Weekend Update – June 26, 2010

http://campfire.theoildrum.com/node/6626#more

The New World Order. The Elite Meet.

Baltic Dry Index. 2502

LIR Gold Target by 2019: $3,000

Who are you going to believe, me or your own eyes?

Grouch Marx.

Serfs of the world know your place! And that place isn’t anywhere near Toronto Canada, at least not when the new Kings and Emperors want to strut their stuff for the new world order. Truly a gathering worthy of everything socialist, bureaucratic, undemocratic Brussels strives for. Canada’s Torontonians, get the bum’s rush treatment from their betters. Not to worry, it’s all for their own good, really it is. While Brazil’s President ducks this summer’s event due to disastrous flooding in Northeast Brazil, and Australia’s new Prime Minister ducks the summit too, she only took over mid week after a palace coup, the EU has sent along a full contingent lead by the unelected joke “President” of the EU, Belgium’s obscure and unaccomplished, Herman Van Rompuy, not to be confused with the unelected “President” of the EU, former Maoist, Portugal's Jose Barroso. Both are not to be confused with Jerzy Buzek, who also calls himself a president of the EU.

For puzzled other attendees, like the Presidents of Malawi, Argentina, Indonesia, Japan and South Africa, Van Rompuy is the EU President in the cream coloured suit usually accompanied by the elderly lady in mauve, Barroso is the EU President in the dark suit accompanied by the young lady in a dark coloured trouser suit and striped top. EU President Buzek, “the prof” to his friends in the EU “Parliament”, couldn’t make this summer’s junket in Toronto opting instead to co-chair the National Democratic Institute conference on transatlantic dialogue in Washington on Monday and Tuesday next week. No word yet on what EU lady will be accompanying him. Who needs Toronto and a cast of thousands sharing top billing, when there’s Washington DC at one’s disposal. Needless to say, the long suffering European taxpayers get to pick up all the bills. You really couldn’t make this sort of thing up.

Those are my principles, and if you don't like them... well, I have others.

Grouch Marx.

'Secret' law lets police arrest for failing to show ID near summit

The Ottawa Citizen June 25, 2010

TORONTO — The Ontario government secretly passed legislation giving police sweeping new powers for the duration of the G8 and G20 summits.

Police are now able to jail anyone who refuses to furnish identification and submit to a search while within five metres of a designated security zone in downtown Toronto.

Critics reacted furiously to the new rules, which remained unpublicized until Thursday when a 32 year-old man was arrested in Toronto for refusing to show ID to police.

New Democrat MPP Peter Kormos said Friday the provincial Liberals created a “Kafka-esque” situation where people could be arrested for violating rules they didn’t know existed.

------The Canadian Civil Liberties Association (CCLA) said it was “extremely concerned” that the new measures violate constitutional safeguards.

Nathalie Des Rosiers, general counsel for the CCLA said the changes are contrary to Canadian law.

“You don’t have any obligation to speak to Canadian police, to give your name or the reasons for your existence unless you’ve done something wrong — unless you’re being detained or arrested,” she said. “So on its face, it’s a dramatic change from what our constitution guarantees.”

-----Premier Dalton McGuinty and his Community Safety Minister, Rick Bartolucci, defended the government action.

McGuinty said he attempted to “limit the intrusiveness” of the powers by applying them to a specific zone in downtown Toronto.

------Bartolucci, who is also the minister of correctional services, said the changes were voted in by a special five-member meeting of cabinet on June 14. The regulations were then posted on a relatively obscure government website, http://www.e-laws.gov.on.ca/.

He said the changes were demanded by Toronto police.

----The changes deemed Toronto’s downtown security zone — surrounded by a three-metre fence — a “public work” akin to a hydroelectric station or courthouse. Those fixtures are governed by a 1939 law known as the Public Works Protection Act.

http://www.ottawacitizen.com/news/Secret+lets+police+arrest+failing+show+near+summit/3201082/story.html

Police can use sound cannons, but with limits: judge
Jill Mahoney

Globe and Mail Update Published on Friday, Jun. 25, 2010 10:50AM EDT Last updated on Friday, Jun. 25, 2010 3:59PM EDT

Toronto Police can use sound cannons during the G20 summit with restrictions, a judge ruled Friday.

The decision by Ontario Superior Court Justice David Brown means officers can use the voice function of Long-Range Acoustical Devices, but not the ear-piercing alert function.

Toronto Police Chief Bill Blair said police will abide by the ruling. Officials said the force would formally change its procedures to comply with existing Ontario Provincial Police protocol by Friday afternoon.

“We are committed that it’s … safe for the people of Toronto, safe for all the people engaged in protests and safe for our officers,” he told reporters.

Chief Blair said police consider the devices communications tools. Toronto Police obtained four in the lead up to the summit.

http://www.theglobeandmail.com/news/world/g8-g20/police-can-use-sound-cannons-but-with-limits-judge/article1617752/

Trans-Atlantic Tiff Brewing Ahead of G-20 Summit

06/25/2010

The G-20 talks in Canada this weekend are to focus on shoring up the global economy but German commentators are not expecting much in the way of agreement. Ahead of the summit Germany and the US have been trading barbs about whether the best strategy is to save or spend.

A trans-Atlantic tiff has been brewing ahead of this weekend's G-8 and G-20 summits as the US and Europe disagree on how to best ensure recovery from the global economic crisis.

Ahead of the meetings at a lakeside resort north of Toronto, US President Barack Obama wrote a letter to the G-20 leaders urging a pro-growth policy in what seemed a thinly veiled criticism of German plans to slash spending in a bid to tackle the country's deficit. It "is critical that the timing and pace of consolidation in each economy suits the needs of the global economy," Obama wrote.

Chancellor Angela Merkel, however, is not backing down from austerity. On Thursday she told German public broadcaster ARD that her center-right coalition was going to "implement the efforts we have agreed to," adding: "I do not think we should relent."

-----Berlin is concerned at the spiralling deficits across Europe, particularly since Germany, Europe's largest economy, has been forced to shoulder the lion's share of the rescue package for Greece and other struggling European countries. To that end, Merkel's government announced sweeping cuts of some €80 billion ($98 billion) over the next four years in order to keep a lid on Germany's deficit.

Obama, meanwhile is concerned that the austerity measures in Europe could choke off the tentative recovery and even plunge the world into a double-dip recession, repeating the mistakes of the 1930s that led to the prolonged Great Depression.

German Finance Minister Wolfgang Schäuble joined the debate this week with a guest contribution to the business daily Handelsblatt, writing that "governments should not become addicted to borrowing as a quick fix to stimulate demand. Deficit spending cannot become a permanent state of affairs."

The tit-for-tat interviews and letters ahead of this year's summit are a far cry from the unprecedented united front just two years ago.

Back in 2008 the G-20 leaders found it easy to agree on a response to the global economic crisis by assembling giant stimulus packages to restart growth and financial rescue plans for the frozen banking system. Now that financial meltdown has been averted and economies are tiptoeing towards renewed growth, divisions are opening up on how best to proceed.

Germany is not the only European country opting for saving over spending. The new government in London introduced a drastic budget on Tuesday aimed at tackling the deficit by cutting public spending and raising taxes.

http://www.spiegel.de/international/world/0,1518,702854,00.html#ref=nlint

More than 150,000 remain homeless amid Brazil floods

By the CNN Wire Staff June 25, 2010 -- Updated 1457 GMT

Rio Largo, Brazil (CNN) -- Federal aid is flowing to rain-ravaged areas of northeastern Brazil and the number of missing has diminished to less than 140, but more than 150,000 people remained homeless or displaced Friday, the government said.

President Luiz Inacio Lula da Silva said Friday he will not attend this weekend's G20 meeting in Canada to attend to the emergency at home, the Agencia Brasil government news outlet reported. Finance Minister Guido Mantega will take Lula's place.

The death count in two hard-hit states still stood at 46 -- 29 in Alagoas state and 16 in Pernambuco, Agencia Brasil said.

There were nearly 75,000 homeless or displaced residents in Alagoas and more than 80,000 in Pernambuco, the national civil defense office said.

In addition, civil defense said, there were more than 19,000 homes in Alagoas that were damaged or destroyed, as were 79 bridges.

http://edition.cnn.com/2010/WORLD/americas/06/25/brazil.floods/index.html?hpt=T2&fbid=0ZR_3t_KNP9

China has also been suffering from disastrous flooding.

