Baltic Dry Index. 4187 +244
LIR Gold Target by 2019: $3,000.
"A well is constructed and completed the same way a house is built—at the direction of the owner and the architect. And in this case, that's BP."
Transocean spokesman.
More on BP later where today is intended to be a make or break “top kill” day, but first more news from ground zero in the financial crisis roiling the markets. Italy joins the sackcloth and ashes brigade. The news from Greece just goes from bad to worse. According to yesterday’s article in Der Spiegel, tourism has collapsed in Greece, especially tourism from Germany, it seems. Trapped in the straightjacket of the Euro, Greece is hopelessly over priced compared to next door Turkey. It doesn’t take a genius to see what eventually comes down the road. Restructuring and a different sort of Euro lie ahead.
"Tourism is our heavy industry," says hotel manager Andreas Metaxas. "It's a key economic sector next to agriculture and shipping." The latter is also suffering as a result of the global crisis.
MAY 25, 2010, 11:27 P.M. ET
Italy Approves Budget Cuts
Rome joins Europe's crisis-driven effort to reduce public spending
ROME—The government of Italian Prime Minister Silvio Berlusconi approved budget cuts Tuesday of up to €24 billion ($29.7 billion) over the next two years in an effort to shore up public finances.
The cuts come as other European governments try to reduce public spending in response to the growing levels of sovereign debt.
Spain last week approved measures valued at €15 billion for this year in an effort to trim a budget deficit equal to 11% of gross domestic product. Britain's new coalition government, which outlined $9.05 billion in budget cuts on Monday, plans to unveil further cuts next month.
Italy is heavily indebted, with an outstanding public debt equal to 115% of GDP. However, the government's budget deficit—forecast at 5.3% of GDP for this year—is relatively modest compared with other EU countries. The government expects its cuts to bring Italy's deficit down to 3.9% in 2011 and 2.7% in 2012.
-----The government will carry out half of the cuts by reducing the amount of funds that Italy's central government allocates to regions and cities. About €6 billion in cuts will be made through wage freezes and wage cuts for public-sector workers.
The plan cuts current salaries of government ministers and parliamentarians by 10% in 2011 and introduces a so-called "construction amnesty."
That measure will allow Italians who built houses without the approval of zoning officials to register their homes by paying a fine that is lower than the sum of the taxes that are owed on the property.
Mr. Berlusconi's government didn't announce any tax increases, an option that would have been deeply unpopular in Italy, where tax burdens remain heavy and evasion is rampant.
Crisis Hits Greek Tourism as Cancellations Soar
By Manfred Ertel 5/25/2010
The Greek tourism industry, which was hoped to contribute to the country's recovery, is in crisis. Hundreds of hotels are for sale, and visitor numbers are in sharp decline. The cash-strapped government is hardly in a position to help.
The season got off to a late start this year. It is mid-May, there is bright sunshine in the skies over Greece, and Dimitris Fassoulakis is standing on the abandoned terrace of his hotel on the southern coast of Crete. The lobby and the restaurant are empty, and there is no one in the pool. "Pick a spot," says the manager, spreading his arms widely.
-----Reservations are down by an average of about 30 percent nationwide since last summer, and experts expect a large number of cancellations. The Association of Greek Tourism Enterprises (SETE) reported that in the first 24 hours after the general strike in early May, more than 5,800 reservations were cancelled in 28 Athens hotels. According to SETE calculations, at least 300,000 Germans will decide not to make their usual trips to Greece this year.
Dozens of conferences and major events have been cancelled in the country's two largest cities, Athens and Thessaloniki, as well as in Crete and the northern Greek beach resort area of Chalkidiki. After the riots in the capital, some countries, like Romania, issued travel warnings for Athens.
More than 400 hotels are now officially for sale: 81 on the Ionian Islands, 48 on Rhodes, 50 on the Cyclades and 44 on Crete. The Greek vacation atlas, with names like Paros, Naxos, Andros, Milos, Santorini, Corfu and Kos, reads like one big bargain-basement sale. The Athens daily newspaper Kathimerini estimates the value of all properties currently on the market at more than €5 billion ($6.2 billion). They also include luxury hotels, the names of which have been concealed from the public.
