Tuesday 13 May 2014

The Giant Blunder.



Baltic Dry Index. 987  -10 

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

The secret of politics? Make a good treaty with Russia.

Count Otto von Bismarck.

How did we end up on the wrong side of history? After belatedly discovering that any real Russian sanctions will destroy much of continental Europe, America’s serial blunderers in Washington seem to be searching desperately for a way short of war, to gain something more than a landlocked rump of a western Ukraine run by neo Nazis and anti-Semite parties. As of this morning, much of continental Europe is facing a natural gas crisis as early as June 3.

Replacement LNG supplies, if available at all, most LNG from the Persian Gulf and Nigeria goes to Asia, where they pay 15-18 dollars per million Btu compared to Europe’s 10 dollars per Mbtu, will come at a much higher cost. Thanks to America’s reckless botched coup in Kiev, much of Europe’s economic competitiveness is about to vaporise in sunny June 2014.

With the Ukraine in meltdown in the east and south, now even the Hungarians trapped in west Ukraine want out of a Kiev run US puppet government. How long before the Ukraine’s trapped Poles want to re-join Greater Poland? How long before we repeat the mistakes of 1914 and end up in a global war?

Below, this morning’s instalment on how not to stage a putsch. How much longer before the reality sinks in with Europe’s downtrodden serfs. Next week’s European elections threaten to oust the Bilderberger elite. If it wasn’t all so serious, this would be seriously funny. Stay long fully paid up physical gold and silver held outside of the reach of John Bull and Uncle Sam. Euros anyone?

When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

US Declaration of Independence. July 4th 1776.

Ukraine crisis: rebels proclaim birth of sovereign 'People's Republic'

Separatist leader asks to join Russia after claiming an overwhelming 'yes' to self-rule in unofficial referendum

 Ukraine's most populous regions stood on the verge of joining Russia on Monday when the birth of a "People's Republic" was simultaneously proclaimed in Donetsk and Luhansk.

Denis Pushilin, the self-styled "prime minister" of the "Donetsk People's Republic", appeared outside the main government building, which was seized by his followers last month, and announced: “The People’s Republic is now sovereign!”

A few hundred people had gathered for the occasion inside a barricade of old tyres, festooned with posters comparing America, Europe and Ukraine’s new government to “fascists” and “Nazis”. They clapped, whistled and cheered.

Earlier, Roman Lyagin, one of Mr Pushilin’s colleagues, said the regions – which have a combined population of 6.6 million people and form the industrial backbone of Ukraine’s economy – were destined to join Russia.

“There are a lot of paths which we may follow, so the step to join the Russian Federation would probably be an appropriate step,” he said

---- The State Department said America would not recognise a poll designed to “create further division and disorder in the country”.

However, the pro-Russian leaders are trying to give their “People’s Republic” the trappings of a state. Mr Pushilin now has an entourage of aides and bodyguards clad in camouflage fatigues. On Monday, he said that an army was “in the process of being formed”, based on the “Donbass People’s Militia”, whose fighters already guard occupied buildings armed with Kalashnikov assault rifles.

Mr Pushilin said that everything else about the future of the territory - including whether it would join Russia or seek recognised independence, or issue its own diplomas - would be “decided later” with the help of “experts”.

---- Ukraine’s government has deployed the army to crush the "People's Republic". However, the offensive has made no progress and alienated many of Donetsk’s people with a series of bungled or bloody operations, particularly in the city of Mariupol, which has effectively been abandoned to the pro-Russian movement.

Mr Pushilin accused the Kiev government of spurning negotiations and relying solely on “force”. He added that the “People’s Republic” might request Russian military help - and it would not participate in Ukraine's presidential election on May 25.

More

http://www.telegraph.co.uk/news/worldnews/europe/ukraine/10823960/Ukraine-crisis-rebels-proclaim-birth-of-sovereign-Peoples-Republic.html

Ukraine Is Urged to Extend Autonomy for Ethnic Hungarians

May 12, 2014 3:57 PM GMT
Ukraine must grant autonomy to ethnic Hungarians living there, Hungarian Prime Minister Viktor Orban said, adding to demands on the leadership in Kiev that’s trying to fight off pro-Russian separatists in the country’s east.

Ethnic Hungarians living in western Ukraine, who Orban says number about 200,000, “must be granted dual citizenship, must enjoy all of the community rights and must be granted the opportunity for autonomy,” the Hungarian premier said in a speech in parliament.

Ukrainian troops are battling pro-Russian rebels who are trying to wrest control of the country’s easternmost provinces, which held two disputed referendums yesterday that separatists said backed independence. Unlike the Russian sympathizers who want to break away from Ukraine, Hungary is urging autonomy for its ethnic kin living in countries in the Carpathian basin.

