Goodnight Euro.

Baltic Dry Index. 2069 -07

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

Gracie: Well, I sent your handwriting in to be analyzed, and you’re in the wrong business. You have the hands of a surgeon.

Trichet: What?

Gracie: Your handwriting has revealed the inner you, the real Jean-Claude Trichet. You were never meant to be a bankster. That’s why people laugh at you.

With apologies to Burns and Allen.

Today, the sad state of Europe. No words need from me today, this selection of today’s news says it better than anything I could add. The Euro is a dead currency on ECB life support just waiting for the day that they pull out the plug. Stay long physical gold and silver.

“The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

DECEMBER 15, 2010, 2:28 A.M. ET

Moody's Threatens Spain Downgrade

Moody's Investors Service warned Wednesday it may downgrade Spanish government debt, citing the country's refinancing needs next year and the strain of recapitalizing its debt-strapped banks.

The ratings company put on review for possible downgrade the Aa1 local and foreign-currency ratings on the debt of the Spanish government and the government-guaranteed Fund for Orderly Bank Restructuring (FROB) bank-bailout fund. The move hurt the recently steady euro by highlighting concerns over the spread of the European debt crisis from peripheral countries like Greece to bigger nations closer to the euro-zone core.

Moody's said a downgrade could be triggered by "Spain's vulnerability to funding stress given its high refinancing needs in 2011," a problem that "has recently been amplified by fragile market confidence."

Spain's debt problem could worsen "should the cost of bank recapitalization prove to be higher than expected," Moody's said in a press release, adding that there are concerns whether Spain can achieve the needed "sustainable and structural improvement."

"However, Moody's also wants to stress that it continues to view Spain as a much stronger credit than other stressed euro-zone countries," said Kathrin Muehlbronner, Moody's lead analyst for Spain. "This is reflected in the significantly higher rating for the Spanish sovereign."

The agency "does not believe that Spain's solvency is under threat," she said, and the "base-case assumptions" don't assume Spain will need liquidity support from the European Union's €440 billion ($588.76 billion) European Financial Stability Facility, she said.

More

http://online.wsj.com/article/SB10001424052748704828104576020752591067510.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Eurozone debt crisis spreads to Belgium on rising political risk

Europe's debt woes have moved closer to the core of monetary union after Standard & Poor's threatened to downgrade Belgium over the failure of Flemings and Walloons to form a government.

By Ambrose Evans-Pritchard 6:11AM GMT 15 Dec 2010

The warning comes a day after the International Monetary Fund said Belgium "urgently needed" to control spending as public debt pushes above 100pc of GDP. "A clear plan is needed to contain contagion from abroad," it said.

The yield spread on Belgian 10-year bonds has ballooned to 102 basis points over German Bunds, raising fears of a funding squeeze next year. S&P said the country needs to refinance debt equal to 11pc of GDP next year, leaving it "exposed to rising real interest rates".

"It's ugly for our reputation," said Jean Deboutte, head of Belgium's debt office. "This is bearable but the premiums are mounting little by little."

The country has been limping along with caretaker ministers since Flemish separatists emerged as the biggest party in June. Talks have broken down over the scale of subsidies to the poorer French-speaking areas, making Belgium a microcosm of EMU's North-South divide.

It is unclear whether the political system can muster the discipline of the early 1990s when Belgium came back from the brink of a debt compound spiral with an impressive fiscal squeeze.

"We believe Belgium's prolonged domestic political uncertainty poses risks," said S&P. "Belgium's current caretaker government may be ill-equipped to respond to shocks to public finances. If Belgium fails to form a government soon, a downgrade could occur, potentially within six months."

----- Jean-Claude Trichet, head of the European Central Bank (ECB), said a "quasi-fiscal union" may now be required to stabilise the eurozone's debt markets, adding the EU's €440bn rescue fund should be deployed with "maximum flexibility", and beefed up in "quantity and quality".

Mr Trichet hopes to prod political leaders into authorising use of the fund for pre-emptive purchases of bonds, perhaps from Spain, relieving the ECB of its lonely burden. The ECB has been stuck with the task of propping up the banks and debt markets of peripheral Europe, conducting a fiscal rescue without a legal mandate and on slender resources.

Officials are mulling plans to raise the ECB's capital to cope growing liabilities, which means asking member states to provide fresh money. Its capital base is just €5.8bn, compared with the US Federal Reserve's $57bn (£36bn).

More

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8202422/Eurozone-debt-crisis-spreads-to-Belgium-on-rising-political-risk.html

Germany Opposes Bailout Boost in Face-Off With ECB

Dec. 15 (Bloomberg) -- Germany stiffened its opposition to expanding government-financed aid for debt-plagued euro nations, leaving the European Central Bank to shoulder the bulk of the burden of fighting the crisis.

With Chancellor Angela Merkel ruling out an increase in the euro area’s 750 billion-euro ($1 trillion) emergency fund, Germany yesterday put the spotlight on the ECB by endorsing a possible boost in its capital.

Discord between Merkel and ECB President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker on the eve of a European Union summit evokes the tensions during the first phase of the debt crisis, when Germany held out for more than two months before consenting to a loan package for Greece.

“The consequence is a stalemate that leaves us with a familiar sense of déjà vu,” Ken Wattret, chief euro-area economist at BNP Paribas SA in London, said in a note to investors. “Market tensions are likely to resurface, as governments remain very publicly divided on the appropriate way forward.”

The euro weakened after Moody’s Investors Service said today it may cut Spain’s Aa1 credit rating. The country lost its top rating in September. The currency declined 0.5 percent to $1.3312 at 7:35 a.m. in London.

The review is “not good for spreads or the euro,” Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London wrote in an e-mailed note.

More

http://noir.bloomberg.com/apps/news?pid=20601087&sid=a_9G0sqSK.Ds&pos=3

New general strike brings Greece to a halt

AP Wednesday, 15 December 2010

A new general strike hit Greece today, grounding flights and disrupting hospital and transport services as unions protested against freshly approved labour reforms amid painful austerity and rising unemployment.

Security is tight in central Athens, where two separate demonstrations are planned. Previous protests have been marred by violence, and in May three people died in a bank torched by rioting demonstrators.

The new general strike is the seventh organised this year by unions appalled at a wave of austerity measures meant to pull Greece out of its worst financial crisis since the Second World War.

All air, rail and ferry services have been cancelled, while traffic in Athens is being severely disrupted as public transport workers and taxi drivers walk off the job for hours. Journalists are also holding a 24-hour strike, causing TV, radio and internet news blackouts, and newspapers will not be published on Thursday.

Crippled by high budget deficits and a mountain of debt, Greece was saved from bankruptcy in May by a 110 billion euro international rescue loan package. In return, the Socialists slashed pensions and salaries, hiked taxes, raised retirement ages and eased restrictions on private sector layoffs.

Late yesterday, the government won a key vote in parliament on a fresh labour reform package that includes fresh pay cuts, salary caps and involuntary staff transfers at state companies. The new law also reduces unions' collective bargaining powers in the private sector, where employers will be able to substantially reduce salaries.

