Monday, 14 March 2016

Pie Day 3.1416

Baltic Dry Index. 384 +08        Brent Crude 40.26

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

Brexit odds checker.

Brexit Quote of the Day.
“Cameron: He was a great man in an era of small events.”

With apologies to Winston Churchill.

However, a deflationary recession may differ in one respect from "normal" recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero.2 Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the "zero bound."
Ben Bernanke, 21 November 2002. Quack.
Today is Pie day, more correctly Pi Day, at least under the American way of writing down dates, 3.1416. Strictly speaking 3.14159…. but you get the idea. But what is Pi? The ratio of the circumference of a circle to its diameter. But enough of trivia, there’s a major revolution underway across Europe.  Heads will roll next.
Mad Merkel’s Migrant Madness, led her to a disaster at the polls yesterday. AfD a three year old upstart party that wants to undo the Euro, had its best showing so far. Merkel’s CDU support is in free fall since January, and all those moslem migrant sexual assaults across Europe.  Mainstream Europe is coming to its senses. Bilderberger Europe is dead on the floor.
Europe’s own version of Trump-mania is rising. Euros anyone? Stay long fully paid up physical gold and silver, held outside of the financial house of cards.  From America, to Europe, to China, to the emerging markets, the Great Nixonian Error of fiat money, communist money, is undergoing an earthquake.  Bancors next? Only over Uncle Scam’s dead body.

Merkel's CDU Loses Support in Elections Swayed by Refugee Crisis

March 13, 2016 — 5:12 PM GMT Updated on March 13, 2016 — 11:00 PM GMT
Chancellor Angela Merkel faces an increasingly splintered political landscape after voters punished her party and lifted the anti-immigration Alternative for Germany to its best showing yet in three state elections dominated by the refugee crisis.

Support for Merkel’s Christian Democratic Union tumbled across the board Sunday as her candidates failed to capture two western states including Baden-Wuerttemberg, home to carmaker Daimler AG. Her party hung on to win the most votes in Saxony-Anhalt in the formerly communist east, though Alternative for Germany, or AfD, upended the coalition math there by winning about 24 percent support in its first attempt in the state.

While Merkel didn’t make the rounds of evening talk shows, CDU party officials signaled she won’t renounce her stance of fighting for open travel and commerce within the European Union and a deal with Turkey to stanch the flow of refugees from war-torn Syria. Merkel will chair a meeting of her party’s national leadership on Monday to assess the election results and plans to hold a news conference at 1:15 p.m. in Berlin.

The election outcome will add to the unease within Merkel’s party about her migration policies “but even this protest vote is unlikely to put her job as chancellor at risk,” said Holger Schmieding, Berlin-based chief economist at Berenberg Bank. “Whereas the debate about migration in Germany could get more noisy near-term, by far the most likely scenario remains that Merkel stays in office until the next federal election in September 2017 –- and probably beyond.”

----“None of the established parties with seats in the Bundestag had a particularly good night,” Michael Grosse-Broemer, parliamentary whip for Merkel’s party bloc in the federal parliament, said on ARD television, dismissing the AfD as a “protest party.” Peter Tauber, the CDU’s secretary general, said “I don’t see” the need for Merkel to change course.

The CDU fell to its worst result of the postwar era in Baden-Wuerttemberg, compounding the party’s shock at its loss to the Greens in 2011 after more than half a century governing the state. The chancellor’s problem is that polls suggested her party had a lock on all three states as recently as last fall, before the impact of the refugee crisis on Germany upended the contest.

Greens Recapture Biggest Prize With First German State Victory

March 13, 2016 — 7:25 PM GMT
Germany’s Green party for the first time won a state election outright, capturing the most votes in Baden-Wuerttemberg to lay claim to govern the southwestern region for another five years.

Support for the Greens in the state, the biggest of three that voted on Sunday, was 30.7 percent, followed by 27.3 percent for German Chancellor Angela Merkel’s Christian Democratic Union, according to projections from public broadcaster ZDF as of 8:09 p.m. local time. While the Greens dislodged the CDU in the last election in 2011, they did so after placing second and forging a coalition with the third-placed party.
The state -- boasting the country’s lowest unemployment, fine wines, the fabled Black Forest and the home of Porsche and Mercedes-Benz -- was run by the CDU for 58 years until the Greens took control in a proxy ballot on Merkel’s about-face on nuclear power in the wake of the nuclear accident in Fukushima, Japan. Even as late as January, the CDU appeared on track to recapture the state. The Greens were aided in their win Sunday by the popularity of their regional leader and state premier, Winfried Kretschmann.

