Baltic Dry Index. 867 +09
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"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
With Iraq disintegrating like South Vietnam in
1975, from London this morning it looks like President Obama is about to try to
switch horses mid-stream. In the words
of Sergeant Wilson of the 1970s UK comedy “Dad’s Army,” “do you think that’s
wise, sir?” What will America’s other placemen in the
region think when they see one of America’s puppets tossed aside like a
broken toy. The ghost of Nicaragua’s “Tachito” Anastasio Somosa looms into
view, and we all know how well that worked out for President Carter and the
discarded Somosa, assassinated in “safe” Paraguay one year later. What must “the
Chocolate King” be thinking in Kiev this morning? What will they be thinking in
Beijing and Moscow?
Below, President Obama dithers, while Iraq crumbles
and oil heads off towards $120 a barrel. So Europe is really going to choose
2014 to give up buying Russian oil and natural gas? Only in “Mad dog” McCain’s
dreams. Even “Wrong Wag” Hollande of France isn’t that daft. Europe should
quietly buy the Kurds oil while it’s still on offer at half price.
Obama Distances U.S. From Maliki as Iraq Strikes Debated
Jun 19,
2014 5:00 AM GMT
The U.S. is distancing itself from Iraqi Prime Minister Nouri al-Maliki,
pressing for a political change that could help blunt a Sunni insurgency as
President Barack
Obama weighs possible air strikes against the extremists. Obama administration officials publicly urged Iraq’s leaders yesterday to make their Shiite-dominated government more inclusive as part of a broader strategy to roll back gains by the Sunni militants. The calls were made as Maliki warned that the violence could spill into neighboring countries and as militants attempted to seize a major oil refinery.
“Not enough has been done by the government, including the prime minister, to govern inclusively and that that has contributed to the situation and the crisis that we have today,” White House press secretary Jay Carney said. Asked if Maliki should step down, he declined to voice support, saying, “that’s not, obviously, for us to decide.”
More
In Washington, growing chorus calls for Iraq's Maliki to go
By Patricia Zengerle and Matt Spetalnick WASHINGTON
(Reuters) - President Barack Obama came under pressure from U.S. lawmakers
on Wednesday to persuade Iraqi Prime Minister Nuri al-Maliki to step down over
what they see as failed leadership in the face of an insurgency threatening his
country.As Obama held an hour-long meeting with congressional leaders on U.S. options in Iraq, administration officials joined a chorus of criticism of Maliki, faulting him for failing to heal sectarian rifts that militants have exploited.
Army General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff, told a congressional hearing that Maliki's Shi'ite-led government had asked for U.S. air power to help counter Sunni militants who have overrun northern Iraq.
The general did not say whether Washington would meet the request.
More
Iraqi Leader Warns War May Spread as U.S. Weighs Action
Jun 18,
2014 5:38 PM GMT
Iraqi Prime Minister Nouri
al-Maliki warned that the offensive by Islamist militants his army is fighting
could spill over into neighboring states, as the U.S. weighed options on how to
counter the insurgents.
“They will flee to you and your
countries will also be inflamed with sectarian wars,” Maliki said in a
televised speech today, without naming nations he considered at risk. His
Shiite Muslim-led government yesterday accused Saudi Arabia, the region’s
biggest Sunni power, of providing “moral and material support” for the Islamic
State in Iraq and the Levant, the group that began its assault by sweeping into
Mosul last week.
The conflict with Sunni Muslim
militants has weakened Maliki’s control over the country, OPEC’s second-biggest
oil producer. It threatens to draw in the U.S. and regional powers including
Iran, a key backer of Maliki which said it will fight ISIL should the group
move closer to its border.
More
Saudis give apparent warning to Iran: don't meddle in Iraq
By Noah Browning and Rania El Gamal DUBAI
(Reuters) - Saudi Arabia gave an apparent warning to arch enemy
Iran on Wednesday by saying outside powers should not intervene in the conflict
in neighboring Iraq.Foreign Minister Prince Saud al-Faisal also said Iraq was facing a full-scale civil war with grave consequences for the wider region.
His remarks coincided with an Iranian warning that Tehran would not hesitate to defend Shi'ite Muslim holy sites in Iraq against "killers and terrorists", following advances by Sunni militants there.
The toughening of rhetoric about Iraq by the Gulf's two top powers suggested that Tehran and Riyadh have put on hold recent plans to explore a possible curbing of their rivalry across the region's Sunni-Shi'ite sectarian divide.
The Sunni-Shia edge to the Saudi-Iran struggle has sharpened in the last few years. The two see themselves as representatives of opposing visions of Islam: the Saudis as guardians of Mecca and conservative Sunni hierarchy, and Shi'ite Iran as the vanguard of an Islamic revolution in support of the downtrodden.
