Monday 8 June 2015

Greece Has “Friends.”



Baltic Dry Index. 610 +07       Brent Crude 62.88

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

"I don't have a personal problem with Alexis Tsipras, quite the contrary. He was my friend, he is my friend. But friendship, in order to maintain it, has to have some minimum rules," he said at the G7 summit in Germany.

Jean-Claude Juncker.

With Nero and the Senators busy fiddling away in Bavaria, trying to start a war with Russia and trying to save the world from the fiction of “man-made global warming,” now re-launched as  “climate change” after an earlier flop, the European extras in the Nero drama opened up on Greece. The EC president declared his “friendship” for Greek Prime Minister Tsipras, this from a failed former Luxembourg Prime Minister, who says “that when it gets serious, you have to lie.”  With “friends” like these one wonders if Greece needs enemies.

The President of the European Parliament, Martin Schulz, meanwhile, had no such notions of friendship towards Greece. This “Great German” did what Germans do best, he started issuing warnings and threats, and demanded that “Syriza has a responsibility towards the rest of the European Union, not simply its own voters” something plainly untrue, though I’m sure Goebbels would have approved. The Great Schulz is threatening “dramatic consequences” for Greece, and threatening them with “automatic exit from the EU,” something not in the rules or his power, but then again this is the EUSSR. It used to be what Germany or France wanted, Germany and France got, but now it’s just what Germany wants everyone else gets. So if Schulz wants Greece out of the EU by German diktat, a British veto is unlikely.

We open with the never ending saga of Greece.

“When it becomes serious, you have to lie.”

Jean-Claude Juncker. Failed former Luxembourg P.M., serial liar, president of the European Commission.

Greece told to strike a deal or face 'dramatic consequences'

Time is running out for Syriza and Greece's lenders to find common ground, European leaders warn

Greece's creditors are losing patience with the country's uncompromising stance on its debt obligations, with the heads of the European Parliament and Commission calling on Alexis Tsipras's government to find common ground for a deal or face "dramatic consequences".

Jean-Claude Juncker, President of the Commission, has vented his frustration at Mr Tsiprs for rejecting the lenders' proposals last week without telling his parliament that sticking points such as income support for pensioners had been put on the table for negotiations.

"He didn't tell parliament that we did address that subject already," said Mr Juncker, adding that he is yet to receive a revised proposal from the Greek leadership following Mr Tsipras' "disappointing" comments.

-----Meanwhile, the President of the European Parliament has put further pressure on Greece to agree a deal with its international creditors and unlock rescue funding, warning of “dramatic consequences” if the indebted country resists compromise.

Martin Schulz told the Welt am Sonntag newspaper that the anti-austerity ruling party Syriza has a responsibility towards the rest of the European Union, not simply its own voters.

----Mr Schulz echoed Mr Tsipras’s foreboding tone about how quickly Europe needs to come to an agreement. "Time is running out and the consequences would be dramatic,” he said, warning Greece against “turning down the outstretched hand again”.

He has also suggested over the weekend that if Greece were to depart from the eurozone, it would spell “automatic exit from the EU”.
More
http://www.telegraph.co.uk/finance/economics/11657660/Greece-told-to-strike-a-deal-or-face-dramatic-consequences.html

If You Think Greece’s Crisis Will End Any Time Soon, Think Again

June 7, 2015 — 11:01 PM BST
Frustrated by Greece’s cat and mouse game with its creditors? Get used to it.
Even if Prime Minister Alexis Tsipras clinches the 7.2 billion euros ($8 billion) that creditors are withholding, he’s going to need another cash infusion shortly thereafter.

What will ensue is a renewed battle after almost five months of trench warfare. The beleaguered country requires a third bailout of about 30 billion euros, according to Nomura International Plc analysts Lefteris Farmakis and Dimitris Drakopoulos. Tsipras says any aid must be on his terms rather than those of governments whose taxpayers have forked out billions in the past five years to keep Greece in the euro.

