Baltic Dry Index. 887 -24 Brent Crude 63.45
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Money,
again, has often been a cause of the delusion of the multitudes. Sober nations
have all at once become desperate gamblers, and risked almost their existence
upon the turn of a piece of paper.
Charles
Mackay. Extraordinary Popular Delusions and the Madness of
Crowds
We open this Friday with yet more bad news out of China.
Bad news for the crude oil price, now already approaching 50 percent down since
June. China, in keeping with best practise from the CIA and Republicans
spinning that torture wasn’t that bad, and so what that it’s illegal only if
Putin does it, and Hollywood spinning that racism against Obama isn’t the same
as anti-Semitism, spun the data as really quite encouraging. Old Ebenezer Squid couldn’t put it any better.
Welcome to the bizarre, lawless end to
the Great Nixonian Error of fiat money. We are one last central bank bust away
from its disastrous end, probably next year. Stay long fully paid up gold and
silver.
Sadly we are not yet far enough in to our new Carbon Age
led by graphene, to have an easy exit. The graphene age and cheap universal
electricity from efficient photo voltaic solar, plus local and megawatt grid
storage, is still roughly a decade away. Not quite Moses taking 40 years to
cross the Sinai, but a difficult transition all the same.
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
China Industrial Output Slows as Factory Halt Compounds Slowdown
Dec 12, 2014 5:41 AM GMT
China’s industrial production climbed the least in three months in November
as factory shutdowns exacerbated a manufacturing slowdown. Factory production rose 7.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing, compared with the 7.5 percent median estimate in a Bloomberg News survey. Investment (CNFAYOY) in fixed assets such as machinery expanded 15.8 percent in January through November from a year earlier, and retail sales gained 11.7 percent last month.
The government ordered some factories to close in Beijing and surrounding provinces during the Asia-Pacific Economic Cooperation forum in early November to curb pollution. China’s central bank cut benchmark interest rates last month as a property slump weighs on the economy.
“November economic data were likely distorted by the temporary production freeze enforced during Beijing’s APEC meeting,” Wang Tao, chief China economist at UBS Group AG in Hong Kong, wrote in a note before today’s release. “The underlying real trend likely remained feeble.”
China’s economy is showing resilience and potential even as it slows, giving the government plenty of room to maneuver, the official Xinhua News Agency said yesterday in a summary of a policy-setting meeting of top leaders. The country will keep a prudent monetary policy with more attention on the balance between loosening and tightening, Xinhua reported.
Industrial production’s 7.2 percent rise compares with October’s 7.7 percent expansion. The retail sales increase beat October’s 11.5 percent rise, which was also the median economist estimate.
More
http://www.bloomberg.com/news/2014-12-12/china-industrial-output-slows-as-factory-halt-compounds-slowdown.html
Blankfein Says ‘I Don’t Know’ If China Manipulates Economic Data
Dec 11, 2014 4:52 PM GMT
Lloyd
Blankfein said he isn’t sure he can trust China’s
official economic data. “I don’t know; how do I know?” the Goldman Sachs Group Inc. chief executive officer said today when asked at a DealBook conference in New York if he thinks China manipulates government statistics. “I’m not taking it that they are.”
Blankfein drew laughs with his carefully worded response to interviewer Andrew Ross Sorkin’s question about whether he believed China’s numbers. “Do I believe the numbers? I believe there are numbers,” Blankfein replied.
“I’m not sure they’re measuring things in the same way,” he said. “I’m not sure they’re collecting the information the way we would, in as sophisticated, metric-oriented” a way, he said.
More
http://www.bloomberg.com/news/2014-12-11/blankfein-says-i-don-t-know-if-china-manipulates-economic-data.html
In 2003, U.S. experts doubted key Iraq war claim: cable
WASHINGTON(Reuters) - A CIA cable disclosed on Thursday showed that U.S. counter terrorism officials in 2003 discounted reports that a leader of the Sept. 11 attacks met an Iraqi intelligence official in Prague just before the attacks, further undermining a Bush administration argument for the invasion of Iraq.
Senator Carl Levin released a newly declassified section of a March 11, 2003 cable that undercut administration statements that Mohammed Atta and Iraqi agent Ahmad al-Anian had met in the Czech capital in April 2001.
