Baltic Dry Index. 805 +11 Brent Crude 60.32
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Any
sudden event which creates a great demand for actual cash may cause, and will
tend to cause, a panic in a country where cash is much economised, and where
debts payable on demand are large. In such a country an immense credit rests on
a small cash reserve, and an unexpected and large diminution of that reserve
may easily break up and shatter very much, if not the whole, of that credit.
Walter Bagehot. Lombard Street, 1873.
Whichever way the hapless Greeks vote on Sunday, be prepared for turmoil across Europe next week. There are no good outcomes to where the troika and EC, and EU have taken Greece. Worse, Belgium, France, Italy and Spain are all on their own glide path to Greece. Merkel, Schauble, Draghi, Juncker, Lagarde, Dijsselbloem, all haven’t a clue at the incompetent damage they’ve done to the EU’s credibility. As a case study in how to turn a relatively minor problem in a tiny EMU country in 2010, into a catastrophe for all in 5 years of never ending crisis, this EU example will go down in history.
The EMU hasn’t any future in its present form with its present leadership. Next week it’s all only far too likely to get much worse. If they’re to stay together at all, both the EU and EMU have to be reformed. They are simply not up to the job of dealing with Belgium, France, Italy and Spain to come. Next week, the blame game, although the New York Times got in early.
Greece's Yanis Varoufakis prepares for economic siege as companies issue private currencies
Greek finance minister says the country has a six-month stock of oil and four months of pharmaceuticals
Greece has stockpiled enough reserves of fuel and pharmaceutical supplies to withstand a long siege, and has set aside emergency funding to cover all the country's vitally-needed food imports.Yanis Varoufakis, the Greek finance minister, said the left-Wing Syriza government is still working on the assumption that Europe's creditor powers will return to the negotiating table if the Greek people don't agree to their austerity demands in a referendum on Sunday, but it stands ready to fight unless it secures major debt relief.
"Luckily we have six months stocks of oil and four months stocks of pharmaceuticals," he told The Telegraph.
Mr Varoufakis said a special five-man committee from the Greek treasury, the Bank of Greece, the trade unions and the private banks is working feverishly in a "war room" near his office allocating precious reserves for top priorities.
Food has been exempted from an import freeze since capital controls were introduced last weekend. Grains, meats, dairy products, and other foodstuffs should be able to enter the country freely, averting a potential disaster as the full tourist season kicks off.
The cash reserves of the banks are dwindling fast as citizens pull the maximum €60 a day allowed under the emergency directive - already €50 at many banks. "We can last through to the weekend and probably to Monday," Mr Varoufakis said.
Despite assurances, the crisis is likely to escalate fast if there is no
resolution early next week. Businesses in Thessaloniki and other parts of the
country are already creating parallel private currencies to keep trade alive
and alleviate an acute shortage of liquidity.
Vasilis Papadopoulos, owner of the Maxi paper mill in Katerini, said the
situation was becoming desperate for his industry. "I have enough raw
materials to last until July 14. If I don't get any more pulp, I will have to
close the factory. It is a simple as that. I have 183 employees and I will have
to start laying them off," he said.
Mr Papadopoulis, who manufactures paper towels, napkins, and toilet
paper - partially for export - said a consignment of 3,000 tonnes of pulp from
Finland was stranded in the port of Salonica. "I can't pay the suppliers
because the bank is blocked, so they won't release it," he said.
His firm has reached an accord with regional supermarkets to accept
coupons or private scrip money in lieu of payment as soon as next week. His
workers will then be able to use this paper as a parallel currency at the
supermarket to buy goods.
In the meantime, people are trying to offload their bank holdings as
fast as possible. (Electronic bank transfers within the country are still
allowed). "Everybody is afraid of a haircut. Our clients are trying to pay
us as much as possible, and transfer their problems to us. We, in turn, are
paying everything in advance: taxes, gas, anything we can."
"It is like musical chairs because nobody wants to be the last one
left standing with money in their account when the music stops. Before all this
happened we were about to invest €5m to build new warehouses and buy a new
cutting machine from Italy. It is totally suspended," he said.
----The Greek crisis is likely to come to a head one way or another soon after the referendum. The European Central Bank is expected to restore emergency liquidity for the Greek banking system almost immediately if there is a "yes", an outcome likely to trigger the downfall of the Syriza government and the creation of a national unity administration.