All opposition parties opposed the reforms, which left-wing parties claim will take labour relations "back to the Middle Ages".

http://www.independent.co.uk/news/world/europe/new-general-strike-brings-greece-to-a-halt-2160808.html

Silvio Berlusconi vote sparks violence in Rome

Silvio Berlusconi narrowly won a vital no confidence vote yesterday following a series of sex and corruption scandals sparking chaos inside the Italian parliament and violent protests on the streets of Rome.

By Nick Squires, Rome 5:45PM GMT 14 Dec 2010

The margin of victory was so razor-thin that Mr Berlusconi remains the leader of a lame-duck government which was declared "clinically dead" by the opposition.

After months of political crisis, the prime minister scraped through by just three votes in the lower house of parliament, where his once-guaranteed majority was shattered by a split with his one-time ally, Gianfranco Fini, during the summer.

Mr Berlusconi's government defeated the no confidence motion by just 314 votes to 311. It won a similar vote in the upper house of parliament with a more comfortable majority.

Voting had to be suspended at one point in the Chamber of Deputies after a scuffle broke out between MPs when a member of Mr Fini's breakaway party took the surprise decision to vote for the government.

Catia Polidori broke ranks with her colleagues and cast her vote in favour of Mr Berlusconi, prompting jeers and accusations of bribery, with scuffles erupting between rival groups of MPs. One of her colleagues called her a "whore" while others shouted "shame".

Outside the Italian parliament, around 100,000 students and demonstrators clashed with police as they railed against the government, in particular its plans to cut university funding.

They hurled stones, bottles, paint bombs and fire crackers at police and threw uprooted traffic signals through the windows of banks, including a branch of Barclays close to the Vatican.

As word spread that Mr Berlusconi had won the vote, demonstrators banged on the metal blinds of shuttered shops and surged towards symbols of authority such as the two houses of parliament, daubing them with paint.

They fought running battles along Via del Corso and in Piazza del Popolo, close to the Spanish Steps, digging up cobblestones and throwing them at riot police, who responded with tear gas and baton charges.

http://www.telegraph.co.uk/news/worldnews/europe/italy/8201929/Silvio-Berlusconi-vote-sparks-violence-in-Rome.html

"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

At the Comex silver depositories Tuesday, final figures were: Registered 47.75 Moz, Eligible 58.09 Moz, Total 105.84 Moz.

+++++

Crooks and Scoundrels Corner.

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

"The dollar will be wiped out."

Dr. Franz Pick (After President Nixon severed the gold link.)

US will lose AAA credit rating, says M&G's Jim Leaviss

A leading fund manager has warned that the world's largest economy will be downgraded within two years because of its high levels of debt.

By Philip Aldrick 6:11AM GMT 15 Dec 2010

Jim Leaviss, head of retail fixed interest at M&G, the fund management arm of the Prudential, said France remains "the AAA economy closest to a downgrade" and that the US "will lose its AAA rating – but not in 2011" as the two countries grapple with debt.

Although the UK is under pressure, he believes, he did not state whether it would also lose its rating.

His concern is that "economic growth will not make the inroads ... that the central banks want to see". However, he does not believe there will be a double-dip recession in any of the three countries. "These economies will continue a period of expansion that is sub-trend," he said.

The UK, he predicts, will see "a renewed bout of quantitative easing" even though "inflation will remain above target at a headline level".

http://www.telegraph.co.uk/finance/economics/8202225/US-will-lose-AAA-credit-rating-says-MandGs-Jim-Leaviss.html

"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."

Oakley R. Bramble

The monthly Coppock Indicators finished November:

DJIA: +178 Down. NASDAQ: +247 Down. SP500: +167 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. November is the sixth down month in a row.

Technorati Tags: Euro crisis calamity,Spain downgrade,Belgian downgrade,German austerity,Italy riots,USA warning,gold and silver,global cooling

The Nuke Option.

Baltic Dry Index. 2099 -46

LIR Gold Target by 2019: $30,000. Revised.

The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.

Walter Bagehot.

Today the nuke option, and no we are not talking about Mrs Palin’s dangerous coded call for someone to take out Wikileaks founder. Today’s nuke option is the call by more and more of Europe’s frightened banksters and dodgy leaders to abandon German economic sanity and go whole hog for Italy’s Lira solution. More on that later.

First this bad news from Asia. China excepted, East Asia is starting to slow. Very bad news for a Europe setting out on the yellow brick road of austerity. Below, Reuters with yesterday’s scary news. Our western stock markets are not priced for trouble in Asia. They are not priced for anything but the Fed forever propping up US stocks.

"We are in a world of irredeemable paper money - a state of affairs unprecedented in history."

John Exter

Japan, S.Korea factory output slumps as Asia shifts down

* Japan Oct factory output drop sharpest since Feb 2009

* S.Korea industrial output falls 3rd month in row

* Japan, Korea data follow Q3 slowdown in much of Asia

* Japanese Nov export orders gauge weakest in year

* India stands out, growth stronger than expected (Updates with India July-Sept GDP)

By Stanley White and Kim Yeonhee

TOKYO/SEOUL, Nov 30 (Reuters) - Factories in Japan and South Korea cut output in October, adding to evidence of an Asia-wide slowdown and boding ill for the rest of the world that has relied on the region to keep the global economy humming.

Japanese companies cut production for the fifth month and by the biggest margin since February 2009, while South Korea's industrial output fell for the third month in a row, disappointing markets which had bet on a rebound.

In contrast, India asserted itself as a regional standout, reporting on Tuesday that its economy grew 8.9 percent in the past quarter from a year earlier.

Asia's third-largest economy handily beat market forecasts, but it has a long way to go to become a global source of demand that could fill the void left by debt-ridden Europe and the United States, which are struggling to take off.

The fall in Japan's output was expected -- in fact a drop of 1.8 percent was smaller than the forecast 3.3 percent decline -- after a key stimulus measure, incentives for buyers of fuel-efficient cars, expired in September, and exports continued to cool.

More.

http://www.reuters.com/article/idUSL3E6MU05H20101130

Now back to why Europe’s leaders, banksters and squids have gone into full panic mode. But even if we rebrand the Euro the Lira, would it do more than buy a year for the dying Euro? Will it even buy a year? Stay long physical gold and silver.

"The gold standard, in one form or another, will prevail long after the present rash of national fiats is forgotten or remembered only in currency museums."

Hans F. Sennholz

Ireland's Debt Servitude

By Ambrose Evans-Pritchard Last updated: November 30th, 2010

Stripped to its essentials, the €85bn package imposed on Ireland by the Eurogroup and the European Central Bank is a bail-out for improvident British, German, Dutch, and Belgian bankers and creditors.

The Irish taxpayers carry the full burden, and deplete what remains of their reserve pension fund to cover a quarter of the cost.

This arrangement – I am not going to grace it with the term deal – was announced in Brussels before the elected Taoiseach of Ireland had been able to tell his own people what their fate would be.

The Taoiseach said afterwards that Brussels had squelched any idea of haircuts for senior bondholders: a lack of “political and institutional” support in his polite words: or “they hit the roof”, according to leaks.

