Wednesday, 24 February 2016

Bad Money Drives Out Good.

Baltic Dry Index. 318 +02        Brent Crude 32.81

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

Brexit odds checker.
"When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."
Gresham’s Law.
For more on bad money, scroll down to Crooks Corner.

Now back to our bad news global economy. If it wasn’t for bad news we’d have no news at all, these days. Just don’t let on to mainstream media and bubble vision. Stocks are hopelessly mispriced to reality, thanks to our increasingly dangerous, deluded central banksters. NIRP and a war on cash aren't just silly and heretical, but an existential threat to what’s still left of our capitalist system. Money is too important to be left to crooked lying central banksters and bent politicians.

Asian stocks slump as oil concerns spread

Published: Feb 23, 2016 10:21 p.m. ET
Most markets in Asia fell Wednesday amid a slump in energy and financial shares.

Hong Kong’s Hang Seng Index HSI, -1.66%   fell 1%, Australia’s S&P/ASX 200 XJO, -2.10%   was off 1.5% and Japan’s Nikkei Stock Average NIK, -0.90%   lost 0.8%. The Shanghai Composite Index SHCOMP, -1.04%   and South Korea’s Kospi SEU, -0.19%   were roughly flat.

In Hong Kong, shares of Standard Chartered PLC 2888, -6.60%   slumped 6.2%, after the bank reported its first annual loss since 1989 on increasing bad loans. Its shares in London fell 6.7% Tuesday.

Concerns about falling oil prices and the pace of global economic growth were pushing investors to sell, extending losses from the previous day.

Brent crude oil prices gave up early gains in Asia to trade down 1% at $32.95. Hopes for a supply cut dimmed after Saudi Arabia and Iran dismissed the possibility of reducing or freezing production.

Overnight, U.S. crude oil dropped 4.6% to $31.87 a barrel. The Dow industrials were off 1.1% and the S&P 500 fell 1.3%. Banking stocks slumped after J.P. Morgan JPM, -4.18%   said it plans to hold more money than analysts had previously expected in case energy companies default on debt.

On Wednesday, energy and financial shares in Australia were down 2.7% and 1.8% respectively.
Banks on Japan’s Topix benchmark were off 1.2%. Mitsubishi UFJ Financial Group Inc. 8306, +0.89%   lost 1.6%.

Earliest Chinese Data Signal Slowdown Hasn't Bottomed Out Yet

February 22, 2016 — 4:01 PM GMT
The first indicators for China’s economy this month signal its slowdown hasn’t bottomed out yet, highlighting the case for continued stimulus as the nation prepares to host finance chiefs and central bankers from the Group of 20 later this week.

Private gauges of manufacturing and services fell to new lows, a reading of business confidence slipped, and interest in small and medium sized businesses deteriorated, the readings show. If confirmed in official data for February that starts to roll out from March 1, such weakness would suggest a slowdown in the nation’s old growth drivers may be deepening.

Still, private data can be volatile, and readings may be distorted by the week-long Lunar New Year holiday in February. That was the government’s official view Monday, when it said there’s "no hard landing." The 2015 slowdown "was not as bad as some would make it out to be," the Xinhua News Agency said in a commentary.

Here’s what early indicators show for February:

Gauges tracking both manufacturing and services based on surveys of more than 4,000 companies fell to new lows. The data, published since late 2014, were revised to reflect new methodology in December and publication resumed in January.

The Minxin manufacturing index fell to 37.5 in February from 41.8 in January, while the non-manufacturing gauge fell to 37.5 from 43, according to the China Academy of New Supply-side Economics. Numbers below 50 indicate deteriorating conditions.

US factory woes add to pressure on Fed to hold interest rates

Worst manufacturing month for three years could influence central bank chiefs when they meet in three weeks

Phillip Inman Economics correspondent Monday 22 February 2016
US factories have suffered their worst month for three years, heaping further pressure on the Federal Reserve to hold off from raising interest rates when it meets next month.

A sharp decline in exports and plunging domestic orders were blamed for the fall in activity for February, making the month the lowest point for US manufacturing since the start of 2013 and joint lowest with October 2009.