The ECB has given strong hints that it will tighten the tourniquet yet further if there is a "no" vote - probably by raising collateral requirement - pushing Greek banks that it also regulates towards the abyss. This is a legal minefield since the ECB has a treaty duty to uphold financial stability. Syriza has said it will consider legal action at the European Court of Justice if this occurs.
More
http://www.telegraph.co.uk/finance/economics/11716318/Greeces-Yanis-Varoufakis-prepares-for-economic-siege-as-companies-issue-private-currencies.html
Greece Referendum: What Happens If They Vote ‘No’
July 3, 2015 — 11:49 AM BST
Greeks are being asked to vote on whether to accept a proposal by the
country's creditors for more austerity to keep aid flowing.Voters have received a clear message from the euro area: vote “Yes” in the July 5 bailout referendum. But Greece’s Syriza-led government is pushing the other way.
The Question:
The 68-word ballot question namechecks four international institutions and asks voters for their opinion on two highly technical documents that weren’t made public before the referendum was called. Here it is, translated into English:“Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on on June 25 and which consists of two documents:
‘‘The first document is called Reforms for the Completion of the Current Program and Beyond and the second document is called Preliminary Debt Sustainability Analysis.
‘‘- Those citizens who reject the institutions’ proposal vote Not Approved / NO
‘‘- Those citizens who accept the institutions’ proposal vote Approved / YES.’’
Not everyone in Greece is finding the question easy to understand.
More with explanatory diagram.
http://www.bloomberg.com/news/articles/2015-07-03/greece-referendum-what-happens-if-it-s-a-no-
Exclusive: Europeans tried to block IMF debt report on Greece: sources
BRUSSELS
|
Euro zone countries tried in vain to stop the IMF publishing a gloomy
analysis of Greece's debt burden which the leftist government says vindicates
its call to voters to reject bailout terms, sources familiar with the situation
said on Friday.
The document released in Washington on Thursday said Greece's public finances
will not be sustainable without substantial debt relief, possibly including
write-offs by European partners of loans guaranteed by taxpayers.
It also said Greece will need at least 50 billion euros in additional
aid over the next three years to keep itself afloat.
Publication of the draft Debt Sustainability Analysis laid bare a
dispute between Brussels and the Washington-based global lender that has been
simmering behind closed doors for months.
Greek Prime Minister Alexis Tsipras cited the report in a televised
appeal to voters on Friday to say 'No' to the proposed austerity terms, which
have anyway expired since talks broke down and Athens defaulted on an IMF loan
this week.
---- At a meeting on the International Monetary Fund's board on Wednesday, European members questioned the timing of the report which IMF management proposed at short notice releasing three days before Sunday's crucial referendum that may determine the country's future in the euro zone, the sources said.
There was no vote but the Europeans were heavily outnumbered and the
United States, the strongest voice in the IMF, was in favor of publication, the
sources said.
The Europeans were also concerned that the report could distract
attention from a view they share with the IMF that the Tsipras government, in
the five months since it was elected, has wrecked a fragile economy that was
just starting to recover.
"It wasn't an easy decision," an IMF source involved in the
debate over publication said. "We are not living in an ivory tower here.
But the EU has to understand that not everything can be decided based on their
own imperatives."
The board had considered all arguments, including the risk that the
document would be politicized, but the prevailing view was that all the
evidence and figures should be laid out transparently before the referendum.
"Facts are stubborn. You can't hide the facts because they may be
exploited," the IMF source said.
More
Angela's Ashes: How Merkel Failed Greece and Europe
By Peter Müller and René Pfister July 03, 2015 – 08:17 PM
----But when Merkel returned to Berlin, she received a call from Tsipras. He
told her that he was not interested in a deal, but that he intended to hold a
referendum in Greece first. A short time later, he tweeted: "With a clear
'NO,' we send a message that Greece is not going to surrender."Merkel is known for not being easily fazed. She has made it this far in part because she has firm control of her emotions. And she remained silent throughout the weekend. But at a Monday meeting of leading members of her Christian Democratic Union (CDU), she hinted at the depth of her disappointment in Tsipras. His policies are "hard and ideological," she said, adding that he is steering his country into a brick wall "with his eyes wide open."
Merkel had always described Tsipras as a man who, while leading a crazy organization, was quite open and accommodating in person. She had hoped that Tsipras would ultimately help reason prevail. Now, though, it appears that he has handed Merkel the greatest debacle of her tenure as chancellor.