“Any plausible deal at this stage is unlikely to do enough and it’s unlikely to be the end of the matter,” said Simon Tilford, deputy director of the Centre for European Reform in London. “This could just play out again and again.”

The latest episode in the five-year saga has focused on releasing the final tranche of Greece’s second bailout, which expires at the end of June. The amount at stake roughly equates to the bond repayments that Greece needs to make to the European Central Bank in July and August.

Here’s the problem for the policy makers struggling to avoid a default in Athens: Even if Greece muddles through until August, it faces a financing shortfall of at least 25 billion euros through the end of 2016. That’s likely to worsen as the economy slides deeper into recession and tax revenue shrivels.

---- Then there are the fractures on each side of the negotiating table. Among creditors, the IMF says Greece’s financial burden may be unsustainable; the EU says it needs to honor its commitments.

On the Greek side, Tsipras’s Syriza coalition is plagued by infighting over possible concessions, differences that may ultimately force him to call new elections.

A deal this month may not even be enough to get Greece through into August. Another potential wildcard with any agreement with creditors is whether the IMF coughs up its portion of the existing bailout.
More
http://www.bloomberg.com/news/articles/2015-06-07/if-you-think-greece-s-crisis-will-end-any-time-soon-think-again

Elsewhere in the continent made for tanks, Nero and the 6 dwarfs, were in an obscure  Bavarian fantasy world of their own, far removed from the global reality of everyone else. Below, Bloomberg drily, and with unintended comedy, covers the cringingly awful Nero encounter with the local Alpine rifle club, who for some reason, were forced to leave their rifles at home. After one alcohol free beer too many, President Nero declared “It was a very fine beer. I wish I was staying.” A sentiment widely shared by many of the rest of us outside of the Bavarian Bubble, leaving Nero to shop for some lederhosen. I look forwards to the pictures later in the year.

Obama Gets Tip Over Bavarian Beer on G-7 Tour With Merkel

June 7, 2015 — 1:08 PM BST Updated on June 7, 2015 — 7:57 PM BST
The people of Kruen in Bavaria only learned at the last minute that the world’s most powerful man and woman were going to tour their village.

“We were surprised to be invited,” said Bernhard Neuner, the leader of the local branch of a traditional Alpine rifle club, a grouse feather sprouting from his green cap. “Normally we would fire a salute, but this time we had to leave our guns at home.”

Bavarian folklore mixed with modern security as U.S. President Barack Obama’s motorcade swept into the village square on Sunday to be met by German Chancellor Angela Merkel. Men in lederhosen played alpine horns to greet the leaders, who are in southern Germany for a two-day summit of Group of Seven leaders in nearby Schloss Elmau.

“That was without question the best alphorn performance that I’ve ever heard,” Obama told the crowd, all of whom were in traditional dress of leather shorts for the men and decorative dirndl dresses for the women. “I have to admit that I forgot to bring my lederhosen, but I’m going to see if I can buy some while I’m here.”

The two leaders sat with villagers drinking wheat beer -- non-alcoholic for Obama -- and eating pretzels in the sun. For all the smiles, the president was told about rural concerns over the planned Transatlantic Trade and Investment Partnership, or TTIP, which both he and Merkel champion. The prospective accord was the subject of further discussions when the leaders held a private meeting at Schloss Elmau.

“We talked about the problems of free trade for regional farmers,” said Alois Kramer, 45, a farmer from Kruen who was seated next to the U.S. president for about 15 minutes. “He said that he understands that TTIP would be difficult for farmers who produce milk and vegetables.”

Kramer, who learned his English working on a farm in Vermont, said that Obama told him his beer was alcohol-free because he had work to do. While praising the president’s openness and concern, Kramer said Obama had failed to convince him about the benefits of TTIP. “I know there are such strong lobby interests behind this,” he said.

Merkel’s husband, Joachim Sauer, meanwhile taught the president how to cut a Weisswurst, another Bavarian specialty.

