Baltic Dry Index. 1197 +23
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The
war in the Pacific has not necessarily developed in Japan’s favour.”
Hirohito,
informing the hapless Japanese he was surrendering. 1945.
Thank God for red flags and euphemism. If it wasn’t
for red flags, we wouldn’t have any flags to play with at all. If it wasn’t for
euphemism, where would our fiat “money” be. In the Great Nixonian error of fiat
money, under QE forever, the Dow would already be at the 30,000 level dreamed
of in the 1990s, and the one percent would be down to the point one percent.
Today an unpleasant thought. Was the 20th century an aberration in a
real world of lawlessness, mob rule and anarchy? Are we all headed for a fate
of Argentina, Turkey, Thailand South Sudan and the Ukraine? Is the outcome of
the Great Nixonian Error, the Great Anarchy? Stay long fully paid up physical
gold and silver in case it is. If China
sneezes do we all get pneumonia?
“There seems to be something wrong
with our bloody ships today.”
Admiral Jellico at the battle of
Jutland after two of his battleships blew up.
Crisis Gauge Rises to Record High as Swaps Avoided
Feb 26, 2014 3:53 AM GMT
China’s credit-market
gauges are triggering alarm bells, as banks grow cautious in lending to each
other while investors prefer the safest government bonds. The spread between the two-year sovereign yield and the similar-maturity interest-rate swap, a gauge of financial stress, reached 121 basis points on Feb. 19, the widest in Bloomberg data going back to 2007. Two days later, the cost to lock in the three-month Shanghai interbank offered rate for one year reached an eight-month high of 94 basis points over similar contracts based on repurchase agreements, which are considered safer because they involve government securities as collateral.
----“What I do see
are increasing parallels between China and the U.S. in the run-up to the global
financial crisis,” said Patrick Perret-Green, a London-based strategist at
Australia & New Zealand Banking Group Ltd. “Shibor-repo is similar to
Libor-OIS. Shadow banking is subprime. Credit spreads are widening as they did
in 2007. Money growth is softening as tightening bites.”
More
China Faces Lost Decade as Stocks Echo Japan: Chart of the Day
Feb 25, 2014 4:23 PM GMT
China’s stock market is turning
Japanese.
The CHART OF THE DAY shows the
Shanghai Composite Index is repeating a pattern in the Nikkei 225 Stock Average
during the 1980s and 1990s. The Japanese gauge tumbled as much as 80 percent
from its 1989 peak as a collapse in home prices hobbled the nation’s financial
system and led to a decade of tepid economic growth. The Shanghai index has dropped
60 percent since the end of 2007, erasing almost $2 trillion of market value.
China’s lending surge over the
past five years has evoked comparisons to the debt growth in Japan before its
lost decade. Credit in the biggest emerging economy rose to 187 percent of
gross domestic product in 2012 from 105 percent in 2000, compared with Japan’s
increase to 176 percent in 1990 from 127 percent in 1980, according to JPMorgan
Chase & Co.
More
Credit Agricole Says Easy Money Shorting Gold Over on China
Feb 26, 2014 4:33 AM GMT
Gold demand in China
will be sustained as incomes expand in the largest consuming nation, supporting
prices above $1,000 and extending bullion’s flow from west to east, said Credit
Agricole SA’s private-banking unit. “The market hasn’t quite fathomed the scale of annual Chinese buying just because of the wealth effect in China over the next coming years,” said Davis Hall, global head of foreign exchange and precious metals advisory. “I don’t think gold’s going to come back to $1,000, like many people are suggesting, because I’m seeing what’s happening in China.”
Bullion advanced 11 percent this year on rising consumption in Asia and as emerging-market turmoil and signs the U.S. recovery may be faltering boosted haven demand. China overtook India as the largest user last year as the biggest price drop in more than three decades spurred purchases, the World Gold Council said last week.
More
China's $12 trillion corporate debt pushes up refunding costs, drives mergers
By Matthew Miller and Umesh Desai BEIJING/HONG
KONG
(Reuters) - China's corporate debt has hit record levels and is likely to
accelerate a wave of domestic restructuring and trigger more defaults, as
credit repayment problems rise.Chinese non-financial companies held total outstanding bank borrowing and bond debt of about $12 trillion at the end of last year - equal to over 120 percent of GDP - according to Standard & Poor's estimates.
Growth in Chinese company debt has been unprecedented. A Thomson Reuters analysis of 945 listed medium and large non-financial firms showed total debt soared by more than 260 percent, from 1.82 trillion yuan ($298.4 billion) to 4.74 trillion yuan ($777.3 billion), between December 2008 and September 2013.
