Baltic Dry Index. 2036 -77 (03/01/14)
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Congressional
hot air freezes.
Anon.
It’s
bitterly cold in North America, with lower state American’s getting the chance
to become Canadians for a few days. or even Eskimos, now rebranded as Inuit. It
was also a record cold time in Washington’s Senate, where Janet Yellen was
confirmed as the next Fedster chairwoman, but on record low support. An ill
omen perhaps for the rest of the year as America’s two warring tribes battle
tooth and nail for the spoils of November’s mid-term elections. In Washington,
at least, the big freeze looks likely to last all year.
Hell freezes over.
Yellen’s Record-Low Senate Support Reflects Fed’s Politicization
Jan 7, 2014 5:00 AM GMT
Janet Yellen’s
confirmation as chairman of the Federal
Reserve with the least Senate support on record shows that the central bank
still faces intense political scrutiny six years after the financial crisis. The Senate vote of 56-26 to confirm Yellen means she garnered even less support than outgoing Chairman Ben S. Bernanke, whose 2010 confirmation for a second term by a vote of 70-30 represented the most opposition for a Fed chief. Bernanke’s term ends Jan. 31.
Yellen takes over a Fed with a $4.02 trillion balance sheet bloated by a quantitative easing program, undertaken to pull the nation out of the deepest recession since the 1930s, that sparked strong Republican criticism. Crisis-era bailouts of financial firms, including American International Group Inc. (AIG), exposed the Fed to charges it overstepped its authority.
----Yellen, 67, the first woman to head the
Fed, will preside over an unwinding of the central bank’s unprecedented
stimulus program if the economy performs as forecast. The Fed took the first
step toward the exit last month when it reduced the monthly pace of asset
purchases to $75 billion from $85 billion, citing evidence of improvement in
the labor market.
More
Mainstream
media (MSM) is covering the big freeze in its usual fashion, with plenty of
pictures of unfortunate wretches stuck in barely functioning airports, or in
snowdrifts, or in warm shelters for the homeless or those suffering from fuel
poverty. And jolly good fun it all is, for those of the rest of us in faraway
warmer climes from Florida to the rainy UK. But readers of the LIR know that we
focus on what this big freeze might be doing to the USA economy. Just how much
oil and gas production will be lost, and what if ant impact on the world’s
largest economy? Just how much money spent on heating, will come at the expense
of the retailing sector? Just how much productivity will be lost due to delays
in a dysfunctional logistics sector? How much winter kill will there be to
grains, cattle herds and fruits and vegetables?
Of course it’s
far too early to know at present, so this is a story for another day, but it’s
one that can shoot from insignificance to the big story of the day, especially
if winter kill is large and starts to trigger food price inflation. Nothing
triggers voter discontent faster than food inflation when it hits the great
dumbed down masses of the other 99 percent.
Canadians, not in Florida, put on sweaters.
Anon.
Deep freeze grips United States, disrupting travel, business
CHICAGO/CLEVELAND, Ohio (Reuters)
- A blast of Arctic air gripped the vast middle of the United States on Monday
with the coldest temperatures in two decades causing at least four deaths,
forcing businesses and schools to close and canceling thousands of flights.
Shelters for the homeless were
overflowing due to the severe cold described by some meteorologists as the
"polar vortex" and dubbed by media as the "polar pig."
Temperatures were 20 to 40
degrees Fahrenheit (11 to 22 degrees Celsius) below average in parts of
Montana, North and South Dakota, Minnesota, Iowa, Wisconsin, Michigan and
Nebraska, according to the National Weather Service.
Babbitt, Minnesota, was the
coldest place in the United States on Monday at minus 37F (minus 38.3C),
according to the National Weather Service. It was chillier even than Mars in
recent days, where NASA's rover Curiosity showed a high temperature on January
2 of minus 32.8F (minus 36C).
The U.S. cold snap outdid
freezing weather in Almaty, Kazakhstan, where it was minus 8F (minus 22C),
Mongolia at minus 10F (minus 23C) and Irkutsk, in Siberia, at minus 27F (minus
33C).
----In oil fields from Texas to North Dakota and Canada, the severe cold threatened to disrupt traffic, strand wells and interrupt drilling and fracking operations.
