Baltic Dry Index. 1706 -120
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“Nothing is so painful to the human mind as a great and sudden
change.”
Mary Shelley.
Our world
now increasingly runs to a Chinese beat. 250 years of Anglo-American ascendancy
is coming, if not already come, to an end. The Great Nixonian Error of fiat
currency will soon come to its end too. What replaces it is still a mystery,
but with America no longer the world’s largest oil importer, oil is unlikely to
continue to be priced forever in US dollars. Tomorrow will not be like today
which was like yesterday. We have left yesterday behind, and are leaving today.
Stay long physical gold and silver for a rocky transition. China’s beat is
highly vulnerable to a heart attack.
“We are the change we have been waiting for.”
Barrack Obama.
China Imports Rise to Help Nation Claim World Trade Crown
Jan 10, 2014 4:14 AM GMT
China’s imports rose the
most in five months in December, indicating that domestic demand will support
economic growth, as the government claimed the title of the world’s biggest
trader of goods. Inbound shipments advanced 8.3 percent from a year earlier, the customs administration said today in Beijing. Exports (CNFREXPY) rose 4.3 percent, a pace that may understate the true gain after fake invoices inflated figures the previous year. The trade surplus was $25.6 billion.
Improving demand will help support expansion amid risks from rising domestic debt and the impact of President Xi Jinping’s broadest policy reforms since the 1990s. While China said today it became the top trading nation in 2013, the government highlighted challenges for exporters including gains in the yuan and increased labor costs.
“Domestic demand is not as soft as had been feared, and the Chinese economy -- while decelerating -- is unlikely to see a sharp slowdown,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
At the same time, today’s figures “should be interpreted cautiously as they look much different after seasonal adjustment,” Kowalczyk said. On that basis, imports rose 4.3 percent from a year earlier and exports gained 3.3 percent, customs data show.
More
China Vehicle Sales Seen Slowing on Pollution Controls
Jan 9, 2014 4:01 PM GMT
China’s main car
association forecast that the world’s biggest automobile market will see slower
growth this year as anti-pollution and austerity campaigns spread. China, which in 2013 became the first country to see domestic sales surpass 20 million units a year, will see deliveries rise as much as 10 percent in 2014 after last year’s 14 percent growth, the state-backed China Association of Automobile Manufacturers said yesterday.
While China’s motorization has been a boon for foreign automakers -- all the major ones saw record sales in the country in 2013 -- pressure is building on the government to step in as pollution chokes residents and traffic congestion turns roads into parking lots. Sales of luxury goods have been hit since Xi Jinping took over as Communist Party chief in November 2012 and started a campaign to rein in lavish spending.
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In other
Asian news, Morgan Stanley warns of a crisis coming to Japan. Japan has they
think, no more than two to three years to take action to avoid it. In giant
economy terms, that’s the equivalent of turning a super tanker of a dime.
Morgan Stanley Warns of Crisis Amid Inflation Sign: Japan Credit
Jan 10,
2014 1:04 AM GMT
Morgan Stanley said inflation and overspending threaten to push Japan’s finances
to the brink, amid signs government-bond investors are preparing for rising
consumer prices. An auction of inflation-linked sovereign notes yesterday drew a higher-than-expected price, as investors bid for 2.87 times the amount available. The benchmark 10-year yield on non-protected securities will probably climb to 0.84 percent by the end of 2014, delivering a 0.5 percent loss, based on analyst estimates and data compiled by Bloomberg. That would be the first negative return since 2003, according to Bank of America Merrill Lynch index data.
The Japanese government has two to three years to curb expenditures or face a possible crisis, according to Robert Feldman, the head of Japan economic research at Morgan Stanley MUFG Securities Co. The government is doubling the nation’s 5 percent sales tax in two steps from this year, as a more than 4 percent jump in welfare expenditures and debt servicing costs next fiscal year is set to outpace revenue growth, according to the Ministry of Finance budget plan.
“There’s the risk interest payments would swell should the government fail to cut budget deficits when inflation and yields grind higher,” Feldman said in an interview in Tokyo on Jan. 8. “Absent an increase in tax revenues stemming from a tangible improvement in the real economy, there is a risk of collapse.”
More
In Europe, one
of the EUSSR’s multiple presidents has declared victory again. Some victory
that consigns nearly 3 in every 5 of Club Med’s youth to unemployment of
emigration.
"When I warned
them [France 1940] that Britain would fight on alone whatever they did, their
generals [Petain] told their Prime Minister and his divided Cabinet, 'In three
weeks England will have her neck wrung like a chicken.' Some chicken! Some
neck!"
Winston Churchill,
Ottawa, Dec. 30, 1941
Barroso triumphant as jobless Europe wastes five (precious) years of global recovery
Last updated: January 9th, 2014
José Manuel Barroso has declared
victory again. The European Commission chief tells us that the eurozone crisis
is over. The scorched-earth contraction policies have succeeded.
