Tuesday, 31 December 2013

2014 – The Future.

Baltic Dry Index. 2277 +30 (Dec. 24)

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

"It is far better to foresee even without certainty than not to foresee at all. "

Henri Poincare

Tis the last day of year 2013, and time to foresee the future. Of course no one can foresee the future, least of all me or our corrupt central banksters who have never yet foreseen a recession, or for that matter a crisis, or even an inflation.

That said, here are my predictions for 2014. (The next LIR will be on Friday.)

"In economics, hope and faith coexist with great scientific pretension."

J. K. Galbraith

The great currency war triggered by Japan will go seriously wrong as “Abenomics” backfires.

France, Italy and Spain will all separately create a crisis for the EU, leading to the breakup of the EMU in its present form. A new core Germanic EMU will be the result. The snake bit wealth destroying EU will go on destroying European wealth at an ever faster pace. Germany will slide into a EU wide recession. Bulgarian and Romanian economic migrants will flood Europe and the UK.

Brent crude oil will end the year below $80, if a “no nukes” deal with Iran is accomplished, above $120 if it isn’t and new sanctions are imposed on Iran. $80 will do little to boost the global economy. $120 dollar oil will reverse the Fed’s announced QE taper.

China will hit its first real economic crisis since the cultural revolution of the murderous days of Mao, as the shadow banking system collapses in a tsunami of corruption and fraud. Officially, China will still hit its growth targets.

The China v Japan war over the Diaoyu Islands will result in a clash/skirmish.

Argentina will default again.

Australia, Brazil, India, Turkey and South Africa will all undergo economic reversals from a pause in the great commodity super cycle.

The Islamic terrorist war against modernity, progress, Christian values and the west will intensify and spread further across Africa and into parts of Europe.

Obamacare will fail to deliver as promised, generating a new war over the spoils of the 2014 mid-term elections in America. America’s energy advantage over the rest of the world from “fracking”  will start to diminish, as all the low hanging fruit are plucked, and fracking oil well decline accelerates. America will find it impossible to pull out of Afghanistan.

New market rigging scandals will roil markets from America to Asia.

Global cooling will continue, and Europe will accelerate its retreat from “Green energy” subsidies.

The new 21st century super-material graphene will again fail to deliver in 2014. 2017 onwards is a different story.

Gold will continue to flow from west to east generating a delivery crisis in the London Bullion Market Association. Gold will finish the year above $2,000 a troy ounce as the fiat currency race to the bottom intensifies.

Social unrest will intensify.

"Prediction is very difficult, especially if it's about the future."

Nils Bohr,

At the Comex silver depositories Monday final figures were: Registered 51.21 Moz, Eligible 122.11 Moz, Total 173.33 Moz.  

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

No crooks today just a little light relief from yester year. Have a happy, healthy and prosperous 2014 everyone.

The Exploding Oregon Whale

"Those who have knowledge, don't predict. Those who predict, don't have knowledge. "

Lao Tzu                         

The monthly Coppock Indicators finished November:
DJIA: +190 Up. NASDAQ: +281 Up. SP500: +232 Up. The Fed’s final bubble continues to grow, until QE Forever isn’t forever. Up will remain up, until one fine day out of the blue the Fed finally loses control, or the next Lehman hits.

Monday, 30 December 2013

2013 – The Lawless Age.

Baltic Dry Index. 2277 +30 (Dec. 24)

LIR Gold Target in 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

As we end 2013 and look forward to 2014, today we take stock of our new lawless age of rigged markets, QE Forever and ZIRP, and the Great Disconnect between central bank rigged stock markets and the reality of everyday life. Tomorrow, what I think is in store for us in 2014.

Below, how our financial and economic world looks this morning. In our world of rising fanatical moslem terrorism, we seem to be ending 2013 with an Islamic global war against the secular and Christian west plus Africa. A development only likely to get worse in 2014.

Dollar Touches 5-Year High as U.S. Recovery Sustains Taper Pace

By Kristine Aquino Dec 30, 2013 6:41 AM GMT
The dollar touched a five-year high versus the yen and headed for an annual gain against major peers amid optimism a sustained U.S. economic recovery will allow the Federal Reserve to cease bond purchases by the end of 2014.

