Showing posts with label Currency wars. Show all posts
Showing posts with label Currency wars. Show all posts

Friday, 15 October 2010

Currency War Update.

Baltic Dry Index. 2769 +21
LIR Gold Target by 2019: $3,000.

"And if all others accepted the lie which the central banks imposed—if all records told the same tale—then the lie passed into history and became truth. 'Who controls the money' ran the central bankers’ slogan, 'controls the future: who controls the money controls the present.'"

With apologies to George Orwell. 1984

Later today, a speech by Dr. Bernanke on the US economy and monetary policy, I really can’t wait. The man hired by George Bush the younger for his supposed knowledge and expertise on the Great Depression and how to prevent new ones. He never saw the Great Recession coming, then denied it was here when it arrived. He expressed confidence in the US banking system just before it blew up with Bear Stearns and vey nearly took out the world financial system when Lehman Brothers collapsed, declared that there was no bubble in the US real estate market, just before it spectacularly imploded, then declared that it wouldn’t impact the wider US economy right before it did just that, went on to pontificate that house prices had reached bottom in 2008, right before they relapsed into a downward death spiral that continues to this day. This is the man now working on collapsing the dollar in some kind of bizarre plan to punish the Chinese by impoverishing ordinary Americans, most of whom have nearly 100% of their wealth tied up in the fiat dollar, in contrast to the ordinary Chinese who have virtually no exposure to the fiat dollar, this is the man who is about to share his destructive thoughts with us peons, later in the day.

Below, the state of the currency wars so far. Even Dr. Bernanke’s weak dollar policy isn’t working the way he thought it would.

'Si monumentum requiris, circumspice.' (If you seek Bernake’s monument, look around.)"

With apologies to Sir Chistopher Wren.

Dollar fall sparks stability warnings

By David Oakley and Peter Garnham in London and Michael Mackenzie in New York

Published: October 14 2010 19:55

The dollar tumbled against most major currencies on Thursday, prompting warnings that the weakness of the world’s reserve currency could destabilise the global economy and push other countries into retaliatory devaluations to underwrite their exports.

Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.

----A senior European policy-maker, who asked not to be named, said a further aggressive round of monetary easing by the US Federal Reserve would be “irresponsible” as it made US exports more competitive at the expense of its rivals.

Simon Derrick, chief currency strategist for BNY Mellon, said: “In narrow terms, the US is winning the currency wars as a weaker dollar will help its economy, but it could damage the other big economic blocs of China, Japan and Europe.”

The dollar’s fall was given fresh impetus after the Monetary Authority of Singapore surprised the market when it tightened policy by widening the trading band for its currency, allowing it to appreciate. The move by the Singapore authorities, responding to fears over inflation, helped push up other Asian currencies.

Russia’s finance minister Alexei Kudrin, in a meeting with European Union officials, blamed the US – and others – for global currency instability.

He said one reason for exchange rate turmoil “is the stimulating monetary policy of some developed countries, above all the United States, which are trying to solve their structural problems in this way”.

Commodities, which are mostly traded in dollars, were boosted by the US currency’s slide. Copper hit a two-year high of $8,490 per tonne at one point, while gold surged to a record of $1,387 per troy ounce.

http://www.ft.com/cms/s/0/5505a7f0-d7c2-11df-b478-00144feabdc0.html

China warns US against making yuan dispute a 'scapegoat' for a flagging economy

China has again warned the US not to use the dispute over the value of the Chinese currency, the yuan, as a “scapegoat” for its high unemployment and flagging growth prospects.

By Peter Foster in Beijing Published: 6:30AM BST 15 Oct 2010

The remarks from China’s ministry of commerce came hours before the US was due to release a report on whether it considers China a “currency manipulator” as fears grow that tensions over the currency could lead to a protectionist trade war.

The report has been repeatedly delayed despite a growing chorus of demands from US legislators and union bosses for the Obama administration to take tougher action against China’s alleged trade distortions.

However Yao Jian, a Chinese Ministry of Commerce spokesman, rejected US complaints as unfair. “It's totally wrong to blame the yuan for the Sino-U.S. trade imbalance,” he said, “The Chinese yuan shouldn't be a scapegoat for the U.S.' domestic economic problems.”

The artificially weak Chinese currency, which some analysts say is trading up to 25pc below its true market rate, has become a growing political issue in the US where it is blamed for giving Chinese exporters and unfair advantage at the cost of millions of US jobs.

However China has repeatedly said it cannot afford the costs of substantially re-valuing the yuan at a time when global demand for its exports remains weak and the recovery from the global recession remains fragile.

“Job losses would hurt the Chinese economy and domestic consumption. A relatively large yuan appreciation would definitely hurt Chinese exports, so a stable yuan exchange rate is needed for domestic consumption and the stability of the world economy," Mr Yao added.

China has also said that legislation currently being formulated in the US to impose trade tariffs as a result of the yuan’s under-valuation would be in breach of World Trade Organisation regulations.

-----The issue of currency manipulation is expected to be the central theme of a meeting of Group of 20 finance ministers meet in South Korea on October 22-23 ahead of a heads of state meeting in early November.

http://www.telegraph.co.uk/finance/currency/8065529/China-warns-US-against-making-yuan-dispute-a-scapegoat-for-a-flagging-economy.html

China’s Trade Gap With U.S. Climbs to Record; First Since 2008

Oct. 15 (Bloomberg) -- China ran up a record $28 billion trade surplus with the U.S. in August, bolstering complaints from American business groups and lawmakers that a weak Chinese currency gives exports an unfair advantage.

