Europe Situation Hopeless.

Baltic Dry Index. 711 +07       Brent Crude 47.87

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

“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."

J. K. Galbraith. The Great Crash: 1929.

Repeat after me, there isn’t a banking crisis in Italy. We know so, because Germany’s “hammer of the Greeks and Cypriots,” Wolfgang Schaeuble, said so. In the lawless EUSSR, Italy is about to be given permission to ignore the bail-in rules adopted in 2013, to use state funds to bailout its insolvent banks, which as we all know, aren’t in “crisis.”  Of course, were Italy’s banks in crisis, the Italian state bailing them out would put Italy itself in crisis, given the poor state of the Italian economy, but repeat after me, there isn’t a crisis in Italian banking.

Below, why would anyone want to remain in the EUSSR asylum?

Merkel, Padoan Confident Italian Bank Crisis Can Be Averted

July 12, 2016 — 2:21 PM BST Updated on July 12, 2016 — 4:13 PM BST

European leaders from German Chancellor Angela Merkel to Italian Finance Minister Pier Carlo Padoan signaled that a pragmatic solution to Italy’s banking woes can be found within the boundaries of current rules.
“Intensive talks” are under way between Prime Minister Matteo Renzi’s government and the European Commission, with European finance ministers also discussing the matter on Tuesday, Merkel told reporters in Berlin.

“I am very convinced that the questions that need to be decided there will be resolved in a good way,” Merkel said. “I don’t see any crisis-like development overall.” Her comments sent the shares of Italian lenders higher, with Banca Monte dei Pasci Siena SpA soaring as much as 6 percent in Milan trading.

Italy is trying to shore up a banking system saddled with bad loans without breaching European Union rules that prescribe the bail-in of junior bonds. Monte Paschi’s shares have lost more than 40 percent of their value since the Brexit referendum, sparking fears of a collapse that would reignite the euro-area crisis.

Speaking after two days of meetings with regional finance ministers in Brussels, Italy’s Padoan said his government is looking to put instruments in place aimed at shoring up market confidence.

“A precautionary tool, I repeat, means something that is used only if needed,” Padoan said at a press conference on Tuesday. “The goal is to support if necessary -- but I don’t think this will be the case -- market operations that are already underway, in the direction in any case of a total protection of savers.”

Under EU rules, banks receiving state aid typically need to impose some losses on creditors, unless the intervention is done to remedy "a serious disturbance in the economy of a Member State and preserve financial stability.”

The issue is made more complex for Italy by the fact that investment products such as subordinate bonds have often been sold to retail investors and the government is trying to shield them from losses. Padoan said the Italian government is working with the Commission to find a solution within the current set of rules.

Bail-in is “regulated by rules that also consider extraordinary situations,” he said. “Any potential move or action by the Italian state will be completely within the rules.”

German Finance Minister Wolfgang Schaeuble, while declining to prejudge the commission’s decision in negotiations with Italy on precautionary measures, noted that the enforcer of EU rules has changed its stance in the application of state aid regulation. He added that he has “full confidence” there isn’t a banking crisis.

More

http://www.bloomberg.com/news/articles/2016-07-12/merkel-padoan-confident-italian-banking-crisis-can-be-averted

Later today, John Bull gets a new Prime Minister. Dodgy Dave Cameron, having lost his Project Fear referendum on GB leaving the asylum, has packed his bags in number 10 Downing Street, and is off to make his way in Civil Street. In a very British exercise in parliamentary democracy, another unelected Prime Minister like Gordon Brown, is about to be appointed by Her Majesty the Queen later in the afternoon. A Remainiac, soon to be Prime Minister May, says that “Brexit means Brexit,” and she is just the man to lead GB out of the insane asylum, but just not now. Maybe in 5 or 6 months might be right. Maybe longer, who knows.

