Baltic Dry Index. 608 -24 Brent Crude 51.65
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.
Remain with the shell shocked and routed SNB in the
Bunker. All hell is about to break loose. Not only are the next Lehman(s) out
there and getting closer by the day, our central banksters are out of
ammunition, ideas, credibility, and democratic tolerance. They kicked the can,
but this time it hit the wall and came bouncing right back. This time it’s
different. 2015 will not be a repeat of 2008. Commodity prices have collapsed.
There’s a universal fiat currency war underway in global age of ZIRP and now
negative interest rates. After an unwise botched American coup in Kiev, an all
too real hot war is about to get underway in the Ukraine once spring rolls
around. Despite dodgy numbers that would make even Uncle Scam blush, China
can’t hide anymore that its malinvestment boom has ended. The USA GDP was far
from the Great Vampire Squids hype. And Uncle Scam hasn’t yet taken the massive
hit to come from the collapse of the oil patch.
Not only may there be trouble ahead, with Greece trouble
hits this month. Trouble hits the UK in May with an iffy general election
headed at present for a hung Parliament, and again in November when Spain
appears likely to vote in Podemos. A
political party to the far left of Syriza. Next year comes French President
Marine Le Pen and a return to the Franc. In America, even Tiger Woods is now
hitting a lame duck Obama like 82! What (more) could possibly go wrong? Stay
long fully paid up physical precious metals held well outside of the larcenous
reach of John Bull and Uncle Scam. They both have form when it comes to theft.
China manufacturing shrinks for the first time in two years, survey shows
China’s official measure of activity in factory and workshops shows it contracted in January, signalling continued slowing of the economy
China grows at slowest rate for 24 years
China’s manufacturing activity
contracted for the first time in more than two years in January, an official
survey showed on Sunday, signalling further downward pressure on the world’s
second-largest economy.
The official purchasing managers’
index (PMI) released by the national bureau of statistics came in at 49.8 last
month, down from the 50.1 recorded in December.
The index, which tracks activity
in factories and workshops, is considered a key indicator of the health of
China’s economy. A figure above 50 signals expansion, while anything below
indicates contraction.
January’s figure was the first
contraction for 27 months.
----The bank is scheduled to release its final PMI figure on Monday.
ANZ Banking Group said in a research report that the NBS figures were unexpected, particularly given “favourable seasonal factors”.
“The Chinese New Year falls into late February this year, while it was in late January last year,” ANZ said.
“Past experience suggests that there could be significant front loading effect before the Chinese New Year, which would provide short-term impetus to the manufacturing industry.”
China’s central bank surprised economists in November by cutting benchmark interest rates for the first time in more than two years, in a move interpreted as an attempt to shore up flagging growth.
The People’s Bank of China lowered its one-year rate for deposits by 25 basis points to 2.75% and its one-year lending rate by 40 basis points to 5.6%.
The Chinese economy is struggling with not just stalling factory growth, but also other problems including soft exports and the weakening property market.
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Asian Stocks Decline for Fourth Day on Global Growth Concern
February 2, 2015
(Bloomberg) -- Asian stocks fell
for a fourth day after data signaled Chinese manufacturing shrank last month
for the first time in more than two years and the U.S. economy grew less than
forecast.
The MSCI Asia Pacific Index
retreated 0.3 percent to 139.98 as of 9:01 a.m. in Tokyo, before markets opened
in China and Hong Kong. The measure gained 1.8 percent in January, rebounding
from two months of losses.
China’s official purchasing
managers’ index showed an unexpected contraction, data at the weekend showed,
boosting prospects Asia’s largest economy will add to stimulus amid a wave of
global monetary easing. The U.S. economy expanded at a slower pace than
forecast in the fourth quarter as cooling business investment, a slump in
government outlays and a widening trade gap took some of the luster off the
biggest gain in consumer spending in almost nine years.