While a credit crisis isn't expected anytime soon, analysts say companies in China's most leveraged sectors, such as machinery, shipping, construction and steel, are selling assets and undertaking mergers to avoid defaulting on their borrowings.
More defaults are expected, said Christopher Lee, managing director for Greater China corporates at Standard and Poor's Rating Services in Hong Kong. "Borrowing costs already are going up due to tightened liquidity," he said. "There will be a greater differentiation and discrimination of risk and lending going forward."
More
We end today on China, with Germany squirming over China
mentioning “a painful past.” Presumably Germany’s weasel words for starting two
world wars, slaughtering millions of communists, catholics, jews and slavs, while
enslaving most of continental Europe not already enslaved by murderous Bolshevik
communism. When is a spade not a spade in the German run EUSSR.
“Ladies and gentlemen this is your
captain speaking. We have a small problem. All four engines have stopped. We
are doing our damnedest to get them going again. I trust you are not in too much
distress.”
BA pilot Eric Moody after volcanic
ash caused all 4 engines to fail near Indonesia. They landed at Jakarta.
Exclusive: China, eyeing Japan, seeks WW2 focus for Xi during Germany visit
By Ben
Blanchard and Michael Martina BEIJING
(Reuters) - China
wants to make World War Two a key part of a trip by President Xi Jinping to Germany
next month, much to Berlin's discomfort, diplomatic sources said, as Beijing
tries to use German atonement for its wartime past to embarrass Japan.China has increasingly contrasted Germany and its public contrition for the Nazi regime to Japan, where repeated official apologies for wartime suffering are sometimes undercut by contradictory comments by conservative politicians.
Ties between the two Asian rivals worsened when Japanese Prime Minister Shinzo Abe visited Tokyo's Yasukuni Shrine on December 26, which China sees as a symbol of Tokyo's past militarism because it honors wartime leaders along with millions of war dead.
Xi will visit Germany in late March, as well as France, the Netherlands and Belgium, Beijing-based diplomats said. China's Foreign Ministry declined to comment on Xi's agenda as the trip has yet to be formally announced.
"China wants a strong focus on World War Two when Xi visits Germany and Germany is not happy," said one diplomatic source who has been briefed on China's plans for the Xi trip.
The German government declined to comment. But the diplomatic sources said Germany did not want to get dragged into the dispute between China and Japan, and dislikes China constantly bringing up Germany's painful past.
More
Next more news from Asia. Is Thailand about to
become the next Ukraine? Was the 20th century despite its two world
wars, an aberration of peace and world order?
Gunfire by night becomes new norm in downtown Bangkok
By Pairat Temphairojana and Amy Sawitta Lefevre
BANGKOK
(Reuters) - Shots fired by
unknown gunmen on Wednesday rattled parts of the Thai capital where
anti-government protesters have set up camp for weeks, with small but
occasionally deadly bombs and gunfire fast becoming the new norm in the city.
No one was wounded in the
shootings in the central commercial area of Bangkok, although five people were
killed in weekend violence in the city and the eastern province of Trat, four
of them young children.
National security chief Paradorn
Pattanathabutr said there had been no reported deaths or injuries in the
incidents in the early hours of Wednesday.
"As for the perpetrators, we still don't know who they are," he told Reuters. "Recently we have been seeing more incidents like this happening more frequently ... It is noticeable that there are incidents like this every day."
The protesters, whose disruption of a general election this month left polarized Thailand in political paralysis, aim to topple Prime Minister Yingluck Shinawatra and erase the influence of her brother, ousted premier Thaksin Shinawatra, seen by many as the real power in the country.
The protesters want to set up an unelected "people's council" of the good and worthy to oversee vaguely defined political reforms, including a restructuring of the police force, before new elections are held.
----Thailand announced a slump in trade figures on Tuesday, with the biggest drop in imports in more than four years in January, the political crisis extending its economic toll beyond falling tourism numbers.
More
“Death has a tendency to encourage a
depressing view of war.”
Donald Rumsfeld. US Defense
Secretary.
At the Comex silver depositories Monday final figures were: Registered 50.29 Moz,
Eligible 131.74 Moz, Total 182.03 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, modern criminal banking. Bank of America, Morgan Stanley and Credit
Swizz. Does this sound like banks that should hold banking licences in
five continents, or more like clones of Switzerland’s criminal UBS. Sounds like
a job for RICO to me, though I fully expect their US godfathers in Government
and the doubled over Fed to protect them. Where is the NSA when they‘re really
needed? If poor old Bernie Madoff had a banking licence rather than a brokerage
licence, would he still be walking 5th Avenue today?