Below, the EUSSR with a member who’s neither in nor out, run by a Prime Minister with no more legitimacy than Italy’s Prime Minister Matteo Renzi. With loads of political scores to be settled, and a UK loyal opposition that’s been taken over by the Communists and Socialist Workers Party and is in the process of going out of business, GB and the EUSSR are in for period of erratic sailing. But not until all of continental Europe’s over paid and under talented politicians take the whole month of August off for their summer holidays. You couldn’t make this sort of thing up in Hollywood.

OECD suspends monthly economic outlook indicators due to Brexit

Mon Jul 11, 2016 6:12am EDT

The OECD said on Monday it would suspend publication until September of its flagship economic indicators, as uncertainty created by Britain's vote to leave the European Union could make the data misleading or inaccurate.

Every month the Paris-based Organization for Economic Cooperation and Development publishes a composite leading indicator for all its member countries, designed to flag early signals of turning points in economic activity.

It said none would be released this month or next to allow for more significant data to be collected.

The OECD has previously suspended publication of the data because of "significant unforeseen or unexpected events". It did so in April and May 2011 following a major earthquake in Japan.

Referring to the impact of Britain's shock vote to leave the EU, the organization said data collected before the June 23 referendum pointed to stable growth momentum in OECD countries and a pick-up in emerging economies.

However, "the underlying data that capture subsequent and potentially significant changes in expectations will not be available until early September," it said.

More

http://www.reuters.com/article/us-britain-eu-oecd-idUSKCN0ZR0ZP

Eurogroup:UK Must Invoke A50 ASAP;Spain, Port In Fiscal Breach

Monday, July 11, 2016 - 14:44  By Angelika Papamiltiadou

BRUSSELS (MNI) - Eurogroup President Jeroen Dijsselbloem said Monday that there is a high degree of economic and political uncertainty due to the result of Britain's EU referendum which must be dealt with as soon as possible in order to limit its effects.

Speaking to the media following their scheduled monthly meeting in Brussels, Dijsselbloem and European Commissioner for Economic and Financial Affairs Pierre Moscovici also said that currency area finance ministers expressed "strong support" for recommendations from the European Commission with respect to deficit targets in Spain and Portugal.

"The Leave vote has surprised the markets and the longer the uncertainty lasts the costlier it becomes," Moscovici said. "It is important to accelerate the process and activate Article 50, the sooner the better."
Moscovici added that according to preliminary figures, which are not forecasts, Brexit will hit UK growth by around 1% to 2.5% by 2017 and slow growth in the Eurozone by around 0.2% to 0.5% over the same timeframe.

"Challenges have increased so do downside risks. But these are not forecasts, they are assessments and can be changed if we are able to limit uncertainty and respond with the right policy," he said.

On the issue of Spain and Portugal's budget deficit sanctions, Dijsselbloem said Eurogroup said finance ministers from the broader European Union would meet Tuesday and likely vote in unanimous agreement to the Commissions's view that formal disciplinary procedures should be launched against the two countries for failing to reduce their budget deficits in 2014 and 2015 in-line with Stability & Growth Pact commitments.

More

https://www.marketnews.com/content/eurogroupuk-must-invoke-a50-asapspain-port-fiscal-breach

May ally says Britain to trigger EU divorce 'when we're ready'

Tue Jul 12, 2016 6:09am EDT

Britain will not rush to trigger divorce proceedings with the European Union, a leading ally of incoming Prime Minister Theresa May said on Tuesday as David Cameron bowed out at his final cabinet meeting.

May, 59, will on Wednesday replace Cameron, who is resigning after Britons rejected his advice and voted on June 23 to quit the EU, plunging the country into political and economic uncertainty.

Arriving for the brief cabinet meeting, she waved to reporters from the doorstep of 10 Downing Street, shortly to become her home. She will face the enormous task of disentangling Britain from a forest of EU laws, accumulated over more than four decades, and negotiating new terms of trade while limiting potential damage to the economy.

Her ally Chris Grayling, the Leader of the House of Commons, said there was no hurry to invoke Article 50 of the EU's Lisbon Treaty, which will formally launch the process of separation and start the clock ticking on a two-year countdown to Britain's actual departure.

