Monday 9 February 2015

Greece Week.



Baltic Dry Index. 559 -05    Brent Crude 57.88

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"

Douglas McWilliams, chief executive of the Centre of Economics and Business Research.

This appears to be make or break week for Greece. If the German hard line on “break” prevails, Greece could exit the euro as early as next week, though a late night exit in the early hours of a Sunday would be more likely. If Greece gets strong armed out of the euro, how many more will be exiting before year end? Stay long fully paid up physical precious metals.

Below, Greece on the brink.

"We are not discussing the exit of Greece from the euro area. This is a stupid idea and an avenue we would never take."

Jean-Claude Juncker.  Failed Luxembourg Prime Minister, former president of the Euro Group of Finance Ministers, Liar and current EC President.

Defiant Greek PM sets up EU clash with bailout rejection, austerity rollback

By Lefteris Papadimas and Renee Maltezou ATHENS Sun Feb 8, 2015 6:17pm EST
(Reuters) - Leftist Prime Minister Alexis Tsipras laid out plans on Sunday to dismantle Greece's "cruel" austerity program, ruling out any extension of its international bailout and setting himself on a collision course with his European partners.

In his first major speech to parliament since storming to power last month, Tsipras rattled off a list of moves to reverse reforms imposed by European and International Monetary Fund lenders: from reinstating pension bonuses and cancelling a property tax to ending mass layoffs and raising the mininum wage back to pre-crisis levels.

Showing little intent to heed warnings from EU partners to stick to commitments in the 240-billion-euro ($272 billion) bailout, Tsipras said he intended to fully respect campaign pledges to heal the "wounds" of the austerity that was a condition of the money.
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G20, EU leaders meet in a week to mend Greece

By Mike Peacock LONDON Sun Feb 8, 2015 4:04am EST
(Reuters) - Meetings of G20 finance ministers and EU leaders top and tail this week with Greece's fate uppermost in policymakers' minds and global turbulence caused by diverging monetary policies and cheap oil coming a close second.

The central bank world has been upended by a steepling fall in oil prices, and the effect that may have on inflation and growth, and the prospect of the European Central Bank creating 1 trillion euros out of thin air.

The Swiss National Bank caused currency turmoil by abruptly ending its Swiss franc cap. Impromptu interest rate cuts have followed from India to Australia and Canada to Denmark, while China has cut bank reserve requirements.

On the other side of the ledger, the prospect of a first U.S. interest rate rise this year highlights the very different directions major central banks are heading in.

A by-product of that is the dollar being driven higher while stimulus from the ECB and Bank of Japan, among others, drives other major currencies lower.

All that will be front and center for finance ministers and central bankers from the Group of 20 nations who meet in Istanbul on Monday and Tuesday, as will the perennial debate about countries that can afford to do so spending more to generate demand.

"The rest of the world cannot depend on the United States to be the sole engine of growth," Treasury Secretary Jack Lew told U.S. lawmakers last week.

Germany, with its giant current account surplus, has consistently rejected that approach and last year balanced its budget for the first time in more than four decades.

----Sweden could be the latest to adopt unconventional policies when its central bank meets. The Riksbank has said it could take new steps as early as its meeting on Thursday. These could include negative rates, offering cheap loans to banks and buying bonds.
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Greenspan Sees Greek Exit From Euro as Just a Matter of Time

5:30 PM WET  February 8, 2015
(Bloomberg) -- Greece’s exit from the euro is just a matter of time because no one wants to risk lending money to the country any more, according to Alan Greenspan.

Hours before Prime Minister Alexis Tsipras was due to set out plans on how to keep his government paying its bills, the former Federal Reserve chairman said the nation’s crisis can’t be resolved as long as it remains in the single currency.

“I don’t see that it helps them to be in the euro and I certainly don’t see that it helps the rest of the euro zone,” Greenspan said in a radio interview with the BBC on Sunday. “I think it’s just a matter of time before everyone recognizes that parting is the best strategy.”

Greenspan spoke on the eve of a critical week for Greece, providing a backdrop to Group of 20 officials meeting Monday before euro-zone finance ministers gather for emergency talks on the country on Wednesday and a summit of leaders the next day. Greek public debt stands at more than 320 billion euros ($362 billion), about 175 percent of gross domestic product.

