Friday, 8 July 2016

A Darkening World.

Baltic Dry Index. 699 +05       Brent Crude 46.86

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

When all is said and done, the real citadel of strength of any community is in the hearts and minds and desires of those who dwell there.

Senator Everett Dirksen.

This morning opens with very bad and disturbing, developing news from Dallas Texas, where 4 policemen have been murdered and 7 more shot in what appears to be a premeditated racial attack. From west to east the old order of 1945-2005 seems to be failing.

At least 11 Dallas police officers shot, 4 killed, by snipers

Published: July 8, 2016 12:56 a.m. ET
At least 11 police officers were shot — four fatally — by snipers in downtown Dallas, Texas, on Thursday night following a peaceful march protesting recent police shootings of black men.

Dallas Police Chief David Brown said late Thursday that four of the officers died, three others were in critical condition, and two more were in surgery.

CNN reported that at least three of the wounded officers were from the Dallas Area Rapid Transit police. Two of the deceased officers were from the Dallas Police Department, and one from DART. One civilian was also wounded, police said.

Brown said shots had come from two snipers in elevated positions, with news reports saying they were possibly from the rooftop of a nearby parking garage. Brown said no suspects were in custody.

The Dallas Police Department tweeted a photo of a person of interest, and said the suspects may have planted a bomb in the downtown area.

Obama Says Police Shootings a Symptom of Broad Racial Disparity

July 8, 2016 — 12:04 AM BST
President Barack Obama said the fatal shootings of two black men by police officers in Minnesota and Louisiana demonstrate the racial disparities that still exist in the U.S. and that should be troubling to all Americans.

“These are not isolated incidents,” Obama said just after arriving in Warsaw for a meeting of the North Atlantic Treaty Organization. “They’re symptomatic of a broader state of racial disparities that exist within our criminal justice system."

Obama said blacks and Hispanics are far more likely than whites to be stopped and searched by police and they are shot by officers at more than twice the rate. While lauding the “heroic” work being done by most police officers, he said the situation must be addressed through better police training and practices. The issue can’t be allowed to devolve into “the usual political scrum,” he said.

“To be concerned about these issues is not to be against law enforcement,” Obama said. “When people say black lives matter, that doesn’t mean blue lives don’t matter.”

Obama was responding to the death of a black man shot by a police officer in a suburb of St. Paul, Minnesota, and another on Tuesday in Baton Rouge, Louisiana. Parts of both encounters were captured on video that rocketed through social media.

In regular business news, a billion dollars of losses here, a billion dollars there, and pretty soon you’re talking real money.

The big bank bloodbath: losses near half a trillion dollars

Published: July 7, 2016 6:08 p.m. ET
Big banks are nearly half a trillion dollars in the hole.

Since the start of 2016, 20 of the world’s bigger banks have lost a quarter of their combined market value. Added up, it equals about $465 billion, according to FactSet data.

Brexit isn’t all to blame. True, bank stocks have plummeted since the U.K. voted last month to leave the European Union. But they have been losing value since the start of the year, when a group of factors—the Chinese economy, the path of U.S. interest rates, oil prices—weighed on the markets.

More than pride is at stake. Sharp share-price falls will make it much more difficult, and expensive, for banks to raise capital if that is what is ultimately needed to shore up their balance sheets.

Just as bad, a serious decline in market value can breed inaction among bank executives. Instead of selling equity when they can, executives may wait for share prices to recover, only to find themselves in a worse situation as stocks drop even further.

Another potential worry: As bank share prices decline, employees get antsy. Compensation packages that include stock options or restricted stock suddenly become a lot less attractive.

To get a handle on the severity of 2016 for banks, The Wall Street Journal examined the biggest U.S., U.K. and Swiss banks, some of the biggest European ones, as well as the biggest bank in each of China and Japan.