The China data “will be stoking
hard landing fears that are ever present in market thinking,” said Evan Lucas,
Melbourne-based market strategist at IG Ltd. “The fact new exports are also
declining is a big issue on a macro-level. It illustrates that the lower growth
in the global economy is impacting consumption of Chinese goods.”
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Europe's creditors play with 'political fire' in pushing Greece to the brink
"The creation of the euro was a terrible mistake but breaking it up would be an even bigger mistake. Anything could happen," warns former IMF bail-out chief
The North European power
structure has issued stern and inflexible warnings to Greece. Syriza’s
triumphant radicals must pay the country’s debts and stick to the letter of the
hated `Memorandum’ imposed by creditors.
If premier Alexis Tsipras
breaches the terms of Greece’s EU-IMF Troika bail-out – signed by earlier
leaders under duress, and deemed unjust in Athens – Europe will cut off €54bn
of support for the Greek banking system and force the country out of the euro
in short order. Europe must not yield to “blackmail,” said Germany’s ZEW
institute.
Wolfgang Schäuble, Germany’s
finance minister, said the new Syriza government is bound by the contractual
terms of Greece’s €245bn loan package from the Troika. “Elections change
nothing. There are rules. We did whatever could be done to support Greece in
difficult times, again and again," he said.
When the crisis first erupted in
2010, and re-erupted in 2012, Europe lacked a firewall. The conflagration
threatened to spread instantly from Greece to Portugal, Ireland, and beyond.
This time Mr Schäuble thinks they
are ready. “We face no risk of contagion, so nobody should think we can be put
under pressure easily. We are relaxed,” he said.
In Frankfurt, the Bundesbank’s Joachim Nagel warned that there will be “fatal consequences” if Greece violates the terms of the rescue deal.
His words were echoed by the European Central Bank’s Benoît Cœuré, ubiquitous on the airways with hot admonitions. "Mr Tsipras must pay, those are the rules of the game, there is no room for unilateral behaviour in Europe,” he said.
The riposte from Athens has been tart. Greece will not have any further dealings with the Troika and will not ask for an extension of its bail-out at the end of February. “We will not accept the self-reinforcing crisis of deflation and debt,” said the new finance minister, Yanis Varoufakis.
The creditors are treating the
unfolding drama as if it were a local Balkan affair. If a country of eleven
million chooses to commit economic suicide, it is free to do so. The broader
consequences will be no greater than the fall-out from Argentina’s default in
2001. That is the message from Berlin.
Brussels is for now sticking to
the tough line. “We expect them to fulfil everything that they have promised to
fulfil,” said Jyrki Katainen, the EU’s economic enforcer.
Experts are deeply divided about
the wisdom of this strategy, and the implications of Grexit.
----It is politics that now matter. EU veterans warn that any mishandling of the Greek drama could escalate into an existential threat to the European Project itself. They deplore the sabre-rattling in Brussels and Berlin, deeming it petulant, even bordering on idiocy at a time when the political centre is imploding in a string of countries, and not just in the South.
The Dutch Labour Party, the
dominant force of Holland’s post-war `Polder’ era, collapsed to 9pc in the EU
elections last year. It has immolated itself like so many of Europe’s
once-great socialist parties by enforcing what amounts to reactionary 1930s
policies in the name of EMU. “The centre-Left has lost all credibility,” said
Simon Tilford from the Centre for European Reform.
Spain’s Podemos party – much in
evidence at Syriza’s victory party in Athens, and even more mutinously radical
– is leading national polls at 27pc. Marine Le Pen’s Front National won the EU
elections in France with calls for a return to the franc and a return to
sovereign borders. The three biggest opposition parties in Italy are now
hostile to the euro. This is not contagion from Greece. It is running in
parallel. Yet how it is handled will spill over with emotional force into the
internal debates everywhere in Europe.
“Syriza has just won a landslide
popular mandate from the Greek people to tell the Troika to go to Hell. It is
ludicrous to shout at them and tell them they can’t wriggle out of agreements,”
said Giles Merritt, head of the Brussels think-tank Friends of Europe.
