Monday, 29 February 2016

Crash Coming.

Baltic Dry Index. 327 +02        Brent Crude 35.53

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

Brexit odds checker.

Brexit Quote of the Day.
“Cameron: Don't be so humble, you're not that great.”

With apologies to Golda Mier.

There are lies, damned lies, and lying fiat money. Fiat money, communist money, isn’t real money at all. It has no “store of value.” It was a scam back in 1971, when President Nixon devalued the world into it, in the Great Nixonian Error of fiat money, August 15, 1971. It’s still a scam now, only now the Great Nixonian Error is breaking down. The Great American Ponzi Scheme is in the final act. The benefits of fiat money were all front loaded, and long ago dissipated in never ending war, socialist bribes to voters, special interests, and political contributors. On fiat money, the whole world ran up unrepayable debt that is now coming to an end. The final country to go “all-in” was China with its massive malinvestment building boom in the last decade and up to last year.

But tomorrow will not be like today, which was like yesterday. The Great Nixonian Error is about to end in a massive bust.  Leveraged Casino Capitalism has already started to fail, and our panicky central banksters know that they’re all out of ideas, road and talent. Leverage works against the casino gamblers on the way down. Not for nothing has wobbly Deutsche Bank suddenly decided it’s time to head for the hills and buy gold. In this case getting in early beats getting in late. Unlike electronic dollars, there is only so much gold in the world and much of it has been illegally hypothecated. “Corzined” if you prefer.  In disconnect from reality stock markets, getting out early always beats getting carried out last.

Below, when the Great Nixonian Error of fiat money, house of cards, seriously started to fall.

At the G-10 Rome meetings held in late 1971 Connally proclaimed to his astonished counterparts, "The dollar is our currency, but it's your problem."

Nixon’s Treasury Secretary John Connally.

It’s everyone’s problem now.

Deutsche Bank: It’s time to buy gold

Leslie Shaffer | @LeslieShaffer1 Friday, 26 Feb 2016 | 4:01 AM ET
Gold is still expensive, but rising economic risks and market turmoil mean investors should buy it for insurance, Deutsche Bank said Friday.

The recovery since the global and European financial crises had put the price of gold under some pressure. The yellow metal, which some analysts view as a safe haven or as a protection against rising inflation, typically underperforms during periods when the economy is growing or inflation is low. However, in a note issued Friday, the German Bank said economic signs are pointing in gold's favor.
"There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China's capital outflows," Deutsche Bank added."Buying some gold as 'insurance' is warranted."
----"A bit like insurance, which is often a grudge purchase for many, some investors may balk at the current levels," it said. "We would, however, argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets."

Day Of Reckoning Imminent

Tyler Durden
So goes the dollar – or any paper money – when it’s not backed by gold or some other commodity that can’t be created at will.  For without a stable base to hold its supply in check, what’s a dollar anyway?
It’s abstract, indefinite, and arbitrary.  It can be created out of thin air at the whims of the Federal Reserve.  A pocket full of dollars one day and you can buy the things you want and need.  On the next day these same dollars can revert to their intrinsic value…fire tinder or toilet paper.
Gold to paper currency conversion once limited the Federal Reserve’s money creation games.  But that was before the U.S. severed the dollar’s relationship to gold and commenced the dollar reserve standard.  Prior to 1971, a foreign bank could exchange $35 with the U.S. Treasury for an ounce of gold.  After that, when foreign banks handed the U.S. Treasury $35, they received $35 in exchange.
Nixon announces that he will “temporarily” default on the convertibility of the dollar into gold. One cannot show this video often enough, because it is such an excellent example of a government official lying as soon as he opens his mouth, with every single sentence he utters. It also betrays a frightening degree of economic ignorance.
Unlike gold, which has no debt obligation or counterparty risk, dollars can expire worthless when their promissory obligation is defaulted on.  Alternatively, they can be inflated to nothing when a desperate Federal Reserve moves to dropping suitcases of money from helicopters over major urban centers.

If this helicopter drop concept is new to you let me assure you that it is no joke.  In fact, this is what former Federal Reserve Chairman, Ben S, Bernanke, said the Fed would do in a time of financial crisis.  He laid it out very clearly in his November 21, 2002 speech, Deflation: Making Sure “It” Doesn’t Happen Here. Then as Federal Reserve Governor (now former Chairman), Bernanke had the following to say…

“The U.S. Government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.  By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. Government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the price in dollars of those goods and services.”

Later in this same speech, Bernanke made reference to a “helicopter drop,” alluding to a central banker hovering in a helicopter – dropping suitcases full of money to individuals.

The dollar is our currency, but it’s your problem

October 2007 (Magazine)By Kevin Hebner

World economy stands on the cusp of another crash, warns Lord Mervyn King

7 February 2016 • 8:02pm
Former Bank of England Governor Lord Mervyn King has warned that the world is on the cusp of another crash because regulators’ have failed in their attempts to reform the financial system in the wake of the last crisis.