More
Exxon, BP Evacuate Iraq Workers as Oil Drilling Continues
Jun 18, 2014 8:01 PM GMT
Exxon Mobil Corp. and BP Plc
began removing employees in Iraq as militants continued a push toward Baghdad
and a battle raged for control of the nation’s largest oil refinery.
The evacuations come amid government
and company assertions that Iraq’s output of almost 3 million barrels a day
should remain unaffected by escalating sectarian tensions. Exxon has removed
some workers from the West Qurna oil field as operations continue, according to
a person familiar with the company’s Iraq operations. BP Plc has removed
non-essential workers, Chief Executive Officer Bob Dudley said yesterday.
---- Fighters from
ISIL battled government forces for control of the Baiji refinery in northern
Iraq today, a day after clashes in Baquba, 34 miles (55 kilometers) northeast
of the capital. A military spokesman said elite Iraqi forces were defending the
Baiji refinery, but the comments contradicted local police who said militants
had captured the facility.
More
British oil giants start to pull staff out of Iraq
Oil prices have spiked around $114 per barrel amid growing concern that Isis forces pose a real threat to Iraq oil production
British oil majors are beginning
to pull workers out of Iraq as the battle between Sunni-Muslim Islamists and
government forces north of Baghdad intensifies.
BP has said it is withdrawing
non-essential staff and is monitoring the situation on the frontline closely
although its oil field interests are concentrated in the south of the country
near Basra. BP has a contract to operate the Rumaila field that is eventually
expected to pump almost 3m barrels per day (bpd) of crude.
Royal Dutch Shell is also closely
following events as the Iraqi army prepares to launch a counter-offensive
against Isis insurgents around the Baiji refinery, the country’s largest and a
strategic asset in terms of the supply of petrol and liquid petroleum gas used
for cooking.
“The safety and security of our
staff is our top priority. We don’t comment on specific security issues but we
are following the situation in Iraq closely,” said Shell in a statement. The
Anglo-Dutch company operates the giant Majnoon field, one of the world’s
largest onshore oil areas, located about 340 miles south of Baghdad.
Oil prices have spiked around
$114 per barrel amid growing concern that Isis forces pose a real threat to
Iraq oil production, which weighs in at around 3.5m bpd - roughly four-times
more than the UK pumps from the North Sea.
More
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/10909742/British-oil-giants-start-to-pull-staff-out-of-Iraq.html
$120 Oil Flagged as Danger Point for Global Economy on Iraq Crisis
Jun 18, 2014 9:05 AM GMT
The global economy faces a new threat from an old enemy: oil. A spike in the price of crude foreshadowed economic slumps in each of the last four decades and economists are worrying anew after Brent touched its highest price in nine months above $113 a barrel amid fresh violence in Iraq, OPEC’s second biggest producer. Brent started the year about $6 cheaper.
The rule of thumb favored by many economists is that every $10 increase in the price of a barrel of oil ends up cutting global growth by about 0.2 percentage point. That’s not an inconsequential amount for an already lackluster expansion. The World Bank last week cut its outlook for 2014 global growth to 2.8 percent.
“There is no doubt that, beyond a certain point, higher prices become a major constraint on global economic activity, particularly if the price reflects supply problems rather than buoyant demand,” said Julian Jessop, chief global economist at Capital Economics Ltd. in London.
Net energy importers such as China and Japan would suffer the most from any jump, though exporters in the Middle East would benefit to mitigate growth concerns, according to Neil MacKinnon, a global macro strategist at VTB Capital Plc in London.
More
Half-Price Kurdish Oil Threatens Iraq Breakup With Turkish Help
Jun 18, 2014 10:06 PM GMT
A tanker containing a million barrels of crude oil is floating around the
Mediterranean, and its cargo is available at half-price. Yet if any country
seizes the bargain, it may be pushing Iraq closer to
disintegration. The oil aboard the tanker is at the center of a fight over its ownership between the semi-autonomous region of Kurdistan, which pumped and shipped the crude from its territory in northern Iraq, and the central government in Baghdad, which claims the rights to all oil revenue.
Kurdish Peshmerga armed forces seized on the anarchy in northern Iraq, where militant Islamists routed the Baghdad government’s army last week, to occupy the region’s key oil hub, Kirkuk. The oil dispute has raised the possibility of the Kurdish region achieving financial self-sufficiency to go with those expanding territorial ambitions.
“If that tanker docks, Iraq’s Kurdistan Regional Government will take an important step toward independence and hasten the break-up of Iraq,” said Nihat Ali Ozcan, an analyst at the Economic Policy Research Foundation in Ankara, said by phone June 13.
The potential sale has embroiled Turkey, the conduit for the Kurdish oil, and Iraq in legal arbitration, while the U.S. has sought to dissuade the Kurds from going it alone.
