Baltic Dry Index. 1056 -17
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
We open deep in Ivory Tower land. Once upon a time,
not very long ago, actually yesterday, in a land faraway in deep self delusion,
there lived a person who needed to get out more, to visit Main Street, rust
belt towns and former industrial cities. Sadly such visits were long ago ended,
once Wall Street’s gamblers and banksters took over the Fed in the Great Panic
and stock market crash of 1987. From faraway London, soon to join in the new
Iraq bombing campaign, led by Europe and Asia the Great Wobble is starting to
look like a major roll over. Just wait
for the “winter vortex.”
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly and results far much less.
J. K. Galbraith.
Fed's Mester: Economy returning to normal territory
Published: Sept 24, 2014 12:40 p.m. ET
WASHINGTON (MarketWatch) - The economy is returning to more
normal territory and the Fed is prudently planning for the exit from its
zero-rate policy stance, said Loretta Mester, the president of the Cleveland
Fed, on Wednesday. A return to a more normal policy would be "a very good
place to be," Mester said in a speech to the Cleveland Association for
Business Economics. Mester, who is a voting member of the Fed's policy
committee this year, said she expected real gross domestic product to expand at
about a 3% pace for the rest of this year and through 2016.
Inflation should firm toward the Fed's 2% annual target by
end of 2016, she said. Mester again called for scrapping the central bank's
forward guidance that says rates will stay low for a "considerable
time" after its bond-buying program ends, expected in October. "Even
though the FOMC has emphasized that policy is contingent on the state of the
economy, in my view, the 'considerable time' part of the guidance tends to
focus the public's attention on a calendar-time for liftoff rather than on the
changes in economic conditions that will help determine changes in appropriate
policy," Mester said.
Up next Asia. To no one’s surprise, some Chinese
figures again proved bogus. The Qingdao hypothecation scandal returns. Vietnam
stalls. Trouble brews in Thailand from a growing natural rubber glut. Perhaps
they should try selling it on Alibaba. To me this seems like a global economy
rolling over from boom to bust.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
Industrial Metals Fall as China Finds $10 Billion in Fake Trades
Sep 25, 2014 5:23 AM GMT
Industrial metals fell as the discovery of almost $10 billion in fraudulent
trades in China
raised speculation supplies may rise. Metals also sank as the U.S. dollar
strengthened. Copper slid as much as 0.4 percent and almost all main metals on the London Metal Exchange declined. Investigators in China discovered documents revealing fraudulent trades going back to April 2013, Wu Ruilin, deputy head of State Administration of Foreign Exchange’s inspection department, said today. Some are related to fake trades at Qingdao Port, where security officials are investigating whether metals held in bonded facilities were pledged for loans multiple times.
“Qingdao is not over,” said Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. The news will “definitely” impact demand for metals tied up in financing deals, he said.
Copper inventories in warehouses linked to exchanges such as the LME will rise over the next six months in part because of fewer financing deals in China, Goldman Sachs Group Inc. said in a report Sept. 23. Banks, trading companies and warehouse operators are checking their exposure to metals stored at Qingdao and have reigned in commodity financing this year.
The U.S. dollar climbed to a four-year high as surging U.S. new-home sales signaled improvement in the world’s biggest economy. A rising dollar makes commodities priced in greenbacks cheaper compared to other currencies.
“The stronger dollar is dominating the bear market for metals at moment,” Tetsu Emori, a fund manager at Astmax Asset Management Inc. in Tokyo, said in an e-mail today.
More
China Steel Mills Hawk Rebar on Alibaba to Export Surplus
Sep 25, 2014 6:08 AM GMT
Tangshan Donghua Steel Enterprise Group Co. in China was so eager
for new customers overseas that it turned to cold-calling manufacturers and
tried hawking metal on the e-commerce website run by Alibaba Group Holdings
Ltd. A glut in the world’s biggest steel-making country means that prices for basic products like rebar used in construction have collapsed, so Tangshan Donghua is targeting buyers outside China who pay more. The company now ships as much as 40 percent of its output everywhere from Southeast Asia to South America to the Middle East, and wants to expand exports even further.