More
The dam has burst; we are all Syriza supporters now
There’s not much doubt where the biggest threat to global economic stability comes from right now – it’s the pesky euro
Central banks tend on the whole not to trespass on each other’s territory; it’s just not thought polite among this small elite of monetary witch doctors. Just lately, however, it seems to have become something of a habit. First to break the taboo was Raghuram Rajan, chairman of the Reserve Bank of India, who strongly criticised the manner of US Federal Reserve tapering for the chaos it was inflicting on some emerging markets.Now comes the Bank of England’s Mark Carney, who admittedly wasn’t lambasting his long-standing friend and opposite number at the European Central Bank, Mario Draghi, as such, but was lambasting something that might be thought even more of a no-go area for a central banker – the whole political construct of the eurozone. He’s hardly the first to express such frustration.
Tim Geithner, US Treasury Secretary at the height of the eurozone sovereign debt crisis, later said that he had “completely underweighted the possibility they would flail around for three years. I thought it was just inconceivable they would let it get as bad as they ultimately did”.
But they did, and have been continuing in much the same vein ever since. Some might argue that Mr Carney should first address the mote in his own eye before taking aim at allies across the Channel. Yet on two grounds he has every right to complain. Mr Carney is also chairman of the international Financial Stability Board, and there is not much doubt where the biggest threat to global economic stability comes from right now – it’s the pesky euro.
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Russia's sanctions hand the advantage straight back to debt-laden Athens
Syriza's rejection of EU measures against Russia are a diplomatic hand grenade lobbed directly at Brussels
So, the gloves are off. Anyone
who thought negotiations between the new radical-Left Greek government and its
creditors were going to be conciliatory, or even rational, must think again.
It is only a few days since
Syriza’s seismic election victory and the installation of Alexis Tspiras as
prime minister. Yet discussions over Athens’ €350bn (£240bn) debt mountain –
owed mainly to other eurozone governments, the International Monetary Fund and
European Central Bank (ECB) – have already turned ugly.
Greece and its official creditors
are now issuing full-blooded threats and counter-threats, regardless of the
impact on financial markets. The Athens stock exchange endured single-day,
double-digit percentage falls last week. On Tuesday, Greek banks, effectively controlled
by official foreign creditors, lost over a quarter of their value.
Banking fears extend way beyond
capital flight – as savers worry about Greece crashing out of the eurozone.
There is concern the Syriza-led coalition could take direct control of Greek
lenders and write off billions of euros in household loans, destroying bank
balance sheets in a frenzy of populist contractual vandalism.
Such recklessness would, of
course, make a nonsense of Greek bail-out terms agreed in both 2010 and 2012,
deals which amounted to a €325bn rescue to keep Greece afloat and the eurozone
intact. Yet rewriting those deals, and softening related reform conditions, is
the stated aim of both Syriza and the small, Right-wing Independent Greeks
party with which it is now in government.
Since last weekend, Syriza has
blocked the sale of the government’s controlling stake in the Public Power
Corporation, which generates two thirds of Greek electricity, vowing to
re-employ sacked workers and reverse pension cuts. The privatisation of
Greece’s main port, another key plank of the sell-off programme which forms
part of the bail-out conditions, has also been halted. Tspiras then appointed
Yanis Varoufakis as economics minister, the man who will lead negotiations with
international creditors. He says his country has been subjected to “fiscal
waterboarding”.
Since Syriza won, Greek two-year
bond yields have spiked towards an eye-watering 20pc. If sustained, such
borrowing costs will drive the country into penury. The challenge now is to
hammer out a debt-relief package that justifies Syriza’s chest-thumping, and
satisfies an angry electorate, while not snapping the patience of voters across
eurozone creditor nations – not least Germany, which directly holds almost
€60bn of Greek debt and implicitly stands behind much more.
The current bail-out package
expires at the end of February. After that Greek banks won’t be able to borrow
from the ECB – which would result in a bank run, a shut-out of depositors and,
almost certainly, widespread civic unrest. A new deal simply must be done by
month-end. So time is tight – and the rhetorical mud-slinging will get a lot
worse before it gets better.
