Monday, 20 March 2017

Germany Welches And Calls On Japan.

Baltic Dry Index. 1196 +24   Brent Crude 51.45

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.
“The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market.”
Ludwig von Mises.

After the failed Merkel mission to Washington on Friday, the USA and Germany carried on sparring over the weekend. Quite how Germany expects to win is something of a mystery, since effectively in NATO, all the rest are tenants to the United States landlord. Without the United States heft, duplication and redundancy, NATO isn’t just a toothless tiger, it’s a very dead toothless tiger, from the Atlantic to the Ukraine.  Seen from NATO dues paying London, Germany, Europe’s richest country, doth protest too much. Unlimited millions for all the world’s economic migrants, barely a penny for Europe’s defence.  

In desperation Germany is now looking to its old wartime ally Japan for help. How this will play in Pearl Harbor America is anyone’s guess, but it doesn’t look  good from London, but anyway adds more leverage to London in the coming Brexit negotiations. Stay tuned to this disturbing, developing clash.

Germany Trades Barbs With Trump on Defense After Merkel Meeting

by Margaret Talev,Patrick Donahue, and Justin Sink
19 March 2017, 12:40 GMT
Germany and U.S. traded barbs over the weekend about defense spending following an awkward first meeting between President Donald Trump and Chancellor Angela Merkel.

German Defense Minister Ursula von der Leyen on Sunday rebuffed Trump over her country’s commitment to meeting NATO funding commitments after the U.S. president posted on Twitter Saturday that “Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!”

“There is no debit account in NATO,” von der Leyen countered in her statement, arguing that the spending goal for NATO members includes other activities beyond the defense alliance. “We all want fair burden-sharing and that requires a modern concept of security.”

The president wrote that he’d had a “GREAT meeting with” Merkel, brushing off what he termed “fake” reports suggesting otherwise. The exchanges come after Merkel, at a joint White House press conference on Friday, appeared to tweak the president about his criticisms of her and others on social media and elsewhere, including an interview in January calling Germany’s open-border refugee policy a “catastrophic mistake.”

“In the period leading up to this visit, I’ve always said it’s much, much better to talk to one another and not about one another, and I think our conversation proved this,” the German leader said through a translator.

Trump on Friday said he had “reiterated to Chancellor Merkel my strong support for NATO, as well as the need for our NATO allies to pay their fair share for the cost of defense.” He said “many nations owe vast sums of money from past years and it is very unfair to the United States.”

‘Free Riders’

Trump isn’t the first U.S. leader to complain that most NATO nations, including Germany, weren’t meeting the alliance’s goal that members spend 2 percent of their GDP on defense. Germany spends about 1.2 percent on defense now.

President Barack Obama in 2016 said in an interview with The Atlantic about his foreign policy doctrine that “free riders aggravate me.” Sigmar Gabriel, Germany’s foreign minister, said a few weeks ago said that meeting the 2 percent goal is “unrealistic,” although that’s a much lower percentage than the U.S. spends on defense.

Merkel, Abe Call for EU-Japan Deal to Stem Trade Barriers

by Arne Delfs
19 March 2017, 20:48 GMT
German Chancellor Angela Merkel and Japanese Prime Minister Shinzo Abe called for a concerted effort to defend free trade, saying global markets can be both open and fair.

Two days after U.S. President Donald Trump and Merkel held inconclusive talks at the White House, the German and Japanese leaders opened the CeBIT technology show in Hanover, Germany, by advocating a trade accord between Japan and the European Union as a way to underscore the benefits of an interconnected global economy.

“Of course we want fair markets, but we don’t want to put up barriers,” Merkel said in an apparent retort to Trump’s pledge of enacting “America First” economic and trade policies. “At a time when we have to quarrel with many about free trade, open borders and democratic values, it’s a good sign that Germany and Japan aren’t quarreling about that.”

Abe said Japan, having benefited from free trade and investment, “wants to be the champion of upholding open systems alongside Germany,” though “it will be necessary to have rules that are fair and can stand up to democratic appraisal.”

Talks on an EU-Japan accord began in 2013 with the goal of lowering barriers to trade and investment on both sides. Japan is the EU’s second-biggest Asian trading partner after China, and together with the EU accounts for more than a third of global economic output, according to EU data.

Germany is ready to “be the motor” for completing the deal as a signal that “we want free, open markets,” Merkel said.

Below, some reasons why President Trump’s team might be pressuring Germany and NATO now, ahead of the next global slowdown. If Germany, the paymaster of Europe won’t pay correctly into NATO now, how likely is Germany to pay correctly for NATO once a new recession hits. If uber rich Germany can get away with shirking its responsibility, what message does that send to all the other NATO members.