“We don’t make any profit selling here,” Wei Guotong, assistant to Tangshan Donghua’s general manager, said in an interview Sept. 22 at the company’s mill about 170 kilometers (106 miles) east of Beijing. “If we sell overseas, we can at least make some money, although not much.”
After the Chinese steel industry expanded by 50 percent since 2010 to keep up with surging demand, mills can produce 210 million metric tons more than the market needs and a quarter of capacity sits idle, according to data compiled by Bloomberg Intelligence. With economic growth slowing, producers are reluctant to close plants, forcing a record pace of sales overseas, where competitors accuse China of dumping.
China,
which produces almost half the world’s steel, shipped 52.4 million tons in the first eight months of this
year, up 36 percent from a year earlier and more than the 42.5 million exported
over the same period in 2007, when sales were at an all-time high, government
data show. By year-end, the 2014 total may reach 85 million tons, according to
Hu Yanping, an analyst at custeel.com, a researcher in Beijing. That’s 44 percent more
than the 2007 record of 59 million tons.
More
Vietnam Growth Worst Since 1980s Seen on Credit Crunch: Economy
Sep 25,
2014 6:06 AM GMT
Do Thi Hien points to about two dozen sewing machines lined up on one side
of her apparel workshop near Hanoi’s Red River. They have been gathering dust
as she tried to get a loan to increase output for exports. “I’ve knocked on the doors of four banks already this year and I still can’t get a loan,” Hien, 42, said. “They’re only prepared to lend at high interest rates.”
Hien’s factory is among thousands in the country that have cut production or shut down as one of the highest levels of bad debt among Southeast Asia’s biggest economies damps lending. Government efforts to clean up banks have failed to reinvigorate the credit growth local companies rely on, threatening their ability to supply the Japanese and Chinese manufacturers who are turning to Vietnam as a production center.
----Vietnam’s gross domestic product probably increased 5.4 percent in the
nine months through September from a year earlier, according to the median
estimate in a Bloomberg survey ahead of data due tomorrow.
The government’s
full-year target is 5.8 percent for a seventh year of growth below 7 percent,
the longest such stretch according to International
Monetary Fund records going back to the 1980s, when
the nation embarked on “Doi Moi” market opening.
More
Thai Farmers Threaten Protest in Defiance of Martial Law
Sep 25, 2014 1:48 AM GMT
Thai junta leader Prayuth Chan-Ocha is bracing for the country’s biggest
public protests since a coup four months ago, as farmers frustrated by falling
prices threaten to take to the streets in defiance of martial law. Prayuth, the 60-year-old army chief who also took the post of prime minister, told farmers last week that they may have to sell their rubber “on Mars” amid a global glut and urged them not to stage protests or demand hand outs from the government. He has pledged to quicken state spending, promote investment and create jobs to spur economic growth.
“We have suffered with falling prices and lower income for so many years without much help,” Perk Lertwangpong, head of the Rubber Holders Cooperatives Federation of Thailand, said by phone from Chanthaburi province, 245 kilometers (152 miles) southeast of Bangkok. “With prices at this level, we aren’t afraid of martial law. We’ll gather to fight.”
----“They indirectly paved the way for the military to take over,” said Ambika Ahuja, a London-based analyst at Eurasia Group. “Now, they feel they did not get any share of power or even an ability to negotiate with the current regime.”
While agriculture accounts for about 8 percent of Thailand’s gross domestic product, rural residents make up almost 87 percent of Thailand’s 67 million population. Yingluck won a parliamentary majority in 2011 after pledging to buy rice directly from farmers to lift rural incomes.
Prayuth has said he was forced to seize power to avoid violent clashes between supporters of Yingluck and opponents who accused her of corruption and buying the support of rural voters with economically damaging subsidies.