Marred by general strikes, mass protests, burning banks and deaths, the vacation paradise hasn't looked like one for weeks, at least not in the news. The Greeks themselves have less money to spend on vacation, while tourists have other options.
And then there are the ongoing stories of corruption, sleaze and fraud, like the massive tax debt of pop singer and actor Tolis Voskopoulos. Using tricks and deception, he managed to avoid paying €5.5 million on back taxes for 17 years. Until last week, the singer's wife was the deputy minister for tourism in the administration of Prime Minister George Papandreou. She resigned because of her husband.
One in five jobs depends directly or indirectly on tourism, as does -- or did, at least -- 18 percent of the country's gross domestic product. Some 850,000 people work in the tourism industry in Greece.
"Tourism is our heavy industry," says hotel manager Andreas Metaxas. "It's a key economic sector next to agriculture and shipping." The latter is also suffering as a result of the global crisis.
http://www.spiegel.de/international/europe/0,1518,696493,00.html#ref=nlint
We end for the day on Europe, with the great EU project turning against itself. Suddenly it looks like it’s open season on Germany. The twin midget Caesars of Europe have abruptly started biting the German hand that feeds them. An unwise move for both I think. Euros anyone? Restructuring the PIIGS looks to me the only sensible way out.
It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought.
J. K. Galbraith.
Barroso Attacks Merkel over Calls for EU Reform
05/25/2010
The EU remains divided over how to respond to the euro-zone debt crisis, with Commission President Jose Manuel Barroso calling Chancellor Angela Merkel's plans for EU reform "naive." Meanwhile concerns about the European banking sector continue to batter the euro.
European stock markets fell sharply on Tuesday and the euro continued to weaken amid investor concern about the stability of the banking system following the near-bankruptcy of a Spanish savings bank, Cajasur.
-----The rescue highlights problems in the European banking sector. Many commercial banks are heavily exposed to the euro crisis through their holdings of government bonds issued by highly-indebted southern European countries such as Greece, Spain and Portugal.
-----Meanwhile, in a further sign of divisions in Europe over how to deal with the euro crisis, the president of the European Commission, Jose Manuel Barroso, called Chancellor Angela Merkel's demands for modifications to the EU treaty to enhance control of member states' budgets "naive."
"We will not propose treaty modifications even though we are open to good ideas," Barroso told German newspaper Frankfurter Allgemeine Zeitung in an interview published on Tuesday. "It would also be naive to think one can reform the treaty only in areas Germany considers important."
If the treaty were amended to boost economic governance, other member states would want to see modifications in other areas too, said Barroso.
Barroso also questioned Merkel's calls for persistent debt offenders in the euro zone to have their voting rights withdrawn. "When it comes to procedures against countries with excessive deficits, it is already the case under current rules that the member state affected is not allowed to vote. Under constitutional law it would be nearly impossible to do more, in my view," he said.
EU finance ministers had met on Friday to discuss the consequences of the Greek crisis. There was agreement on the need for "financial and non-financial sanctions" to force high-debt countries to curb spending. But EU leaders are divided on how to achieve this goal. EU Council President Herman Van Rompuy said amendments to the European treaty demanded by Germany were not a priority.
http://www.spiegel.de/international/europe/0,1518,696555,00.html#ref=nlint
Now back to make or break day for BP. Below, the latest on the BP oil rig disaster from the WSJ. BP seems to have admitted responsibility for the fatal error of judgment to proceed after a “very large abnormality” had occurred. Later today, BP is about to attempt its “top kill.” The effort to close down the spewing oil well by pumping drilling mud under high pressure into the top of the breakout preventer. By their own standards BP rates the likelihood of success about 70%. An increasingly unhappy US public is unlikely to be tolerant of failure, heaven help BP if they make it worse.