“Another crisis is certain, and the failure…to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later,” Lord King says in his new book, the exclusive serialisation of which starts in The Telegraph this weekend.

Since the last crisis, “governments and regulators have been hyperactive at the national and international level” but “bankers and regulators have colluded in a self-defeating spiral of complexity”, he claims.

Lord King had a turbulent ten-year reign as Governor of Bank of England between 2003 and 2013 - a period in which he was at the heart of a £500bn bailout of Britain’s broken banking system in 2008 led by Chancellor Alistair Darling and Prime Minister Gordon Brown in response to the global crash.
As Governor of the Bank, Lord King was responsible for Britain’s interest rate policy and money supply. He says that Brown’s “tripartite” system of financial regulation, created in 1997 and comprising the Bank of England, the Treasury and the Financial Services Authority – failed to protect Britain’s financial system when the credit crunch struck in 2007.
---- Since the crisis, low interest rates have fuelled asset prices and a desperate search for yield, leaving central banks trapped “in a prisoner’s dilemma” unable to raise rates for fear of slowing growth and causing another downturn. However, short- term measures to maintain market confidence in the aftermath of the crisis has only perpetuated the underlying disequilibrium, Lord King argues..
“Only a fundamental rethink of how we...organise our system of money and banking will prevent a repetition of the crisis. Without reform of the financial system, another crisis is certain, and the failure…to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later."

After G20 stalemate, focus turns to signs of growth momentum

Sat Feb 27, 2016 9:52am EST
Investors worried about the risk of a new global recession are hoping that data over the coming week will show that some momentum remains in the world economy, eight years into its slow recovery from the financial crisis.
The Group of 20 economies were unable to agree on a joint push for new stimulus measures at a meeting which ended on Saturday, turning attention instead to upcoming business surveys from China, Japan, Europe the United States.
Central banks in Europe and Japan may inject a little more stimulus into their economies later in March. But the Federal Reserve and the Bank of England look likely to sit tight for now, meaning hopes for a period of calm in the world's volatile financial markets lie largely with the indicators.
"It seems economic data will have to bear the burden of stabilizing sentiment," economists at Barclays said in a note to clients on Friday.
A first reading of inflation in February for the euro zone on Monday will help shape expectations of how much further below zero the European Central Bank is likely to push its deposit rate the following week.
Euro zone inflation picked up in January but is expected to have fallen back to zero in February, according to a Reuters poll of economists. ECONEZ
If there is also a weakening of the monthly purchasing manager indexes for Germany and other leading euro zone countries, the ECB may consider increasing its bond-buying program as well as cutting rates on March 10.
"There is a growing chance that the ECB will do more at its March meeting than simply lowering its deposit rate," Ralph Solveen, an economist at Commerzbank, said.
U.S. payrolls figures on Friday may help ease fears about the world's biggest economy, which appeared to stumble soon after the Federal Reserve felt confident enough to hike interest rates for the first time in nearly a decade in December.
Solid U.S. job growth and pay growth are seen as the best antidote to the upheaval in global financial markets which has hurt confidence and even raised questions about whether the United States was heading back into recession.

Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says

February 28, 2016 — 9:02 AM GMT
Gulf Cooperation Council countries may struggle to refinance $94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC Holdings Plc.

Oil-rich GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of $395 billion over the period, it said.

Expectations that these funding gaps "will be part financed through the sale of sovereign U.S. dollar debt will complicate efforts to refinance existing paper that matures over 2016 and 2017," Simon Williams, HSBC’s chief economist for the Middle East, said in the report. "With the Gulf acting as a single credit market, the refinancing challenge will likely be much more broadly felt" and "compounded by tightening regional liquidity, rising rates and recent downgrades," he said.

GCC states, which collectively produce about a quarter of the world’s oil, are taking unprecedented measures to shore up their public finances as crude prices struggle to rebound from the lowest levels in 12 years. The countries, which include Saudi Arabia and Oman, have also been hit by a series of rating cuts, while billions of dollars have been drained from the region’s banking system.

Gulf countries have about $610 billion outstanding in FX-denominated bonds and syndicated loans, HSBC said. This includes financial and corporate debt, as well as sovereign debt, mainly in the U.A.E., Bahrain and Qatar, it said.
We end with democracy British, perfidious Albion, style. Brexit looks better with each passing day. Time to take back democracy from the Bilderberger insider elite. In the EUSSR, the eurocrats are getting their feelings hurt. That’ll be another 100 million euros in eurocrat benefits then.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

Nine deceptions in our history with the EU

The strange pseudo-deal stitched up between David Cameron and his 27 EU colleagues is yet another example of the EU's smoke and mirrors

The key to understanding the unique system of government known as the “European Union” is that everything about it is based on smoke and mirrors, with nothing ever being quite what it is pretending to be. Of this, the strange little pseudo-deal stitched up between David Cameron and his 27 EU colleagues is only yet another example.