Heavy rains to pound China's flooded south regions again

BEIJING, June 24 (Xinhua) -- China's National Meteorological Center (NMC) warned Thursday that torrential rains are expected to pound the nation's badly-flooded southern regions over the next two days.

Heavy downpours are likely to hit many areas in provinces of Guizhou, Hunan, Jiangxi, Zhejiang, Fujian, and Guangxi Zhuang Autonomous Region from Thursday to Friday, according to the NMC.

Torrential rain was also forecast for the country's north and west regions, including some areas in Xinjiang Uygur Autonomous Region, provinces of Yunnan and Sichuan, and Tibet Autonomous Region.

As of Wednesday, floods in south China had left 211 people dead and 119 others missing, causing direct economic losses to 43.3 billion yuan (6.3 billion U.S. dollars), according to the Ministry of Civil Affairs

http://news.xinhuanet.com/english2010/china/2010-06/24/c_13367016.htm

Back in the real world of rapidly going bust Europe, the Greeks have apparently taken up German newspapers suggestion for raising cash. I wonder if anyone has thought to wire President Hu? But there again, maybe not.

Greece starts putting island land up for sale to save economy

Desperate attempt to repay debts also driven by inability to find funds to develop infrastructure on islands

Elena Moya guardian.co.uk, Thursday 24 June 2010 21.33 BST

There's little that shouts "seriously rich" as much as a little island in the sun to call your own. For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideway.

Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts.

The Guardian has learned that an area in Mykonos, one of Greece's top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations.

Potential investors also looking at property on the island of Rhodes, are mostly Russian and Chinese. Investors in both countries are looking for a little bit of the Mediterranean as holiday destinations for their increasingly affluent populations. Roman Abramovich, the billionaire owner of Chelsea football club, is among those understood to be interested, although a spokesman denied he was about to invest.

Greece has embarked on the desperate measures after being pushed into a €110bn (£90bn) bailout by the EU and the IMF last month, following a decade of overspending and after jittery investors raised borrowing costs to unbearable levels.

The sale of an island – or convincing a member of the international jet-set to take on a long-term lease – would help to boost its coffers. The Private Islands website lists 1,235-acre Nafsika, in the Ionian sea, on sale by private interests for €15m. But others are on offer by private owners for less than €2m – less than a townhouse in Mayfair or Chelsea.

http://www.guardian.co.uk/world/2010/jun/24/greece-islands-sale-save-economy

Greek gov't denies report on sales of islands, large estate properties to Chinese, Russian

ATHENS, June 25 (Xinhua) -- Greek government spokesman George Petalotis sent an official letter to "The Guardian" newspaper on Friday, categorically rejecting a report published in the English daily newspaper regarding "plans to sale Greek islands" to foreigners, especially Chinese and Russian, to tackle a severe debt crisis.

"I was deeply disappointed by the misleading article written by Elena Moya. The assertion that the Greek government is involved in the sale of any islands is wholly inaccurate," stressed Petalotis in his reply, noting that sale of privately owned islands in Greece is nothing new for years.

http://news.xinhuanet.com/english2010/world/2010-06/26/c_13369944.htm

We close for today, while we await word from our overlords, with the IRS now wanting their piece of BP’s pensioners former dividends. Who’d have ever thought America’s IRS would become a BP victim too. Is the victim culture great or what? Looks like Mexico wants in on the game too. Stay long precious metals, I sense another bailout coming up.

Updated: IRS says it wants its share of BP payments received by oil spill victims

Published: Friday, June 25, 2010, 12:19 PM

WASHINGTON -- The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.
Under current law, BP payments for lost wages are taxable -- just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.
BP officials have agreed to create a $20 billion fund for spill victims, as well as a $100 million fund to support displaced oil rig workers.
The IRS issued the guidance today to help spill victims sort through the law's complexities. The agency has posted tax information for oil spill victims on its website and plans to hold forums in seven Gulf Coast cities on July 17 to help victims with tax troubles or questions.
"As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it," IRS Commissioner Doug Shulman said. "We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution."

http://blog.al.com/live/2010/06/irs_says_it_wants_its_share_of.html

Mexico finds possible traces of oil spill on Gulf of Mexico beach

MEXICO CITY, June 25 (Xinhua) -- Officials from Mexico's northern state Tamaulipas have found traces on the Gulf of Mexico beach which might be from the massive oil spill in U.S. territorial waters, Mexican media reported on Friday.

Officials from the Civil Protection Agency were quoted as saying that they had found solid lumps of crude along Miramar close to Ciudad Madero, one of the state's most famous tourist beaches.

http://news.xinhuanet.com/english2010/world/2010-06/26/c_13370420.htm

More Monday when we know just what idiotic things the G-20 going on G-200 have meddled with.

There's one way to find out if a man is honest - ask him. If he says, "Yes," you know he is a crook.

Grouch Marx.

GI.

Technorati Tags: the G-20,too many EU Presidents,serfs of the world unite,floods,BP,Mexico and the IRS strike oil

G-8. G-20. Yawn

Baltic Dry Index. 2502 -13

LIR Gold Target by 2019: $3,000.

If all else fails, immortality can always be assured by spectacular error.

J. K. Galbraith.

Today the G-8 meet for the Gospel according to Barak Obama, leader of the G-1 cult from Chicago, which features the feeding of the 5,000 great vampire squids with 1.5 trillion of food stolen from the masses of US taxpayers. More accurately, borrowed by US taxpayers from the People’s Bank of China, who bought into the great American real estate dream peddled by Greenspan and Paulson earlier in this new century. Oddly, China isn’t invited to meetings of the G-8 since that would make it a G-9 meeting, with China reading the riot act over the failings of the fiat dollar reserve standard, which doesn’t seem any longer to have any standards at all.

As it is, today, while the G-1 drones on about turning paper dollars into gold in Washington, and the need for all to keep electronically printing and spend, spend, spend our way out of debt, the European Apostles attending are undergoing a schism between the easy going, feckless, southern members of mostly bankrupt Club Med, who believe passionately in the Gospel of conspicuous consumption, believing that any bills can be sent round to Berlin for an economic miracle, and the dour, but flush northern Calvinists, who believe in hard work, paying taxes, and saving for the future, in case something might go wrong like the Mongols suddenly showing up out of nowhere. The northerners haven’t quite grasped that since President Nixon made the great heretical error of abandoning the dollar link to gold, the whole world has been operating in a Kafkaesque fiat money world, where saving for the future is irrelevant. If it all goes wrong, just borrow or print up trillions more, goes the heretical Nixonian theory, if we give it all to the banksters it will all work out like before. Don’t worry, be happy, what could possibly go wrong, remember this is change we can believe in. Below, Presidents Obama and Medvedev get to con each other in Washington, before heading up to Canada to play three card monte.

Meetings are indispensable when you don't want to do anything.

J. K. Galbraith.

Obama, Medvedev pledge stronger economic ties

By the CNN Wire Staff June 24, 2010 -- Updated 2048 GMT (0448 HKT)

Washington (CNN) -- President Barack Obama and visiting Russian President Dmitry Medvedev pledged cooperation on stronger economic ties Thursday, announcing a deal for Russia to again accept U.S. poultry exports and touting U.S. support for Russia's bid to join the World Trade Organization.

During a busy day that included White House talks, a joint news conference and participation in a U.S.-Russia business council meeting, the two presidents repeatedly cited strengthening relations between their countries after what Obama called a "drift" under the previous administration.

Faced with the continuing struggle to recover from the global economic recession, nuclear ambitions of Iran and North Korea, terrorism threats and other major issues, Obama and Medvedev said the world needed a strong U.S.-Russian relationship in the 21st century.

Obama called Medvedev a "solid and reliable partner" and repeated his commitment to "resetting, but also broadening" ties, while Medvedev called for a "level of economic cooperation in line with the potential" of the two nations' economies.

"We want this volume to grow" with each country investing in the other, Medvedev said. "It's not a one-way road."

Obama called for accelerated talks on Russia's membership in the WTO, a goal of the former communist country in its efforts to fully join the global economy. He noted agreements announced Thursday on energy technology trade and the readmittance of U.S. poultry exports to Russia as signals of Russia's serious intent to become a WTO member.

