Baltic Dry Index. 977 +18
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
The
bankster in his mansion,
The
taxpayer at his gate,
Draghi
made them High or lowly,
He disordered
their estate.
With
apologies to All things bright and beautiful.
For more on
monkey business scroll down to Crooks Corner.
Poor Europe,
the ECB doubles down and rolls the dice. Forget Germany, Club Med now runs the
euro. We all know how this ends, just not when. Stay long fully paid up
physical gold and silver. On the continent of Europe, in the casino, it’s free
money for four years for speculation. All are to be Greeks eventually, just don’t
tell the Germans who are busy promoting Jean-Claude Junker to run the EC casino
on speed. With the ECB finally joining the Fed, BOE, BOJ, SNB, PBOC et al, in
the funny money horror show, we have entered the final act in the Great
Nixonian Error of fiat money.
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
Mario Draghi takes historic gamble with negative rates but still stops short of QE
ECB's revolutionary move aims to force banks to pay a charge if they continue to park money for safe-keeping in Frankfurt
The European Central Bank has
become the first of the world’s monetary superpowers to cut its deposit rate
below zero, taking a leap into the unknown as it tries to drive down the euro
and head off deflation.
The bank opened the door to
direct purchases of private assets or quantitative easing, and announced a
€400bn blast of long-term lending at cheap rates for banks.
The benchmark interest rate was
cut to a record low of 0.15pc, tantamount to zero. The revolutionary move was
to lower the deposit rate to -0.1pc, forcing banks to pay a charge if they
continue to park money for safe-keeping in Frankfurt.
“Are we finished? The answer is
no,” said Mario Draghi, the ECB’s president. “If required, we will act swiftly
with further monetary policy easing. The Governing Council is unanimous in its
commitment to using unconventional instruments within its mandate should it
become necessary to further address risks of prolonged low inflation.”
The rate cuts prompted fury in
Germany, where the head of the German Association of Savings Banks, Georg
Fahrenschon, accused the ECB of expropriating savers. “We are tearing a hole in
the pensions of savers. Over time these low rates will destroy the value of
assets,” he said.
Der Spiegel
deemed it was the “end of capitalism”, while Die Welt described Mr Draghi as
Europe’s Bismarck, a near autocrat beyond control. It is a foretaste of what
may happen if the ECB does graduate to QE later this year, once the machinery
is ready.
----In an
extraordinary development, Germany’s finance minister, Wolfgang Schäuble, has
called into question the backstop plan for Italian and Spanish bonds unveiled
with spectacular effect by Mr Draghi two years ago, saying the scheme cannot go
ahead without German consent and “we will not approve of such a programme”. The
comments yet again call into question how far Germany is willing to go keep the
system together.
David Owen, from Jefferies Fixed
Income, said the lending measures offer more than meets the eye and amount to a
mini-bazooka. “Draghi has drawn a line in the sand and is telling us that he is
not going to raise interest rates for four years. This is highly significant,”
he said.
Banks will be able to borrow
€400bn for four years at near zero rates at LTRO (long-term refinancing
operation) auctions in September and December. The magic is in the details.
While the sums are far lower than earlier LTRO auctions, the banks will be able
to tap the ECB for funds equal to 7pc of their private loan book without using
up collateral. “They can get free money for four years so long as they lend it
to the real economy,” he said.
More
Draghi Unveils Historic Measures Against Deflation Threat
Jun 5,
2014 5:07 PM GMT
Mario Draghi unveiled an
unprecedented round of measures to help the European
Central Bank’s record-low interest rates feed through to an economy
threatened by deflation.
More
Below, is QE
forever the problem rather than the cure?
The nagging fear that QE itself may be causing deflation
The way we are going, the whole
world will end up with zero interest rates or some variant of quantitative
easing before long. Such is the overwhelming power of deflation in countries
with burst credit bubbles. Such too is the implication of a global savings rate
that has spiralled to an all-time high of 25pc of GDP, starving the world of
demand.
The European Central Bank looks
poised to cut the discount rate below zero on Thursday, becoming the first of
the monetary superpowers to venture into these uncharted waters. Banks will be
charged to park money in Frankfurt. More than €800bn of money market funds will
sink below the water line, so the funds will go elsewhere.
The chief purpose is to drive
down the euro, an attempt to pass the toxic parcel of incipient deflation to
somebody else.
----Narayana Kocherlakota, the Minneapolis Fed chief, suggested as far back as 2011 that zero rates and QE may perversely be the cause of deflation, not the cure that everybody thought. This caused consternation, and he quickly retreated.
Stephen Williamson, from the St
Louis Fed, picked up the refrain last November in a paper entitled
"Liquidity Premia and the Monetary Policy Trap", arguing that that
the Fed's actions are pulling down the "liquidity premium" on
government bonds (by buying so many). This in turn is pulling down inflation.