More
http://www.bloomberg.com/news/2014-06-18/half-price-kurdish-oil-threatens-iraq-breakup-with-turkish-help.html
In other news, at the end of the Fed’s largely irrelevant two day meeting yesterday, the Fed’s talking chair said “buy more stocks.” The Fed will press on with its taper, but keep interest rates low forever, and not to worry about anything, “trust me, I’m a central bankster.” Stocks surged. We can only hope that oil doesn’t, and that Iran and Saudi Arabia don’t end up in a hot war, rather than their proxy war as is.
With the Saudis backing and bankrolling ISIS against the Shia, and Iran backing the Shia against the Saudi backed ISIS Caliphate fanatics, so extreme they got tossed out of Al Qaeeda, President Obama has a real dilemma on his hands. Which side to back and why. How they must be loving this in Beijing and Moscow. The Europeans have already gone out on a limb backing Baghdad and Tehran against the ISIS fanatics. If President Obama switches sides to back the Saudis and ISIS, the Europeans limb will come crashing down to earth. Stay tuned for tomorrow’s update on lies and deceit in the desert religious war. Which side will the Washington Crusaders finally back? I don’t know either, but whichever way they go I suspect that the price of oil is going higher.
We end with yet another red flag from China.
Eternal Trust Number 37
-----Despite paying a tempting
9.7 per cent annual interest rate, his product, marketed as “Eternal Trust
Number 37”, is not catching on with investors.
The near-default of other Chinese financial products recently has set off alarms – inside China and in global markets – that the country is in the midst of a dangerous credit bubble.
Mr Qiao admits the Yuncheng heating project will not provide any returns for his company, an unsettling fact for any investor. But he is dismissive that this is the problem.
“All of our investments are public works that should actually be paid for by the local government so when the trust product matures the government should take this project off our hands and give us the money to repay investors,” he says. “Don’t worry, it is impossible for there to be any sort of financial crisis here in Yuncheng.”
more
The near-default of other Chinese financial products recently has set off alarms – inside China and in global markets – that the country is in the midst of a dangerous credit bubble.
Mr Qiao admits the Yuncheng heating project will not provide any returns for his company, an unsettling fact for any investor. But he is dismissive that this is the problem.
“All of our investments are public works that should actually be paid for by the local government so when the trust product matures the government should take this project off our hands and give us the money to repay investors,” he says. “Don’t worry, it is impossible for there to be any sort of financial crisis here in Yuncheng.”
more
"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 Wednesday final figures were: Registered 57.06
Moz, Eligible 118.97 Moz, Total 176.03 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Not your usual Crooks today. Today it’s the
aftermath of America’s botched Kiev coup, that was supposed to force the
Ukraine into NATO and with it slice and dice up Belarus and Putin’s Russia. All
those vast EurAsia natural resources were going to become property of Uncle
Scam and the Chocolate King. Along the way, the hapless Ukrainian serfs are
getting crushed.
“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
Ukraine Faces Backlash as Devaluation Ravages Foreign-Currency Borrowers
Jun 18, 2014 12:33 PM GMT
As central Kiev burned amid deadly street protests in February, Ukraine’s
currency dived and Alex Bukovetskiy stopped paying his dollar-based mortgage. The 41-year-old joined hundreds of angry borrowers at parliament last week to demand the authorities provide relief after the hryvnia lost a third of its value in two months. Payments to Universal Bank on his flat in the capital’s suburbs have jumped 40 percent to $1,250 since President Viktor Yanukovych was toppled.
“I don’t have that kind of money,” Bukovetskiy, who’d been dipping into savings to pay his mortgage after losing his marketing job last autumn, said June 5 by phone. “I’m not hiding from my bank. I’m ready to pay but I want a compromise.”
Six months of political turmoil have rocked Ukraine’s finances, turning the hryvnia into 2014’s worst performer versus the dollar and prompting the government to sign a $17 billion bailout with the International Monetary Fund. Already battling an insurgency in the nation’s east, officials must now decide between placating the borrowers and further undermining the nation’s fiscal position or antagonizing them by doing nothing.
The situation could be worse: Ukrainian banks, which include Dnipropetrovsk-based Privatbank, Russian lenders such as OAO Sberbank (SBER) and foreign institutions such as Raiffeisen Bank International AG (RBI), have been limited to issuing hryvnia-based home loans since the 2008 financial crisis ravaged the economy.
Before that, Ukrainians lured by
cheaper rates had already piled into mortgages denominated in foreign
currencies, which still amount to 48.3 billion hryvnia ($4 billion), or almost
a quarter of total retail lending.
The ratio of banks’
non-performing loans will reach 30 percent this year as credit costs rise,
Moody’s Investors Service predicted in a May report. Ukraine had 81,000
foreign-currency home loans as of May 1, central bank data show.
Some are already feeling the
pinch. Svitlana Miryanova, a 40-year-old mother of two who works as a product
manager for a cosmetics distributor, says her dollar mortgage now swallows 70
percent of her monthly pay check, up from 45 percent before.
“The hryvnia devaluation is
bleeding me dry,” she said.
More
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."
F. A. von Hayek
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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