Baltic Dry Index. 1174 -01
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
Today, welcome to the 21st century. Don’t
worry, be happy, what could possibly go wrong in our fiat currency world of
unlimited money, QE Forever and ZIRP for eternity. Suddenly the USA, GB, the
IMF and the EU all have a bottomless pit of hitherto unknown money to rescue
corrupt Ukraine from itself, and the clutches of President Putin’s Stalinist
Russia.
So what about charity beginning at home, and
bailing out Europe’s youth unemployed, Great Britain’s disabled and bedroom
taxed poorest, and Uncle Sam’s tired, and poor, huddled masses yearning to breathe free?
If there’s suddenly
money available to bailout Ukrainian oligarchs and Russian banks, why in a fiat money system,
where nothing is real and all is political, was it withheld from the west’s
neediest? Why not bribe Scotland to stay
in the UK, Catalonia to stay in Spain, Greeks to stop committing suicide, and
Club Med’s rich to stop moving their capital and domicile to London? London is
now the 6th largest French city by population, and well on its way
to make 5th sometime next year.
On the Great Nixonian Error of fiat money, it’s only fiat
money after all, and there’s plenty more where that comes from.
"As
fewer and fewer people have confidence in paper as a store of value, the price of
gold will continue to rise. The history of fiat money is little more than a
register of monetary follies and inflations. Our present age merely affords
another entry in this dismal register." Hans F. Sennholz
Is Ukraine’s misery the next Black Swan for West’s financial markets?
Ukraine’s disgusting kleptocracy deserves to fail; genuine democracy and rule of law in this brutalised nation would be an overwhelmingly positive development
Is the world about to experience
another Black Swan, a seemingly improbable or unpredictable turn of events with
deeply negative consequences for financial markets and the economy?
Developments in Kiev certainly
have the potential to turn into such a catastrophe, for they are not just about
Ukraine. Just as the Syrian civil war reflects a wider regional struggle between
Iran and Saudi Arabia for political and religious supremacy, Ukraine finds
itself the luckless victim of much bigger forces than its own internal
divisions - centuries old East/West rivalries and ambitions.
Ukraine’s disgusting kleptocracy
deserves to fail; genuine democracy and rule of law in this brutalised nation
would be an overwhelmingly positive development. Yet there is something almost
Napoleonic about the idealistic fervour with which Europe pursues its eastern
ambitions.
At this stage, Western markets
are fairly sanguine about the long-term impact of Ukraine’s civil conflict.
Ukraine is a relatively small
economy that remains profoundly more integrated with Russia than Europe.
Indeed, Russia has always regarded Ukraine not just as a vassal state, but
essentially as part of the same country.
If it were to vanish from the
face of the Earth tomorrow, there would undoubtedly be consequences for Russia,
but the direct impact on Western economies would be marginal to non-existent.
Yet it is in the nature of Black
Swans that they spring from the seemingly insignificant. Europe’s attempts to
woo Ukraine have combined with the defensiveness of Vladimir Putin’s Russia to
give the situation a potentially highly explosive dynamic. We don’t know how Mr
Putin is going to react.
Despite the warm glow of a
relatively successful Winter Olympics, it’s unlikely to be kindly. First
Ukraine, next Russia; Ukraine is only a mirror image of Russia’s own, corrupt
form of semi-totalitarian, gangster capitalism. If Russia’s sphere of influence
is not defended in Ukraine, it can only be a matter of time before the wolves
will be at Mr Putin’s own door.
Hopes of persuading Russia into
some kind of cuddly grand economic bailout with Europe and the US – apparently
seriously entertained by those who should know better - are for the birds.
Ukraine must choose, and if it chooses “wrongly” there will be consequences.
Military intervention, or separation of Ukraine, cannot be ruled out.
Even so, it seems unlikely that
Ukraine will turn out, as more alarmist pundits predict, to be the giant powder
keg that blows up the world economy anew. Most events that seem at the time to
be transformational turn out to have little or no long-term impact on the wider
international economy or even established political consensus.
This tends to be the case even
when they hit at the heart of the world’s biggest economy, the United States.
Both the Cuban missile crisis and the assassination of John F Kennedy, forever
seared on the memories of those who lived through them, were in the event mere
ripples across the sands of time. Things soon got back to “normal”.
More
Elsewhere in emerging market land, another
candidate was shaping up for yet another Euroland bailout. Step forward
perpetual EU bride, Turkey. Perhaps Turkey could merge with the Ukraine before
both, along with tiddler Scotland, join the European Monetary Union. “Better
together,” presumably, in the EUSSR.
Erdogan Resignation Demanded by Turkish Opposition Over Tape
Feb 25,
2014 6:06 AM GMT
The office of Turkish Prime
Minister Recep Tayyip Erdogan said alleged leaked conversations of him discussing
hidden funds are fake -- a denial that was ignored by opposition leaders who
called for his resignation.
