Baltic Dry Index. 1097 +12
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
It’s been a banner week for red flags, most of them
coming from Asia and the EUSSR, not that anyone in rain hit Europe, or snow
challenged North America seems to care. Chairwoman Yellen at the Fed has
promised to continue on with Dr. Bernocchio’s policy of administering heroin. What
could possibly go wrong, I ask myself?
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
Japan’s Topix Tumbles as Yen Strengthens, Developers Drop
Feb 14,
2014 3:59 AM GMT
Japan’s Topix
index fell, erasing its weekly advance and heading for a sixth week of
declines, as the yen reversed losses and developers tumbled. All 33 Topix (TPX) industry groups retreated. Toyota Motor Corp., the world’s biggest carmaker, decreased 2.2 percent after rising as much as 1.1 percent. The Topix Real Estate Index sank 4.6 percent, extending yesterday’s slump, as Sumitomo Realty & Development Co. dropped 6.5 percent. Kirin Holdings Co., Japan’s biggest beverage maker by market value, tumbled 8.9 percent to lead declines on the Nikkei 225 Stock Average after its net-income forecast missed estimates.
The
Topix slid 2 percent to 1,175.48 as of 12:46 p.m. in Tokyo, reversing gains of
as much as 0.8 percent. The measure is on course for a 1 percent drop this week
and is headed for its longest weekly losing streak since June 2012. The Nikkei 225
slid 1.8 percent today to 14,279.63. The yen gained 0.4 percent to 101.73 per
dollar, after falling as much as 0.2 percent.
More
China Banks’ Bad Loans Rise to Highest Since Financial Crisis
Feb 14, 2014 4:15 AM GMT
Chinese banks’
bad loans increased for the ninth straight quarter to the highest level since
the 2008 financial crisis, highlighting pressures on asset quality and profit
growth as the world’s second-largest economy falters.
Non-performing
loans rose by 28.5 billion yuan ($4.7 billion) in the last quarter of 2013
to 592.1 billion yuan, the highest since Sept. 2008, the China Banking
Regulatory Commission said in a statement on its website yesterday. Bad
loans accounted for 1 percent of total lending, up from 0.97 percent three
months earlier. Chinese banks are struggling to keep bad soured loans in check and extend earnings growth as a slowing economy and government efforts to curb shadow financing make it harder for borrowers to repay debt. Standard & Poor’s Ratings Services said this week loan quality will deteriorate “noticeably” in 2014 as banks remain “heavily exposed to debt-laden local government financing platforms and manufacturers saddled with overcapacity.”
Chinese banks have added 89 trillion yuan of assets, mostly through loans, over the past five years, equivalent to the entire U.S. banking industry’s, CBRC data shows. By comparison, U.S. commercial banks held $14.6 trillion of assets at the end of September, according to the Federal Deposit Insurance Corp.
Investors
are increasingly concerned that the country’s investment through borrowing
since 2008 may trigger a financial crisis, Haitong Securities Co. said in
December. Liabilities at nonfinancial companies may increase to more than 150
percent of gross domestic product in 2014, raising default risks, the brokerage
said. The ratio at the end of 2012 of 139 percent was already the highest among
the world’s 10 biggest economies.
More
China Hard Landing War-Gamed for World Economy
Feb 14, 2014 12:00 AM GMT
A
hard landing in China
would hobble global growth and buoy the dollar, says Societe
Generale SA in a study that war-games the international implications of a
steep decline in China’s expansion.
A plunge to 2 percent from more than 10 percent in 2010 would be enough to slash 1.5 percentage points from worldwide economic growth in the first year as China’s troubles are transmitted through trade, banking and financial market channels, the French bank said in a Feb. 11 report.
Among the reasons to expect such reverberations from what the authors called the “worst reasonable case:” China’s imports are equivalent to 30 percent of its gross domestic product. Asian and commodity-producing nations would be the hardest hit, according to Michala Marcussen, global head of economics research in London.
The impact could be aggravated by China’s bias toward investment, which accounts for half of its GDP. Less worrisome is the risk of China hurting the world through banks, given that total foreign claims of banks on the country are just 3.2 percent of the total, according to data from the Bank for International Settlements cited in the report.
Some multinational companies would be hurt by their exposure and the dollar would also rise 10 percent against the yuan in the first year, according to Societe Generale.
More
In the snake bit, wealth destroying, youth emigrating,
EUSSR, it was business as usual yesterday. In work and tax shy, nominally
democratic Italy, it was time to try out yet another unelected man as Prime
Minister. Whatever happened to elections in Euroland?