“This is our clear expectation of a new Ukraine that’s being formed right now,” Orban said on May 10 after taking the oath of office following his re-election last month. Ukraine holds a presidential election on May 25.

Hungary has a population of 10 million and an additional 2.5 million Hungarians live beyond the country’s borders in neighboring states, mostly in Romania and Slovakia.

They are descendants of Hungarians who lost their citizenship in 1920, when the country lost two-thirds of its territory under the Trianon peace treaty signed in France at the end of World War I.

Gazprom Threatens to Halt Gas Shipments to Ukraine on June 3

May 12, 2014 6:40 PM GMT
Russia threatened to stop supplying gas to Ukraine on June 3 unless the country starts paying for the fuel in advance.

Tomorrow, OAO Gazprom (GAZP) will send Ukraine a bill for June, Chief Executive Officer Alexey Miller said today at a meeting with Russian Prime Minister Dmitry Medvedev. If the bill isn’t paid by June 2 the neighboring country won’t receive any Russian gas from 10 a.m. the next morning, Miller said.

“It’s time to stop coddling them, notify them tomorrow and move to pre-payments,” Medvedev said during the meeting. “I think that all possible ways to settle this situation using other measures were undertaken by Gazprom.”

The deadline marks an escalation in the dispute over energy supplies that’s an element in the broader struggle for Russian influence over Ukraine. Stopping shipments to Ukraine may have an impact on the rest of Europe because about 15 percent of the region’s gas travels through the country’s Soviet-era pipeline system.

Ukraine, which depends on Russia for half of its gas consumption, has been seeking to renegotiate a 2009 gas contract since before unrest began in Ukraine’s capital in November.

Russia is moving Ukraine to prepayments because it owes $3.51 billion for fuel delivered in 2013 and through April this year, Miller said today.
More

Russia to Discuss Gas Price Cut With Ukraine Only If Debt Paid

May 12, 2014 11:22 AM GMT
Russia will consider a compromise on natural gas prices with Ukraine only after its neighbor pays its debt for previous supplies, the Energy Ministry said as preparations for talks begin in Brussels today.

Ukraine hasn’t used any of the funds received under a $27 billion international package to pay down its gas debt, Russian Deputy Energy Minister Anatoly Yanovsky told reporters today in Moscow. The country sandwiched between Russia and the European Union received the first $3.2 billion of aid last week. OAO Gazprom, Russia’s gas exporter, has billed Ukraine for $3.51 billion for fuel delivered in 2013 and through April.

----Russia doesn’t need “pain and suffering” in Ukraine, Yanovsky said, after being asked about sanctions. “We want to trade normally and receive a normal price for our goods.”

Gazprom raised the price it charges Ukraine for gas by 81 percent in April, to $485 per 1,000 cubic meters, more than any EU member pays.

Gazprom has to switch Ukraine to prepayments as the state-controlled company can’t allow the country to continuing building up its debt, Yanovsky said. Russia will present a preliminary gas bill for June on May 16, Energy Minister Alexander Novak said last week.
More

http://www.bloomberg.com/news/2014-05-12/russia-to-discuss-gas-price-cut-with-ukraine-only-if-debt-paid.html

U.S. Plays Down Russian Sectoral Sanctions Over Retaliation Risk

May 13, 2014 5:00 AM GMT
Officials in the U.S. and European Union are playing down the prospect of punishing Russia with sanctions targeting entire sectors of its economy, opting instead to focus on tightening pressure by targeting more individuals and companies.

Policy makers say they are concerned that broad-brush sanctions on Russia’s energy and financial sectors, the two areas mentioned as possible targets, risk provoking economically costly retaliation by Russia.

“The Europeans don’t want to have a clear, transparent move to sectoral sanctions,” said Robert Kahn, a senior fellow for international economics at the Council on Foreign Relations in Washington. “What we might see therefore is sort of creeping into sectoral sanctions through the naming of the specific firms, so it wouldn’t be necessarily the whole sector or all transactions, but it would be partial.”

OAO Gazprom (OGZD), Russia’s gas-export monopoly, yesterday threatened to cut off supplies to Ukraine, a reminder of the power Russia wields over energy supplies to the rest of Europe. A gas cutoff by Russia would wipe out half of Ukraine’s supply and could severely disrupt supplies to the EU. The EU, Turkey, Norway, Switzerland and the Balkan countries got 30 percent of the natural gas they burned from Russia last year, according to the U.S. Energy Department.

“We have to be very careful not to hurt ourselves more than we hurt the other side,” Polish Foreign Minister Radoslaw Sikorski said yesterday in a speech in Brussels, echoing comments made last week by U.S. Treasury Secretary Jacob J. Lew.

