Thursday, 28 July 2016

We Owe It To Ourselves!

Baltic Dry Index. 679 -17      Brent Crude 43.62

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

"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."

Henry Hazlitt

Henry Hazlitt was an American journalist who wrote about business and economics for such publications as The Wall Street Journal, The Nation, The American Mercury, Newsweek, and The New York Times. Author Economics in One Lesson.

We are deep into the end game of the Great Nixonian Error of fiat money, communist money, where our central bankster,unplanned malinvestment world gets more dysfunctional by the day. We open with the aging society of unfixable Japan, land of the forever setting sun. With Abenomics still failing, the government there is now resorting to arm twisting the Bank of Japan.

“When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: ‘Yes, stand a little less between me and the sun.’

Henry Hazlitt.

Pressure for BOJ easing intensifies as economy minister urges action

Wed Jul 27, 2016 10:41pm EDT
Political pressure on the Bank of Japan to expand stimulus this week is intensifying with the economy minister calling on the bank to work with the government to boost growth, in the wake of premier Shinzo Abe's announcement of a bigger-than-expected fiscal spending package.

Abe sent a "powerful message" by announcing the 28 trillion yen ($267 billion) stimulus package on Wednesday, Economy Minister Nobuteru Ishihara was quoted as saying by Japanese media hours after the announcement.

"I think people at the BOJ will take into that account and make an appropriate decision," he said in a television appearance on Wednesday evening, the Kyodo news agency reported.

"I think (BOJ Governor Haruhiko) Kuroda understands that the world is watching" the bank's policy response, Ishihara said.

The remarks suggest the earlier-than-expected announcement of Abe's economic package was an attempt by the government to pressure the BOJ into expanding stimulus at a two-day rate review ending on Friday.
"Abe's announcement is a squeeze play on the BOJ. The BOJ has to move now. It is unavoidable," said Hiroaki Muto, an economist at Tokai Tokyo Research Center.

"There is a growing sense that the BOJ cannot move the market on its own, which is part of the reason why the government wants to combine fiscal and monetary policy."

Finance Minister Taro Aso told reporters on Tuesday that he hoped the BOJ would continue to do its utmost to beat deflation, reinforcing the government's eagerness to see more BOJ monetary easing.

Abe's announcement of the package boosted Japanese stocks on Wednesday and reinforced market expectations that the BOJ will match fiscal stimulus with another dose of monetary expansion.

There is near-consensus in markets that the BOJ will sharply cut its inflation forecasts, delaying the timeframe for hitting its 2 percent inflation target and further ease monetary policy.

Many BOJ policymakers prefer to hold off on easing on Friday, worried about the rising costs and diminishing returns of an already massive asset-buying program that is drying up bond market liquidity.

But Ishihara's remarks suggest that political considerations may nudge the BOJ into action, even as the central bank struggles to beat economic headwinds with its dwindling policy tool-kit.

Elsewhere in Asia, has the USA already given up on confronting China in the South China Sea? When it comes to enforcing judgements against China, has China joined the USA in only allowing for selective enforcement? Has a new world reality emerged in 2016?

U.S. diplomatic strategy on South China Sea appears to founder

Wed Jul 27, 2016 8:05pm EDT
In the lead-up to an international court ruling on China's claims in the South China Sea this month, United States officials talked about rallying a coalition to impose "terrible" costs to Beijing's international reputation if flouted the court's decision.

But just two weeks after the July 12 announcement by the Permanent Court of Arbitration in The Hague - which at least on paper, appeared to be a humiliating defeat for China - the U.S. strategy appears to be unraveling and the court's ruling is in danger of becoming irrelevant.

Earlier this year, U.S. officials spoke repeatedly of the need for countries in the Asia-Pacific region and elsewhere, including the European Union, to make it clear that the decision of the court should be binding.

"We need to be ready to be very loud and vocal, in harmony together ... to say that this is international law, this is incredibly important, it is binding on all parties," Amy Searight, the then-U.S. deputy assistant secretary of defense for South and Southeast Asia, said in February.

