Baltic Dry Index. 999 +10
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
Time to be out of
all leveraged risk bets, and safely in cash and fully paid up physical precious
metals.
Haul down Old
Glory, “Stars and “Stripes, and move over pipsqueaks China and Japan, last
Friday Uncle Scam just hoisted the biggest Red Flag of all. Thanks to disgraced
“Bubbles” Greenspan, B.S. Bernanke, and the “talking chair,” London School of
(leftwing) Economics, Mrs. Yellen, Titanic America, still the largest national
economy on planet earth, where real live earthlings still live and work, is
still headed for the crash of all crashes, just don’t let on to the Fed’s crony
Squids on Wall Street. Little wonder every Squid is still robbing everything
that isn’t nailed and welded down. The Great Disconnect from reality has
reached the final blow-off phase. A new 1987 or 2008 will eventually arrive,
probably in the traditional crash season of Autumn.
Jobs Friday: What The Bubblevision Revelers Missed
by David Stockman • June 9, 2014
Yes, the nonfarm payroll clocked
in at 138.5 million jobs and thereby retraced for the first time the
point at which it stood 77 months ago in December 2007. This
predictably elicited another “milestone of progress” squeal from
the mainstream media.
So you have to wonder. Did these
people skip history class? Do they understand the vital idea of
“context”? Are they so mesmerized by paint-by-the-numbers agit prop from Wall
Street and Washington that they have come to mindlessly embrace the notion that
any number that is better than the last “print” is all that it
takes—regardless of composition, quality or longer-term trend?
Thus, consider the
ancient days of the Reagan era. Back then there were
actually 15.0 million new jobs by the time that 77 months had elapsed after the June
1982 bottom. And these were honest-to-goodness new jobs that had
never before existed, not born again jobs of the type that
CNBC has made a “jobs Friday” fetish out of ever since the Great
Recession was officially declared over in June 2009.
So if you want to try a
little “context” absurdity recall this. So far we have created
a trifling 100k “new” jobs since the last cyclical peak. During the
equivalent 77 months in the Reagan era the US economy actually generated
150 times more jobs!
----But the larger
point is that each cycle since the 1980s has generated net new jobs,
albeit at a steadily declining rate. The truth of the matter is that we
have now reached the point where no new payroll jobs have appeared for
77 months—which is to say, over the entire span of a historically ordinary
peak-to-peak business cycle. Rather than a cause for celebration, therefore,
the Friday jobs print ought to stand out as a wake-up call.
----Stated
differently, 6-years of ZIRP have left the world’s financial system
booby-trapped with tottering pyramids of debt and rampant carry trades
and financial speculations. Why would this be assumed
to comprise the kind of stable and productive financial environment
that would enable the current business cycle expansion to go on for
years into the future, thereby eclipsing every record from far more stable
times of decades past?
----Taken in broader context, however, the two most recent cycles of first middling job growth during the Greenspan housing bubble and then zero growth during the entire duration of Bernanke’s ZIRP experiment constitute an alarm bell of secular import. After all, since January 2000—when Bill Clinton was enjoying his last days in the Oval Office—the US economy has created only 7.5 million net nonfarm payroll jobs. That amounts to less than 45,000 per month or not even 30 percent of the monthly growth in the pool of the working age population.
That comparison alone points
to a up-coming crisis, but not one of the type imagined by the stock
market cheerleaders on bubblevision. The crisis that we are drifting into owing
to the failure of meaningful economic growth and job creation during this
century is one of fiscal dependency.
----Owing to the lack of job creation since the turn of the century, the number of Americans over 16-years who are not employed has soared, rising from 75 million to 102 million. And that massive gain in the ranks of non-workers is not because the entire baby-boom up and retired. In fact, there are only about 7 million more “retired” Americans on OASI today than there were 14 years ago.
So upwards of 20 million have
tumbled into public and private safety nets. As to the former, the number of
combined food stamp and social security disability recipients(DI)—the
first line of the public safety net—has surged from 23 million in 2000 to in
excess of 60 million today. So one-in-five citizens are already in the public
safety net, and millions more have fallen on private support by moving in with
mom and day, into public shelters or onto the streets.
More
Obama to Expand Program Easing Student Loan Repayments
Jun 9, 2014 3:38 PM GMT
President Barack Obama
will order the Department of Education today to expand a program that would
ease student loan repayments for about 5 million people. Under a 2010 “Pay as You Earn” law, borrowers make repayments of no more than 10 percent of their monthly income. The benefit applies only to those who started borrowing after October 2007, shortly before the recession began. The executive order would widen the eligibility to people who took out loans before October 2007.