“China’s decision to undervalue its currency has been a persistent thorn in the side of our relationship,” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement after meeting with Chinese officials in Beijing yesterday.

China’s exports to the U.S. climbed to a record $35.3 billion, while U.S. exports dipped to $7.3 billion, according to Commerce Department figures released yesterday. It’s the first record-setting trade gap since the financial crisis hit in 2008. A weak currency makes a country’s exports cheaper.

In previous years, China’s exports to the U.S. increased in August and peaked in October as retailers stocked goods for the holiday shopping season.

“A lot of what we are seeing is a resurgence in retail,” Art Wong, public information officer at the Port of Long Beach, California, said in an interview. “In this period we get all the Christmas stuff.”

-----A twice-annual report by the U.S. Treasury Department about whether China manipulates its currency is due later today. Under Presidents George W. Bush and Barack Obama, the department has resisted calls from Congress to make such a determination. In recent weeks, Treasury Secretary Timothy F. Geithner has become increasingly vocal in pressing for China to act on its currency.

Overall, international trade subtracted 3.5 percentage points from U.S. growth in April through June, the most since 1947, as imports surged at the fastest pace since 1984.

The U.S. trade deficit grew 8.8 percent to $46.3 billion, an increase that took place even as the dollar’s value dropped, according to the Commerce Department.

http://noir.bloomberg.com/apps/news?pid=20601089&sid=a8M4DzO7s8eM

We end for the week giving the last word to the NY Times on the Black Swan that flew in to the banksters' fraudclosuregate. Even now the media and Wall Street still haven’t grasped the scale of the fraud and it’s implications. With many internet sites now showing exactly how to go about checking titles for fraudulent documents and fraudulent signatures, many home owners are going to do just that. Up to 60 million US residential home titles are clouded, a figure equal to the entire UK population. Potential new buyers will now demand the most thorough of title searches, anything suspicious is likely to block the sale whether fraudulent or not. And just wait until taxpayer owned Freddie and Fannie start putting back failed securitisations. My guess is that the banksters will want another TARP bailout to cover it all up.

Mortgage Mess May Cost Big Banks Billions

By NELSON D. SCHWARTZ Published: October 14, 2010

One billion dollars? Six billion? Ten billion? More?

After scratching their heads for weeks over how much the foreclosure mess will hurt banks’ bottom lines, investors got out their calculators Thursday to tally the potential costs — and sent bank stocks plunging.

Analyst estimates of the possible toll varied widely, but the fear was evident in the stock market. The share price of Bank of America fell 5.2 percent, while shares of JPMorgan Chase sank almost 2.8 percent.

“The market never likes uncertainty, and it seems like every day we’re adding to the list of things we need to worry about with the financials,” said Jason Goldberg, an analyst with Barclays Capital. “The industry needs to work quickly to put this issue behind them.”

Wall Street initially hoped the banks would do just that but as the political furor grew, a quick end to the crisis was looking less and less likely. On Wednesday, 50 state attorneys general announced they were investigating the practices of the mortgage servicing industry, while Florida’s attorney general subpoenaed the nation’s largest mortgage processor, L.P.S., as part of a broader investigation.

----I don’t see how it can be cleared up in a short period of time,” said Richard X. Bove, an analyst with Rochdale Securities. “The moratorium won’t last that long but the problem will last at least four or five years, maybe a decade.” In the short term, he said, “it could easily cost $1.5 billion per quarter.”

Meanwhile, the foreclosure machinery in many states has ground to a halt. Major institutions like Bank of America, JPMorgan and GMAC Mortgage have halted foreclosures in many states, and have not said when they would resume. As a result, foreclosed homes will remain on the bank’s books while racking up thousands of dollars a month in extra costs.

Until Thursday, Wall Street regarded the foreclosure issue as a risk to the banks’ reputations, rather than their bottom lines. Indeed, some analysts insisted it was unlikely that wide-scale abuses would be found.

-----Inside the investment houses, several traders said nerves were frazzled further by worries that banks could face much bigger mortgage related losses, not from foreclosures, but because of questions about how the money was lent in the first place. If it turns out that mortgages were bundled together and sold improperly, more holders could sue the banks and force them to buy back tens of billions in mortgage-backed securities.

An alarming report on Bank of America, compiled by Branch Hill Capital, a San Francisco hedge fund, circulated widely on Wall Street on Thursday. Branch Hill suggested that the bank, the nation’s largest, could be facing more than $70 billion in losses from mortgage securities that it may have to repurchase from Fannie Mae and Freddie Mac, as well as private investors.

“We think this is a very important issue, and the liability will be substantial,” said Manal Mehta, a partner at Branch Hill. “There has been pervasive bad behavior throughout the system.” The fund is betting that Bank of America shares could decline because of the potential liability.

----For now, bank executives are not making any predictions how long the foreclosure halt will last.