The Bloomberg U.S. Dollar Index is set for its biggest annual advance in five years before reports this week that may show improvements in housing and manufacturing. The euro is poised for the strongest advance among major developed currencies as European Central Bank officials damp prospects for interest-rate cuts. Japan’s yen was poised for a yearly slide versus most major counterparts as Asian stocks strengthened, curbing demand for haven assets.

“As long as the data flow continues to be positive and risk appetite is positive, you get the dollar supported,” said Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney.

China Cash-for-Votes Scandal Shows Xi’s Graft Challenge

By Bloomberg News Dec 30, 2013 4:36 AM GMT
A cash-for-votes scandal in China’s southern city of Hengyang that snared more than 500 lawmakers underscores the challenges facing Xi Jinping as he enters his second year in charge of the world’s second-biggest economy.

The unprecedented electoral fraud, which led to the resignations of almost the entire city People’s Congress, was disclosed on Dec. 28, less than a week after the ruling Communist Party issued a new plan to fight corruption and described the situation as “critical and complicated.”

Authorities are intensifying a graft crackdown a year after Xi took control of the party with a warning the issue could lead to social unrest and end its six-decade grip on power. Targeting both “tigers and flies” -- as Xi described perpetrators of all ranks -- may bolster the party’s image as economic expansion slows and public discontent over corruption spreads.

Chinese police shoot dead eight after Xinjiang 'terrorist attack'

BEIJING Sun Dec 29, 2013 11:21pm EST
(Reuters) - Police in China's restive far western region of Xinjiang shot dead eight people during a "terrorist attack" on Monday, the regional government said, the second outbreak of violent unrest this month in a region that has a substantial Muslim population.

The attack happened in Yarkand county close to the old Silk Road city of Kashgar in Xinjiang's far south, the Xinjiang government said in a statement on its official news website (www.ts.cn).

"At around 6:30 am, nine thugs carrying knives attacked a police station in Kashgar's Yarkand county, throwing explosive devices and setting police cars on fire," the brief statement said.

"The police took decisive measures, shooting dead eight and capturing one," it added, labeling the incident a "violent terrorist attack" which was being investigated further.

Earlier this month, police shot and killed 14 people during a riot near Kashgar in which two policemen were also killed.

Japan Consumer Prices Seen Rising Five Times as Fast as Wages

By James Mayger and Cynthia Li Dec 30, 2013 1:33 AM GMT
Japanese employers will fail in the next fiscal year to heed Prime Minister Shinzo Abe’s goal of wage increases that outpace inflation, highlighting risks that the nation’s recovery will stall, surveys of economists show.

Labor cash earnings, the benchmark for wages, will increase 0.6 percent in the year starting April 1, according to the median forecast in a poll of 16 economists by Bloomberg News. Consumer prices will climb five times faster, increasing 3 percent, as Japan raises a sales tax for the first time since 1997, a separate Bloomberg survey shows.

The squeeze on consumers from higher prices risks undermining public support for Abenomics and dragging on retail spending, unless Abe can convince companies to boost wages to cushion the blow. At stake is sustaining a recovery in the world’s third-biggest economy, set to expand this year at the fastest pace since 2010 as Abe tries to drive an exit from 15 years of deflation.

----In an interview in Tokyo this month, Abe urged companies to increase wages faster than gains in the cost of living. “For us to escape deflation it is extremely important that wages rise,” Abe said Dec. 6.

Special Report: Japan's homeless recruited for murky Fukushima clean-up

By Mari Saito and Antoni Slodkowski  SENDAI, Japan Mon Dec 30, 2013 12:44am
(Reuters) - Seiji Sasa hits the train station in this northern Japanese city before dawn most mornings to prowl for homeless men.

He isn't a social worker. He's a recruiter. The men in Sendai Station are potential laborers that Sasa can dispatch to contractors in Japan's nuclear disaster zone for a bounty of $100 a head.

