Friday, 27 November 2015

A Fast Changing World.

Baltic Dry Index. 562 +16        Brent Crude 45.21

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

"The principal cause of the crisis was the dismantling of the system of regulation and supervision in the financial sector which had for much of the post-war period kept the most dangerous elements of that sector in check. In the absence of an appropriate system of effective supervision and regulation, what happens is that the actors in the system, who are intent upon taking the greatest degree of risk — including actors who are intent upon using fraudulent methods to increase their returns — come to dominate parts of the system. As they do that, the general methods of assessing performance in the market, specifically stock-market valuations, become counter-productive. That is to say, they invariably reward the worst actors, while they force more traditional actors, who are still respecting the old norms of conduct, into a competitively disadvantaged position. Thus the bad actors, the fraudulent actors, and the speculative extremists quickly take over.”

J. K. Galbraith. The Great Crash: 1929.

Tomorrow will not be like today which was like yesterday. Today during America’s long weekend holiday season we focus on a fast changing political world. Pax Americana is dying. It’s not 1945-2005 anymore. As our Great Nixonian Error of fiat money, communist money, enters its end game, our four decade long malinvestment bubble is about to get further challenged by a political earthquake. Who knew that three terrible US leaders in a row would end like this. Stay long fully paid up physical gold and silver held outside of western banks and the financial system. When our current deflation finally ends we likely get hit with global inflation.

Terror and Refugees May Weigh on Euro-Area Economy, EU Says

November 26, 2015 — 1:00 PM GMT Updated on November 26, 2015 — 2:48 PM GMT
Conflict in the Middle East, the biggest wave of refugees to Europe since World War II and the terrorism threat is having an impact on the euro area’s economy, the European Commission said, underscoring the fragile nature of the region’s recovery.

With euro-area growth forecast to be 1.8 percent in 2016, compared to 2.8 percent in the U.S., the European Union warned that international instability could further undermine efforts to resuscitate the currency zone’s economy.

“There are a number of conflicts in our neighborhood and, as regards security challenges, of course this is something we need to pay particular attention to in the aftermath of the Paris terror attacks,” European Commission Vice President Valdis Dombrovskis told a press conference in Brussels. “It’s premature at this stage to draw far-reaching conclusions as regards the impact of those factors on the economy,” he said.

“We need to monitor those tendencies quite closely,” Dombrovskis said.

The deepening chaos in nations from Libya to Syria has spawned an unprecedented wave of more than 860,000 people seeking shelter within the EU this year. The influx opened divisions within the bloc as German Chancellor Angela Merkel insisted Europe must honor its asylum commitments while other leaders such as Hungary’s Viktor Orban complained of the strain on their communities.

“The unprecedented inflow of refugees and asylum seekers over the last year has represented a significant new development in some member states,” the commission said in its annual growth survey released on Thursday in Brussels. “Security concerns and geopolitical tensions have intensified and the global economic outlook is becoming more challenging.”

This has an “immediate impact in terms of additional public expenditure in the short run,” the commission said in its report, adding that in the longer term it could have a positive effect on labor supply and growth as long as governments pursued the right policies and helped refugees integrate.

It’s too early to assess the precise impact of the Paris terror attacks of Nov. 13 and the associated threats on the French or Belgian economies, EU Economy Commissioner Pierre Moscovici told reporters in Brussels.

Russia to Target Syria Jihadists as Hollande Steps Up Diplomacy

November 26, 2015 — 8:48 PM GMT Updated on November 26, 2015 — 11:06 PM GMT
France and Russia agreed to coordinate strikes in Syria to increase the focus on jihadist militants, as French President Francois Hollande seeks to rally support against Islamic State before hosting world leaders in Paris next week.

Russian President Vladimir Putin’s tentative nod toward cooperation with the anti-terror alliance sought by Hollande emerged after the two presidents met for almost three hours in Moscow on Thursday. That followed Hollande’s talks with German Chancellor Angela Merkel and President Barack Obama earlier this week in the wake of the Paris terror attacks.

With Hollande insisting that fighting Islamic State and “neutralizing the terrorists” is “the only objective,” he and Putin said the two sides would exchange information about which areas of Syria are controlled by the country’s moderate anti-government groups.

“We will avoid striking them,” Putin said at a joint press conference after the talks.

The two leaders failed to bridge differences over Assad, an ally of Russia and Iran whose ouster is sought by the U.S.-led coalition. Hollande said Assad can’t play “any role” in Syria’s future, while Putin described him as a “natural ally” in the fight against terrorism whose fate must be decided by his country’s people.

Hollande’s diplomacy aims to turn the downing of a Russian passenger plane in Egypt in October and the killing of 130 people in Paris on Nov. 13 into a catalyst for a united front involving Russia and the U.S.

----While Russia will continue to influence the civil war in Syria, the bombing of the Russian jetliner “has forced Moscow to concentrate more on the threat posed by ISIS,”  New York-based Eurasia Group said in an e-mailed research note. “The best that Hollande can hope for is the assurance of greater coordination of strikes.”

