Baltic Dry Index. 587 Brent Crude 66.14
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“Experience
declares that man is the only animal which devours his own kind; for I can
apply no milder term to the governments of Europe, and to the general prey of
the rich on the poor.”
Thomas
Jefferson.
If Grexit doesn’t do for the wealth destroying, dying EUSSR, the
collapse of France will. Though both may play second fiddle to a
constitutional, existential crisis in Great Britain after Thursday if the latest
UK polls are to be believed. Below, Europe as a tsunami of trouble rolls into
view.
'Warning lights' flash over Greece and France as manufacturing stumbles
France and Greece remain the eurozone's laggards, with the former "locked in reverse gear" as manufacturing remains mired in contraction in April
Warning lights are flashing over the Greek and French economies, analysts said on Monday, after a closely-watched manufacturing survey showed both nations remained "mired in contraction" in April.Turmoil in Greece, and concerns that the country could default on its debt and be forced out of the eurozone pushed Greek activity to a 22-month low, according to Markit's latest manufacturing barometer.
The figures also suggested that the European Central Bank's €1.1 trillion bond-buying programme, which has helped to weaken the euro, has so far failed to lift France out of its chronic malaise.
French manufacturing activity contracted for the 11th consecutive month in April, with the rate of decline the fastest so far this year. Markit also said employment levels fell for a thirteenth successive month in April.
“The French manufacturing sector remains locked in reverse gear," said Jack Kennedy, senior economist at Markit. "Production levels were cut at an accelerated rate amid a steeper decline in new orders. This was despite a further fall in prices charged and the recent weakening of the euro, underlining the competitive challenge facing firms.”
Markit's French manufacturing purchasing managers' index (PMI) fell to 48 in April, from 48.8 in March. This was lower than a flash estimate of 48.4 and well below the 50 level that divides growth from contraction. Greece's PMI contracted to 46.5, from a previous reading of 48.9.
----Chris Williamson, Markit's chief economist, said: “Warning lights are flashing particularly brightly over France and Greece, both of which saw accelerating rates of decline at the start of the second quarter. Weaker rates of growth in Germany and Ireland are also cause for concern."
More
Why it's time for debt-addled Greece to worry about the Finns
New Nordic finance minister will try and squeeze Greece to the edge of default, whoever gets the job
The eurozone’s coterie of finance ministers is set to get a new face this week as Finland is set to announce the details of its coalition government.Following elections last month, in which the liberal Centre Party emerged as the largest party, Finland's prime minister elect, Juha Sipila is poised to announce who has made it into his cabinet after three weeks of political horse-trading.
As one of the single currency’s most ardent champions of austerity, the rest of the eurozone will be watching on with interest.
The candidates in line for the role of finance minister could help determine how far debt-stricken Greece will be pushed in its ill-tempered negotiations
The favourite for the job is Timo Soini, leader of eurosceptic True Finns who first stormed into the limelight at the height of the eurozone’s woes in 2011.
Fiercely anti-immigration and a trenchant critic of creditor benevolence to southern countries, Mr Soini was left out of government over his resistance to Finnish involvement in the eurozone’s rescue programme for Portugal four years ago.
This time round, the True Finns - who have been rebranded as just The Finns - came in with nearly 18pc of the vote, and are likely to be brought into from the cold as the second largest party in parliament.
Traditionally, the post of finance minister has gone to the leader of the junior coalition partner.
In Mr Soini, a 52-year-old Millwall supporter who counts Nigel Farage among his closest political allies, the euro’s finance chiefs may well find themselves sitting around the table with a maverick who would put Greece’s much-maligned Yanis Varoufakis in the shade.
More
In a bad week for Europe, as the UK sleepwalks to an apathetic general
election disaster, according to the polls, there was more bad, if belated bad
news from the Institute of International Finance. Seems to me, stay long fully
paid up gold and silver against what comes next, is pretty good advice. Hapless
Brits still have 3 days left to get long some gold and silver.