One can see why the EU authorities reacted so vehemently. Such a move at this delicate juncture would have set off an even more dramatic chain reaction in the EMU debt markets than the one we are already seeing.

It is harder to justify why the Irish should pay the entire price for upholding the European banking system, and why they should accept ruinous terms.

I might add that if it is really true that a haircut on the senior debt of Anglo Irish, et al, would bring down the entire financial edifice of Europe, then how did any of these European banks pass their stress tests this summer, and how did the EU authorities ever let the matter reach this point? Brussels cannot have it both ways.

More

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100008812/irelands-debt-servitude/

Portugal banks face 'intolerable' risk unless austerity measures are implemented

Portugal's central bank has given warning that the country's banking sector faces "intolerable" risk unless its government implements planned austerity measures, as continuing fears for the health of the eurozone dragged the euro to a 10-week low against the dollar.

By Emma Rowley 9:00PM GMT 30 Nov 2010

Failure to consolidate the public finances will put the country's banks in danger, the Bank of Portugal said in a report, which followed Prime Minister Jose Socrates last week pushing through an austerity budget.

The Portuguese government says no bail-out is needed, but markets are already pointing the finger at the country as the next to follow Greece and Ireland in requesting a rescue package.

"The risk will become intolerable if we do not see the implementation of measures that consolidate public finances in a credible and sustainable way," the central bank said.

Ratings agencies have downgraded Portugal's sovereign debt, leaving its banks shut out from market funding and reliant on the European Central Bank (ECB) for their borrowing needs.

The banks must address this dependency, the central bank said, as "large-scale and permanent use of financing from the Eurosystem is unsustainable".

Meanwhile, Spanish lenders are now paying the biggest premium ever on their debt compared with other banks in Europe - a record 166 basis points more than the average for other euro lenders, according to Bank of America.

The warnings came as the euro dropped below the $1.30 mark for the first time since the middle of September, while fears over the eurozone's debt crisis pushed bond yields - the rewards investors demand to take on the debt - to new highs. The spreads between Spanish and Italian 10-year bond yields over the German benchmarks widened to the biggest levels since the euro was launched in 1999 - around 3 and 2.1 percentage points respectively.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8171455/Portugal-banks-face-intolerable-risk-unless-austerity-measures-are-implemented.html

Mounting calls for 'nuclear response' to save monetary union

As Europe's debt crisis spreads ever wider, the EU authorities are coming under intense pressure to move beyond piecemeal rescues and resort to radical action on a nuclear scale.

By Ambrose Evans-Pritchard 6:00AM GMT 01 Dec 2010

Spain's former leader Felipe Gonzalez warned that unless the European Central Bank steps into the market with mass bond purchases, the EMU system will lurch from one emergency to the next until it blows up.

Alluding to Portugal and Spain, he said a third country will need a rescue as soon as "January or February", and fourth soon after, at which point it will "contaminate the whole of Europe and get out of hand".

"If the ECB bought just a third as much public debt as the US Federal Reserve is doing, we could stop the speculation," he said.

Willem Buiter, chief economist at Citigroup, said Greece, Ireland and Portugal are all insolvent already, and Spain is close behind. The combined rescue needs of these countries is likely to exhaust the EU's €440bn (£368bn) bail-out fund, which in reality has just €250bn in usable money.

"Once Spain needs assistance, the support of the ECB will be critical. As the sole source of unlimited liquidity and as an institution that can take decisions without the need for political or popular approval, it is the only institution that can take actions of sufficient size and with sufficient speed to stave off major financial instability," he said.

Dr Buiter said the rescue packages for Greece and Ireland put off the day of reckoning. At some point creditors will have to take their punishment. While Europe is now the epicentre of the debt crisis, concerns may ultimately spread to Japan and the US. "There is no such thing as an absolutely safe sovereign," he said.

He said the ECB would have to continue propping up the banking systems of crippled eurozone states - whether it liked it or not.

----There was a whiff of systemic contagion as Belgian yields blew through 4pc, drawing unwelcome attention to a country that has not had a government for five months and appears to be sliding towards Flemish-Walloon dissolution.

"The big change is that Belgium has gone from being the weakest of the strong group to the best of the weak group", said Koen Van de Maele from Dexia.

Most alarming is the surge in Italian yields to 4.7pc, raising fears that the world's third biggest debtor, with more than €2 trillion of outstanding bonds, could be drawn into the maelstrom.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8171403/Mounting-calls-for-nuclear-response-to-save-monetary-union.html#disqus_thread

A permanent Governor of the European Central Bank would be one of the greatest men in Euroland. He would be a little `monarch` in every City; he would be far greater than the Elected Leaders. He would be the personal embodiment of the ECB; he would be constantly clothed with an almost indefinite prestige. Every nation in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.

With Apologies to Walter Bagehot. Lombard Street. 1873.

At the Comex silver depositories Tuesday, final figures were: Registered 48.03 Moz, Eligible 59.97 Moz, Total 108.00 Moz.

+++++

Crooks and Scoundrels Corner.

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

While the world’s dodgy scientists and even dodgier politicians meet in Sun King luxury in sun drenched Cancun Mexico to discuss global warming, today we present the view facing the serfs of Europe. Carbon taxes anyone? Perhaps Europe’s shivering huddled masses yearning to be warm can burn some of Goldman’s carbon futures. But first this from the global warming nutters.

Snowfalls are now just a thing of the past

By Charles Onians Monday, 20 March 2000

Britain's winter ends tomorrow with further indications of a striking environmental change: snow is starting to disappear from our lives.

Sledges, snowmen, snowballs and the excitement of waking to find that the stuff has settled outside are all a rapidly diminishing part of Britain's culture, as warmer winters - which scientists are attributing to global climate change - produce not only fewer white Christmases, but fewer white Januaries and Februaries.

The first two months of 2000 were virtually free of significant snowfall in much of lowland Britain, and December brought only moderate snowfall in the South-east. It is the continuation of a trend that has been increasingly visible in the past 15 years: in the south of England, for instance, from 1970 to 1995 snow and sleet fell for an average of 3.7 days, while from 1988 to 1995 the average was 0.7 days. London's last substantial snowfall was in February 1991

Global warming, the heating of the atmosphere by increased amounts of industrial gases, is now accepted as a reality by the international community. Average temperatures in Britain were nearly 0.6°C higher in the Nineties than in 1960-90, and it is estimated that they will increase by 0.2C every decade over the coming century. Eight of the 10 hottest years on record occurred in the Nineties.

However, the warming is so far manifesting itself more in winters which are less cold than in much hotter summers. According to Dr David Viner, a senior research scientist at the climatic research unit (CRU) of the University of East Anglia,within a few years winter snowfall will become "a very rare and exciting event".

"Children just aren't going to know what snow is," he said.

http://www.independent.co.uk/environment/snowfalls-are-now-just-a-thing-of-the-past-724017.html

Now we now return to reality. Why would anyone pay any attention to anything put out by the now discredited Climate Research Unit of the dodgy science University of East Anglia.

