Baltic Dry Index. 1004 +05
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Ludwig
von Mises. Omnipotent Government.
What could possibly go wrong? Nothing, is the
answer according to our QE Forever, central bankster promoted, bubble stock
markets. The real world is totally irrelevant, it’s all about getting free
money to speculate in ever more dangerous risk. Should something go wrong, Wall
Street and the City’s Squids, are betting that the central banksters will have
no choice but to bail them out once again. The Squids think that they have the
banksters over a barrel. Besides, once on ZIRP and QE Forever, forever really
is forever, they reason, reversing either, brings on the very crash both were
started to avoid. Ignore Fear, buy Greed.
Below, some of the things in the real world,
starting to go wrong. Stay long fully
paid up physical precious metals. If a bailout follows the next Lehman, fiat
currency will be massively debased setting off a giant fiat money inflation.
Without another bailout, the financial system as we know it will simply cease
to exist. Of course, if the American War Party actually manage to set off World
War Three against Russia, or China, or both, the state of the global financial
system and its fiat currencies will be the least of our worries, but the Squids
and the banksters are betting it won’t happen. The Flash Boys at Goldie too, who
are betting on ZIRP reaching 4 percent by the end of 2018, just 4 years away.
What could possibly go wrong?
World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start
Jun 11, 2014 5:00 AM GMT
The World Bank cut its global growth forecast amid weaker outlooks for the
U.S., Russia and
China, while
calling on emerging markets to strengthen their economies before the Federal
Reserve raises interest rates. The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered. The setbacks may be temporary: the 2015 estimate for world economic growth was unchanged at 3.4 percent.
----In the report, the World Bank warned
emerging markets that the next bout of financial unrest may catch them off
guard, recommending smaller budget deficits, higher interest rates and measures
to boost productivity.
----The bank cut its 2014 forecast for Russia’s growth to 0.5 percent from a January prediction of 2.2 percent. It sees Ukraine contracting 5 percent.
“A sharp escalation of tensions
in Ukraine poses acute risks to the global economy,” according to the report.
“These could operate through a number of channels,” including through commodity
and financial linkages.
More
ECB creating ‘dangerous’ bubbles: German think tank
The policy actions announced by
the European Central Bank last week received major criticism on Tuesday, with
the head of influential German think tank ZEW detailing his concerns about
surging asset prices which he says are creating dangerous bubbles.
Clemens Fuest, from the
Mannheim-based organization best known for its widely-watched economic
sentiment index - told German business daily Handelsblatt that the euro zone
region could be at a "turning point."
"I've got a bad feeling
about this...I am concerned by the danger that the ECB is producing new bubbles
with its policy of cheap money," he told the newspaper.
"We have all the ingredients
of a bubble: The prices of real estate and stock markets continue to rise, and
on the bond markets, yields are falling despite high risks."
Fuest told Handelsblatt he now
believes that there is a 95 percent probability that a quantitative easing
program - under which government bonds are purchased - will be launched further
down the road as last week's stimulus measures will be deemed as insufficient.
This asset purchase program, he
said, would potentially be the tipping point and lead stock markets and other
asset classes into dangerous territory. The purchase of government bonds would
only be acceptable if the ECB explicitly claimed senior status relative to
private bondholders, he said, and were exempt from any writedown in case of an
asset's devaluation.
"To overcome the crisis,
governments in Europe must act, the ECB alone cannot cope," he added,
implying that governments need to continue with structural reforms to stimulate
their own economies.
More
Goldman Shuns ‘New Neutral’ After Doubting ‘New Normal’
Jun 10, 2014 3:58 PM GMT
Goldman Sachs Group Inc. didn’t buy the “new normal” and it’s not rushing to
embrace the “new neutral” either. Goldman Sachs economists led by Jan Hatzius and Dominic Wilson are questioning the bet made last month by investor Bill Gross that Federal Reserve monetary tightening will be much less aggressive than in the past -- when it comes.
“We do not disagree that the Fed funds rate will on average be at least modestly lower over the next 20 years than it was over the 20 years preceding the crisis,” New York-based economist Kris Dawsey wrote in a June 6 report. “We lean towards the view that the difference will not be drastic.”
----Using
bond yields and surveys of forecasters, Dawsey reckons investors anticipate a
neutral rate of 3.8 percent, in line with the 4 percent projected by Fed
officials. While Goldman Sachs still doesn’t expect the Fed to begin raising
before 2016, it predicts the key rate will reach 4 percent at the end of 2018.
More
There was bad news from China too, though we are spoiled for choice this morning. From hoarding oil, driving the crude price higher, helping Russia beat off the west’s token sanctions, to a slowing economy, to building their own Chinese version of Diego Garcia in the South China Sea, to setting out to rein in Hong Kong lest America use it as a Trojan Horse Kiev style, the news out of China today all suggest a coming clash with you know who.