"[T]here is not one [U.S. counter terrorism] or FBI expert that ... has said they have evidence or 'know' that [Atta] was indeed [in Prague]. In fact the analysis has been quite the opposite," said the cable, made available by Levin, retiring chairman of the Armed Services Committee.
President George W. Bush and Vice President Dick Cheney had earlier linked Iraq with al Qaeda and international terrorism and, incorrectly, said it was in possession of weapons of mass destruction, justifying the March 20, 2003 U.S. invasion of Iraq.
Levin said a recent memoir published by Jiri Ruzek, head of Czech counterintelligence in 2001, described the story about Atta's Prague meeting as a single-source rumor and said the Bush administration pressured officials in Prague to confirm it.
More
http://www.reuters.com/article/2014/12/11/us-iraq-usa-atta-idUSKBN0JP2LE20141211
Below, more on the Black Swan oil shock to the fiat bubble of 21st century financialised monetary madness. West Texas Intermediate traded at $107 as recently as late June.
Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets
Dec
11, 2014 3:59 PM GMT
The danger of stimulus-induced
bubbles is starting to play out in the market for energy-company debt.
Since early 2010, energy
producers have raised $550 billion of new bonds and loans as the Federal
Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil
prices plunging, investors are questioning the ability of some issuers to meet
their debt obligations. Research firm CreditSights Inc. predicts the default
rate for energy junk bonds will double to eight percent next year.
“Anything that becomes a mania --
it ends badly,” said Tim Gramatovich, who helps manage more than $800 million
as chief investment officer of Santa Barbara, California-based Peritus Asset
Management. “And this is a mania.”
The Fed’s decision to keep
benchmark interest rates at record lows for six years has encouraged investors
to funnel cash into speculative-grade securities to generate returns, raising
concern that risks were being overlooked. A report from Moody’s Investors
Service this week found that investor protections in corporate debt are at an
all-time low, while average yields on junk bonds were recently lower than what
investment-grade companies were paying before the credit crisis.
Borrowing costs for energy
companies have skyrocketed in the past six months as West Texas Intermediate
crude, the U.S. benchmark, has dropped 44 percent to $60.46 a barrel since
reaching this year’s peak of $107.26 in June.
Morehttp://www.bloomberg.com/news/2014-12-11/fed-bubble-bursts-in-550-billion-of-energy-debt-credit-markets.html
Norway’s Shock Rate Cut Drives Krone to Lowest Since 2009
Dec 11, 2014 10:06 AM GMT
Norway’s central bank cut
its main interest rate
for the first time in more than two years and signaled it may ease again next
year as plunging oil prices threaten growth in western Europe’s biggest crude exporter.
The rate was lowered by 0.25 percentage point to 1.25 percent, the Oslo-based bank said today. The cut was forecast by only one of the 17 economists surveyed by Bloomberg, while the rest saw unchanged rates.
The bank sees a “50-50 chance” for another rate cut next year, Governor Oeystein Olsen said at a press conference.
The job now is to “prevent a severe downturn,” he said in an interview after a press conference.
The krone plunged as much as 1.8 percent against the euro and traded 1.1 percent lower at 9.0138 as of 10:56 a.m. in Oslo.
A 44 percent drop in oil prices from a June high is proving to be the worst since the financial crisis erupted in 2008. The slump comes as an investment boom in Norway’s petroleum industry fades with companies such as Statoil ASA lowering planned spending. A survey this month showed oil companies anticipate offshore investments will drop by 13 percent next year.
More
http://www.bloomberg.com/news/2014-12-11/norway-surprises-with-rate-cut-as-oil-slump-weighs-correct-.html
SNB Says Deflation Risks Increased as Franc Cap Maintained
Dec 11, 2014 10:18 AM GMT
The Swiss
National Bank predicted consumer prices will drop next year and said the risk
of deflation has increased as it vowed to defend its cap on the franc. The central bank kept its ceiling of 1.20 per euro and the target range for its benchmark interest rate at zero to 0.25 percent at its quarterly meeting today, as predicted by economists. Officials cut their forecasts for inflation for the next two years, while raising this year’s projection for economic growth.
“Our new conditional inflation forecast has been revised downwards once again,” SNB President Thomas Jordan told reporters in Bern. “Above all, the appreciably lower oil price will push inflation into negative territory during the next four quarters.”
