Baltic Dry Index. 732 +05
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The boom can last only as long as the
credit expansion progresses at an ever-accelerated pace. The boom comes to an
end as soon as additional quantities of fiduciary media are no longer thrown
upon the loan market...”
Ludwig Von Mises
Today I must go off to arrange a funeral, so today’s
update is briefer than most. Up first a disgraced fallen former economic central bank guru issues a
warning about what happens next.
"Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."
Alan Greenspan
July 24, 2014, 8:44 a.m. EDT
Greenspan says bubbles can’t be stopped without ‘crunch’
Former Fed chairman worries about false dawns and the looming Fed exit
WASHINGTON (MarketWatch) — Former
Federal Reserve Chairman Alan Greenspan has always been a student of the
economy. Since the financial crisis, he’s become a student of human nature.
Sitting in his office with a view
of the Washington Monument in the distance, Greenspan is eager to share the
insight distilled in his recent book, “The Map and the Territory,” due out in
paperback this fall.
Greenspan, 88, who was chairman
of the U.S. central bank for more than 18 years, from 1987 to 2006, managed to
steer the economy through multiple crises, mainly by slashing rates and remaining
upbeat. He suffered a remarkable fall from grace after leaving office and has
apologized for trusting big banks too much. He has since gone back and
re-examined his views on the economy.
Greenspan, now the president of
Greenspan Associates LLC, an economic consulting firm, spoke to MarketWatch
about the current stance of Fed policy, the economy and what to do about asset
bubbles. The economy will do all right in the near term, he said, buoyed by a
strong equity market, but he added that he remains worried that we could be
facing another false dawn.
The interview has been edited for
length and clarity
MarketWatch: What is the biggest challenge
facing the Fed?
Greenspan: How to unwind the huge increase
in the size of its balance sheet with minimal impact. It is not going to be
easy, and it is not obvious exactly how to do it.
MarketWatch: As the Fed is looking at the
exit, do you think we can get through this without upsetting the economy?
Greenspan: I certainly hope so. I certainly
think they will. But it is going to be difficult.
MarketWatch: Do you expect a sharp market
reaction to the first hike?
Greenspan: Of course. Look what happened
when the first indication of tapering occurred. Markets have always been
sensitive. They reflect animal spirits.
More
More on the rush to US ordered economic suicide.
How many unemployed Brits and youth is enough for America’s War Party? Uncle
Scam ups his rhetoric against Russia, but looks impotent in Gaza. Russia prepares to retaliate against
sanctions for the botched US illegal coup in Kiev. It’s all getting very ugly
as Russia starts playing by America’s rules.
Russia threatens to hit British companies in 'retaliation' for sanctions
Putin could seize assets of British oil companies, Russian diplomat warns, as war of words over sanctions intensifies
Russia has issued a threat to
seize the assets of British companies including BP and Shell as a retaliation
against David Cameron’s demand for tough sanctions.
In a mounting war of words, a
senior diplomatic source claimed Moscow would “fight back” against any
industry-wide EU sanctions by putting British companies working in Russia oil
on the frontline.
“We want friendly relations. We
will go along as far as we can. Then we will retaliate,” the figure said
The official measures will
include seizing the assets of British firms, adding: “BP and Shell have a lot
of assets in Russia.”
The two firms have major
partnerships with Russia energy firms Gazprom and Rosneft
In March, senators loyal to Mr
Putin proposed freezing the assets of European and American companies in
Russia, in response to Western sanctions imposed on Kremlin figures responsible
for the annexation of Crimea.
The regime has previously seized
major companies belonging to Putin’s political enemies on trumped-up charges.
However, the sabre-rattling will
surprise British industry, as Russia badly needs foreign investment in its
creaking energy industry. More than half the state’s revenue comes from oil and
gas and Putin is thought to be reluctant to turn off the taps to foreign
customers.
Alexander Yakovenko, the Russian
ambassador, distanced himself from the threat and insisted BP and other British
firms would remain be “comfortable” in his country.
But in a combative press
conference, he warned of a new economic collapse if Western sanctions went
ahead, saying they “may well trigger the long-anticipated end-game of the
present global crisis.”
He suggested the downing of
Malaysia Airlines flight MH17 was a conspiracy aimed at “framing up Russia that
went terribly wrong”.