12 Reasons Why The Federal Reserve May Have Just Made The Biggest Economic Mistake Since The Last Financial Crisis

By Michael Snyder, on March 15th, 2017
Has the Federal Reserve gone completely insane?  On Wednesday, the Fed raised interest rates for the second time in three months, and it signaled that more rate hikes are coming in the months ahead.  When the Federal Reserve lowers interest rates, it becomes less expensive to borrow money and that tends to stimulate more economic activity.  But when the Federal Reserve raises rates , that makes it more expensive to borrow money and that tends to slow down economic activity.  So why in the world is the Fed raising rates when the U.S. economy is already showing signs of slowing down dramatically?  The following are 12 reasons why the Federal Reserve may have just made the biggest economic mistake since the last financial crisis…

#1 Just hours before the Fed announced this rate hike, the Federal Reserve Bank of Atlanta’s projection for U.S. GDP growth in the first quarter fell to just 0.9 percent.  If that projection turns out to be accurate, this will be the weakest quarter of economic growth during which rates were hiked in 37 years.

#2 The flow of credit is more critical to our economy than ever before, and higher rates will mean higher interest payments on adjustable rate mortgages, auto loans and credit card debt.  Needless to say, this is going to slow the economy down substantially

The Federal Reserve decision Wednesday to lift its benchmark short-term interest rate by a quarter percentage point is likely to have a domino effect across the economy as it gradually pushes up rates for everything from mortgages and credit card rates to small business loans.

Consumers with credit card debt, adjustable-rate mortgages and home equity lines of credit are the most likely to be affected by a rate hike, says Greg McBride, chief analyst at He says it’s the cumulative effect that’s important, especially since the Fed already raised rates in December 2015 and December 2016.

#3 Speaking of auto loans, the number of people that are defaulting on them had already been rising even before this rate hike by the Fed…

The number of Americans who have stopped paying their car loans appears to be increasing — a development that has the potential to send ripple effects through the US economy.

Losses on subprime auto loans have spiked in the last few months, according to Steven Ricchiuto, Mizuho’s chief US economist. They jumped to 9.1% in January, up from 7.9% in January 2016.

“Recoveries on subprime auto loans also fell to just 34.8%, the worst performance in over seven years,” he said in a note.

#4 Higher rates will likely accelerate the ongoing “retail apocalypse“, and we just recently learned that department store sales are crashing “by the most on record“.

#5 We also recently learned that the number of “distressed retailers” in the United States is now at the highest level that we have seen since the last recession.

#6 We have just been through “the worst financial recovery in 65 years“, and now the Fed’s actions threaten to plunge us into a brand new crisis.

#7 U.S. consumers certainly aren’t thriving, and so an economic slowdown will hit many of them extremely hard.  In fact, about half of all Americans could not even write a $500 check for an unexpected emergency expense if they had to do so right now.

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression. 

Ludwig von Mises.

At the Comex silver depositories Friday final figures were: Registered 38.80 Moz, Eligible 149.46 Moz, Total 188.26 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Increasingly, Europe wakes up to the new reality, plus Brexit. Chancellor Merkel must rue the day, she foolishly sent Dodgy Dave Cameron away with an empty EU reform envelope to sell to the British people.

Sun Mar 19, 2017 | 4:49am EDT

G20 trade wording considered a setback for export champion Germany

The failure of the world's financial leaders to agree on resisting protectionism and support free trade marks a setback in the G20 process and poses a risk for growth of export-driven economies such as host Germany, economists said on Sunday.
Acquiescing to an increasingly protectionist United States after a two-day meeting in the German town of Baden-Baden, the finance ministers and central bank governors of the 20 biggest economies dropped a pledge to keep global trade free and open.
Instead, they only made a token reference to trade in their main communique by saying the G20 would work together to strengthen the contribution of trade to their economies.
"The weak wording on trade is a defeat for the German G20 presidency," Ifo economist Gabriel Felbermayr told Reuters.
"This is particularly true in the light of the fact that Germany is one of the world's strongest export nations and relies on open markets to maintain its prosperity like hardly any other country."
Private consumption and state spending have become the main growth drivers of Europe's biggest economy, but exports still account for roughly 45 percent of its gross domestic product.
"The lack of a rejection of protectionism is a clear breach of tradition. Now everything is possible," Felbermayr said. The future would probably bring a weakening of the World Trade Organization (WTO) and a more aggressive use of protectionist policies, he added.
The Association of German Chambers of Commerce and Industry (DIHK) said the token reference to trade was a serious setback for the multilateral trade order.
"The result is a warning shot for every trading nation and this means also for the German economy," DIHK foreign trade economist Volker Treier told Reuters.
"The German economy has to adapt itself to the fact that 'America First' will also mean a loss for us. So instead of a win-win situation, there will probably be a lose-lose situation."