“If you’re talking about three or four weeks it will be a blip in the housing market,” said Jamie Dimon, chief executive of JPMorgan Chase, in a conference call on Wednesday. “If it went on for a long period of time, it will have a lot of consequences, most of which will be adverse on everybody.”

http://www.nytimes.com/2010/10/15/business/15bank.html?ref=business

"Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious."

George Orwell, 1984

At the Comex silver depositories Thursday, final figures were: Registered 52.20 Moz, Eligible 60.41 Moz, Total 112.61 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks today, and a break from America’s black swan of massive bankster fraudulent foreclosures too. Today, a warning that the UK can expect snow next week. Not unprecedented but if it happens unusually early, especially since we’re all supposed to believe in the new age religion of “global warming”, now rebranded “climate change" after last year’s fiasco in snowy Copenhagen. Below The Telegraph covers next week’s weather and Russia Today covers the “coldest winter in 1,000 years" expected later this coming winter. I have my doubts, although anything is possible, but were it to happen, look for exceptional winter kill of wheat and barley, across much of Europe out as far as Kazakhstan. If that were to actually happen, I would expect grain prices to double again from here, with serious consequences for food price inflation. In an age of austerity, I would think that quickly leads to widespread social instability.

"Hot is Cold; Freedom is Slavery; Ignorance is Strength."

With apologies to George Orwell. 1984.

Snow to hit Britain

Winter will come early to Britain next week as snow is forecast for the north while the south will shiver in frosty sub-zero nights.

Published: 3:21PM BST 13 Oct 2010

The cold snap will seem worse after temperatures soared to 75F (23C) last weekend.

Forecasters warned snow is due in Scotland and possibly northern England next week, with frost as far south as southern England, which will see bitter 48F (9C) daytime maximum temperatures.

A northerly air stream in the middle part of next week means coldest conditions will probably be in Scotland, with sleet or snow showers and snow settling on higher ground,” said forecaster Brian Gaze of independent forecasters The Weather Outlook.

“Even southern England will feel distinctly chilly."

Forecasters Positive Weather Solutions have already predicted a ‘white-out’ winter almost as harsh as last winter - with widespread snow, temperatures down to -4F (-20C) and transport chaos.

The Weather Outlook, which has an accurate seasonal forecasting record, warned the UK is now being gripped by a bitter series of winters comparable with the harsh 1939-42 winters which made conditions so horrendous during the Second World War.

Last winter was the coldest for 31 years, with an average UK-wide temperature of just 34F (1.5C).

“Winters were mostly milder than average from 1991 to 2007, but this changed with a colder winter in 2008-09 and last winter being the worst since 1978-79,” Mr Gaze said.

“History shows cold winters do tend to come in clusters, indicating underlying factors cause them to persist for a number of years.

“It’s unusual to have three consecutive cold winters, a good example of which are the 1939-40 to 1941-42 winters.

http://www.telegraph.co.uk/topics/weather/8061737/Snow-to-hit-Britain.html

Coldest winter in 1,000 years on its way

04 October, 2010, 07:20

After the record heat wave this summer, Russia's weather seems to have acquired a taste for the extreme.

Forecasters say this winter could be the coldest Europe has seen in the last 1,000 years.

The change is reportedly connected with the speed of the Gulf Stream, which has shrunk in half in just the last couple of years. Polish scientists say that it means the stream will not be able to compensate for the cold from the Arctic winds. According to them, when the stream is completely stopped, a new Ice Age will begin in Europe.Read more

So far, the results have been lower temperatures: for example, in Central Russia, they are a couple of degrees below the norm.

“Although the forecast for the next month is only 70 percent accurate, I find the cold winter scenario quite likely,” Vadim Zavodchenkov, a leading specialist at the Fobos weather center, told RT. “We will be able to judge with more certainty come November. As for last summer's heat, the statistical models that meteorologists use to draw up long-term forecasts aren't able to predict an anomaly like that.”

In order to meet the harsh winter head on, Moscow authorities are drawing up measures to help Muscovites survive the extreme cold.

http://rt.com/prime-time/2010-10-04/coldest-winter-emergency-measures.html/print

Another weekend and autumn is in full cry. The first icy blast of the winter to come is about to hit, just as Her Majesty’s coalition government is about to announce its draconian austerity cuts. Cuts that no party would talk about prior to last May’s election. Cuts that no party in the coalition has a true public mandate to carry out. Stay long precious metals against the coming public backlash. A backlash soon to catapult the UK into front position again in the international race to Reykjavik. Have a great weekend everyone. Time to see where I last left the snow shovel.

Rather more than a quarter of a year has passed since the new Government came into power in this country. What a cataract of disaster has poured out upon us since then!

With apologies to Winston S. Churchill. 1940.

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. September is the fourth down month in a row.

Wednesday, 6 October 2010

Buying Tangible Assets.

Baltic Dry Index. 2569 +91
LIR Gold Target by 2019: $3,000.

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

It’s time to buy tangible assets, think the world’s managers of smart money, as Japan kicks off a new race to the bottom in fiat currency devaluation. Below, the scandal tainted Frenchman running the IMF attempts to shut the stable door long after the horses have bolted. The Great Nixonian Error of fiat currency is deep into its final act of tragedy. But don’t tell anyone in the stock markets, where all news is now only good news. Time to swap yet more pictures of dead US white men for something real.