It also disrupted grain and
livestock shipments throughout the farm belt, curbed meat production at several
packing plants and threatened to damage the dormant wheat crop.
----Some 4,000 flights were canceled and 7,500 delayed, according to FlightAware.com, which tracks airline activity.
Many airlines could not allow
their ground crews to remain outdoors for more than 15 minutes at a time.
There
were hundreds of cancellations by airlines including United, Southwest, and
American.
"The fuel and glycol
supplies are frozen at (Chicago O'Hare) and other airports in the Midwest and
Northeast," said Andrea Huguely, a spokeswoman for American Airlines
Group. "We are unable to pump fuel and or de-ice."
----The bitter cold combined with blowing snow was complicating rail traffic as well. Union Pacific, one of the largest railroads and a chief mover of grains, chemicals, coal and automotive parts, warned customers on Monday that the weather was causing delays up to 48 hours across Illinois, Iowa, Minnesota, Missouri and Wisconsin.
Following last week's storm that
dumped up to 2 feet of snow on parts of New England, some shoppers opted for
the comforts of home rather than venturing out.
More
In Asian
news, Japan is busy trying to line up other allies against China in case the
USA does a Syrian like U-turn over its pledge to swap Washington for Beijing in
Japan’s claim to sovereignty over the Diaoyu Islands. I think a skirmish is on
the cards for 2014.
"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
Japan Eyes India Air Force Links Before Abe Trip Amid China Spat
Jan 6, 2014 6:30 PM GMT
Japan and India moved to expand air force ties before Prime Minister Shinzo Abe visits New Delhi in a few weeks, bolstering
relations two months after China declared an air-defense identification zone in
a disputed area. Japan’s Defense Minister Itsunori Onodera and his Indian counterpart A.K. Antony discussed starting talks between air force officials while reaffirming plans to conduct regular naval exercises, according to an Indian government statement yesterday. Asia’s second- and third-largest economies may also conduct pilot exchanges, it said.
“Both sides know that China stands between them and that they’d be smart to make sure they’re on the same page with each other now and in the future,” said C. Uday Bhaskar, an analyst with the New Delhi-based National Maritime Foundation who spent 37 years in the Indian Navy. “They’re taking steps, small steps, but if there’s an inclusion of the air force now, then you’re seeing growth in this relationship.”
Japan and India, which both have territorial disputes with China, are increasing ties as tensions escalate in Northeast Asia. China and South Korea rejected Abe’s call for talks yesterday after his visit to a war shrine last week drew an angry response from both countries.
More
In regular
business news, Wall Street’s banksters and Squids are pulling the plug on most
of Goldie’s BRIC. In Squidland land it’s a new flavour called MINT. Mexico,
Indonesia, Nigeria and Turkey. I think the real give away on this new mirage
lies in that last word turkey. It’s just that man-made global warming
promoting, self-righteous, scandal mired, BBC Labour, just doesn’t get the
joke.
"Where there is discord, may we bring disharmony. Where
there is error, may we bring falsehood. Where there is doubt, may we bring despair.
Where there is despair, may we bring atheistic old socialism."
BBC News, with apologies to St Francis of Assissi.
Goldman to JPMorgan Say Sell Emerging Markets After Slide
Jan 7, 2014 2:33 AM GMT
Wall Street’s biggest banks say the slump in emerging-market assets that
left equities trailing advanced-nation shares by the most since 1998 last year
will prove more than a fleeting selloff. Goldman Sachs Group Inc. recommends investors cut allocations in developing nations by a third, forecasting “significant underperformance” for stocks, bonds and currencies over the next 10 years. JPMorgan Chase & Co. expects local-currency bonds to post 10 percent of their average returns since 2004 in the coming year, while Morgan Stanley projects the Brazilian real, Turkish lira and Russian ruble will extend declines after tumbling as much as 17 percent in 2013.
While the economies of Brazil, Russia, India and China symbolized the increasing power of the developing world during the worst of the global financial crisis and delivered outsized returns, Morgan Stanley says some of the same nations may now prove to be laggards as the U.S. Federal Reserve scales back unprecedented stimulus and interest rates rise. The MSCI Emerging Markets Index is down 3 percent this year, compared with a 1.2 percent drop in the developed-market index, and hit a four-month low yesterday as data from China showed weakness in manufacturing and services.