When, some years back, I co‑authored what I believe is still the most comprehensively researched history of the “European project”, nothing struck me more than how consistently it has, at every stage, been built on one deception after another, which is why the book was called The Great Deception. Here are nine of them.

1. How it all began

To this day, the European Commission website deliberately confuses two quite incompatible models for a future “United States of Europe” put forward after the Second World War. Its account starts with Winston Churchill’s call for a “United States of Europe” in 1946, which led two years later to the “intergovernmental” Council of Europe. But no one was more scornful of this than the Frenchman Jean Monnet, who had a wholly different model in mind, first conceived back in the Twenties. His “United States of Europe” would be centred on an entirely new kind of “supranational” government, able to overrule the vetoes of any of its individual member states. It was Monnet’s vision that won, through the “Schuman Declaration” he drafted in 1950. This led to the European Iron and Steel Community, with Monnet at its head, which even then he explicitly hailed as the “government of Europe”.

2. 'Switch-sell’ in Rome

When Monnet’s first bid to move straight to the complete political union of its original six members was rebuffed in 1954, he and his allies realised they could only achieve their real goal step by step. So they deliberately decided to conceal it, by pretending that they were only seeking to create a trading arrangement. But the treaty of Rome in 1957 did begin by declaring their intention to work for “ever-closer union”, and set up all the core institutions needed to run a future government of Europe – even though this was far more than was needed to administer what was sold as its headline purpose: the creation of just a “Common Market”.

3. Macmillan joins deceit

When, in 1961, Britain first applied to join “the Six”, Harold Macmillan and Edward Heath had been fully briefed by Monnet’s allies as to the project’s ultimate goal, full economic and political union. But papers released under the 30-year rule show that, at the end of June, the Cabinet accepted their urging that, for “presentational” reasons, this should not be revealed to the public or Parliament. British entry should be sold as being only to a “Common Market”, concerned just with trade and jobs.

9. Mr Cameron’s 'treaty’

Almost everything about Cameron’s “treaty” to give Britain a “special relationship” with the EU is yet again smoke and mirrors, not least the insistence that it is “legally binding and irreversible”. Under the Vienna Convention, a treaty is only valid when the signatories can guarantee delivery of what they have agreed. But in at least two respects, on economic governance and recognition that Britain is no longer bound to “ever closer union”, Cameron’s deal requires change to the EU treaties themselves. So it could only become “legally binding” after going through all the procedures now required for EU treaty change, depending on ratification by every member state, often involving referendums, any one of which could make Cameron’s “treaty” reversible.

Until then, Cameron’s little deal cannot conceivably be considered “legally binding”. To pretend otherwise is just another deception. But he may still get away with it, because no one will challenge him on it (Michael Gove’s claim that it could be reversed by the European Court of Justice is quite irrelevant).

Brussels bureaucrat: ‘We’re not bureaucrats!’

Juncker’s chief spokesperson takes exception at journalist’s description of his work.
By Paul Dallison 2/23/16, 5:04 PM CET Updated 2/24/16, 10:39 AM CET

A journalist who used the term “euro bureaucrats” received an ear-bashing from Jean-Claude Juncker’s chief spokesman Tuesday who said it was not an acceptable way to refer to “European civil servants.”
Margaritis Schinas, who heads the European Commission’s spokesperson’s service, took offense at a question from an Italian journalist during the daily midday briefing. The journalist asked Schinas about the behavior of Martin Selmayr, Juncker’s powerful chief of staff, who has been accused by officials in Rome of briefing against them.
The journalist asked if Selmayr’s alleged conduct was “in line with the duties of ‘euro bureaucrats,’ whose salaries are paid by European taxpayers.”
Schinas responded: “Thank you for repeating that we are bureaucrats in our faces. I have told you repeatedly that we do not like that term for the European civil service, for the many thousands of colleagues who work for the institutions. We do not think bureaucrat is the way to describe our job.”
“Each time you will use the term bureaucrat, I will answer back that we are civil servants working for the interests of all 28 member states.”
More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.

Woody Allen.
At the Comex silver depositories Friday final figures were: Registered 24.79 Moz, Eligible 129.41 Moz, Total 154.20 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today back to the usual suspects again, the banksters. How these criminals hold on to their global banking licences is a mystery. Of course Citigroup is innocent until proven guilty in a court of law, but being American rather than Swiss or European, I suspect that this will never see the light of day in a US criminal court.