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

IMF chief fears risk of currency war after Japan's zero interest rate move

The Bank of Japan’s surprise move to reinstate zero interest rates has led to a warning of the danger of a currency war from the head of the International Monetary Fund.

By Philip Aldrick and Jonathan Russell Published: 11:34PM BST 05 Oct 2010

Dominique Strauss-Kahn warned that moves by central banks across the world to cut interest rates and carry out billions of pounds worth of quantitative easing could upset the global economy recovery as currencies chased each other ever lower.

In an interview with the Financial Times, he said: “There is clearly the idea beginning to circulate that currencies can be used as a policy weapon. Translated into action, such an idea would represent a very serious risk to the global recovery ... Any such approach would have a negative and very damaging longer-run impact.”

Japan surprised markets by adopting a zero interest rate policy and announcing plans for quantitative easing (QE) in an attempt to inject fresh stimulus into the economy.

The move led to an immediate fall in the value of the yen against the dollar.

The Japanese central bank has pledged to buy assets worth five trillion yen (£38bn) and cut its overnight rate to between zero and 0.1pc,from 0.1pc, reinstating the so-called “zero interest policy” that the Bank only ended in July 2006.

It will keep its benchmark rate effectively at zero until establishing price stability, adopting a similar loose policy commitment to the US Federal Reserve.

The size of the QE programme roughly matches the extra stimulus package desired by the Japanese government. Japan is running out of options as it seeks to reinvigorate its economy in the face of national debt running at twice the national output – the largest of the advanced economies.

-----Japan is not the only country enact policies that could suppress the value of its currency. Brazil recently threatened to intervene to keep the real down and earlier this week doubled taxes on foreign investors buying Brazilian bonds. The move was seen as way of stopping large inflows of foreign currency pushing up the value of the real.

Mr Strauss-Kahn was speaking ahead of this week’s IMF and World Bank annual meeting.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8045133/IMF-chief-fears-risk-of-currency-war-after-Japans-zero-interest-rate-move.html

Today we leave the last word on the fiat currency war to the hard working, tax paying Germans, new owners of the land formerly known as Greece. Will Germanic habits invade Greece, or Greek habits invade Germany?

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F.A. von Hayek

World Faces New Wave of Currency Wars

The Specter of Protectionism 10/05/2010

An American bill imposing punitive tarifs on countries that undervalue their currencies is set to unleash a new trade war between the US and China. But in fact the whole global currency system is in a state of jeopardy. As confidence in the dollar drops, private investors are putting their faith in gold. By SPIEGEL Staff.

At first glance, the new bill sounds perfectly innocuous. "H. R. 2378 -- Currency Reform for Fair Trade Act" was on the agenda of the US House of Representatives late last Wednesday afternoon. Fair trade -- who could object to that?

But as the representatives started debating, it didn't sound harmless anymore. In fact, it sounded like war.

"International trade is a high-stakes, cutthroat business. And every time we simply talk, the other side acts. And every time they act, an American loses a job," said Xavier Becerra, a Democratic congressman from California.

Timothy Murphy, a Republican from Pennsylvania, went one step further: "We are about to lose our position as a global leader when next year China overtakes us as the biggest manufacturer in the world. The trouble is that China has never really accepted the basic rules of fair trade."

Democrat Linda Sanchez from California argued: "Opponents say that this bill will start a trade war. I say, we are already in a trade war. And China is using cannons and we're standing here shooting (air gun) pellets."

More.

http://www.spiegel.de/international/world/0,1518,721044,00.html#ref=nlint

image-138065-galleryV9-shau

Banks' $4 trillion debts are 'Achilles’ heel of the economic recovery', warns IMF

More taxpayer support is needed to ensure global financial stability despite the billions already pledged, the International Monetary Fund has warned, as banks remain the “achilles heel” of the economic recovery.

By Philip Aldrick, Economics Editor Published: 2:27PM BST 05 Oct 2010

Lenders across Europe and the US are facing a $4 trillion refinancing hurdle in the coming 24 months and many still need to recapitalise, the Washington-based organisation said in its Global Financial Stability Report. Governments will have to inject fresh equity into banks – particularly in Spain, Germany and the US – as well as prop up their funding structures by extending emergency support.

“Progress toward global financial stability has experienced a setback since April ... [due to] the recent turmoil in sovereign debt markets,” the IMF said. “The global financial system is still in a period of significant uncertainty and remains the Achilles’ heel of the economic recovery.”

Although banks have recognised all but $550bn of the $2.2 trillion of bad debts the IMF estimates needed to be written off between 2007 and 2010, they are still facing a looming funding shock that will need state support. “Nearly $4 trillion of bank debt will need to be rolled over in the next 24 months,” the report says.

“Planned exit strategies from unconventional monetary and financial support may need to be delayed until the situation is more robust, especially in Europe... With the situation still fragile, some of the public support that has been given to banks in recent years will have to be continued.”

Although the IMF does not mention individual countries, it is clear it has concerns about the UK. According to the Bank of England, British banks need to refinance £750bn-£800bn of funding by the end of 2012, £285bn of which is emergency support that expires in the same period.