Liquidity drought could spark market bloodbath, warns IIF
Evaporating liquidity and higher US interest rates will cause huge market swings with potentially catastrophic consequences, Institute of International Finance warns
Investors face a “painful”
adjustment in a world of evaporating liquidity and higher US interest rates
that will trigger huge market swings with potentially catastrophic
consequences, the Institute of International Finance has warned.
Timothy Adams, the chief
executive of the IIF, which represents the world’s biggest banks, described
liquidity as the “top issue” at high level meetings of central bankers, chief
executives and other financial institutions.
He warned that the raft of
regulation introduced in the wake of the 2008 crisis could potentially cause
market gyrations larger than last October’s “flash crash” in US Treasuries.
While Mr Adams supports tougher
rules that have made the banks more resilient, he said a complex web of
regulatory reform may have left banks less able to respond to the next crisis.
“There’s just less capacity for
making markets,” he said. “Officials will say: we expect some volatility and
this was part of this broader scheme of regulatory reform. But for the private
sector there is this issue of: is the total effect of all of these various
regulatory changes likely to produce outcomes larger than each individual
regulatory reform and its consequences?
"The cumulative unintended
could end up being much larger than the one-off intended - we just don’t know.”
----Investors face a “painful” adjustment in a world of evaporating liquidity and higher US interest rates that will trigger huge market swings with potentially catastrophic consequences, the Institute of International Finance has warned.
Timothy Adams, the chief
executive of the IIF, which represents the world’s biggest banks, described
liquidity as the “top issue” at high level meetings of central bankers, chief
executives and other financial institutions.
He warned that the raft of
regulation introduced in the wake of the 2008 crisis could potentially cause
market gyrations larger than last October’s “flash crash” in US Treasuries.
While Mr Adams supports tougher
rules that have made the banks more resilient, he said a complex web of
regulatory reform may have left banks less able to respond to the next crisis.
“There’s just less capacity for making
markets,” he said. “Officials will say: we expect some volatility and this was
part of this broader scheme of regulatory reform. But for the private sector
there is this issue of: is the total effect of all of these various regulatory
changes likely to produce outcomes larger than each individual regulatory
reform and its consequences?
"The cumulative unintended
could end up being much larger than the one-off intended - we just don’t know.”
More
“There
are two kinds of Europeans: The smart ones, and those who stayed behind.”
H. L.
Mencken.
At the Comex silver
depositories Monday final figures were: Registered 62.20 Moz, Eligible 112.45
Moz, Total 174.65 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Bernocchio,
Mr Bubbles mad Keynesian Great Excessor.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
Blogger Ben’s Basically Full Of It
by David Stockman •
Ben Bernanke’s skin is as thin,
apparently, as is his comprehension of honest economics. The emphasis is
on the “honest” part because he is a fount of the kind of Keynesian drivel
that passes for economics in the financially deformed world that the Bernank
did so much to bring about.
Just recall that he first joined
the Fed way back on 2002 after an academic career of scribbling historically
superficial and blatantly misleading monographs about the 1930s.
These were essentially zeroxed from Milton Friedman’s monumental
error about the cause of the Great Depression. In a word, Friedman and Bernanke
pilloried the Fed for not going on a bond buying spree during 1930-1932 and
thereby stopping the shrinkage of money and credit.
In fact, excess reserves in the
banking system soared by 12X during those four years, interest rates were at
rock bottom and the US economy was saturated with idle cash. So there was no
financial stringency——not the remotest aspect of a great monetary policy error.
Instead, what actually happened
was that the US banking system was massively insolvent after a 12-year credit
boom fueled by the Fed’s printing presses. This first great credit
bubble arose initially from the Fed’s maneuvers to fund
the massive war production surge of 1915-1919 and then from
its fostering of a vast domestic and international credit bubble
during the Roaring Twenties.
Alas, none of the Fed governors
during the 1930-1932 credit contraction had graced the lecture halls of
Princeton. But to nearly a man they knew you can’t push on a string, and that a
healthy economy requires that busted loans and soured speculations must
be purged from the financial system in order for sustainable growth
to resume.