A survey of European businesses also disappointed investors and indicated that recent turmoil in global markets has dealt the eurozone economy a bigger blow than previously estimated.

Fed chiefs meet in three weeks to consider how to react to the global slowdown and slump in oil prices that has hit exports and stalled the US recovery since it raised rates in December for the first time since the financial crisis. Meanwhile, the European Central Bank has already indicated it is likely to inject further funds into the eurozone when its governing council meets in a fortnight.

-----The Markit flash purchasing managers’ index (PMI) of US manufacturing businesses registered the third month of decline out of the past four.

Firms said they were largely unaffected by bad weather and instead blamed the high dollar for a steep fall in exports and uncertainty about the general economic outlook, which encouraged customers to delay spending decisions.

After a rise in the index to 52.4 in January, it fell back to 51.0. A figure greater than 50 indicates expansion.
Some analysts speculated that a collapse in orders for equipment from the US and Canadian oil industries, and especially fracking firms crippled by the low oil price, had hit US manufacturing harder than previously understood.

For Exxon and Shell, Age of Ultramajors Comes at the Wrong Time

February 24, 2016 — 12:01 AM GMT Updated on February 24, 2016 — 5:08 AM GMT
This may not be the best time to be bigger than big.

The $64 billion tie-up of Royal Dutch Shell Plc with BG Group Plc and the steady growth of Exxon Mobil Corp. are creating a new league of two: the ultramajors. Executives at smaller companies are even starting to joke that Chevron Corp., Total SA, BP Plc, ConocoPhillips and ENI SpA are merely the mid-cap sector of Big Oil.

But as oil and gas prices have tumbled, Exxon and Shell have been forced to retreat. With oil barely above $30 a barrel, they’re cutting spending, including some costly, high-risk mega-projects. Shell abandoned construction of the 80,000 barrel-a-day Carmon Creek oil sands project in Alberta, Canada, last year after having started to build it. Exxon is slashing investment by 25 percent this year compared with 2015.

Scale was very important in the late 1990s and 2000s,” said Michele Della Vigna, the top oil industry analyst at Goldman Sachs Group Inc. “In the past there was scarcity of capital. Being big was an advantage. The last 15 years were about being bigger. Today is about being nimbler and lower on the cost curve.”
The problem for the ultramajors is that they’re so big that they need to put off more or bigger projects every year to make a difference in production. The scale of Exxon and Shell has reached a point that it’s creating its own problems, said Tom Ellacott, vice president of corporate analyst at oil consultants Wood Mackenzie Ltd. “You need much bigger projects to move the needle,” he said.

When oil was at $100 a barrel, the two companies had sought to move the needle through developing reservoirs in the roughest, deepest and coldest parts of the world, spending billions of dollars over up to a decade in places like Kazakhstan, the remote corners of Australia, off the shores of Angola and in the Arctic.

But as companies adapt to an era of low oil prices, most of those projects may fail to deliver the 15-to-20 percent return the Big Two hope for, industry executives and analysts said.

We close for the day with China. Can a clash still be averted in the South China Sea? But like Israel on the West Bank of Palestine, China is just creating facts on the ground. Ultimately, is Woody Island worth Hawaii?

China gearing up for East Asia dominance: U.S. commander

Tue Feb 23, 2016 11:02pm EST
China is "changing the operational landscape" in the South China Sea by deploying missiles and radar as part of an effort to militarily dominate East Asia, a senior U.S. military official said on Tuesday.

China is "clearly militarizing the South China (Sea)," said Admiral Harry Harris, head of the U.S. Pacific Command, adding: "You'd have to believe in a flat Earth to think otherwise."

Harris said he believed China's deployment of surface-to-air missiles on Woody Island in the South China Sea's Paracel chain, new radars on Cuarteron Reef in the Spratlys and its building of airstrips were "actions that are changing in my opinion the operational landscape in the South China Sea."

Soon after he spoke, U.S. government sources confirmed that China recently deployed fighter jets to Woody Island. It was not the first time Beijing sent jets there but it raised new questions about its intentions.