The recording of what sounds like Erdogan and his son Bilal discussing ways to conceal funds from a police investigation is an “unethical” montage, the premier’s office said in a statement on its website. It said legal action would be taken.
Erdogan’s government has been caught up in a graft scandal since December. The premier has repeatedly said that his office was bugged and conversations with family members wiretapped by his political foes, including followers of U.S.-based cleric Fethullah Gulen within the police and judiciary.
Haluk Koc, deputy chairman of the Republican party, said it was time for Erdogan to resign. “It’s unacceptable for someone who’s in the middle of these dirty relationships to govern Turkey after this hour,” Koc said in a televised press conference last night.
Erdogan called an emergency meeting in his office after the tape was made public. He met with his chief of intelligence, Hakan Fidan, and Deputy Prime Minister Besir Atalay, according to NTV television. The phone conversations “are the product of an immoral montage and entirely untrue,” the prime minister’s office said in a statement following the meeting.
The lira weakened 0.6 percent to 2.2133 per dollar at 7:42 a.m. in Istanbul. The currency has lost 8.4 percent since the corruption investigation became public Dec. 17, the worst performance among emerging market currencies in Europe, the Middle East and Africa.
More
In Asian news, China wants in on Japan’s
beggar thy neighbour currency war to the bottom. India is headed for a hard
landing bust after the coming general election. Not yet two full months in to 2014, and I
suspect that we haven’t seen anything yet. Just where will we be come December
2014?
Yuan Drops Most Since 2012 on Speculation PBOC Wants Volatility
Feb 25, 2014 5:32 AM GMT
China’s yuan tumbled the
most in more than a year on speculation the central bank wants an end to the currency’s
steady appreciation to ward off speculators before a possible widening of the
trading band. The yuan fell 0.2 percent to 6.1107 per dollar as of 1:04 p.m. in Shanghai, sliding for a sixth day, according to China Foreign Exchange Trade System prices. It dropped as much as 0.44 percent earlier. The spot rate was within 0.13 percent of the central bank’s reference rate, which was set at 6.1184 today. The currency traded 0.77 percent stronger than the fixing on average this year and the maximum allowed gap is 1 percent.
The yuan has strengthened in all but three quarters since a dollar peg ended in July 2005 and its 35 percent advance against the greenback in that time is the best performance among 24 emerging-market currencies tracked by Bloomberg. UBS AG said yesterday recent depreciation may suggest the People’s Bank of China is shifting away from allowing a steady pace of gains and this may lead to a reversal of “hot money” inflows.
“The PBOC is engineering the yuan declines, which might mean the central bank wishes to change the perception of the one-way bet on yuan gains,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “It also looks like the PBOC is introducing two-way volatility as it prepares the renminbi for a wider trading band.”
China may double the yuan’s trading band to 2 percent in two to three months, JPMorgan Chase & Co. economists led by Zhu Haibin said in a note yesterday, adding that yuan declines will likely be moderate and temporary.
More
Chinese Property Stocks Drop as Funding Concern Mounts
Feb 25, 2014 4:24 AM GMT
Chinese property shares fell to an eight-month low as Industrial Bank Co. (601166)’s suspension of mezzanine
financing for developers fueled speculation lenders may pare real-estate
funding. The Shanghai Property Index lost 0.6 percent to 3,042.91 as of the city’s trading break, poised for its lowest close since June 27 and extending its 5.4 percent slump yesterday. The Fuzhou city-based bank is delaying loans for property-related projects until the end of March as it prepares a new set of internal guidelines for credit allocation, it said in a statement to the Shanghai Stock Exchange yesterday.
While China International Capital Corp. estimates that mezzanine financing accounted for just 2 percent of the nation’s property investment last year, Industrial Bank’s decision heightens concerns about an industry already grappling with falling sales and slower growth in new-home prices.
More
Most-Powerful Woman in Indian Finance Declares War on Bad Loans
Feb 24, 2014 11:00 PM GMT
----Now, as
the most-powerful woman in Indian finance, Arundhati Bhattacharya must tackle
the highest bad-loan ratio among India’s 10-largest banks. Appointed in October as the first female chairman and most-senior executive officer of the country’s largest lender, State Bank of India, Bhattacharya has been combing through balance sheets riddled with 678 billion rupees ($10.9 billion) of bad debt. Some 5.7 percent of total loans at the 207-year-old behemoth are nonperforming, the highest level in at least eight years, the earliest date for which data are available, exchange filings show.
“The war on bad loans continues,” Bhattacharya, 57, said in a Feb. 14 interview in Mumbai after SBI (SBIN) reported a bigger decline in third-quarter profit than estimated. “I have no magic wand to make the nonperforming assets go away. We have to work through the pain to fight the issue.”
India’s slowing economy and the highest borrowing costs among Asia’s largest nations are eroding debtors’ capacity to repay loans. The ability of companies to generate cash and service debt is at the lowest level in five years, said Deep Narayan Mukherjee, a Mumbai-based director at India Ratings & Research, a unit of Fitch Ratings Ltd.