Colder than Reykjavik: UK set for more snow as temperatures drop to -1C

Freeze spreads to London and the south, with arctic winds predicted to sweep in from northern Russia

Tuesday 30 November 2010 18.48 GMT

Fresh snowstorms are expected to continue for at least two more days across much of the United Kingdom, after 24 hours which saw falls in almost every part of the country.

Strengthening northeasterly winds have taken the national average temperature to –1C (30.2F), lower than Reykjavik in Iceland and parts of Greenland. These are expected to trigger a further week of cold weather payments to four million households.

For the first time in the current chill, the worst in November for 17 years, snow today reached London and England's most southerly counties. Roads, trains and airports including Heathrow and Gatwick were all seriously disrupted.

Trains were cancelled on Scotrail, the East Coast main line and four other operators, while delays and cancellations spread to Eurostar, on which there was upheaval during the cold snap last winter. Although the brunt of the weather continued to hit the eastern half of the country, temperatures plummeted on the west coast, too.

More

http://www.guardian.co.uk/uk/2010/nov/30/uk-snow-forecast-weather-freezing

Sweden braces for record freeze

Published: 30 Nov 10 10:43 CET

Stockholm is forecast to experience its coldest seasonal temperatures for over 100 years this week as winter weather takes hold of the country, according to the Swedish Meteorological Institute (SMHI).

Temperatures across the country are expected to drop to record lows for the first week of December, with the exception of the far north, with averages coming in 7-10 degrees Celsius below normal.
Stockholm registered -11 degrees Celsius at the weekend, the coldest November temperature since 1965 and the mercury is set to plunge further on Wednesday and Thursday, dropping as low as -15.
"It is far below average temperatures, which usually oscillate around zero at this time of the year," said Alexandra Ohlsson, a meteorologist with SMHI.
Dalarna and Jämtland in northern Sweden will also be hit with the harsh weather. The Storsjön lake in the heart of Jämtland's main city Östersund has already frozen over in most parts.
SMHI forecasted that in southern and central areas the cold will ease off somewhat come Friday. Northern Norrland will however drop to minus 14-17 degrees Celsius in the middle of the day.

More.

http://www.thelocal.se/30516/20101130/

Travel Chaos and Beauty 11/30/2010

Snow and Freezing Weather Hits Germany

Winter arrived early in Germany and much of Europe this week, causing thousands of accidents and travel chaos but also creating snowy landscapes of exquisite beauty. Temperatures are expected to remain well below freezing for the rest of the week and more snow is expected.

Winter hit Germany with a vengeance on Tuesday as heavy snowfall and freezing temperatures caused some 2,000 traffic accidents on icy roads and led to more than 250 flight cancellations at Frankfurt airport alone. At least three people died in accidents on icy roads.

Many roads and motorways became impassable due to ice and snowdrifts, and there were long traffic jams across the country. On the A-96 motorway near Munich, an accident cause a 10-kilometer tailback.

Some 200 passengers had to be evacuated from a high-speed ICE train near the Bavarian town of Kronach on Monday night after snow caused a tree to topple onto an overhead line. The train was stuck and temperatures inside fell sharply because of a power outage. The passengers were taken to a nearby school gymnasium and provided with hot drinks and food before they continued the journey in buses.

In the town of Sigmaringen in the southwestern state of Baden-Württemberg, the temperature plunged as low as 18 degrees Celsius below zero (-0.4 degrees Fahrenheit) on Monday night. More snowfall is expected in the coming days and it is forecast to get even colder.

In the eastern city of Leipzig, an initially harmless snowball fight among several dozen youths escalated into a full-blown riot involving 500 people in which stones, bottles and firecrackers were hurled.

http://www.spiegel.de/international/germany/0,1518,732088,00.html

Cold snap sends Europe into deep freeze

2010-12-01 00:12:57

BEIJING, Nov. 30 (Xinhua) -- An ongoing cold wave with heavy snow and record low temperatures has delayed air flights and snarled road travel across much of Europe.

The Danish National Observatory reported Monday that Northern Jutland reached minus 3.8 degrees Celsius on Nov. 27, Denmark's lowest reading in November in the past 120 years.

Meanwhile, a rare snowstorm with strong winds hit Copenhagen, the capital of Denmark, on Sunday. The storm blanketed Copenhagen with more than 10 cm of snow and temporarily closed the city's airport the next morning for the first time in 25 years.

Heavy snowfall caused the cancellation of 125 flights at the Munich airport in southern Germany on Monday, a spokesman said.

Capacities were halved at the airport so its two runways could be cleared of snow.

Road travel in the region was also hampered by accidents and long traffic jams, police said.

The snowfall caused more than 100 accidents, leading to many minor injuries. Roads were blocked by more than 50 lorries that crashed or got stuck in the snow.

Many provinces in western and central France have seen power outages in recent days because of the bad weather.

Meanwhile, in the Lorraine area in eastern France, some highways were closed because of snow and low temperatures.

At the same time, wintry weather also paralyzed public transportation in some cities in central France.

French health authorities also reported that a total of 54 people so far have been taken to hospitals for treatment after breathing carbon monoxide due to malfunctioning heating equipment.

Weather forecasters said the cold wave could stay in most parts of France for the next week. On Dec. 1 and Dec. 3, some areas could possibly see drop of temperatures to a record low.

----- In Poland and Czech, most areas suffered heavy snows last weekend. On Nov. 26 and 27, Austria and Switzerland also saw their first snow of the winter.

http://news.xinhuanet.com/english2010/world/2010-12/01/c_13629252.htm

Are Sunspots Different During This Solar Minimum?

-----But something is unusual about the current sunspot cycle. The current solar minimum has been unusually long, and with more than 670 days without sunspots through June 2009, the number of spotless days has not been equaled since 1933. [813 days through June 2010. GI]

----During the period from 1645 to 1715, the Sun entered a period of low activity now known as the Maunder Minimum, when through several 11- year periods the Sun displayed few if any sunspots. Models of the Sun's irradiance suggest that the solar energy input to the Earth decreased during that time and that this change in solar activity could explain the low temperatures recorded in Europe during the Little Ice Age.

----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.
http://rs6.net/tn.jsp?et=1102678927575&s=1&e=001UyfO_wN_C81IrqYbA3w8N3hkc9KCTd3b8zGDXYSyIqfs4WqgttvCceErdow7pOYUPq1VjzV52Gys14jzZ86u_Cfl4pUoOrsCLnR6j8T6J0sqSWAceSG0JDfK9x8Cij2iSMIUEfQlhro=

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way

A Tale of Two Cities. Charles Dickens

The monthly Coppock Indicators finished November:

DJIA: +178 Down. NASDAQ: +247 Down. SP500: +167 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. November is the sixth down month in a row.

Technorati Tags: East Asian slowdown,Irish Debt slavery,Euro crisis calamity,making the Euro a Lira,precious metals,global cooling,the new Dalton Minimum.

Euro – Too Big To Fail.

Baltic Dry Index. 2018 -109

LIR Gold Target by 2019: $3,000.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

George Papandreou, with apologies to Cary Grant. To Catch A Thief.