The IMF adds: “Without further bolstering of balance sheets, banking systems remain susceptible to funding shocks that could intensify deleveraging pressures and place a further drag on public finances and the recovery.”

http://www.telegraph.co.uk/finance/economics/8043800/Banks-4-trillion-debts-are-Achilles-heel-of-the-economic-recovery-warns-IMF.html

Elsewhere, smart money is moving itself into tangible assets of long term value. Why hold dodgy fiat currency if everyone and their dog is going to trash fiat currency in a futile effort to beggar their neighbor. Stay long precious metals. Gold has remonitised itself no matter what the central banksters think.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise."

Jerome F. Smith

Gold futures climb near $1,350 on Globex

Oct. 6, 2010, 1:18 a.m. EDT

TOKYO (MarketWatch) — Gold futures extended their record streak onto Globex during Asia’s Wednesday afternoon trading, with the Bank of Japan’s surprise cut in interest rates and further weakness in the U.S. dollar helping to lift prices for the precious metal to nearly $1,350 an ounce.

http://www.marketwatch.com/story/gold-futures-climb-above-1345-on-globex-2010-10-05

Copper hits 26-month high, but rally could stall

Long-term prospects for metal are bullish, but first, a correction?

SAN FRANCISCO (MarketWatch) -- Copper soared to a 26-month high on Tuesday, adding to a longer-term rally on the back of a weaker dollar that has made investing in commodities more appealing. But the metal could get a reality check in just a few days.

Analysts are quick to point out the fundamentals of the copper market bode well for sustained high prices. Supply has stalled, with very few new mines coming on line in a sector rife with labor disputes. There is enough demand from China alone to support strong prices for copper.

-----Copper rose 8.3% in September, following gains of 1.5% in August and 12% in July. So far this year, the metal has gained 11%, earning it a sure spot among 2010’s most lucrative investments.

Moreover, copper is generally seen as a harbinger of economic activity. The metal is sometimes called Dr. Copper — a nickname earned for its ability to run ahead of booms and busts because of its widespread use in building, manufacturing and electronics.

And at least one major investment bank thinks the rally has plenty of legs. Goldman Sachs, also a major commodities broker, on Tuesday increased its price targets for copper, making a case for long-term higher prices on supply constraints and hopes demand will pick up.

-----“Even relatively conservative demand forecasts suggest that the global copper market will sustain deficits large enough to mostly deplete exchange inventories over the next five quarters, leading to periods of extreme volatility and price spikes,” the Goldman analysts said.

They raised their price forecasts well past $8,000 per metric ton in the next three and six months, and pegged copper at $11,000 a metric ton in 12 months, or $5 a pound.

http://www.marketwatch.com/story/copper-extends-rise-but-short-term-dip-may-be-due-2010-10-05

Oil rallies to a five-month high

Traders will get their first look at inventories Tuesday afternoon

Oct. 5, 2010, 3:36 p.m. EDT

SAN FRANCISCO (MarketWatch) — Crude futures rose to a five-month high Tuesday, helped by a weaker U.S. dollar, bullish moves in global equities and hopes that the U.S. will soon follow Japan’s footsteps in expanding liquidity measures.

----Gasoline finished at a two-month high.

A surprise interest-rate cut in Japan helped set the tone, with the nation’s central bank pledging to buy assets while setting its key interest rate between zero and 0.1%.

A similar round of moves giving rise to currency devaluations in the U.S. and around the world — as well as tightening oil-market fundamentals — are likely to push prices even higher, analysts at J.P. Morgan wrote in a note Tuesday.

http://www.marketwatch.com/story/crude-resumes-gains-nears-82-a-barrel-2010-10-05

In food and weather news, bad news from the southern hemisphere where winter has turned into spring, and brought the worst late winter blizzard “in living memory”. New Zealand is a major supplier of lamb to the world and it is only a matter of time before the price of lamb will rise to reflect reduced supply.

NZ - Snow hits farmers big time

05 Oct 2010

Following a reasonably benign winter, the Southland region of New Zealand (NZ) has in the past week been hit by “the worst spring storm in living memory” according to the NZ Herald.

Six days of blizzards have caused deaths among new lambs numbering in the hundreds of thousands, and raised concern over the welfare of ewes yet to lamb.

Besides the effect of the cold weather itself, the continued snowfall has not allowed snow on the ground to thaw, making it much harder for stock to feed.

This makes ewes about to lamb particularly susceptible to metabolic illnesses from a lack of nutrients.

Reportedly, lamb mortality in the area may be as high as 15% for some farmers.

http://www.meattradenewsdaily.co.uk/news/051010/nz___snow_hits_farmers_big_time_.aspx

Bad news too for those of us fearing the arrival of global cooling. Is another hard back to back winter about to hit in the northern hemisphere?

Coldest winter in 1,000 years on its way

04 October, 2010, 22:20

After the record heat wave this summer, Russia's weather seems to have acquired a taste for the extreme.

Forecasters say this winter could be the coldest Europe has seen in the last 1,000 years.

The change is reportedly connected with the speed of the Gulf Stream, which has shrunk in half in just the last couple of years. Polish scientists say that it means the stream will not be able to compensate for the cold from the Arctic winds. According to them, when the stream is completely stopped, a new Ice Age will begin in Europe.Read more

So far, the results have been lower temperatures: for example, in Central Russia, they are a couple of degrees below the norm.