However, Obama offered no estimate of when the country would join the 153-nation group that sets rules for international trade. Russia currently is an observer nation.

http://edition.cnn.com/2010/POLITICS/06/24/obama.medvedev/index.html?hpt=T2&fbid=0ZR_3t_KNP9

Into the G-8 thieves’ conclave, Her Majesty’s Government is sending its neophyte Prime Minister, the leader of a strange UK coalition that seeks to straddle the great schism in Europe. Neither entirely sold on the spend, spend, spend Gospel of Washington, it doesn’t seem to really believe in the hair shirt austerity of Berlin. The suspicion is that when the austerity going gets tough, HMG will get going back to Quantitative Easing. Besides, the UK didn’t win the second world war just so some bunch of fanatical Berliners could start ordering around what HMG could spend on and when. Left to itself, the UK is a sort of closet member of Club Med. Except for the photo-op, most attending won’t even know he’s there. By universal agreement, 6 of the G-8 have agreed it’s time to gang up on Chancellor Merkel and her Bundesbank Thesis.

And so after today’s G-8 meeting it’s on to the weekend’s G-20 meeting that has managed to shut down most of Toronto, Canada’s most important city of the Great White North. This being the northern hemisphere summer, it’s mostly a pleasant shade of green for the next few weeks, with unbelievably large swaths given over to gigantic herds of Caribou and even larger herds of midges. The G-20 allows in just about anyone who can afford the airfare. In two years of meetings and trying, no one can name any single thing that they’ve achieved. This time out, they’re unlikely to disturb they’re 100% record. The BRIC grouping hold the high ground, but are universally hated by the other 16. The EU grouping are widely seen as total lunatics, desperately trying to recreate the old Soviet Union in Western Europe. They are universally loathed and feared for creating a phony fiat currency that’s now in the process of going out of business. The UK will be largely irrelevant in the current meeting.

The North Americans, well what can one say. The Mexicans are all so desperate to become Americans they seem to be engaging in a reverse stealth takeover, aided and abetted by Washington DC. The Canadians try desperately to pretend not to be Americans at all, but all insist on living in a thousands of miles long 100 mile deep corridor attached to the northern extremity of the USA economy. The Americans themselves have crashed from western leadership after a run of 4 terrible presidents in a row, that allowed Wall Street’s great vampire squids to all but wreck the dysfunctional great Nixonian fiat currency experiment. For the moment, while the US president isn’t exactly a lame duck president, he does look likely to be another one-timer. Few in the G-20 are going to go out on a limb for an iffy US leader. All in all, it’s hard to see very much coming out of this weekend’s meetings.

Wealth is not without its advantages, and the case to the contrary, although it has often been made, has never proved widely persuasive.

J. K. Galbraith.

JUNE 25, 2010

Cameron Takes Skeptical Approach to G-20

HALIFAX, Nova Scotia—New U.K. Prime Minister David Cameron, making his debut on the global stage at this week's meetings of international leaders in Toronto, is striking a skeptical tone about the ability of leaders to carry out their lofty conference promises.

Mr. Cameron, in office for just six weeks, has emphasized domestic policy over foreign affairs during most of his political career. Arriving in Canada Thursday for meetings of the Group of 20 and Group of Eight economies, he took a low-key approach to the possible output of the sessions. He emphasized the potential for simple bilateral agreements with individual nations over the kind of broad, unified reform that such sessions typically aim to achieve.

In that way, he is striking a much different stance than his predecessor, Gordon Brown, who relished the role of statesman and used such meetings to push for sweeping action, such as pushing hard for the Doha global trade deal that Mr. Cameron says is unlikely to be sealed this weekend. Mr. Cameron, in his short time as prime minister, has shown himself as pragmatic rather than ideological on foreign policy, particularly in his Conservative Party's prickly dealings with the European Union. He has advocated pragmatic engagement rather than grandstanding rhetoric.

-----Speaking to reporters en route to Toronto, Mr. Cameron said the G-20 has "shown it has a role on the global economy." Nonetheless, he was critical of the inability of such gatherings—particularly the G-8—to deliver on stated pledges.

"The G-8 needs to demonstrate to the public that when we get together and sign up to these things, we mean it," he said. The U.K. has complained before that goals set to provide aid to the poorest nations at the 2005 G-8 summit in Gleneagles, Scotland, haven't been met by some of the countries that signed on.

"That is why I think there is an accountability issue, on aid delivery and promises made," he said.

http://online.wsj.com/article/SB10001424052748704227304575327013475749000.html?mod=WSJEUROPE_hps_LEFTTopStories

Below, the US gets ready to blitz the economy with acres more of new cash. Could the Fed really be proposing to expand its balance sheet again, from $2.4 trillion to $5.0 trillion? Stay long precious metals, they probably will.

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

J. K. Galbraith

Ben Bernanke needs fresh monetary blitz as US recovery falters

Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:44PM BST 24 Jun 2010

Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.

Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.

"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."

http://www.telegraph.co.uk/finance/economics/7852945/Ben-Bernanke-needs-fresh-monetary-blitz-as-US-recovery-falters.html

We end for the day with more on the wobble in China. Even in China, it seems, the front loaded benefits of fiat currency have passed. As in the increasingly dysfunctional gambling economy west, fiat currency has turned into a wealth destruction mechanism, fast gobbling up the world’s resources for projects of little or no economic value. Future generations will pay dearly for all our excess fuelled by Nixonian heresy.

China's chief auditor warns mounting local government debt a risk to economy

China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.

By Malcolm Moore in Shanghai Published: 1:20PM BST 24 Jun 2010

Liu Jiayi, the head of China's National Audit Office said the financial crisis had left some Chinese provinces with serious debt problems.

"The scale is large, and the burden is quite heavy," he said, in an annual report to the Chinese government.

Chinese provinces are, in some cases, equivalent in size to major European countries and run with a degree of fiscal autonomy. The southern province of Guangdong, for example, has the same population size as Germany.

However, provincial budgets have been classified as state secrets until now and this is the first time that China has disclosed the level of local government debt.

Mr Liu said the ratio of debt to disposable revenues at some local governments was over 100pc and in the highest case it was 365pc.

He said the audited debts of 18 of China's 22 provinces, together with 16 cities and 36 counties amounted to 2.79 trillion yuan (£279bn) in 2009.

Several observers believe the situation is far worse. The China Daily newspaper, which is run by the government, suggested that the total sum could add up to between 6 trillion and 11 trillion yuan (£590bn-£1.08 trillion).

Victor Shih, a professor at Northwestern University in the United States, believes the sum in 2009 was 11.4 trillion yuan, equivalent to 71pc of China's nominal GDP.

Mr Shih has warned that local governments have also succeeded in rapidly funnelling large amounts of debt off their balance sheet and into public-private investment vehicles.

China's banking regulator said outstanding loans from banks to local government financing vehicles was 7.38 trillion yuan at the end of 2009, rising 70pc year-on-year.

Mr Shih, who researched more than 8,000 of these "local investment companies", said that orders to ramp up spending on infrastructure after the financial crisis could leave China with widespread debt problems.

"I collected data from thousands of sources, including regulatory filings, bond-rating reports and press releases of government-bank agreements," he said, although he admitted that comprehensive data was difficult to track down.

Next year, he is forecasting government debt to hit 96pc of gross domestic product as infrastructure projects continue to eat up cash and produce negligible returns.

http://www.telegraph.co.uk/finance/china-business/7851504/Chinas-chief-auditor-warns-mounting-local-government-debt-a-risk-to-economy.html

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith

At the Comex silver depositories Thursday, final figures were: Registered 51.12 Moz, Eligible 63.82 Moz, Total 114.94 Moz.

+++++

Crooks and Scoundrels Corner.

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

Below, it’s almost game over for BP’s long suffering shareholders. Next comes every man for himself as BP’s managers start to jump ship and head for “let’s make a deal.” With billions at stake, whistle blowers will be the next shoe to fall. BP seems to have drilled itself into the history books.

BP oil spill was avoidable: IEA

PARIS Petroleumworld.com, June 24, 2010

The oil spill in the Gulf of Mexico is a catastrophy caused by human error which could have been avoided, the head of the International Energy Agency said here on Wednesday.

"This is a catastrophy that could have been avoided," IEA director general Nobuo Tanaka told a press conference on the occasion of publication of the agency's medium-term outlook for the oil market..

He said: "We have to wait until the investigation."

