Baltic Dry Index. 964 -02
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."
Henry Hazlitt
The big
story this holiday Monday un the UK and USA, is the outcome of the EU
elections, and the outcome of what passes for a presidential election in the CIA puppet state of the
Ukraine. In the UK offshore branch of the Great Bilderberger United States of
Europe project, Scotland and Northern Ireland have yet to declare their
results, (in the Western Isles of Scotland they couldn’t count yesterday out of
respect for the Sabbath.) In England a Wales, the Europhile political parties
took a battering, with U-turn Dave’s coalition partner hammered down from 11
useless MEPs, to merely one useless MEP. Not to worry for the useless ten,
under the crazy EU rules, they get to carry on feeding from the EU taxpayer’s
trough for another six month.
The big
winner in the UK was UKIP, the party that wants the UK to stop paying Danegeld
to Brussels, and to tell continental Europe, that “get over it,” we’re simply
not part of continental Europe and never will be. “Push off!” However, this being the EUSSR, the Brussels
fat cats will simply ignore the supposed EU Parliament, whenever and on
whatever it likes. Most MEPs are too deep in the gravy train to vote for
change, and being virtually unemployable in the real world, never will vote for
change or reform.
In tax and
work shy, Germany excepted, Continental Europe, the serfs seem to have voted
heavily for the odds and sods of the far right and far left. Out of roughly
700+ useless MEPs, the Continental odds and sods, plus UKIP seem likely to muster
about 140 to 180 votes. With policy divergence from fascist, racist, and communist,
to economic reform to EU exit, this rabble will make for interesting YouTube,
but is unlikely to amount to much else.
In the
Ukraine, at least in those parts that supposedly held a free and fair election, the “Cocoa King” oligarch
seems to be claiming victory.
Ironically, he seems to be acceptable to the CIA and to Putin’s FSB, though his
writ doesn’t run much beyond the Pale of Kiev–Lviv-Odessa, without resorting to
formerly neo-Nazis militia, now rebranded as special forces. The latest rumour spread by Washington, is
that he intends to reclaim the Crimea. The silliness of the botched Kiev coup never
ends. Much of the Cocoa King’s wealth lies in Russia. We are about to get to
see how easy it is or not, to serve two masters.
While we all
await developments and clarifications, today we posit will America follow 20th
century Russia and default on its massive, unrepayable Treasury debt?
Unthinkable goes the current complacency, Uncle Scam can always pay off his
massive debt by printing dollars. Maybe, but stay long physical gold and silver
for the day when the unthinkable happens. This coming May 31 is the 98th
anniversary of the Battle of Jutland, where the Royal Navy’s Grand Fleet, the
most powerful in the world at the time, suffered its first defeat in over 100
years. Unthinkable things happen. (I know,
purists will say it was a technical victory, because though the Grand Fleet
lost, Germany’s High Seas Fleet never dared to go into action again.)
Below, when
Russia defaulted. Poor France. When America defaults, poor us?
William F. Rickenbacker
Text of “The Death of French Savings, the Russian Bonds Story 1880-1996″
By Antoine Clarke, on 23 May 14
If there is one feature of human society
that makes it successful, it is the capacity that human beings have of choosing
to satisfy short-term appetites or to defer gratification. This ability to
distinguish between short term and long term interests is at the heart of
economics.
But why defer consumption? Why save at all?
One reason is the transmission of wealth from one generation to the next. Another is to ensure security in hard times.
A complaint of American academics about French savings in the 19th century is that they were too conservative. Easy for them to say.
The population of France grew more slowly than any other industrialising nation in the 19th century (0.2% per year from 1870 to 1913, compared with 1.1% for Germany and 0.9% for Great Britain). The figures would be even worse if emigration from the British Isles were added to the headcount.