More
U.S. Says Russia Firing Artillery Into Ukraine
Jul 24,
2014 11:39 PM GMT
The U.S. said Russia
is firing artillery across its border into Ukraine, the first time American
officials have publicly alleged such direct participation in fighting on behalf
of separatists. “Russia is firing artillery from within Russia to attack Ukrainian military positions,” State Department spokeswoman Marie Harf told reporters today in Washington, offering no evidence for what she described only as information “from our intelligence friends.”
The allegations are at odds with Russian denials that the country is aiding the pro-Russian rebels fighting the Ukrainian government in eastern Ukraine. Questions about Russia’s role have grown since the downing of a civilian plane on July 17, killing all 298 passengers and crew members.
The U.S. has said that a surface-to-air missile fired from territory held by the rebels in eastern Ukraine shot down the plane, while stopping short of alleging direct involvement by Russia.
More
Shelling of UN Gaza Shelter Kills 16 as Truce Talks Stall
Jul 24, 2014 11:53 PM GMT
Palestinian officials said 16 people were killed in a shelter run by the
United Nations in northern Gaza, as diplomatic efforts intensified to end the
fighting between Israel
and Hamas. Seven children were among the dead at the United Nations Relief and Works Agency refuge in the town of Beit Lahia yesterday, Ashraf al-Qedra, spokesman for the health ministry in Gaza, told reporters. UNRWA spokesman Chris Gunness confirmed on Twitter that the facility had been hit, and said there were “multiple dead, injured.” Details of the attack weren’t immediately clear, and the Israeli army said it’s investigating.
UN
Secretary-General Ban Ki-moon, who said he was “appalled” by the incident, and
U.S. Secretary of State John Kerry are among international diplomats working in
the region to end 17 days of fighting that has killed almost 800 Palestinians
and 34 Israelis. The conflict deepened last week when Israel added to its air
bombardment by sending troops into Gaza, ruled by the Islamist group Hamas. Egypt, the
traditional mediator in Gaza, is also involved in talks.
More
In less reported news, is America’s west entering a
multi-generational drought? What happens next to Sin City if it is?
July 24, 2014 7:50 pm
Drought drains critical US water supply
By Pilita Clark, Environment Correspondent
A huge volume of fresh water has disappeared from the drought-struck south
west of the US in the past decade in what researchers say is a startling sign
of the fragility of one of the country’s most important water supplies.
Almost 65 cubic kilometres of water has been lost since
late 2004 from the Colorado River Basin, an area
roughly the size of France that is a vital but heavily used source of water for
more than 30m people and 4m acres of farmland.
The amount lost was nearly double the volume of the Colorado River’s Lake Mead, the largest man-made reservoir in the US, according to a study by scientists using data from Nasa satellites that can measure changes in water levels.
“This is a lot of water to lose. We thought that the picture could be pretty bad, but this was shocking,” said the study’s lead author, Stephanie Castle, a water resources specialist at the University of California, Irvine.
More than 75 per cent of the loss was due to the rapid depletion of groundwater from underground aquifers that many farmers depend on for irrigation, especially during droughts like the one that has afflicted parts of the south west for the last 14 years.
The researchers found the rate of decline of groundwater, much of which is non-renewable and poorly managed, was roughly six times greater than the losses in Lake Mead and Lake Powell, another large reservoir further upstream on the Colorado River.
“Groundwater is already being used to supplement the gap between surface water supply and basin water demands,” said study co-author, Jay Famiglietti, adding the study revealed a surprisingly high and prolonged reliance on groundwater to bridge the gap between demand and supply.
“The water security of the western United States may be at
greater risk than is fully appreciated,” he said.
Lake Mead, Las Vegas’s main source of water, has been a highly visible victim of the drought. Its levels have fallen so much for so long that it has a prominent white ‘bathtub ring’ of exposed rock around its edges.
It has been falling by a foot a week in recent months and earlier
this month fell to its lowest level since it was
formed in the 1930s by the construction of the Hoover Dam.
More
In European news, it’s nearly time to turn out the
lights in number two euroland economy France. Too big to fail or bail, France
is rapidly approaching that fail. It would be suicidal of France to impose real
sanctions on Russia because of America’s botched and ill thought out coup. German
led Euroland is approaching it’s Waterloo.
