Wednesday, 6 January 2016

In Other News.

Baltic Dry Index. 468 -05       Brent Crude 36.45

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

What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit expansion is built on the sands of banknotes and deposits. It must collapse. 

Ludwig von Mises.
Today a look at some of the other global news that barely makes it to mainstream financial media, with its perpetual rose tinted view of the global economy. The central bankster have it all covered, buy more! But the central banksters don’t have it all covered. The BRICs except India are all in deep trouble. America itself seems to be flirting with a new recession. Europe as usual is a basket case, about to get pummelled from  Merkel’s migrant madness to the Volkswagen outrage. The industrial commodity depression is deepening. Finally, the central banksters are still at the zero bound.  Six years of voodoo economics seems to have failed. Will 2016 repeat 2008? The Baltic Dry Index and crude oil suggest yes.

Brazil Heads for Worst Recession Since 1901, Economists Forecast

January 4, 2016 — 11:12 AM GMT Updated on January 4, 2016 — 1:08 PM GMT
Brazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed.
Latin America’s largest economy will shrink 2.95 percent this year, according to the weekly central bank poll of about 100 economists, versus a prior estimate of a 2.81 percent contraction. Analysts lowered their 2016 growth forecast for 13 straight weeks and estimate the economy contracted 3.71 percent last year.
Brazil’s policy makers are struggling to control the fastest inflation in 12 years without further hamstringing a weak economy. Finance Minister Nelson Barbosa, who took the job in December, has faced renewed pressure to moderate austerity proposals aimed at bolstering public accounts and avoiding further credit downgrades. Impeachment proceedings and an expanding corruption scandal have also been hindering approval of economic policies in Congress.
“We’re now taking into account a very depressed scenario,” Flavio Serrano, senior economist at Haitong in Sao Paulo, said by phone.
Central bank director Altamir Lopes said on Dec. 23 the institution will adopt necessary policies to bring inflation to its 4.5 percent target in 2017. Less than a week later, the head of President Dilma Rousseff’s Workers’ Party, Rui Falcao, said Brazil should refrain from cutting investments and consider raising its inflation target to avoid higher borrowing costs.
---- The last time Brazil had back-to-back years of recession was 1930 and 1931, and has never had one as deep as that forecast for 2015 and 2016 combined, according to data from national economic research institute IPEA that dates back to 1901.

China Could 'Spook' Markets Again in 2016, IMF's Obstfeld Warns

January 4, 2016 — 3:54 PM GMT
China could once again “spook” global financial markets in 2016, the IMF’s chief economist warned.
Global spillovers from China’s slowdown have been “much larger than we could have anticipated,” affecting the global economy through reduced imports and weaker demand for commodities, IMF Economic Counselor Maurice Obstfeld said in an interview posted on the fund’s website.

After a year in which China’s efforts to contain a stock-market plunge and make its exchange rate more market-based roiled markets, the health of the world’s second-biggest economy will again be a key issue to watch in 2016, Obstfeld said.

“Growth below the authorities’ official targets could again spook global financial markets,” he said as global equities on Monday got off to a rough start to the year. “Serious challenges to restructuring remain in terms of state-owned enterprise balance-sheet weaknesses, the financial markets, and the general flexibility and rationality of resource allocation.”

Emerging Stocks Sink With Currencies on China as Won Declines

January 6, 2016 — 3:37 AM GMT Updated on January 6, 2016 — 4:56 AM GMT
Emerging-markets stocks headed for a six-year low as Apple Inc. suppliers tumbled and China’s move to lower its daily fixing for the yuan pummeled developing-nation currencies. The won slid after North Korea said it successfully tested a hydrogen bomb.

Technology companies were the biggest decliners in the MSCI Emerging Markets Index as Taiwan’s Largan Precision Co. paced losses for Apple suppliers after a report the U.S. company will cut production of its latest iPhones. China’s CSI 300 Index gained amid  government efforts to shore up the share market after the worst start to a year on record. The won dropped to the lowest level in three months. The offshore yuan slid to a five-year low as a gauge of developing-nation currencies fell to a record.

The People’s Bank of China lowered its daily fixing by 0.22 percent to the weakest level since April 2011, spurring concern that the government is facing pressure to devalue its currency to revive growth in the world’s second-biggest economy. That’s raising the risk that developing nations will have to weaken their currencies to stay competitive.

