Baltic Dry Index. 682 -03
Brent Crude 51.09
Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.
J. M. Keynes.
We open today with another unintended consequence of the Great Nixonian
Error of fiat money, the death of rational market pricing. QE forever and ZIRP
and NIRP, turn speculative gambling into the only game around, exactly as
forecast by 19th century economists. High Frequency Algo trading, and
close access to the free money from the central banksters by hedge funds, has
turned commodity futures markets into the USA version of the Shanghai stock market.
Sadly as fiat money dysfunction only gets worse over time, the death of the
capitalism price discovery mechanism will have a major impact in the supply of
the commodities on which we rely, from foodstuffs, to metals, to energy.
Below, irrational exuberance comes
to live cattle market pricing, although it also seems to have returned in the
oil market. The tail now wags the dog, from oil, to gold and silver, and now
cattle. Only one week to go for the Fed’s talking chair to pontificate on her
solution to the growing dysfunction of fiat money, communist money. My guess is
that the talking chair will give the whole subject a pass.
Welcome to the ‘Meat Casino’! Cattle futures market descends into chaos
Published: Aug 18, 2016 6:45 a.m. ET
Trading of physical cattle has become so scant that the futures market can’t get the signals it needs to set prices
CHICAGO—Wild swings in the cattle futures market have prompted some
traders to call it “the meat casino.”
In response, the world’s largest futures exchange has refused to list
new contracts, leaving ranchers with fewer tools to hedge the $10.9 billion
market. CME Group Inc. said that is because trading of physical cattle has
become so scant that the futures market can’t get the signals it needs to set
prices.
“It’s madness. The market makes major moves for no reason,” said Blake
Albers, a cattle feeder in Wisner, Neb.
The decision to delay new contract listings is the culmination of alarms
raised by the exchange and industry groups this year that problems in the
physical marketplace have affected futures—a highly unusual meltdown in a
market that has attracted more speculators.
Few producers complained as cattle prices surged to record highs in 2014
and early 2015. But as prices this summer sank to five-year lows, financial
strain on the industry has highlighted the extent of the problem. Revenue from
cattle sales is forecast to drop 3.9% this year to $73.6 billion, after falling
5.7% in 2015, according to U.S. Department of Agriculture data.
Live-cattle futures climbed as high as $1.4155 a pound before
free-falling to $1.1580 over seven weeks this spring. That represents a more
than $10,000 drop in income for a single contract. Many producers have lost
money as prices tumbled to a five-year low of $1.07525 a pound this summer.
“Guys like me who have been around a long time aren’t putting as many
positions on,” said Dan Norcini, an independent livestock-futures trader in
Coeur d’Alene, Idaho. “It’s just not worth the risk anymore, when there’s no
rhyme or reason to these price swings.”
Through July, futures volume fell 1.9% compared with the same period in
2015, and was down 9.7% from 2014, according to CME data.
The CME has formed a working group with cattlemen to discuss fixes,
including ways to increase the number of cash traders. The exchange shortened
trading hours for the livestock futures contracts in February to confine market
activity to the daytime, when liquidity is higher, after ranchers complained
that speculators had too great an impact on prices in the evening trading.
The failure to list contracts after October 2017 is a problem for
ranchers buying calves this summer. They typically need around 18 months to
grow to slaughter weight, meaning ranchers are exposed to possible price swings
in the 2017 winter.
Steve Sunderman, a partner at a feedlot in Norfolk, Neb., recalls
watching cattle futures prices earlier this year rise and fall by more than one
cent in just 15 minutes, unprecedented leaps in a market more accustomed to
daily moves of fractions of a penny. The swings made him uneasy about locking
in a hedge for his cattle on a Friday, when prices had climbed over $1.15 a
pound only to settle at $1.12975, thinking the market would likely climb
further.
But CME said that opening up markets to a diverse group of investors,
including hedge funds and algorithmic traders, adds liquidity to products like
cattle futures, which tend to be more thinly traded than gold or oil. Just 10%
of the total volume in live-cattle futures came from high-frequency trading in
2015 for which the latest data is available, the exchange said.