French Manufacturing Contracts in Sign of Sluggish Recovery
Jul 24, 2014 8:00 AM GMT
French manufacturing contracted in July at the fastest pace this year in a
sign that the euro area’s second-largest economy is struggling to gather pace. A Purchasing Managers Index for the manufacturing industry fell to 47.6 from 48.2 in June, London-based Markit Economics said today. That’s the lowest since December 2013 and the third straight reading below 50, the mark that signals contraction. Economists had forecast a decrease to 48, according to a Bloomberg News survey.
The French economy stagnated in the first three months of this year, compared with a 0.2 percent expansion in the 18-nation euro area. Second-quarter gross-domestic-product data are due on Aug. 14, and will be a key element in the European Central Bank’s assessment of the state of the economy.
France’s PMI data “remain consistent with quarterly GDP close to stagnation levels as the economy continues to show little sign of turning around its recent sluggish performance,” said Jack Kennedy, senior economist at Markit. Weakness in the manufacturing industry “offset a small improvement in services,” he said
More
We close for the week with Abenomics dying. What comes
next is likely a big slump and yet another global wobble.
Slower Japan Inflation Highlights BOJ’s Reflation Task: Economy
Jul 25, 2014 5:28 AM GMT
Japan’s inflation slowed in June, highlighting the task Bank of Japan
Governor Haruhiko Kuroda faces in reaching the bank’s target. Consumer prices excluding fresh food rose 3.3 percent from a year earlier after a 3.4 percent gain in May, the statistics bureau said today in Tokyo. The increase matched the projection in a Bloomberg News survey of 32 economists.
Kuroda has said inflation will ease in coming months before accelerating later this year toward the BOJ’s 2 percent goal, which strips out the effects of a sales-tax increase in April. As the impact of the yen’s slide on prices fades, some economists say the central bank may add stimulus should price gains drop below 1 percent -- a level Kuroda forecast they wouldn’t break.
“There are factors that will reduce upward pressure on prices, challenging the BOJ’s projection,” Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo, said after the report. “Exports are weak, the recovery in consumption has been slow and real incomes aren’t growing. The situation is quite severe.”
The BOJ estimated the 3 percentage point increase in the sales levy added 2 percentage points to core inflation in May.
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. EC President
At the Comex silver depositories Thursday final figures were: Registered 58.15
Moz, Eligible 116.84 Moz, Total 174.99 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, the by now infamous double standard of
western spin. Why are Iranian dead children worth less than European dead
children? They’re not of course, unless they’re western or Israeli “collateral
damage.” But how do we stop the endless
cycle of hatred and violence?
“The Germans [your nation here] outside
looked from America to Russia, and from Russia to America, and from America to Russia
again; but already it was impossible to say which was which.”
With apologies to George Orwell and
Animal Farm.
Everyone seems to have forgotten the time the U.S. shot down a passenger jet, killing 290, and then tried to cover it up
Fred Kaplan, Slate Thursday, Jul. 24, 2014
Fury and frustration still mount
over the downing of Malaysia Airlines Flight 17, and justly so. But before
accusing Russian President Vladimir Putin of war crimes or dismissing the
entire episode as a tragic fluke, it’s worth looking back at another doomed
passenger plane—Iran Air Flight 655—shot down on July 3, 1988, not by some
scruffy rebel on contested soil but by a U.S. Navy captain in command of an
Aegis-class cruiser called the Vincennes.
A quarter-century later, the
Vincennes is almost completely forgotten, but it still ranks as the world’s
seventh deadliest air disaster (Malaysia Airlines Flight 17 is the sixth) and
one of the Pentagon’s most inexcusable disgraces.
In several ways, the two
calamities are similar. The Malaysian Boeing 777 wandered into a messy civil
war in eastern Ukraine, near the Russian border; the Iranian Airbus A300
wandered into a naval skirmish—one of many clashes in the ongoing “Tanker War”
(another forgotten conflict)—in the Strait of Hormuz. The likely pro-Russia
rebel thought that he was shooting at a Ukrainian military-transport plane; the
U.S. Navy captain, Will Rogers III, mistook the Airbus for an F-14 fighter jet.