Yingluck’s government spent about 900 billion baht ($28 billion) buying rice and rubber at above-market rates, a strategy that was also used by her brother, Thaksin Shinawatra, before he was ousted as prime minister by the military in 2006. The opposition Democrat Party, which took power through a parliamentary vote after the 2006 coup, gave about 115 billion baht to rice farmers in the two years before Yingluck’s election victory.
A day after seizing power on May 22, Prayuth pledged to pay 800,000 rice farmers about 92 billion baht owed under the previous government’s program. He’s since ruled out further direct crop subsidies, and rejected demands to guarantee rubber prices at 100 baht per kilogram.
“Who on Earth can we sell it to?,” he said in a policy speech Sept. 15. “We have lots of supply in the country and plantations keep expanding. We might have to sell it on Mars, because there isn’t enough demand in the world.”
Export prices of Thai rubber have dropped 39 percent this year to 51 baht per kilogram, the lowest level since December 2008. Prices, which have tumbled 74 percent from a record in 2011, have fallen for three straight years as production expanded, adding to a global glut. Thailand is the world’s largest producer and exporter, accounting for about 34 percent of global output, according to rubber industry data.
More
In dying Europe news, don’t ask. Who other than the
American and Italian Mafia puts people in the boot of a Ferrari?
Ferrari recalls £200,000 cars because people can get trapped in boot
Italian sports car maker says faulty latch means people trapped in the boot can only escape when the 200mph cars are moving
Ferrari
is recalling more than 3,000 of its luxury sports cars because a fault with a
latch means anyone trapped in the boot won't be able to get out.
A recall
notice states that the Italian car maker's F458 Italia and F458 Spider
models suffer from a fault that means the "secondary latch" in the
boot, located at the front of the £200,000 cars, won't release when the vehicle
has stopped.
Ferrari said this means that
"in the event an individual is trapped in the trunk and the latch system
does not release the trunk lid, it increases the risk of personal injury or
possibly death".
In the US, where the notice was
released, cars must have a working latch in the boot in case a person gets
trapped. Ferrari has urged owners to take their cars to a dealer for a free
repair
However, the fault with Ferrari's
500-plus-horsepower cars only occurs when the car is stationary. So, anyone trapped
inside should presumably wait until the cars, which both have a top speed of
more than 200mph, are moving.
We end with the folly of Russian sanctions.
"Buy
when there's blood in the streets, even if the blood is your own."
Baron Rothschild. June 1815.
Moscow’s ‘Mr. Yuan’ Builds China Link as Putin Tilts East
Sep 24,
2014 3:06 PM GMT
Vladimir Putin has
a secret agent in his campaign to curb the impact of sanctions on Russia’s economy:
Mr. Yuan. That’s what skeptical bankers started calling Igor Marich after he introduced yuan trading in Moscow in 2010, when Russia became the first country outside China to offer regulated renminbi purchases. Now, as sanctions from the west over the conflict in Ukraine prompt more Russian companies to look east for growth, Mr. Yuan has become something of an honorific.
The yuan-ruble trade on the Moscow Exchange, where Marich
runs money markets, has jumped 10-fold this year to $749 million in August,
though still a sliver of the $367 billion in dollar-for-ruble sales. Yuan
buying hit a then-peak of 666 million yuan ($109 million) on July 31, when the
European Union penalized Russia’s largest banks, OAO Sberbank (SBER), VTB Group and OAO Gazprombank, over
Putin’s support for Ukraine’s insurgency. With EU and U.S. sanctions in place
and ties with China deepening, daily trading will soon reach 1 billion yuan,
Marich said.
“I believe we can see this result within a year,” the
40-year-old sports enthusiast said in an interview at the exchange in central
Moscow, where he started working in 2000, the same year Putin became president.
Marich’s goal may come sooner than he thinks. Russia is considering accepting yuan for gas under the $400 billion, 30-year supply deal that China signed during Putin’s visit to Beijing in May, according to four senior Russian officials and executives who asked not to be identified because a final decision hasn’t been made.