But from the information available, "there is an accumulation of human errors."

While awaiting the results of an enquiry into the accident, the moratorium on deepwater drilling decided by the US administration, "is a reasonable measure," he said.

On Tuesday, a judge in Louisiana annulled the six-month moratorium.

Referring to the effect of the spill on the oil market, Tanaka said that it had "so far has been minimum."

But he also said that the impact on new deepwater projects could reduce expected US oil output in the Mexican gulf by 100,000 to 300,000 barrels per day.

Similar restrictions worldwide, although very unlikely, "could ramp the number up to 800,000 to 900,000 bpd."

The International Energy Agency is the oil policy arm of the 31-member Organisation for Economic Cooperation and Development.

http://www.petroleumworld.com/storyt10062401.htm

AP check: Shoddy disposal work mars oil cleanup

By JAY REEVES, Associated Press Writer Jay Reeves, Associated Press Writer – Thu Jun 24, 6:21 am ET

ORANGE BEACH, Ala. – A leaky truck filled with oil-stained sand and absorbent boom soaked in crude pulls away from the beach, leaving tar balls in a public parking lot and a messy trail of sand and water on the main beach road. A few miles away, brown liquid drips out of a disposal bin filled with polluted sand.

BP PLC's work to clean up the mess from the worst offshore oil spill in U.S. history already has generated more than 1,300 tons of solid waste, and companies it hired to dispose of the material say debris is being handled professionally and carefully.

A spot check of several container sites by The Associated Press, however, found that's not always the case.

Along the northern Gulf coast, where miles of beaches have been coated with oil intermittently for two weeks, the check showed the handling and disposal of oily materials was haphazard at best.

A mound of oily sand sits in an uncovered waste container in a parking lot at the crown jewel of Alabama's park system, Gulf State Park. Water from the previous night's storm drips out of the bin into a brown pool on the asphalt.

----- Cleaning up a spill is an undeniably messy job, particularly when crude oil or tar balls are washing ashore in varying amounts in four states. The debris isn't classified as hazardous waste, so it can be placed in landfills that accept ordinary household garbage, including table scraps.

Yet Jerry Kidd, doing maintenance work at a condominium, couldn't believe it when he saw a Waste Management Inc. truck pull away from a collection site in Orange Beach piled with loose sand, oil-smeared protective gear and oily boom pulled out of the water. It was trailing pollution of its own.

The company says it is using 535 containers lined with what amount to huge black trash bags to collect debris from Mississippi, Alabama and part of the Florida Panhandle under a contract with BP. But not all of the bins really are lined, and liners have failed in others.

"They're going down the road leading to the landfill; they take the same route every day. They're leaking onto the roads, into the storm sewers," said Kidd. "There's no telling where it's going."

http://news.yahoo.com/s/ap/20100624/ap_on_bi_ge/us_gulf_oil_spill_waste_disposal_4

Another weekend, and the G-20 elite get to compete for coverage with the World Cup, Wimbledon, and Formula 1 from Valencia Spain, to say nothing of those headed off the beaches and countryside to enjoy another of God’s summer weekends. More on the blog as the G-20 unfolds. For England football supporters, Sunday becomes another do or die mission against Germany, though both teams are two more of Europe’s under performing teams this year. Have a great weekend everyone. The lucky citizens of Toronto can leave their fine city to the Lords of the Universe, instead they can get to spend time in God’s country. I know where I’d rather be this weekend.

"In economics, hope and faith coexist with great scientific pretension."

J. K. Galbraith.

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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 June 24
Current Stretch:0 days

2010 total: 35 days (20%)
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?

Absence of sunspots make scientists wonder if they're seeing a calm before a storm of energy

by Stuart Clark New Scientist Tuesday, June 22, 2010

Sunspots come and go, but recently they have mostly gone.

----- As 2009 arrived, solar physicists looked for some action. They didn't get it. The sun continued to languish until mid-December, when the largest group of sunspots to emerge in several years appeared. Even with the solar cycle finally underway again, the number of sunspots has so far been well below expectations. Something appears to have changed inside the sun, something the models did not predict. But what?

----- Michael Lockwood, a professor of space environment physics at the University of Reading in England, may already have identified one response: the unusually frigid European winter of 2009-10. He has studied records back to 1650 and found that severe European winters are much more likely during periods of low solar activity. This fits an idea of solar activity's giving rise to small changes in the global climate overall but large regional effects.

---- What the sun will do next is beyond our ability to predict. Most astronomers think that the solar cycle will proceed but at significantly depressed levels of activity, similar to those last seen in the 19th century. However, there is also evidence that the sun is inexorably losing its ability to produce sunspots. By 2015, they could be gone altogether, plunging us into a new Maunder minimum -- and perhaps a new Little Ice Age.

http://www.newscientist.com.

Technorati Tags: G-8,G-20,Fed balance sheet,China trouble,BP,BP cleanup woes,missing sunspots,global cooling,mining stocks.

Open Season on Germany. Do Mention the War.

Baltic Dry Index. 2515 -32

LIR Gold Target by 2019: $3,000.

As the fifteenth century drew to a close, coinage throughout Europe was in a shambles. The financing of ceaseless wars between dukes and kings over territorial disputes was largely done through the debasement of the silver coinage. The fact that the rate of debasement differed from country to country, from dukedom to dukedom, only made matters worse. Trade, investment, and progress were hampered by the lack of uniform, easily recognizable, and reliable means of payment.

Architecture for a New World Financial System. Antal E. Fekete

In the run up to tomorrow’s G-8 meeting and the weekend’s G-20 meeting, it looks like it’s now open season on Germany. The poor Germans make the mistake of working hard, paying their taxes, saving for the future, and wanting their national accounts balanced. They well remember having to bailout the former East Germany at the wrong exchange rate between the worthless Ossi Mark and the West German D-Mark. They do not want to repeat the experience bailing out Greece, Spain, Italy, and every other spendthrift wastrel country of the European Monetary Union. The world’s Keynesians are all up in arms. They want Germany to follow America’s lead and borrow and spend, spend, spend, their way out of debt. If America’s going down, they reason, we don’t want any Germany’s out there benefiting. Below, George Soros gets shrill over Germany’s sound money policy. Forget what EU treaties say, says Overlord George, do what I say, and do it fast. Using polite code words and guilt, Mr. Soros even raises the specter of 1930s Germany. Perhaps it’s time again for the Greeks to bring up the war and their stolen gold. Sounds like the coming G-20 meeting is going to be fun.

Soros tells Germany to step up to its responsibilities, or leave EMU

Legendary investor George Soros has called on Germany to leave the euro unless it willing to embrace a growth strategy, describing Berlin’s austerity doctrine as a threat to democracy and political stability in Europe.

By Ambrose Evans-Pritchard, International Business Editor

Published: 6:31PM BST 23 Jun 2010

"German policy is becoming a danger that could destroy the European Project. A collapse of the euro cannot be excluded," he told the German weekly Die Zeit.

"Unless Germany changes policy, its withdrawal from the currency union would be helpful for the rest of Europe. At the moment Germany is pushing its neighbours into deflation: this threatens a long phase of stagnation, leading to nationalism, social unrest, and zenophobia. It endangers democracy," he said.

-----His comments reflect growing alarm in influential circles on both sides of the Atlantic over the 1930s-style policies of wage cuts and debt-deflation being imposed up the Club Med bloc, Ireland, and parts of Eastern Europe by the EU authorities, at the behest of Berlin.

President Barack Obama clearly had Germany in mind when he wrote a letter to fellow leaders before the G20 summit in Canada this week that surplus countries should do more to shore up global demand. "Our highest priority must be to safeguard and strengthen the recovery: we cannot let it falter or lose strength now. Should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed," he wrote.

China has deflected G20 criticism by starting to free the yuan, leaving Germany facing the full wrath of Washington. While the German economy is not in itself large enough to shape global events, US officials fear that Berlin’s dominant influence over the European Central Bank and the fiscal machinery of monetary union is dragging most of Europe into an economic swamp. Germany has raised the bar for every eurozone country by announcing €80bn of belt-tightening from next year.