U.S. Navy Captain Darryn James, spokesman for U.S. Pacific Command, said China's repeated deployment of advanced fighter aircraft to Woody Island continued a disturbing trend.

"These destabilizing actions are inconsistent with the commitment by China and all claimants to exercise restraint from actions that could escalate disputes," he said. "That's why we've called for all claimants to stop land reclamation, stop construction and stop militarization in the South China Sea.”

Japan's Suga: Government gathering info on China's move with 'serious interest’

Tue Feb 23, 2016 10:31pm EST
Japan's top government spokesman said on Wednesday the country was gathering and analyzing information on China's moves in the South China Sea with "serious interest".

China is "changing the operational landscape" in the South China Sea by deploying missiles and radar as part of efforts to militarily dominate East Asia, a senior U.S. military official said on Tuesday.

Japanese Chief Cabinet Secretary Yoshihide Suga repeated the government's concerns about China's moves, saying Japan would cooperate with related nations.

Brexit Quote of the Day.
The difference between a misfortune and a calamity is this: If Cameron fell into the Thames, it would be a misfortune. But if someone dragged him out again, that would be a calamity.
With apologies to Benjamin Disraeli.

At the Comex silver depositories Tuesday final figures were: Registered 28.90 Moz, Eligible 126.60 Moz, Total 155.50 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the Great Nixonian Error of fiat money. There was no free lunch after all. On Nixon’s fiat  money, our central bankster’s steal from the poor and give to the rich, a bunch of modern day renegade Robin Hoods, with the emphasis very much on the Robbin’.
“I am not a crook.”
President Nixon. 1974. But his lips moved.

The Fatal Flaw That Has Doomed Our Economy——-Bad Money

by Bill Bonner • February 22, 2016

BALTIMORE – We are searching for an insight. Each time we think we see it… like the shadow of a ghost in an old photo… it gets away from us. It concerns the real nature of our money system… and what’s wrong with it. Here… we bring new readers more fully into the picture… and try to spot the flaw that has doomed our economy.
Let’s begin with a question. After the invention of the internal combustion engine, people in Europe… and then the Americas… got richer, almost every year. Earnings rose. Wealth increased. Then in the 1970s, after two centuries, American men ceased making progress.
Despite more PhDs than ever… more scientists… more engineers… more capital… more knowledge… more Nobel Prizes… more college graduates… more machines… more factories… more patents… and the invention of the Internet… after adjusting for inflation, the typical American man earned no more in 2015 than he had 40 years before.
Why? What went wrong? No one knows. But we have a hypothesis. Not one person in 1,000 realizes it, but America’s money changed on August 15, 1971. After that, not even foreign governments could exchange their dollars for gold at a fixed rate.
The dollar still looked the same. It still acted the same. It still could be used to buy booze and cigarettes. But it was flawed money. And it changed the whole world economy in a fundamental way… a way that is just now coming into focus.
The Old Testament tells us that God chased Adam and Eve from the Garden of Eden with this curse: “By the sweat of your brow, you will earn your food until you return to the ground.” From then on, you worked… you earned money… you could buy bread. Or lend it out. Or invest it.
Dollars – or any form of real money – were compensation… for work, for risk taking, for accumulating knowledge and capital. Money is information. It tells us how much reward we’ve earned… how much things cost… how much profit, how much loss, how much something is worth… how much we’ve saved, how much we’ve spent, how much we need, and how much we’ve got.
Money doesn’t have to be “hard” or “soft” or expensive or cheap. But it has to be honest. Otherwise, the whole system runs into a ditch. But the new money was a phony. It put the cart ahead of the horse. This was money that no one ever had to break a sweat to get. It was based on credit – the anticipation of work, not work that had already been done.
Money no longer represented wealth. It now represented anti-wealth: debt. So, the economy stopped producing real wealth.  The Fed could create money that no one ever earned and no one ever saved. It was no longer the real thing, but a counterfeit.
In this way, effort and reward were cut off from one another. The working man still had to labor. But it was the banker, gambler, speculator, lender, financier, investor, politician, or inside operator who made the money. And the nature of the economy changed. Instead of rewarding the productive Main Street economy, it rewarded insiders… and the financial sector.
The penthouses of Manhattan and the summer houses of the Hamptons changed owners. Gone were the scions of Detroit factories and the titans of New York commerce. Gone were the people who had added to the wealth of the nation. In their place were the Wall Street hustlers… the people who moved money around… taking it from the people who made it and giving it to the financial industry, the money lenders, the insiders, and the Deep State.