The possibility of broad-based asset purchases by the European Central Bank has helped push the franc toward the SNB’s upper limit. Officials have held out the prospect of further steps -- including a charge on sight deposits -- to reinforce the cap it introduced three years ago.
More
http://www.bloomberg.com/news/2014-12-11/snb-says-deflation-risks-increased-as-franc-cap-maintained-1-.html
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel
France drifts into deflation as ECB 'pea-shooter' falls short
The Bank of Italy warns that any further falls in prices at this stage could have 'extremely grave consequences for economies with very high public debt levels'
France is sliding into a
deflationary vortex as manufacturers slash prices to keep market share,
intensifying pressure on the European Central Bank to take drastic action
before it is too late.
The French statistics agency INSEE
said core inflation fell to -0.2pc in November from a year earlier, the first
time it has turned negative since modern data began.
The measure strips out energy
costs and is designed to “observe deeper trends” in the economy. The price goes
far beyond falling oil costs and is the clearest evidence to date that the
eurozone’s second biggest economy is succumbing to powerful deflationary
forces.
----Eurostat data show prices have fallen since April in Germany, France, Italy, Spain, Holland, Belgium, Portugal, Greece and the Baltic states, as well as in Poland, Romania and Bulgaria outside the EMU bloc. Marchel Alexandrovich, from Jefferies, said the number of goods in the eurozone’s price basket now falling has reached a record 34pc.
“Eurozone deflation is now inevitable. There is no way around it,” said Andrew Roberts, at RBS. “We think yields on German 10-year Bunds will fall to 0.42pc next year.”
----The trade-weighted exchange rate of the euro has risen by 2pc over the past two months as the rouble plummets and currencies buckle across the emerging market nexus, despite the ECB's efforts to talk it down. This is a form of monetary tightening.
More
http://www.telegraph.co.uk/finance/economics/11288829/France-drifts-into-deflation-as-ECB-pea-shooter-falls-short.html
The euro is heading for disaster - what luck for David Cameron!
The final unwinding of the disastrous single currency could give Britain everything it wants from Europe
----The Marxist vision of society has been disproved many times, always at epic human cost. However, his doctrine that productive forces propel history has stood the test of time – and is invaluable for an understanding of the current predicament of the European Union.
It elegantly explains why
European Monetary Union was destined to fail. The state socialists and former
communists who invented the euro never got to grips with this aspect of Marxist
thought. Only Conservatives with an intelligent appreciation of economics and
history – an enlightened congregation that included Margaret Thatcher, Oliver
Letwin, Peter Lilley, Tim Congdon, John Redwood, Nicholas Ridley and Alan
Walters – grasped that the EMU would collapse under the weight of its own
contradictions, and that it was folly to construct a single currency before the
political conditions were in place.
Meanwhile the European elite who
advocated the euro (British representatives included Michael Heseltine, Peter
Mandelson, Tony Blair, Ken Clarke, Nick Clegg and Danny Alexander, at the time
only a cadet member of the European political class, so perhaps the chief
secretary can be forgiven) ignored all warnings. Indeed, Lord Mandelson is
still advocating British membership!
It is impossible to exaggerate
the arrogance, the bone-headed stupidity and above all the brutality and
callousness of these Europhiles. Their demented attempt to impose a new
economic model on an unworkable political structure has already caused untold
suffering. At the heart of their project is an audacious attempt to prove the
primacy of politics over economics. Bear in mind that it is an experiment for
which the European elite personally do not have to pay a price.
Their experiment has caused
depression (not recession as inaccurately reported by pro-European journalists
at the BBC and elsewhere) across much of Europe.
This is getting worse. The
Italian economy is moribund, social cohesion has vanished and Italians are
starting to turn venomously on immigrants. The Greek economy has shrunk by 30
per cent, and one quarter of the population is out of work. Youth unemployment
in Spain stands at an unspeakable 50 per cent.
We are talking about tens of
millions of ruined lives, and busted dreams. This reality has already brought
about a convulsion in Europe. Entirely new political parties have emerged, from
the far-Left and far-Right, brought into existence by a common scream of
despair against a broken system.
