Tuesday, 28 June 2016

Brexit Plus 5. No Plan.

Baltic Dry Index. 616 +07       Brent Crude 47.84

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

“For the want of a nail the shoe was lost,
For the want of a shoe the horse was lost,
For the want of a horse the rider was lost,
For the want of a rider the battle was lost,
For the want of a battle the kingdom was lost,
And all for the want of a horseshoe-nail.”
Benjamin Franklin.
It is five days on from Great Britain’s historic vote to leave the European Union, and it is now painfully obvious to Great Britain and Europe and the world, that neither Her Majesty’s Government in GB nor the European Union based in Brussels, made a contingency plan for what would happen next if john Bull’s voters voted to leave the jobs and wealth destroying EUSSR. Amazingly, both entities complacently assumed Remain voters would easily beat Leave voters, and no contingency planning was therefore necessary. Scroll down to Crooks Corner for more on the legal minefield now generated.
Even more incredibly, Europe’s central banks,  banks and most of the world’s hedge funds all bet on Remain winning as well, generating massive crushing losses in stocks and currencies, as weapons of financial mass destruction were triggered, leaving us all now guessing where the next Lehman lies. Italian banks? French banks? German banks? Elsewhere? With the end of quarter, end of the half year rapidly approaching, plus the Independence day holiday in America, there’s very little room for the next Lehman to dodge and duck their new reality. Within a month at best, any zombie banks or hedge funds must fess up, or go criminal, Madoff style.
We open today with just when HMG thinks the news can’t get any worse, it does. Time for a glass of whisky and a revolver in Number 10?  Perhaps not, day 3 of a crisis often brings the first bounce as shorts cover, and while that bounce won’t help the England football team, it brings a measure of relief to everyone else.

Iceland knocks England out of Euro 2016 in stunning upset

Published: June 27, 2016 5:40 p.m. ET
England’s tortured history of major-tournament heartbreak added its most embarrassing chapter here on Monday evening with a 2-1 defeat to Iceland, the smallest nation ever to qualify for the European Championship.

Iceland, population 331,000, held off the Three Lions to eliminate them from the tournament and deny England a first knockout-round victory in a decade. The Cinderella of Euro 2016 will now advance to take on France in the quarterfinal in Saint-Denis on Sunday.

England manager Roy Hodgson resigned from his post immediately after the game after four years in charge, though his contract was due to run out anyway after the tournament.

“We haven’t progressed as far as I thought we were capable of,” he said, reading from a prepared statement. “That is not acceptable. I would have loved to stay on for another two years. However, I am pragmatic and know we are in the results business.”

Up next, Bloomberg plays fast and loose with the truth. Far from “The rest of the EU feel they bent over backwards to accommodate Cameron over the last months,” the reality was that the EU collectively treated Cameron’s renegotiation reform attempt with contempt, and sent him back from the new “Munich” with an empty envelope to try to sell to a sceptical British public. A campaign made impossibly difficult by Migrant Mad Mrs Merkel unilaterally inviting all the world’s economic migrants to come to Germany, and by extension the rest of the EU. The dinners attending Dodgy Dave’s last supper, brought the current calamity on themselves.

Cameron Heads for Last Supper With Leaders Amid Brexit Pain

June 27, 2016 — 11:06 PM BST Updated on June 27, 2016 — 11:19 PM BST
Prime Minister David Cameron is set to face his fellow European Union leaders for the first time since triggering the political earthquake that’s undermined the bloc’s foundations and shocked global financial markets.

Cameron will endure an awkward dinner with his EU cohorts Tuesday after his effort to calm the U.K.’s divided public and soothe investors failed to stop the pound and the country’s biggest banks from getting clobbered. The premier has already announced he will quit after last week’s vote, leaving him little leverage at the table. His government has signaled it prefers a gradual exit from the European Union while the region’s three largest economies are keen to set a timetable to contain the economic damage.

“We don’t know how long he is going to be prime minister for, when a new government could begin to negotiate terms,” Mark Leonard, director of the European Council on Foreign Relations, said. “The rest of the EU feel they bent over backwards to accommodate Cameron over the last months and he launched this reckless referendum and lost it so the other EU states are in no mood to do him any favors.”

The EU gathering will unfurl against a backdrop of market turmoil with shares in Barclays Plc and Royal Bank of Scotland Group Plc crashing to their lowest level since the financial crisis. Reeling from the referendum outcome, EU leaders are split on how hard to come down on the U.K. In the meantime, Britons have lost any influence they had in the 28-nation bloc while remaining bound by its rules and membership fees for at least two years.

More than $4 trillion have been erased from global equity values in the aftermath of the June 23 plebiscite as the pound extended its record selloff.

The rot continued in U.K assets on Monday with S&P Global Ratings cutting the nation’s top credit grade by two levels and midcap stocks recording their worst two-day drop since 1987. EasyJet Plc plummeted 23 percent after a warning that a drop in travel demand and weaker pound will hurt earnings in the summer. Estate agent Foxtons Group Plc fell 24 percent after complaining of prolonged uncertainty in London’s residential market and forecasting revenue would be lower this year than last.

