Friday, 20 December 2013

Play It Again Uncle Sam!

Baltic Dry Index. 2134 -22

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

“Every victory is only the price of admission to a more difficult problem”

Henry Kissinger.

Today, the more things change… Long live the Great Disconnect. The greater the bubble, the worse the bust when we eventually reconnect with reality.

“The illegal we do immediately. The unconstitutional takes a little longer.”

Henry Kissinger.

US can only pay its bills until March, Treasury Secretary Jack Lew warns

Unprecedented US debt default could rock the country if Washington does not raise the borrowing cap soon

10:40PM GMT 19 Dec 2013
The Obama administration has warned Congress that the government could run out of borrowing authority needed to help pay its bills as soon as February if lawmakers do not swiftly raise the federal debt ceiling.

"I respectfully urge Congress to take action to raise the debt limit at the earliest possible moment," Treasury Secretary Jack Lew said in a letter to congressional leaders.

Congress passed a two-year budget deal on Wednesday to trim some spending cuts planned for next year, and the pact reduces the risk of a government shutdown.

But the legislation does nothing to avoid a potential unprecedented US debt default that could occur if Washington does not raise the borrowing cap soon.

In October, Congress and the administration suspended a $16.7 trillion cap on borrowing until February 7. If the debt ceiling isn't raised by then, Treasury will be able to juggle money between government accounts for a few weeks to keep just under the new limit.

European Union Loses AAA Rating From S&P on Weaker Cohesion

By Bloomberg News Dec 20, 2013 6:11 AM GMT
The European Union lost its top credit rating from Standard & Poor’s, which said the group’s cohesion has weakened and its financial profile has deteriorated.

S&P cut its long-term rating on the EU to AA+ from AAA and maintained its short-term rating at A-1+. The outlook is stable, the company said in a statement today. “The downgrade reflects our view of the overall weaker creditworthiness of the EU’s 28 member states,” S&P said.

The reduction follows ratings cuts in recent years on EU members including France, Italy and Spain, as a sovereign-debt crisis roiled the region. The average rating of net contributors to the EU budget has fallen to AA from AA+ since January 2012, when S&P revised its outlook on the long-term EU rating to negative, the company said.

China’s Money Rates Climb, Stocks Slide as Cash Crunch Deepens

By Fion Li Dec 20, 2013 5:05 AM GMT
China’s money-market rates surged and stocks dropped for a ninth day, the longest losing streak in 19 years, as targeted fund injections by the central bank failed to alleviate the worst cash crunch since June.

The seven-day repurchase rate, a gauge of liquidity in the financial system, increased 100 basis points to a six-month high of 7.60 percent in Shanghai, according to a daily fixing by the National Interbank Funding Center. It jumped 328 basis points this week, the most since January 2011. Transactions were recorded at rates ranging from 3.80 percent to 9.9 percent as of 12:31 p.m. local time, with a weighted average of 8.13 percent. The Shanghai Composite Index (SHCOMP) of shares dropped 0.6 percent.

BOJ Keeps Record Easing as Fed Taper Helps Weaken Yen: Economy

By Toru Fujioka and Masahiro Hidaka Dec 20, 2013 5:09 AM GMT
The Bank of Japan maintained its record easing, after a U.S. Federal Reserve decision to taper policy helped weaken the yen to a five-year low against the dollar.

Governor Haruhiko Kuroda’s board kept its pledge to expand the monetary base by an annual 60 trillion to 70 trillion yen ($670 billion) today after a two-day meeting in Tokyo. The decision was in line with forecasts of all 35 economists surveyed by Bloomberg News.

Kuroda’s push for 2 percent inflation underscores the difference in policy direction between the BOJ and the Fed, which could end its bond-purchase program next year. The yen’s 17 percent slide against the dollar this year is fueling price gains and boosting exporters’ profits, aiding Prime Minister Shinzo Abe’s bid to end 15 years of deflation.

Finally, in our new lawless age, there’s no honour among thieves anymore. The banksters are turning on each other in the world’s largest unfolding market rigging scandal. My view, sentence them all to a “Bernie.”

Banks Said to Snitch on FX Rivals in Race to Avoid Fines

By Gaspard Sebag and Aoife White Dec 20, 2013 12:00 AM GMT
Banks are racing to betray their competitors to avoid possible European Union fines for rigging foreign-exchange markets, according to a person with knowledge of the EU’s preliminary investigation.