Then in April, U.S. Deputy Secretary of State Antony Blinken said China risked "terrible" damage to its reputation if it ignored The Hague's ruling.

The top lawyer from the Philippines, which brought the case against China, even said Beijing risked "outlaw" status.

The United States had backed Manila's case on the grounds that China's claims to 85 percent of the South China Sea, one of the world's busiest trade routes, were a threat to freedom of navigation and international law.

Yet after the international court rejected Beijing's position, the U.S. calls for a united front appear to have made little headway, with only six countries joining Washington in insisting that the decision should be binding.

They include the Philippines, but not several other countries with their own claims to parts of the South China Sea that might benefit if Beijing observed the decision.

China also scored a major diplomatic victory earlier this week, when the Association of Southeast Asian Nations (ASEAN) dropped any reference to the ruling from a joint statement at the end of a meeting of the 10-country group's foreign minister in Laos. This followed objections from Cambodia, Beijing's closest ASEAN ally.

On July 15, the European Union, distracted after Britain's vote to leave the bloc, issued a statement taking note of the ruling, but avoiding direct reference to Beijing or any assertion that the decision was binding.

---- "We should all be worried that this case is going to go down as nothing more than a footnote because its impact was only as strong as the international community was going to make it," said Greg Poling, a South China Sea expert at Washington's Center for Strategic and International Studies think-tank.

"And the international community has voted by not saying anything. The consensus seems to be 'We don’t care. We don’t want to hold China to these standards.'"

Dean Cheng, an expert on China with the Heritage Foundation think-tank, said Washington appeared reluctant to push a tougher line with Beijing - a vital economic partner as well as a strategic rival - with only a few months to go in President Barack Obama's tenure and a presidential election in November.

"What we have is China pushing very hard into the South China Sea, physically, politically, illegally and diplomatically, and the United States refraining from doing very much at all," said Cheng.

One reason for the administration's relative passivity may be its desire to prevent any major escalation of the dispute after the ruling, including further land reclamation by China or the declaration of a new air defense identification zone.

China has so far responded only with sharpened rhetoric, but analysts and officials worry that Beijing might take bolder action after it hosts the Group of 20 meeting of the world's biggest economies in September.

China denies access to Hong Kong magazine founder, a U.S. citizen: U.S.

Wed Jul 27, 2016 4:06pm EDT
The U.S. State Department confirmed on Wednesday that U.S. citizen James Wang has been imprisoned in China and that American diplomats have been denied permission to meet with him since he was arrested nearly 14 months ago.

Wang was one of two men who held senior positions on Hong Kong political magazines who were sentenced to prison terms on Tuesday on charges of illegal business operations, bribery and bid rigging, his lawyer has said.

Wang, 63, and Guo Zhongxiao, 41, were sentenced after five Hong Kong booksellers from a shop that specialized in gossipy books about China's leaders disappeared and later appeared in custody in mainland China. The men worked for the political magazines New-Way Monthly and Multiple Face. Wang was a magazine founder and Guo a chief editor.

The case has raised concern about free speech in Hong Kong, a special administrative region of China. It has greater freedoms and separate laws from the mainland under a "one country, two systems" framework agreed when Britain handed back its former colony in 1997.

Wang, identified by his lawyer as Wang Jianmin, was sentenced to five years and three months in prison. Guo was sentenced to two years and three months, Wang's lawyers, Chen Nansha, has said. The Shenzhen Nanshan District Court published details in line with Chen's account.

Asked about the case, U.S. State Department spokesman John Kirby said that since Wang's arrest on May 31, 2014 "we've asked our Chinese counterparts repeatedly for permission to visit him, including permission to attend his trial. Those requests have all been denied."

Kirby said the United States would continue to request access to Wang in order to provide consular services. Guo's citizenship was not immediately clear, but he was born in China and had a Hong Kong identity card, Chen said.

