Monday, 21 March 2016

Helicopter Time.

Baltic Dry Index. 395 +03        Brent Crude 40.90

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

Brexit Quote of the Day.
If Cameron fell in the Thames, that would be a misfortune. If anyone dragged him out again, that would be a calamity.
With apologies to Benjamin Disraeli and Gladstone.

In the weekend edition we focused on gold, the ultimate money when the great Nixonian Error of fiat money, communist money, eventually fails. Today we focus on our desperate central banksters, deep into voodoo crackpot economics, and speeding fast towards the next Lehman. No amount of rigging stocks in the global casinos, does anything at all to fix the underlying problem of too much unrepayable global debt in the system, and the massive malinvestment over production bubble triggered by China this century. Our new commodities depression now seems about to take down Brazil as its first major casualty. For more on Brazil scroll down to Crooks Corner.
We open with a warning from China. Are the central banksters already dropping helicopter money in Japan and the EUSSR?
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.

China's Central Bank Chief Sounds Warning Over Rising Debt

March 20, 2016 — 7:36 AM GMT Updated on March 20, 2016 — 8:19 AM GMT
People’s Bank of China Governor Zhou Xiaochuan sounded a warning over rising debt levels, saying corporate lending as a ratio to gross domestic product had become too high and the country must develop more robust capital markets.
China still has a problem with illegal fundraising and financial services are insufficient, Zhou said in a speech at the China Development Forum in Beijing on Sunday. He said the country still needs regulation to guard against excessive leverage in foreign currencies.
“Lending as a share of GDP, especially corporate lending as a share of GDP, is too high,” Zhou said. He said a high leverage ratio is more prone to macroeconomic risk.
Chinese leaders are struggling to balance between the meeting a target of at least 6.5 percent average annual growth to 2020, while addressing growing debt levels. In a briefing on March 16, Premier Li Keqiang said a high corporate debt ratio “is not new in China” and China would seek to bring it down with capital-market reforms.
Corporate debt alone now stands at 160 percent of China’s GDP, according to the Organization for Economic Cooperation and Development. The group’s secretary-general, Angel Gurria, said earlier in the day that sectors with especially high leverage include cement, steel, coal and flat glass, and China must address the issue. He called it a short-term risk.
Zhou, 68, spoke on the second day of a three-day forum, where some of the world’s best-known executives -- including Facebook Inc.’s Mark Zuckerberg, UBS Group AG’s Sergio Ermotti and International Business Machines Corp.’s Ginni Rometty -- mingled with top government officials. The Chinese leadership’s message overall was that it would press ahead with necessary structural reforms even as economic growth slows.

Central banks are already doing the unthinkable - you just don't know it

Mehreen Khan19 March 2016 • 7:00pm
----Institutions which dragged the world from its worst depression since the early 20th century are finally seeing their magic desert them, if conventional wisdom is to be believed.

Eight years on the from the Great Recession, voices as authoritative as the International Monetary Fund and the Bank of International Settlements - dubbed the 'central bank of central banks' - have called time on the era of extraordinary monetary policy.

Having hoovered up $12.3 trillion (£8.5 trillion) in financial assets and carried out 637 interest rate cuts since 2008, central banks have been stunned back into action in the last six weeks.

The Bank of Japan kicked off a new round of global easing with its decision to cross the rubicon into negative interest rate territory on January 29.

Eurozone policymakers followed suit earlier this month with a triple whammy of interest rate cuts, €20bn in additional asset purchases a month, and an unprecedented move to allow commercial banks to borrow money at negative rates.
The Federal Reserve has also taken its foot off the pedal by slashing its expected interest rate hikes from four a year to just two.
----Faced with political intransigence, central bankers are openly talking about the previously unthinkable: "helicopter money".

A catch-all term, helicopter drops describe the process by which central banks can create money to transfer to the public or private sector to stimulate economic activity and spending.

Long considered one of the last policymaking taboos, debate around the merits of helicopter money has gained traction in recent weeks.

ECB chief Mario Draghi has refused to rule out the prospect saying only that the bank had not yet “discussed” such matters due to their legal and accounting complexity.  This week, his chief economist Peter Praet, went further in hinting that helicopter drops were part of the ECB's toolbox.

"All central banks can do it", said Praet. "You can issue currency and you distribute it to people. The question is, if and when is it opportune to make recourse to that sort of instrument".

----For some observers, the next phase in extraordinary central bank action has already arrived, and it is Japan which is leading the way. 
The Bank of Japan’s move to impose a three tiered deposit rate on banks this year can be seen as a covert attempt to transfer funds to the private sector, argues Eric Lonergan, economist and hedge fund manager.
He notes that the BoJ's decision to exempt some reserves from the negative rate represents a transfer of cash to commercial lenders at rate of 0.1pc. 
The system "separates out the interest rate on reserves from that which affects market rates”, says Lonergan. 
"It is taking the first step along the journey towards helicopter money and opens up a whole new avenue of stimulus”. 

“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…We conclude that under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

Dr. Ben Bernanke. 2002
At the Comex silver depositories Friday final figures were: Registered 31.69 Moz, Eligible 123.38 Moz, Total 155.07 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, more on the deepening corruption crisis in Brazil from the BBC. If only they would cover the GB Brexit contest in the same way. Brazil’s political and economic crisis now seems beyond control.