More
6 January 2014 Last updated at 00:36
The Mint countries: Next economic giants?
In 2001 the world began talking
about the Bric countries - Brazil, Russia, India and China - as potential
powerhouses of the world economy. The term was coined by economist Jim O'Neill,
who has now identified the "Mint" countries - Mexico, Indonesia,
Nigeria and Turkey - as emerging economic giants. Here he explains why.
So what is it about the so-called
Mint countries that makes them so special? Why these four countries?
A friend who has followed the
Bric story noted sardonically that they are probably "fresher" than
the Brics. What they really share beyond having a lot of people, is that at
least for the next 20 years, they have really good "inner" demographics
- they are all going to see a rise in the number of people eligible to work
relative to those not working.
This is the envy of many
developed countries but also two of the Bric countries, China and Russia. So,
if Mexico, Indonesia, Nigeria and Turkey get their act together, some of them
could match Chinese-style double-digit rates between 2003 and 2008.
Something else three of them share,
which Mexican Foreign Minister Jose Antonio Meade Kuribrena pointed out to me,
is that they all have geographical positions that should be an advantage as
patterns of world trade change.
For example, Mexico is next door
to the US, but also Latin America. Indonesia is in the heart of South-east Asia
but also has deep connections with China.
And as we all know, Turkey is in
both the West and East. Nigeria is not really similar in this regard for now,
partly because of Africa's lack of development, but it could be in the future
if African countries stop fighting and trade with each other.
This might in fact be the basis
for the Mint countries developing their own economic-political club just as the
Bric countries did - one of the biggest surprises of the whole Bric thing for
me. I can smell the possibility of a Mint club already.
More
"Finance
is the art of passing customer segregated funds from hypothecation to hypothecation
until it finally disappears."
At the Comex
silver depositories Monday
final figures were: Registered 50501 Moz, Eligible 125.24 Moz, Total 175.74 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, old BS Bernanke gets his just comeuppance from Karl Denniger. UBS’s former top cheat gets his unexpected day in a USA court. Is banking the most crooked business on the planet?
"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."Leonard Read
Bernanke: One Of My Last Lies
2014-01-03 13:55 by Karl Denninger
“The immediate
trigger of the crisis, as you know, was a sharp decline in house prices, which
reversed a previous run-up that had been fueled by irresponsible mortgage
lending and securitization practices. Policymakers at the time, including
myself, certainly appreciated that house prices might decline, although we
disagreed about how much decline was likely; indeed, prices were already moving
down when I took office in 2006.”
Bernocchio.
----In the year leading up to the crash you watched while the economy built seven dollars of debt for every dollar of advancement in GDP. That very same year when you pronounced that subprime was likely to be contained you knew damn well what was going on because this is your data, not mine and you had it before I or anyone else did.
You in fact knew, factually that the American consumer had been falling behind since 1980 on a continual basis, with only a quarter or two (in the early 1990s) where income from all sources, including government transfers, kept pace. You knew damn well that this was all a game of pulling forward tomorrow's demand into today and that like all exponential functions it had to eventually end.
You may not have known exactly when it would end, but you were utterly certain that it would, because mathematically it had to. You did not lift a finger to stop it before the crash, you did not take one regulatory action to uncover and stop the fraudulent issuance of credit to people who could never have paid back what was lent to them and you did exactly nothing to shut down the securitization fraud machine upon which all of this exponential increase in credit issuance rested.
Then when things got dicey you claimed to be providing liquidity to the system while in fact you were draining it. You factually drained $125 billion out of the banking system over the space of four business days from 9-19-2008 to 9-24-2008.
What happened during those days Ben -- and in the days that followed?
Yeah.
These are facts published by your own institution and not subject to dispute.
The media's unwillingness to hold you to account for this crap, up and down the line, along with the government leaves them all standing as willing and intentional co-conspirators in these lies.
Go away. Go back to Princeton, or wherever.
More
Ex-UBS Banker Weil Heads Back to Court as He Prepares Defense
Jan 6, 2014 11:00 PM GMT
Raoul Weil, once a powerful UBS AG (UBSN) executive, will return today
to a U.S. courthouse where prosecutors said last month he ran a business that
used Swiss bank secrecy to help Americans cheat on their taxes. Weil, 54, will plead not guilty in Fort Lauderdale, Florida, his lawyer said Jan. 5 in an interview. The banker first appeared there Dec. 16, five years after he was indicted for conspiracy and declared a fugitive.
