Thursday 30 April 2015


Baltic Dry Index. 595 -06       Brent Crude 65.49

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

"A company for carrying out an undertaking of great advantage, but nobody to know what it is".

The South Sea Bubble 1720

Forced  by Germany into the corner of getting the blame for forcing Greece to default and almost certainly exit the wealth destroying failed euro, Draghi and the ECB blinked yesterday, and provided a trickle of more cash to Greece. The new “drop dead” date moves out a week to May 6th,  one day before Great Britain votes in its general election precipitating the next European crisis. This is now what passes for adult policy making in the 21st century EUSSR. Still I remain “optimistic” that something will “turn up.” Rumours are around that Greece and the Troika are about to pull a rabbit out of a hat at the coming weekend. Buy the rumour, sell the news.

"Buy gold and sit on it. That is the key to success."

Dr. Franz Pick

Greek Banks Get More Funds as ECB Weighs Collateral Discount

9:24 AM BST  April 29, 2015
The European Central Bank raised the amount of emergency liquidity available to Greek banks, while signaling that access to such funds may become more difficult if bailout talks remain deadlocked.

The Governing Council lifted the cap on Emergency Liquidity Assistance by 1.4 billion euros ($1.5 billion) to 76.9 billion euros on Wednesday, people familiar with the decision said. That follows an increase of about 1.5 billion euros last week. An ECB spokesman declined to comment.

With no speedy deal between Greece and its creditors in sight, the ECB is studying measures to rein in ELA funding to limit risks. Staff have proposed increasing the discounts imposed on the securities banks post as collateral when borrowing, and the Governing Council may discuss the issue at its May 6 meeting.

“When the Eurosystem as a whole gives such support, we have our own collateral rules, we can set them ourselves,” ECB Governing Council member Ardo Hansson told reporters in Tallinn, Estonia. “When it’s ELA, then that’s given by the national central bank, which has some latitude in this matter.”

Intended to counter deposit outflows, Greece’s ELA is provided by the country’s central bank at its own risk, and against lower-quality collateral than the ECB accepts.

Household and business deposits fell 1.9 billion euros in March to 138.6 billion euros, the lowest level since January 2005, according to Bank of Greece data released Wednesday.

Weekly ELA injections reflect deposit outflows, as liquidity buffers are kept at about 3 billion euros to give the Bank of Greece and the ECB time to react in an emergency.

'We won't surrender': Firebrand Greek minister risks fresh schism with Europe

Syriza's radical Leftist energy chief warns Grexit will land a 'mortal blow' to monetary union

Hopes that a revamped Greek bail-out team would finally break a two-month deadlock with creditors took a fresh blow on Wednesday, as the Leftist government's firebrand energy minister pledged "no surrender" to international lenders.

Highlighting a deep schism within the ruling party over Greece's future in the single currency, Panagiotis Lafazanis said there could be "no compromise" with creditor powers, who were seeking "subordination and surrender" from his government.

"Our government will not bow down, neither will it surrender," wrote Mr Lafazanis in a Greek newspaper. "Syriza will not accept an agreement that would be incompatible to its radical commitments."

A popular figurehead of the party's radical Left Platform, Mr Lafazanis attacked the Troika for "water-boarding" the Greek economy, choking its people into submission.

"If our 'partners' and the IMF believe that they will blackmail us using the refusal of financing as a weapon, and that they will terrorise the Greek people forever using the 'bogeyman' of default and of a national currency, they are woefully deluded."

The energy minister, who has ties with Moscow, has been one of the fiercest critics of the Troika's plans to undercut Athens' promises to address Greece's "humanitarian crisis" through raising wages and pensions for the poorest.

Meanwhile in America. Recovery? What recovery! While the Telegraph’s renowned AEP remains “an optimist,” Don Quixote was an optimist too. Right now we have the global economy stalling, with a disastrous currency war underway. China barely growing if not actually stalled. Europe all but falling apart, the emerging market economies reeling from China’s slowdown. Russia in a trade war with the EUSSR. Now comes the USA economy actually contracting once the unintended inventory build-up is stripped out. In my world view there’s not a lot to be optimistic about. But Iceland, I understand, is on something of a roll.

“I am an optimist. It does not seem too much use being anything else.”

CNBC, with apologies to Sir Winston Churchill.