Brazil tumbles like 'House of Cards' in crisis

17 March 2016
---- This is the country's toughest political crisis since the early 1990s, when its first democratically-elected President in the modern era, Fernando Collor, was removed from power.
On Wednesday night the crisis took a bizarre turn, as a judge revealed phone conversations between President Dilma Rousseff and her predecessor Luiz Inacio Lula da Silva and suggested they are trying to obstruct the course of an investigation into corruption.
Spontaneous protests erupted in more than 15 cities across the country and riot police acted against demonstrators in Brasilia.
Both Rousseff and Lula - as he is known - are fighting for their political survival.
Their political project has been shaping Brazil since 2003, when Lula defeated the opposition and established the Workers' Party at the top of Brazilian politics.
Rousseff is under fire for allegedly doctoring government accounts last year and could be suspended from her job as early as May if she loses a key vote in Congress.

Lula is investigated for allegedly having received gifts from construction firms that were benefitted with inflated contracts from state oil giant Petrobras.

Two weeks ago it looked like investigators were close to charging Lula for corruption, after he was detained and questioned for three hours.

On Sunday, opponents of Rousseff and Lula staged one of the country's largest demonstrations in history asking for her removal and his imprisonment.

Strange times

Usually when politicians are involved in corruption allegations, they are either fired or suspended from their jobs - not invited into the government.

But these are strange times in Brazilian politics.

Rousseff's reaction this week took everyone by surprise.
She invited Lula to become her Chief of Staff and help lead her efforts out of the impeachment mess.
On Wednesday, she justified her decision by saying he is "important and relevant for his unequivocal political experience".
She dismissed criticism that Lula was only being offered a job to escape criminal charges.
As a minister, he will have prosecution privileges and only Brazil's Supreme Court will be able to try him.
She also denied that Lula would become a "de-facto" President - a "super minister" more powerful than the President herself.
"I have to laugh when you ask that," she told journalists on Wednesday.
But hours after Rousseff's announcement to the press, a "bomb" was dropped in Brazil's political scene.
A phone conversation between Rousseff and Lula - taken earlier that day - was released to the public.

Brazil's Rousseff lacks Senate votes to defeat impeachment: senator

Sun Mar 20, 2016 2:33pm EDT
Brazil's ruling coalition lacks the votes in the Senate to defeat a request to remove left-leaning President Dilma Rousseff from office if it is approved by the lower house, a senior senator in the coalition's largest party said on Sunday.

The leading member of the Brazilian Democratic Movement Party (PMDB), who asked not to be identified because of the sensitive nature of the issue, told Reuters the coalition could not rally the one-third of votes needed in the 81-seat Senate to stop Rousseff being dismissed.

On Sunday, Estadao newspaper quoted sources close to Senate Speaker Renan Calheiros, also a member of the PMDB, as saying he believed that if the lower house approves the ongoing impeachment process it would create an unstoppable wave of support for removing Rousseff.

---- Congress' lower house opened impeachment proceedings last week against the unpopular Rousseff based on opposition allegations that she deliberately manipulated government accounts to boost her chances of reelection to a second term in 2014.

Rousseff, a former Marxist guerrilla who is Brazil's first female president, has vigorously denied any wrongdoing.

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.

Brexit Quote of the week.
Damn your principles! Stick to your party.

D. Cameron, with apologies to Benjamin Disraeli.

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?

How nanowires can be formed

Date: March 17, 2016

Source: Lund University

Summary: Researchers show how different arrangements of atoms can be combined into nanowires as they grow. Researchers learning to control the properties of materials this way can lead the way to more efficient electronic devices.
In an article published in Nature today, researchers at Lund University in Sweden show how different arrangements of atoms can be combined into nanowires as they grow. Researchers learning to control the properties of materials this way can lead the way to more efficient electronic devices.
Nanowires are believed to be important elements in several different areas, such as in future generations of transistors, energy efficient light emitting diodes (LEDs) and solar cells.
The fact that it is possible to affect how nanowires are formed and grow has been known for a long time. What researchers have now been able to show is what needs to be done to give the nanowires a particular structure.
The gound-breaking discovery includes showing how nanowires grow, and affect the formation of different atomic layers, by using a powerful microscope and theoretical analysis.
"We now have on tape the events that take place, and what is required to be able to control the nanowire growth," says Daniel Jacobsson, former doctoral student at the Lund University Faculty of Engineering, and currently a research engineer at the Lund University Centre for Chemistry and Chemical Engineering.
The team wanted to understand how nanowires grow, and chose to film them though an electron microscope. The article in Nature is about these films, which show nanowires made from gallium arsenide and composed of different crystal structures.
"The nanowires grow through a self-assembly process which is spontaneous and hard to control. But if we can understand how the nanowires grow, we can control the structures that are formed in a more precise way, and thereby create new types of structures for new fields of application," says Daniel Jacobsson.
At the Centre for Chemistry and Chemical Engineering in Lund, a world-leading "super microscope" is under construction, which will be able to show, in high resolution, how atoms are joined together when nanostructures are formed.

The monthly Coppock Indicators finished February

DJIA: 16517 -23 Down. NASDAQ:  4558 +45 Down. SP500: 1932 -17 Down. 

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