Fiat money

Fiat money is a currency established as money by government regulation or law.[1] The term derives from the Latin fiat ("let it be done", "it shall be")[2] used in the sense of an order or decree.[1] It differs from commodity money and representative money. Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange (such a good is called a commodity), while representative money simply represents a claim on such a good.[1][3][4]

----After World War I, governments and banks generally still promised to convert notes and coins into their underlying nominal commodity (redemption in specie) on demand. However, the costs of the war and the required repairs and economic growth based on government borrowing afterward made governments suspend redemption in specie. Some governments were careful of avoiding sovereign default but not wary of the consequences of paying debts by consigning newly printed cash which had no metal-backed standard to their creditors, which led to hyperinflation – for example the hyperinflation in the Weimar Republic.

From 1944 to 1971, the Bretton Woods agreement fixed the value of 35 United States dollars to one troy ounce of gold.[23] Other currencies were pegged to the U.S. dollar at fixed rates. The U.S. promised to redeem dollars in gold to other central banks. Trade imbalances were corrected by gold reserve exchanges or by loans from the International Monetary Fund.

The Bretton Woods system collapsed in what became known as the Nixon Shock. This was a series of economic measures taken by United States President Richard Nixon in 1971, including unilaterally canceling the direct convertibility of the United States dollar to gold. Since then, a system of national fiat monies has been used globally, with freely floating exchange rates between the major currencies.[24]
"When it becomes serious, you have to lie"

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

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?

Promising results obtained with new, simpler way to fabricate graphene component

Date: February 19, 2016

Source: Aalto University

Summary: Graphene is a so-called 2D material, meaning that it is only one atom thick film. Graphite, which is a well-known material, consists of huge number of graphene layers on top of each other. Now researchers say that a 2D material device may prove useful in wearable electronics and sensors, among other things.
The 2D material device designed and fabricated by Aalto University's researchers may prove useful in wearable electronics and sensors, among other things.
Graphene has been predicted to revolutionize electronics since Andre Geim and Konstantin Novoselov received the Nobel Prize in physics in 2010 for the breakthrough experiments conducted with the material.
Graphene is a so-called 2D material, that is, it is only one atom thick film. Graphite, which is a well-known material, consists of huge number of graphene layers on top of each other. Despite being ultimately thin, graphene is an excellent conductor of electricity and heat, and it is extremely durable. However, its band gap is zero, which limits its application in some semiconductor applications as it results in low intrinsic on/off ratio. 
Now Aalto University's researchers have managed to fabricate an electricity-conducting material combination with especially promising properties by merging graphene and another 2D material, gallium selenide. In the semiconductor industry this kind of structure is known as a heterojunction. The results were recently published in the Advanced Materials science journal.
'This is the first time when gallium selenide is used with graphene. This kind of new heterojunctions will be important in future as conventional heterojunctions are already vital part of current semiconductor industry forming the basis for example for lasers and transistors.', explains Juha Riikonen, head of the research group.
'Because the component is made of 2D materials, it is, in comparison with those containing silicon, extremely thin, approximately one ten-thousandth part of the diameter of a single hair', post-doctoral researcher Wonjae Kim explains.
From research labs to industry
In earlier research, the 2D structures combined with graphene were fabricated manually, layer by layer, which made the process slow, challenging and difficult to scale. The component structure developed by Riikonen, Kim and their colleagues utilized elements from both lateral and vertical device design enabling the use of standard fabrication methods utilized in the semiconductor industry instead of laborious manual fabrication.

The monthly Coppock Indicators finished January

DJIA: -06 Down. NASDAQ: +75 Down. SP500: -02 Down.  Both the DJIA and the S&P 500 have now turned negative.

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