The group included: J.P. Morgan Chase & Co. JPM, +0.65% Wells Fargo & Co. WFC, +0.32%  , Bank of America Corp. BAC, +1.17%  , Citigroup Inc. C, +0.56%  , Goldman Sachs Group GS, +0.98%  , Morgan Stanley MS, +2.15%  , Royal Bank of Scotland PLC RBS, +2.97%  , HSBC Holdings HSBC, -0.56%  , Barclays PLC BARC, +2.35%  , Standard Chartered PLC STAN, +1.49%  , UBS Group AG UBS, -1.37%  , Credit Suisse Group AG CS, -1.07%  , BNP Paribas SA BNP, +0.36%  , Credit Agricole SA ACA, +0.63%  , Société Générale SA GLE, +0.74%  , UniCredit SpA UCG, -0.28%  , Deutsche Bank AG DTE, +1.07%  , Banco Santander SA SAN, +0.90%  , Industrial and Commercial Bank of China Ltd. and Mitsubishi UFJ Financial Group Inc. 8306, -1.11%
Read the full version of this article at

Asian Stocks Retreat With Ringgit After Oil Slump; Dollar Falls

July 8, 2016 — 12:29 AM BST Updated on July 8, 2016 — 5:55 AM BST
Asian stocks dropped with Malaysia’s ringgit as oil traded below $46 a barrel in the wake of U.S. stockpiles figures. The dollar weakened against its G-10 peers before an American employment report, while deadly gun attacks on police in Dallas bolstered demand for haven assets.

The MSCI Asia Pacific Index extended its weekly loss with almost three shares falling for every one that rose. Crude clawed back some of the last session’s 4.8 percent plunge, which was triggered by data showing a smaller-than-expected decrease in U.S. supplies. New Zealand’s currency led gains among major currencies as the Bloomberg Dollar Spot Index fell by the most in a week. Japanese bond yields sank to fresh lows, while markets in Taiwan were shut Friday because of a typhoon.

While anxiety over the fallout from the U.K.’s vote to leave the European Union flared again in markets this week, the focus of attention on Friday is a U.S. payrolls report that could sway expectations for the timing of the Federal Reserve’s next interest-rate increase. Officials at the central bank flagged concern over job creation at their last meeting, which followed data showing American employers in May took on the fewest workers since 2010.

Next, the EUSSR is a powder keg looking set to blow up this summer. Whatever happened to all that supposed European comity and unity?  Syphoned off by the one percent and Brussels Bilderberger eurocrats.

Populist Politicians Take On Italy’s Massive Debt Pile

Unpaid bills stoke frustration over the country’s old guard.

July 7, 2016 — 6:00 AM BST
The Rome Olympics of 1960 marked the rebound of the Italian capital after years of war and reconstruction, an affirmation of the country’s renaissance and the city’s emergence as a symbol of dolce vita insouciance. Rome is still paying the bill, and the new mayor, Virginia Raggi, is sick of it.

The city has roughly €13.6 billion ($15.2 billion) in debt and more than 12,000 creditors—though the pile is so complex no one really knows how much is owed to whom. Rome faces outstanding bills for operating its 61-year-old metro system, hauling trash, and running a network of unprofitable pharmacies that compete with private shops. The courts are grappling with hundreds of lawsuits over unpaid debts going back 50 years for land expropriated to build hospitals, streets, and other city projects—including some debts connected to the 1960 games, former Mayor Ignazio Marino has said. The average interest rate: 5 percent, at a time when the Italian government is issuing 10-year bonds at 1.5 percent annually. “We can’t keep paying such high interest just because nobody bothered to renegotiate the debt,” Raggi, who was elected on June 19, told the RAI television network.

Raggi, a 37-year-old lawyer and Rome’s first female mayor, has ridden a wave of frustration with Italy’s old guard—especially its handling of the economy—to one of the country’s most powerful political jobs. Her rise mirrors the growing strength of her party, the Five Star Movement, founded in 2009 by Beppe Grillo, a scruffy, bearded comedian who got his start on variety shows in the 1970s but was later banned from public television for his biting political satire. Five Star (the stars are meant to represent water, environment, transport, development, and energy, though the party mostly focuses on fighting corruption and cutting regulations) has grown into a formidable rival to the Democratic Party of Prime Minister Matteo Renzi. Its biggest names—Grillo, Raggi, and Chiara Appendino, a 32-year-old businesswoman just elected mayor of Turin—have won support from across the political spectrum with their portrayal of the establishment as greedy buffoons unprepared to deal with the country’s problems. Renzi’s “life of privilege with public money,” Grillo writes on his blog, “is an insult to those who can barely make ends meet.”