While the Baltic Dry Index fell for the 31^st consecutive day yesterday, something completely ignored by global stock markets everywhere, busy betting that the BDI is not signaling a trade slowdown ahead, Dutch bank ING released a report on Euroland’s Frankenstein currency. The Euro, according to ING, is simply “too big to fail.” Like it or not, and most German taxpayers don’t like it at all, hardworking taxpaying German milch cows are now learning the truth about their new European one size fits all currency, they are trapped in it forever, according to ING. Germans will just have to get used to working harder for longer, to support the Club Med way of high life. With banks issuing dire reports like this, does anyone really think that Club Med countries will really stick to their austerity programs for years to come, transforming themselves into little Bavaria’s along the way? Just by coincidence, the Greeks are revolting again today. Yet another reason to stay long precious metals. Poor Eurolander’s are now mere pawns of their elitist overlords in seriously crooked Brussels, home of magical unauditable accounting.

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

EMU break-up risks global deflation shock that would dwarf Lehman collapse, warns ING

A full-fledged disintegration of the eurozone would trigger the worst economic crisis in modern history, devastate every country in Europe including Germany, and inflict a deflationary shock on the US. There would be no winners, warns the Dutch bank ING in a new report "Quantifying the Unthinkable".

By Ambrose Evans-Pritchard Published: 6:55PM BST 07 Jul 2010

"Complete break-up would have effects that dwarf the post Lehman Brothers collapse. Governments would find themselves having to bail out banks again, worsening already fragile government finances. The risk of at least a temporary break-down in payments systems would be enormous, " said the report by Mark Cliffe, Maarten Leen, and Peter Vanden Houte.

"Initial trauma is sufficiently grave to give pause for thought to those who blithely propose EMU exit as a policy option," it said, a rebuke to those German politicians and economists who have talked openly of shaking out weaker members.

The new Greek drachma would crash by 80pc against the new Deutschemark. The currencies of Spain, Portugal, and Ireland would fall by 50pc or more, causing inflation to soar into double-digits. "The impact is dramatic and traumatic," it said.

ING has attempted to unpick the complex consequences of break-up scenarios, concluding that even a surgical exit by Greece alone would hurt everybody, and be suicidal for Greece. Both weak and strong states would suffer violent downturns if EMU unravelled altogether, though each in very different ways. "In the first year, output falls by between 5pc and 9pc across the various former member states," it said.

The German sphere would face a "deflationary shock". The US dollar would rocket to 85 cents against the euro equivalent, with a "temporary overshoot" to near 75 cents. This would tip the US into acute deflation, threatening North America with a double-dip recession. East Europe would contract 5pc in 2011 alone.

Safe-haven flows to core debt markets would drive down yields on 10-year US, German, and Dutch bonds to near 0.5pc, by far the lowest ever. Club Med yields would decouple brutally, rising to between 7pc and 12pc, "capital controls, notwithstanding."

This is the picture of a world falling apart. It is an outcome that Angela Merkel, the German Chancellor, now seems determined to avoid, after dragging her feet over the Spring. The Bundestag has backed Germany's share of the €110bn rescue for Greece, and the €750bn EU-IMF bail-out for future casualties should they need it. The Bundesbank has lifted its de facto veto on purchases of Club Med bonds by the European Central Bank.

-----The markets perhaps sense that the bail-out battles in Germany are not yet over. There are four complaints lodged at the German constitutional court arguing that the rescues breach EU treaty law and therefore German basic law. While the court has refused an immediate injunction to block aid, it has not yet ruled on the cases.

A group of five professors has just expanded its original complaint against the Greek rescue to cover the EU's €440bn Stability Facility, describing the methods used to ram through the measures as "putschist" and anti-democratic. "This course is leading Germany to ruin," they said.

------ING's global strategist Mark Cliffe said any Anglo-Saxon Schadenfreude at a euro break-up would be short-lived. The UK economy would shrink by 4.5pc from 2011-2012. "It would be a very unpleasant experience," he said.

Safe-haven flows pouring into Britain would drive sterling through the roof. Eurozone demand for UK exports would contract viciously. Pension funds would suffer fat losses on eurozone assets. UK lenders would face havoc again though a web of cross-border linkages.

The Dutch bank does not make any judgement on the merits of EMU, or on whether it is an 'optimal currency area', nor does it explore half-way options such as a split into a hard Teutonic euro and a weak Latin euro.

The report said break-up talk is "no longer just a figment of fevered Anglo-Saxon imaginations". It has spread into top policy-making circles in the eurozone and must now be analysed as a serious tail-risk.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7877724/EMU-break-up-risks-global-deflation-shock-that-would-dwarf-Lehman-collapse-warns-ING.html

My guess is that ING and the 40 Brussels thieves notwithstanding, the whole Euroland fiat currency scam will still collapse at some point ahead, undone by the EU’s never ending expansionist policy, and the willingness of most socialist EU political parties to endlessly seek re-election by bribing the voters with other people’s money.

The trouble with socialism is that eventually you run out of other people’s money.

Margaret Thatcher.

Below, Club Med’s leader Napoleon Bling, hits the headlines again for all the wrong reasons. A legend in the Elysee Palace, the big man of France was second only to the UK’s former Prime Minister Tony Blair in fawning over billionaires and US Presidents for freebies. Note, this writer has no idea or not, whether Ms Bettencourt did or did not avoid paying French tax, nor whether she arranged to send over bungs to the Elysee Palace to help with the grocery bill.

"We don't pay taxes. Only the little people pay taxes."

Leona Helmsley.

French public anger grows at government sleaze allegations

When a poll this week found two thirds of French people consider their politicians "mostly corrupt", many were surprised at how low the figure was.

Peter Allen, in Paris Published: 9:45PM BST 07 Jul 2010

Suspicions about financial irregularities have plagued Nicolas Sarkozy's administration since he came to power in 2007 and immediately awarded himself a 140 per cent pay rise.

It prompted Arnaud Montebourg MP to say: "You get the feeling that the political class is helping itself while the French people are abandoned on the edge of the pavement."

Within days of being elected, Mr Sarkozy was enjoying a holiday on the luxury yacht of Vincent Bolloré, the wealthy businessman.

For an egalitarian conservative whose campaign slogan had been "Work more, to earn more" the cruise certainly sent out all the wrong messages.

A whirlwind romance and then marriage to heiress Carla Bruni – one of the richest women in Paris thanks in part to the fortune built by her Italian industrialist father – did not help to improve Mr Sarkozy's image either.

While the French may just about be able to tolerate Mr Sarkozy's high-living, glitzy family and friends, it asks questions about the source of his own money which lies at the centre of the latest allegations against him, and his colleagues.

Mr Sarkozy does not come from a moneyed background. His father, Pál, was a Hungarian immigrant who was penniless when he arrived in Paris after the Second World War. After divorcing from Mr Sarkozy's mother, he left his family with very little money.

As a schoolboy in Paris, the future president said he frequently felt inferior to his wealthier classmates, and later admitted: "What made me who I am now is the sum of all the humiliations suffered during childhood."

But he has since earned a reputation as a "Bling Bling" statesman whose government is known for its links to billionaires and love of the good life.

It recently emerged that Christian Blanc, the minister for Paris, spent 12,000 euros of taxpayers' money on cigars.