For the time being, the former
political class remains in charge. It has as much legitimacy as the ancien
regime in pre-revolutionary France, with the same moral bankruptcy, calculating
venality and profound sense of entitlement. This elite has the same distaste
for democracy as 18th-century lords, and over the long term the same chances of
survival. In its dying convulsions, Jean-Claude Juncker’s political class has
abolished democracy. Italy has had three consecutive unelected prime ministers
since Silvio Berlusconi’s scepticism about the euro caused the EU elite to
recruit an unscrupulous cabal of bankers to remove him (former US Treasury
Secretary Tim Geithner gives a gripping account of this unwholesome manoeuvre
in his recent memoir).
That it has survived so far is
thanks to a series of financial confidence tricks, of which the latest example
is Juncker’s implausible scheme to convert €21 billion of equity into a €315
billion slush fund to relaunch the European economy. This amounts to no more
than wishful ravings, though it would be financially disastrous if by some
malign chance it were put into effect.
Australia develops world's most efficient solar panels
Published time: December 08, 2014 09:38
Australian researchers have developed a new method of using commercial solar
panels that converts more electricity from sunlight than ever before.The new photovoltaic (PV) system created by University of New South Wales (UNSW) researchers converts 40 percent of solar light into electrical energy, which is a 15 percent increase over regular panels.
Laboratory tests have shown the solar cell method can convert up to 46 percent of the sun’s energy into electricity. The new Australian technique works with regular commercial PV panels under normal conditions, and could potentially make solar plants more competitive with other energy sources, such as fossil fuels.
“This is the highest efficiency ever reported for sunlight conversion into electricity," UNSW Professor Martin Green said in a statement. "We used commercial solar cells, but in a new way, so these efficiency improvements are readily accessible to the solar industry."
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008
At the Comex silver
depositories Thursday final figures were: Registered 65.03 Moz,
Eligible 111.91
Moz, Total 176.94 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, the Old Lady of Threadneedle Street goes
Yankee Doodle. Who needs to meet 12 times a year when they can get paid the
same to meet only 8 times a year. In our new lawless age, no need to cut their
wages by a third. Having gone all Yankee Doodle, how long before they go whole
hog? Why hold meetings in rainy, cold London at all? Wouldn’t sunny Florida,
Monte Carlo, or Las Vegas be more convenient?
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.
Bank of England policy changes: The Bank wants to cut MPC meetings to eight a year
by Emma
Haslett
The Bank of England has announced
a raft of changes to the way it operates in an effort to increase transparency
- including cutting the number of meetings its monetary policy committe (MPC)
has each year from 12 to eight.
Does this mean MPC members are as
bored of interest rates - which this month were held at 0.5 per cent for the
69th month in a row - as the rest of us?
The announcement was part of a
number of recommendations made by Kevin Warsh, former governor of the US
Federal Reserve, which the Bank said it will adopt. New measures included
publishing the minutes of its policy meetings at the same time as its policy
decisions, as well as creating an eight-year lag on written transcripts of the
meetings at which monetary policy is decided.
Among other measures were plans
to:
- Hold four join meetings between the monetary and financial policy committees in 2016
- Align the status of the financial policy committee and the Prudential Regulation Authority board with the "tried and tested model" of the MPC
- Establish the Bank's Court as a unitary board, with executives and non-executives
- Publish minutes of Court meetings held between 1914 and 1987, "thereby aligning its release of archives with best practice in Whitehall"
- release the minutes of Court and related meetings during the crisis period of 2007-09, which will take place in January next year, "in appropriately redacted form"
Mark Carney, the Bank of
England's governor, said that with its "immense" responsibilities for
monetary stability, financial stability and microprudential regulation comes
the need for "effective transparency, genuine accountability and robust
governance".
morehttp://www.cityam.com/1418293050/bank-england-policy-changes-bank-wants-cut-mpc-meetings-eight-year?utm_medium=Email&utm_source=Email&utm_campaign=141211_CMU
There can be few
fields of human endeavour in which history counts for so little as in the world
of finance. Past experience, to the extent that it is part of memory at all, is
dismissed as the primitive refuge of those who do not have the insight to
appreciate the incredible wonders of the present.
J. K. Galbraith.
Another weekend, and how low can the crude oil price go before the
Scottish Nationalists surrender? How about another vote about Scottish
independence, this one involving all of the UK. Let each region of Scotland
vote on whether to to stay or go, and implement it. Oily “Wee Eck”, is losing
his oil. Have a great weekend everyone.
The monthly Coppock Indicators finished November.
DJIA: +136 Down. NASDAQ: +262 Down. SP500: +204 Down.
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