The new rules would take effect in December 2015, according to the White House.
“While most students are able to
repay their loans, many feel burdened by debt, especially as they seek to start
a family, buy a home, launch a business, or save for retirement,” the White
House press office said in a statement.
Young voters gave Obama decisive
majorities in his two presidential runs and Democrats are attempting to turn
out that voting bloc for the November congressional elections. With much of his
agenda blocked by the Republican-controlled House, Obama has used executive
actions to bypass Congress on initiatives that appeal to the party’s base.
More
http://www.bloomberg.com/news/2014-06-09/obama-to-expand-program-easing-student-loan-repayments.html
Lean Retirement Faces U.S. Generation X as Wealth Trails
Jun 9, 2014 3:10 PM GMT
Vera Johnson from Seattle
is barely making do, let alone saving for retirement. “I try to remain in the present moment and not live in fear of the future,” said Johnson, who has neither retirement savings nor a college fund for her two children. “My property is underwater, the properties around me are underwater, I’m not building equity in my home.”
The 45-year-old almost lost her home to foreclosure in 2010 after the housing-market collapse in the worst recession since World War II. She embodies the financial challenges facing America’s Generation X, those born between the mid-1960s and 1980, which lags behind other generations in building assets.
Good timing is not the age group’s forte. Many took out mortgages just before prices plunged, making them the most disadvantaged by the housing crisis, while the 2008 stock-market slump dealt them a further setback. Only one-third of Generation X households have more wealth than their parents, even though most earn more, according to The Pew Charitable Trusts.
When their working years end, Gen-Xers might have to live on just half of their pre-retirement income, compared with 60 percent for the Baby Boom generation, Pew said last year.
More
Next, yet another
red flag from China. China gets serious about cracking down on the shadow
economy. The Great China Boom of 1978 – 2012 seems to have come to an end. Getting
what follows next right is the challenge of the next few decades.
Below, China closes
the shadowest window in the shadow economy. Money is going to become
desperately tight in China for months to come, if it’s available at all.
Galaxy Leads Casino Drop as Macau’s Revenue Growth Slows
Jun 3, 2014 9:41 AM GMT
Galaxy
Entertainment Group Ltd. (27) fell the most in almost a month in Hong Kong
trading, leading declines among casino operators as Macau gambling revenue grew
by the slowest in four months. Macau casino revenue rose 9.3 percent to 32.4 billion patacas ($4.1 billion) last month, according to data on the website of the city’s Gaming Inspection and Coordination Bureau. The growth was lower than the median estimate of 14.5 percent from seven analysts surveyed by Bloomberg News.
----Government
limits on gambling tables have slowed capacity growth in Macau, after a 10-year
boom transformed the southern Chinese city into the world’s biggest casino hub.
Growth has also slowed amid concern a government crackdown on unauthorized
debit card transactions made it more difficult for some gamblers to get cash.
More
Macau Further Restricts UnionPay Card Use at Casinos
Jun 10, 2014 5:24 AM GMT
Macau’s government plans to further restrict the use of China UnionPay Co.’s
debit cards at casinos, curbing money flows to the world’s largest gambling hub by making it harder for bettors to buy
expensive items that they exchange for cash. Casino stocks slumped in Hong Kong. The Macau Monetary Authority ordered jewelry stores and pawnshops operating on casino floors to remove their UnionPay card terminals by July 1, according to the head of SJM Holdings Ltd. (880), the city’s biggest gambling company. The banking regulator didn’t reply to e-mails or answer calls seeking confirmation.
“It has come to our knowledge that individual shops in the casinos have received such notification from the Macau Monetary Authority,” SJM Chief Executive Officer Ambrose So said in an e-mail responding to Bloomberg News questions. He said the change won’t affect SJM much, because it doesn’t have any on-premises pawnshops, just watch and jewelry stores.
The planned change may slow Macau’s casino revenue growth, which rose 20 percent in the first quarter to $12.8 billion, about eight times that of the Las Vegas Strip. China has already been cracking down on the use of UnionPay hand-held card swipers within casino resorts as concerns illegal funds are being taken out of the mainland into Macau.
More
In “better” news from China, producer prices fell for a second month. Is global deflation the next horseman to ride in to our Great Disconnect? Another month and it will look like a trend.