The more the policy fails - he argues - the more the Fed doubles down, thinking
it must do more. That too caused a storm.
The theme refuses to go away.
India's central bank chief, Raghuram Rajan, says QE is a beggar-thy-neighbour
devaluation policy in thin disguise. The West's QE caused a flood of hot
capital into emerging markets hunting for yield, stoking destructive booms that
these countries could not easily control. The result was an interest rate
regime that was too lax for the world as a whole, leaving even more economies
in a mess than before as they too have to cope with post-bubble hangovers.
The West ignored pleas for
restraint at the time, then left these countries to fend for themselves. The
lesson they have drawn is to tighten policy, hoard demand, hold down their
currencies and keep building up foreign reserves as a safety buffer. The net
effect is to perpetuate the "global savings glut" that has starved
the world of demand, and that some say is the underlying of the cause of the
long slump. "I fear that in a world with weak aggregate demand, we may be
engaged in a futile competition for a greater share of it," he said.
The Bank for International
Settlements says the world is suffering from addiction to stimulus. "The
result is expansionary in the short run but contractionary over the longer
term. As policy-makers respond asymmetrically over successive financial cycles,
hardly tightening or even easing during booms and easing aggressively and
persistently during busts, they run out of ammunition and entrench instability.
Low rates, paradoxically, validate themselves," it said.
Claudio Borio, the BIS's chief
economist, says this refusal to let the business cycle run its course and to
purge bad debts is corrosive. The habit of turning on the liquidity spigot at
the first hint of trouble leads to "time inconsistency". It steals
growth and prosperity from the future, and pulls the interest rate structure
far below its (Wicksellian) natural rate. "The risk is that the global
economy may be in a deceptively stable disequilibrium," he said.
Mr Borio worries what will happen
when the next downturn hits
More
And on the
other side of the planet, same voodoo economics, same dismal failure. Continental
Europe’s future, worse if America successfully starts a new European war. How did we all end up as slaves to unelected
central banksters and bent politicians?
Abenomics Spurs Most Misery Since ’81 as Senior Scrimps
Jun 6,
2014 6:45 AM GMT
Mieko Tatsunami finds Prime Minister Shinzo Abe’s drive to reflate Japan’s economy hard
to digest. “The price of everything we eat on a daily basis is going up,” Tatsunami, 70, a retired kimono dresser, said while shopping in Tokyo’s Sugamo area. “I’m making do by halving the amount of meat I serve and adding more vegetables.”
Tatsunami’s concerns stem from the price of food soaring at the fastest pace in 23 years after April’s sales-tax increase. Rising prices helped push the nation’s misery index to the highest level since 1981, while wages adjusted for inflation fell the most in more than four years.
With food accounting for one quarter of
the consumer
price index and the central bank looking to drive inflation higher, a
squeeze on household budgets threatens consumption as Abe weighs a further boost in the sales levy.
The prime minister may be forced to ease the pain with economic stimulus, cash
handouts or tax exemptions championed by his coalition partner.
More
Up next,
more on our new lawless age. “Trust me serf, I’m the UK Crown Prosecution Service. Nothing to see
here.” It took nearly 400 years to get
to the freedoms and rights of the 20th century free citizen. It took
9/11 and a mere 13 years in the UK to overthrow them.
Secretary of State John Kerry on Wednesday called National
Security Agency leaker Edward Snowden a fugitive and challenged him to
"man up and come back to the United States."
The trial that has to be heard in secret – and don’t ask why
Politics Last updated: June 5th, 2014The first major criminal trial to be held entirely in secret in UK legal history is set to take place. It was meant to be so secret that you wouldn’t even know it existed, except that the Telegraph and other media organisations challenged the decision in the Court of Appeal. As things stand, however, the public will be prevented from attending proceedings and the press from reporting them.
This much we do know. The case is thought to involve two men, known only as AB and CD, who are accused of possessing terrorist documents, including a file called “bomb making” found on a memory card. AB is charged with making preparations for terrorism and CD with improper possession of a British passport. The Crown Prosecution Service (CPS) has not outlined the argument for total secrecy, save that these are “exceptional circumstances” involving national security.
Is that view correct? The public cannot say, because the CPS is keeping the reasons for secrecy secret. Those hidden reasons may carry significant weight: they were evidently enough to persuade Mr Justice Nicol to put the secrecy orders in place last month in a hearing in the Old Bailey. But are they sufficiently powerful to justify overturning a longstanding tenet of UK law?
Anthony Hudson, for the media, argued that the orders depart from “the principle of open justice” to the extent “that they are inconsistent with the rule of law and of democratic accountability”. In other words, as Lord Hewart’s famous aphorism put it: “Not only must Justice be done; it must also be seen to be done.”
----Still, during three decades of IRA violence, including a concerted attempt to blow up the entire British cabinet in Brighton, a criminal trial has never before been conducted in absolute secrecy. In a few instances, key sections of a case have been heard in camera due to national security issues: one might ask why such measures are deemed impossible here.