"This is how labor recruiters like me come in every day," Sasa says, as he strides past men sleeping on cardboard and clutching at their coats against the early winter cold

It's also how Japan finds people willing to accept minimum wage for one of the most undesirable jobs in the industrialized world: working on the $35 billion, taxpayer-funded effort to clean up radioactive fallout across an area of northern Japan larger than Hong Kong.

Almost three years ago, a massive earthquake and tsunami leveled villages across Japan's northeast coast and set off multiple meltdowns at the Fukushima nuclear plant. Today, the most ambitious radiation clean-up ever attempted is running behind schedule. The effort is being dogged by both a lack of oversight and a shortage of workers, according to a Reuters analysis of contracts and interviews with dozens of those involved.

----Part of the problem in monitoring taxpayer money in Fukushima is the sheer number of companies involved in decontamination, extending from the major contractors at the top to tiny subcontractors many layers below them. The total number has not been announced. But in the 10 most contaminated towns and a highway that runs north past the gates of the wrecked plant in Fukushima, Reuters found 733 companies were performing work for the Ministry of Environment, according to partial contract terms released by the ministry in August under Japan's information disclosure law.

Reuters found 56 subcontractors listed on environment ministry contracts worth a total of $2.5 billion in the most radiated areas of Fukushima that would have been barred from traditional public works because they had not been vetted by the construction ministry.

Aussie Dollar Set for Biggest Yearly Drop Since ’08 on Fed Taper

By Mariko Ishikawa Dec 30, 2013 6:32 AM GMT
Australia’s dollar headed for its biggest yearly decline since 2008 as signs of improvement in U.S. economy boosted expectations the Federal Reserve will continue to scale back stimulus that has debased the greenback.

The Aussie dollar weakened today, extending the worst weekly run of losses in more than three decades before data which may show expansion in Chinese manufacturing slowed. Iron ore ports on Australia’s northwest coast began shutting down over the weekend before Tropical Cyclone Christine hits land tonight, after being upgraded to a Category 3 storm by Australia’s Bureau of Meteorology. New Zealand’s dollar declined for a sixth day versus the U.S. currency.

“The big theme has been Fed tapering,” said Janu Chan, economist at St. George Bank Ltd. in Sydney. “With that set to continue into 2014, we’ll expect the Aussie to come under some further pressure over the next year.”

France approves 75pc company tax on €1m salaries

President Hollande's controversial measure receives the green-light from France's highest court

By Ashley Armstrong 11:37AM GMT 29 Dec 2013
France’s highest court has approved President Francois Hollande’s 75pc company “supertax” rate on annual salaries exceeding €1m.

The decision is a step-change for the Constitutional Council which last year ruled a measure to impose a 75pc tax on individuals earning over €1m as “unconstitutional.”

The council said at the time the tax band did not guarantee equality for taxpayers because two households with the same total revenue could end up with different tax bills.

Mr Hollande’s redrafted proposal instead makes companies pay for the high-earner salaries.

Mr Hollande, who once publicly declared "I don't like the rich", had called for economic "patriotism" from France's wealthiest citizens.

Insight: Italy's Chinese garment workshops boom as workers suffer

By Silvia Aloisi PRATO, Italy Sun Dec 29, 2013 5:11pm EST
(Reuters) - Shen Jianhe lost both her job and home when Italian police shut down her garment factory in the Tuscan city of Prato.

By day, the 38-year-old mother of four would sew trousers at one of the nearly 5,000 workshops run by Chinese immigrants in Prato, which largely turn out cheap clothing for fast-fashion companies in Italy and across Europe.

At night she slept in a plasterboard cubicle hidden behind a wooden wardrobe at the Shen Wu factory - until the police arrived one cold December morning. They sealed the doors and confiscated the 25 sewing machines under a crackdown on an industry that is booming but blighted by illegality and sweatshop conditions.

----Prato, the historical capital of Italy's textile business, has attracted the largest concentration of Chinese-run industry in Europe within less than 20 years.

As many as 50,000 Chinese live and work in the area, making clothes bearing the prized "Made in Italy" label which sets them apart from garments produced in China itself, even at the lower end of the fashion business.