China Inflation Quickens to Fastest Pace in 4 Months on Food
Jun 10, 2014 4:48 AM GMT
China’s inflation
accelerated in May to the fastest pace in four months on food costs, while a
decline in factory-gate prices moderated. Consumer prices rose 2.5 percent from a year earlier, the statistics bureau said today in Beijing. That exceeded the median 2.4 percent estimate in a Bloomberg News survey of economists. The producer-price index fell 1.4 percent after a 2 percent decline the previous month.
Inflation below the government’s full-year target of 3.5 percent leaves room for more monetary easing in an economy projected to grow this year at the slowest pace since 1990. While Premier Li Keqiang is resisting broad stimulus, limited loosening includes yesterday’s announcement of a cut in some banks’ reserve requirements from June 16, intended to support agriculture and small businesses.
More
We end for the day
still full of gloom and doom. In the land of the sinking sun, that “sink” is
about to speed up. The Great Nixonian Error of fiat money, that hollowed out
America, spawned the error of the one size fits all euro, and financed the Great Bubble of China, is now
hurtling to a long overdue end. Is this why America is trying to start World
War Three?
“The issue will be whether Japan can attract enough foreign capital to make up for the current-account deficits as countries like the U.S. do.” Some tall order when official government policy is to trash the Yen in a currency war to beggar Japan’s export competitors. How not to win friends and influence people the wrong way.
Japan’s Top Creditor Title at Risk as Surplus End Looms: Economy
Jun 10,
2014 4:53 AM GMT
Japan risks losing its position as the world’s top creditor nation, as dwindling
savings become insufficient to finance growing public debt, a Bloomberg News survey of economists
indicates. A run of current-account surpluses that drove Japan’s net asset position to the largest in the world starting in 1991 is set to reverse, according to 10 of 16 economists in a Bloomberg News survey, with nine projecting sustained deficits by the end of 2020. Japan had net assets of 325 trillion yen ($3.2 trillion) at the end of 2013, with China in second place with 208 trillion yen, according to Japan’s finance ministry.
As an aging population draws down its savings, Japan will become more dependent on foreign creditors to finance its budget deficits and manage the world’s biggest debt burden. A swing to current-account deficits could augur a surge in bond yields as investors reassess the nation’s prospects, and clear the way for China to overtake it as the world’s biggest net creditor.
“Chances are high that China will surpass Japan as early as 2020 in the size of net overseas assets,” said Hidenori Suezawa, a financial market and fiscal analyst at SMBC Nikko Securities Inc. “The issue will be whether Japan can attract enough foreign capital to make up for the current-account deficits as countries like the U.S. do.”
More
Japan PM Shinzo Abe vows to step up efforts to resume commercial whale hunt
Comments to parliament put Japan on collision course with anti-whaling groups
Monday, 09 June, 2014, 12:26pm
Japan’s prime minister told parliament
on Monday he would boost his efforts toward restarting commercial whaling,
despite a top UN court’s order that Tokyo must stop killing whales in the
Antarctic.
Shinzo Abe’s comments put him
firmly on a collision course with anti-whaling groups, who had hoped the ruling
by the International Court of Justice (ICJ) would herald the beginning of the
end for the mammal hunt.
“I want to aim for the resumption
of commercial whaling by conducting whaling research in order to obtain
scientific data indispensable for the management of whale resources,” Abe told
a parliamentary commission.
“To that end, I will step up
efforts further to get understanding from the international community,” he
said.
Abe said that in contrast to the
foreign perception that whaling communities mercilessly exploit the giant
mammals, whaling towns appreciate the meat and show respect to the creatures
with religious services at the end of every hunting season.
More
So some mumbled prayers to Tojo and the gang at the Yasukuni
Shrine make murdering whales ok, apparently. Nice allies the American’s picked
against China.
"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"
Kenneth J. Gerbino
At the Comex silver depositories Monday final figures were: Registered 57.01 Moz,
Eligible 118.80 Moz, Total 175.81 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
After the anti-Chinese
rioting in Vietnam, comes a pretty obvious reaction. Even though it was mostly
Taiwanese firms operating in China that suffered, all Chinese look alike to the
Vietnamese, it’s Taiwan’s big brother that’s reacting. From the tone of the
article below, I expect more trouble in the South China Sea. Both parties seem
up for round two.