“I understand people want a simple answer about why this happened and who is to blame,” Tony Hayward, BP chief executive officer, said in a statement. “The honest truth is that this is a complex accident, caused by an unprecedented combination of failures. “A number of companies are involved, including BP, and it is simply too early – and not up to us – to say who is at fault.”
MAY 26, 2010
BP Cites Crucial 'Mistake'
'Very Large Abnormality' in the Well Wasn't Heeded Hours Before Fatal Explosion
Oil giant BP PLC told congressional investigators that a decision to continue work on an oil well in the Gulf of Mexico after a test warned that something was wrong may have been a "fundamental mistake," according to a memo released by two lawmakers Tuesday.
The document describes a wide array of mistakes in the fateful final hours aboard the Deepwater Horizon—but the main revelation is that BP now says there was a clear warning sign of a "very large abnormality" in the well, but work proceeded anyway.
The rig exploded about two hours later.
The congressional memo outlines what the lawmakers say was a briefing for congressional staff by BP officials early Tuesday. Company representatives provided a preliminary report on their internal investigation of the April 20 disaster, which killed 11 workers and continues to spill thousands of barrels of oil daily into the Gulf of Mexico.
-----According to the memo, BP identified several other mistakes aboard the rig, including possible contamination of the cement meant to seal off the well from volatile natural gas and the apparent failure to monitor the well closely for signs that gas was leaking in, the congressmen wrote in their post-meeting memo. An immense column of natural gas, erupting from the oil well, fueled the fireball that destroyed the rig.
A BP spokesman declined to comment on the memo's specific statements. He said the company had identified "what we believe to be a series of underlying failures" that caused the accident.
Although the memo identifies some of the problems that led to these mistakes, it doesn't identify who made the key decisions. Most of the work aboard the rig was performed by employees of Transocean Ltd., the rig's owner and operator, and other contractors, but BP had managers aboard the rig to supervise the work at the time of the accident.
In related news, NOAA has expanded the GOM fishing ban, though other media reports say that the ban is being widely flouted. If true, the violators are putting the whole GOM fishing industry at risk of a consumer backlash.
NOAA: Fishing Ban Now Covers 22% of Gulf Federal Waters
Deepwater Horizon Incident Joint Information Center Tuesday, May 25, 2010
NOAA has extended the closed fishing area in the Gulf of Mexico to match the Louisiana state waters closure west of the current boundaries, and to incorporate an area reportedly with oil in the southwest. Closing fishing in these areas is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers.
The closed area now represents 54,096 square miles, which is slightly more than 22 percent of Gulf of Mexico federal waters. This leaves more than 77 percent of Gulf federal waters still available for fishing. The closure will be effective at 6:00 p.m. EDT. Details can be found at http://sero.nmfs.noaa.gov/.
The federal and state governments have systems in place to test and monitor seafood safety, prohibit harvesting from affected areas, and keep oiled products out of the marketplace. NOAA continues to work closely with the U.S. Food and Drug Administration and the states to ensure seafood safety, by closing fishing areas where tainted seafood could potentially be caught, and assessing whether seafood is tainted or contaminated to levels that pose a risk to human health. NOAA and FDA are working to implement a broad-scaled seafood sampling plan. The plan includes sampling seafood from inside and outside the closure area, as well as dockside- and market-based sampling.
According to NOAA, there are approximately 5.7 million recreational fishermen in the Gulf of Mexico region who took 25 million fishing trips in 2008. Commercial fishermen in the Gulf harvested more than one billion pounds of fish and shellfish in 2008.
http://www.rigzone.com/news/article.asp?a_id=93758&hmpn=1
We end with the great legal fight for the spoils just beginning and this is only on the civil side of the coming litigation. Below, Transocean wants its cake and to eat it too. More and more BP looks like being a very troubled stock for several years to come. It may already be too late for BP Plc to try to ring fence the problems into BP America, but even if they could, what is the true shareholder value of the resulting rump?
