Baltic Dry Index. 1149 -02
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
I feel sure that
coups d'état would go much better if there were seats, boxes, and stalls so
that one could see what was happening and not miss anything.
Edmond De Goncourt
(1822–1896), French writer, journalist, and Jules De Goncourt (1830–1870),
French writer. repr. in Pages from the Goncourt Journal, Dec. 1851
In our new game of global stupidity, continental
Europe is getting ready to add more bullets into the chambers in this 21st
century version of Russian Roulette. Only a madman or mad woman in the case of
Europe would want to play in this game. Unsurprisingly, with nothing much by
way of trade to lose, Uncle Scam and John Bull simply spin the chambers and
pass along the gun when it becomes their turn in this insane game. For the
moment, all the other Muppets are too polite to say anything.
For now the greatest disconnect continues. My guess
is that President Putin is quite content to continue playing cat and mouse, until
winter kicks in later in the year, or Europe slumps towards a depression, or US
stock markets collapse as the reality of a new global slump begins to dawn on
the over leveraged algo gamblers. As an added bonus, the world just still might
get its first Russian Formula One Grand Prix in October.
Below, the 26 cars of the continental EUSSR, plus
Russia and the Ukraine hurtle round the oval track in close proximity at 200 mph. The UK, USA and
tiny offshore Ireland, remain in the safety of pit lane. I wonder what happens next?
I was
deposed by a coup d'etat, by friends that I trusted and aided by the American
Government.
Ferdinand Marcos.
Russia-China Prove Cheap to Investors as Money Flows Rise
Sep 2, 2014 8:15 PM GMT
For all the concern about the prospect of tougher international sanctions
and signs of slowing growth, more money flowed last month into Russia and China
exchange-traded funds than any other emerging markets. U.S.-based ETFs focused on Russia attracted $265 million last month, or 14 percent of their market value, the most among 47 regions after Portugal and Hong Kong, according to data compiled by Bloomberg. That was followed by Chinese funds, which drew $944 million, equivalent to 10 percent of their value.
Traders added to their Russian holdings as the six-month old conflict with Ukraine pushed the benchmark Micex Index (INDEXCF) to the steepest discount to emerging-market peers since 2008. In China, the Shanghai Composite Index rose to a 15-month high as weaker-than-expected economic data fueled speculation policy makers may take steps to boost growth.
“It appears that investors don’t believe that the situation in Russia will worsen much further from where we are now and expect the indices to bounce again from oversold levels,” Elena Ogram, a Zurich-based investor at Bank Bellevue AG, said by e-mail yesterday. The Chinese stocks are buoyed by the prospect of economic stimulus from the government, she said.
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Russian rouble hits record low as suffocating sanctions loom
Russia's currency has dropped 25pc over the past 18 months but Vladimir Putin shows no signs of backing down over Ukraine
The Russian rouble has fallen to
record lows against the dollar as the US, Europe and Japan prepare to launch a
fresh raft of financial sanctions within days unless the Kremlin pulls its
troops and heavy armour out of eastern Ukraine.
The currency has dropped 25pc
over the past 18 months, raising the real cost of servicing almost $610bn
(£369bn) of foreign currency debt owed by Russian banks, companies and state
bodies. Fresh capital flight pushed the rouble to 37.46 against the dollar on
Tuesday, a level that may soon force the central bank to raise rates, driving
the economy deeper into a protracted slump.
Data from Sberbank showed that
net “short” positions held by speculators on the derivatives markets have
reached an all-time high and are significantly more stretched than during the
first wave of the crisis in March and April. Traders warn that a serious
liquidity crunch is taking hold in Russian financial markets, even if this is
not yet reflected on the Moscow bourse, where a strange calm still prevails.
“People are very scared,” said
one Moscow banker. “There is talk of Iran-style sanctions against Russia and,
if we go down that route, we may not have much of a financial sector left.”
The political mood has hardened
in Europe after Russian president Vladimir Putin began talking over the weekend
of an independent state in eastern Ukraine, with even Austria abandoning its
softly-softly approach.
----“There is a serious discussion under way in Brussels for a complete embargo on purchases of Russian sovereign debt,” said Alastair Newton, head of political risk at Nomura.
Officials are mulling bans on
syndicated loans and the sale of hi-tech equipment for the gas industry,
especially for liquefied natural gas projects.
Mr Newton said the Obama
administration may opt for tougher measures than it wants at this stage to head
off even more draconian demands from Congress, where calls are growing for
military aid for Ukraine.