The state, brandishing the
security argument, effectively says to citizens: “Trust us absolutely. Don’t
ask, don’t look. We know best how to protect you.”
----What worries many people, within our legal establishment and beyond, is that the secrecy bid comes as the wider fabric of UK justice is under both ideological and practical threat. Chris Grayling, the Justice Secretary, is the first Lord Chancellor who is not a lawyer, and he has so far shown little respect for the fundamental principles that have long underpinned our justice system.
He has restricted or abolished
the access of ordinary individuals to legal aid in many civil cases,
paradoxically resulting in an explosion of “litigants in person” prolonging
costly court sittings. He has ended up in long-running open hostilities with
the independent criminal bar and solicitors. At the same time, the smooth
operation of courts is regularly stalled by equipment breakdowns and no-shows,
resulting in part from schemes such as the disastrous government outsourcing of
court interpreters’ work to the private firm Capita.
Secrecy and justice have never
been natural bedfellows, and the trouble with pleas for “exceptional
circumstances” is that, once allowed, they tend to re-occur. Next year will
herald the 800th anniversary of the sealing of Magna Carta at Runnymede.
Perhaps, before then, our politicians should read it again.
We end for
the day with the latest research from SoCal. Judging by the rapidly expanding population
of GB, I have my doubts that this will be of much use here.
Fasting for two days can regenerate entire immune system, study finds
A person's entire immune system can be rejuvenated by fasting for as little as three days as it triggers the body to start producing new white blood cells, a study suggests
Fasting for as little as three
days can regenerate the entire immune system, even in the elderly, scientists
have found in a breakthrough described as "remarkable".
Although fasting diets have been
criticised by nutritionists for being unhealthy, new research suggests starving
the body kick-starts stem cells into producing new white blood cells, which
fight off infection.
Scientists at the University of
Southern California say the discovery could be particularly beneficial for
people suffering from damaged immune systems, such as cancer patients on
chemotherapy.
It could also help the elderly
whose immune system becomes less effective as they age, making it harder for
them to fight off even common diseases.
The researchers say fasting
"flips a regenerative switch" which prompts stem cells to create
brand new white blood cells, essentially regenerating the entire immune system.
"It gives the 'OK' for stem
cells to go ahead and begin proliferating and rebuild the entire system,"
said Prof Valter Longo, Professor of Gerontology and the Biological Sciences at
the University of California.
"And the good news is that
the body got rid of the parts of the system that might be damaged or old, the
inefficient parts, during the fasting
More
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Ex-Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. Next EC President!
At the Comex
silver depositories Wednesday
final figures were: Registered 57.02 Moz, Eligible 118.72 Moz, Total 175.74 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Some things are so good that you just have to
share. The poor vet below probably got the shock of life, when the gorilla turned
around and swore and cursed at him in Spanish, and made unkind remarks about
his parentage. On the upside, at least the “gorilla” was only shot in the foot.
No word yet if David Attenborough was on hand to film the gorilla escapade. It’s
an odd sort of life in continental Europe. Now if only we could shoot those
lose gorillas in our central banks. Man in gorilla suit shot with tranquilliser dart at Tenerife zoo
A man is recovering in hospital after being shot with a tranquilliser dart when he was dressed as a gorilla at a zoo
Frantic zoo keepers in Tenerife
rushed to call an ambulance after a vet shot a tranquilliser dart at a man
dressed as a gorilla.
Police on the Spanish island
received a call from a panicked member of the public, who said that a gorilla
had escaped from its pen in Loro Park zoo, and was seen running around the
theme park.
A vet was called, and on spotting
the creature fired a tranquilliser dart at its foot with enough sedative to
fell a 200kg beast.
But to his
horror, the vet realised that the creature was in fact an employee of the zoo,
dressed in a gorilla suit, who was staging a mock escape to practise their
emergency routines.
The 35-year-old man was taken to
the island's University Hospital after the shooting, which happened at 11.40am
on Monday.
He was said to be in a serious
condition, having suffered an allergic reaction to the tranquilliser, but was
expected to make a full recovery.
(Update: the zoo now denies the
worker was wearing a gorilla suit, so the vet apparently just shot a zoo worker
for the hell of it, while a panicked member of the public was just having a bad
drugs day. Tenerife anyone?)
Q:
What kind of a key opens a banana?
A: A
monkey!
Another weekend, D-Day plus one and plus two, seventy years on. In Washington the War Party seems to have learned nothing, desperate to start World War Three using the Ukraine. Have a great summer weekend everyone. Only 16 days to the summer solstice.
Another weekend, D-Day plus one and plus two, seventy years on. In Washington the War Party seems to have learned nothing, desperate to start World War Three using the Ukraine. Have a great summer weekend everyone. Only 16 days to the summer solstice.
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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