“Although the forecast for the next month is only 70 percent accurate, I find the cold winter scenario quite likely,” Vadim Zavodchenkov, a leading specialist at the Fobos weather center, told RT. “We will be able to judge with more certainty come November. As for last summer's heat, the statistical models that meteorologists use to draw up long-term forecasts aren't able to predict an anomaly like that.”

http://rt.com/prime-time/2010-10-04/coldest-winter-emergency-measures.html/print

"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."

Hans F. Sennholz

At the Comex silver depositories Tuesday, final figures were: Registered 52.26 Moz, Eligible 58.79 Moz, Total 111.05 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks or scoundrels today, at least not in the ordinary use of those words. Today, the latest news from the USA on renewable energy. The timing has all to do with getting access to expiring federal grants and loan guarantees for renewable energy. Still, the solar plants if built, will advance the solar technology database and as with all new technologies as they get adopted, will likely lead to big advances in solar power efficiency in the decade ahead. California today, America tomorrow, the rest of the world that day after. Well maybe not quite, but with a world heading towards a population of 9 billion by mid century, renewable energy has to be a part of meeting our future energy needs.

Solar Power Plants to Rise on U.S. Land

By FELICITY BARRINGER Published: October 5, 2010

SAN FRANCISCO — Proposals for the first large solar power plants ever built on federal lands won final approval on Tuesday from Interior Secretary Ken Salazar, reflecting the Obama administration’s resolve to promote renewable energy in the face of Congressional inaction.

Both plants are to rise in the California desert under a fast-track program that dovetails with the state’s own aggressive effort to push development of solar, wind and geothermal power. The far larger one, a 709-megawatt project proposed by Tessera Solar on 6,360 acres in the Imperial Valley, will use “Suncatchers” — reflectors in the shape of radar dishes — to concentrate solar energy and activate a four-cylinder engine to generate electricity.

A 45-megawatt system proposed by Chevron Energy Solutions and featuring arrays of up to 40,500 solar panels will be built on 422 acres of the Lucerne Valley. When complete, the two projects could generate enough energy to power as many as 566,000 homes.

Mr. Salazar is expected to sign off on perhaps five more projects this year; the combined long-term output of all the plants would be four times that of the first two.

“It’s our expectation we will see thousands of megawatts of solar energy sprouting on public lands,” he told reporters.

The announcement, which came shortly after the White House unveiled plans to install the latest generation of solar panels on the roof of its living quarters, reflects a need to enable solar manufacturers to break ground by the end of 2010 so they can share in soon-to-expire grants and loan guarantees for renewable energy.

Federal stimulus grants and federal loan guarantees could underwrite as much as hundreds of millions of dollars or more of the $2.1 billion Imperial Valley plant, said Janette Coates, a Tessera spokeswoman.

The decision also follows a long series of setbacks for climate and energy legislation in Congress. After passage of a House bill last year, efforts to advance a major emissions-reducing bill through the Senate collapsed over the summer for lack of votes linked to fears of a voter backlash.

In addition to the two plants approved Tuesday, projects that are poised to gain approval by the end of the year include BrightSource Energy’s proposed 370-megawatt Ivanpah facility, Tessera’s 850-megawatt Calico project, NextEra’s 250-megawatt Genesis Solar Energy Plant and Solar Millennium’s 1,000-megawatt Blythe project.

The next batch of approvals, Secretary Salazar said, “is something that is not months away.”

http://www.nytimes.com/2010/10/06/science/earth/06solar.html?hp

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. September is the fourth down month in a row.

Wednesday, 29 September 2010

War!

Baltic Dry Index. 2468 -36 29/9/10
LIR Gold Target by 2019: $3,000.

"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."

Elgin Groseclose

A fiat currency war has broken out, as more and more countries have joined the UK in manipulating its currency lower. But first this. Right on the heels of reading Goldman’s latest excellent, if gloomy report on the US economy:

Investment Strategy Group

US Economic and Equity Market Outlook

September 2010

I ran into the following equally dismal news portending imminent disaster in the US real economy. Far away from where Wall Street banksters ply their religion, the trucks of America have gone into reverse. Below, the wheels fly off the American Trucking Association’s tonnage index. The numbers might actually still be over optimistic due to the way the index is constructed. So why is the S&P 500 back near 1150 again? If the stock market is a forward looking indicator, right now it’s got its eyes tightly shut and blindfolded. As the month-end and end of quarter approaches, could it be that the professional money managing squids are busy dressing up the pig for their quarterly bonus?

ATA Truck Tonnage Index Plunged 2.7 Percent in August

September 28, 2010 4:00 PM

ARLINGTON, VA — The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index fell 2.7 percent in August, which was the largest month-to-month decrease since March 2009. The latest drop lowered the SA index from 110 (2000=100) in July to 106.9 in August.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 113.5 in August, up 3.2 percent from the previous month.

Compared with August 2009, SA tonnage climbed 2.9 percent, which was well below July’s 7.4 percent year-over-year gain. Year-to-date, tonnage is up 6.2 percent compared with the same period in 2009.

ATA Chief Economist Bob Costello said that August’s data highlights that the economy, while still growing, is slowing.