Britain, France and Germany all
want broader “Tier III” sanctions against sectors of the Russian economy but
any one of the EU’s 28 states can veto a deal. Cyprus, Hungary and Slokavia all
have deep misgivings.
Ian Bond, from the Centre for
European Reform, said the need to keep everybody on board is preventing a
coherent response, allowing the Kremlin to pick off the weakest links. “The
chances are that we shall have another feeble package of half measures, which
will only encourage Putin to press on,” he said.
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In this high-stakes poker game, Vladimir Putin holds most of the cards
War against Putin is rightly off the table, while truly crippling sanctions are also unlikely to happen, as they could harm a sclerotic Europe at least as much as Russia
By John C Hulsman 8:03PM BST 01
Sep 2014
Just 10 days ago it looked as if
the Kremlin-inspired revolt in eastern Ukraine was sputtering to a halt. The
Ukrainian army – reinfused with a new sense of purpose following the election of
President Petro Poroshenko – had decisively turned the tide, all but finishing
off the ragtag, Russian-backed rebels. Suddenly, the pressure was entirely on
the Russian president. In poker terms, he either had to fold or up the ante.
Predictably, Putin doubled down,
sending in at least 1,000 regular Russian army troops, more than 100 tanks,
artillery and armoured vehicles. A further 20,000 soldiers remain menacingly
poised on the Russian-Ukraine border. This has been enough to dramatically turn
the strategic tide.
The separatists, now bolstered by
Russian troops, have managed to open a second front in the south east of
Ukraine, possibly creating a swathe of territory linking the recently annexed
Crimea with Russia proper. Momentum – so hard to quantify but so important to
understand – now lies with the Kremlin.
Like all good poker players,
Putin waited for his opponents’ emotional response to subside, hoping to work
out what cards they actually hold. The West did not disappoint him. Military
action has already (and rightfully) been ruled out by the major Western states;
that leaves only full-bore sanctions. The European Union has given Russia one
week to reverse its policy over Ukraine, or else further sanctions are to be
implemented.
And then, in a move that must
have made the ice-cold Russian president smile, European diplomats began to
meekly walk back from their threat. Chancellor Angela Merkel herself pointed
out that the “new” sanctions are not really new at all, but merely build on
what had already come before: certain loopholes will be tightened on sanctions
aimed at Russia’s financial, defence and energy sectors. It is clear these
won’t amount to comprehensive Iran-style strictures. Rather they’re merely a
tidying up of sanctions that have already been imposed. Rather lamely, European
sources noted that it could be weeks (well into October) before even this
would
happen. Europe has made it very clear that it’s bluffing.
----The bottom line is this: Russia simply cares more about what happens in Ukraine than either the US or any of the major European powers. Moscow is therefore prepared to invest more to achieve its desired outcome.
Geography is too often considered
the less important aspect of geopolitics. A useful thought exercise is to
imagine if Mexico were keen to join the Shanghai Cooperation Organisation
(dominated by Russia and China) today. It is unlikely that the US would
placidly bless such a union. Putin has similar feelings about his neighbours.
He is hoping to keep Ukraine from definitively moving into the Western orbit by
joining either the EU or Nato. For good measure, he wants to ensure that
Ukraine is a failure – both economically and politically. Putin can live with a
weak, tepidly pro-western Kiev; a successful, confident, pro-alliance next-door
neighbour, on the other hand, is a different order of threat altogether.
More
Ukraine Pitches to Investors as Fighting Sparks Selloff
Sep 2, 2014 11:20 PM GMT
President Petro Poroshenko is taking on the daunting task of promoting Ukraine to
investors even as the country’s conflict with Russia pushes the economy deeper
into recession and batters the nation’s currency and bonds. Poroshenko is scheduled to address via video broadcast an audience including foreign investors and lenders today at the “Invest in Ukraine” forum in London. The event will be the first international conference since Ukraine and the European Union signed an association agreement in June, according to organizer A7 Conferences. Similar meetings are scheduled in Frankfurt this month and New York in November.
Ukraine is seeking to shore up investor confidence as it fights pro-Russian separatists in the country’s industrial east in a conflict that the United Nations estimates has cost at least 2,600 lives. The hryvnia has lost a third of its value against the dollar this year, while government Eurobonds due in 2017 slumped to a 3 1/2-month low. Ukraine may need an additional bailout of about $19 billion if the conflict continues through 2015, the International Monetary Fund said.