"I think Article 50 should be triggered when we're ready. The most important thing right now is we do what's in our national interest," Grayling told Sky News.

"We get ourselves ready for the negotiation, we decide what kind of relationship we want to negotiate, and then we move ahead and trigger Article 50. We'll do it right, we'll do it in a proper way, we'll do it when we're ready."

More

http://www.reuters.com/article/us-britain-eu-wrapup-idUSKCN0ZR19P

In other Asian news, a European based United Nations arbitration court ruled against China and in favour of the Philippines over a dispute in the South China Sea. China doesn’t recognise the court, and has hinted that as a result it may join the USA by withdrawing from the U. N. Convention on the Law of the Sea, (UNCLOS.) The USA never signed up. If China follows through, the world’s two top economies will not be parties to UNCLOS.

Tribunal says China has no historic title over South China Sea

Tue Jul 12, 2016 6:25am EDT

An arbitration court ruled on Tuesday that China has no historic title over the waters of the South China Sea and that it has breached the sovereign rights of the Philippines with its actions there, a long-awaited ruling sure to infuriate Beijing.

China, which has boycotted the hearings at the Permanent Court of Arbitration in The Hague, vowed again to ignore the ruling and said its armed forces would defend its sovereignty and maritime interests.

China's state-run Xinhua news agency said shortly before the ruling was announced that a Chinese civilian aircraft successfully carried out calibration tests on two new airports in the disputed Spratly Islands.

And China's Defense Ministry announced that a new guided missile destroyer was formally commissioned at a naval base on the southern island province of Hainan, which has responsibility for the South China Sea.

"This award represents a devastating legal blow to China's jurisdictional claims in the South China Sea," Ian Storey, of Singapore's ISEAS Yusof Ishak Institute, told Reuters.

"China will respond with fury, certainly in terms of rhetoric and possibly through more aggressive actions at sea."

China claims most of the energy-rich waters through which about $5 trillion in ship-borne trade passes every year. Neighbors Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

Finding for the Philippines on a number of issues, the panel said there was no legal basis for China to claim historic rights to resources within its so-called nine-dash line, which covers much of the South China Sea.

It said China had interfered with traditional Philippine fishing rights at Scarborough Shoal, one of the hundreds of reefs and shoals dotting the sea, and had breached the Philippines' sovereign rights by exploring for oil and gas near the Reed Bank, another feature in the region.

None of China's reefs and holdings in the Spratly Islands entitled it to a 200 mile exclusive economic zone, it added.

"No matter what kind of ruling is to be made, Chinese armed forces will firmly safeguard national sovereignty, security and maritime interests and rights, firmly uphold regional peace and stability, and deal with all kinds of threats and challenges," China's Defense Ministry said earlier in a bilingual Chinese and English statement shortly before the ruling was made public.

More

http://www.reuters.com/article/us-southchinasea-ruling-stakes-idUSKCN0ZS02U

Below, Bloomberg issues the unofficial, official American response. I suspect that no one in Beijing is interested.

Keeping Calm in the South China Sea

July 12, 2016 6:24 PM EDT By Editorial Board

China was widely expected to reject a ruling against its maritime claims in the South China Sea, and it didn’t disappoint. Declaring Tuesday’s 479-page decision “null and void,” China said it “neither accepts nor recognizes it.”

More important than what China says, however -- and Tuesday’s statement is more measured than last week’s, when Chinese leaders denounced the opinion in advance as “a piece of waste paper” -- is what China does. Its neighbors and the U.S. should make clear how dangerous and damaging a more aggressive response would be, even as they prepare for that possibility.

The decision from a tribunal convened under the United Nations Convention on the Law of the Sea was sweeping, saying that China had no “historic rights” to much of the South China Sea. Judges also declared that none of the Chinese-controlled land features in the Spratly Islands chain could lay claim to a 200-mile exclusive economic zone. Instead several fall under the Philippines’ jurisdiction, and Chinese interference with the nation's fishing vessels in the area is illegal.