'Nothing Left to Fear'
In the end, of course, it will primarily be the fault of the radical Greek government if the country is ejected from the euro zone. How should one deal with a prime minister who conducts negotiations using the language of military mobilization? "We have justice on our side. If we can overcome fear, then there is nothing left to fear," Tsipras tweeted on Monday.
But the divide that is now opening up in Europe also has something to do with Merkel's leadership style -- and with her idiosyncrasy of allowing things to drift for extended periods. This method works when it comes to negotiating a compromise, and when everyone involved is interested in a favorable outcome. But it reaches its limits when someone like Tsipras is determined to carry things to the extreme.
It has long been clear that Greece is a special case in the context of the euro crisis. It is a country in which neither the taxation system nor the land registry system works, a country that is so deeply in debt that no reasonable economist still believes that it can ever repay what it owes. In addition, parties that habitually plundered the state ran the country for years. Then came Syriza, a movement that, at least in its radical quarters, dreamed of toppling the system.
Merkel knew all of this. Nevertheless, she tried to fix the problem with recipes she had used in German domestic politics: delaying, hiding and allowing things to remain vague. There was no lack of cautionary voices. Finance Minister Wolfgang Schäuble has long argued that Greece should be taken on an orderly path out of the euro.
Merkel hopes that the Greeks will vote against Tsipras and in favor of their creditors' austerity proposals on Sunday. If that happens, the Greek prime minister will hardly be able to remain in office. But even so, Greece will remain a bankrupt country and would be faced with forming a new government in the midst of chaos.
More
New York Times Paints Stubborn Picture of Jeroen Dijsselbloem and Wolfgang Schäuble in Greek Negotiations
Landon Thomas Jr. in a New York Times column offers a step by step
account of how the talks between Greece and its European creditors broke down,
laying direct blame on the intransigence of Dutch Jeroen Dijsselbloem, the head
of the Eurogroup and Wolfgang Schäuble, Germany’s finance minister.
In other news, the oil bounce looks to be over, even before any nuke deal with Iran raises the prospect of a flood of Iranian oil in 2016.
Oil prices fall on strong shale supply
Published: July 3, 2015 7:14 a.m. ET
Oil prices fell on Friday, in response to concerns over resilient U.S. crude
production.The number of U.S. oil-drilling rigs rose by 12 to 640 in the past week, snapping 29 straight weeks of decline, data from Baker Hughes showed late on Thursday. The rig-count, which some investors see as a proxy for activity in the oil industry, has fallen sharply since oil prices headed south last year. U.S. oil output, however, has remained strong and continued to pressure oil prices.
Brent crude LCOQ5, -2.45% the global oil benchmark, fell 0.7% to $61.62 a barrel on London’s ICE Futures exchange. In a shortened trading session because of the U.S. Independence Day holiday, U.S. crude futures CLQ5, -2.48% were trading down 0.7% at $56.55 a barrel on the New York Mercantile Exchange.
“The pickup in activity might be illustrative of the competitiveness of the U.S. shale industry which, thanks to cutting costs, might have become comfortable with producing oil at prices around $60 per barrel,” said Norbert Ruecker, head of commodities research at Julius Baer.
“The U.S. shale industry has become the oil market’s swing producer and its responsiveness to prices will shape the market for the years to come, paving the way for lower prices for longer,” he said.
Though this is the first increase since 2014, there are still about 60% fewer rigs working since a peak of 1,609 in October.
“One swallow doesn’t make a summer,” said analysts at Commerzbank. But the bank noted if other new oil rigs were to be added in the coming weeks, that would cast doubt over the expected decline in U.S. shale oil production.
“Yet precisely such a decrease is necessary so that the oversupply on the global oil market can be reduced and oil prices can further recover,” Commerzbank said.
According to analysts at Deutsche Bank, U.S. shale oil production will decline over coming months, likely into early 2016. However, it said that the decline would prove relatively shallow, owing to the continued benefits of productivity gains.
That would leave the oil market materially oversupplied in the first half of next year, by an average of 2.3 million barrels a day. Currently, the market is oversupplied by between 1.5 million and 2 million barrels a day, according to analysts’ estimates.
More
http://www.marketwatch.com/story/oil-prices-fall-as-us-shale-shows-resilience-2015-07-03
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories
Thursday final figures were: Registered 60.11 Moz, Eligible 123.57 Moz, Total
183.68 Moz.
The monthly Coppock Indicators finished June
DJIA: +98 Down. NASDAQ:
+192 Down. SP500: +127 Down.
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