China agreed to prepay for supplies, which are scheduled to start in 2018, to help state-run OAO Gazprom (OGZD) finance the construction of the pipeline that will carry the fuel to the border. Introducing yuan payments into the gas business would lead to an exponential rise in trading in the Chinese currency in Moscow, the people said. China is already Russia’s largest trading partner, with turnover of $89 billion last year, according to Russian customs data, and Putin has set a goal of reaching $100 billion next year.
More
http://www.bloomberg.com/news/2014-09-23/moscow-s-mr-yuan-builds-china-link-as-putin-tilts-east.html
Investors Flock to Russia ETF as Ukraine Tension Eases
Sep 25,
2014 5:04 AM GMT
Investors betting on a rebound in Russian stocks are piling into the
benchmark exchange-traded fund for the market at the fastest pace in six
months. They poured $183 million into the Market Vectors Russia ETF (RSX) in the eight days through Sept. 23, the longest streak of daily inflows since March, data compiled by Bloomberg show. The shares gained 2.3 percent to $23.98 yesterday, reducing their decline to 1.9 percent since President Vladimir Putin moved to annex the Black Sea peninsula of Crimea in late February.
The ETF and the Bloomberg Russia-US Equity Index rallied amid mounting speculation that Ukraine will reach a peace accord with rebels as a cease-fire entered its 20th day. NATO said on Sept. 22 that Russia, which denies involvement in the conflict, has embarked on a “significant” withdrawal of its forces from the former Soviet republic.
“NATO, one of the most outspoken critics of Russia, admits that the nation is pulling back, which means the conflict isn’t deteriorating and there’s hope for a solution,” Ilya Kravets, the New York-based director of investment research at Daniloff Capital LLC, said by phone yesterday. “It’s not getting worse and is beginning to get better. Russia is clearly sending positive signals.”
The
benchmark Micex Index (INDEXCF) rallied for a second day in
Moscow, gaining 0.9 percent to 1,441.83. The gauge trades at 5 times estimated
12-month earnings, the cheapest in emerging
markets.
More
http://www.bloomberg.com/news/2014-09-24/investors-flock-to-russia-etf-as-ukraine-tension-eases.html
"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."
Murray N. Rothbard
At the Comex silver depositories Wednesday final figures were: Registered 66.52
Moz, Eligible 117.81 Moz, Total 184.33 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
“The Canadians 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.
Canada Warns Its Citizens Not To Take Cash To The USA
Submitted by Martin
Armstrong via Armstrong Economics,
The Canadian government has had to warn its citizens not to carry cash to
the USA because the USA does not presume innocence but guilt when it comes to
money. Over $2.5 billion has been confiscated from Canadians traveling
to the USA, funding the police who grab it.If you are bringing cash to the land of the free, you will find that that saying really means they are FREE to seize all your money under the pretense you are engaged in drugs with no evidence or other charges.
It costs more money in legal fees to try to get it back so it is a boom business for unethical lawyers to such an extent than only one in sixth people ever try to get their money back and the cops just pocket it. That’s right. Money confiscated is usually allowed to be kept by the department who confiscated it.
This is strangely working its way into funding police and pensions.
This is identical to the very issue that resulted in the final collapse of Rome when the armies began to sack cities to pay for their pensions. We are at that level now with respect to seizing whatever they want knowing you will have to spend more in legal fees to assert your rights that do not really exist.
Those trying to flee tyranny elsewhere can not bring money with them for the police get to take it on this end.
This pretend war on terrorism is really a wholesale war against the people. It serves as the justification to seize whatever they desire ever since 9/11 as reported by the Washington Post.
It’s morally wrong to let a sucker keep his money.
Uncle Scam, with apologies to W. C. Fields.
The monthly Coppock Indicators finished Aug.
DJIA: +152 Down. NASDAQ: +312 Down. SP500: +231 Down.
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