Obama, now jacketless, shook hands with villagers with Merkel translating as the leaders prepared to leave.

“It was a very fine beer,” said the president. “I wish I was staying.”
More
http://www.bloomberg.com/news/articles/2015-06-07/obama-gets-tip-over-bavarian-beer-on-g-7-tour-with-merkel

Outside in the real world, today’s instalment of data from Asia.

Asian shares slip, China's imports disappoint

TOKYO |  Sun Jun 7, 2015 11:28pm EDT
An index of Asian shares extended losses on Monday after Chinese imports declined more than expected, while the dollar was higher after upbeat U.S. employment data raised bets that the U.S. central bank would raise interest rates as early as September.

China's exports fell less than expected last month, but imports tumbled at a greater pace, stoking concerns over a slowdown in the world's second largest economy and giving Beijing more reason to take further stimulus steps.

China's exports in May fell 2.5 percent from a year earlier in dollar-denominated terms, better than market expectations, while imports tumbled 17.6 percent.

Considering expectations of a slight rebound in import levels in May due to recovering crude prices, "the continuing fall in imports suggest demand side factors – softening domestic consumption - are at play," said Chester Liaw, economist at Forecast Pte Ltd in Singapore.
More

Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.

George Orwell.

At the Comex silver depositories Friday final figures were: Registered 57.81 Moz, Eligible 120.82 Moz, Total 178.64 Moz.  

Crooks and Scoundrels Corner

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

What happens when it all goes wrong and the next Lehman strikes? Below, when the central banksters fear happens.

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

Wolf Richter: Get Used to Selloffs, Central Bankers Say as They Fret about the Terrifying Moment When Liquidity Evaporates

Posted on June 5, 2015 by Yves Smith
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
Axel Weber, president of the Bundesbank and member of the ECB’s Governing Council until he quit both in 2011 to protest the ECB’s bond purchases, quickly landed a new gig: chairman of UBS. WHIRR went the revolving door. From this perch, he warned in 2012 that the easy-money policies and the expansion of central-bank balance sheets would lead to “new turmoil in the financial markets.” Now that the turmoil has arrived, he’s at it again.

“Volatility and repricing” – a euphemism for losses – are “part of getting back to normal,” he told NBC. We should get used to it, he said, echoing what ECB President Mario Draghi had said a couple of days ago. So no big deal. However, he was fretting “about the liquidity in the market, in particular under stress situations.”

Despite unleashing a deafening round of QE on the European markets, the ECB has watched helplessly as government bonds have done the opposite of what they should have done: Prices have plunged, and yields have spiked. The German 10-year yield soared in seven weeks from 0.05% to over 1% on Thursday, before settling down a bit. And it wasn’t even a “stress situation.”

US Treasuries have sold off sharply as well since the beginning of February, with the 10-year yield jumping from 1.65% to 2.31%, the worst selloff since the taper tantrum in 2013.

Now one word is on the official panic list: “liquidity.” They’re thinking about the terrifying moment when it suddenly evaporates.

Weber blamed central banks for the liquidity issues in the global bond markets. They’ve been buying “vast amounts of assets and putting them on their balance sheets”; not just government bonds but also corporate bonds. Since central banks “buy and hold,” they “take some liquidity out of the market.”

He pointed at regulation that “has moved a lot of banks out of market-making into more long-term sustainable business models,” he said. UBS, for example, has turned from investment banking to wealth management.

And the Fed’s forward guidance has changed from a nearly unified statement about not raising rates to a cacophony on whether to raise rates earlier or later. “That actually impacts pricing in the market; market moves are then translated into much bigger moves because people aren’t on the same page.”

Everyone is chiming in with their fears that liquidity in the bond market will dry up just when you need it the most.

The liquidity that investors believed they had in the bond markets was “illusory” during the last crisis, explained Fed Governor Daniel Tarullo at an Institute for International Finance summit on Thursday. Like Draghi, Weber, and many others, he said that investors should get used to more volatility. It’s liquidity they’re worried about.