Citigroup Faces Fraud Suit Claiming $1.1 Billion in Losses

February 27, 2016 — 2:34 AM GMT Updated on February 27, 2016 — 6:11 PM GMT
Citigroup Inc. was sued for fraud by investors and creditors of a bankrupt Mexican oil services firm over claims they were harmed by a loan scheme that also led the bank to cut 2013 profit by $235 million and fire at least a dozen people.
Citigroup’s loans led to the 2014 collapse of the Mexican firm, Oceanografia SA, and caused Dutch lender Rabobank Groep, with investors and creditors, to lose at least $1.1 billion, according to the lawsuit filed Friday in Miami federal court. Rabobank and other investors separately filed a negligence suit in Delaware state court against auditor KPMG LLP. 
Citigroup’s Mexican subsidiary, Banamex, made short-term loans to Oceanografia, which did work for state-run Petroleos Mexicanos, or Pemex. In turn, Pemex repaid the bank. Citigroup Chief Executive Officer Michael Corbat said in February 2014 that $400 million of accounts receivable from Oceanografia were fraudulent. He said the bank was working with Mexican authorities and would find out “who perpetrated this despicable crime.”
Rabobank and the investors claim Citigroup conspired with Oceanografia to accept falsified work estimates even as the oil services firm became increasingly dependent on cash advances to survive. Those Citigroup loans propped up Oceanografia, while Pemex repaid the bank with millions of dollars in interest, according to the complaint.
“Intentional misconduct on the part of Wall Street banks -- including Citigroup specifically -- is far from unfamiliar,” according to the complaint. “Yet again, greed and dishonesty have victimized blameless businesses and investors.”
Mark Costiglio, a Citigroup spokesman, and Manuel Goncalves, a spokesman at KPMG, both declined to comment on the lawsuits. Quinn Emanuel Urguhart & Sullivan LLP, the law firm that filed the lawsuit, provided copies of the complaint. The filing couldn’t be independently confirmed in court records.
Citigroup has said in regulatory filings that it’s cooperating with an investigation by the U.S. Securities and Exchange Commission and a Justice Department request for information about the fraud. The SEC inquiry has included requests for documents and witness testimony, the bank said in a filing on Friday.  
Mexican authorities placed Oceanografia in bankruptcy and later charged several Citigroup employees with crimes, according to the complaint. None of the creditors who sued have collected money through the bankruptcy, according to the complaint.
The complaint includes claims that the bank violated the Racketeer Influenced and Corrupt Organization Act and engaged in fraud while breaching its fiduciary duty. It seeks compensatory and punitive damages.
----Oceanografia’s cash advance requests were subject to a two-step approval process by Citigroup to verify that documents submitted accurately reflected the terms of its contracts with Pemex, according to the complaint. In at least 166 cash requests, Citigroup didn’t satisfy either step, failing to detect falsified documents, according to the complaint.
In February 2014, Citigroup contacted Pemex to discuss the cash advances and learned about Oceanografia’s phony supporting documentation, according to the complaint.
With Pemex aware of this scheme, “Citigroup had no choice but to distance itself from and shift blame to Oceanografia including by becoming a whistle-blower and playing the victim,” according to the lawsuit. “However, Citigroup’s efforts to avoid responsibility are transparent.”

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?

Buffett: Wind and Solar Power Competition Challenges Utilities

February 27, 2016 — 9:45 PM GMT
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said subsidized wind and solar power in the U.S. may erode the economics of electric utilities that care little for efficiency.

The joke in the industry was that a utility was the only business that would automatically earn more money by redecorating the boss’s office,” Buffett wrote Saturday in his annual letter to shareholders. “Some utilities ran things accordingly. That’s all changing.”

Utilities across the country have been grappling with how to integrate wind farms and solar plants into their systems and business models. Cheap power from large-scale renewables has undercut the profitability of conventional electricity generation from coal and nuclear sources. In addition, rooftop solar panels have sapped sales for power distribution companies.

Berkshire is both a utility owner and a producer of electricity from renewable energy. After it pledged in July to almost double its $16 billion investment in renewables, its Nevada utility, NV Energy, persuaded state regulators to raise fees and cut credits for new home-solar customers. Nevada casino operators have tried to break away, saying they can buy cheaper power in the open market, including some from renewable sources.

High-Cost Utilities

“Tax credits, or other government-mandated help for renewables, may eventually erode the economics of the incumbent utility, particularly if it is a high-cost operator,” Buffett wrote Saturday. Berkshire Hathaway Energy’s track record of efficiency “leaves us particularly competitive in today’s market (and more important, in tomorrow’s as well).”

The company’s Iowa, Oregon and Utah utilities produce more power with fewer employees and a lower accident rate than before it bought them, Buffett said. The Iowa utility operated without a rate increase for 16 years, while average rates in the industry rose 44 percent, he said.

Berkshire’s pledge to spend another $15 billion on renewable-power development “will make great sense, both for the environment and for Berkshire’s economics,” he said. “It seems highly likely to me that climate change poses a major problem for the planet.”

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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