Greece on a collision course with creditors after vowing not to slash pensions

Athens maintains it will not cut pension spending as part of reforms demanded by the Troika

Greece has promised not to implement controversial cuts to pensions, putting the indebted nation on a collision course with creditors months into a new bail-out programme.

Athens' left-wing Syriza government said it would not slash expenditure on its main and supplementary pensions as part of a reform plan submitted to international lenders on Monday night.

The reforms have been demanded by lenders in return for the latest release of bail-out cash.

But pensions spending has proven to be the main sticking point for Greece and its Troika of creditors - the European Commision, the European Central Bank, and the International Monetary Fund - during nearly a year of tortuous negotiations.
The IMF has pushed hardest for bold cuts to the govenment's pensions outlay, leading to Greek prime minister Alexis Tsipras demanding that the Fund take no further part in the country's bail-out deal.
Greeks have seen a 40pc fall in their pension provision over the last five years - a shrinkage that has been ruled unconstitutional by the country's highest administrative court.

Saudis slash oil prices for Europe, perhaps to undercut Iran

Published: Jan 5, 2016 10:33 p.m. ET

Price cut may be pre-emptive move to financially hurt Iran when embargo lifts

LONDON — Saudi Arabia on Tuesday sharply cut the prices it charges for crude oil in Europe, a move that could undercut Iran as sectarian tensions escalate between the rival Middle Eastern nations.

The Saudi move appears to pave the way for a competition over European oil markets later this year when Iran is expected to increase its exports after the expected end of western sanctions over its nuclear program.

Italy and Spain relied on Iran for 13% and 16% of their oil imports before the European Union banned such purchases under sanctions related to its nuclear program in 2012. Although the country was replaced in the market by Saudi Arabia and other countries such as Russia, Tehran is counting on rekindling those ties when it resumes exports.

The price cut comes after a diplomatic chasm opened this week between Saudi Arabia and Iran, and by extension, the Sunni and Shiite Muslim worlds. Riyadh and a number of Sunni Muslim capitals have severed or downgraded diplomatic ties with Iran after the Saudi embassy was set on fire in Tehran following the execution in Saudi Arabia of Shiite cleric Nemer al-Nemer.

Read: Traders worry Saudi-Iranian rift may result in fresh flood of oil

Iranian oil professionals interpreted the move as a way to compete with Iran returning to the oil markets. The European Union is set to lift an embargo on Tehran as soon as next month.

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression

Ludwig von Mises. Omnipotent Government.

At the Comex silver depositories Tuesday final figures were: Registered 36.50 Moz, Eligible 125.25 Moz, Total 161.75 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Stupid to think that they could get away with it. Wolfsburg arrogance.

Volkswagen Faces Billions of Dollars in Penalties From U.S. Suit

January 4, 2016 — 10:38 PM GMT
The U.S. Justice Department sued Volkswagen AG for installing illegal devices meant to defeat emissions testing, and laid out claims that could push penalties into the tens of billions of dollars -- an opening salvo in a legal battle that could be far more costly for the German carmaker than had been expected.

The civil complaint filed Monday accuses the automaker of four violations of the Clean Air Act and outlines penalties that could amount to as much as $80 billion -- about four times as much as the maximum some legal experts had estimated. While the court is unlikely to come anywhere near that amount, according to a senior Justice Department official, the penalties sought against the company would still be in the billions of dollars, another senior Justice Department official said.

Volkswagen already faces hundreds of private lawsuits in the U.S. for its actions, which have been consolidated in San Francisco federal court. The Justice Department said it will ask for its suit to be transferred to that court as well, borrowing a tactic from its case against BP Plc in the Gulf oil spill litigation, where it worked alongside plaintiff’s lawyers.

Criminal Charges

Volkswagen is also facing lawsuits from state attorneys general, while regulators in at least seven countries, including Germany, have launched investigations. The U.S. could also bring criminal charges against Volkswagen for lying to the Environmental Protection Agency about the cheating devices.

“The U.S. seeks and obtains larger penalties for environmental violations than any other country, ” said David Uhlmann, a law professor at the University of Michigan and former head of the environmental crimes section of the Justice Department. “VW needs to fix the problem it has created, cooperate with the government investigations and make its victims whole.”