China’s Record Oil Hoarding Seen Keeping Crude Above $100
Jun 11, 2014 6:41 AM GMT
China is hoarding crude at the fastest pace in at least a decade, shielding
itself from supply disruptions and helping keep prices above $100 a barrel. The country imported a record volume in April as it emulates steps taken by the U.S. in the 1970s to create a strategic petroleum reserve, government data show. Chinese President Xi Jinping is building stockpiles as his nation clashes with Vietnam over resources in the South China Sea and faces potential risks to oil sales from Russia, Africa and the Middle East because of sanctions and violence.
The purchases are helping drive oil prices higher, according to Barclays Plc, Citigroup Inc. and Nomura Holdings Inc. As China’s thirst for crude grows with the expansion of its emergency stockpiles and refining, the International Energy Agency estimates that the Asian nation is poised to surpass the U.S. as the world’s largest oil consumer by 2030.
“This
panicked stockpiling is one of the ways that geopolitical tensions can actually
tighten physical oil markets,” Seth Kleinman, a London-based analyst at
Citigroup, said yesterday by e-mail. “This buying spree is partly driven by the
infrastructure needs of China’s ongoing refinery expansion, but also reflects
the rise in geopolitical tensions.”
More
http://www.bloomberg.com/news/2014-06-11/china-s-record-oil-hoarding-seen-keeping-crude-above-100.html
PBOC Widening Reserve Cuts Signaled by Negative Spread
Jun 10, 2014 5:00 PM GMT
China’s interest-rate swaps are trading below sovereign bond yields,
reflecting expectations that this week’s targeted reserve-requirement ratio
cuts will be followed by broader monetary easing. The spread between two-year yields and the interbank swap rate narrowed 97 basis points this quarter and slid below zero on May 22, an unusual phenomenon as swaps bear counterparty default risks. The last time the gap was negative was on the eve of comprehensive RRR reductions in early 2012. The People’s Bank of China announced on June 9 that it will cut the ratio only for city commercial banks and small rural lenders.
Forecasts for the slowest economic growth since 1990 are putting pressure on the PBOC to reverse tightening policies aimed at cooling the property market that drove benchmark money market rates to a record a year ago. An RRR cut for all banks could unlock about 500 billion yuan ($80 billion) of financing, five times more than this week’s targeted measures, Everbright Securities Co. estimates.
----The State Council, or cabinet, is looking to spur credit growth that eased to the slowest pace in more than eight years in April. Long-end rates have remained elevated, curbing loan demand, while higher returns offered by wealth-management products and online funds have pushed up banks’ financing costs, Xu said. China’s 10-year sovereign bond yield averaged 4.41 percent this year, compared with 3.83 percent in 2013.
more
http://www.bloomberg.com/news/2014-06-10/pboc-widening-reserve-cuts-signaled-by-negative-spread.html
China Building Dubai-Style Fake Islands in South China Sea
Jun 11, 2014 2:59 AM GMT
Sand, cement, wood and steel are the latest tools in China’s
territorial arsenal as it seeks to literally reshape the South China Sea. Chinese ships carrying construction materials regularly ply the waters near the disputed Spratly Islands, carrying out work that will see new islands rise from the sea, according to Philippine fishermen and officials in the area. China’s efforts are reminiscent of Dubai’s Palm resort-style land reclamation, they say.
“They are creating artificial islands that never existed since the creation of the world, like the ones in Dubai,” said Eugenio Bito-onon, 58, mayor of a sparsely populated stretch of the Spratlys called Kalayaan, or “freedom” in Filipino. “The construction is massive and nonstop. That would lead to total control of the South China Sea,” Bito-onon said May 28, citing fishermen.
Artificial islands could help China anchor its claims and potentially develop bases to control waters that contain some of the world’s busiest shipping lanes. China, which says the area falls within its 1940s-era “nine-dash line” map, successfully assumed control of the Scarborough Shoal from the Philippines in 2012 and has pressured Vietnam in the past month with an exploration oil rig in waters claimed by its neighbor.
“China’s end game is to have de facto -- if not de jure -- control over adjacent waters, the Western Pacific,” said Richard Javad Heydarian, a political science lecturer at the Ateneo de Manila University. “The only question is if and how it will achieve it. China might need to consider more coercive measures to do so given the hardening resistance of other claimant states.”
More
Hong Kong Democracy Protest Plan Worries Foreign Businesses
Jun 11, 2014 5:05 AM GMT
The Canadian,
Indian and Italian chambers of commerce in Hong Kong joined brokers and
executives in opposing a planned pro-democracy protest, publishing a letter
that said the demonstrations may “cripple” businesses. Organizers of Occupy Central, who are threatening to bring the business district to a standstill with protests if their demands for universal suffrage aren’t met, should rethink their plans and argue their case through other channels, the foreign chambers said in a quarter-page advertisement in the South China Morning Post newspaper today.
“We respect the fact that politics is part of community life here,” the groups said, “However, we cannot, and should not, sit idly by when political actions threaten to disrupt general business activity and with it, the livelihoods of Hong Kong’s workers and their families.”
Their comments come a day after China’s State Council, its cabinet, issued a white paper asserting national interests above those of Hong Kong, saying some people are “confused or lopsided” in their understanding of the autonomy conferred on the southern city by the Chinese government.