In response, China may be tempted to declare an air-defense identification zone over the disputed area, but that would only spur the U.S. and other nations to defy it. Withdrawing from the Law of the Sea treaty would strip China of valuable seabed mining rights, among other benefits. Meanwhile, reclaiming land around Scarborough Shoal, which lies less than 140 miles from the U.S.-allied Philippines, risks an American naval response.

It should be clear to China by now that bullying doesn’t work. Its threats and economic pressure have infuriated rather than cowed its Southeast Asian neighbors. None of them are about to surrender their claims in the region.

Rather than alienating its neighbors and driving them closer to the U.S., China should be looking for an off-ramp -- a way to pause in its activities and shift attention back to diplomacy. Stalled negotiations with the Association of Southeast Asian Nations over a binding code of conduct offer just such an opportunity.

In contrast to leaders in Beijing, the new administration in the Philippines has greeted the ruling with welcome restraint, leaving the door open to talks about resource-sharing in the disputed area. China should be looking for a way to enter such negotiations without preconditions, rather than continuing to insist that the Philippines first set aside the ruling. Concluding long-running talks with Vietnam over their shared maritime boundary would earn Chinese leaders a degree of goodwill, as would efforts to rein in Chinese fishing fleets that have strayed into the waters of other nations, including Indonesia.

More

http://www.bloomberg.com/view/articles/2016-07-12/keeping-calm-in-the-south-china-sea

S. China Sea arbitration: A US-led conspiracy behind the farce

By Wang Xiaohui (China.org.cn)    17:48, July 12, 2016

Since U.S. President Barack Obama took office, "Pivot to Asia" has become one of Washington's political pursuits and military strategies. The disputes between China and the Philippines over the South China Sea, which was provoked by former Philippine President Aquino III, came just in time as it offered Washington a good excuse and easy approach to return to the region.

In January 2013, the Philippines unilaterally initiated arbitral proceedings on the South China Sea issue. To circumvent the law, it secretly changed relative concepts, deliberately separated the Nansha Islands, and asked the tribunal to issue an award over the legal status and maritime claims of some of the islands and reefs that belong to the Nansha Islands as a whole.

What Aquino III did was a clear violation of international law. However, Washington chose to ignore the facts and the law, giving full support to its flunkey in Asia without hesitation.

So, we can tell that Washington has taken sides from the very beginning. What has it done before and behind the curtain then? Generally, it took four kinds of actions.

First, colluding with its allies to rubbish China.

Regarding the South China Sea arbitration, U.S. government officials and media have expressed many negative opinions of China, so as to portray Beijing as a "violator" of international order. U.S. Secretary of Defense Ash Carter used to say in public that China's activity in the South China Sea could lead to a "great wall of self-isolation." Japan, as an ally of Washington, was also active and enthusiastic in helping the U.S. to suppress China.

Second, showing off military force and putting pressure on China.

The U.S. has been stepping up military actions in the South China Sea recently. Particularly, in the middle of June, two U.S. aircraft carriers, the USS John C. Stennis and USS Ronald Reagan, launched joint operations in the South China Sea, staging a show of force aimed at China.

In the meantime, Japan also launched joint military exercises with the Philippines and conducted arms sales with the latter, which is meant to put pressure on China. On July 8, Washington and Seoul jointly announced the deployment of the THAAD (Terminal High Altitude Area Defense) systems in South Korea, and the ulterior motive behind it was obvious enough.

Third, playing China and ASEAN countries off each other.

Chu Yin, a research fellow at the Center for China and Globalization said that "the U.S. escalates the tensions in the South China Sea with an essential purpose of containing China." For the U.S., sabotaging the relations between China and ASEAN countries is an effective way to hinder China's development, apart from being a best solution with low cost and high efficiency to increase Southeast Asian countries' dependence on it.

More

http://en.people.cn/n3/2016/0712/c90000-9085051.html

China issues white paper on settling disputes with Philippines

Not to worry or fret though, there is no way that the central banks will let reality get in the way of driving stocks higher, bonds lower, and more maturities into negative interest rates. What could possibly go wrong?