----Note on the impact of trucking company failures on the index: Each month, ATA asks its membership the amount of tonnage each carrier hauled, including all types of freight. The indexes are calculated based on those responses. The sample includes an array of trucking companies, ranging from small fleets to multi-billion dollar carriers. When a company in the sample fails, we include its final month of operation and zero it out for the following month, with the assumption that the remaining carriers pick up that freight. As a result, it is close to a net wash and does not end up in a false increase. Nevertheless, some carriers are picking up freight from failures, and it may have boosted the index. Due to our correction mentioned above, however, it should be limited.

Trucking serves as a barometer of the U.S. economy, representing 68 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

http://www.truckline.com/pages/article.aspx?id=791%2F%7B8E1C7279-ED27-4C03-B189-CEEEE26BBB12%7D

Below, another explanation for the S&P 500 at 1150 in the face of an economy heading into a double dip. Thankfully it’s only fiat money, and there’s plenty more where that comes from.

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

‘Stealth QE’ in fact never ended

-----American QE1 officially ended last March, but between April 1st and 22nd July, the Fed's own stats show that it greased the New York markets by continuing to buy Wall St banking debts - to the tune of $130 billion during that four-month period. Over a year, given lighter trading in some summer months, that would be equivalent to a half-trillion dollar QE exercise. QE1 contained $1 trillion worth of expiration purchases - so in real terms, a secret arrangement has continued QE at a roughly 50% level. The mini bail-outs ended in August - by which time the White House team had already decided on some form of QE2 anyway - details of which The Slog covered yesterday.

What makes the allegations especially damning is that ALL the big Federal Treasury bank payments were made during weeks when loss-making options were due to expire. Thus the major banks had most of their trading mistakes settled....the price for this action being that the monies must go back into stock purchases. This they duly did - creating the rally that never was. Effectively, investors who became bullish during that time have been cheated by the US Government....a scam the taxpayers underwrote without any knowledge of it.

While firms such as Goldman Sachs, Credit Suisse, J P Morgan and BoA were paying their staff vast bonuses, ordinary Americans were struggling to avoid foreclosure - but unwittingly ensuring the payment of those bonuses. The banks simply couldn't lose.

Now, however, Slog sources in the US insist that Ben Bernanke's secret slush-fund operation started up again last week, when some $15-20 billion were again 'given' to the primary banks.

"It's a sweet deal," an informant told us, "in that just like with the banks buying low-cost US securities, everyone wins. The Feds clear all the debts and the Banks keep buying the stocks."

http://nbyslog.blogspot.com/2010/09/revealed-how-bernanke-propped-up-stock.html

Now back to the currency wars.

"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."

Leonard Read

Capital controls eyed as global currency wars escalate

Stimulus leaking out of the West's stagnant economies is flooding into emerging markets, playing havoc with their currencies and economies

By Ambrose Evans-Pritchard Published: 6:00AM BST 29 Sep 2010

Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows.

Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. "It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries," he said.

"I worry that we are on the cusp of a competitive race to the bottom as country after country feels they need to keep up."

Brazil's finance minister Guido Mantega has complained repeatedly over the past month that his country is facing a "currency war" as funds flood the local bond market to take advantage of yields of 11pc, vastly higher than anything on offer in the West.

"We're in the midst of an international currency war. This threatens us because it takes away our competitiveness. Advanced countries are seeking to devalue their currencies," he said, pointing the finger at America, Europe and Japan. He is mulling moves to tax short-term debt investments.

Goldman Sachs said net inflows have been running at annual rate of $520bn (£329bn) in Asia over the last 15 months, and $74bn in Latin America. Intervention to stop it creates all kinds of problems so the next step may be "direct capital controls", the bank warned.

----"Everybody is worried that global growth is fading and they are trying to use exchange rates to protect exports. Brazil has watched as the Asians intervened and feels it can't stand by," said Ian Stannard, a currency expert at BNP Paribas.

Brazil has used taxes to slow the capital inflows but the allure of super-yields and the country's status as a grain, iron ore, and commodity powerhouse have proved irresistible. It is a textbook case of the "resources curse" that can afflict commodity producers.

A $67bn share issue by Petrobras has been a fresh magnet for funds, forcing the central bank to buy an estimated $1bn of foreign bonds each day over the past two weeks. Such action is hard to "sterilise" and can it fuel inflation.

Japan has begun intervening to stop the yen appreciating to heartburn levels for Toyota, Sharp, Sony and other exporters. A strong yen risks tipping the country deeper into deflation.

Switzerland spent 80bn francs in one month to stem capital flight from the euro, only to be defeated by the force of the exchange markets, leaving its central bank nursing huge losses.

Stephen Lewis from Monument Securities said the Fed is playing a risky game toying with more QE. There are already signs of investor flight into commodities. The danger is a repeat of the spike in 2008, which was a contributory cause of the Great Recession.

http://www.telegraph.co.uk/finance/economics/8031203/Capital-controls-eyed-as-global-currency-wars-escalate.html

We end for the day with “better” news. Der Spiegel’s interview with the head of Volkswagen. Like me Mr. Winterkorn thinks hybrid cars will lose out to eventually to the arriving electric car. Tomorrow will not be like today which was like yesterday.

SPIEGEL Interview with VW Chief Martin Winterkorn

'The Next Step Is the Electric Car'

09/28/2010

SPIEGEL: Still, many companies are only providing their top managers with company cars with hybrid engines. The Mercedes-Benz S Class and the BMW 7 Series are available with hybrid engines, but the Audi A8 isn't.