Ireland has conducted a
"clean exit" and is tapping the bond markets again. Latvia has joined
the euro and is now the EU's fastest growing country.
"This shows that the
programs do work when they are properly implemented," he said.
Senhor, it shows no such thing. Ireland
is highly competitive (second best in EMU after Finland on the World Bank
gauge).
It has an open economy with a
trade gearing of 108pc of GDP, giving it three or four times more export
leverage than Club Med. It trades heavily with the dollar and sterling zones,
now recovering. It has a current account surplus near 4pc of GDP.
Ireland was never unable to cope
with the rigours of the euro as a "trade" currency. It was instead in
the wrong interest rate regime, causing a destructive credit bubble (which it
failed to contain by other means). This tells us nothing about the entirely
different circumstances of Italy or Portugal where the intra-EMU exchange rate
is overvalued.
But even if Ireland can make it
without debt restructuring (and that is not certain), the underlying erosion of
the workforce through hysteresis from mass unemployment – and from mass
migration to the UK, US, and Australia – has greatly damaged the long-term
growth potential of the economy.
Public debt is 125pc of GDP and
the budget deficit is still the highest in Europe at 7.8pc of GDP. There is no
margin for any error. Mortgage arrears are still rising to record levels. We
will find out whether or not the banks need another shot in the arm from an
Irish state that cannot afford any more.
At the end of the day, Ireland was
forced by the EU authorities to take on the vast liabilities of Anglo-Irish to
save the European banking system in the white heat of the Lehman crisis, and
the EU has since walked away from its pledge to help make this good.
More
Mario Draghi denies eurozone is sinking into Japanese deflation
European Central Bank President says all possible tools will be considered if record-low inflation becomes more problematic
The head of the European Central
Bank (ECB) has insisted that the eurozone is not at risk of a Japanese-style
deflationary spiral and promised to use all the necessary tools to ward off the
threat of the currency union’s problems worsening.
Mario Draghi said the ECB’s
governing council had discussed “all the possible instruments” to cope with the
threat of falling prices. However, he said they would only be used if the
situation deteriorated, even though inflation is expected to be unusually low
in the near future.
Eurozone inflation fell to a
record low in December, with the core figure that excludes gas and food prices
at 0.7pc. Steadily declining inflation rates have raised the prospect that the
eurozone could eventually slip into deflation.
This would threaten to send the
region’s tentative recovery back years, with some nations’ colossal debt
burdens becoming even more expensive and consumer demand being suppressed as
people wait for prices to get even lower.
This prospect has stoked
speculation that the ECB could cut its base interest rate from the already
razor-thin 0.25pc, or even begin its own quantitative easing programme in the
style of the Bank of England and the US Federal Reserve.
Mr Draghi, speaking after ECB
officials voted to maintain its ultra-low rate, said the Governing Council did
not yet see the need for such measures, claiming both inflationary and
deflationary pressures are moderate.
“By and large we don’t see a
deflation in the Japanese sense of the ‘90s,” Mr Draghi said. “We also ask
ourselves ‘Are we close to Japan?’ and the answer we gave ourselves is ‘No we
are not.’.”
The euro fell against the pound
and dollar as Mr Draghi stated that there remain several risks to the
eurozone’s recovery, suggesting interest rates will remain at their current
lows for the foreseeable future.
More
"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"
Kenneth J. Gerbino
At the Comex
silver depositories Thursday
final figures were: Registered 49.82 Moz, Eligible 125.70 Moz, Total 175.52 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No bent banksters today, nor even any doubled over politicians, just
resolution of the bizarre case of NY City declaring war on NY based female
Indian diplomats. After India threatened to cut off Indian based US diplomats
and their families, from a New Delhi based cultural centre serving American
haute cuisine, Washington’s will to pursue the war seems to have collapsed. Presumably
burgers are now back in New Delhi.
Quite who had an agenda in pursuing this matter in such a crass fashion
still isn’t clear, but someone had an intent to stir up trouble between the
world’s leading economy and the world’s largest democracy. Even the way it was
resolved seemed uncoordinated and amateurish. Who gains from stirring up Indian
public opinion against America and western values?
J. K.
Galbraith
Indian Diplomat Leaves U.S. in Case That Fueled Tensions
Jan 10, 2014 5:00 AM GMT
Devyani Khobragade, the Indian diplomat accused of visa fraud for allegedly
underpaying her babysitter, left the U.S. after she was indicted in a case that
roiled relations between the two countries. Khobragade, 39, was charged yesterday with making “multiple false representations” to U.S. authorities to obtain a visa for the caretaker, and the State Department later ordered her to leave the country after India denied waiving her diplomatic immunity. Her flight has already left the U.S., according to an Indian government official who asked not to be identified because he was not authorized to speak publicly.
Khobragade’s departure may resolve a diplomatic row that threatened to jeopardize a growing economic relationship as annual trade in goods and services between the countries nears $100 billion. The dispute, which erupted after reports that she was strip-searched, put a cloud over President Barack Obama’s goal of strengthening U.S.-India ties.