----Russia’s two-month bombing campaign in Syria has bolstered Assad, who controls a quarter of Syrian territory but 60 percent of its population, after almost five years of civil war that has killed about 300,000 people and displaced millions.

France has stepped up air strikes on Islamic State since the Paris attacks, deploying the aircraft carrier Charles de Gaulle to boost the number of jets available for bombing to 48 from 12.

Putin said after the Kremlin meeting with Hollande that he expects information-sharing will lead to coordinated action on the battlefield. In contrast, Obama has said the U.S. can’t work with Russia unless the Russian military concentrates its strikes on Islamic State and fully commits to a political solution in Syria.

China Unveils Biggest Army Overhaul in Decades to Project Power

November 26, 2015 — 10:56 AM GMT Updated on November 27, 2015 — 1:40 AM GMT
President Xi Jinping announced a major overhaul of China’s military to make the world’s largest army more combat ready and better equipped to project force beyond the country’s borders.

Under the reorganization, all branches of the armed forces would come under a joint military command, Xi told a meeting of military officials in Beijing Thursday, the official Xinhua News Agency reported. Bloomberg in September reported details of the plan, which may also seek to consolidate the country’s seven military regions to as few as four.

The plan also seeks to tighten the Communist Party’s grip over the 2.3-million-member military, with Xi insisting the People’s Liberation Army maintain "correct political direction” and stressing "the Communist Party of China has absolute leadership of the armed forces," Xinhua reported.

Under Xi, China has been more assertive over territorial claims in the East China Sea and South China Sea, raising tensions with neighbors such as Japan and the Philippines, as well as the U.S. Xi’s policy marks a shift from China’s previous approach of keeping a low profile and not attracting attention on the world stage, a philosophy laid out by former paramount leader Deng Xiaoping. 

“Under the leadership of the party, the army has gone from small to large, from weak to strong and from victory to victory," Xi told military leaders, according to Xinhua. “The reason why the military has stayed vigorous is that it has kept pace with the times and never ceased reforming itself. Now, as the country progresses from a large country to a large and powerful one, defense and military development stands at a new and historic starting line.”

"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

At the Comex silver depositories Wednesday final figures were: Registered 43.65 Moz, Eligible 114.74 Moz, Total 158.39 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today Brazil, “where the nuts come from” famously wrote Oscar Wilde. “God’s work” in Brazil seems little different to Wall Street.

How Brazil's Banking Golden Boy, Arrested in Rio, Built an Empire

November 25, 2015 — 6:42 PM GMT Updated on November 25, 2015 — 9:11 PM GM
Andre Esteves, the brash banker who once joked his firm’s name, Grupo BTG Pactual, stood for ‘better than Goldman,’ became the latest high-profile executive dragged into Brazil’s widening corruption scandal.

The 47-year-old billionaire was arrested Wednesday in Rio de Janeiro, along with Senator Delcidio Amaral, police said. Esteves allegedly sought an agreement with Amaral to interfere with testimony from a jailed former executive of oil producer Petroleo Brasileiro SA, according to a court document.

Esteves made a splash on the international financial stage -- and became Brazil’s youngest self-made billionaire -- when he sold Pactual to UBS for $2.6 billion in 2006. He and partners bought it back three years later and set off on an expansion, snapping up businesses including the Swiss private-banking unit of Assicurazioni Generali SpA. The firm sold shares to the public in 2012.

“He epitomizes the idea of a private, successful, entrepreneurial generation of Brazilian bankers -- that’s what he represents,” said Felipe Monteiro, a professor of strategy at Insead in France. His alleged involvement “with the most classic type of old politics is somehow strange.”

Interim CEO

Esteves joins more than 100 people who have already been arrested, including former top executives at state-owned Petrobras and Brazil’s biggest construction conglomerate. The sweeping investigation into alleged corruption at Petrobras, which began in March 2014, has helped make Brazil’s real the worst-performing major currency this year, contributed to an economic contraction and shaken the government of
President Dilma Rousseff. Shares of BTG Pactual dropped as much as 39 percent on Wednesday, the most ever.

“The risk to the firm is that Andre Esteves is the firm,” said Mark Williams, author of “Uncontrolled Risk,” a book on the rise and collapse of Lehman Brothers. “There is not a charismatic number 2 executive groomed and ready to lead.”

The Betrayal of Brazil

As a massive corruption scandal unfolds, Brazilians are facing some stark truths: The powerful and connected are still dividing the country’s riches among themselves. The past decade’s economic miracle was in large part a mirage. And the future is again on hold.

May 8, 2015

In mid-2013, Brazilian federal police investigator Erika Mialik Marena noticed something strange.
Alberto Youssef, suspected of running an illicit black-market bank for the rich, had paid 250,000 reais (about $125,000 at the time) for a Land Rover. The black Evoque SUV ended up as a gift for Paulo Roberto Costa, formerly a division manager at Brazil’s national oil company, Petrobras. “We were investigating a money-laundering case, and Petrobras wasn’t our target at all,” says Marena. “Paulo was just another client of his. So we started to ask, ‘Why is he getting an expensive car from a money launderer? Who is that guy?’”