Into this heady financial and
political mix, we must now add something else. Within a week of taking office,
Syriza played the geopolitical card. A formally worded complaint, issued by a
spokesman for Tsipras, said the new Greek administration had not approved a
European Union heads of government statement on possible further sanctions
against Russia.
“The aforementioned statement was
released without the prescribed procedure to obtain consent by the member
states and particularly without ensuring the consent of Greece,” the complaint
read. “In this context, it is underlined that Greece does not consent to this
statement.”
This amounts to a diplomatic hand
grenade, lobbed directly at Brussels. EU sanctions against Russia will expire
in March unless renewed by the unanimous decision of member states, giving
Greece an effective veto. Amid a breakdown of the ceasefire in East Ukraine,
and intensifying Western claims of Russian aggression, the US is exerting
enormous pressure on “our European colleagues” to renew, and even tighten,
sanctions against Russia. Has Syriza found the leverage it needs to secure serious
debt-restructuring?
---- Just before topping the Greek poll in European parliamentary elections last May, Syriza’s high command met in Moscow with pro-Putin politicians subject to EU travel bans. In September, Syriza’s MEPs voted against the European Parliament’s ratification of the EU-Ukraine Association Agreement. Then last week, Tspiras announced that his new defence secretary is the leader of Greek Independents, Panos Kammenos – who last year stated that his party “publicly supports President Putin and the Russian government who have protected our Orthodox brothers in Crimea”. Oh, and Syriza’s manifesto also calls for Greece to leave Nato.
If these Greek debt negotiations
go wrong, and positions become so entrenched and tempers unchecked that the
madness of an outright default prevails, or even looks very likely, financial
markets across the eurozone and the entire world could endure a Lehman-style
systemic lurch. That would seriously damage the still-fragile global economic
recovery. This Russia angle, the cosying-up by Syriza to Moscow, at a time when
East-West relations are at a post-Cold War low, will add additional edge and
potential nastiness to already complex and fraught negotiations that we all
desperately need to go right.
More
Memo To Yellen: What ‘Escape Velocity’—-The Q4 GDP Report Was Not “Solid”
by David Stockman • January 30, 2015
Janet Yellen and her band of
money printers think they are driving the GDP forward toward the nirvana of
full employment and the achievement of every last dime of “potential GDP”. What
they are actually doing, instead, is inflating the Wall Street bubble to ever
more dangerous heights because their monetary injections never make it to the
real main street economy; they just whirl around in the canyons of Wall Street
where they enable speculators to wildly inflate the price of risk assets.
Now comes another GDP report card,
this one “disappointing”. Not only does it refute the claim of the Wall
Street Keynesian chorus that the U.S. economy hit “escape velocity”
last spring and summer, but it is also chock-a-block full of evidence that
the Fed’s machinations have nothing to do with the performance of the real
economy.
As usual, the seasonally adjusted
numbers on a annualized basis are full of noise—-the most significant being
inventory fluctuations. The latter flattered the 5% number that so excited the
headline writers last quarter, but had the opposite impact this time. The
actually gain in real financial sales, therefore, was only 1.8%—-even more
tepid than the headline.
But the annualized quarterly
figures just don’t cut it, in any event. National defense spending in Q4
declined at a whopping 13.2% annualized rate, but unfortunately, it did not
reflect the actual hard-chop to the Pentagon’s budget that is long
over-due. It was just the payback for the anomalous annualized growth of
15% in Q3. The latter period tracks the fiscal year-end in
September, and therefore the big figure which ballooned Q3 GDP did
not reflect economic growth at all—–just the usual scramble of
bureaucrats to waste money at year end before appropriations lapse.
In fact, real defense spending in
Q4 2014 was identical to the figure recorded for Q4 2013. This unfortunately
means that the nation continues to waste vast resources on defense at a
constant level, but that has nothing to do with the trend rate of economic
growth.