Alain Joyandet, the International Development Secretary, meanwhile spent 116,500 euros on a private plane to take him to the Caribbean for a meeting about the Haiti earthquake.

Both resigned. However, questions remain about employment secretary Eric Woerth, who is facing allegations he "assisted" L'Oreal heiress Liliane Bettencourt in avoiding tax.

Mr Woerth is also said to have helped collect cash payments from Mrs Bettencourt to fund Mr Sarkozy's presidential election campaign.

While Mr Sarkozy recently announced cutbacks on ministers' perks, including official homes and cars, accusations that he personally received envelopes stuffed full of cash himself have plunged him into the deepest scandal of his presidency.

http://www.telegraph.co.uk/news/worldnews/europe/france/7877612/French-public-anger-grows-at-government-sleaze-allegations.html

In other EU news, was the latest news from Germany a blip or the start of something more? Either way, stock markets ignored it yesterday, but I suspect they will come to regret it ahead.

German Factory Orders Unexpectedly Fell in May

July 7 (Bloomberg) -- German factory orders unexpectedly fell for the first time in five months in May as demand for goods made in Europe’s largest economy waned across the 16- nation euro region.

Orders, adjusted for seasonal swings and inflation, declined 0.5 percent from April, when they rose a revised 3.2 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.3 percent gain for May, according to the median of 30 estimates in a Bloomberg News survey. From a year earlier, orders increased 24.8 percent.

Europe’s sovereign debt crisis has pushed the euro down 17 percent against the dollar since late November, making exports to countries outside the currency bloc more competitive just as the global recovery gathered pace. With governments cutting spending to convince investors that budget deficits are under control, growth in the euro area, Germany’s biggest export market, may slow.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=axrasGogNr0g

In also ignored US news:

US shopping center vacancy rates rose in 2nd qtr

Wed Jul 7, 2010 12:01am EDT

* U.S. strip mall vacancy hits 10.9 pct

* U.S. mall vacancy reaches 10-year high

* Recovery expected to be weak and prolonged

By Ilaina Jonas

NEW YORK, July 7 (Reuters) - Retailers shuttered more stores in U.S. shopping centers during the second quarter, further delaying a rebound in the struggling retail real estate market, according to research firm Reis Inc.

Shopping centers and strip malls have been pounded harder than other types of real estate, hurt by weak consumer spending, anemic job growth and an oversupply built to serve new housing that never materialized.

"Until we see stabilization and recovery take root in both consumer spending and business spending and employment, we do not foresee a recovery in the retail sector until late 2012 at the earliest," said Victor Calanog, Reis director of research.

For U.S. strip centers, the vacancy rate in the second quarter rose 0.10 percentage point from the first quarter to 10.9 percent, slightly below the 11 percent in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday.

http://www.reuters.com/article/idUSN0610302020100707

We end for the day with two of the best “informed” opinions around. Like the rebounding stock markets, canny Dutchman Willem Buiter, now chief economist dancing for his supper at Citigroup, doesn’t see a double-dip recession ahead.

Below that, “Investment Biker” Jim Rogers holds court with The Telegraph on his investment view from Singapore.

Willem Buiter: double-dip recession won't happen despite worry of 'noisy' market

Willem Buiter, chief economist at Citigroup and a former Bank of England policy-maker, said he does not believe there will be a global double-dip recession.

By Angela Monaghan Published: 9:31PM BST 07 Jul 2010

He said that the process of fiscal tightening planned in many countries was necessary but unlikely to tip economies back into contraction.

In recent weeks mounting fears of a double-dip have driven markets down, despite the fact economists widely believe that it is unlikely.

Mr Buiter said: "I view the markets as noisy children. You have to pay attention to them but you shouldn't take them too seriously. Markets have predicted eight of the last three recessions."

Referring to the UK, he said it would be "unwise" to close the Bank of England's Special Liquidity Scheme without putting something else in its place. The scheme provided the banks with £185bn of emergency funding in total, and comes to an end in 2012. Mervyn King, the Governor of the Bank of England has insisted in the past that the scheme would not be extended.

The Bank's Monetary Policy Committee is expected to leave interest rates on hold at 0.5pc on Thursday, as it weighs the fragility of the recovery against above-target inflation. It is also expected to maintain its quantitative easing target at £200bn of asset purchases.

http://www.telegraph.co.uk/finance/markets/7877937/Willem-Buiter-double-dip-recession-wont-happen-despite-worry-of-noisy-market.html

Jim Rogers: 'I don't have investments in the UK'

Legendary investment guru Jim Rogers set up one of the world's first hedge funds with George Soros in 1970.

By Justin Harper Published: 1:47PM BST 06 Jul 2010

After co-founding the famous Quantum Fund he has since amassed millions with his contrarian investment strategies.

The maverick investor started putting money into the Chinese economy long before it became popular with today's fund managers.

----- Do you still hold the view that the UK is finished?

Well, I don't have investments in the UK. I am put off by the gigantic debts built up in the last few years by the previous government. The numbers are truly staggering.

And the UK has had a balance of trade deficit for the last 25 years which has been growing over the years. It used to rely on North Sea oil to bolster its international earnings coupled with the City of London being a financial centre. But as these have declined I don't see anything replacing this revenue stream. I think the balance of trade and debt levels will get worse.

------Are you as downbeat about the rest of the world's economies?

I have not been buying stocks for at least a year and a half. Lying ahead I see more currency turmoil and the world economies' problems have still not been sorted out. I moved to Asia as I see massive opportunities here compared to Europe and the US.

Many Asian economies have been powering ahead while the rest of the world suffered. But Asian economies can't pull the world out of its hardships. Even with China and India booming these can't save the day for the rest of us. As Europe continues to have its problems everybody else is affected.

So do you see the balance of power shifting to Asia?

In the 1920s and 30s there was a shift in economic power from the UK to the US and the same thing is happening now to Asia. Few people realised it at the time and the same is true now. But the continent has some of the largest creditors in the world – Korea, China, Japan, Taiwan, Singapore etc all have surpluses while other major economies are massively in debt.

------But you've been buying the euro recently?

When no one wants something that should be a signal to buy it. Everyone has been selling the euro so I bought some, if only for the rally.

This doesn't mean that I think European governments have got their act together. Far from it. But the euro could go up from a rebound rally so that's why I'm interested.

But generally I think paper money is flawed. Nearly every currency in the world is flawed, the euro just happens to be less flawed than others.

I've also been buying the Danish Kroner and the Swedish Kronor but I'm not buying any more now.

So if you're not investing in equities where else are you putting your money?

There are lots of alternatives. I own gold and it is reaching an all-time high but that doesn't mean I'm about to sell it. While now might not be the best time to buy gold there are other precious metals that are well off their all-time highs.

Foe example silver is about 60pc off its all-time high so could be a buying opportunity. Anything that is so far off its all-time high gets me interested. Platinum and palladium are also nowhere near their historic highs.

-----And what lies in store for your homeland?

The US has similar problems to the UK with massive debt levels. In fact it is the biggest debtor the world has ever seen. So I have no investments there either.