In other under reported news.
Chaos Looms in South Africa Local Councils as Malema Wields Veto
August 18, 2016
Sporting a slimmed-down physique and a newly earned university degree,
South Africa’s political provocateur Julius Malema has emerged as the kingmaker
in several key cities where the ruling party has lost outright control. The
result may be chaotic.
With neither the ruling African National Congress nor the main opposition
Democratic Alliance winning a majority in 27 towns in Aug. 3 elections, Malema,
35, and his Economic Freedom Fighters may wield a veto over municipal budgets
and appointments in centers like Johannesburg, the economic hub, and Pretoria,
the capital.
“Whenever
they have a budget, we will want to see it,” Malema, who formed the EFF three
years ago after being expelled from the ruling party for insubordination, said
with a chuckle at a Johannesburg press conference on Wednesday. “Show us
specifics. Not good enough to say 500 million rand ($36 million) for housing.
Show us where it will go.”
While the EFF decided to back DA mayoral candidates in hung councils to
shut out the ANC, it plans to vote on other decisions on an ad hoc basis. Its
past record doesn’t bode well for the new minority city administrations. Party
lawmakers in parliament wear red miners’ helmets and overalls and routinely
heckle President Jacob Zuma and his cabinet members, ignoring calls to order
before being dragged out by security officials.
----The
municipalities oversee electricity and water distribution, some roads,
parks, libraries and sanitation. Johannesburg, headquarters to the stock
exchange and most of South Africa’s largest companies, and Pretoria, where
dozens of diplomatic missions are based, have a combined budget of about 81
billion rand.
More
Italy Wants the EU to Change Tack on Growth and Security
August 18, 2016 — 11:00 PM BST
Italy is seeking an expansionary push for growth in the European Union as
the bloc forges a new course after the U.K. voted to leave, Prime Minister
Matteo Renzi’s junior minister for European affairs said.Undersecretary Sandro Gozi, speaking ahead of an Aug. 22 informal meeting of Renzi, German Chancellor Angela Merkel and French President Francois Hollande, called for a wide-ranging agreement to boost cooperation on security and defense as well as an expansionary economic policy to boost European growth.
“We need to increase and reinforce EU action on security and defense, including rapidly launching the European policing of its external borders,” Gozi said in a telephone interview. “Also as a reply to the terrorist threat, some EU countries should be able to work on joint initiatives in the security, policing or military fields if they wish to do so.”
In the wake of the Brexit referendum, and with the Italian economy unexpectedly stalling in the second quarter, Renzi has stepped up calls for a departure from what his government sees as German-inspired austerity policies. Renzi is preparing for a referendum on constitutional reform, expected to take place in November, on which he has staked his political future.
“We seek a different, more expansionary economic policy at the European level,” Gozi said. “On this there is agreement with the French. There is work to be done with the Germans.”
Gozi said the investment plan of European Commission President Jean-Claude Juncker, which runs to the end of 2017, should be extended to 2019 and should include more cross-border projects possibly involving the digital sector and infrastructure. Gozi also called for measures to tackle youth unemployment, and for the EU to do more to ensure the repatriation of migrants.
More
Japan sinking deeper into de-facto helicopter money
The Bank of Japan says there is no possibility of helicopter money, and
by a strict definition they are correct. But as the government plans to issue
more 40-year bonds, it is looking more and more like some monetization of debt
is underway.
The BOJ says as long as it buys Japanese government bonds (JGB) from the
market, it is not directly underwriting bonds to fund government spending.
However, that distinction has become blurred as investors buy bonds only
to take profits by selling them immediately to the bank - a transaction coined
the "BOJ trade."
"The BOJ is now buying the entire 30 trillion yen ($299.1 billion)
in bonds newly issued by the government annually. In a sense, it has the same
effect of helicopter money," said Etsuro Honda, a former special adviser
to the cabinet and a close associate to Prime Minister Shinzo Abe.