“Greece is in the position that if they don’t get additional loans, then they will default and leave the euro,” Greenspan said. “At this stage, I don’t see any people who are willing to put up the funds, having been disappointed so often.”
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Greece downgraded as S&P warns cash crisis could force it out of euro

Standard & Poor's cuts Greece to the brink of default and warns that the country could be forced to leave the single currency if it loses access to European funding

Greece saw its credit rating cut on Friday night, with Standard & Poor's warning the country's cash constraints could force it to leave the euro.

S&P downgraded Greece to B- from B, one notch above default range, and kept the outlook on the nation at "negative", meaning further cuts to the rating are possible.

The ratings agency said the amount of time Greece’s new government has to reach an agreement with its creditors over its €240bn bailout has shrunk, with its worst-case scenario seeing the country being forced to leave the euro after European funding dries up.

S&P said the downgrade “reflects our view that the liquidity constraints weighing on Greece’s banks and its economy have narrowed the timeframe during which the new government can reach an agreement on a financing programme with its official creditors”.
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In Asian news, yet another giant red flag from China. In a sign of slowing global trade, exports slumped but imports crashed. It may already be too late to save Greece and Club Med.

China's imports slump, capping dismal January trade performance

By Pete Sweeney SHANGHAI Sun Feb 8, 2015 2:19am EST
(Reuters) - China's trade performance slumped in January, with exports falling 3.3 percent from year-ago levels while imports tumbled 19.9 percent, far worse than analysts had expected and highlighting deepening weakness in the Chinese economy.

Largely as a result of the sharply lower imports - particularly of coal, oil and commodities - China posted a record monthly trade surplus of $60 billion.

The data contrasted sharply with a Reuters poll which showed analysts expected exports to gain 6.3 percent and the slowdown in imports to slow to 3 percent, following a better-than-expected showing in December. The poll had also forecast a trade surplus of $48.9 billion.

The slide in imports is the sharpest since May 2009, when Chinese factories were still slashing inventories in reaction to the global financial crisis. Exports have not produced a negative annual reading since March 2014.

The dismal trade performance will increase concerns that an economic slowdown in China - originally considered a desirable adjustment away from an investment-intensive export model toward one based on domestic consumption - is at risk of derailing.

The government is expected to lower its GDP target to around 7 percent this year, after posting 7.4 percent in 2014 - the slowest pace in 24 years.
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In the botched US  Ukraine coup news, Europe has fallen out of love with Uncle Scam and America’s War Party.  Sanctions don’t hurt the USA or UK they way they hurt continental Europe, and neither the USA or the UK face the prospect of hundreds of thousands of refugees if a red hot  proxy war breaks out between America’s War Party and Russian Patriots. If America sends in offensive weapons to Kiev, I fully expect President Putin to take pre-emptivr Action Reagan style in Panama and Grenada.

A newspaper is a device for making the ignorant more ignorant and the crazy crazier.
H. L. Mencken.

Merkel defends Ukraine arms stance in face of U.S. criticism

By Stephen Brown and Noah Barkin MUNICH Sat Feb 7, 2015 4:44pm EST
(Reuters) - Germany's Angela Merkel said on Saturday that sending arms to help Ukraine fight pro-Russian separatists would not solve the crisis there, drawing sharp rebukes from U.S. politicians who accused Berlin of turning its back on an ally in distress.

The heated exchanges at a security conference in Munich pointed to cracks in the transatlantic consensus on how to confront Russian President Vladimir Putin over a deepening conflict in eastern Ukraine that has killed more than 5,000.

Ukraine's military said on Saturday that pro-Russian separatists had stepped up shelling of government forces and appeared to be amassing troops for new offensives on the key railway town of Debaltseve and the coastal city of Mariupol.

The rebel offensive has triggered a flurry of shuttle diplomacy, with Merkel and French President Francois Hollande jetting to Moscow on Friday to try to convince Putin to do a peace deal.

But European officials acknowledge that the Russian leader may have little incentive to negotiate now, preferring to sit back and watch as separatists seize more territory, undermining a ceasefire agreement clinched last September in the Belarus capital Minsk.

The German leader conceded in Munich, after returning home from Moscow in the dead of night, that it was uncertain whether a Franco-German peace plan presented to Kiev and Moscow this week would succeed.

But she flatly rejected the notion that sending weapons to Kiev, an idea being considered by U.S. President Barack Obama, would help resolve the conflict.

----U.S. Vice President Joe Biden, speaking at the same conference, tried to play down differences with Europe, saying he and Obama agreed that no efforts should be spared to resolve the conflict peacefully.

But he made clear that Washington stood ready to provide Ukraine with the means to defend itself, saying: "Too many times President Putin has promised peace and delivered tanks, troops and weapons."