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel
The eurozone crisis is just getting started
The project to impose political union is bringing economic ruin, making the legitimacy of the EU project ever more vulnerable
On the face of it, they seem
worlds apart. Switzerland’s referendum vote against the free movement of
labour, the ruling by the German Constitutional Court on the European Central
Bank’s (ECB) attempts to save the euro, and the warning to Scotland that it
won’t be allowed to keep the pound if it votes for independence – these might
seem unrelated, but in truth they are all part of an increasingly explosive
stand-off between the forces of national sovereignty on the one hand, and
political and economic integration on the other.
With elections in May likely to
give rise to the most Eurosceptic parliament in the EU’s history, Europe’s
long-running financial and economic crisis is threatening to spill over into an
all-encompassing political one. According to Berlin and Brussels, Europe’s dark
night of the soul – its most serious crisis since the Second World War – is now
essentially behind us, with the promise of a slowly recovering economy and
renewed political harmony to come. To my mind, it has hardly begun. Europe’s
epic attempt to impose political union on widely divergent countries is being
broken on the back of economic hardship, popular discontent, and financial
disintegration.
Virtually all successful currency
unions start with political union, and then proceed through shared insurance,
institutions, and fiscal arrangements to a common form of exchange. Europe, it
hardly needs saying, is trying to do it the other way round; it has forced
monetary union on an unsuspecting public, and now, via the resulting financial
crisis, hopes to bulldoze through the shared fiscal and political arrangements
that might eventually make it work, culminating ultimately in a United States
of Europe
More
Italian prime minister Enrico Letta to resign after party withdraws support
Matteo Renzi, leader of Mr Letta's Democratic Party, called for a new government
By Nick Squires, Rome 6:15PM GMT
13 Feb 2014
Italian politics was thrown back
into crisis Thursday after Matteo Renzi, a 39-year old rising star of the Left,
threw down the gauntlet and forced the resignation of Enrico Letta, the prime
minister.
Months of tension finally came to
a head when Mr Renzi, the mayor of Florence and the recently-elected head of
the centre-Left Democratic Party, called on the prime minister to step aside.
In a terse statement last night,
47-year-old Mr Letta, who had been in power for just 10 months, said he would
hand in his resignation to Giorgio Napolitano, Italy’s president, on Friday.
That will pave the way for Mr
Renzi to become Italy’s youngest ever prime minister, at the helm of the
country’s third government in 12 months.
He will also qualify for a less
enviable accolade – becoming the nation’s third unelected premier in a row.
The president is expected to ask
Mr Renzi to form a new coalition with a working majority in parliament – a
process likely to take days, if not a few weeks. He is expected to undertake a
major reshuffle of the cabinet.
Mr Renzi is not an MP and has
never governed at the national level, with critics saying he lacks experience
and scores well on style but poorly on substance.
The former boy scout and admirer
of Tony Blair and Barack Obama had for months criticised Mr Letta for failing
to push through the difficult economic and political reforms necessary to pull
Italy out of its worst recession since the Second World War.
More
Exclusive: EU executive sees personal savings used to plug long-term financing gap
By Huw
Jones LONDON
(Reuters) - The savings of the European Union's 500 million citizens could
be used to fund long-term investments to boost the economy
and help plug the gap left by banks since the financial crisis, an EU document
says.The EU is looking for ways to wean the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment.
"The economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment," said the document, seen by Reuters.
The Commission will ask the bloc's insurance watchdog in the second half of this year for advice on a possible draft law "to mobilize more personal pension savings for long-term financing", the document said.
Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.
The document said the "appropriateness" of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.
More
We end for the week with a
picture of where Euroland’s Club Med is headed, the worker’s paradise of
Venezuela. Stay long fully paid up physical gold and silver.
"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
Army sent in to Venezuelan cities as unrest prompts coup warning
President Nicolás Maduro claims 'fascist' opponents orchestrated protest violence that claimed three lives as part of plan to overthrow government
Hannah Strange, Alasdair
Baverstock in Caracas 6:55PM GMT 13 Feb 2014
Venezuelan troops fanned out
across the capital, Caracas, and other major cities on Thursday after President
Nicolás Maduro ordered a military clampdown against deadly unrest that he
warned was part of a "fascist" coup plot.