Ignore the 'whiff of panic' as US economy stalls

The economy contracted in the first quarter once inventories are stripped out. 'It is hard to put lipstick on that pig,' said UniCredit.

The US economy has suddenly stalled. A blizzard of shockingly weak figures raise the awful possibility that America's six-year growth cycle since the Great Recession has already rolled over, with unsettling implications for the world.

Worse yet, this apparent exhaustion is taking hold even before the Federal Reserve has begun to raise interest rates or to drain any of its $3.7 trillion of quantitative easing and balance-sheet expansion.

Former US Treasury Secretary Larry Summers warned in Davos earlier this year that the Fed typically needs to cut rates by three or four percentage points to combat each cyclical downturn. It is currently at zero. "Are we anywhere near the point when we have 3pc or 4pc running room to cut rates? This is why I am worried," he said.

"Nobody over the last 50 years, not the IMF, not the US Treasury, has predicted any of the recessions a year in advance, never," he said.

We should not ignore his warnings lightly, yet for once I am an optimist, clinging to the belief that the US will recover from the strange "air pocket" of early 2015. A siege of snow and ice across the North East over the late winter - for the second year in a row, and some say evidence of a drastically slowing Gulf Stream - has obscured the picture. The first flash of data is often wrong, in any case.

Yet the latest GDP figures are indisputably atrocious. "It is hard to put lipstick on that pig: This is unequivocally a very weak report," said Harm Badholz from UniCredit.

The slump in the annual growth rate to 0.2pc in the first quarter does not convey the full horror of it. Once you strip out a surge in inventories - often a pre-recession warning - the economy contracted sharply. Investment in business buildings and factories fell 23pc. "A whiff of panic is in the air," said the Economic Cycle Research Institute.

The putatitve post-winter rebound keeps disappointing. Citigroup's economic surprise index has tumbled to deeply negative levels. The Conference Board's index of consumer confidence fell from 101.4 to 95.2 in April.

Stocks slip, euro near two-month high as US economy loses steam

TOKYO | | Thu Apr 30, 2015 1:18am EDT
(Reuters) - Asian stocks stumbled on Thursday while the euro held near two-month highs against the dollar after surprisingly downbeat first-quarter economic growth in the United States - a key export destination for many of the region's economies.

Spreadbetters expected the equity markets to stabilize a little in Europe, forecasting Britain's FTSE, Germany's DAX and France's CAC to open flat to slightly firmer.

The disappointing news on the world's biggest economy comes on top of a worrying slowdown in China and persistent worries about Europe as Greece scrambles to avoid bankruptcy.

New Zealand's central bank said early in the day that it could cut interest rates if domestic momentum weakened.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 percent with South Korean, Australian, Chinese and Hong Kong shares suffering losses.

Japan's Nikkei slumped 2.6 percent, extending losses after the Bank of Japan kept monetary policy unchanged. The decision had been expected, but disappointed some participants who had bet it may ramp up its already massive stimulus program.

“Success is going from failure to failure without losing enthusiasm.”

The talking chair, with apologies to Sir Winston Churchill.

At the Comex silver depositories Wednesday final figures were: Registered 62.63 Moz, Eligible 112.68 Moz, Total 175.31 Moz.  

Crooks and Scoundrels Corner

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

Today we let David Stockman cover yesterday’s sad US GDP report.

Punk Q1 GDP Wasn’t Surprising—It Extends A 60-Year Trend Of Exploding Money And Imploding Growth

by David Stockman • 
During the heyday of post-war prosperity between 1953 and 1971, real final sales—–a better measure of economic growth than GDP because it filters out inventory fluctuations—-grew at a 3.6%  annual rate. That is exactly double the 1.8% CAGR recorded for 2000-2014.

And after this morning’s punk GDP report in which growth stayed above the flat-line by a hair only due to a massive inventory build, the contrast is even more dramatic. Real final sales actually declined by 0.5% during Q1 and, more importantly, reflected a mere 1.1.% annual growth rate since the pre-crisis peak in the winter of 2007-2008.

The long and short of it, therefore, is that there has been a dramatic downshift in the trend rate of economic growth during an era in which central bank intervention and stimulus has been immeasurably enlarged. In this regard, the size of the fed’s balance sheet is the telltale measure of its policy intrusion. That’s because the only mechanism by which the Fed can actually impact the real economy is through open market purchases of treasury bills, bonds and other existing securities for the purpose of raising their price and lowering their interest rate or yield. And it doesn’t matter whether the Fed is buying short term T-bills to peg the federal funds rate or 10-year notes to drive down long-term interest rates and flatten the yield curve.