----Ukraine’s dollar-denominated bonds
maturing in July 2017 has slid in the past 10 days, sending the yield up 3.81
percentage points in the longest slump since the securities were sold in 2012.
The hryvnia has weakened 34 percent against the dollar this year, the
second-worst performer among world currencies.
More
Elsewhere, continental Europe is already starting
to buckle. Just wait until real sanctions on Russia are imposed and Russia
retaliates in kind.
Swiss Economy Unexpectedly Stalls as Euro Area Takes Toll
Sep 2, 2014 10:32 AM GMT
The Swiss economy unexpectedly stalled in the second quarter as stagnating
growth in the euro area hurt exports. Swiss gross domestic product was unchanged in the three months through June from the previous quarter, when it expanded 0.5 percent, the State Secretariat for Economic Affairs in Bern said in a statement today. That’s the weakest quarterly reading in two years and compares with a median estimate for 0.5 percent growth in a Bloomberg News survey of 16 economists.
The Swiss National Bank’s three-year-old cap on the franc has helped the economy outperform that of the euro area in nine of the last 12 quarters. With conflicts between Russia and Ukraine, as well as in the Middle East, putting a strain on global growth, SNB President Thomas Jordan yesterday reaffirmed the ceiling’s importance to ward off economic risks.
“Unfortunately, one must conclude that the Swiss economy has taken a step back -- if not two,” said Felix Brill, senior economist at Wellershoff & Partners Ltd. in Zurich. “My big concern is that the domestic economy has lost momentum faster than expected.”
Net trade was a drag on growth as exports increased at a slower pace than imports, while consumption of households and non-governmental organizations rose just 0.2 percent from a quarter earlier, according to SECO. Investments in construction declined 0.7 percent.
Given slowing domestic demand, it is even more important for exports “to pick up steam,” Brill said. “But here the conditions aren’t exactly favorable, given the faltering recovery in Europe.”
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Bangladesh....
In 1971 ... Kissinger overrode all advice in order to support the Pakistani
generals in both their civilian massacre policy in East Bengal and their armed
attack on India from West Pakistan.... This led to a moral and political
catastrophe the effects of which are still sorely felt. Kissinger’s undisclosed
reason for the ‘tilt’ was the supposed but never materialised ‘brokerage’
offered by the dictator Yahya Khan in the course of secret diplomacy between
Nixon and China.... Of the new state of Bangladesh, Kissinger remarked coldly that
it was ‘a basket case’ before turning his unsolicited expertise elsewhere.
Christopher
Hitchens.
At the Comex silver depositories Tuesday final figures were: Registered 63.21 Moz,
Eligible 116.40 Moz, Total 179.61 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today the view from Moscow. A reminder from Rosneft,
it wasn’t Russia that set off a botched coup.
East
Timor. The day after Kissinger left Djakarta in 1975, the Armed Forces of
Indonesia employed American weapons to invade and subjugate the independent
former Portuguese colony of East Timor. Isaacson gives a figure of 100,000
deaths resulting from the occupation, or one-seventh of the population, and
there are good judges who put this estimate on the low side. Kissinger was
furious when news of his own collusion was leaked, because as well as breaking
international law the Indonesians were also violating an agreement with the
United States.... Monroe Leigh ... pointed out this awkward latter fact.
Kissinger snapped: ‘The Israelis when they go into Lebanon—when was the last time
we protested that?’
Christopher
Hitchens.
Rosneft President Igor Sechin: 'Russia Didn't Initiate the Ukraine Crisis'
Interview Conducted by Gerald Traufetter
and Matthias Schepp
September 02, 2014 – 06:50 PM
Igor Sechin, head of the oil
giant Rosneft, is considered by many to be the second most powerful man in
Russia. In an interview, he speaks with SPIEGEL about natural gas deliveries to
Europe, the Ukraine crisis and the damage caused by economic sanctions.
His adversaries refer to him as Darth Vader; his admirers
call him the energy czar. His power, though, is uncontested. And Igor Sechin,
the director of Rosneft, the world's largest listed oil company, is also
reclusive. He only seldom appears before the public and the press.
But when Sechin, 53, enters the
room for his interview with SPIEGEL, he is in a cheerful mood, immediately
handing over his business card which reads: "No Name, No Company, No
Address."