State firms barred from Vietnam contract bids
UPDATED : Monday, 09 June, 2014, 7:34am
The government has temporarily
stopped state-owned companies from bidding for fresh contracts in Vietnam,
several sources familiar with the matter said, as the two countries are
embroiled in an increasingly bitter dispute over territorial claims in the
South China Sea.
An official working at a
state-owned enterprise, who asked not to be named, said the group had been
informed of the move on the phone by the Ministry of Commerce.
Three other Chinese contractors
operating in Vietnam have also been told, sources with the firms said.
A member of staff working at the
ministry's bidding permit office confirmed the suspension, but said it was not
known how long the ban might last.
China's economic and commercial
counsellor in Vietnam, Xu Qisong, decined to comment.
Xu Liping , an expert on China's
relations in Southeast Asia at the National Institute of International Strategy
at the Chinese Academy of Social Sciences, said Beijing may be trying to put
economic pressure on Vietnam's government.
"Any measure to enhance
China's investment in Vietnam is inappropriate with the current political
tension," said Xu.
"This is a sign that China
is playing the economic card. How effective will it be? We will have to wait
and see."
Vietnamese and Chinese ships have
been involved in a series of clashes since China set up an oil rig near the
disputed Paracel Islands in the South China Sea last month. Tensions over the
move caused anti-China riots in Vietnam last month.
The Foreign Ministry said in a
statement yesterday that Vietnamese ships had rammed Chinese vessels and
trespassed in Chinese restricted waters 1,416 times by 5pm on Saturday.
China has been Vietnam's biggest
trade partner since 2004
----Some 113 Chinese companies, including electrical and chemical engineering firms, are listed as operating in Vietnam, according to the Business Association of China in Vietnam.
China Southern Power Grid led
investment in the US$1.76 billion Vinh Tan 1 coal-fired power plant last year,
in what is thought to be the biggest contract undertaken by a Chinese company
in Vietnam.
Zhang Jie, another foreign
affairs expert at the Chinese Academy of Social Sciences, said the impact of
the ban on bidding would be limited in Vietnam.
"China is not able to
threaten economic development in Vietnam as the amount of our development work
there is too small," said Zhang.
"Even if Chinese enterprises
bid for projects in Vietnam, in the current conditions the Vietnamese
government wouldn't let Chinese contractors win."
China plans artificial island in disputed Spratlys chain in South China Sea
The move indicates a shift from defence to offence in the East and South China seas
UPDATED : Sunday, 08 June, 2014, 10:32am
China is looking to expand its
biggest installation in the Spratly Islands into a fully formed artificial
island, complete with airstrip and sea port, to better project its military
strength in the South China Sea, a Chinese scholar and a Chinese navy expert
have said.
The planned expansion on the
disputed Fiery Cross Reef, if approved, would be a further indication of
China's change of tack in handling long-running sovereignty disputes from a
defensive stance to an offensive one, analysts said. They said it was seen as a
step to the declaration of an air defence identification zone.
----With recent developments in the South China Sea having again focused the international spotlight on China, the analysts warned reclamation at the Fiery Cross atoll - which China, the Philippines and Vietnam all claim - would further strain Beijing's relations with neighbours.
The proposal to build an
artificial island there had been submitted to the central government, said Jin
Canrong , a professor of international relations at Renmin University in
Beijing. The artificial island would be at least double the size of the US
military base of Diego Garcia, a remote coral atoll occupying an area of 44
square kilometres in the middle of the Indian Ocean, Jin added.
----The reef currently houses Chinese-built facilities including an observation post commissioned by Unesco's Intergovernmental Oceanographic Commission.
Li Jie, a naval expert from the
Chinese Naval Research Institute, said the expanded island would include the
airstrip and port. After the expansion the island would continue to house the
observation post and to provide military supplies and assistance, he said.
A retired People's Liberation
Army senior colonel, who spoke on condition of anonymity, said the construction
of a landing strip on Fiery Cross Reef would allow China to better prepare for
the establishment of an air defence identification zone over the South China
Sea.
More
"The
international monetary order is more precarious by far today than it was in
1929. Then, gold was international money, incorruptible, unmanageable, and
unchangeable. Today, the U.S. dollar serves as the international medium of
exchange, managed by Washington politicians and Federal Reserve officials,
manipulated from day to day, and serving political goals and ambitions. This
difference alone sounds the alarm to all perceptive observers."
Hans F. Sennholz
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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