Bernanke has never had a clue
about this truth. As I showed in The Great Deformation, what he
got wrong about the early 1930’s—– he replicated in spades after the September
2008 financial crisis:
Upon becoming chairman of the
Fed, Bernanke then foisted the Fisher-Thomas-Friedman deflation theory upon the
nation’s economy in a panicked response to the Wall Street meltdown of
September 2008. Yet monetary deflation was no more the cause of the 2008 crisis
than it had been the cause of the Great Depression.
The monetary populists of the
1920s and 1930s, including Professor Fisher, had “cause and effect” backward.
The sharp reduction after 1929 in the money supply was an inexorable
consequence of the liquidation of bad debt, not an avoidable cause of the
depression.
----That’s the essence of the matter. Bernanke thought the 2008 crisis was a replay of the fictional world of his so-called Great Depression scholarship. Given half the chance by the clueless White House pols—-so-called conservatives who appointed a thorough-going Keynesian to the most powerful economic job in the world——-this time he did underwrite the speculative mania that preceded the crash. So doing, he took the Fed balance sheet into the netherworld of monetary crankdom.
Had the 1930 Fed actually
followed Bernanke’s spurious advice, the experiment back then would have been
short-lived. There was only about $17 billion of public debt outstanding
in 1929 or about 18% of that year’s GDP. In no time, the Fed would have owned
100% of the public debt, the chastened survivors of the crash would have been
petrified by the central banks repudiation of all known rules of sound finance,
and the economy would have remained mired in depression.
The problem back
then, like in 2008, was mountains of bad credit and massive
over-investment, not a deficiency of that after-the-fact Keynesian chimera
called “aggregate demand”.
Unfortunately, three decades of
free lunch fiscal policy had left Uncle Sam with plenty of debt to
monetize by September 2008, and Bernanke’s specious alarmism about an
imminent Great Depression 2.0 resulted in a $1.5 trillion fiscal eruption
within the space of 5 months (TARP and the Obama Stimulus). So there was
nothing to stop the money printing experiment this time around, thereby
enabling an academic scribbler to act out the Friedmanite fantasy.
The extent of the calamity will
be evident soon enough. Bernanke’s monetary snake oil has been embraced by
nearly every central bank in the world, meaning that the global financial
system is flying blind on a perilous diet of massive liquidity,
rampant speculation and a nearly obscene inflation of financial asset
valuations that has showered the 0.1% with a stupendous windfall of unearned
riches.
It is only a matter of time,
of course, before Bernanke’s monumentally misbegotten experiment in
defying the laws of sound finance and common sense alike comes crashing down.
In the meanwhile, he appears to be taking every possible opportunity to insult
our intelligence by using his new blog to proclaim prophylactically that
the next crash is none of his doing; and, in fact, that the $3.5 trillion
of fraudulent central bank credit conjured from thin air which the Fed has
injected into the financial system is actually working.
----Here’s the thing. The Bernank thinks the Great Recession happened because teenage girls piled to the rafters in export company dormitories in China went on a savings binge. Purportedly, the Fed had nothing to do with expanding credit market debt outstanding by $22 trillion or nearly 6X the growth of nominal GDP during the short interval between the time he joined the Fed in 2002 and the massive Wall Street meltdown of 2008.
Accordingly, his madcap money
printing spree after the Lehman bankruptcy—-during which the Fed balance sheet
of $900 billion accumulated over its first 94 years was nearly tripled in the
span of 13 weeks—-is held to represent some kind of Great Reset. That is,
whatever happened before September 2008 is to be ignored because the crisis was
caused by some kind of global “savings glut”, and that he single handedly had
the “courage” to run the printing presses white hot to save the world.
More
"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
Solar & Related Update.
With events
happening fast in the development of solar power, I’ve added this new section. Updates
as they get reported.
The monthly Coppock Indicators finished April
DJIA: +112 Down. NASDAQ: +198 Down. SP500: +150 Down.
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