The text on the card is his
commentary on the sanctions imposed by the West on Russia and on leading
figures in the country, such as Sechin himself. He is no longer permitted to
travel to the US and Sechin has become persona non grata in the West due
to the ongoing war in Ukraine.
A thickset man with a degree in
Romance languages, Sechin is considered to be one of the most powerful people
behind Russian President Vladimir Putin in the complicated Kremlin power
structures. The two have known each other since the 1990s, having worked
together at the time in the St. Petersburg city government. As Putin rose to
power, he pulled Sechin up with him, first as deputy chief of staff during
Putin's first stint as president and then as deputy prime minister.
Within a decade, Sechin created a
company that controls more oil and natural gas reserves than the energy giant
ExxonMobil.
----SPIEGEL: Igor Ivanovich,
the US government has placed you on the sanctions list and has blocked Rosneft
from receiving oil drilling technology from the West. How bothered are you by
the fact that you are no longer welcome in the US and Europe?
Sechin: Neither I nor my company have
anything to do with the crisis in Ukraine. As such, there is no foundation for
the sanctions against me and Rosneft. They represent a violation of
international law. Rosneft is an international corporation with stockholders in
America, Europe and Asia. After the Russian state, BP is our biggest stakeholder
with a 20 percent holding. As such, the sanctions also affect our Western
partners. I find it curious that Rosneft is on this list even though we work
more closely together with American and European companies than any other
Russian firm.
SPIEGEL: How painful are the sanctions
against Rosneft and Russia?
Sechin: The oil reserves that we are able
to tap with the means available to us today are enough for 20 years. The
sanctions will not prevent us from fulfilling our supply contracts. The
technology affected by the sanctions is related to future projects.
Incidentally, I would like to quote an expert. Juan Zarate, who was an advisor
to President George W. Bush, writes in his book "Treasury's War" that
America is waging a new kind of war. It is being waged without military
attacks, preferring instead to make opponents suffer financially.
SPIEGEL: Are you trying to say that
America has declared such a war on Russia in response to the Ukraine conflict?
Sechin: I'm just quoting him. Early on,
the American geostrategist Zbigniew Brzenzinski warned Europe against turning
to Moscow. He was referring to the natural gas pipeline deals between Russia
and Germany. He wrote that the US should not tolerate a geopolitically united
Europe that might challenge America. That would happen, he wrote, were
Europeans to realize that Russia is their natural economic partner.
SPIEGEL: Despite the war in eastern
Ukraine and the sanctions, Russian-American economic relations when it comes to
oil seem to be quite good. Rosneft and the American concern ExxonMobil just
opened an oil platform together in the Arctic. President Vladimir Putin even
took part in the ceremonies via video link.
Sechin: We have enjoyed working together
with Exxon for 20 years -- and now with the northernmost oil platform in the
world. We believe that there is as much oil there as Saudi Arabia has in its
proven reserves. We plan to invest $400 billion in the Arctic by 2030. In
addition, our platform Berkut, off the coast of Sakhalin Island, has
broken a few records. It is the biggest in the world.
----SPIEGEL:
Has your cooperation with German companies like Siemens been negatively
affected by the sanctions?
Sechin: No, the gas turbines and control
systems that we buy do not fall under the resolutions. But in the first half of
this year, our imports of technology from Germany as a whole have sunk by 15
percent. Nevertheless, there isn't a deficit of such machinery in Russia.
American and Asian companies have been more than happy to fill the void.
Certainly, Germany produces quality drilling rigs and pipeline systems. But if
Germany doesn't want to deliver, we'll just buy in South Korea or China. If
Germany's goal is that of preventing its own companies from earning money, then
go ahead.
More
Kurdistan.
Having endorsed the covert policy of supporting a Kurdish revolt in northern
Iraq between 1974 and 1975, with ‘deniable’ assistance also provided by Israel
and the Shah of Iran, Kissinger made it plain to his subordinates that the
Kurds were not to be allowed to win, but were to be employed for their nuisance
value alone. They were not to be told that this was the case, but soon found
out when the Shah and Saddam Hussein composed their differences, and American
aid to Kurdistan was cut off. Hardened CIA hands went to Kissinger ... for an
aid programme for the many thousands of Kurdish refugees who were thus abruptly
created.... The apercu of the day
was: ‘foreign policy should not he confused with missionary work.’
Christopher
Hitchens.
The monthly Coppock Indicators finished Aug.
DJIA: +152 Down. NASDAQ: +312 Down. SP500: +231 Down.
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