In some ways, the Chinese community of Prato has succeeded where Italian companies have failed. Italy's economy has barely grown over the past decade and is only just emerging from recession, partly due to the inability of many small manufacturers to keep up with global competition.

Yet Prato, which lies 25 km (16 miles) from the Renaissance jewel of Florence, is also a thriving hub of illegality committed by both Italians and Chinese, a byproduct of globalization gone wrong, many people in the city say.

Up to two thirds of the Chinese in Prato are illegal immigrants, according to local authorities. About 90 percent of the Chinese factories - virtually all of which are rented out to Chinese entrepreneurs by Italians who own the buildings -break the law in various ways, says Aldo Milone, the city councilor in charge of security.

SFO plots charges over Libor scandal

More bankers and traders to face action in new year as fraud office reveals extent of rate inquiry

British authorities are preparing charges against several more bankers and traders in connection with the Libor-rigging scandal, the country’s top fraud investigator has revealed.

David Green, director-general of the Serious Fraud Office, said the agency was in the process of an “enormous” investigation into interest rate manipulation, with about a fifth of its staff now working on the inquiry.

“I am sure there will be more charges against others,” said Mr Green in an interview with The Sunday Telegraph in which he also acknowledged a rift with the US over the handling of the investigation.

Three men have already been charged by the SFO over allegations they were involved in attempts to rig the benchmark index, including former Citigroup and UBS trader, Tom Hayes. The SFO currently has a team of 60 working on the investigation, out of a total staff of more than 300.

US prosecutors had wanted to try Mr Hayes and two former brokers in America. But the SFO charges mean that the men will now face trial in Britain.

Turkey Is Biggest Loser in Stocks as Erdogan Crisis Persists

By Ye Xie and Katia Porzecanski Dec 30, 2013 5:09 AM GMT
The mounting power struggle between Turkish Prime Minister Recep Tayyip Erdogan and the judiciary is turning the stock market into the world’s worst performer and driving the currency to unprecedented lows.

The Borsa Istanbul 100 Index (XU100) has slumped 21 percent in dollar terms this month, extending this year’s slide to 32 percent, as a corruption probe embroiled Erdogan’s cabinet and led to three ministerial resignations. The declines were the worst among more than 90 benchmark gauges tracked by Bloomberg. Turkey’s lira has sunk 6.3 percent this month, the most among emerging-market currencies, and traded at a record low of 2.1764 per dollar last week.

The crisis threatens to undo the economic gains Erdogan made in orchestrating a decade of almost uninterrupted growth that earned Turkey its first investment-grade credit ratings since the early 1990s. The investigation, which Erdogan labeled a coup attempt, is deepening the conflict between the government and followers of U.S.-based Islamic cleric Fethullah Gulen, who are influential in the judiciary and police force.

"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

At the Comex silver depositories Friday final figures were: Registered 51.21 Moz, Eligible 122.00 Moz, Total 173.21 Moz.  

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

More on our new lawless age. Yes it’s the banksters again, too big to fail or jail.

It’s morally wrong to let a sucker keep his money.

Ebenezer Squid, with apologies to W. C. Fields.

DOJ declined to enforce Bernie Madoff-related subpoena of J.P. Morgan: document

December 27, 2013, 10:36 AM
The Justice Department likes to brag about being tough on the banking industry. But just how tough?
Not as tough as the Treasury Department would like, apparently, at least when it comes to J.P. Morgan Chase & Co. JPM  and Bernie Madoff.

The government has been looking into whether J.P. Morgan, which had a two-decade relationship with Madoff, ignored warning signs that the operation he was running was actually a giant Ponzi scheme. Banks are supposed to report suspicious activity by clients.

But the Treasury Department, in its investigation, couldn’t seem to catch a break: In May, the Treasury’s inspector-general office subpoenaed J.P. Morgan for Madoff-related documents, but J.P. Morgan declined. Then Treasury asked the Department of Justice to enforce the subpoena, but the Justice Department declined that request in September.