Legal maneuvering may situate Gulf of Mexico oil spill litigation in Houston
By Rebecca Mowbray, The Times-Picayune May 23, 2010, 7:00PM
The 19th century maritime law that Transocean Ltd. cited in filing a lawsuit to limit its liability in the April 20 explosion of its Deepwater Horizon rig could also give the companies involved in the disaster an edge to move all the litigation surrounding the incident to Texas.
On May 13, Transocean filed a proceeding in Houston under an outmoded 1851 law known as the Limitation of Shipowner's Liability Act to limit its legal exposure to $26.8 million, or the value of the sunken rig and whatever freight it was carrying. The limitation of liability act also allows a vessel owner to consolidate all litigation over a shipping accident to a venue of its choosing, and like a bankruptcy filing, halts all proceedings in other courts.
In maritime law, a rig is considered a vessel. Attorneys say it's an uphill battle for vessel owners to successfully limit their liability in a such a proceeding, so the primary reason for filing may be to nudge the massive litigation that is expected over the rig explosion and oil leak to Houston.
"I think there was a considered thought process on behalf of BP and Transocean to hometown the litigation and do anything that they could do to get the litigation in Houston and out of Louisiana," said Scott Bickford, who filed the first lawsuit the day after the explosion in federal court in New Orleans on behalf of the family of a worker who was killed. "Why is this thing in Texas other than the fact that the wrong-doers are there? This is a terrible situation."
More than 100 cases have been filed in federal courts across the Gulf Coast over the rig explosion and oil spill, many of them in New Orleans, plus others in state court, and those proceedings are expected to be consolidated into one giant case.
Reserve plaintiff attorney Daniel Becnel has filed an application with a panel of federal judges that considers consolidation requests to hold the proceedings in New Orleans. BP, which leased the Macondo well where the Deepwater Horizon was drilling, has filed application with the panel to consolidate the proceedings in Houston. The U.S. Judicial Panel on Multi-District Litigation will meet in Boise, Idaho, on July 29 to consider arguments from both sides about where the proceedings should be held, and is expected to make a decision within a few weeks of the gathering.
But as Transocean's proceeding moves forward in Houston to determine whether the company is eligible limit its liability, all depositions and discovery of facts will take place within the context of that suit. As work on the Transocean case proceeds in Houston, it could preempt the work of the panel of federal judges or help make the case that Houston has already become the nucleus of the litigation.
"The center of the entire litigation will move away from Louisiana to a state that has absolutely no damage. The legal implications are you get Texas justice for Louisiana," Bickford said.
In Houston, Judge Keith Ellison has already stayed all legal proceedings involving Transocean because of Tranocean's suit. On Tuesday morning, Ellison will hold a status conference to clarify issues related to the stays and to set a date for a hearing on motions filed by Bickford to dismiss the limitation of liability proceeding or move it to Louisiana. Attorneys representing fishers and the Louisiana Environmental Action Network have made similar requests
------Although Transocean seeks to limit its liability in the disaster to $26.8 million, the company has already collected $401 million from its rig insurers, according to a first quarter earnings conference call held April 26, just days after the explosion.
In a May 13 press release, Transocean said that it filed to limit its liability at the instruction of its insurers.
http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/05/legal_maneuvering_may_situate.html
So far we have stayed away from commenting of the growing crisis between the two Koreas, because a war between the two still seems unlikely, but as in 1914, events can have an unfortunate way of getting away from all the parties involved. With the US well stretched in Iraq and Afghanistan and busy building up Naval forces off Iran, a real war in the region is one war too many. While the USA will be looking to China to restrain North Korea, and who probably will, that reality will not be lost on the East Asian region. Once again, yet another reason to stay long precious metals.
"Germany was until now a big winner from the euro. I feel that more politicians in Germany should make that clear"
Jose Manuel Barroso.
At the Comex silver depositories Tuesday, final figures were: Registered 52.60 Moz, Eligible 65.46 Moz, Total 118.06 Moz.
Day 17 of Hitler’s attack in the west that almost brought down western civilization. We continue our daily update on the “Dunkirk” page.