Nobel laureate Paul Krugman told the German press earlier this week that the country was committing the same error as the United States in 1936-1937, or Japan in the 1990s, by withdrawing stimulus before recovery has taken root.

http://www.telegraph.co.uk/finance/currency/7849965/Soros-tells-Germany-to-step-up-to-its-responsibilities-or-leave-EMU.html

If the Germans had any sense, they should take up George on his word. Announce today, “you’re right George, we’re leaving the Club Med cheater’s Euro.” That ought to make the weekend leaders meeting far more interesting. It’s not Germany’s policy that’s wrong, but America’s out of control, too big to fail, gambling bankster economy, that now exists on unrepayable debt solely for the benefit of the great vampire squids. Below, Chancellor Merkel fires back at the Keynesians and especially spendthrift President Obama.

JUNE 24, 2010

Merkel Rejects Obama's Call to Spend

German chancellor rebuffs pressure to boost domestic demand, not exports; warns Europe's crisis is far from over

BERLIN—Chancellor Angela Merkel roundly rebuffed U.S. President Barack Obama's call for Germans to aid the global recovery by spending more and relying less on exports, even as she warned that Europe's own financial crisis is far from over.

In an interview with The Wall Street Journal in her Berlin chancellery, an unapologetic Ms. Merkel said the nations that share the beleaguered euro have merely bought some time to fix the flaws in their monetary union. She called on the Group of 20 industrial and developing nations meeting in Toronto this weekend to send a signal that tougher financial-market regulation is on its way to dispel the impression that momentum is fading amid resistance by big banks.

She took aim at an idea voiced by France, the U.S. and others that Germany should help global producers by spurring its persistently weak consumer demand and ending its dependence on unsustainable spending elsewhere. The latest call came in a letter last Friday from Mr. Obama to the G-20, in which he asked big exporters—Germany, China and Japan—to rebalance global demand by boosting consumer spending.

Ms. Merkel countered that Germany's growth and employment are rising—and therefore the world's fourth-largest economy has no reason to rethink its dependence on its powerhouse industrial sector and large trade surplus. "German export successes reflect the high competitiveness and innovation strength of our companies," she said. "Artificially reducing Germany's competitiveness would be of no use to anyone."

The U.S. reiterated its stance Wednesday. "It is important for European growth in particular, and the world more generally, that advanced surplus economies in Europe strengthen the contribution of internal demand to growth," a senior administration official said.

Ms. Merkel's defense of Germany's export-heavy model marks Berlin's second rebuff to international demands in recent days. Early this week, Ms. Merkel rejected calls for Germany to prolong fiscal-stimulus measures in the short term.

http://online.wsj.com/article/SB10001424052748703900004575324941614808602.html?mod=WSJEUROPE_hps_LEFTTopStories

The tragedy is that the captains of the world economy refuse to realize that runaway debt is the logical consequence of their having exiled gold from the international monetary system in 1971. They try to cure the bad effects of too much debt, or the presence of toxic debt in the system by introducing more of it. They have no idea how total debt could be decisively reduced and toxic debt safely eliminated.

They are playing a very dangerous game with the welfare of the people. When credit collapse finally comes, production disappears, employment shrinks, law and order break down. We are running into an unprecedented crisis with our eyes blindfolded. Wishful thinking will not coax out “green shoots”.

Architecture for a New World Financial System. Antal E. Fekete

In BP news it just goes from worse to worser. If it wasn’t for bad news BP wouldn’t have any news at all, as the saying goes. Below, BP doing its best to go out of business or bust!

BP oil flow increases after accident

Oil was gushing largely unchecked from BP’s stricken Gulf of Mexico well on Wednesday night – after an accident dramatically increased the flow.

By Rowena Mason, Energy Correspondent Published: 10:38PM BST 23 Jun 2010

The oil giant had to remove a cap that was channeling 16,000 barrels per day to the surface, after a robot crashed into the capturing equipment. The collision raised fears that ice-crystals could have formed on the device.

BP is still piping some oil to the surface and burning it, but it could not confirm when it expects to replace the cap – its largest and most successful containment device to date. The latest blow to BP came as Ken Salazar, the US Interior Secretary, said all preliminary evidence pointed to “reckless conduct” in the run-up to the accident on April 20 that killed 11 men.

It has also emerged that US authorities are not relying on BP’s promises that it will stop its leaking oil well by August.

Tony Hayward, BP’s chief executive, has insisted the company will try to stop the leak by drilling two relief wells to cut off the flow with heavy cement by August. In previous accidents it has taken more than four attempts for this method to work.

Admiral Thad Allen, the US official co-ordinating the response to the disaster, said the authorities have been investigating new emergency measures should the spill go on any longer.

Mr Salazar and Steven Chu, the US Energy Secretary, called an industry gathering to identify other platforms in the area that could take some of the oil through pipelines along the ocean floor. Then it could be brought to the surface or pumped back into a reservoir.

“We’re exploring that over the next couple of days,” said Mr Salazar. “If we’re able to do that, that would give us an option of controlling the flow without having any surface vessels there.

“That wouldn’t be the capacity we’re looking for, but that would be another risk mitigator to handle some of the oil.

“We’re in exploratory conversations, and again, that was just the result of a meeting that we held last week where we asked industry to basically unconstrain their thinking and see what they could do for us.”

A BP spokesman said the oil giant is still confident that two relief wells will stop the flow within two months, adding that it was “sensible” to look at back-up plans. In further developments:

New York’s pension fund said it plans to sue BP to recover losses on its 19m shares that have halved in value since the accident. Eleven other east coast states said on Monday that they are planning legal action. “BP ­misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we’re going to hold it accountable,” said a spokesman.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7850595/BP-oil-flow-increases-after-accident.html

JUNE 24, 2010

BP Relied on Faulty U.S. Data

BP PLC and other big oil companies based their plans for responding to a big oil spill in the Gulf of Mexico on U.S. government projections that gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one.

The government models, which oil companies are required to use but have not been updated since 2004, assumed that most of the oil would rapidly evaporate or get broken up by waves or weather. In the weeks since the Deepwater Horizon caught fire and sank, real life has proven these models, prepared by the Interior Department's Mineral Management Service, wrong.

Oil has hit 171 miles of shoreline in southern Louisiana, Mississippi, Alabama and northern Florida. Further, government models don't address how oil released a mile below the surface would behave—despite years of concern among government scientists and oil companies about deep-water spills.

BP's efforts to contain the spill suffered a brief setback when an undersea robot hit the cap that's channeling oil to the surface. BP was able to reinstall the cap Wednesday night.

----- The government's optimistic forecasts reinforced the oil industry's confidence in its spill-prevention technology, leading to decisions that left both oil companies and the government ill-prepared for the disaster that has unfolded in the Gulf since April 20.

BP and government agencies responding to the spill have scrambled to assemble enough oil-containing boom and the ships and hardware needed to keep oil out of marshes and off beaches. Owen Kratz, chief executive officer of Helix Energy Solutions, one of the company's working to contain the spill for BP, said Wednesday that the industry needs to have more oil containment equipment positioned to handle a blowout – instead of building containment systems after an accident.

http://online.wsj.com/article/SB10001424052748703900004575325131111637728.html?mod=WSJEUROPE_hps_LEFTTopWhatNews

Pension fund in US latest claimant against BP

By Michael Peel and Carola Hoyos in London Published: June 23 2010 20:47

New York state’s pension fund plans to sue BP over the plunge in the company’s share price following the Gulf of Mexico oil disaster in the latest sign of the legal storm brewing for the company in the US.

The fund has hired Cohen Milstein Sellers & Toll, a leading law firm specialising in alleged securities fraud, to pursue claims that BP misled investors over its safety record and ability to deal with oil leaks.

The fund has a history of acting as lead plaintiff in actions in which investors club together to launch claims against companies that can run into billions of dollars.

“BP misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we’re going to hold it accountable,” said Thomas DiNapoli, New York state comptroller and trustee of the $132.6bn (£88.8bn) pension fund.

US plaintiff lawyers have already filed more than 150 class actions against BP, with claimants ranging from shrimpers to stockholders who have seen the value of their investments slashed in the disaster.

http://www.ft.com/cms/s/0/76741e56-7eff-11df-8398-00144feabdc0.html

At the Comex silver depositories Wednesday, final figures were: Registered 51.88 Moz, Eligible 63.35 Moz, Total 115.23 Moz.