The term 'helicopter money', where a central bank directly finances
government spending by underwriting bonds, was coined by American economist
Milton Friedman and gained prominence when former U.S. Federal Reserve Chairman
Ben Bernanke cited it in a 2002 speech as a way to beat deflation.
Some economists, however, fear such moves could trigger hyperinflation
and uncontrollable currency devaluation.
The BOJ seems more relaxed than in the past about markets thinking it
may resort to quasi-helicopter money, say officials familiar with its thinking,
partly on hopes that such market views could help contain the strength of the
yen currency.
More
If, however, a government refrains from regulations and allows
matters to take their course, essential commodities soon attain a level of
price out of the reach of all but the rich, the worthlessness of the money
becomes apparent, and the fraud upon the public can be concealed no longer.
J. M. Keynes.
At the Comex silver depositories Thursday final figures were: Registered
27.04 Moz,
Eligible 130.43 Moz, Total 157.46 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, those killer dirty diesel purveyors at
Volkswagen had some serious help, it appears. It is amazing how much black
smoke pours out of a VW diesel as it pulls away from traffic lights, at least
here in the UK.
Bosch worked 'hand-in-glove' with VW in emissions fraud: lawyers
German auto supplier Robert Bosch GmbH was a "knowing and active
participant" in a decade-long scheme by Volkswagen AG to evade U.S.
emissions laws, according to lawyers for U.S. owners of polluting VW diesel
vehicles.
In a court filing late on Tuesday in U.S. District Court in San
Francisco, the lawyers cited confidential documents turned over by the German
automaker to plaintiffs attorneys in making the new allegations against the
auto supplier.
Volkswagen declined to comment on the filing, except to say that it had
no effect on its multibillion-dollar settlement of a civil complaint over the
diesel scandal. The filing was made a day after sources briefed on the matter
said the automaker has held preliminary talks with the U.S. Justice Department
to settle a criminal probe into the emissions cheating case.
Most of the allegations involving Bosch remain under seal because the
documents have been designated as confidential by VW, the plaintiffs' lawyers
said in the court filing.
A Bosch spokeswoman said the company took the allegations seriously and
is cooperating in several investigations, but declined to comment further.
The documents include records and communications between Bosch, VW and
U.S. regulators. One 2011 email to the California Air Resources Board, among
other communications, demonstrates "Bosch's deep understanding of what
regulators allowed and would not allow, and what Bosch did to help VW obtain
approval," the filing said.
"Bosch played a crucial role in the fraudulent enterprise and
profited handsomely from it," the court papers say.
Bosch has not been charged with any wrongdoing. But German prosecutors
said in December that they were investigating whether staff at the
Stuttgart-based company were involved in the rigging of emissions tests by VW.
Bosch makes an engine control unit, often referred to as the
"brain" of the engine, used by several top automakers including VW.
That system controls a vehicle's acceleration and power and is extensively
customized to give each car model its own unique feel.
Bosch supplied software and components to VW but has said responsibility
for how software is used to regulate exhaust emissions or fuel consumption lies
with carmakers.
In the court papers, the attorneys said Bosch had worked
"hand-in-glove" with Volkswagen to develop a so-called cheat device
to circumvent emissions tests and trick regulators.
The engine control system for VW's clean diesel engine was customized
through years of close collaboration between the carmaker and Bosch, the
lawyers said.
"It is inconceivable," the attorneys wrote, "that Bosch
did not know that the software it was responsible for defining, developing,
testing, maintaining and delivering contained an illegal defeat device."
MoreSolar & 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?
'Sniffer plasmons' could detect explosives
Scientists have proposed a graphene-based spaser that can detect even small amounts of various substances, including explosives
Date: August 15, 2016
Source: Moscow Institute of Physics and Technology
Summary: Scientists have proposed a graphene-based spaser
that can 'sniff out' a single molecule, which could be used to detect even
small amounts of various substances, including explosives.