Thus, the old-fashioned business of pegging the Federal funds rate and the new-fangled intrusion of massive bond buying under QE are all the same maneuver. They both involve expansion of the central bank balance sheet and, therefore, the systematic injection of fraud into the financial system.

That is to say, growth on the asset side of the Fed’s balance sheet involves the acquisition of financial claims that arise from the utilization of real labor and capital resources. This happens, for example, when the Fed buys treasury notes that were issued to fund the purchase of concrete and bulldozer operators under the highway program or when new homes embodying carpenters’ wages and lumber are financed with Fannie Mae guaranteed mortgages purchased by the Fed.

That contrasts with the liability side of the Fed’s balance sheet, which expands dollar for dollar with the asset side, but represents nothing more than bottled monetary air confected from its digital printing press. Stated differently, the Fed’s fundamental tool of open market purchases of public debt and other securities, and thereby the expansion of its balance sheet, embodies the exchange of claims based on something for credits made from nothing.

The Fed’s current $4.5 trillion balance sheet, in fact, could be expanded to sport liabilities of $10 trillion or even $100 trillion by a few keystrokes on the Fed’s computers—–if the open market desk could find enough public debt, private debt, equities and even seashells to buy and stash on the asset side. But questions of practicality or likelihood aside, the basic principle is that the liability side of the Fed’s balance sheets represents spending power made out of nothing. Accordingly, the greater the size of the Fed’s balance sheet, the greater is the amount of fraud released into the financial system and the more intrusive is its deforming and distorting impact on the capital and money markets and ultimately the real main street economy.
More. Much, much more.

"It is extraordinary how many emotional storms one may weather in safety if one is ballasted with ever so little gold."

William McFee

Solar  & Related Update.

With events happening fast in the development of solar power, I’ve added this new section. Updates as they get reported.  

Below, solar news from South Australia. Australia’s only free state that never took any of Britain’s transported convicts.

Solar power plant floating on wastewater hailed for multiple environmental benefits

By Isabella Pittaway Posted
A field of solar panels floating atop a wastewater pond in South Australia is being hailed as an environmental breakthrough that could even prove a hit with tourists.

The plant, hailed as the first of its type in Australia, has been built at a wastewater treatment facility at Jamestown in the state's mid north.

Sydney-based Infratech Industries developed new solar technology for the site, at a cost of $12 million.

Company director Felicia Whiting said the water cools the panels, making them more efficient.
"Solar panels don't really operate when they're at a high temperature, so we get a longevity of the panels and also the solar rafts can shade the water," she said.

"We actually get a cooling of the water which is beneficial for water treatment.

"We can get about 57 per cent more efficiency than a land-based solar system."

Ms Whiting said the plant also boosted water conservation by preventing evaporation and cutting blue-green algae outbreaks.

"This floating solar has a dual benefit of being able to prevent water evaporation and that translates into water savings," she said.

"For a one megawatt plant, that's about 70,000 kilolitres a year. That's a big saving and it's also a revenue for any host water utility to save that water and on-sell it."

The project sourced 90 per cent of its materials within South Australia.

"The modern mind dislikes gold because it blurts out unpleasant truths."

Joseph Schumpeter

The monthly Coppock Indicators finished March

DJIA: +118 Down. NASDAQ: +209 Down. SP500: +161 Down.  

Wednesday 29 April 2015

Strange Odds.

Baltic Dry Index. 600 Unch.       Brent Crude 62.64

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

The three supervolcano eruptions at Yellowstone – on the Wyoming-Idaho-Montana border – covered much of North America in volcanic ash. A supervolcano eruption today would be cataclysmic, but Smith says the annual chance is 1 in 700,000.

6 numbers are drawn at random from the set of integers between 1 and 49, which means there are 49!/(6!*(49-6)!) combinations of numbers (the draw order doesn't matter). The means that the [UK] jackpot chance is 1 in 13,983,816 or approximately 1 in 14 million.

Less than 10 years ago, who would have thought that asset backed bonds could legitimately stop paying interest to the hapless Goldman Muppets that invested in them. Yet that is one of the ever more bizarre outcomes of our insane world of QE forever, ZIRP and NIRP in the Great Nixonian Error of fiat money, fuelling the central bankster asset bubbles. We are destroying the basis of the pensions and annuities savings sector, to the detriment of the rapidly retiring baby boom generation. And all seemingly just to enrich the one percent cronies of the central banksters. 