Dunkirk & the Battle of France – Day by day 70 years on.
http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html
+++++
Crooks & Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today a reported Madoff settlement that might not be quite all that’s claimed, plus more on the egregious case of a gross deliberate illegal breach of privacy by Google. Who wrote the computer program and who authorised it? Who got all the data illegally collected? What purpose was intended for the illegal data? If this was known and authorised at board level, someone needs to go to jail to make sure this never happens again.
Madoff Investors, Banks Settle for $15.5 Billion, Lawyers Say
By Charles Penty and Stephanie Bodoni
May 25 (Bloomberg) -- Banks agreed to pay about $15.5 billion to settle claims by about 720,000 investors outside the U.S. who lost money in Bernard Madoff’s fraud, according to a group of law firms that represent victims.
About 80 percent of the clients represented by the firms are covered by the settlements, said Miguel Larios, a senior associate at Cremades & Calvo-Sotelo. The Madrid firm last year helped set up a network of lawyers that were taking on Madoff- related complaints. The New York Times reported the settlement agreement yesterday.
Banco Santander SA, Spain’s biggest lender, last year offered compensation in the form of preferred shares paying 2 percent interest in an attempt to repair relationships with private banking clients who lost 1.38 billion euros ($1.7 billion) on Madoff-linked products Santander sold them.
European banks have come under increased pressure since Madoff’s arrest as investors in France, Ireland and Luxembourg have sued seeking repayment of losses. UBS AG and HSBC Holdings Plc, Europe’s largest bank, are together facing more than 100 investor complaints for allegedly failing in their duties as custodians for European Union-regulated funds.
“We have never, ever heard of these settlements,” Edouard Fremault a senior analyst at Deminor International, which advises some 1,200 investors in Europe who lost money invested with Madoff, said in a telephone interview. “We are a bit skeptical. I am certain that there’s been no deal in France, Belgium, Luxembourg or the Netherlands.”
Javier Cremades, chairman of Cremades & Calvo-Sotelo and president of the law firm network will hold a news conference in New York today to talk about the settlements, Larios said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4by.X3XQYKg&pos=6
Google Street View 'single biggest breach of privacy in history'
The Australian communications minister has labelled internet search giant Google "creepy" and said that the company's collection of wireless network data through its Street View service was the single biggest breach of privacy in history.
Bonnie Malkin in Sydney Published: 1:37PM BST 25 May 2010
Earlier this month, Google announced it had discovered that the roving cars it uses to create its online mapping services were inadvertently gathering data on people's website use over unsecured wireless networks.
Google apologised, but the admission caused alarm across the globe.
Germany's consumer protection said that Google had acted "illegally" and failed to show respect for the privacy of its citizens. The UK Information Commissioner has asked Google to delete information gathered on British citizens as soon as possible.
Now Stephen Conroy, Australia's minister for broadband, communications and the digital economy, has told a senate committee that Google deliberately decided to collect the private information.
Mr Conroy, whose plan to implement an internet filter in Australia has been strongly criticised by Google, blamed the company's CEO Eric Schmidt.
"I think the approach taken by Mr Schmidt is a bit creepy frankly," Mr Conroy said.
"When it comes to their attitude to their own censorship, their response is simply, 'trust us'. That is what they actually state on their website: 'Trust us'."
Mr Conroy said that the search engine considered itself above government.
"They consider that they are the appropriate people to make the decisions about people's privacy data and that they are perfectly entitled to drive the streets and collect as much private information by photographing over fences and collecting data information," he said.
He said claims by Google that it collected the data by mistake were wrong and that the company deliberately wrote a computer code designed to gather the information.
Google has dismissed the claims.
In a statement a spokesman for the company said that Google was surprised to hear criticism about its privacy record in a hearing that was supposed to be focused on the proposed internet filters.
“We have reason to believe you have committed an offence."
City of London. 1960s parking ticket.
The monthly Coppock Indicators finished April:
DJIA: +245 UP. NASDAQ: +448 UP. SP500: +276 UP. The great Bull market goes on with the all three continuing higher in positive numbers. But how much Bull is enough?
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