----- After digesting the shocking news, the EU has calibrated its response to a U.K. departure. The knee-jerk reaction of some had been that the U.K. should trigger Article 50 as early as this week. German Chancellor Angela Merkel is among those calling for a more thoughtful approach with two EU diplomats saying the alliance could potentially wait until the end of the year.

 “We can’t afford an extended waiting game because that would be bad for the economy of both sides of the EU -- the 27 members and Britain,” Merkel said. “But I have a certain level of understanding if Britain takes some time to analyze things first.”

Merkel said the U.K. will need to give its official declaration to exit the bloc before formal negotiations on the terms of its future relationship can begin. In a joint statement with her French and Italian counterparts, she urged the EU summit to “set in motion a process based on a concrete timetable and precise commitments.”

Speaking from London, U.S. Secretary of State John Kerry called on EU leaders not to take revenge on Britain and to handle the transition with care.

World’s Top Fortunes Fall $196.2 Billion Since Brexit Bombshell

June 27, 2016 — 11:26 PM BST
Global markets erased another $69.2 billion from the combined net worth of the world’s 400 richest people Monday, bringing the total since the U.K. shocked investors with a vote to leave the European Union to $196.2 billion in the last two trading days.

The billionaires on the index control $3.8 trillion, a 1.8 percent decline from the start of the year, according to the Bloomberg Billionaires Index.

The pain on Monday was felt most by Europe’s wealthiest, where 92 billionaires lost $29.4 billion, bringing their two-day decline to $81.7 billion, data compiled by Bloomberg show. Since year-end, their net worth has slid more than $45.5 billion, a 5.1 percent decline.

The 150 billionaires from the U.S. and Canada lost $26.7 billion, or a two-day total of $62.5 billion. They’re essentially flat for the year, with a collective gain of $236 million. China’s 26 billionaires lost $1 billion Monday, bringing their two-day total loss to $5 billion. They’re down 7.4 percent this year, an $18.7 billion drop.

Germany’s third-richest person, Georg Schaeffler, fared the worst on the index Monday with $1.9 billion trimmed from his net worth. Europe’s richest person, Spanish retailer Amancio Ortega, shed $1.5 billion. Bill Gates and Mark Zuckerberg were the worst-performing U.S. billionaires on Monday losing $1.8 billion and $1.6 billion respectively.

Brexit is not just Europe’s problem. It highlights a crisis in democracies worldwide

LONDON — Britain’s political system remained in turmoil Monday, virtually leaderless and with the two major parties divided internally. But the meltdown that has taken place in the days after voters decided to break the country’s ties with Europe is more than a British problem, reflecting an erosion in public confidence that afflicts democracies around the world.

Last Thursday’s Brexit vote cast a bright light on the degree to which the effects of globalization and the impact of immigration, along with decades of overpromises and under-delivery by political leaders, have undermined the ability of those officials to lead. This collapse of confidence has created what amounts to a crisis in governing for which there seems no easy or quick answer.

The debris here is clear. The Brexit vote claimed Prime Minister David Cameron as its first victim. Having called the referendum and led the campaign to keep Britain in the European Union, he announced his intention to resign the morning after the vote. The results also now threaten the standing of Labour leader Jeremy Corbyn, who faces a likely leadership election after seeing more than two dozen members of his leadership team resign in the past two days.

Alastair Darling, a former chancellor of the exchequer, outlined the extent of the crisis here during an interview with the BBC’s “Today” program on Monday. “There is no government. There is no opposition. The people who got us into this mess — they’ve gone to ground,” he said “How has the United Kingdom come to this position? We have taken this decision and have no plan for the future.”

The seeds of what has brought Britain to this moment exist elsewhere, which makes this country’s problems the concern of leaders elsewhere. In Belgium and Brazil, democracies have faced crises of legitimacy; in Spain and France, elected leaders have been hobbled by their own unpopularity; even in Japan, where Prime Minister Shinzo Abe faces no threat from the opposition, his government has demonstrated a consistent inability to deliver prosperity.

---- Britain’s political system faces months if not years of instability. Cameron originally recommended that a new prime minister be in place by early October. On Monday, the party committee overseeing the rules for the selection of a new Conservative Party leader to succeed Cameron accelerated that timetable, calling for a decision to be made by Sept. 2.

Boris Johnson, the former mayor of London and the leading voice in the campaign to leave the E.U., is seen as the favorite to succeed Cameron. But he is a controversial figure and faces resistance inside the party.
The selection of a new prime minister probably will be followed by an early election — almost four years ahead of the next scheduled election — because the next prime minister will need a public endorsement as they begin the process of negotiating a withdrawal from the E.U.