In the end game of the Great Nixonian Error and the EUSSR, we live in a world where the odds are considerably better that the Yellowstone super volcano will explode this year, than the chance of winning the UK lottery assuming one bought a ticket.  On unorthodox measures, our central banksters long ago lost control of the volcano they’re toying with. On an astronomical fiat money debt fuelled gambling binge, we are all assuming that we will win the UK lottery before witnessing a cataclysmic blowoff in the debt bubble.

Negative Rates Halt Payments in European Asset-Backed Bonds

11:22 AM BST April 28, 2015
Bonds backed by loans to Spanish small businesses became the first asset-backed securities to stop making interest payments last week after benchmark rates turned negative, according to JPMorgan Chase & Co.

The floating-rate notes, which were sold as part of a securitization in 2007 by Banco Popular Espanol SA, cease payments to investors when the euro three-month interbank offered rate, or Euribor, falls to zero. The benchmark is now at minus 0.005 percent, according to data compiled by the European Money Markets Institute.

Investors in outstanding asset-backed bond are the latest to suffer the consequences of the European Central Bank’s efforts to spur new lending and boost growth in the euro area. Yields on about $2 trillion of government notes along with about 150 billion euros of covered bonds have also dropped below zero.

“This is another example of the side-effects of ECB action,” said Gareth Davies, JPMorgan’s head of European asset-backed securities research in London. More notes including some Dutch residential mortgage-backed securities with government guarantees may stop paying interest if rates drop further, according to Davies.

Banco Popular’s securities are the first to stop paying interest and others may follow if benchmark rates fall further. More than 2.2 billion euros of notes secured with residential mortgages in Europe are among asset-backed securities priced with spreads over Euribor of five basis points or less, according to data compiled by Bloomberg.

Why Markets Are Manic—-The Fed Is Addicted To The ‘Easy Button’

by David Stockman • 
Later this week another Fed meeting will pass with the policy rate still pinned to the zero bound. The month of May will make the 77th consecutive month of ZIRP—–an outcome that would have been utterly unimaginable even a decade ago; and most especially not with the unemployment rate at 5.5% and after 23 quarters had elapsed since the official end of the recession.

There never was an Armageddon-like crisis in 2008 that justified all this; it all happened because two emotionally unstable and misguided high officials—-Ben Bernanke and Hank Paulson—-panicked Washington into the utterly false fear that Great Depression 2.0 was at hand.

I debunked this urban legend by chapter and verse in The Great Deformation, but suffice it to say here that not withstanding all the crony capitalist larceny that this financial terrorism enabled, it is impossible with the stock market at 2100—-50% above its pre-crisis level—that there remains any justification for maintaining these “extraordinary policies” seven years later.

In fact, the Fed’s cowardly dithering for yet another meeting this week has precious little to do with the so-called Great Financial Crisis—-the ostensible reason why we ended up with perpetual free money subsidies for financial market speculators. Instead, it is a product of a policy ideology and insular culture that has been building at the Fed and most other major central banks for more than two decades.

Central bankers now have their big fat thumbs perpetually on the Easy Button because they are addicted to it. In the case of the Fed, it has been in a rate cutting or rate holding mode during 80% of the time since 1990. Stated differently, during 240 of the last 304 months, the Fed has been riding the Easy Button.

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873

At the Comex silver depositories Tuesday final figures were: Registered 62.64 Moz, Eligible 112.72 Moz, Total 175.36 Moz.  

Crooks and Scoundrels Corner

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

Today, a rare trip by mainstream media into today’s Keynesian madness central bankster world. Even then, the Telegraph’s Jeremy Warner can’t seem to grasp that it’s just the logical outcome of the Great Nixonian Error of fiat money. The few, the cronies of the central banksters who get free money and unlimited bailouts when gambling goes wrong prosper, but only at the expense of everyone else, and our children and grandchildren’s future. To fatten up banksters and their ilk in the central bankster casino, we are eating up our seed corn of the future.

Negative interest rates put world on course for biggest mass default in history

More than €2 trillion-worth of eurozone government bonds trade on a negative interest rate. It's a bubble that is bound to end badly

Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.