UK launches bilateral trade talks for post-Brexit deal with India

Thu Jul 7, 2016 7:07pm EDT
Britain said it would start preliminary talks with India on Friday about an eventual bilateral trade deal after last month's referendum vote to leave the European Union, which has forced London to rethink its trade ties with the rest of the world.

British Business Secretary Sajid Javid also said Britain would have as many as 300 trade specialists in place before the end of the year, up from about 100 now, as the country tries to increase its firepower to operate as a solo trading nation.

Britain has negotiated its trade deals through the EU for decades.

"Following the referendum result, my absolute priority is making sure the UK has the tools it needs to continue to compete on the global stage," Javid said in a statement

"Over the coming months, I will be conducting similar meetings with other key trade partners, outlining the government's vision for what the UK's future trade relationship might look like," he said.

Javid's trip to New Delhi was likely to be followed in the coming months by discussions about trade with the United States, China, Japan and South Korea, the business ministry said.

London also appears to be keen to tighten its trade ties with China. A source close to British finance minister George Osborne said he met senior officials from the world's second-largest economy in London on Thursday to discuss trade, agreeing to work to foster stronger ties between the two countries.

We close for the day with Italy v Germany, just like in the European Cup. Unable to get a bailout of Italy’s insolvent banks because Germany is demanding a bail-in of the bondholders and large depositors first, Prime Minister Renzi retaliated by nuking Deutsche Bank’s massive unstable derivatives book. The “if we’re going down we’re taking you with us,” Goldman Sachs nuclear approach.
If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too.
Lloyd Blankfein’s CEO Goldman Sachs, nuclear threat.

Italy's bad loan woes tiny compared to Europe's derivative problem -Renzi

Wed Jul 6, 2016 10:14pm IST
The difficulties facing Italian banks over their bad loans are miniscule by comparison with the problems some European banks face over their derivatives, Italian Prime Minister Matteo Renzi said on Wednesday.
Italian bank shares have tumbled in recent days and are the worst performers among European lenders this year on investor concerns over how they will handle some 360 billion euros of bad and non-performing loans.
Speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Renzi said other European banks had much bigger problems than their Italian counterparts.
"If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred," Renzi said.

A Furious Italian Prime Minister Slams Deutsche Bank As Europe's Most Insolvent Bank

Jul 6, 2016 10:30 PM
Several years ago, we were the first to point out the true "elephant in the room", namely Deutsche Bank's $75 trillion in derivatives which as we said at the time was about 20 times bigger than Germany's GDP, and 5 times bigger than the entire economic output of the Eurozone."
This was largely ignored by the "experts" because why bring attention to something which is fundamentally a devastating break in the narrative that "Europe is fine" and the financial crisis is now contained.
Fast forward to today when Europe is once again not fine, only this time one can't blame Europe's problems on Greece (instead the same "experts" are trying to blame everything in Brexit), when in a surprising admission of reality, none other than Italy's prime minister Matteo Renzi, "went there" and slammed Deutsche Bank as the true "derivative problem" facing Europe.
---- So it is not surprising that when faced with stiff resistance from the Germans, Renzi decided to call a spade a spade when, as Reuters reports, he said that the difficulties facing Italian banks over their bad loans are miniscule by comparison with the problems some European banks face over their derivatives.

One look at the chart above and it becomes clear just who he was referring to.

As Reuters adds, speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Renzi said other European banks had much bigger problems than their Italian counterparts.

"If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred," Renzi said

So just like that the Mutually Assured Destruction doctrine is activated, because now that Deutsche Bank's dirty laundry has been exposed for all to see, Renzi's gambit is clear: if Merkel does not relent on bailing out Italian banks, the collapse of Italian banks will assure the failure of Deutsche Bank in kind. And since in a fallout scenario of that magnitude DB's derivative would not net out, there will be no chance to save the German banking giant, bail out, in, or sideways.