Posted on July 12, 2016 by Graeme Irvine

Gold: Yelling “Fire” in a packed theatre

“Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money.” — Daniel Webster (1782-1852), U.S. constitutional scholar, Secretary of State, and senator.

It is not often that central bankers start yelling “fire” in a packed theatre, so when it happened in Basel, Switzerland last month I was more than mildly interested. It didn’t happen before the Great Recession of 2008-2009, nor at any other time of interesting financial distress that I can think of. That the Bank of International Settlements (BIS) have done this now speaks volumes about the financial predicament we are in — and the need for most in the developed world to now hold some insurance in the form of fully paid up physical gold and silver.

Though they didn’t come right out and say buy gold (after all, they are central bankers, and serious believers in the cult of Keynes), the implication is that the BIS feels that the world’s central bankers have lost the plot and have strayed into heretical error, with calamity and disaster looming into view.

More

http://investorintel.com/gold-precious-metals-intel/gold-yelling-fire-in-a-packed-theatre/

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

At the Comex silver depositories Tuesday final figures were: Registered 25.83 Moz, Eligible 125.99 Moz, Total 151.82 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Despite Dodgy Dave Cameron’s “Project Fear” Remainiac campaign failing, surprise, surprise, Germany’s Siemens is staying in the UK economy. In fact if GB negotiates trade pacts with America, China, India, among others, GB might become the preferred option over the sclerotic, unreformed, unreformable EUSSR.

Germany's Siemens embraces 'Project Optimism' in Brexit U-turn

Ambrose Evans-Pritchard 11 July 2016 • 7:38pm

Europe’s largest industrial combine has vowed to press ahead with investment in Britain despite the vote to leave the EU, backing away deftly from earlier suggestions that Brexit would cause a painful freeze on new activities.

Joe Kaeser, the chief executive of Siemens, said the German engineering and technology giant remains fully committed to the UK whatever happens, but called on Theresa May to clarify Britain's post-Brexit trade vision as soon as possible and tell the world what kind of country it will become.

“We’re here for the long-term and we don’t let ourselves get jerked up and down. We’re staying because the UK is a good place to do business,” he said.

Mr Kaeser said the company had been misunderstood in the heat of the Brexit campaign when it was widely seen as a cheer-leader for Remain. Corporate damage-control is underway at the highest level.

“We never said the UK is in bad shape if it leaves the EU: we said the EU would miss a massive opportunity. Without the UK, the EU may never be able to stand up against superpowers like China and the US,” he told the Daily Telegraph and three other UK newspapers.

The top management of the 350,000-strong company is converging on the Cotswolds for a retreat to thrash out its post-Brexit strategy. “This is to show that the UK matters with or without it being a member of the EU,” he said.

Siemens employs 14,000 people in Britain, from wind power, to turbo-machinery, transport signals, MRI scanners, and health care diagnostics, mostly in highly-skilled jobs. It is a central pillar of Britain’s manufacturing and hi-tech sector, crucial to a nexus of sub-contractors.

Mr Kaeser said trade barriers for digital products are unthinkable in the internet age and called for common sense to prevail on tariffs, a refrain now heard daily from German exporters and the country’s industry federation (BDI).

He exhorted political leaders to “calm down” and work out a sensible settlement in the common interest. “Don’t go overboard. The UK is still going to be in geographic Europe. This is a balanced scenario of power,” he said.

The company is quietly breathing a sigh of relief that Andrea Leadsom will not be prime minister, both because she has called for a review of the £50bn HS2 high-speed rail project and because Leave’s leaders may have been irritated by Siemens’ tone during the campaign.

Siemens already plays a crucial role in Thameslink and Crossrail. It is angling for a big share of the trains and signalling for HS2 as well, along with other prize contracts in the gift of the British government.