Bail was set at $10.5 million. Weil, a Swiss citizen, was arrested Oct. 2 after checking into a hotel in Bologna, Italy, and was extradited to Florida. As ex-head of Zurich-based UBS’s global wealth-management business, he is the highest-ranking banker charged in a U.S. crackdown on offshore tax evasion.
If he doesn’t cooperate with the probe, prosecutors must prove he oversaw 60 private bankers who helped UBS make $200 million a year by managing $20 billion in assets not declared to the Internal Revenue Service.
“It is a pyramid conspiracy involving the executives, managers, bankers at UBS and the customers,” a Justice Department trial attorney, Mark Daly, told a judge at Weil’s hearing last month. “Weil stands at the very top of that pyramid as a man who oversaw the private bank at UBS. The weight of the evidence is substantially in favor of the government.”
Prosecutors will rely on “substantially” the same evidence that led UBS, the biggest Swiss bank, to pay $780 million in February 2009 to avoid prosecution, Daly said. The bank admitted then that it helped defraud the U.S. by setting up accounts that taxpayers hid from the IRS.
----UBS that day signed its deferred-prosecution agreement with the Justice Department. It admitted that its private bankers created undeclared accounts in the names of offshore companies, met with clients in the U.S. even though they weren’t registered to do so, used encrypted laptop computers, and trained on how to avoid detection by authorities while traveling in the U.S.
The accord followed disclosures to the U.S. about how the scheme worked from a former UBS banker, Bradley Birkenfeld. He pleaded guilty and went to prison -- and won a $104 million whistle-blower award from the IRS.
One of his superiors, Martin Liechti, gave evidence to the U.S. after his detention in Florida for several months as a material witness.
----Weil was caught because Italy started requiring hotels to provide guest registers with passports to police every night, Daly said at the hearing. Italian police ran his passport against outstanding warrants and discovered he was wanted in the U.S., Marcu said.
Weil is under house arrest with an unidentified elderly couple in central New Jersey, according to terms of his bail. A global positioning system is monitoring his movements.
More
JP Morgan set to be fined $2bn for allegedly ignoring Bernard Madoff Ponzi scheme
Fine for ignoring signs of Bernard Madoff's Ponzi scheme will take JP Morgan's penalties to $22.2bn, more than a fifth of its revenues
JP Morgan is set for another $2bn
in fines, putting the bank on track to pay out $22.2bn - more than a fifth of
its revenues - in fines and settlements in the current financial year.
Regulators and federal
prosecutors in the US are preparing to fine the investment bank around $2bn,
after it allegedly ignored signs of Bernie Madoff’s Ponzi scheme. The
settlement could be finalised as early as Tuesday, according to reports.
The penalty is the latest in a
spate of expensive punishments to be levied against JP Morgan, which is
America’s largest bank and was the only one to weather the financial downturn
without going into the red.
In October, the US Department of
Justice fined JP Morgan a record $13bn to settle a slew of different lawsuits,
pushing the bank to its first quarterly loss under chairman and chief executive
Jamie Dimon.
The bank has also paid out $1.2bn
in fines over the 2012 “London Whale” scandal, in which a series of high risk
trades went wrong and put a $6.2bn hole in the company’s balance sheet.
In the past few months, JP Morgan
has also paid out $400m to the Federal Energy Regulatory Commission for alleged
manipulation of the energy markets, and $1.1bn to the Federal Housing Finance
Agency for mis-representing the quality of some mortgages in the run-up to the
financial collapse. The latter fine was part of a larger $5.1bn settlement, but
$4bn of that figure fell under the DoJ’s $13bn catch-all deal.
Also on JP Morgan’s charge sheet
is a $4.5bn settlement with investors, headed by the lawyer Kathy Patrick, who
lost money on mortgage-backed securities before the collapse of the US housing
market.
The bank has already set aside a
$23bn fund for its tally of fines. However, the penalties will still take a
painful bite out of JP Morgan’s annual revenues, which are expected to weigh in
at $99bn when the bank reports its fourth-quarter results next week.
JP Morgan declined to comment.
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
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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