Germany Wakes Up to Politics Trump-Style as AfD Takes on Merkel

March 13, 2016 — 6:02 PM GMT Updated on March 13, 2016 — 11:00 PM GMT
If you think Donald Trump has some outrageous ideas, wait until you meet Germany’s AfD party.

The Alternative for Germany, to give the party its full name, has shaken up the country’s consensus-driven politics with headline-grabbing policies that include telling Germans to have more children to avoid the need for immigration. Frauke Petry, the AfD’s co-leader, has said that police must “prevent illegal border crossings, using firearms if necessary.”

Like Trump, her rhetoric hasn’t damaged AfD support but rather struck a chord with those disgruntled with the establishment parties, in particular nabbing voters unhappy with Chancellor Angela Merkel’s open-door policy for refugees. The party surged to record support in Sunday’s regional elections, taking seats in all three states that voted and boosting its representation to half of Germany’s 16 state assemblies. The AfD had its strongest showing in Saxony-Anhalt with 24.3 percent, making it the second-biggest party in the former communist eastern state, according to TV projections.

The rise of the AfD in Germany mirrors growing support for populist politicians such as National Front leader Marine Le Pen in France and Trump, who has called for banning Muslims from emigrating to the U.S.
Like Trump, Petry spars regularly with the media that follows her every word. One German newspaper even ran a quiz asking readers to attribute statements to Trump or Petry.

“We have fundamental problems in Germany that led to this outcome,” Petry said on broadcaster ARD Sunday to explain the party’s surge. “Now we want to force the other parties into a substantive debate.”
The German political establishment is having none of it, vowing instead to band together to keep the AfD out of government. Petry has responded by saying her party plans to take on an opposition role to push AfD policies in the face of what they see as a cartel of established politicians.

The AfD began in 2013 out of opposition to the euro and taxpayer-funded bailouts of countries such as Greece. Co-founder Bernd Lucke, an economics professor who focused the party on the euro, quit last year after losing a power struggle with rivals including Petry, 40, an East German-born chemist. The AfD failed to win seats in the German parliament in 2013, though it entered the European Parliament the following year. It still wants to dissolve the 19-nation euro area.
And in Brexit news, Yankee Doodle aka Barry Kenya’s meddling is fuelling an all too predictable GB voter backlash. Now if the Clinton’s will just come out ordering Britain to vote “Remain” in the EUSSR, Brexit will become a betting certainty.

Americans would never accept EU restrictions – so why should we?

Barack Obama's plan to urge voters to remain in the European Union is a 'piece of outrageous and exorbitant hypocrisy', Boris Johnson writes

I love America. I believe in the American dream. Indeed, I hold that the story of the past 100 years has been very largely about how America rose to global greatness – and how America has helped to preserve and expand democracy around the world. In two global conflicts, and throughout the Cold War, the United States has fought for the founding ideals of the republic: that government of the people, by the people, for the people should not perish from the earth.
So it is on the face of it a bit peculiar that US government officials should believe that Britain must remain within the EU – a system in which democracy is increasingly undermined.

Some time in the next couple of months we are told that President Obama himself is going to arrive in this country, like some deus ex machina, to pronounce on the matter. Air Force One will touch down; a lectern with the presidential seal will be erected. The British people will be told to be good to themselves, to do the right thing. We will be informed by our most important ally that it is in our interests to stay in the EU, no matter how flawed we may feel that organisation to be. Never mind the loss of sovereignty; never mind the expense and the bureaucracy and the uncontrolled immigration.

The American view is very clear. Whether in code or en clair, the President will tell us all that UK membership of the EU is right for Britain, right for Europe, and right for America. And why? Because that – or so we will be told – is the only way we can have “influence” in the counsels of the nations.

It is an important argument, and deserves to be taken seriously. I also think it is wholly fallacious – and coming from Uncle Sam, it is a piece of outrageous and exorbitant hypocrisy.

There is no country in the world that defends its own sovereignty with such hysterical vigilance as the United States of America. This is a nation born from its glorious refusal to accept overseas control. Almost two and a half centuries ago the American colonists rose up and violently asserted the principle that they – and they alone – should determine the government of America, and not George III or his ministers. To this day the Americans refuse to kneel to almost any kind of international jurisdiction. Alone of Western nations, the US declines to accept that its citizens can be subject to the rulings of the International Criminal Court in The Hague. They have not even signed up to the Convention on the Law of the Sea. Can you imagine the Americans submitting their democracy to the kind of regime that we have in the EU?