Sat Mar 18, 2017 | 9:07am EDT

Germany's DIHK says 'hard Brexit' would severely hit German economy

The impact of a "hard Brexit" on Germany would be severe, the president of Germany's DIHK Chambers of Industry and Commerce said in a media interview published on Saturday.
Eric Schweitzer told the Funke media group that Britain was Germany's third most important export partner and shipments had already dropped by nine percent in the fourth quarter.
He said the European Union should take a tough line in Brexit negotiations with Britain.
"EU membership is based on the free movement of services, goods, capital and workers ... Britain now wants to benefit from the first three but do away with the free movement of workers and that's not possible, above all because there could then be copycats," Schweitzer said.
----German Chancellor Angela Merkel has repeatedly said that post-Brexit Britain can only get access to the EU's Single Market if it accepts the freedom of movement of workers.

In yet more news from the worker’s paradise of the wealth and jobs destroying EUSSR, Alitalia takes an Anglo-American approach to reality.

Fri Mar 17, 2017 | 1:13pm EDT

Alitalia to cut 2,037 jobs, reduce flight crew pay in latest revamp: unions 

Alitalia's new restructuring plan envisages cutting 16 percent of its workforce and reducing flight personnel's salaries by up to a third in a last-ditch attempt to make the troubled Italian airline profitable, labor officials said on Friday.
Italy's flagship carrier, which has made an annual profit only a few times in its 70-year history, is in a race against time to win union support for its latest turnaround plan as it seeks to unlock financing and avoid having to ground planes.
Unions, however, called a 24-hour strike for April 5 after discussions with Alitalia management on Friday. The company's plan includes 2,037 ground staff job cuts out of a total workforce of 12,500.
"This is not a plan to get the company back on its feet but only a cost-cutting exercise," said Emiliano Fiorentino, national secretary of the Filt-Cisl union.
"It's basically a survival plan and as such it is not acceptable."
Under the plan, flight attendants could have their pay cut by 32 percent and pilots by 22-28 percent, unions said.
Labor groups also fear that job cuts could soon extend to flight personnel.
Alitalia CEO Cramer Ball said the cuts were "painful but necessary".
Despite several overhauls and cash injections over the years, Alitalia is losing at least half a million euros a day and could run out of cash in the coming weeks unless shareholders agree to pump in more money, sources say.
Alitalia, 49 percent of which is owned by Etihad Airways, said this week that it expects to return to profit by the end of 2019 through 1 billion euros ($1.1 billion) of cost cuts over the next three years and a revamp of its business model for short and medium-haul flights.
----The airline, in which banks Intesa Sanpaolo and UniCredit hold stakes, warned that union backing for the plan is essential to obtaining fresh funding from shareholders.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

Technology 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?

Nanotube film may resolve longevity problem of challenger solar cells

Date: March 17, 2017

Source: Aalto University

Summary: Researchers have lengthened the lifetime of perovskite solar cells by using nanotube film to replace the gold used as the back contact and the organic material in the hole conductor.
Five years ago, the world started to talk about third-generation solar cells that challenged the traditional silicon cells with a cheaper and simpler manufacturing process that used less energy.
Methylammonium lead iodide is a metal-organic material in the perovskite crystal structure that captures light efficiently and conducts electricity well -- both important qualities in solar cells. However, the lifetime of solar cells made of metalorganic perovskites has proven to be very short compared to cells made of silicon.
Now researchers from Aalto University, Uppsala University and École polytechnique fédérale de Lausanne (EPFL) in Switzerland have managed to improve the long term stability of solar cells made of perovskite using "random network" nanotube films developed under the leadership of Professor Esko Kauppinen at Aalto University. Random network nanotube films are films composed of single-walled carbon nanotubes that in an electron microscope image look like spaghetti on a plate.
'In a traditional perovskite solar cell, the hole conductor layer consists of organic material and, on top of it, a thin layer of gold that easily starts to disintegrate and diffuse through the whole solar cell structure. We replaced the gold and also part of the organic material with films made of carbon nanotubes and achieved good cell stability in 60 degrees and full one sun illumination conditions', explains Kerttu Aitola, who defended her doctoral dissertation at Aalto University and now works as a researcher at Uppsala University
In the study, thick black films with conductivity as high as possible were used in the back contact of the solar cell where light does not need to get through. According to Aitola, nanotube films can also be made transparent and thin, which would make it possible to use them as the front contact of the cell, in other words as the contact that lets light through.
'The solar cells were prepared in Uppsala and the long-term stability measurement was carried out at EPFL. The leader of the solar cell group at EPFL is Professor Michael Grätzel, who was awarded the Millennium Prize 2010 for dye-sensitised solar cells, on which the perovskite solar cells are also partly based on', says Aitola.
Solar cells in windows
The lifetime of solar cells made of silicon is 20-30 years and their industrial production is very efficient. Still, alternatives are needed as reducing the silicon dioxide in sand to silicon consumes a huge amount of energy. It is estimated that a silicon solar cell needs two or three years to produce the energy that was used to manufacture it, whereas a perovskite solar cell would only need two or three months to do it.

The monthly Coppock Indicators finished February

DJIA: 20,812  +133 Up. NASDAQ:  5,825 +120 Up. SP500: 2,364 +115 Up.

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