Feb. 25, 2014, 7:51 p.m. EST
Bank of America’s legal problems pile up
Bank says it’s facing inquiries over foreign-exchange trading and other practices
NEW YORK (MarketWatch) — Bank of
America Corp. has worked hard to put its legal
skirmishes behind it, but the problems keep piling up.
The
country’s second-largest bank by assets said in a regulatory filing late
Tuesday that it is facing investigations into its foreign-exchange trading and
its involvement in a government mortgage program. It is worried that its legal
expenses could shoot higher.
In
some ways, Bank of America’s BAC +0.12% problems
could signal that regulators are shifting their focus from rival J.P. Morgan
Chase & Co.
The bank said
that the U.S. Attorney’s Office for the Eastern District of New York, based in
Brooklyn, is investigating its compliance with the Federal Housing
Administration’s “direct endorsement program.” Earlier this month, J.P. Morgan
settled with the government over allegations that it submitted false claims to get
government-backed insurance for mortgages that didn’t deserve it.
Bank
of America is also facing the prospect of paying penalties and reimbursing
consumers over its sale and marketing of certain credit-card debt-cancellation
products, a possibility that the bank first revealed in August.
Last
year, J.P. Morgan settled allegations from regulators who accused the bank of unfairly enrolling customers in
additional credit-card products without their written permission.
Bank
of America also confirmed for the first time on Tuesday that government
authorities in North America, Europe and Asia are examining its participation
in foreign-exchange markets. The bank said it is cooperating with the
inquiries. Regulators around the world have been looking into whether banks worked
together to fix foreign-exchange rates.
Among
the other legal and regulatory disputes, the bank is being sued by Prudential
Insurance Company of America PRU
+0.21% ,
related to mortgage-backed bonds that the bank sold in the run-up to the
financial crisis.
Bank
of America also said that the European Commission is laying the groundwork to
fine it and other banks, accusing them of breaking European Union competition
laws by allegedly colluding to prevent exchange-trading of credit-default
swaps.
Overall,
Bank of America said it now estimates it could have to spend up to $6.1 billion
for legal expenses over and above current reserves, up from an estimate of $3.1
billion a year ago.
Morgan Stanley Agrees to Pay $275 Million to End SEC Probe
Feb 25, 2014 10:21 PM GMT
Morgan
Stanley (MS) agreed to pay the U.S. Securities and Exchange Commission $275
million to resolve a probe into the sale of subprime mortgage-backed securities
in 2007. The SEC hasn’t presented the proposed settlement to the commission and offered no assurance it will be accepted, the New York-based bank said today in an annual regulatory filing. The firm said it’s also responding to subpoenas and requests for information from federal and state regulators in mortgage-related matters.
Morgan Stanley listed nine legal matters it resolved or settled since October, including agreements with MetLife Inc. and Cambridge Place Investment Management Inc., as the largest U.S. banks seek to put crisis-era lawsuits behind them. The firm said its litigation costs more than tripled to $1.95 billion in 2013 from $513 million in 2012.
More
Credit Suisse Helped Clients Hide Billions, Senate Says
Feb 26,
2014 5:30 AM GMT
Credit
Suisse Group AG (CSGN) helped American customers hide as much as $10
billion in assets from the Internal
Revenue Service, more than double the amount previously known, according to
a U.S. Senate committee. A report by the Senate Permanent Subcommittee on Investigations criticized the Zurich-based bank for failing to discipline any senior executives in the face of widespread tax evasion fostered by 1,800 Credit Suisse employees serving U.S. clients. The firm also misled investors about growth in its private banking unit, according to the report.
The Justice Department has failed
to use all its legal tools in its criminal probe of whether Credit Suisse, the
second-largest Swiss bank, helped U.S. clients evade taxes, according to the
report. Lax enforcement also allowed Credit Suisse to turn over the names of
only 238 U.S. account holders to prosecutors, the report said.
This U.S. inaction symbolizes a
larger problem in a five-year crackdown on offshore tax evasion, the
subcommittee said. Prosecutors have “failed to utilize available U.S. legal
means to obtain the names of tens of thousands” of Americans who owe billions
of dollars in taxes and whose identities are still hidden by the Swiss,
according to the 176-page report
More
http://www.bloomberg.com/news/2014-02-25/credit-suisse-helped-clients-hide-billions-senate-says.html
“Houston we’ve had a problem.”
US Astronaut Jim Lovell 200,000 miles from earth.
The monthly Coppock Indicators finished January.
DJIA: +202 Down. NASDAQ: +330 Up. SP500: +249 Up. The new Fed bubble continues, but seems to be running out
of momentum.
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