I’m in Awe at How Fast Deutsche Bank is Coming Unglued

by Wolf Richter • July 6, 2016

Bond-buyback miracle-nonsense flops. Shares, CoCo bonds plunge.

Deutsche Bank – “the most important net contributor to systemic risks,” as the IMF put it last week after a lag of several years – is having a rough time. Shares dropped 4.2% today to close at a new three-decade low of €11.63, down 48% since July 31 last year, lower even than the low during the doom-and-gloom days of the euro debt crisis and the Global Financial Crisis.

It’s not the only European bank in trouble. Credit Suisse dropped 1.7% today to CHF 9.92, another multi-decade low, down 63% since July 31. Other European banks are getting mauled too. The European Stoxx 600 banking index dropped 3% today to 117.69, approaching the Financial Crisis low of March 2009.

If July 31, 2015, keeps showing up, it’s because this was the propitious day when Draghi’s harebrained experiment with negative interest rates and massive QE came unglued, when European stocks, and particularly European bank stocks began to crash.

Deutsche Bank is so shaky that German Finance Minister Wolfgang Schäuble found it necessary to stick his neck out and explain to Bloomberg in February that he has “no concerns about Deutsche Bank.” Finance ministers don’t say this sort of thing about healthy banks.

At the time, CEO John Cryan – whose main job these days is propping up Deutsche Bank with his rhetoric – explained ostensibly to frazzled employees that the bank’s position was “absolutely rock-solid, given our strong capital and risk position.”

Days later, he followed up his rhetoric with a stunning ruse: On February 12, the bank announced that it would buy back $5.4 billion of its own bonds, including some issued only a month earlier.

“The bank is using market conditions to buy back these bonds at attractive prices and to cut debt,” CFO Marcus Schenck said at the time. “By buying them back below their issuance value, the bank is making a profit. The bank is also using its financial strength to provide liquidity to bond investors in a difficult market environment.”

Shares soared 12% on the spot! Its bonds rocketed higher. Even its contingent convertible bonds, the infamous CoCo bonds, though they weren’t part of the buyback plan, bounced. For example, its €1.75 billion of 6% CoCo notes soared from a record low of 70 cents on the euro on February 9 to 87 cents by March – a 24% move!

The ruse had worked! During the miracle rally, short sellers got their heads handed to them.
But it was one of the silliest, most desperate ways to prop up shares and bonds. And now the bond-buyback miracle-nonsense rally has collapsed, with shares at a new multi-decade low, and with bonds swooning.
This is what these 6% CoCo notes did: they plunged 5.7% today to 75 cents on the euro. Nearly the entire bond-buy-back miracle-nonsense rally has re-collapsed…
At the Comex silver depositories Thurssday final figures were: Registered 25.05 Moz, Eligible 127.67 Moz, Total 152.72 Moz.  Comex was closed on Monday.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, more on the unintended consequences of the Great Nixonian Error of fiat money, communist money.

Crisis Is Us——-The Inexorable Result Of Modern Central Banking

by David Stockman • 
The inexorable effect of contemporary central banking is serial financial booms and busts. With that comes increasing levels of systemic financial instability and a growing dissipation of real economic resources in misallocations and malinvestment. At length, the world becomes poorer.

Why? Because gains in real output and wealth depend upon efficient pricing of capital and savings, but the modus operandi of today’s central banking is to deliberately distort and relentlessly falsify financial prices.
After all, the essence of ZIRP and NIRP is to drive interest rates below their natural market clearing levels so as to induce more borrowing and spending by business and consumers.

It’s also the inherent result of massive QE bond-buying where central banks finance their purchases with credits conjured from thin air. The central banks’ big fat thumb on the bond market’s supply/demand scale results in far lower yields than real savers would accept in an honest free market.

The same is true of the hoary doctrine of “wealth effects” stimulus. After being initiated by Alan Greenspan 15 years ago, it has been embraced ever more eagerly by his successors at the Fed and elsewhere ever since.