Mr Kaeser said the company would step up investments in UK research and innovation regardless of whether there is any trade deal, and would build a new factory to manufacture railway rolling stock “in a heartbeat” if it won the order.

More

http://www.telegraph.co.uk/business/2016/07/11/germanys-siemens-embraces-project-optimism-in-brexit-u-turn/?WT.mc_id=e_DM138654&WT.tsrc=email&etype=Edi_FAM_New_AEM_Recipient&utm_source=email&utm_medium=Edi_FAM_New_AEM_Recipient_2016_07_12&utm_campaign=DM138654

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 21^st century onwards? DC? A quantum computer next?

Germs add ripples to make 'groovy' graphene

New nanomaterial conducts differently at right angles

Date: July 11, 2016

Source: University of Illinois at Chicago

Summary: Graphene, a two-dimensional wonder-material composed of a single layer of carbon atoms linked in a hexagonal chicken-wire pattern, has attracted intense interest for its phenomenal ability to conduct electricity. Now researchers have used rod-shaped bacteria -- precisely aligned in an electric field, then vacuum-shrunk under a graphene sheet -- to introduce nanoscale ripples in the material, causing it to conduct electrons differently in perpendicular directions.

The resulting material, sort of a graphene nano-corduroy, can be applied to a silicon chip and may add to graphene's almost limitless potential in electronics and nanotechnology. The finding is reported in the journal ACS Nano.

"The current across the graphene wrinkles is less than the current along them," says Vikas Berry, associate professor and interim head of chemical engineering at UIC, who led the research.

The key to formation of these wrinkles, he said, is graphene's extreme flexibility at the nanometer scale, which allows formation of carbon nanotubes.

"The wrinkle opens a 'V' in the electron cloud around each carbon atom," Berry said, creating a dipole moment, which can open an electronic band gap that flat graphene does not have.

Other researchers have created wrinkles in graphene by stretching the sheet and letting it snap back. But such wrinkles are not confined in microscale and cannot be directed towards a location on a micro-device, Berry said.

He and his colleagues came up with a unique way to introduce circumscribed, guided, and regular graphene ripples using bacillus bacteria, by using the graphene itself as a check-valve to alter the volume of the cells.

The researchers placed the bacteria in an electric field, causing them to line up like strings of hot dogs in repeating rows. Then they applied a sheet of graphene over the top.

"Under vacuum, the graphene lifts, and lets water out," Berry said. But under pressure, graphene sits back down on the substrate and prevents water from re-entering the bacteria, he said.

"It's a nanoscopic valve that actuates unidirectional fluid flow in a microorganism," Berry said. "Futuristically, this valve operation could be applied to microfluidic devices where we want flow in one direction but not the other."

After the bacteria have been vacuum-shrunk, the graphene reconforms, but with wrinkles. After heat treatment, the resulting permanent ripples atop the bacteria are all aligned longitudinally, with a height of 7 to 10 nanometers, and a wavelength of about 32 nm.

The wrinkles were observed by field emission scanning electron microscopy, which must be done under high vacuum, and by atomic force microscopy at atmospheric pressure.

"The [ripple] wavelength is proportional to the thickness of the material, and graphene is the thinnest material in the world," Berry said. "We envision that with graphene one could make the smallest wavelength wrinkles in the world -- about 2 nanometers."

The next goal, he said, will be to create processes to further refine the ripples and vary their amplitude, wavelength and longitudinal length.

To measure the effect of the ripples' orientation on the carrier transport, graduate student Shikai Deng, the lead author of the paper, fabricated a plus-shaped device with bacteria aligned parallel to one pair of electrodes and perpendicular to another pair. He found the rippled graphene's conduction barrier was greater in the transverse direction than in the longitudinal direction.

The introduction of oriented ripples to graphene represents an entirely new material, Berry said.

More

https://www.sciencedaily.com/releases/2016/07/160711155823.htm?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+sciencedaily%2Fmatter_energy%2Fgraphene+%28Graphene+News+--+ScienceDaily%29

The monthly Coppock Indicators finished June

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