Maximilian I was crowned in Aachen on April 9, 1486. This important event was followed by the first issue of the Guldengroschen, struck from silver found in Schwaz near Hall, in 1487. The new coin was an instant and unqualified success. Indeed, it was a landmark in the monetary history of the world. The silver coin soon reached world-class status as its mintage beat all earlier records, and its circulation spread all over Europe. Naturally, the success of the guldiner soon attracted imitators in every dukedom of Europe with a silver mine.

The winner among these imitators was the Joachimsthaler nicknamed “thaler” (from which the English word “dollar” was derived). The silver came from the rich mines of Joachimsthal, or Joachim’s Valley, in Bohemia (today, the Czech Republic). Saint Joachim, the husband of Saint Anne and the father of the Blessed Virgin Mary, is commemorated by the first thaler struck 30 years after the inauguration of the guldiner in 1518. It was of similar physical size but had slightly lower fineness. It became the standard for silver coinage for almost four hundred years in Europe and, later, in America.

The market dropped the guldiner and embraced the thaler. The Mint in Hall had to turn to the production of thalers of which it struck 17 million specimens during the 20-year period from 1748 through 1768 alone.

Architecture for a New World Financial System. Antal E. Fekete

+++++

Crooks and Scoundrels Corner.

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

No crooks today, just a good news story from the NY Times that’s too good not to share. The old America, and New York City, at it’s very best. The other side of America the Great, vs Wall Street’s great vampire squids. Well done, America, NY City, New Yorkers.

Descent Into Slavery, and a Ladder to Another Life

By JIM DWYER Published: June 22, 2010

He wore a satin suit onstage, so new that a tag was still fixed to the cuff. His 2-year-old daughter wiggled in his arms. The crowd cheered. Lifting his right hand to his lips, Jose Gutierrez seemed to blow a kiss to the audience. But it was more.

Mr. Gutierrez had gotten to the other side of slavery, climbing a ladder of second chances.

More than a decade ago, he was part of the nameless, unseen cast of a horror story. Lured from Mexico on promises of prosperity, he and 56 other people lived as prisoners in two row houses in Queens. By day, they sold key chains and miniature screwdriver kits in the subways, at airports, on roadsides. At night, they turned over every penny to the bosses of the houses.

All of the peddlers were deaf. Mr. Gutierrez, the youngest, had arrived in the United States at age 15, fluent only in Mexican Sign Language.

On Tuesday morning, 13 years after two of the deaf Mexican peddlers walked into a police station in Queens with a letter describing the conditions, Mr. Gutierrez was honored for his diligent work at a company that has cleaning contracts with federal agencies.

Mr. Gutierrez’s assignment: janitor at the Statue of Liberty and Ellis Island.

“I remembered playing with a car when I was a little boy, and seeing a picture of her,” he said. “When I found out that I was going to work there, it moved me. Thrilled me.”

There are, it turns out, second acts in American lives. Mr. Gutierrez leaves his home in Astoria shortly after 5 a.m., catches a ferry at 6:30, lands on the island 15 minutes later. He cleans bathrooms, empties trash, dusts a giant globe that shows the journeys of people to the United States.

His own odyssey began in 1995, when he heard from a friend about opportunities for deaf people in the United States. He was the seventh child in a family of eight, the only one who was deaf. “My friend’s father drove us to San Diego,” Mr. Gutierrez said. “I was very awkward. I didn’t know anything. We were supposed to go around and sell things. The money we collected we had to give to the boss.”

After a year in Los Angeles, he moved to a house in New York City that ran under the same terms, led by the Paoletti family, many of whom were also deaf. They would order a box of novelties, like miniature balls and bats, paying $75. The items would be attached to cards explaining that the seller was deaf. The peddlers would spend 12 to 16 hours a day in subway cars, dropping the trinkets in the laps of riders. Each box would bring in $485 in revenue. The bosses would swap bundles of single dollars at Atlantic City casinos for $100 bills, making the money easier to smuggle into Mexico, where it was banked.

Mr. Gutierrez depended entirely on the bosses for a bed and food. They took his money. “We were like slaves,” he said. “It was very frustrating. We couldn’t talk to the cops. It was heartbreaking.”

One day in July 1997, two of the peddlers went into the 115th Precinct station house in Queens, bringing a letter they had composed with help from a couple they had met at Newark Airport. “The police brought interpreters in to get the story told,” said Maria V. Pardo, a job counselor for the deaf with Fedcap Rehabilitation Services. The police found $35,000 in cash in one of the houses and 57 imprisoned peddlers. Federal prosecutors indicted 20 people on charges that included slavery and smuggling, and ultimately, they all pleaded guilty to some wrongdoing.

The peddlers, who were in the country illegally, were subject to deportation, but the administration of Mayor Rudolph W. Giuliani stepped in; the era of zero tolerance for illegal immigrants had not yet begun. They were put up in a motel by the city, and slowly found places to live, schools to attend, jobs to go to. “They were given special permission to work,” Ms. Pardo said. Nearly 40 people decided to stay in the United States.

Mr. Gutierrez, 17 at the time that the slavery ring was broken up, went to the Lexington School for the Deaf. “The support I got there was wonderful,” he said, and he also fell in love with another student, Christina Gonzalez, who was born in the United States. “I had no family here; her family has been so good to me.”

She pointed him to Fedcap, which provides training and employment for people with disabilities. In 2007, Fedcap sent him to work on Liberty and Ellis Islands under a janitorial services contract administered by AbilityOne, a federal program. He makes $20 an hour plus benefits, and now has a green card.

So on Tuesday, Mr. Gutierrez was brought back to receive a special honor at the Fedcap graduation ceremony.

With him onstage were Ms. Gonzalez and their daughter, Gloria. He lifted his fingers to his mouth, as if he were blowing a kiss. His audience knew better: it was a symbol from American Sign Language, repeated over and over.

“Thank you,” he said. “Thank you.”

http://www.nytimes.com/2010/06/23/nyregion/23about.html?hp

The present Great Financial Crisis is far from over. In fact, it is getting worse. It can be described as a debt crisis or, at its roots, a belated gold crisis. The landmark year was 1971, when the United States defaulted on its international gold obligations. Now there have been many defaults in history, but the one forty years ago was unique in that it exiled gold from the international monetary system; thereby gold has been prevented from discharging its natural function as the ultimate extinguisher of debt ever since.

When you pay a debt of $100 by writing a cheque on your bank account, the debt is not extinguished, it is merely transferred to your bank. If you pay it by handing over a $100 Federal Reserve note, the debt is not extinguished either but is transferred to the Federal Reserve bank that has issued the note. Ultimately the U.S. Treasury is responsible for all the liabilities of the Federal Reserve. Under these monetary arrangements the total dollar debt outstanding can only grow, never contract, even if there is a net reduction of debt in the economy. All debt presumed to have been extinguished will ultimately show up as an increase in the indebtedness of the U.S. government. No matter how you look at it, the desire to retire debt is frustrated by the lack of an ultimate extinguisher in the system. The consequences are frightening. Continued.

Architecture for a New World Financial System. Antal E. Fekete

http://www.financialsense.com/editorials/fekete/2010/0622.html

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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 June 23
Current Stretch:0 days

2010 total: 35 days (21%)
2009 total: 260 days (71%)
Since 2004: 803 days
Typical Solar Min: 485 days

http://www.spaceweather.com/

Technorati Tags: G-20,Germany v USA,Soros v Germany,BP,fiat currency default,missing sunspots,global cooling,mining stocks

A China Wobble. Derby Day.

Baltic Dry Index. 3933 -108

LIR Gold Target by 2019: $3,000

"A Horse! A Horse! my kingdom for a horse!"

Shakespeare

We open this morning with the Journal on a wobble in China. In China’s still largely centrally controlled command economy, has the government there overdone the crackdown on the real estate market. If it has, will China’s real estate market impact the rest of the global economy. In our world now run on fiat currency, everything is now a command economy as authorities everywhere struggle to keep the fiat currency economy running. With no real economics anymore, and no fiat currency worth more than another, all decisions are now political, as a handful of central banksters keep trying to rig the failing fiat currency system to keep it from collapsing. Stay long precious metals for what comes next. The next Lehman drops us into the next great depression. Unlimited fiat currency creation risks setting off a run into tangible assets that have long term intrinsic value. We are all pawns of crooked banksters now.

"Horse sense is the thing a horse has which keeps it from betting on people."