The Russian SA-11 surface-to-air missile that downed the Malaysian plane killed
298 passengers, including 80 children; the American SM-2 surface-to-air missile
that downed the Iranian plane killed 290 passengers, including 66 children.
After last week’s incident, Russian officials told various lies to cover up
their culpability and blamed the Ukrainian government; after the 1988 incident,
American officials told various lies and blamed the Iranian pilot. Not until
eight years later did the U.S. government compensate the victims’ families, and
even then expressed “deep regret,” not an apology.
As
the Boston Globe’s defense correspondent at the time, I reported on the
Vincennes shoot-down, and I have gone back over my clips, chronicling the
official lies and misstatements as they unraveled. Here’s the truly dismaying
part of the story. On Aug. 19, 1988, nearly seven weeks after the event, the
Pentagon issued a 53-page report on the incident. Though the text didn’t say so
directly, it found that nearly all the initial details about the shoot-down—the
“facts” that senior officials cited to put all the blame on Iran Air’s
pilot—were wrong. And yet the August report still concluded that the captain
and all the other Vincennes officers acted properly.
For example, on July 3, at the
first Pentagon press conference on the incident, Adm. William Crowe, chairman
of the Joint Chiefs of Staff, said that the Iranian plane had been flying at
9,000 feet and descending at a “high speed” of 450 knots, “headed directly” for
the Vincennes. In fact, however, the Aug. 19 report—written by Rear Adm.
William Fogarty of U.S. Central Command—concluded (from computer tapes found
inside the ship’s combat information center) that the plane was “ascending
through 12,000 feet” at the much slower speed of 380 knots. “At no time” did
the Airbus “actually descend in altitude,” the report stated.
When I pointed out this
discrepancy at the press conference where the report was handed out, Secretary
of Defense Frank Carlucci waved me away and said, “It’s really questionable
whether a different reading would have affected the judgment” to shoot down the
plane. (I still find this astonishing.)
There were other equally
disturbing discrepancies between Crowe’s July 3 press conference (which struck
me as suspicious even at the time) and Fogarty’s Aug. 19 report. Crowe had said
the plane was flying “outside the prescribed commercial air route”; the report
said it was flying “within the established air route.” Crowe had said the
plane’s transponder was “squawking” a code over the “Mode 2” military channel;
the report stated that it was squawking over the “Mode 3” civilian channel.
Crowe had said the Vincennes issued several warnings; the report confirmed
this, but noted, “Due to heavy pilot workload during take-off and climb-out,
and the requirement to communicate with” two air traffic control centers, the
pilot “probably was not monitoring” the international air-distress channel.
Adm. George B. Crist, head of
U.S. Central Command, issued a “non-punitive letter of censure” to the ship’s
anti–air warfare officer, but Secretary of Defense Carlucci withdrew the letter.
Not only that, but two years later, Capt. Rogers was issued the Legion of Merit
“for exceptionally meritorious conduct in the performance of outstanding
service” as the Vincennes’ commander “from April 1987 to May 1989.”
One more shocking bit, which I didn’t
know until just now: In 1992, four years after the event (and shortly after I
moved on to a different beat), Adm. Crowe admitted on ABC’s Nightline that the
Vincennes was in Iranian waters at the time it shot down the plane. Back in
1988, he and others had said that the ship was in international waters. It also
came out that some other Navy officers had regarded Rogers as “aggressive” and
found it strange that he was moving his Aegis cruiser into those waters to
pursue Iranian patrol boats—overkill at best, asking for trouble in any case.
The distractions of the chase, possibly combined with the fact that the Aegis
radar-guided missile system was new at the time, may have led to his fatal
misjudgment.
Not long after the shoot-down,
Iran asked the United Nations Security Council to censure the United States for
its “criminal act” against Iran Air Flight 655. Vice President George H.W.
Bush, who was running to succeed Ronald Reagan as president, said on the
campaign trail, “I will never apologize for the United States—I don’t care what
the facts are.”
More
Have
a great weekend everyone.
“Those who don't know history are destined to repeat it.”
Edmund Burke (1914?)
The monthly Coppock Indicators finished June
DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down. The Fed’s final bubble still grows,
but …..
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