We end for the day back in the dying EUSSR, where the rules as usual, are optional. We live in an increasingly lawless age. Laws, like taxes, only apply to little people. In the real world, it makes no sense to fine struggling Spain and Portugal for not meeting their budget commitments, thereby worsening both countries ability to meet those commitments. But only the EUSSR would invent rules like this in the first place. Below, yet another Euroland President expresses his “disappointment.” America, China and Russia get by with one President, sclerotic Euroland has at least five.  Mrs Migrant Mad Merkel interrupts her pre-summer holiday. Remainiacs remorse rises with each passing day.

Only little people pay taxes.

Amazon, Apple, Google, Facebook, Starbucks, et al, with apologies to Leona Helmsley.

Eurogroup's Dijsselbloem disappointed Spain, Portugal not penalized

Wed Jul 27, 2016 1:44pm EDT
Eurogroup President Jeroen Dijsselbloem said on Wednesday that he was disappointed with the European Commission's decision not to levy fines against Spain and Portugal for failing to bring their budget deficits below the EU cap.

"It is disappointing that there is no follow up on the conclusion that Spain and Portugal did not take effective action to consolidate their budgets, Dijsselbloem said in a statement.

"It must be clear that despite all the efforts already taken, Spain and Portugal are still in danger."

He said he would wait for the EU executive to clarify its decision and also discuss the issue with other euro zone countries.

EU Presidents – who does what?  [Plus Dijsselbloem.]

After attacks, Merkel cuts short holiday to face refugee policy storm

Thu Jul 28, 2016 12:57am EDT
Chancellor Angela Merkel interrupted her vacation on Thursday to face down accusations at home and abroad that her open-door refugee policy allowed Islamist terrorism to take hold in Germany.

Merkel returns to Berlin to hold a news conference at 12 p.m. (07:00 a.m. EDT) after a spate of attacks since July 18 left 15 people dead - including four attackers - and dozens injured.

Two assailants, a Syrian asylum seeker and a refugee from either Pakistan or Afghanistan, had links to Islamist militancy, officials say.

The attacks have burst any illusions in Germany that the country is immune to attacks like those claimed by Islamic State in neighboring France.

Politicians from left and right say Merkel's refugee policy is at fault, after more than a million migrants entered Germany in the past year, many fleeing war in Afghanistan, Syria and Iraq.

"All our predictions have been proven right," Horst Seehofer, Bavaria's state premier and a long-standing critic of Merkel's open-door refugee policy, said on Tuesday. "Islamist terrorism has arrived in Germany."
Seehofer demanded that Merkel's government adopt tougher security measures and tighter immigration policies.

Merkel has been on holiday in northern Germany since chairing a security meeting on Saturday, leaving Interior Minister Thomas de Maiziere - who twice returned from vacation in the last 10 days - to present the government's response.

“When the government makes loans or subsidies to business, what it does is to tax successful private business in order to support unsuccessful private business.”

Henry Hazlitt.
At the Comex silver depositories Wednesday final figures were: Registered 29.29 Moz, Eligible 125.81 Moz, Total 155.10 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the stark reality behind Germany’s largest bank. Not to worry, on fiat money, communist money, the central banks will fix it.

Deutsche Bank's Pain Turns Chronic

By Lionel Laurent Jul 27, 2016 10:15 AM GST
Rarely, if ever, has Deutsche Bank looked this miserable -- and the pain is set to get even worse.
On Wednesday, the bank's quarterly profit was all but wiped out by the costs of an overhaul by CEO John Cryan that has yet to bear fruit.