So the point is to get out of the
GDP reporting weeds. That requires eliminating the volatile element of
inventory fluctuations, and looking at the rate of change on a year or over
year basis in order to screen out temporary anomalies and dispense with
the faulty seasonal adjustments entirely.
Here’s what we get. During
the year ended in Q4 2014 (LTM), real final sales grew at a 2.2% annual
rate. That’s right. When you eliminate the noise from an allegedly
bad winter quarter (Q1) and the annualized distortions in the Q3 headline owing
to defense, the Obamacare catch-up and several others, you get an economic
expansion rate that was humdrum, not evidence of escape velocity; and
worse still, it actually represented a deceleration from the 2.6% rate of
real final sales gain for the LTM ending Q4 2013.
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"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
At the Comex silver
depositories Friday final figures were: Registered 67.73 Moz, Eligible 110.39
Moz, Total 178.12 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
As we start February, below how to get a long spell
as a guest in one of Her Majesty’s Spartan Accommodation blocks. Mr. Summers
whole article is well worth the read. Coming soon to America, apparently,
possibly as early as later this year.
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
The Bomb Squad: Hunting the U.K.'s Explosive Thieves
Nicholas
Summers Jan 27, 2015
Along the western coast of England, under a half-moon hidden by
clouds, a dark Audi sports car with fabricated plates followed an empty road
toward a Barclays bank. Inside were five men, dressed all in black, and their
gear: crowbars, power tools, coils of flexible tubing, and two large tanks of
explosive gas. It was 1:51 a.m. The job would take just under seven minutes.
This particular Barclays was just waiting to be robbed. Located at the rear of a shopping mall in a town called Birchwood, it was secluded from the street by 300 feet of parking lot and faced a creek, a railway, and acres of cropland. Early on this Friday in September 2013, the area was deserted, and the walk-up ATM glowing Barclays blue onto the brick forecourt was likely filled with cash for the weekend crowds. For six months, the gang had been targeting cash machines across a 150-mile swath of the country, from Oxford to Liverpool, with a technique never before used in the U.K.
Two men exited the Audi, balaclavas covering their faces, and with professional calm attacked the face of the machine. One pried open the cash slot with a 3-foot gorilla bar, then worked it like a lever, hopping up and down with a two-handed grip. A third man knelt to assist, a fourth stood watch, and the fifth remained behind the wheel of the car, idling at a short distance behind a perimeter of security bollards. After several minutes one of the team walked up trailing a wire and two lengths of hose, which he fed a short distance into the ATM, as a doctor might intubate a patient’s mouth. The hoses carried oxygen and acetylene, and the men took cover as the gases began to mix in the pit of the machine.
The strongbox inside an ATM has two essential holes: a small slot in front that spits out bills to customers and a big door in back through which employees load reams of cash in large cassettes. Criminals have learned to see this simple enclosure as a physics problem. Gas is pumped in, and when it’s detonated, the weakest part—the large hinged door—is forced open. After an ATM blast, thieves force their way into the bank itself, where the now gaping rear of the cash machine is either exposed in the lobby or inside a trivially secured room. Set off with skill, the shock wave leaves the money neatly stacked, sometimes with a whiff of the distinctive acetylene odor of garlic.
In Birchwood, the oxyacetylene bomb exploded immaculately at 1:57 a.m.—a single concussive thunderclap that sent a minimum of dust and debris raining onto the sidewalk. Only now did the men hustle. Smashing a low window to the left of the ruined ATM, they crawled inside with more tools, shoved the cash into a black duffel, and exited on their hands and knees. One gently helped another to his feet, and the Audi made a neat three-point turn to begin their getaway. Details of the heist, and other events in this story, come from security camera footage, police files, court records, and interviews with investigators, prosecutors, bank representatives, security experts, and defense lawyers.
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“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
The monthly Coppock Indicators finished January
DJIA: +124 Down. NASDAQ: +220 Down. SP500: +178 Down.
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