“Even though the case is being resolved, it caused waves that will take time to resolve and it has caused reputational harm on both sides,” P.J. Crowley, a former State Department spokesman, said in an e-mail. “Both sides need to make conciliatory gestures in the aftermath,” he wrote. “Wounds do heal, but as always, they leave a scar.”
India’s Ministry of External Affairs said today Khobragade had been transferred to a post in New Delhi and that it had declined a U.S. request to waive her diplomatic immunity. Syed Akbaruddin, a ministry spokesman, didn’t answer calls to his mobile phone.
Khobragade was first charged Dec. 12. Her case triggered Indian outrage when news circulated that she was arrested by the State Department’s Diplomatic Security Service in front of her daughter’s school in upper Manhattan and strip-searched while being held with other female suspects. She was released on $250,000 bond which was unsecured.
Manhattan U.S. Attorney Preet Bharara has said the strip-search was standard practice in an arrest. The incident sparked an uproar in India as the nation of 1.2 billion people prepares for elections in a few months.
“India will continue to be upset about how this was handled and rightfully so, but this has opened the door to putting this issue behind us,” said Karl Inderfurth, a former U.S. State Department official responsible for South Asia.
---- Indian Prime Minister Manmohan Singh, who was Obama’s first official diplomatic guest in 2009, last week described a deal with the U.S. that allowed it to import nuclear technology as his greatest achievement during a decade in power. He told reporters in New Delhi that diplomacy should be given a chance to resolve the recent “hiccups” in relations.
---- At the hearing in Manhattan, Khobragade’s lawyer Daniel Arshack said he told her not to board an Air India flight yesterday afternoon because “there was at least a possibility that it would be viewed as flight” from prosecution.Arshack said his client had “diplomatic status” and told U.S. District Judge Shira Scheindlin that she no longer had jurisdiction over the case.
“I was not willing to permit her to depart without appearing before your honor,” Arshack said. He asked Scheindlin to vacate his client’s bail.
Scheindlin later agreed that Khobragade wouldn’t be accused of bail jumping if she agreed to the State Department’s request. The judge deferred a decision on bail to a later date.
“We are pleased that the United States Department of State did the right thing today by recognizing the diplomatic status to which Dr. Khobragade has always been entitled,” Arshack said in a statement issued last night. He accused the government of committing a series of “blunders.”
More
U.S.-India dispute: A diplomat and a double-standard laid bare
By Jonah Blank January 8, 2014
Relations between the United States and India have crashed to their lowest ebb since
the last millennium, something many Americans might have missed during the
holiday buzz. A spat over the treatment of a diplomat and her maid
threatens the foundations of a key international partnership, and the
implications extend far beyond foreign policy. This case could endanger
American diplomats, businesspeople and tourists travelling abroad.The fight began with the December arrest of Devyani Khobragade, India’s Deputy Consul in New York. Khobragade, a young mother accused of under-paying her maid and making a false statement on a visa form, says she was hand-cuffed, strip-searched, and thrown in a holding facility with violent criminals. India regards her arrest as a violation of diplomatic immunity. The United States argues that such immunity does not extend to consular officials.
The incident provoked widespread protests in India, and the government withdrew many privileges accorded to American diplomats. Some, such as a suspension of the right to import liquor, are inconveniences. Others, like the removal of security barriers outside the embassy in New Delhi, and issuing officials with ID cards noting that their bearers are subject to arrest for many offenses, could put U.S. diplomats in physical danger. Indian officials have demanded an apology, but the United States has offered only a statement of “regret.” The federal prosecutor who launched the case, said, “Ms. Khobragade was accorded courtesies well beyond” those to which she was entitled.
----But there is another reason, one that should be of even greater concern to Americans: The perception by many that this incident laid bare not merely a diplomat, but a double standard. Many in India (and elsewhere) feel the United States has one set of rules for itself, and a different one for the rest of the world. This perception poses a danger to U.S. policy, U.S. diplomats and to ordinary Americans wherever they may travel.
Less than three years ago, the United States was on the other side of a diplomatic dispute—only the official in question was no diplomat (he was a CIA contractor) and his offense was far more serious than visa fraud (he shot and killed two men on a crowded street in Pakistan). When Raymond Davis was arrested, the United States claimed complete diplomatic immunity, and rejected the argument it is making now: that consular staff have far less immunity than their embassy colleagues. From the perspective of India, not to mention Pakistan and many other nations, the United States expects privileges that it does not grant to others.
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"It is important to remember that government interference always means either violent action or the threat of such action.....taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employer of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom."
Ludwig von Mises
Have a great
weekend everyone, and remember, someone is always listening in and collecting
your emails and phone calls. Don’t get on the wrong side of some petty jobsworth.
The monthly Coppock Indicators finished December and 2013.
DJIA: +204 Up. NASDAQ: +311 Up. SP500: +247 Up.
The new Fed bubble continues, but for how much longer?
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