The documents included internal interviews that J.P. Morgan conducted with more than 90 employees after Madoff’s arrest in December 2008. And the Office of the Comptroller of the Currency, which regulates national banks, had originally asked for the documents in 2009. J.P. Morgan had argued that the documents were protected by attorney-client privilege and “work product” immunity.

The behind-the-scenes development is from a letter  from the Treasury’s inspector general, stamped Oct. 8. It was posted on the website of Government Attic, which posts documents obtained through Freedom of Information Act requests, and previously reported by Newsweek.

After the Justice Department declined to enforce the subpoena, the OCC and the Treasury’s inspector-general office agreed that the latter“could not undertake further actions regarding the matter,” according to the letter.

“As a result we are closing this matter accordingly,” a Treasury special agent wrote. A Justice Department spokesman in Washington declined to comment. A Treasury Department spokesman didn’t immediately return a call for comment.

"God, no, we don't club baby seals. We club babies."

Goldmanite, quoted in The Times of London. November 8 2009

The monthly Coppock Indicators finished November:
DJIA: +190 Up. NASDAQ: +281 Up. SP500: +232 Up. The Fed’s final bubble continues to grow, until QE Forever isn’t forever. Up will remain up, until one fine day out of the blue the Fed finally loses control, or the next Lehman hits.

Monday, 23 December 2013

100 Years Old Today.

Baltic Dry Index. 2208 +74

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

Merry Christmas to all and every good wish for a healthy, happy and prosperous 2014. The next LIR update will be on Monday December 30th 2013.

One hundred years old today.  No not your LIR editor, writer, analyst and go-fer, but the USA Federal Reserve Bank, since 1945 the leading central bank on planet earth. So how has the bank that “Bubbles” and “Bernocchio” built fared? All you need to know is summed up below.  A 2200% inflation rate, although most of it has occurred since 1971.
Stay long physical gold and silver. In 1913 it took roughly $20 to buy a troy ounce of gold. 
In 2013 it takes roughly $1,200 to buy a troy ounce of gold.

“Paper money eventually returns to its intrinsic value – zero.”


The Shrinking Value of the Dollar

The CPI inflation calculator uses the average Consumer Price Index for a given calendar year. This data represents changes in prices of all goods and services purchased for consumption by urban households. This index value has been calculated every year since 1913. For the current year, the latest monthly index value is used. In 2008, for example, it took $21.57 to buy what $1 bought in 1913. Note that in 1920, it cost $2.02, and declined in 1925 and through the 1930s, illustrating the effect of the Great Depression, when prices slumped. Prices did not pass $2 again until 1950.
Amount it took to
equal $1 in 1913
Source: Bureau of Labor Statistics. Web: http://stats.bls.gov/ .
Information Please® Database, © 2013 Pearson Education, Inc. All rights reserved.

US Inflation Calculator

Easily calculate how the buying power of the US dollar has changed from 1913-2013; get inflation rates, and inflation news.

According to an interesting study of the 775 fiat currencies that have existed 599 are no longer in circulation. The median life expectancy for the defunct currencies? Fifteen years.  Perhaps the author was being unfair by focusing solely on the failures. Sadly no, the average life expectancy of all fiat currency is running at a truly underwhelming 27 years. Only a select few have managed anything approaching old age. The British pound sterling is one such example at over 300 years and counting. Before we get too excited by this apparent example of longevity, at inception the pound was defined as 12 ounces of silver.  The pound is now worth less than 0.5% of this original value and of course there is no silver involved anywhere. In other words, the most successful currency in existence in terms of life-span has lost more than 99% of its value.

At the Comex silver depositories Friday final figures were: Registered 51.71 Moz, Eligible 121.25 Moz, Total 172.96 Moz.   

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

No crooked banksters or bent politicians today, at this special time of year, they haven’t gone away, but we take a well-deserved seasonal break from the criminal classes. Merry Christmas everyone.

 Below Merry Christmas from Mozart’s dad.

The monthly Coppock Indicators finished November:
DJIA: +190 Up. NASDAQ: +281 Up. SP500: +232 Up. The Fed’s final bubble continues to grow, until QE Forever isn’t forever. Up will remain up, until one fine day out of the blue the Fed finally loses control, or the next Lehman hits.