Piles of burning rubbish sat
smoking along Caracas' main avenue as troops moved to secure the city following
an outbreak of street violence that left three dead on Wednesday. Armed
soldiers surrounded government buildings and diverted traffic, while riot
troops guarded entrances to the shuttered subway system as residents picked
their way through broken glass.
Mr Maduro ordered the arrest of a
top opposition leader and a former military chief as he claimed
"fascist" forces financed from the United States were plotting
against his government. He claimed the civil unrest was part of a plan by
"far right" opponents "to bring us to a dog fight, set our
people at war, one against another".
"There will be no coup
d'etat in Venezuela, you can rest assured," he vowed, warning that anyone
who perpetrated acts of violence or protested without permission would be
arrested.
On Wednesday, the visceral
political and class hatreds that have riven Venezuelan society were on full
display.
Three people were shot dead and
dozens injured when long-brewing anger over the country's deepening economic
and security woes erupted into violence during rival protests by government
supporters and opponents
---- Under the slogan "The Exit", meaning the
departure of Mr Maduro from power, hardline opposition groups have for the last
fortnight been staging protests over the country's searing crime, corruption,
rampant inflation and shortages of basic goods
More
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
At the Comex silver depositories Thursday final figures were: Registered 48.43
Moz, Eligible 110.21 Moz, Total 158.64 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yes it’s the banksters
again. Not content with rigging the likes of Libor, currencies, gold and
silver, our bankster crooks are out manipulating just about everything else not
already being rigged by the DC Fedster’s.
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet
|
------But banks aren't just buying stuff, they're buying whole industrial processes. They're buying oil that's still in the ground, the tankers that move it across the sea, the refineries that turn it into fuel, and the pipelines that bring it to your home. Then, just for kicks, they're also betting on the timing and efficiency of these same industrial processes in the financial markets – buying and selling oil stocks on the stock exchange, oil futures on the futures market, swaps on the swaps market, etc.
Allowing one company to control the supply of crucial physical commodities, and also trade in the financial products that might be related to those markets, is an open invitation to commit mass manipulation. It's something akin to letting casino owners who take book on NFL games during the week also coach all the teams on Sundays.
The situation has opened a Pandora's box of horrifying new corruption possibilities, but it's been hard for the public to notice, since regulators have struggled to put even the slightest dent in Wall Street's older, more familiar scams. In just the past few years we've seen an explosion of scandals – from the multitrillion-dollar Libor saga (major international banks gaming world interest rates), to the more recent foreign-currency-exchange fiasco (many of the same banks suspected of rigging prices in the $5.3-trillion-a-day currency markets), to lesser scandals involving manipulation of interest-rate swaps, and gold and silver prices.
But those are purely financial schemes. In these new, even scarier kinds of manipulations, banks that own whole chains of physical business interests have been caught rigging prices in those industries. For instance, in just the past two years, fines in excess of $400 million have been levied against both JPMorgan Chase and Barclays for allegedly manipulating the delivery of electricity in several states, including California. In the case of Barclays, which is contesting the fine, regulators claim prices were manipulated to help the bank win financial bets it had made on those same energy markets.
And last summer, The New York Times described how Goldman Sachs was caught systematically delaying the delivery of metals out of a network of warehouses it owned in order to jack up rents and artificially boost prices.
You might not have been surprised that Goldman got caught scamming the world again, but it was certainly news to a lot of people that an investment bank with no industrial expertise, just five years removed from a federal bailout, stores and controls enough of America's aluminum supply to affect world prices.
How was all of this possible? And who signed off on it?
By exploiting loopholes in a dense, decade-and-a-half-old piece of financial legislation, Wall Street has effected a revolutionary change that American citizens never discussed, debated or prepared for, and certainly never explicitly permitted in any meaningful way: the wholesale merger of high finance with heavy industry. This blitzkrieg reorganization of our economy has left millions of Americans facing a smorgasbord of frightfully unexpected new problems. Do we even have a regulatory structure in place to look out for these new forms of manipulation? (Answer: We don't.) And given that the banking sector that came so close to ruining the world economy five years ago has now vastly expanded its footprint, who's in charge of preventing the next crash?
More
It’s morally wrong to let a
sucker keep his money.
Ebenezer Squid, with apologies to W. C. Fields.
Another weekend, and while Tokyo and America’s east coast digs out from snow, and a large part of Java digs out from volcanic ash, Britain and much of western Europe suffer under a surfeit of rain. Isn’t “man-made global warming from carbon” fun. Have a great weekend everyone.
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. Does the Final Fed Bubble end in an emerging market crash?
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