Think of Nafta – the North Atlantic Free Trade Agreement – that links the US with Canada and Mexico. Suppose it were constituted on the lines of the EU, with a commission and a parliament and a court of justice. Would the Americans knuckle under – to a Nafta commission and parliament generating about half their domestic law? Would they submit to a Nafta court of justice – supreme over all US institutions – and largely staffed by Mexicans and Canadians whom the people of the US could neither appoint nor remove? 
No way. The idea is laughable, and completely alien to American traditions. So why is it essential for Britain to comply with a system that the Americans would themselves reject out of hand? Is it not a blatant case of 
“Do as I say, but not as I do”?


The bancor was a supranational currency that John Maynard Keynes and E. F. Schumacher[1] conceptualised in the years 1940-42 and which the United Kingdom proposed to introduce after World War II. This newly created supranational currency would then be used in international trade as a unit of account within a multilateral clearing system – the International Clearing Union – which would also have to be founded.
----Bancor would not be an international currency. It would rather be a unit of account used to track international flows of assets and liabilities. Gold could be exchanged for bancors, but bancors could not be exchanged for gold. Individuals could not hold or trade in bancor. All international trade would be valued and cleared in bancor. Surplus countries with excess bancor assets and deficit countries with excess bancor liabilities would both be charged to provide symmetrical incentives on them to take action to restore balanced trade.
----Since the outbreak of the financial crisis in 2008 Keynes's proposal has been revived: In a speech delivered in March 2009 entitled Reform the International Monetary System, Zhou Xiaochuan, the governor of the People's Bank of China called Keynes's bancor approach "farsighted" and proposed the adoption of International Monetary Fund (IMF) special drawing rights (SDRs) as a global reserve currency as a response to the financial crisis of 2007–2010. He argued that a national currency was unsuitable as a global reserve currency because of the Triffin dilemma - the difficulty faced by reserve currency issuers in trying to simultaneously achieve their domestic monetary policy goals and meet other countries' demand for reserve currency.[2][3] A similar analysis can be found in the Report of the United Nation's "Experts on reforms of the international monetary and financial system" [4] as well as in the IMF's study published on 13 April 2010.[5]

Cameron:   a hypocrite in public life, the world will be puzzled to decide whether you are an apostate or an impostor, whether you have abandoned good principles, or whether you ever had any?

With apologies to Thomas Paine on George Washington.
At the Comex silver depositories Friday final figures were: Registered 28.71 Moz, Eligible 126.37 Moz, Total 155.08 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, just how secure are our central banks and our electronic, easy come easy go, Nixonian fiat money.
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But 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 prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Ben Bernanke. November 21, 2002

Malware suspected in Bangladesh bank heist: officials

Fri Mar 11, 2016 4:33pm EST
Investigators suspect unknown hackers installed malware in the Bangladesh central bank's computer systems and watched, probably for weeks, for how to go about withdrawing money from its U.S. account, two bank officials briefed on the matter said on Friday.
More than a month after hackers breached Bangladesh Bank's systems and attempted to steal nearly $1 billion from its account at the Federal Reserve Bank of New York, cyber security experts are trying to find out how the hackers got in.
FireEye Inc's Mandiant forensics division is helping investigate the cyber heist, which netted hackers more than $80 million before it was uncovered.
The hackers appeared to have stolen Bangladesh Bank's credentials for the SWIFT messaging system, which banks around the world use for secure financial communication.
In a statement Friday, Belgium-based SWIFT said: "SWIFT and the Central Bank of Bangladesh are working together to resolve an internal operational issue at the central bank. SWIFT’s core messaging services were not impacted by the issue and continued to work as normal."
Banks and other businesses are eager to learn more about how the central bank was compromised so they can review their own networks for signs that they are vulnerable to similar attacks or might already have been breached, security professionals and bank executives told Reuters.
The incident could prompt central banks worldwide to beef up security and regulate financial institutions more tightly to prevent similar attacks, said Aviv Raff, chief technology officer with the cyber security firm Seculert.
---- Investigators suspect that malicious software code, often referred to as malware, which allowed hackers to learn how to withdraw the money could have been installed several weeks before the incident, which took place between Feb. 4 and Feb. 5, said Bangladesh Bank officials briefed on the matter.
Investigators believe the attack was sophisticated, describing the use of a "zero day" and referring to an "advanced persistent threat," the officials said.
A zero day is a vulnerability in software that has yet to be identified or patched. This makes it easier for hackers to infect a targeted computer without the victim's knowledge, even if it is protected with security software.
Advanced persistent threat refers to long-term attacks where hackers remain inside a network for months or even years.
Security experts said they hope samples of the malware will be made available to researchers so they can determine whether they are truly advanced, or if Bangladesh Bank's security protections were not strong enough to block the attack.