The stock sank as much as 5.3 percent. The shares now trade for two thirds less than their tangible book value, a steeper discount than even during the depths of the financial crisis. Analysts' bearishness about the stock is close to record levels, according to Bloomberg Intelligence.
For all his assertions that 2016 will be a year of peak restructuring, Cryan may be setting up shareholders and staff for more pain next year and beyond. Faced with a worsening economic outlook and a weaker environment for asset disposals, he will either have to ramp up the scale of his overhaul to cut thousands more jobs and shrink the balance sheet further -- or ask for more time to meet his targets.
Either way, the worst is yet to come.
The second quarter gives little cause for celebration. Revenue sank 12 percent and net income came in at almost zero -- even after litigation costs tumbled.
The only division to increase revenues and profit was Postbank --- the consumer unit, which Cryan hopes a "white knight" will take off his hands. And unlike rival Commerzbank, Deutsche Bank was able to boost its key capital ratio fractionally in the quarter.
The focus on cutbacks meant that Deutsche Bank was unable to benefit from its strength in fixed-income trading in a quarter during which the U.K. vote to leave the European Union stoked market volatility.
While debt trading revenue climbed 22 percent at the top U.S. investment banks in the quarter, Deutsche Bank's fixed-income trading revenue fell 19 percent. In foreign exchange, performance was flat, a sign that restructuring is preventing the bank from getting the most out of the market action.
Sure, Cryan's cost-cutting is having some positive impact too -- expenses fell 5 percent from the year-earlier period -- but with revenue shrinking, the cost-income ratio remains stubbornly high at 91 percent. Then look at headcount: it stood at 101,307 at the end of June, down by 138 full-time equivalents from the end of March, but still up on the year-earlier period. None of this looks like peak pain.
Cryan's suggestions on Wednesday that he might have to be "yet more ambitious" in the timing and depth of the restructuring looks like a promise to bolt the stable door long after the horse has bolted.
The weak economic environment is unlikely improve soon, especially in Europe, where lower-for-longer interest rates are crushing bank profits. Worse, Deutsche Bank is also seeing rising loan losses from the shipping and metals and mining industries.
None of this bodes well for the execution of Cryan's strategy.
Morgan Stanley analysts reckon Deutsche Bank has a 9 billion-euro ($9.9 billion) capital hole to fill by 2018 -- and that's not including damage caused by future litigation costs.
“Everything we get, outside of the free gifts of nature, must in some way be paid for. The world is full of so- called economists who in turn are full of schemes for getting something for nothing. They tell us that the government can spend and spend without taxing at all; that it can continue to pile up debt without ever paying it off, because "we owe it to ourselves.”
Henry Hazlitt.

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?

US to create nationwide network of EV charging stations

John Anderson July 25, 2016
The US government has announced "an unprecedented set of actions" to pump up the country's plug-in electric vehicle market, including US$4.5 billion in loan guarantees to create a nationwide network of commercial scale and fast charging stations. The initiative to push for greater electric car adoption calls for a collaboration between federal and state agencies, utilities, major automakers and other groups.
The initiative will identify zero emission and alternative fuel corridors across the country, to determine the best locations to put in fast charging stations, as part of the Fixing America's Surface Transportation (FAST) Act.
As part of a partnership between the US departments of energy and transportation, a 2020 vision for a national fast charging network will be developed, with potential longer-term innovations that include up to 350 kW of direct current fast charging. According to the administration, a 350 kW DC system could charge a 200-mile-range battery in less than 10 minutes. For comparison, Tesla just boosted some of its Superchargers' power capacity to 145 kW, which is claimed the fastest currently available.
Another interesting part of the initiative is the Battery500 research consortium led by the Pacific Northwest National Laboratory, which will receive up to $10 million per year for five years to develop a cheaper, lighter and more powerful battery. Specifically, the goal is to triple the energy of current batteries to 500 Wh/kg, with 1,000 electric vehicle cycles, while lowering the cost of a battery pack to below $100/kWh – the point at which electric cars are considered to become price competitive with gas-powered models.
---- The federal government, which already plans to buy 500 plug-in hybrids or EVs in 2017, will partner with state, county and city governments to acquire fleets of electric vehicles at discounted rates. An electric vehicle hackathon is also planned for later this year, using big data to come up with new and innovative solutions to EV charging, and is open to public participation.
Besides Tesla and Nissan, which currently provide most of the fast-charging stations in the country, other carmakers signing onto the deal include Ford, General Motors, BMW and Mercedes-Benz. Tesla currently has 681 Supercharger stations worldwide with 4,157 charging points. According to the administration, there are more than 16,000 EV charging stations currently in the US, while battery costs have decreased 70 percent since 2008.

The monthly Coppock Indicators finished June

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

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