So in effect, get used to selloffs. It’s all part of “re-pricing,” as Weber had put it so eloquently. It’s the new normal. IF there is enough liquidity, “re-pricing” is going to be orderly. But that’s a big IF.

The next crisis will “probably be oriented to lack of liquidity,” BlackRock CEO Larry Fink said at the same summit. And there’s “the potential for frozen markets….”

That’s when everyone panics.

----Bond markets are supposed to be fairly liquid, with the US Treasury market being the most liquid. Corporate bonds are less liquid. Each bond issue is different, and even in good times, it may take days to find a buyer for a particular bond at a price that won’t kill the seller. But when liquidity dries up – that is, when buyers with liquidity lose interest – these bond markets can seize, and that’s when forced selling leads to a collapse in prices, runs on bond funds, panic, and mayhem.

Even conservative sounding “open end” bond funds can get eviscerated when they experience a run and are forced to sell their holdings into an illiquid market [Are These Ticking Time Bombs in Your Portfolio?].
More
http://www.nakedcapitalism.com/2015/06/wolf-richter-get-used-to-selloffs-central-bankers-say-as-they-fret-about-the-terrifying-moment-when-liquidity-evaporates.html
  

Solar  & Related Update.

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

In Moscow on Saturday, Formula E was another win for China racing. On to London next.

Nelson Piquet Jr. wins Formula E race in Moscow

June 06, 23:31
Audi Sport ABT’s Lucas di Grassi finished the race in the second place and the third step of the winning podium was occupied by Sebastian Buemi from E.Dams Renault

Formula E World Championship after winning on Saturday the ninth race of the season held on the scenic track of the Russian capital of Moscow, outside the Kremlin walls. Having qualified in the second place, Piquet from NEXTEV TCR team (former China racing) was quicker to take advance over the pole position holder Jean-Eric Vergne from team Andretti in the opening lap and remained in the lead for the rest of the race.

Audi Sport ABT’s Lucas di Grassi finished the race in the second place and the third step of the winning podium was occupied by Sebastian Buemi from E.Dams Renault.

Although, securing the pole of the first ever motorsport race in the heart of the Russian capital, French Vergne eventually finished in the fifth place.

Despite fears that the weather in Moscow will be rainy, the drivers raced the spectacular track outside the Kremlin walls under the bright sun.

The inaugural Formula E season already saw eight spectacular races in different corners of the world and the weather favored all of the previous races with nice and sunny conditions. The two remaining races of the championship are scheduled to be held in Moscow on June 6 and London on June 27 with both capitals of Russia and Great Britain, respectively, known for naughty weather and rains.

All cars racing in the FIA Formula E championship are identical, therefore the drivers are in equal positions. The car weighs little less than 900 kilograms with the battery being the heaviest part of the vehicle weighing 320 kilograms. With the maximum power of 200 kW (270 hp) the car is capable of reaching the speed of 100 kmph in three seconds and its maximum speed is limited to 225 kmph.

A total of 10 teams are currently participating in the Formula E championship with two drivers racing for each team. The list of the pilots of the new racing event include the names of such developed racers as Jerome D'Ambrosio, Jarno Trulli, Sebastien Buemi, Nick Heidfeld, Bruno Senna, Nelson Piquet, Jean-Eric Vergne and many others.

During the races drivers must make one mandatory pit stop in order to change cars, therefore the total number of electricity-driven race cars shipped between the global venues of the championship throughout the season stands at 40.

The Formula E race in Moscow will also be the first ever FIA authorized car race in the historic downtown of the Russian capital.

 You've got a friend in me
You've got a friend in me
When the road looks rough ahead
And you're miles and miles from your nice warm bed
You just remember what your old pal said
Greece you've got a friend in me
Yeah you've got a friend in me

JC Juncker and the Six Dwarfs.

The monthly Coppock Indicators finished May

DJIA: +107 Down. NASDAQ: +195 Down. SP500: +139 Down.  

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