Lenders are vying to emulate UBS AG (UBSN) and Barclays Plc, which dodged penalties of about 3.2 billion euros ($4.4 billion) for blowing the whistle on manipulation of interest-rate benchmarks, said the person who asked not to be named because the EU process is private. More banks have volunteered information on currency markets than for the probes into Libor and Euribor rigging, the person said.

With penalties forgiven for the first to snitch and discounts of as much as 50 percent for the next in line, banks have an incentive to win the race to EU Competition Commissioner Joaquin Almunia’s door. This year’s total for EU price-fixing fines is almost 1.88 billion euros -- about half the waived penalties for companies that first blew the whistle in cartel cases.

“If you offer a big enough carrot, i.e. full immunity, then you are likely to get someone to come forward,” Stephen Smith, a lawyer at Reynolds Porter Chamberlain LLP in London, said in an interview. “The reality is that if there any skeletons, they are going to come tumbling out of the cupboard” anyway as part of global investigations. Banks may decide that “they might as well be first in the queue at the EU,” he said

Regulators in the U.K., Switzerland, the U.S. and Asia are probing the $5.3 trillion-a-day foreign-exchange market after Bloomberg reported that dealers said they had been front-running client orders and attempting to rig the benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmarks are set.

At least 11 banks including Goldman Sachs Group Inc., Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) have disclosed investigations by regulators. Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Barclays have all suspended or put on leave senior currency traders. Deutsche Bank AG (DBK), continental Europe’s largest lender, has also said it’s cooperating with requests for information. No one has been accused of wrongdoing.

At the Comex silver depositories Thursday final figures were: Registered 51.63 Moz, Eligible 120.12 Moz, Total 171.75 Moz.   Someone seems to be expecting a massive December delivery.

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

Today more on the failure of the great Bilderberger EUSSR project. Far from generating European wealth and harmony, the EMU has turned into a giant wealth destroying monster, ruining Europe’s largely unemployed youth population, generating continental capital flight and setting nation against nation. France, Spain and Italy are all in danger of exiting the EMU next year, even if no one is willing to admit it.

Set in EU-Camelot, Arthur and Guinevere have a daughter. At the Blessing of Princess Aurora, MrDraghi arrives and sets an evil curse on the child, forcing the child into paying off the national debt….

Apologies to Richard Gauntlett.

The EU is in denial over the euro - its failed currency

While Britain and the US kickstart their economic recovery, Europe clings to its sinking ship

Rarely has the economic gulf that separates the English-speaking world and continental Europe looked quite as wide as it does today. While much of the eurozone remains mired in an economic funk, Britain and America are recovering fast, with rising demand and near record levels of private-sector job creation.

As if the last, crisis-ridden three years haven’t already given Europe’s policy elite enough to think about, this juxtaposition in fortunes must surely have awoken them to the truth: monetary union isn’t working. Unfortunately, the reality is that euroland continues to stumble blindly from one botched response to another, neither able to reconfigure the single currency in a more sustainable form nor enact the sort of measures that might give it a credible future. This week’s blueprint for a banking union is only the latest example. Even in Brussels, they struggled to call it a job well done; this was meant to be the most significant leap forward for European integration since the launch of the euro itself, but in the event it was just another messy compromise.

Overly complicated and chronically underfunded, it fails some of the most basic tests for any credible banking union. Decisions on whether to wind up failing banks remain subject to national veto; more crucially still, there is no agreement on collective responsibility for the costs. At some stage in the future, these things are meant to fall into place, but Europe really doesn’t have the luxury of time. Even major economies such as France, Italy and Spain are right on the edge of social and political fracture. The euro offers no plausible path back to growth, yet they cannot or will not give up on it.

Not that these failings should be cause for triumph in Britain and America. Europe’s tragedy is Britain’s misfortune, forcing the UK artificially to support demand via the palliative of extreme forms of monetary stimulus to avoid the same fate. This can work for a while, but eventually Britain needs to rebalance its economy away from consumption to trade and investment.

European leaders tend to console themselves with the thought that the UK’s economic recovery is therefore just a conjuring trick, which cannot last. Even so, they can no longer ignore the contrast. Their own forced march to ever closer union seems to have resulted only in policy paralysis and economic ruin. By pursuing their own solutions outside the madhouse of eurozone integration, Britain and America seem to have kickstarted growth.

"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

Another weekend, and for most, another final weekend to boost the Chinese economy with purchases of tat they don’t need, with money they can’t afford, to give as gifts to people they don’t like. Is the modern secular, commercialised, retail Christmas great or what? Have a great weekend everyone.

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.

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