Baltic Dry Index. 936 -34
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Sanctions
are as old as time. So are the salutary lessons. Pericles tried to cow the city
state of Megara in 432 BC by cutting off trade access to markets of the
Athenian Empire. He set off the Pelopennesian Wars, bringing Sparta's hoplite
infantry crashing down on Athens. Greece's economic system was left in ruins,
at the mercy of Persia. That was a taste of asymmetry.
We open by
noticing the continuing slump in the Baltic Dry (shipping) Index. The Great
Disconnect between global stock markets and the real world continues apace. But
I suspect for not too much longer as “sell in May, go away…” approaches. Will
we all really grow rich and prosperous by sending each other meaningless twits
on Twitter?
We open with
why QE Forever, really is forever, as the Great Nixonian error of fiat money
draws to its end . Stay long fully paid up physical gold and silver held outside
of the US and UK financial systems, where it’s all hypothecated away. Is the
ECB now ready for its own version of voodoo economics?
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly and results far much less.
J. K. Galbraith.
Weak U.S. prices, not inflation, the threat now: Fed's Yellen
By Jonathan
Spicer NEW YORK
(Reuters) - Persistently low inflation poses a more immediate threat to the
U.S. economy
than rising prices, Federal Reserve Chair Janet Yellen said on Wednesday,
stressing that the U.S. central bank would be delivering policy stimulus for some
time to come.In her second public speech since taking the Fed's helm, Yellen was careful not to predict when interest rates would rise from near zero. Instead, she stressed the decision would hinge on healing in the labor market and on how briskly inflation rises toward the Fed's 2 percent goal.
Yellen's relatively staid remarks to the Economic Club of New York intensified somewhat when Martin Feldstein, a Harvard University professor and former adviser to President Ronald Reagan, asked her whether she would let inflation creep above 2 percent to give the economy a bit more support.
"With inflation running at around 1 percent, at this point I think the risk is greater that we should be worried about inflation undershooting our goal and getting inflation back up to 2 percent," Yellen said.
The central bank will "of course" eventually need to tighten policy to avoid a run-up in inflation, she said. "Overshooting that goal ... can be very costly to reverse."
Yellen noted the Fed was not alone in its struggle to move inflation higher as a buffer against an economically disabling deflation. The European Central Bank is mulling unconventional policies that could lift inflation in the euro zone, while Japan has been mired in deflation for 15 years.
The Fed has kept its key rate near zero since the depths of the financial crisis in late 2008, and has bought more than $3 trillion in assets to help depress borrowing costs and stimulate economic growth amid a frustratingly slow recovery.
More
Euro zone inflation sticks in 'danger zone', keeps ECB under pressure
BRUSSELS(Reuters) - A drop in March euro zone inflation to its lowest level since November 2009 was confirmed on Wednesday, keeping pressure on the European Central Bank to intervene if prices do not rebound.
The year-on-year inflation rate in the 18 countries sharing the euro was 0.5 percent in March, down from 0.7 percent in February, the European Union's statistics office Eurostat said.
It was the sixth straight month that inflation remained in what ECB President Mario Draghi called a "danger zone" of below 1 percent.
Core inflation, excluding energy, food, alcohol and tobacco dropped to 0.7 from 1.0 percent. Excluding unprocessed food and energy, inflation was 0.9 percent, more than the 0.8 percent economists had forecast but still less than February's reading of 1.1 percent.
Analysts believe inflation will pick up in April because travel prices typically rise over Easter, and Easter comes later this year. It came at the end of March in 2013.
"In April we expect a rebound in core inflation, 0.9 percent, as some of the Easter-related seasonal price increases are likely to come with a month's delay," said economist Gizem Kara at BNP Paribas.
More
In reality,
falling prices, especially food and fuel prices, are actually good for the
masses who are not part of the Fed’s cronies in he one percent. Lower food and
heating costs, actually boosts the standard of living of everyone outside of
the ivory towers of the Fedster’s and Squids. Only in the Cloud Cuckoo land of
the Great Nixonian Error of fiat money is inflation considered the way to
universal prosperity. Zimbabwe never knew when it was well off, in the Gospel
according to the Fed.
Below, the
success of Japan’s inflation policy. What could possibly go wrong?
There can be few
fields of human endeavour in which history counts for so little as in the world
of finance. Past experience, to the extent that it is part of memory at all, is
dismissed as the primitive refuge of those who do not have the insight to
appreciate the incredible wonders of the present.
