were
invited. Former President George H. W. Bush cut the red-white-and-blue ribbon.
Chancellor Angela Merkel offered warm words for the occasion.
Since then, when the US ambassador receives high-ranking visitors, they often
take a stroll out to the roof terrace, which offers a breathtaking view of the
Reichstag and Tiergarten park. Even the Chancellery can be glimpsed. This is
the political heart of the republic, where billion-euro budgets are negotiated,
laws are formulated and soldiers are sent to war. It's an ideal location for
diplomats -- and for spies.
Research by SPIEGEL reporters in Berlin and Washington, talks with intelligence officials and the evaluation of internal documents of the US' National Security Agency and other information, most of which comes from the archive of former NSA contractor Edward Snowden, lead to the conclusion that the US diplomatic mission in the German capital has not merely been promoting German-American friendship. On the contrary, it is a nest of espionage. From the roof of the embassy, a special unit of the CIA and NSA can apparently monitor a large part of cellphone communication in the government quarter. And there is evidence that agents based at Pariser Platz recently targeted the cellphone that Merkel uses the most.
The NSA spying scandal has thus reached a new level, becoming a serious threat to the trans-Atlantic partnership. The mere suspicion that one of Merkel's cellphones was being monitored by the NSA has led in the past week to serious tensions between Berlin and Washington.
Hardly anything is as sensitive a subject to Merkel as the surveillance of her cellphone. It is her instrument of power. She uses it not only to lead her party, the center-right Christian Democratic Union (CDU), but also to conduct a large portion of government business. Merkel uses the device so frequently that there was even debate earlier this year over whether her text-messaging activity should be archived as part of executive action.
----Last Wednesday Merkel placed a strongly worded phone call to US President Barack Obama. Sixty-two percent of Germans approve of her harsh reaction, according to a survey by polling institute YouGov. A quarter think it was too mild. In a gesture of displeasure usually reserved for rogue states, German Foreign Minister Guido Westerwelle summoned the new US ambassador, John Emerson, for a
meeting at the Foreign Ministry.
The NSA affair has shaken the certainties of German politics. Even Merkel's CDU, long a loyal friend of Washington, is now openly questioning the trans-Atlantic free trade agreement. At the Chancellery it's now being said that if the US government doesn't take greater pains to clarify the situation, certain conclusions will be drawn and talks over the agreement could potentially be put on hold.
---- In mid-August Merkel's chief of staff, Ronald Pofalla, offhandedly described the NSA scandal as over. German authorities offered none of their own findings -- just a dry statement from the NSA leadership saying the agency adhered to all agreements between the countries.
Now it is
not just Pofalla who stands disgraced, but Merkel as well. She looks like a
head of government who only stands up to Obama when she herself is a target of
the US intelligence services. The German website Der Postillon published
a satirical version last Thursday of the statement given by Merkel's spokesman,
Steffen Seibert: "The chancellor considers it a slap in the face that she
has most likely been monitored over the years just like some mangy resident of
Germany."
More
A newspaper is a device for making the ignorant more ignorant and the crazy crazier.
H. L. Mencken.
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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