More
Since I’m often
accused of being too old fashioned i.e. negative, I did start out in the 60s
before the age of fiat money, central banksters, and casino capitalism, I’ll
end for the day with good news, below the
UK economy is booming. Of course the UK may only last until September 18th,
when those dour whinging Scots get to vote on turning down England’s subsidy, and
as only the second largest economy in the EU, it’s Berlin and Brussels that
dictate to all the lesser peoples of Europe including the UK.
Still most people
in the world can still find the UK on the globe, which is something, even if it’s
usually because at some time in our past we’ve made war on them. But enough of
the good old days.
U.K. Industrial Output Rises Most Since 2011
Jun 10, 2014 10:50 AM GMT
U.K. industrial
production rose for a third month in April, driving the annual increase to
the biggest since 2011. Output rose 0.4 percent from March, when it gained a revised 0.1 percent, the Office for National Statistics said today in London. That matched the median of 29 estimates in a Bloomberg survey. From a year earlier, output surged 3 percent.
Industry surveys indicate the economy continued to expand this quarter, with Markit Economics saying last week that its gauges show Britain is on track to grow 0.8 percent. Some Bank of England officials have said their decision to keep the benchmark interest rate at a record-low 0.5 percent is becoming “more balanced” as the recovery gathers pace.
The
annual gain in production would have been even bigger were it not for a sharp
drop in electricity and gas output. While that rose 3.7 percent on the month,
it was down 11.5 percent from a year earlier. The annual drop was partly
related to warmer weather this year and knocked about 1 percentage point from
industrial production.
More
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig
von Mises.
At the Comex silver depositories Tuesday final figures were: Registered 57.06 Moz,
Eligible 119.54 Moz, Total 176.60 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Not your usual suspects today, although “U-turn”
Dave made an appearance yesterday. English schools are to be forced to teach
“British values.” That would be the modern UK bankster values of rigging
everything under the sun. Demanding bailouts for bankrupting GB, but still
keeping unearned telephone number bonuses. Everyone north of Birmingham signing
on for benefits, to spend on cigs, betting, and drugs., plus hols on the Costa
del Sol.
And speaking of the
Costa del Sol, who is going to teach “British values” to the UK’s modern, strike
prone, “professional,” socialist teachers?
Cameron backs plans to teach 'British values' in schools
5 hours ago
David Cameron has said he backs plans to place a greater emphasis on British
values in schools throughout England. He said the Education Secretary Michael Gove was right to call for teachers to focus on ideas of freedom, tolerance and respect for British institutions.
The comments come in the wake of investigations into an alleged plot by hardline Muslims to take over a number of schools in Birmingham.
Teachers in a 'drunken brawl' on school trip to Barcelona
Pupils at Stanley Park High School were left terrified as their supervisors allegedly came to blows after a drunken night out in Spain
Teachers leading a school trip to
Barcelona are under investigation after an alleged drunken night out ended in a
brawl that frightened pupils and left one member of staff with a black eye.
Pupils from Stanley Park High
School in Carshalton, south London, travelled to the Spanish city on a
week-long sports tour during their half-term break in May.
A total of 75 boys and girls
competed in football and netball matches, visited the Nou Camp - the home of
Barcelona FC - and relaxed with a trip to the local waterpark.
But according to reports, the
£700-per-person trip was ruined when the teachers tasked with supervising the
tour got drunk, allegedly leaving one sick pupil without her medication.
Parents have said the unnamed
guardians then started fighting in front of the children, shouting offensive
comments at each other and leaving one with a black eye.
It is believed the trip was lead
by five members of staff from the school's 'performance' department, which
specialises in drama, dance, media, music and physical education.
The head of the department, Paul
Stapleton, declined to comment but the school has launched an investigation
into the incident, which it described as “extremely serious”.
One parent whose child was on the
trip said the fight broke out between teachers just before the end of the
holiday on May 29, while the group were staying at Hotel Samba in Lloret de
Mar.
She said: "My child sent me
a text message saying how scared she was to go to sleep because there were
drunk teachers fighting.
"She said they were all
teachers and were calling each other very rude words.
"They hit each other and the
students were all very scared. One teacher came away with a black eye"
More
I can only hope that these degenerate “in loco parentis” drunks, get
named, shamed, and fired, before prosecution for being in breach of their duty
of care under the Children Act 1989, and
the school under the Health and Safety at Work Act 1974, for endangering minors. Sadly
it’ll never happen in dumbed down, modern, lawless, formerly Great, Britain. No
word yet from the teaching unions about their band of drunks. The parents
should sue these bums and the school for the cost of the trip.
“The
U.S. government has a technology, called a printing press (or, today, its
electronic equivalent), that allows it to produce as many U.S. dollars as it
wishes at essentially no cost…We conclude that under a paper-money system, a
determined government can always generate higher spending and hence positive
inflation.”
Dr.
Ben Bernanke 2002. Still trying 2008 -2014.
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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