But what really worries me is that some states, counties and cities have been or are on the verge of going bankrupt. California is much larger than Greece and we've seen the fallout from the Greek debt crisis.

A lot of promises have been made in these cities and states from both the public and private sector and these have been papered over. Greece has been going on about its debt for a decade and people weren't paying attention. The same is happening across the US. The Fed has already bailed out the banks and I wonder how its finances will cope once more bankrupt states and cities approach it.

http://www.telegraph.co.uk/finance/personalfinance/investing/7874935/Jim-Rogers-I-dont-have-investments-in-the-UK.html

At the Comex silver depositories Wednesday, final figures were: Registered 52.54 Moz, Eligible 61.36 Moz, Total 113.90 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks today, just a British senior civil servant exonerating the British dodgy climate science scientists, at the probity challenged Climatic Research Unit of the iffy University of East Anglia. Phew, for a while there we thought it was going to be a whitewash and cover up! So that’s alright then, makes one proud to see British fair play in action.

While giving evidence at the trial of Stephen Ward, charged with living off the immoral earnings of Keeler and Rice-Davies, the latter made a famous riposte. When the prosecuting counsel pointed out that Lord Astor denied an affair or having even met her, she replied, "Well, he would, wouldn't he?"

'Climategate' review clears scientists of dishonesty over data

'Rigour and honesty' of scientists not in doubt but Sir Muir Russell says UEA's Climatic Research Unit was not sufficiently open

David Adam, environment correspondent Wednesday 7 July 2010 13.02 BST

The climate scientists at the centre of a media storm were today cleared of accusations that they fudged their results and silenced critics to bolster the case for man-made global warming.

Sir Muir Russell, the senior civil servant who led a six-month inquiry into the affair, said the "rigour and honesty" of the scientists at the world-leading Climatic Research Unit (CRU) at the University of East Anglia (UEA) are not in doubt. They did not subvert the peer review process to censor criticism as alleged, the panel found, while key data needed to reproduce their findings was freely available to any "competent" researcher.

The panel did criticise the scientists for not being open enough about their work, and said they were "unhelpful and defensive" when responding to legitimate requests made under freedom of information (FOI) laws.

The row was sparked when 13 years of emails from CRU scientists were hacked and released online last year. Climate change sceptics claimed they showed scientists manipulating and suppressing data to back up a theory of man-made climate change. Critics also alleged that the scientists abused their positions to cover up flaws and distort the peer review process that determines which studies are published in journals, and so enter the scientific record. Some alleged that the emails cast doubt on the findings of the Intergovernmental Panel on Climate Change (IPCC).

Announcing the findings, Russell said: "Ultimately this has to be about what they did, not what they said."

He added: "The honesty and rigour of CRU as scientists are not in doubt ... We have not found any evidence of behaviour that might undermine the conclusions of the IPCC assessments."

The review is the third and final inquiry into the email affair, dubbed "climategate", and effectively clears Professor Phil Jones, head of the CRU, and his colleagues of the most serious charges. Questions remain over the way in which they responded to requests for information from people outside the conventional scientific arena, some of whom were long-standing critics of Jones.

http://www.guardian.co.uk/environment/2010/jul/07/climategate-review-clears-scientists-dishonesty

“The appellant made the general answer that this was a free country and a man can do what he likes if he does nobody any harm.... It cannot be too clearly understood that this is not a free country, and it will be an evil day for the legal profession when it is. Citizens of London must realize there is almost nothing they are allowed to do… and least of all may they do unusual actions "for fun". People must not do things for fun. There is no reference to fun in any Act of Parliament. It is not for me to say what offence the appellant has committed, but I am satisfied that he has committed some offence, for which he has been most properly punished."

Lord Light, the Lord Chief Justice. "Is It a Free Country?" A.P. Herbert.

The monthly Coppock Indicators finished June:

DJIA: +269 Down. NASDAQ: +460 Down. SP500: +290 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. Given the weakening BDI, and the ECRI leading indicators signaling recession ahead, it is probably safer to assume that the great stock market bounce has ended and that we are entering a new bear market, or alternately, resuming the old one after a bear market rally.

Help the LIR fight Banksterism, the EU, and for sound money.

If you can, help the LIR stay around and make a difference. Please make a donation at the PayPal link on the website or better still become a sponsor for what looks like an exciting 2010. Capitalism not banksterism. Many thanks to all who have helped.

+++++

Sunspots – A 22 year colder world? (From 2004?)

Spotless Days July 07
Current Stretch:0 days

2010 total: 35 days (19%)
2009 total: 260 days (71%)
Since 2004: 803 days
Typical Solar Min: 485 days

http://www.spaceweather.com/

The long minimum seems to have ended, or has it? Despite the record and near record heat waves sweeping the northern hemisphere, I’m beginning to think our new Dalton Minimum of arriving global cooling, might turn out in fact to be a much longer more severe Maunder Minimum. More in the next few days on the Sunspot page on the website.

Technorati Tags: Baltic Dry Index slump,EU euro crisis,German Exports,US strip mall trouble,Willem Buiter and Jin Rogers,Climategate whitewash,missing sunspots,global cooling

Weekend Update – June 12, 2010

Bye Bye Unloved Euro, pseudo fiat currency of 350 million?

“If you misprice risk, don't come looking to us for liquidity assistance. The longer this goes on and the more risky positions are built up over time, the more luck you need… It is time for financial market to move back to more adequate risk pricing and maybe forego a deal even if it looks tempting… Global liquidity will dry up and when that point comes some of this underpricing of risk will normalize.”

Axel Weber. Davos January 26 2007.

When Axel Weber, German economist and President of the Bundesbank, made those idiotic false statements at the elitist winter junket in Davos 2007, everyone there knew that Axel was merely making a sophisticated joke at German taxpayers’ expense. When the banksters brown stuff hit the legendary cooling machine, everyone and their bankster brother was soon lined up at every central bankster’s door from Washington to Tokyo, and every capital city in between. The ECB and Bundesbank merely went through the motions of talking tough and bailing their favourite crony crisis of the hour. Taxpayers, their children and grandchildren everywhere were sold into debt slavery to bail the “mispriced risk” banksters out. Poor Axel and his Ilk, are not facing any charges of murdering any banksters who bet the ranch the wrong way. The bailouts bought just enough time for a rigged stock market bounce, before Ebenezer Squid’s phony Greek liquidity deals blew up, and the great 2010 sovereign debt crisis sped into view, contaminating all of Club Med along the way. Now the whole unloved Euro project is collapsing one brick at a time. Euroland’s vainglorious pompous politicians, attempt at creating a “kinder gentler,” United States of Europe monetary union, but without the political integration of a debt union, is now well into deep collapse.

The Germans were far to sensible to want a debt union, where hard working, tax paying, hard saving Germans, would be asked to cover the debts of tax shy, work shy, party loving Club Med Europe, until one day they were as impoverished as the rest, but virtually the only ones working in the socialist paradise of 21^st century Europe. Their politicians forced it on them anyway. Luckily in Britain a feud between “I’m a straight kinda guy” Prime Minister Blair, and his sullen, misanthropic Chancellor, Stalin MacBroon, lately departed Prime Minister of downwardly mobile modern Britain, kept Britain out of the now snake bit European Monetary Union.