A failure to curb sour debt would drag further on the lender’s earnings and share price, which has slumped by almost a third in the past year. SBI’s return on equity, which measures profit generated with investors’ funds, is poised to end the bank’s business year on March 31 at the lowest level since 1999.
More
Below, presented without comment, but is anyone
really surprised? Nuclear energy anyone? How about a nuke power plant operated
by experts of course, coming to a new site in your back yard.
Tepco Says Fukushima Radiation ‘Significantly’ Undercounted
Feb 25, 2014 6:18 AM GMT
Tokyo
Electric Power Co. (9501) is re-analyzing 164 water samples collected last
year at the wrecked Fukushima atomic plant because previous readings
“significantly undercounted” radiation levels. The utility known as Tepco said the levels were undercounted due to errors in its testing of beta radiation, which includes strontium-90, an isotope linked to bone cancer. None of the samples were taken from seawater, the company said today in an e-mailed statement.
“These errors occurred during a time when the number of the samplings rapidly increased as the result of a series of events since last April, including groundwater reservoir leakage and a major leak from a storage tank,” according to the statement.
It will run new tests of the samples taken from April to September 2013 and will publish corrected beta radiation readings. Outside experts were being sought in Japan and internationally to cross-check analysis results and review Tepco’s measurement methods, the company said.
The measurement errors were halted in October 2013 after testing manuals were clarified and other steps taken to ensure accuracy, Tepco said.
"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
At the Comex silver depositories Monday final figures were: Registered 50.29 Moz,
Eligible 131.64 Moz, Total 181.93 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Bitcoin. In our new lawless world of the 21st century, of the NSA, GCHQ, death by drone, Gulag Guantanamo, water boarding, and the ultimate crimes of fiat currency, QE Forever, ZIRP, and central banksters, is anyone surprised that a fictitious virtual currency can be disappeared overnight? Stay long physical gold and silver. Our bankster class will ultimately try to steal everything from everyone, with the approval and connivance of the central banksters, bent politicians, and all for our own good of course.
"The
nine most terrifying words in the English language are: 'I'm from the
government and I'm here to help.'"
Ronald
Reagan.
Feb. 25, 2014, 12:41 a.m. EST
Mt. Gox bitcoin site disappears
LOS ANGELES (MarketWatch) — The popular bitcoin exchange Mt. Gox went blank Monday evening,
with reports saying that trading was halted earlier and that the website may
have been deleted.
A
Business Insider report Monday cited customers of the Tokyo-based bitcoin
platform as saying they received messages saying trading activity was disabled,
while two sites monitoring Mt. Gox said there was currently no activity.
A subsequent Wall Street Journal report said the entire site — mtgox.com — appeared to have
been deleted, as accessing the site yielded an answer from the site’s server
but displayed nothing.
Business
Insider reported that the issue could be temporary, given a tech glitch earlier
Monday at popular bitcoin wallet service Blockchain.info.
The
issues at Mt. Gox followed the surprise resignation of Gox executives from the Bitcoin
Foundation, prompting the firm’s bitcoins to trade at a sharp discount to the
currency’s rates at other bitcoin dealers.
The
disappearance of the Mt. Gox site also came after chief executives of six other
large bitcoin exchanges and businesses sought to assure customers that their
funds were safe.
A
separate Wall Street Journal report said the chief executives of the firms —
Blockchain.info, exchanges Bitstamp, BTC China and Kraken, along with
broker/payment processor Coinbase, and payment firm Circle Internet Financia —
issued a statement touching on concerns of insolvency at Mt. Gox.
“This
tragic violation of the trust of users of Mt. Gox was the result of one
company’s actions and does not reflect the resilience or value of bitcoin and
the digital currency industry,” the report cited the statement as saying.
Mt. Gox Bitcoin Exchange Goes Offline as Peers Lash Out
Feb 25,
2014 7:47 AM GMT
Mt. Gox, the Bitcoin exchange
that halted withdrawals this month, went offline as industry peers distanced
themselves from the Tokyo-based company in an effort to defend the virtual
currency.
Efforts to reach the
www.mtgox.com website today directed users to a blank white page, a day after
Mt. Gox Chief Executive OfficerMark Karpeles resigned from the Bitcoin
Foundation, a key advocacy group for the digital money.
“While we are unable to comment
on whether or not Mt. Gox’s business operations employed operational best
practices and reasonable accounting procedures, we can assure the public that
the Bitcoin protocol is functioning properly,” the foundation said in an
e-mailed statement.
Mt. Gox, one of the first
exchanges, said this month that it identified a bug that enables people to
withdraw the same Bitcoins more than once, leaving it vulnerable to hackers.
Prices quoted on the exchange plunged on speculation that account holders
wouldn’t be able to get their coins back.
Mt. Gox didn’t immediately reply
to a phone message and e-mail seeking comment.
More
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
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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