J. K. Galbraith.
Tokyo Housewives Trade Yen as Japan Spurs Inflation: Currencies
Apr 16, 2014 7:18 AM GMT
Bank of Japan
Governor Haruhiko Kuroda’s success in stoking inflation is changing the way
63-year-old Tokyo
housewife Ritsuko Ueda manages her savings. Ueda is one of thousands of ordinary Japanese trying to protect the value of their capital by resorting to currency margin trading, a high-risk way of dealing foreign exchange that uses borrowed money. Individual investors held 767,902 accounts for speculating on currencies in February, the most since July 2005 and up from 595,698 a year earlier, according to Tokyo Financial Exchange Inc.
“I have high hopes that Kuroda’s next measures will drive yen weakness and stock gains,” Ueda said last month at a training seminar in Tokyo organized by Gaitame Online Co., a Japanese currency-trading company focused on the retail market. “I’m a big fan.”
Kuroda was appointed in March last year
to carry out Prime Minister Shinzo Abe’s policy of flooding markets with cheap
money and ending 15 years of crippling deflation by depreciating the yen. With
consumer prices starting to rise, Japanese can no longer simply leave their
savings in bank accounts and watch their value increase, making trading
strategies with potentially higher returns attractive.
More
Japan Consumer Confidence Drops to Lowest Level Since August ’11
Apr 17, 2014 6:24 AM GMT
Japan’s consumer confidence fell in March to the lowest level since
August 2011, a reading that may tumble further this month after a sales-tax
increase on April 1 sapped the public’s spending power. The reading of 37.5, down from 38.5 in February, was released by the Cabinet Office in Tokyo today.
Prime Minister Shinzo Abe risks the public souring on his campaign to sustain growth in the world’s third-biggest economy as prices start to rise while wages (JNLSUCTL) stay stagnant. Weaker sentiment could make it harder to drive a rebound from a contraction forecast this quarter, and raise the odds that the Bank of Japan adds to its already unprecedented easing.
“Consumer sentiment has been undermined to a large extent by rising prices,” Goldman Sachs Group Inc. economists Naohiko Baba and Yuriko Tanaka wrote in an e-mailed note before the release. “We expect a major retreat in sentiment from April as the tax hike drives inflation.”
More
Staying with
Asia and Franken foods, China won’t swallow US genetically modified corn. For
now, China can still get GM free maize from France, at least until the French
courts quash the ban again.
'Our scientific power has outrun our spiritual power. We have
guided
missiles and misguided men'.
missiles and misguided men'.
Martin Luther King.
U.S. Grain Losses Seen Up to $6.3 Billion on China Ban
Apr 16,
2014 11:11 PM GMT
China’s rejection of U.S.
grain grown with seeds genetically modified by Syngenta AG may cost U.S.
growers as much as $6.3 billion in losses through August 2015, a U.S. trade
group estimated. The Asian nation turned away at least 1.45 million metric tons of corn since late November, “substantially greater” than the 908,800 reported by the Chinese government, the National Grain & Feed Association, based in Washington, said today in a statement. The grain contained a gene developed by Basel, Switzerland’s Syngenta, and that MIR 162 variety hasn’t been approved by China.
The “zero-tolerance policy” by China has cost as much as $2.9 billion in corn, distiller grain and soybean revenue, the U.S. group said, and as much as an additional $3.4 billion may be lost in the 12 months starting Sept. 1 after Syngenta offers another modified corn seed still to be approved by China and several other countries.
The group estimates that
benchmark U.S. corn prices are 11 cents a bushel lower because of the trade
discord. Some U.S. soybean shipments were canceled by China after tests for MIR
162, and prices probably fell 15 cents a bushel, the association said.
Cancellations to date cost in a
range of $1 billion to $2.9 billion, and the introduction of the new seed that
hasn’t been approved may lead to losses from $1.2 billion to $3.4 billion, the
group said.
---- Corn is the biggest U.S. crop, followed by soybeans, and China is the biggest oilseed importer.
The U.S. is the leading corn exporter and second-biggest soybean shipper, trailing Brazil.
More
http://www.bloomberg.com/news/2014-04-16/u-s-group-says-losses-may-be-6-3-billion-on-china-corn.html
French parliament bans cultivation of GM maize
PARIS(Reuters) - France's lower house of parliament adopted a law on Tuesday prohibiting the cultivation of any variety of genetically modified maize, saying it posed a risk to the environment.