Below, Internet economics guru, Edward Hugh, tells CNN why he thinks Germany will leave the currency union before Club Med bankrupts them all. Stay long precious metals. This sort of possibility was unthinkable just one year ago. We are only at the first of a multiple series of fiat currency crises and crashes. The central banksters are the problem and not the solution.

"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

Urgent action needed to halt euro crisis

By Edward Hugh, Special to CNN June 10, 2010 -- Updated 1231 GMT (2031 HKT)

(CNN) -- The future of the eurozone seems to be hanging in the balance at the moment, and with it the future of the global financial system.

Despite vigorous commitments from the EU to support those eurozone economies in difficulty and a program of sovereign bond purchases from the European Central Bank, markets remain decidedly nervous, and the cost of financing debt continues to rise.

As a result, the common currency continues to hover anxiously around the 120 to the U.S. dollar mark as investors fret and fret about how the proposed bailout package will apply in practice, and who the first customer will be.

Meanwhile Spain's banking system continues to have hard work financing its short-term liquidity needs, and July looks likely to be a long hot month given the volume of public and private debt that will need rolling over.

The key issue is how a group of economies who have manifestly failed to converge over the last decade are now going to straighten out their imbalances.

Read more about Edward Hugh and his views

As Nobel Economist Paul Krugman continually points out, the problems being experienced on Europe's periphery in countries like Greece and Spain are not simply fiscal ones, they are about structural imbalances and lack of competitiveness, and raise questions which go to the heart of the functioning of the common currency.

In Spain's case, the position is even clearer than in the Greek one: Before the housing bubble burst there simply was no evident fiscal problem -- indeed the country was running a fiscal surplus. Spain's current fiscal problems have only arisen due to the attempt to solve a competitiveness problem, using fiscal stimulus as a means.

Evidently the present situation was not anticipated when the monetary union was set up, so it is hardly surprising that mechanisms to handle it didn't exist, and are having to be put in place on the fly.

It was hoped that monetary management could be carried out on the basis of a hybrid institutional structure (the ECB plus national fiscal policy, with "light" monitoring from the center via the Stability and Growth Pact,) and that no bailouts or closer political integration would be needed.

Again, it is now evident that this methodology simply doesn't work, but there is no road back.

The biggest challenge now facing the EU is thus one of its own making -- Europe's leaders need to be bold and resolute enough to convince markets that they understand what has gone wrong and will do what is needed.

That is to say they need to be resolute in implementing the institutional changes necessary to put the process of monetary union on a firmer and more sustainable footing.

Basically the central euro problem has always been the issue of trying to set up a monetary union without setting up a political one first.

For the euro to work you need consensus, and people need to feel European (like people in the U.S. feel themselves to be Americans). If this were the case, and we had a "no one gets left behind" spirit, then Europeans would be more prepared to share difficult burdens together.

But what we have are excessively strong and largely out-of-date national identities -- just look at the way Greeks and the Germans lose no opportunity to have a go at each another.

Do people in Michigan speak this way about people in Florida? Differing cultural attitudes are a significant part of the picture, and nowhere is this clearer than in the attitude to inflation.

In part the euro hasn't worked because while people in the south anticipated a high-inflation, high-interest-rate environment, people in Germany anticipated a low-inflation one. Now the French would like the Germans to accept a 4 percent inflation target, while the countries in the south have ongoing deflation.

This just isn't going to happen, and we need to be realistic about what we can and can't do.

At the present time there is a lot of speculation about whether or not the euro will break up completely. I think this concern is misplaced at this point.

What the zone needs to do is address the competitiveness issues, and return the struggling economies to growth. To do this they need to restore lost export opportunities with the core countries.

A weaker euro does help, but ironically it is more help to Germany than it is to Greece or Spain, since while Greece only exports something like 4 percent of GDP outside the euro area, and Spain something like 8 percent, in the German case the equivalent figure is more like 24 percent.

Unless the heavily indebted countries on Europe's periphery find their way back to growth, the debt problems will become unsustainable in two, three, five years' time.

One way of resolving this problem would be for the respective countries to carry out a substantial "internal devaluation" -- that is a systematic reduction in prices and wages -- but the citizens involved have shown little stomach for this, and neither the EU Commission nor the IMF are prepared to actively advocate it.

So we are left looking for "doable" alternatives. From a purely technical point of view it could be very constructive to have an organized exit by Germany, allowing the euro to drift downwards for a time, while growth returns to the periphery.

If a new German Mark was trading at around 140 to the dollar, while the euro was at 80 or 90, all the peripheral economies would be rapidly kick-started back to life.

And as the situation improved, then the gap would steadily close, as structural reforms were applied, and productivity gradually rose.

Germany would obviously loose out in terms of peripheral debt, but would gain at the sovereign end, since German government debt is, of course, denominated in euros.

What such a move would do is buy time, which is something which is badly needed right now, and not only here in Europe.

To put things another way, it isn't only Europe's economies that are in disorder at this point -- the high value of the dollar means the U.S. recovery is steadily grinding to a halt.

So, putting it bluntly, we could call the euro-slide story -- "how Greece screwed the U.S." It's time to find some solutions that work here, and as the IMF warns in its latest report on Spain, time is now of the essence.

The opinions expressed in this commentary are solely those of Edward Hugh.

http://edition.cnn.com/2010/OPINION/06/10/edward.hugh.blogger.eurozone/index.html?hpt=Sbin

Editor's note: Blogger Edward Hugh has a growing online fan base for his views on Europe's economy, and his advice has been sought by the IMF. Now 61 and living in Spain, Hugh's thoughts on the region's economic problems are attracting attention worldwide.

Repeating below from last week, it doesn’t look good for the long term existence of the euro.

"Gold is not necessary. I have no interest in gold. We'll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money."

Adolf Hitler

Euro 'will be dead in five years'

The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph.

By Edmund Conway Published: 10:23PM BST 05 Jun 2010

The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office.

Of the 25 leading City economists who took part in the Telegraph survey, 12 predicted that the euro would not survive in its current form this Parliamentary term, compared with eight who suspected it would. Five declared themselves undecided.

http://www.telegraph.co.uk/finance/financetopics/budget/7806064/Euro-will-be-dead-in-five-years.html

Finally, John R. Ing, President and Chief Executive Officer of Maison Placements Canada Inc. Toronto, has been kind enough to allow me to share his latest update and thoughts on our financial world stumbling from crisis to crisis. His always excellent reports are worth reading. His latest report is available at the link below.

http://www.scribd.com/doc/32933537/Neither-a-Borrower-Nor-Lender-Be-1

Stay long precious metals.

"Gold is not less but more rational than paper money. Money holds value so long as it is in limited supply; gold will always be in limited supply, and would require real resources to produce even from the sea; paper and printing ink are not in limited supply. The gold system is much closer to a modern automatic scientific control system than the crude and relatively unstable system of paper."

William Rees-Mogg

Have a great World Cup, Formula 1, weekend.

GI.

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