This slower rate of population growth would tend to mean a slower rate of economic growth: smaller local markets, fewer opportunities for mass production. This was well known to be a problem in France. In fact Jean-Baptiste Say was sent to England in 1815 to study the growth of English cities such as Birmingham and its effect on the economy (here in French).
The causes of low investment must surely include political and social instability.
---- Government bonds were generally considered a good deal: backed by the power of taxation, and, unlike gold, they earned interest.
One constant concern of French
governments in the 19th century was the diplomatic isolation enforced by the
1815 Congress of Vienna. Various attempts were made to break this, some
successful like the split of Belgium from the Netherlands in 1830, the Crimean
War (co-operation with the British), others failed (Napoleon III’s Mexican
adventure, the Franco-Prussian War).
By 1882, Germany looked like
getting economic and military supremacy in Europe, with an Triple Alliance with
Austria-Hungary and Italy. With the British playing neutral, the best bet was
to build up Russia.
The first Russian bonds sold in
France were in 1867 to finance a railroad. Others followed, notably in 1888. At
this point the French government decided on a policy of alliance with Russia
and the encouragement of French savers to invest in Russian infrastructure. From
1887 to 1913, 3.5% of the French Gross National Product is invested in Russia
alone. This amounted to a quarter of all foreign investment by French private
citizens. That’s a savings ratio (14% in external investment alone) we wouldn’t
mind seeing in the UK today!
A massive media campaign
promoting Russia as a future economic giant (a bit like China in recent years)
was pushed by politicians. Meanwhile French banks found they could make
enormous amounts of commission from Russian bonds: in this period, the Credit
Lyonnais makes 30% of its profits from it’s commission for selling the bonds.
In 1897, the ruble is linked to
gold. The French government guarantees its citizens against any default. The
Paris Stock Exchange takes listings for, among others: Banque russo-asiatique,
la Banque de commerce de Sibérie, les usines Stoll, les Wagons de Petrograd.
The first signs of trouble come
in 1905, with the post-Russo-Japanese War revolution. A provisional government
announced a default of foreign bonds, but this isn’t reported in the French
mainstream media or the French banks that continue to sell (mis-sell?).
During the First World War, the
French government issued zero interest bonds to cover the Russian government’s
loan repayment, with an agreement to sort out the problem after the war.
However, in December 1917, Lenin announced the repudiation of Tsarist debts.
The gold standard was abolished,
allowing the debasement of the currency, private citizens were required to turn
over their gold for government bonds.
Income tax was introduced (with a
top rate of 2%) after the assassination in Sarajevo of the Archduke Ferdinand
and his wife.
In 1923, a French parliamentary
commission established that 9 billion Francs had effectively been stolen from
French savers in the Russian bonds affair. Bribes had been paid to bankers and
news outlets to promote the impression of massive economic growth in Russia.
Many of the later bonds were merely issued to repay the interest on earlier
debt.
For the next 70 years, protest
groups attempted to obtain compensation, either from the Russian government or
from the French government that had provided “guarantees”. You won’t be
surprised to know that some banks managed to sell their bonds to private
investors after 1917, having spread false rumours that the Soviets would honour
the bonds.
Successive French governments
found themselves caught between the requirements of “normal” relations with the
USSR and the clamour of dispossessed savers and their relatives.
In November 1996, the post-Soviet
Yelstin government agreed a deal to settle the Russian bonds for $400 million.
The deal covered less than 10% of the families demanding compensation. Despite
this, 316,000 people are thought to have received some compensation, suggesting
that over 3 million families were affected by the Russian bonds scandal.
There are similarities with the
present day but also significant differences.
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 Friday
final figures were: Registered 56.14 Moz, Eligible 120.08 Moz, Total 176.22 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, though they are still hard at work in their never ending quest to separate us from our hard earned wealth. For the rest of us in the UK and USA today is a holiday. Enjoy.
The monthly Coppock Indicators finished April
DJIA: +189 Down. NASDAQ: +347 Down. SP500: +249 Down. Sell in May, go away.
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