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton
At the Comex silver depositories Monday final figures were: Registered 23.96Moz, Eligible 127.51 Moz, Total 151.47 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, how the EUSSR geniuses, were too clever by half. Below, the EU’s now infamous Article 50. Does Article 7 offer some hope? The GB unwritten  “constitution” offers a plan B, but will GB lawmakers dare seize it?
Article 50 (of the Lisbon Treaty.)
1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.
So what happens to a member where the voters of a member state want to leave the EU but their government doesn’t, and refuses to act on it?  Isn’t that a clear breach of Article 7. But if the goal of the Lisbon Treaty is to hold the EU together, why would anyone invoke Article 7?

 The only card the EU does hold is another article of the Lisbon Treaty - but it’s a big card, an ace. Under Article 7, the EU could suspend a member if it deems it to be in breach of basic principles of freedom, democracy, equality and rule of law.

Article 7.
1. On a reasoned proposal by one third of the Member States, by the European Parliament or by the European Commission, the Council, acting by a majority of four fifths of its members after obtaining the consent of the European Parliament, may determine that there is a clear risk of a serious breach by a Member State of the values referred to in Article 2. Before making such a determination, the Council shall hear the Member State in question and may address recommendations to it, acting in accordance with the same procedure. The Council shall regularly verify that the grounds on which such a determination was made continue to apply.

2. The European Council, acting by unanimity on a proposal by one third of the Member States or by the European Commission and after obtaining the consent of the European Parliament, may determine the existence of a serious and persistent breach by a Member State of the values referred to in Article 2 after inviting the Member State in question to submit its observations.

3. Where a determination under paragraph 2 has been made, the Council, acting by a qualified majority, may decide to suspend certain of the rights deriving from the application of the Treaties to the Member State in question, including the voting rights of the representative of the government of that Member State in the Council. In doing so, the Council shall take into account the possible consequences of such a suspension on the rights and obligations of natural and legal persons.

The obligations of the Member State in question under the Treaties shall in any case continue to be binding on that State.

4. The Council, acting by a qualified majority, may decide subsequently to vary or revoke measures taken under paragraph 3 in response to changes in the situation which led to their being imposed.

5. The voting arrangements applying to the European Parliament, the European Council and the Council for the purposes of this Article are laid down in Article 354of the Treaty on the Functioning of the European Union.

Finally, under Article 50, if the EU Council reaches an exit agreement with the UK government, what happens if the European Parliament doesn’t give its consent?
Luckily for all, a legal get out of jail card lies in term 1 of Article 50, but would GB lawmakers dare take it?
1.      Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. (Emphasis added.)
The UK’s “constitutional requirements” to invoke Article 50,  require the British Parliament to repeal the 1972 European Communities Act which took the UK into what has now become the EU. If the UK Parliament doesn’t repeal that act, under the doctrine of Parliament is Supreme, it can’t invoke Article 50 “in accordance with its own constitutional requirements.” The stalemate could be a very long and destabilising one, until the May 2020 general election.
What the UK voters would do then might very well be moot, other more pressing thing may have arisen, as in the arrival of the next recession, Lehman, and another collapse in the banking system.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this 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?

Abu Dhabi’s Masdar Picked to Build Solar Power Project in Dubai

June 27, 2016 — 7:46 AM BST
Renewable energy company Masdar led a group that won the bidding to build a solar-power plant in Dubai to produce what could be the world’s cheapest electricity generated from the sun.

The Masdar consortium is set to complete the 800-megawatt power project by 2020, state news agency WAM reported Sunday. Spanish renewable energy developers Fotowatio Renewable Ventures and Gransolar Group are part of the venture, according to the statement. FRV is a unit of Saudi Arabian conglomerate Abdul Latif Jameel.

Dubai, the second-largest sheikhdom in the United Arab Emirates, is adding solar capacity to diversify its energy mix and help meet growing demand for electricity. The emirate’s utility Dubai Electricity & Water Authority said in May that the lowest bid it received for the project would provide power for as little as 2.99 cents per kilowatt-hour. DEWA didn’t specify the price in the WAM statement.

“This project has set a benchmark now globally,” Saji Sam, a partner at management consultants Oliver Wyman, said in an interview in Dubai on Monday. “The direction now is for lower cost in solar projects. That will help renewables take a bigger share of the energy mix.”

The price bid for the project would undercut the cost of power generated from coal. It’s 15 percent lower than the previous record for solar power set in Mexico in April, according to Bloomberg New Energy Finance.

Dubai plans to invest 50 billion dirhams ($14 billion) to generate a total of 5,000 megawatts of power by 2030 at the desert solar park, helping provide 25 percent of the emirate’s electricity from clean energy sources. The Persian Gulf sheikhdom currently has 13 megawatts in operation at the desert site and a further 200 megawatts under construction.

The monthly Coppock Indicators finished May

DJIA: 17787  -20 Up NASDAQ:  4946 +04 Down. SP500: 2097 -18 Up.

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