Volkswagen’s preferred shares fell 5.5 percent in Frankfurt, the most in two months, before the suit was revealed on Monday. The shares have dropped more than 22 percent since Sept. 18, the day the EPA said the automaker admitted cheating on emissions tests. The carmaker’s shares in the U.S., where they are listed as American depositary receipts, declined 2.8 percent to $30.10 after falling as much as 4.2 percent, the steepest intraday decline in two months.

Volkswagen had been making some progress on the European side in addressing the pollution scandal, which cost the chief executive officer and several other senior employees their jobs. The company won regulatory approval in Germany last month for low-cost fixes for 8.5 million diesel engines in Europe equipped with the cheating software, out of 11 million in total worldwide.

Volkswagen admitted in September that it had rigged some diesel engines so that emissions controls came on only during testing. Those controls shut off while the car was on the road, producing nitrogen oxide emissions well in excess of the U.S. legal standard. The Justice Department complaint includes additional vehicles with larger engines, including some Porsche and Audi models, that Volkswagen admitted in November also contained mechanisms that could be considered defeat devices.

"Car manufacturers that fail to properly certify their cars and that defeat emission control systems breach the public trust, endanger public health and disadvantage competitors," Assistant Attorney General John Cruden said in a statement.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

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?

Panasonic extends solar module product guarantee

By Mark Osborne  05 January 2016, 12:55 Updated: 05 January 2016, 13:28
Electronics and PV module manufacturer Panasonic has increased its ‘HIT’ module product guarantee in European markets from 10 to 15 years, bringing it inline with guarantees given by many rivals.

Panasonic’s Eco Solutions segment noted that the extended product guarantee comes after over five years of monitored reliability analysis of module installations since the company moved from 5 to 10 years of product guarantee.

Daniel Roca, senior business developer at Panasonic said: "As a solar manufacturer, we continually strive to provide installers with increasing value across our high efficiency photovoltaic modules. Backed by 40 years of experience in the PV business and, most crucially, absolute control of every step in our solar manufacturing process, we've been able to improve and optimise all aspects of our product quality and reliability. As a result, we're able to confidently supply the European market with our highest level of guarantee throughout 2016 and beyond."

The extended guarantee is also applicable to Panasonic's most recently launched HIT module, N330 at Solar Energy UK in late 2015, which will be available in the UK and other European markets from March 2016 onwards.

The HIT N330 features 19.7% module-level efficiency and a nominal power output of 330 Watts, according to Panasonic.

Investors look to India as the next solar power

January 4, 2016 2:37 am
Equipment suppliers see opportunity in country’s ‘massive’ renewable energy aspirations

As recently as a few months ago, the alternative energy targets announced by Indian prime minister Narendra Modi’s government in 2014 seemed wildly overambitious — even to solar electricity enthusiasts in the industry. But a surge of investment in solar power stations now makes them look merely optimistic.
“In 2009, when I said that India would have two to three gigawatts [of solar energy] by 2015, people said ‘That’s not possible’,” says Inderpreet Wadhwa, founder and chief executive of Azure Power, one of the country’s biggest producers. “Today we have 5GW running.”
Mr Wadhwa left a technology career in California after he came home to India on what was supposed to be a short personal trip eight years ago and saw the “huge” opportunities presented by the shortage of electricity.
He started with small solar plants for electricity-hungry districts and rooftop systems for companies to replace costly diesel generators.
Today, Azure Power — which is part-owned by the World Bank’s International Finance Corporation as well as Foundation Capital and Helion Ventures and is poised for an initial public offering — is one of dozens of domestic and international investors putting money into building or supplying equipment to large-scale solar photovoltaic power stations across India.
Mr Modi has championed solar power and helped launch a global solar alliance at the Paris climate summit to mobilise an attention-grabbing $1tn of funds worldwide by 2030.
India itself, with current electricity grid capacity of less than 300 gigawatts, aims to increase its solar installations from below 5GW now to 100GW by 2022 — more than double the present solar capacity of China and Germany, the two biggest solar nations.

The monthly Coppock Indicators finished December

DJIA: +18 Down. NASDAQ: +110 Down. SP500: +36 Down. 

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