---- In a sign of Russia’s ability to use its economic clout to drive a wedge between its adversaries, France’s government said this week it will deliver Mistral helicopter carrier warships to Russia as planned, rejecting requests from its European and U.S. allies to cancel the sale.
More

The sources and interpretation of the Declaration have been the subject of much scholarly inquiry. The Declaration justified the independence of the United States by listing colonial grievances against King George III, and by asserting certain natural and legal rights, including a right of revolution.


In Europe, the right of revolution may be traced back to Magna Carta, an English charter issued in 1215, that required the King to renounce certain rights and accept that his will could be bound by the law. It included a "security clause" that gave the right to a committee of barons to overrule the will of the King through force if needed. Magna Carta directly influenced the development of parliamentary democracy and many constitutional documents, such as the United States Constitution.

The Golden Bull of 1222 was a golden bull, or edict, issued by King Andrew II of Hungary. The law established the rights of Hungary's noblemen, including the right to disobey the King when he acted contrary to law (jus resistendi). The Golden Bull is often compared to the Magna Carta; the Bull was the first constitutional document of the nation of Hungary, while the Magna Carta was the first constitutional charter of the nation of England.

Thomas Aquinas also wrote of the right to resist tyrannical rule in the Summa Theologica. John of Salisbury advocated direct revolutionary assassination of unethical tyrannical rulers in his Policraticus.

For as long as but a hundred of us remain alive, never will we on any conditions be brought under English rule. It is not for glory, nor riches, nor honours that we are fighting, but for freedom — for that alone, which no honest man gives up but with life itself.

The Declaration of Arbroath 1320.

Elsewhere, as seen from faraway London, in the Great Game for control of the South China Sea, the score so far seems to be Vietnam nil, China one. For now, a great complacency has settled over our markets. My guess is not for much longer.

China says Vietnam efforts to rope in others on spat will fail

BEIJING Mon May 12, 2014 4:23pm EDT
(Reuters) - China's foreign ministry said on Monday Vietnam's efforts to garner support over a territorial dispute in the South China Sea would fail, a day after Southeast Asian leaders meeting for a regional summit in Myanmar refrained from criticizing Beijing.

Tensions rose in the resource-rich South China Sea last week after China positioned a giant oil rig in an area also claimed by Vietnam. Each country accused the other of ramming its ships near the disputed Paracel Islands.

"The facts prove that Vietnam is trying to rope in other parties and put pressure on China, (but) will not achieve its aims," China's foreign ministry spokeswoman Hua Chunying told a daily news conference.

"We hope that Vietnam can see the situation clearly, calmly face up to reality, and stop harassing the Chinese operations."

Speaking to fellow leaders of the Association of Southeast Asian Nations at a summit on Sunday, Prime Minister Nguyen Tan Dung said Vietnam had acted with "utmost restraint" and used all means of dialogue to request China remove the rig.

Dung said China was slandering his country and committing dangerous violations.

The communiqué issued at the end of the summit by the 10-nation ASEAN group contained no criticism of Beijing, however.

China last week blamed the United States for stoking tension in the South China Sea by encouraging countries to engage in dangerous behavior.
More

We close for the day, with more fallout from the reckless botched coup. Everyone is now rattling their nuclear arms. If the Great American Blunder goes hot, Russia’s not Kosovo or Serbia, be prepared for it to go nuclear pretty fast.

US Holds Massive Nuclear Weapons Exercise "To Deter And Detect Strategic Attacks" Days After Russian Drill

Late last week, in what should not have been a surprise to anyone (because supposedly it was announced "far in advance") but was a major shock due to its intensity and expansiveness, Russia held a massive "simulated massive nuclear attack" drill, coming at a time just ahead of the Donetsk referendum, which may have been pre-scheduled and for foreign policy reasons was hailed as a "non-event", but judging by the amount of production that went into the accompanying video clip, this particular drill was dripping with symbolism aimed squarely at NATO and the US.

So now it is America's turn to retaliate. As the U.S. Strategic Command reported earlier, the US will conduct Exercise Global Lightning 14 from May 12-16 in coordination with other combatant commands, services, and appropriate U.S. government agencies "to deter and detect strategic attacks against the U.S. and its allies."

Stratcom was quick to point out that Exercise Global Lightning 14 has been planned for more than a year and is based on a notional scenario.  It also added that the "timing of the exercise is unrelated to real-world events" but only those who believed that Russia massive nuclear drill was also unrelated to world will fall for this particular embellishment.
More

"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

At the Comex silver depositories Monday final figures were: Registered 55.91 Moz, Eligible 119.84 Moz, Total 175.75 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

No crooks or bent politicians today. Just something too good not to share and held over from last week. My thanks to reader Ian in Toronto for sending along the link. On the link, scroll down to the bottom for the animation. 

Illustris, new computer model of the universe, shows 13-billion-year evolution of cosmos in breathtaking detail


The monthly Coppock Indicators finished April

DJIA: +189 Down. NASDAQ: +347 Down. SP500: +249 Down.  Sell in May, go away.

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