Physicists from the Moscow Institute of Physics and Technology (MIPT)
have found that the two-dimensional form of carbon, known as graphene, might be
the ideal material for manufacturing plasmonic devices capable of detecting
explosive materials, toxic chemicals, and other organic compounds based on a
single molecule, says an article published in Physical Review B.
Plasmons in constructing high-accuracy electronics and optics
Scientists have long been fascinated by the potential applications of a
quasiparticle called the plasmon, a quantum of plasma oscillations. In the case
of a solid body, plasmons are the oscillations of free electrons. Of special
interest are the effects arising from the surface interactions of
electromagnetic waves with plasmons -- usually in the context of metals or
semimetals, as they have a higher free electron density. Harnessing these
effects could bring about a breakthrough in high-accuracy electronics and
optics. One possibility opened up by plasmonic effects is the subwavelength
light focusing, which increases the sensitivity of plasmonic devices to a point
where they can distinguish a single molecule. Such measurements are beyond what
any conventional (classical) optical devices can achieve. Unfortunately,
plasmons in metals tend to lose energy quickly due to resistance, and for this
reason they are not self-sustained, i.e. they need continuous excitation.
Scientists are trying to tackle this issue by using composite materials with
predefined microstructure, including graphene.
Graphene is an allotrope of carbon in the form of a two-dimensional
crystal. It can be visualised as a one-atom-thick honeycomb lattice made of
carbon atoms. Two MIPT graduates, Andre Geim and Konstantin Novoselov, were the
first to isolate graphene, which won them a Nobel Prize in Physics. Graphene is
a semiconductor with extremely high charge carrier mobility. Its electrical
conductivity is also exceptionally high, which makes graphene-based transistors
possible.
Theoretical physicists give the okay
Although, plasmonic devices have seemed an exciting prospect to pursue
from the start, to take advantage of them, it was first necessary to find out
whether the technology behind them was feasible. To do this, scientists had to
find a numerical solution to the relevant quantum-mechanical equations. This
was accomplished by a team of researchers at the Laboratory of Nanostructure
Spectroscopy headed by Prof. Yurii Lozovik: they formulated and solved the
necessary equation. Their research has led them to develop a quantum model that
predicts plasmonic behaviour in graphene. As a result, the scientists described
the operation of a surface-plasmon-emitting diode (SPED) and the nanoplasmonic
counterpart of the laser -- known as the spaser -- whose construction involves
a graphene layer.
A spaser could be described as a device similar to a laser and operating
on the same basic principle. However, to produce radiation, it relies on
optical transitions in the gain medium, and the particles emitted are surface
plasmons, as opposed to photons produced by a laser. An SPED is different from
a spaser in that it is an incoherent source of surface plasmons. It also
requires considerably lower pump power. Both devices would operate within the
infrared region of the spectrum, which is useful for studying biological
molecules.
'The graphene spaser could be used to design compact spectral
measurement devices capable of detecting even a single molecule of a substance,
which is essential for many potential applications. Such sensors could detect
organic molecules based on their characteristic vibrational transitions
('fingerprints'), as the light emitted/absorbed falls into the medium infrared
region, which is exactly where the graphene-based spaser operates,' says
Alexander Dorofeenko, one of the authors of the study.
Another weekend,
and an unusual early autumn storm is about to hit the UK and Ireland. What, if
anything, does it hold for the coming winter?
Have a great weekend, and try to steer clear of VW diesel fumes.
If the Treasury were to fill old bottles with bank-notes,
bury them at suitable depths in disused coal-mines which are then filled up to
the surface with town rubbish, and leave it to private enterprise on well-tried
principles of laissez-faire to dig the notes up again (the right to do so being
obtained, of course, by tendering for leases of the note-bearing territory),
there need be no more unemployment and, with the help of repercussions, the
real income of the community, and its capital wealth, would probably become a
good deal greater than it actually is.
J. M. Keynes. The origins of Friedman’s “helicopter money”
perhaps.
The monthly Coppock Indicators finished July
DJIA: 18432
+03 Up NASDAQ: 5162 +10 Up. SP500: 2173 +01 Up.
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