Marena had spent the previous decade building cases against money launderers, and Youssef had been a perennial target. He’d been arrested at least nine times for using private jets, armored cars, clandestine pickups by bagmen, and a web of front companies to move illicit cash. But Youssef had been spared serious jail time by testifying repeatedly against other doleiros, Brazilian slang for specialists in laundering unreported cash.

The Petrobras connection suggested Youssef was into something bigger. Marena and her partner, investigator Márcio Anselmo, dug into Costa from offices in the modern glass-and-concrete federal police headquarters in the city of Curitiba, 400 kilometers (250 miles) south of São Paulo. A dozen more investigators and prosecutors joined, and the case grew so big that Brazil’s attorney general set up a task force in temporary office space across town.

By March 2014, federal judge Sérgio Moro had begun rounding up dozens of suspects. (In Brazil’s justice system, a judge formally charges a defendant, approves major steps in the investigation by police and prosecutors, hears the evidence, and then decides whether the defendant is guilty or innocent.) They were accused in Moro’s court of participating in a bid-rigging scheme of astounding proportions. For years, prosecutors have alleged in Moro’s court, a cartel of Brazil’s biggest and richest builders fixed a vast swath of the world’s seventh-biggest economy, subverting competition in the oil industry and, possibly, the huge public works programs that drive growth and employment.

Brazilians are riveted by the scandal, nicknamed Operation Carwash because some funds were laundered through a service station. Moro has ordered more than a dozen dragnets so far, and the arrests of executives, bankers, politicians, and bagmen, marching some to jail past a phalanx of television cameras. One suspect took his private jet to Curitiba to turn himself in. Another spent his last hours of freedom in a hotel suite on Rio de Janeiro’s fabled Ipanema beach to avoid being taken from his home handcuffed. The arrested shared four holding cells in Curitiba police headquarters with unenclosed communal toilets. Some slept on mattresses strewn on the bare floor. A dozen have confessed to making or accepting payoffs and rigging contracts, some in videotaped testimony that is posted online.

One former Petrobras manager, Pedro Barusco, described taking almost $100 million in bribes; he’s since returned most of the money in a bid for leniency.

Since March 2014, prosecutors have accused more than 110 people of corruption, money laundering, and other financial crimes. Six construction and engineering firms have been accused of illegal enrichment in what is known as a noncriminal misconduct action. On April 22, Moro delivered the first convictions. He found Costa and Youssef guilty of money laundering, including the Land Rover purchase. Moro gave both men reduced sentences—two years’ house arrest for Costa and three years in prison for Youssef—for cooperating with prosecutors.

All of that is something of a preview of the big show: Prosecutors say they may accuse some of Brazil’s largest builders with running an illegal cartel. “It’s been clearly proven in this case that there was a criminal scheme inside Petrobras that involved a cartel, bid rigging, bribes to government officials and politicians, and money laundering,” Moro wrote in sentencing Costa and Youssef. “There will be a cartel indictment,” says Carlos Lima, a lead prosecutor in the case. “I don’t like to get ahead of myself and say this will happen, but it will. It’s just a matter of time.”

 Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Self-healing gel to repair and connect electronic circuits

Richard Moss November 25, 2015
Researchers at The University of Texas at Austin may have found a solution to one of the key problems holding back flexible, bendable electronics and soft robotics from mass production. Electronic circuits tend to crack and break when repeatedly subjected to bending or flexing, but a new self-healing gel may automatically repair these flaws as they develop.
The gel works without any external stimuli and is meant to be glued or pasted to circuit junction points, because this is where most breakages occur. When damage occurs from excessive bending or normal wear and tear, the gel reassembles itself and reconnects or repairs the circuit.
It is made from combining a conductive polymer hydrogel with a self-assembling metal-ligand gel, which together are stronger and more elastic than the hydrogel on its own. This second component gets its self-assembly – and hence self-healing – capacity from a cubic framework containing soluble molecules called terpyridine, which are held together (structurally speaking) by zinc atoms.
The researcher who created the new gel, Guihua Yu, believes that it has potential applications in batteries and biosensors as well as the more obvious use in electronic circuits. His research team found that by controlling the synthesis of the gel using something called a rational dopant counterion (in this case, a kind of disc-shaped liquid crystal molecule that makes the gel self-assemble into nanostructures), they could achieve about 10 times the conductivity of polymer hydrogels used in conventional rechargeable batteries.
The researchers are also looking at potential applications in medical technology, artificial skin, and soft robotics.
Papers describing the self-healing gel and its synthesis were published in the journal Nano Letters.
Another weekend, and a weekend in America where the weak minded are traditionally separated from their money by retailers. Black Friday indeed. Happily, the attempt to force a similar dodgy scam on the UK seems to have died in the Great Recession. Most folk ain’t as rich as they thought they was, apparently. Away from the one percent busy doing “God’s work,” money’s tight, in the UK. Have a great weekend everyone. Check with the LIR website for the weekend update.

You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too.

J. K. Galbraith.

The monthly Coppock Indicators finished October

DJIA: +31 Down. NASDAQ: +125 Down. SP500: +53 Down. 

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