Brexit Quote of the week.

The world is weary of statesmen whom democracy has degraded into politicians.

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?

What Google's grand Go victory means: Technology is about to get a lot smarter

Madhumita Murgia11 March 2016 • 9:17am
On Wednesday afternoon in Seoul, two players faced off in a game of Go - one of civilisation’s oldest board games. But this game was different to the billions played in the game’s 3,000-year history.
For the first time ever, a computer program beat the world champion at the strategy game at which previously only humans excelled.

Lee Se-dol, a 33-year-old South Korean legend of Go, has lost two of five matches against the AlphaGo program, built by the Google-owned British company DeepMind. The first 3.5 hour game left even first-time viewers, like me, dumbstruck by its swift outcome, with commentators calling it a “superb” game that would be studied for years to come.  AlphaGo won its second game the day after (a victory that left Se-dol, who had originally said it would win one if it were lucky, speechless).

This is probably the first time you’ve ever heard of Go - a fiendishly complex checkers-style game allegedly invented by a Chinese emperor to teach his son about political wiles. So why should we care?
When IBM’s supercomputer DeepBlue beat chess grandmaster Garry Kasparov in 1997, it was a huge milestone in the evolution of computers, but then no one ever heard about DeepBlue again. In fact the machine, which had been built with the very narrow and specific purpose of playing chess, was completely dismantled after its victory - it had nothing more to prove. 
But AlphaGo is different. Backed by the heft of American tech giant Google, it’s not just a blue-sky experiment. Its victory might seem like a slightly obscure triumph for cutting-edge scientific endeavour, but really it’s the moment that Google is staking its claim to the title of most technologically-advanced company on Earth.
In the hours before the first game, chairman and former chief executive Eric Schmidt admitted as much, laughingly saying Google was “all about performance”. This is no moonshot project. The learning principles that underpin how AlphaGo plays can be unpicked and re-trained to improve all of Google’s products - from search to translation, photos, videos and social networks. 
To understand how AlphaGo could be applied broadly, you need to look at its plumbing. Go is a lot more complex than chess - there are 10 ^761 possible moves, compared to 10^120 possible in chess. So it can’t be solved by brute-force calculations that just compute every possible step in the game, which is what DeepBlue did.
Instead, this algorithm needs to learn the rules of Go, and approximate human intuition. To do this, it uses a special technique called “reinforcement learning”. It learns from its own mistakes by playing against itself millions of times.
This is very similar to how the human brain develops.  So AlphaGo learns how to predict moves, and then gauges which player is ahead at any point in time. In other words, the machine can simulate “intuition” by making an informed guess about what moves would be most likely to succeed. 
If AlphaGo can win at Go, founder Demis Hassabis believes it can learn how to do anything from diagnose life-threatening illnesses earlier than doctors, to predict the impact of climate change. But before we get to humanity’s biggest problems, machine learning has already begun to sweep across the Google products we use every day.

In February, John Giannandrea, Google’s head of artificial intelligence, took over Google’s core Search product, merging the two divisions. Machine learning technology is now essential to how Google ranks its search results.

Striking back against the machine: Korean Go player beats Google program

Sun Mar 13, 2016 7:14am EDT
South Korean Lee Sedol won his first match against a computer program developed by a Google subsidiar on Sunday in the ancient board game Go, denying a clean sweep for the artificial intelligence in a five-match series.
Lee, one of the world's top players and a holder of 18 international titles, recovered from three consecutive losses against the AlphaGo program developed by DeepMind.
"This win is invaluable and I would not trade it for anything else in the world," a jubilant Lee told reporters after the match, thanking fans for their support.
The 33-year-old professional player has admitted to underestimating AlphaGo's skills but also said the program was not perfect, asking supporters to keep watching the contest.
DeepMind founder Demis Hassabis told reporters the loss was a valuable learning tool and would help identify weaknesses in the program that his team needed to address.

The monthly Coppock Indicators finished February

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

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