Winterkorn: It will become available soon as a hybrid vehicle, as will the new A6. All the excitement over hybrids will settle down once people realize that this is a bridge technology. The next big step is the electric car.

SPIEGEL: The car bodies need to be lighter so that electric vehicles can have a sufficient range. But BMW is also at the forefront when it comes to lightweight construction, an Audi specialty for years. BMW is developing models with carbon fiber bodies that weigh significantly less than Audi's aluminum cars.

Winterkorn: Audi has long been using parts made of carbon fibers, in the A8, for example. Lamborghini makes an entire body out of carbon fibers. We have mastered this technology. So far our competitors have only offered announcements. They still have to prove that they can produce a car for the mass market with a carbon fiber body at a reasonable cost.

More.

http://www.spiegel.de/international/business/0,1518,719730,00.html#ref=nlint

No update tomorrow due to travel. On what promises to be the wettest day of the week in an wet week, your hapless writer sets out in search of fame and fortune and a warm bar. More on Friday.

At the Comex silver depositories Tuesday, final figures were: Registered 53.78 Moz, Eligible 56.68 Moz, Total 110.46 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks or scoundrels today, just virtuous, hard working, modern reunified Germany getting set to pay off its last remaining debt from World War One. Yes that’s WW1 which ended with the armistice of 11/11/1918 and was formally brought to an end with the Treaty of Versailles in 1919. A lesson for all in the financial cost of war.

Though Germany got all the blame for starting WW1, it was actually the Austrians who started it 4 years earlier, when they refused to accept Serbia’s groveling acceptance of all but one of Austria’s demands following the assassination of Archduke Ferdinand and his wife Sophie in Sarajevo on the 28th of June 1914. Serbia was complicit in the murders. But Germany was also all out for war to crush Russia’s ally Serbia. Ironically, Archduke Ferdinand had been an advocate of Austria reaching an accommodation with Serbia, and had argued that any war with Serbia would bring in Russia setting off a generalized European war to the detriment of all. He never lived to see just how right he was.

Wilhelm II declared on July 4 that he was entirely for “settling accounts with the Serbia”. He ordered the German ambassador in Vienna, Count Heinrich von Tschirschky, to stop advising restraint, writing that “Tschirschky will be so good to drop this nonsense. We must finish with the Serbs, quickly. Now or never!”. In response, Tschirschky told the Austro-Hungarian government that same day that “Germany would support the Monarchy through thick and thin, whatever action it decided to take against Serbia. The sooner Austria-Hungary struck, the better”. On July 5, 1914, Count Moltke, the Chief of the German General Staff, wrote that “Austria must beat the Serbs”.

Germany Closes Book on World War I With Final Reparations Payment

By David Crossland 09/28/2010

Germany will make its last reparations payment for World War I on Oct. 3, settling its outstanding debt from the 1919 Versailles Treaty and quietly closing the final chapter of the conflict that shaped the 20th century.

Oct. 3, the 20th anniversary of German unification, will also mark the completion of the final chapter of World War I with the end of reparations payments 92 years after the country's defeat.

The German government will pay the last instalment of interest on foreign bonds it issued in 1924 and 1930 to raise cash to fulfil the enormous reparations demands the victorious Allies made after World War I.

The reparations bankrupted Germany in the 1920s and the fledgling Nazi party seized on the resulting public resentment against the terms of the Versailles Treaty.

The sum was initially set at 269 billion gold marks, around 96,000 tons of gold, before being reduced to 112 billion gold marks by 1929, payable over a period of 59 years.

Germany suspended annual payments in 1931 during the global financial crisis and Adolf Hitler unsurprisingly declined to resume them when he came to power in 1933.

But in 1953, West Germany agreed at an international conference in London to service its international bond obligations from before World War II. In the years that followed it repaid the principal on the bonds, which had been issued to private and institutional investors in countries including the United States.

Under the terms of the London accord, Germany was allowed to wait until it unified before paying some €125 million in outstanding interest that had accrued on its foreign debt in the years 1945 to 1952. After the Berlin Wall fell and West and East Germany united in 1990, the country dutifully paid that interest off in annual instalments, the last of which comes due on Oct. 3.

----- France and Britain needed the reparations to repay their own debts. Both countries had borrowed vast sums from the US during the war. Germany only settled about an eighth of its treaty obligations by the time it suspended payments.

http://www.spiegel.de/international/germany/0,1518,720156,00.html#ref=nlint

As a "Czech countess [she] was treated as a commoner at the Austrian court". Emperor Franz Joseph had only consented to their marriage on the condition that their descendants would never ascend the throne. The 14th anniversary of the morganatic oath fell on 28 June. As historian A. J. P. Taylor observes:

[Sophie] could never share [Franz Ferdinand's] rank ... could never share his splendours, could never even sit by his side on any public occasion. There was one loophole ... his wife could enjoy the recognition of his rank when he was acting in a military capacity. Hence, he decided, in 1914, to inspect the army in Bosnia. There, at its capital Sarajevo, the Archduke and his wife could ride in an open carriage side by side ... Thus, for love, did the Archduke go to his death.

The monthly Coppock Indicators finished August:

DJIA: +243 Down. NASDAQ: +366 Down. SP500: +243 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. August is the third down month in a row and “crash season” approaches.