Here, the monetary transmission channel is through the top 1% that own 40% of the financial assets and the top 10% that own upwards of 85%. To wit, stock prices are intentionally driven to artificially high levels by means of “financial easing”. The latter is a euphemism for cheap or even free finance for carry trade gamblers and subsidized hedging insurance for fast money speculators.

As the stock averages rise and their Fed-subsidized portfolios attain ever higher “marks”, the wealth effects operators supposedly feel, well, wealthier. They are thereby motivated to spend and investment more than otherwise, and to actually double-down on these paper wealth gains by using them as collateral to obtain even more cheap funding for even more speculations.

The trouble is, financial prices cannot be falsified indefinitely. At length, they become the subject of a pure confidence game and the risk of shocks and black swans that even the central banks are unable to off-set. Then the day of reckoning arrives in traumatic and violent aspect.

Exactly that kind of Lehman-scale crisis is now descending on global markets. In two nearby postings today we highlight bookend events which document why the end result of today’s massive central bank intrusion in financial markets is, always and everywhere, crisis.

Today central banks and their affiliates own about $21 trillion of government bonds and related securities. Most of that has been purchased in the last two decades and the preponderant share since the 2008 crisis.

"The paper standard is self-destructive."

Hans F. Sennholz

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?

Finns unveil acid mine water fix

5th July 2016

JOHANNESBURG ( – A Finnish technology innovator on Tuesday unveiled a new and different solution to the problem of acid mine drainage (AMD).

Global EcoProcess Services Oy (EPSE) provides a technology that extracts saleable metals from AMD and produces purified clean water.

EPSE CEO Lasse Musakka told Creamer Media’s Mining Weekly Online in an interview on the sidelines of a seven-presentation conference here, that the technology had been successfully applied at Finland's Talvivaara nickel mine and at pilot projects in South Africa, with all the test results showing its readiness to enter full-scale  commercial production.

“That will be the next step,” Musakka said. (Also watch attached Creamer Media video).

EPSE international operations head Felix Fondem outlined the technology's ability to deal with both high and low AMD concentrations, ensuring efficient metals extraction for further processing.

“We bring enormous cost savings. We bring a totally different and new paradigm to the way ores are processed and handled,” Fondem told Mining Weekly Online, adding that the multi-application technology also applied to hazardous industrial waste as a whole and not just to AMD.

EPSE has forged partnership links in South Africa and sees its licensing role as ensuring that its technology is applied correctly.

It intends to liaise with government on AMD eradication at large number of closed South African mines that are no longer private-sector managed.

Also in the company’s sights is the huge industrial-waste market, for which commercial-scale operations are already up and running in Finland.

In May, Mining Weekly Online reported that a profitable South African process had been developed that converts AMD into valuable fertiliser materials.

“The whole treatment cost is zero,” Trailblazer Technologies director John Bewsey said in an interview at the company’s pilot plant in Krugersdorp, where treating 15 Mℓ a day of AMD yields 49 000 t /y of potassium nitrate, which retails at R15 000/t, as well as 24 000 t/y of saleable ammonium sulphate.

Envisaged are sales of R735-million worth of potassium nitrate a year on water processing of 5 475 Mℓ a year.

Useable water comes at no cost - or more accurately at minus R14.61/m3 - in this process, giving a 30% return on investment.

Another weekend, and very disturbing news from Dallas Texas to contemplate this weekend. Is America returning to the 1960s or is this merely an extreme outlier in anti-police violence? This weekend our troubled world seems more troubled than ever. Despite that, in our northern hemisphere, God’s great summer season rolls on. On the public footpaths in the Thames Valley countryside where I walk Rosie my border collie, we now pass through rapidly ripening fields of winter oats and surging spring barley. Have a great weekend everyone.

During a political campaign everyone is concerned with what a candidate will do on this or that question if he is elected except the candidate; he's too busy wondering what he'll do if he isn't elected.

Senator Everett Dirksen.

The monthly Coppock Indicators finished June

DJIA: 17930  -14 Up NASDAQ:  4843 -08 Down. SP500: 2099 -10 Up.

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