France adopted a decree last month to halt the planting of Monsanto's insect-resistant MON810 maize, the only GM crop allowed for cultivation in the European Union.
The law also applies to any strain adopted at EU level in future, including another GM variety, Pioneer 1507 developed jointly by DuPont and Dow Chemical, which could be approved by the EU executive later this year after 19 out of 28 member states failed to gather enough votes to block it.
The law adopted by the French National Assembly is similar to one rejected by the Senate, upper house, in February when it was deemed unconstitutional.
The Socialist government, like its conservative predecessor, has opposed the growing of GM crops because of public suspicion and widespread protests by environmentalists.
"It is essential today to renew a widely shared desire to maintain the French ban," Jean-Marie Le Guen, the minister in charge of relations with parliament, told the National Assembly.
"This bill strengthens the decree passed last March by preventing the immediate cultivation of GMO and extending their reach to all transgenic maize varieties," he said.
More
In our precursor
to World War Three update news, the Telegraph has finally figured out that it’s
not going to be a simple repeat of NATO v Serbia over Kosovo. President Putin is
no Milosevic and Russia’s no Serbia. For
that matter “red line” Obama’s no Bush. Who said the German’s don’t get irony.
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.
US financial showdown with Russia is more dangerous than it looks, for both sides
The US Treasury faces a more formidable prey with Russia, the world's biggest producer of energy with a $2 trillion economy, superb scientists and a first-strike nuclear arsenal
The United States has constructed
a financial neutron bomb. For the past 12 years an elite cell at the US
Treasury has been sharpening the tools of economic warfare, designing ways to
bring almost any country to its knees without firing a shot.
The strategy relies on hegemonic
control over the global banking system, buttressed by a network of allies and
the reluctant acquiescence of neutral states. Let us call this the Manhattan
Project of the early 21st century.
"It is a new kind of war,
like a creeping financial insurgency, intended to constrict our enemies'
financial lifeblood, unprecedented in its reach and effectiveness," says
Juan Zarate, the Treasury and White House official who helped spearhead policy
after 9/11.
“The new geo-economic game may be
more efficient and subtle than past geopolitical competitions, but it is no
less ruthless and destructive,” he writes in his book Treasury's War: the
Unleashing of a New Era of Financial Warfare.
Bear this in mind as Washington
tightens the noose on Vladimir Putin's Russia, slowly shutting off market
access for Russian banks, companies and state bodies with $714bn of dollar debt
(Sberbank data).
The stealth weapon is a
"scarlet letter", devised under Section 311 of the US Patriot Act.
Once a bank is tainted in this way - accused of money-laundering or
underwriting terrorist activities, a suitably loose offence - it becomes
radioactive, caught in the "boa constrictor's lethal embrace", as Mr
Zarate puts it.
This can be a death sentence even
if the lender has no operations in the US. European banks do not dare to defy
US regulators. They sever all dealings with the victim.
So do the Chinese, as became
clear in 2005 when the US hit Banco Delta Asia (BDA) in Macao for serving as a
conduit for North Korean commercial piracy. China pulled the plug. BDA
collapsed within two weeks. China also tipped off Washington when Mr Putin
proposed a joint Sino-Russian attack on Fannie Mae and Freddie Mac bonds in
2008, aiming to precipitate a dollar crash.
Mr Zarate told me that the US can
"go it alone" with sanctions if necessary. It therefore hardly
matters whether or not the EU drags its feet over Ukraine, opting for the
lowest common denominator to keep Bulgaria, Cyprus, Hungary and Luxembourg on
board. Washington has the power to dictate the pace for them.
The new arsenal was first
deployed against Ukraine - of all places - in December 2002. Its banks were
accused of laundering funds from Russia's organised crime rings. Kiev
capitulated in short order.
Nairu, Burma, North Cyprus,
Belarus and Latvia were felled one by one, all forced to comply with US
demands. North Korea was then paralysed. The biggest prize yet has been Iran,
finally brought to the table.
---- Sanctions are as
old as time. So are the salutary lessons. Pericles tried to cow the city state
of Megara in 432 BC by cutting off trade access to markets of the Athenian
Empire. He set off the Pelopennesian Wars, bringing Sparta's hoplite infantry
crashing down on Athens. Greece's economic system was left in ruins, at the
mercy of Persia. That was a taste of asymmetry.