W. C. Fields

JUNE 3, 2010

China's Property Market Freezes Up

Actions Taken by Economic Planners Worried About a Real-Estate Bubble May Have Gone Too Far

BEIJING—Government policy changes have thrown China's booming property market into a period of paralysis that some industry executives say will last for several months, weighing on global growth prospects already battered by the turmoil in Europe.

A rebound in China's property market has been central to the nation's rapid recovery from the financial crisis, but surging housing prices had led to increasingly open discontent from middle-class families in major cities. After months of indecision, Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases.

Officials may have gotten more than they bargained for. Though still too recent for their effect to show up in official economic statistics, early indications are that the new measures have sharply cooled the property market. Arriving around the same time as the debt crisis in Greece, China's new restrictions caused many investors and businesses to question the strength of the global recovery. Domestic steel prices are down 7.4% since the April measures, and as of Thursday China's main stock market index is down 19.4%.

The housing market in many—though not all—Chinese cities seems to have nearly ground to a halt after the government moves. On average, the number of residential property transactions in the four weeks after the restrictions were announced is down 40% compared with the four weeks before the measures, according to figures covering 24 major cities from real-estate consultancy Soufun.com.

China's economic growth was already widely expected to slow in coming months, as the impact of last year's stimulus policies fade. Some forecasters, seeing weaker prospects in a key industry, are now further marking down their numbers for this year. China International Capital Corp. now expects the economy to expand 9.5% in 2010 as a whole, rather than the 10.5% it previously forecast.

But the key variable for how things unfold in coming months is difficult to forecast: What the government will do next. Analysts are divided about whether the government is more likely to take additional measures to push down prices, or start to reverse itself to restore confidence in the market.

Investors are focused on whether the government will impose new taxes on residential property, a move that is being discussed by big cities including Shanghai and Chongqing. On Monday, China's State Council signaled support for such changes, approving a set of economic-reform priorities including "gradually advancing reform of real-estate taxation." Even though no specific plans have been announced, the issue is weighing on markets since higher taxes would push down the value of properties.

http://online.wsj.com/article/SB10001424052748704025304575284442742333032.html

In the Gulf of Mexico, finally some “good news” on BP’s blow out oil well. BP should know later today if their latest cap attempt really will draw off much of the spewing oil and gas to waiting ships at the surface. We open with the latest from the NY Times on latest developments.

If an ass goes travelling, he'll not come back a horse.

Thomas Fuller

Obama Cancels Asia Trip as Concern on Spill Mounts

By PETER BAKER Published: June 4, 2010

WASHINGTON – President Obama canceled his trip to Australia, Indonesia and Guam late Thursday night as oil continued to stream into the Gulf of Mexico in what he has called the worst environmental disaster in American history.

His decision came as officials reported progress containing the oil leak at the bottom of the Gulf of Mexico.

Mr. Obama is to visit the Gulf Friday to assess the situation and meet with officials responding to the crisis. While the White House statement offered no reason for scratching the Asia trip this time, officials in recent days had grown increasingly convinced that it was untenable for the president to leave the country for a week with the oil spill still unchecked.

----In the Gulf, officials reported making some headway in the latest effort to place a cap over the well that would funnel at least some of the oil and gas to a ship at the surface. Earlier Thursday, 20-foot-long shears were used to snip the damaged riser pipe at the wellhead, and technicians began to lower the cap over it.

Late Thursday, Adm. Thad W. Allen of the Coast Guard, who is commanding the federal response to the disaster, announced that the cap had been put in place, but warned that “it will be some time before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment.”

Among the concerns was that the cap would not fit tightly and would allow seawater into the oil. That could lead to the formation of icelike hydrates that could block the flow. But the cap was outfitted with pipes for injecting methanol, which acts as a kind of antifreeze to prevent hydrates from forming.

-----Mr. Obama’s decision to cancel his Asia trip underscored the way the oil spill is forcing the White House to recalibrate plans for this summer. BP and the government have given up trying to plug the leak and are focusing now on siphoning or containing it until relief wells can be completed, perhaps by August. As a result, the president faces another two months in crisis management before he can even turn his focus exclusively to cleanup and recovery.

http://www.nytimes.com/2010/06/05/us/politics/05obama.html?hp

Plan for Relief Wells Spurs Hope Amid Caution

By HENRY FOUNTAIN Published: June 3, 2010

As engineers made headway Thursday in containing the oil leak at the bottom of the Gulf of Mexico, crews on two floating rigs flanking the spot where the Deepwater Horizon exploded and sank were doing what rig crews normally do: drilling wells.

The two wells, aimed at the bottom of the runaway well that has spewed millions of gallons of oil into the gulf, represent the most conventional solution to the disaster and the one that experts say is all but certain to succeed. Once either of the relief wells strikes pay dirt, the plan is to pump heavy drilling mud and cement down it to bring the blowout under control and permanently seal the damaged well.

------Doubters have pointed to past problems with relief wells, including one drilled during a blowout off southern Mexico 30 years ago that was unable to stop the gusher for three months after it was completed, and another off Australia last fall that did not hit its target until the fifth try.

BP officials say that the first relief well already extended more than 12,000 feet below sea level, about halfway to the target, but because drilling gets slower as a well gets deeper, it is not expected to be finished before August. The second well was started later and is not yet as deep. President Obama said federal officials ordered BP to drill the second well as a backup shortly after the rig exploded on April 20; the company said it was planning two wells anyway.

------The wells cost about $100 million each and are being drilled from rigs owned by Transocean, the company that owned the Deepwater Horizon.

The work could be delayed by hurricanes or by equipment or drilling problems, and the wells might initially miss the target, causing further delays as the drill bits are backed up and redirected. But BP officials and outside experts say that the relief wells will work. It is a matter of when, they say, not if.

“This is the answer,” said Walt Warchol, a retired drilling engineer in Houston. “It’s just going to take some time.”

http://www.nytimes.com/2010/06/04/science/earth/04relief.html?hp

But BP is living on borrowed time in fixing its Gulf of Mexico problem. It’s the start of the Atlantic and Caribbean hurricane season and there is simply no way to know if this will affect the relief wells timetable. In 2005 two major hurricanes passed almost directly over the site of BP’s oil leak disaster. Below, the latest from Accuweather

BP Running Out of Time in the Gulf of Mexico

Jun 3, 2010; 11:30 AM ET

The arrival of hurricane season and the warmest months of the year translate to rough waters and trouble for containment operations of the massive oil leak in the northern Gulf of Mexico.

Water temperatures have warmed considerably over the Gulf of Mexico in recent months. The warm waters will favor the formation of thunderstorms, rather than lead to their demise like that of the cold water season

The period of calm seas is coming to a close as well. Tropical waves of low pressure roll will soon drift farther north on their westward trip across the Atlantic from Africa. The waves of low pressure, which can breed tropical storms or hurricanes, can also bring intense squalls that kick up seas.

Approximately 1,900 vessels ranging from skimmers to tugs, barges and recovery ships were involved in containment and cleanup operations to date.

Skimming vessels have been circling the oil slick in recent weeks in an attempt to keep the contaminated area as small as possible. However, this operation can only be done in calm or nearly calm seas.

As winds increase from thunderstorms, squalls or tropical storms in the coming weeks, interruptions of containment operations will become more frequent.

If and when capping of the damaged well is successful, the oil is pumped onto a platform. First a temporary platform is brought in, followed by a more permanent platform. Only this heavy duty platform is designed to handle hurricanes.

AccuWeather.com Hurricane Expert Meteorologist Joe Bastardi remains concerned about multiple hurricanes affecting the Gulf of Mexico this season.

Depending on the strength and track of the hurricanes, vast amounts of the existing oil slick and dispersant agents could be captured by the storm and driven well inland by the storm surge.

Similar to the problems facing vessels during stormy conditions, containment and absorbent booms are ineffective during choppy seas. Approximately 4.1 million feet of booms have been deployed to date.

At least on a positive note, while hurricane can be very disruptive at the surface and along the shoreline, there is no wave action 5,000 feet below the surface. As long as the new pipe, which extends to the surface, is detached or secured during a storm, no further damage should be done to the well site and capping devices down below.

A Tropical Storm in the Gulf in mid-June?

While there have been a couple of minor concerns with tropical development over the past few weeks, there now appears the long-range first computer model's rendition of a tropical storm or hurricane in the Gulf of Mexico.