With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.

On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.

Not only has this never happened before on such a scale, but it marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default. Yet far from being a welcome sign of returning economic confidence, this almost surreal state of affairs actually signals the very reverse. How did we get here, and what does it mean for the future? Whichever way you come at it, the answer to this second question is not good, not good at all.

What makes today’s negative interest rate environment so worrying is this; to the extent that demand is growing at all in the world economy, it seems again to be almost entirely dependent on rising levels of debt. The financial crisis was meant to have exploded the credit bubble once and for all, but there's very little sign of it. Rising public indebtedness has taken over where households and companies left off. And in terms of wider credit expansion, emerging markets have simply replaced Western ones. The wake-up call of the financial crisis has gone largely unheeded.

The combined public debt of the G7 economies alone has grown by close to 40 percentage points to around 120pc of GDP since the start of the crisis, while globally, the total debt of private non-financial sectors has risen by 30pc, far in advance of economic growth.

----The flip side of the cheap money story is soaring asset prices. The bond market bubble is just the half of it; since most other assets are priced relative to bonds, just about everything else has been going up as well. Eventually, there will be a massive correction, in which creditors will suffer sickening losses.

Nobody can tell you when that moment will arrive. We live in an “extend and pretend” world in which economies pathetically fight between themselves for any scraps of demand. One burst of money printing is met by another in an ultimately futile, zero-sum game of competitive currency devaluation

A permanent Governor of the Bank of England would be one of the greatest men in England. He would be a little 'monarch' in the City; he would be far greater than the 'Lord Mayor.' He would be the personal embodiment of the Bank of England; he would be constantly clothed with an almost indefinite prestige. Everybody in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.

Walter Bagehot. Lombard Street. 1873

Solar  & Related Update.

With events happening fast in the development of solar power, I’ve added this new section. Updates as they get reported.

A solar future isn't just likely — it's inevitable

Updated by David Roberts on April 28, 2015, 10:30 a.m. ET
I plan to write a great deal about the short-term prospects for clean energy, both economic and political, but I want to begin life here at Vox with an imaginative exercise, a bit of musing about what energy might look like in the future — not 10 or 20 years from now, but 50, 70, even 100 years ahead.

Obviously, predicting the far future is a mug's game if you take it too seriously. This post is more about storytelling, a way of seeing the present through a different lens, than pure prognostication. But storytelling is important. And insofar as one can feel confident about far-future predictions, I feel pretty good about this one.

Here it is: solar photovoltaic (PV) power is eventually going to dominate global energy. The question is not if, but when. Maybe it will happen radically faster than anyone expects — say, by 2050. Or maybe it won't be until the year 3000, or later. But it'll happen.

The main reason is pretty simple: solar PV is different from every other source of electricity, in ways that make it uniquely well-suited to 21st-century needs. (Among those needs I count abundance, resilience, and sustainability.)

Every other commercial source of electricity — besides solar PV — generates energy through roughly the same means: by spinning a turbine.

Coal plants, gas plants, nuclear plants, and concentrated solar power plants are all just different ways of boiling water to produce steam that spins a turbine. Wind power harnesses the wind to spin a turbine. Hydropower dams use flowing water to crank a turbine. These spinning turbines, in turn, provide mechanical force to an electric generator, which translates it into electrical current (this is done by moving electrical conductors through magnetic fields — see Faraday's Law).

Solar PV works differently: it converts sunlight directly into electricity. Photons of light excite the surface of a semiconductor, knocking electrons loose to become part of a charged electrical field, generating electromotive force that can be tapped by wires. (See: the photovoltaic effect.)

This difference sounds technical, but it is enormously consequential. It brings three obvious advantages, often touted by solar proponents.

---- So let's try to think beyond the limitations of today's PV to a possible future — after another, say, 20 or 30 years of intense research, development, and deployment.

Imagine small, modular, highly efficient solar cells embedded in all newly built infrastructure as a matter of course — buildings, bridges, parking lots, vehicles. Solar PV would no longer be a category of product in itself, but a routine feature of other products. As energy storage also gets cheaper, smaller, and better integrated, it will be worthwhile to capture and discharge small amounts of energy continuously.

I never think of the future, it comes soon enough.

Albert Einstein.

The monthly Coppock Indicators finished March

DJIA: +118 Down. NASDAQ: +209 Down. SP500: +161 Down.