U.S. senators Lyndsey Graham and John McCain, both Republican hawks, were withering in their criticism of the German stance, which is supported by other big European countries like France.

"At the end of the day, to our European friends, this is not working," Graham said of Merkel's diplomatic efforts. "You can go to Moscow until you turn blue in the face. Stand up to what is clearly a lie and a danger."

McCain added: "The Ukrainians are being slaughtered and we're sending them blankets and meals.
Blankets don't do well against Russian tanks."

Russia's annexation of the Crimean peninsula in March last year and evidence that it is supporting separatist forces in the east of the country, which the Kremlin denies, have driven Moscow's relations with the West to a post-Cold War low.

The EU and United States have imposed a series of sanctions against Moscow that have contributed to a sharp downturn in the Russian economy.

Merkel and her allies in Europe want to continue to punish Russia by tightening the economic screws. Obama faces pressure from members of Congress to do more.

In an emotional plea for support in Munich, Ukrainian President Petro Poroshenko listed the number of troops and civilians that had been killed since the crisis started and held up red passports of Russian soldiers he said had been found fighting in Ukraine.

----Russian Foreign Minister Sergei Lavrov, also in Munich, said there were "good grounds for optimism" that the talks between Merkel, Putin and Hollande could yield a deal.

But Lavrov also delivered a diatribe against the West. He accused Europe and the United States of supporting a "coup d'etat" against deposed Ukrainian leader Viktor Yanukovich, a Moscow ally, a year ago and turning a blind eye to nationalists he said were intent on ethnic cleansing in eastern Ukraine.

----The French leader, Merkel, Poroshenko and Putin are due to hold a call on Sunday, before the chancellor travels to Washington.

"If we don't manage to find not just a compromise but a lasting peace agreement, we know perfectly well what the scenario will be. It has a name, it's called war," Hollande said.

"When it becomes serious, you have to lie"

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

At the Comex silver depositories Friday final figures were: Registered 67.89 Moz, Eligible 110.05 Moz, Total 177.94 Moz.   

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, more on the end of the Great Commodity Supercycle. We stand at the edge of a great commodities/emerging market  train wreck.

Global Deflation Alert: Iron Ore Heading Toward $40/Ton Due To Slumping Demand, Surging Supply

by Bloomberg Business • February 6, 2015 Jasmine Ng at Bloomberg
Iron ore will slump into the $30s a metric ton this year as low-cost supplies rise and steel demand in China shrinks, according to Andy Xie, a Shanghai-based independent economist who’s forecast a rout for years.

“When it peaked at $190, I started talking about a collapse and nobody believed me,” Shanghai-based Xie, a former Asia-Pacific chief economist at Morgan Stanley, said in a phone interview on Thursday. “We need to see prices much, much lower. It can still go down through $40 before we bounce back.”

The raw material used to make steel will probably average $50 this year, a level that he’s predicted since 2012, said Xie, who’s tracked the Chinese economy for more than two decades. Prices need to decline to a level that’s so painful higher-cost Chinese mines will be forced to give up, he said.

Iron ore collapsed 47 percent in 2014 and extended declines this year as surging low-cost output from Rio Tinto Group, BHP Billiton Ltd. and Vale SA spurred a glut just as growth in China slowed. China expanded at the weakest pace last year since 1990 amid a property market slowdown as policy makers sought to shift the economy away from investment toward consumption. The country accounts for about half of global steel production.

“We have a situation of declining demand and increasing supply,” said Xie, who also worked for the World Bank. “Domestic steel demand in China is actually declining and that trend is going to last a long time.”

Ore with 62 percent content delivered to Qingdao, China, peaked at $191.70 a dry ton in February 2011, according to Metal Bulletin Ltd. In September 2012 Xie said prices would drop to $50, probably by mid-2013, repeating a forecast. Prices — which dropped to $61.64 on Thursday, the lowest on record going back to May 2009 — climbed 1.4 percent to $62.49 on Friday.

While banks including Goldman Sachs Group Inc. see further losses, they aren’t as bearish as Xie, and London-based Rio Tinto this week repeated its outlook that China’s steel output will go on expanding. Goldman forecasts an average of $66 this year, while Citigroup Inc. sees $58 and UBS Group AG has $66.
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"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."

Mikhail Gorbachev

The monthly Coppock Indicators finished January

DJIA: +124 Down. NASDAQ: +220 Down. SP500: +178 Down.  

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