More
We end for
the day with Germany saving the Ukraine, according to Reuters, in what passes
these dumbed down days for financial journalism! Of course, how the Ukraine will
pay Germany (and Poland and Slovakia,) for the natural gas, isn’t disclosed.
The thoroughly corrupt Ukraine wasn’t able to pay Russia for its heavily discounted gas last winter,
now Germany and co., are going to become supplier of choice of the free gas.
Even if the aspirational rescue works out as reported, with free gas forever
from the EU, (I suspect that the Germans will want a pound of flesh,) the “rescue”
seems to leave the Ukraine about 45 billion cubic metres short of gas. Best not to ask Russia for some more free gas,
perhaps Uncle Scam will come through.
Germany's RWE begins natural gas deliveries to Ukraine
FRANKFURT(Reuters) - Germany's RWE began deliveries of natural gas to Ukraine on Tuesday as a diplomatic crisis between Kiev and Moscow raises the risk of Russia cutting off gas supplies to Ukraine.
The gas is being delivered via Poland under a framework agreement signed by Ukraine's Naftogaz and RWE subsidiary RWE Supply & Trading in 2012 which allows for delivery of up to 10 billion cubic meters (bcm) of gas per year.
Deliveries are based on European wholesale prices including delivery costs, it said, and involves gas from the EU, Norway and Russia.
Ukraine has won a promise of help from the European Union after Russia warned it could cut off gas supplies over Ukraine's refusal to pay what Kiev has deemed Moscow's "political, uneconomic price".
Russia has nearly doubled the gas price it charges Ukraine, tearing up a discount agreed under ousted pro-Russia President Viktor Yanukovich for gas from exporter Gazprom.
RWE said it delivered about 1 bcm to Naftogaz in 2013, adding further deliveries to the Ukraine were possible "if various transport restrictions at the Slovakian/Ukrainian border are politically and technically resolved within the next weeks or months".
Slovakia and Ukraine are to hold talks on Tuesday on conditions for reverse flows of natural gas to Ukraine of up to 9 bcm per year.
---- Ukraine consumed around 55 bcm of gas
last year.
I think a curse should rest on me — because I love this
war. I know it's smashing and shattering the lives of thousands every moment —
and yet — I can't help it — I enjoy every second of it.
Winston Churchill, 1916.
At the Comex
silver depositories Wednesday
final figures were: Registered 53.40 Moz, Eligible 124.19 Moz, Total 177.59 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more trouble for the Great Vampire Squids. The great High Frequency Trading rip-off scandal continues to grow. Front running the Muppet’s orders used to be morally and legally wrong, and known as theft and breach of fiduciary duty. In today’s Fed run Wall Street it’s considered the Squid’s God given right. But can a mere NY Attorney General really expect to best the Squids? Won’t the Squids just ask the NSA for the dirt on the NYAG? Time will tell if Mr. Schneiderman is booking a one way ticket to Siberia.
It’s morally wrong to let a sucker keep his money.Ebenezer Squid, with apologies to W. C. Fields.
April 16, 2014, 4:39 p.m. EDT
N.Y. attorney general subpoenas high-speed firms
WASHINGTON—New York Attorney
General Eric Schneiderman’s office sent its first wave of subpoenas to about a
half-dozen high-frequency trading firms in an investigation into whether some
rapid-fire firms have an unfair advantage over other trading outfits, according
to a person familiar with the investigation.
The attorney general is seeking
details about whether the firms have secret arrangements with stock exchanges
or other trading venues, such as dark pools, that give them the ability to
trade ahead of other investors, this person said.
The subpoenas, which were sent in
the past week, seek documents such as emails and other communications related
to the firms’ trading strategies and whether those strategies are enabled by
special deals other trading outfits aren’t privy to, the person said.
Jump Trading LLC, Chopper Trading
LLC, both based in Chicago, and New York-based Tower Research Capital were
among the firms that received subpoenas, the person said. Representatives for
Jump, Chopper and Tower didn’t immediately respond to requests for comment.
Schneiderman has said he is
committed to cracking down on practices that provide high-speed traders with
opportunities to act first on market-moving information, referring to such
access as “Insider Trading 2.0.”
http://www.marketwatch.com/story/ny-attorney-general-subpoenas-high-speed-firms-2014-04-16?dist=tcountdown
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.Ebenezer Squid, with apologies to Cary Grant. To Catch A Thief.
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