The GFS, or Global Forecast System, weather computer model is developing an area in the western Caribbean Sea during the second week of June. The model then brings that system into the Gulf of Mexico and strengthens it, just past the middle of the month.

http://www.accuweather.com/blogs/news/story/32333/bp-running-out-of-time-in-the-1.asp

In other commodities news, Australia’s proposed 40% mining tax is generating a major reappraisal of future projects. Below, Xstrata puts on hold the first of many projects, I suspect, if the tax actually gets passed and goes into effect.

Xstrata puts £3.8bn of projects on hold as row over Australian mining tax deepens

Swiss mining giant Xstrata has announced that it will suspend projects worth A$6.6bn (£3.8bn) in response to the Australian government's push for a new 40pc tax on mining profits.

By Bonnie Malkin in Sydney Published: 12:17PM BST 03 Jun 2010

Development of the "globally significant" Wandoan thermal coal project and the Ernest Henry copper mine, both in Queensland, have been put on hold indefinitely, putting 3250 jobs at risk. Xstrata said that a review had found that the proposed tax, which would be levied on returns on investment above 6pc, would mean that neither projects would be viable.

Mick Davis, the company's chief executive, said the Resource Super Profits Tax (RSPT) would slash profitability.

Our Australian management teams' analysis demonstrates that the RSPT would significantly impact the value and cashflows of both of these projects.

"The impact of the tax eliminates the net present value of the Wandoan (thermal) coal project almost entirely and substantially reduces the value of the Ernest Henry (copper) underground shaft project," he added.

The news is a blow to the Queensland economy, which relies heavily on the mining industry. Kevin Rudd, who is fighting for public support over the issue, said he was not surprised by the announcement.

Mr Rudd is engaged in a public relations war with the mining companies over the controversial tax. Figureheads of the industry have launched a multi-million dollar campaign to convince the public that the tax would cripple the industry, and the country's economy. In response, Mr Rudd has gone back on an election promise not to use taxpayer funds for government advertising, and launched a campaign of his own.

Responding to the Xstrata announcement, Mr Rudd said the threat was to be expected.

"I said at the very beginning of this debate ... that there would be ... threats of project closures, there would be projects threatened to be frozen, or frozen," he said.

"This is part and parcel of what will be the normal argy-bargy of a very tense debate. No mining company I've met so far has whacked up their hand and said they'd like to pay more tax."

The tax, which was announced in the budget last month but is yet to be passed by parliament, has prompted a savage backlash from the mining sector, the country's most valuable export industry, with global giants Rio Tinto and BHP Billiton both reviewing their Australian operations.

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/7800404/Xstrata-puts-3.8bn-of-projects-on-hold-as-row-over-Australian-mining-tax-deepens.html

Owning a racehorse is probably the most expensive way of getting on to a racecourse for nothing.

Clement Freud

At the Comex silver depositories Thursday, final figures were: Registered 52.45 Moz, Eligible 67489 Moz, Total 117.34 Moz.

Day 24 of Hitler’s attack in the west that almost brought down western civilization. Dunkirk the evacuation ends, day 9.

Dunkirk & the Battle of France – Day by day 70 years on.

http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html

+++++

Crooks and Scoundrels Corner.

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

Today and all weekend, meet the Bilderbergers. The ultra elitist, super secretive Lords of the Universe, who meet at least once each year to exchange secret handshakes, spells, and other quaint rituals, before getting down to the job of rigging the world economy, and I suspect markets. In 2008 they met and dispersed home right before Merrill blew up two Bear Stearns hedge funds as time was called on the Greenspan bubbles, setting in motion the process that lead to the first bank run in the UK in over 150 years, and ended when Lehman Brothers blew up, requiring central banksters everywhere to socialize all the losses on to the taxpayers and penalize and crush the working poor. I wonder what they have in store for this summer, and if they’ll at least wait until the World Cup is out of the way, which starts next Friday.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Adam Smith. The Wealth of Nations.

Bilderberg 2010: Plutocracy with palm trees

The shadowy global elite is meeting in Sitges – and Charlie Skelton is there, hoping for a new spirit of CamCleggian openness

Another year, another Bilderberg. The first "participants" (as the delegates are known) won't be arriving until Thursday, but already the Hotel Dolce in Sitges is buzzing with anticipation. This Catalan seaside town hasn't hosted an event as large and politically sensitive as Bilderberg since the legendary 2008 Foam Party at the Mr Gay Sitges awards night.

Last year, Bilderberg was held in Vouliagmeni, on the coast just south of Athens. The Greek minister of finance attended, the minister of foreign affairs, and the governor of the National Bank of Greece. A few months later, Greece was bankrupt and Athens was in flames. So … good luck, Madrid!

Police are already stretching their red stripy tape around the hotel, and zipping up and around the local roads in their squad cars, sniffing for trouble. I'm really hoping there's none to find. The Spanish are promising a beach party and an "awareness camp", with political discussion forums and meditation zones.

I plan to spend at least part of Friday sitting cross-legged in a campsite, sending beams of white light up the hill and into the hotel. Feel my love, Marcus Agius – Chairman of Barclays and senior non-executive director on the BBC's new executive board. Let it surround you, Queen Sofia of Spain. Don't fight it, president of the World Bank. You can't beat the love

It would be nicer if the interface between Bilderberg and the world could be softer – if it could turn an open face towards us, rather than the barrel of a machine gun. What I'm hoping is that this year, in the all-new CamCleggian spirit of openness and political transparency, any British elected official who attends the meeting – and I'm talking to you, Kenneth Clarke and George Osborne – will tell us they attended, tell us what they spoke about, and tell us what the next 12 months has in store. I don't think that's too much to ask.

-----For a long and luxurious weekend at the Dolce Sitges, relishing its "new and creative buffet concepts" (a table with food on it), prime ministers will mingle with European royalty, with various EU commissioners, with representatives from Goldman Sachs, Microsoft, AIB, Deutsche Bank, Chase Manhattan and Royal Dutch Shell.

They'll clink glasses with President Obama's special envoy to Afghanistan and Pakistan, Richard Holbrooke (he is confirmed for this year). And join the Friday night conga line behind the US treasury secretary (Tim Geithner went last year; he goes a lot). We can reasonably expect the head of the Federal Reserve, the president of the World Bank, the secretary general of Nato … they've all attended in the past and many will attend again. So yes, important it is; to think otherwise is painfully naive (see below for the usual "just a big boys' club" comments …)

The conference hotel may be perched above a golf course, and boast two ping pong tables, but this four-day event isn't about who is better at table tennis, Ken Clarke or David Rockefeller (it's Rockefeller). This is about big business, global financial strategy and the economic future of Europe … if indeed it has one.

And most importantly, this four-day event doesn't start until tomorrow – and continues all the way through the weekend – so if you're a PROPER journalist reading this, or a blogger, or simply a curious citizen of a Europe teetering on the edge, then come along. Please come. I'll buy you a Catalan beer. I recommend the Rosita. It's fruity but ballsy – not unlike the winner of Mr Gay Sitges 2008.

http://www.guardian.co.uk/world/blog/2010/jun/02/charlie-skelton-bilderberg-spain

http://www.dolce-sitges-hotel.com/

“"Today Americans would be outraged if U.N. troops entered Los Angeles to restore order; tomorrow they will be grateful! This is especially true if they were told there was an outside threat from beyond whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will pledge with world leaders to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well being granted to them by their world government."

Henry Kissinger in an address to the Bilderberger meeting at Evian, France, May 21, 1992.

Another weekend and Derby day at Epsom Downs on Saturday. Time to enjoy England’s glorious summer again. Trying to plan for the future in the era of failing fiat currencies and command economies, is worse than trying to pick the winner in tomorrow’s Derby. Tomorrow is also the close of the G-20 finance ministers meeting in South Korea, as they prepare for the full G-20 summit in Toronto. Next week, the Shanghai Cooperation Organization summit in Tashkent, and the World Cup opening in South Africa. How lucky can the world get. Have a great weekend everyone. More on the weekend blog over the weekend.

"The race is not always to the swift, nor the battle to the strong, but that's the way to bet."

Damon Runyon

Investec Derby Day

http://www.epsomdownsracecourse.co.uk/racing/investec-derby-day

Derby Day 1913.

http://www.historylearningsite.co.uk/derby_of_june_1913.htm

The monthly Coppock Indicators finished May:

DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.

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