A Very Different Century.

Baltic Dry Index. 2741 +28

LIR Gold Target by 2019: $3,000.

In the past decade the United States has dramatically shifted the way in which it wages war – fewer soldiers and more contractors.

Last month, the Congressional Research Service reported that the Department of Defense (DoD) workforce has 19% more contractors (207,600) than uniformed personnel (175,000) in Iraq and Afghanistan, making the wars in these two countries the most outsourced and privatized in U.S. history.

http://www.counterpunch.org/quigley09012010.html

While high frequency trading programs were busy gaming the stock market yesterday, 27 of the last 89 NYSE trading days have been 90%+ up or down by share volume, yesterday’s turn was up, we opted to take a look at our rapidly changing world. Thanks to BP and Greenpeace, the odds are now higher that we will fall behind in finding and developing the replacement oil we need for our modern way of life. Peak oil, thanks to deepwater drilling restrictions and a shaken public confidence in the ability of the behemoth oil companies to safely drill for technologically challenging oil, is now a very likely prospect. Below, Der Spiegel on a surprising twist in Europe. In Germany and Britain at least, peak oil is now scaring the governments. What do they know that we don’t?

'Peak Oil' and the German Government 09/01/2010

Military Study Warns of a Potentially Drastic Oil Crisis

By Stefan Schultz

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes further.

The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the "total collapse of the markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about a supply crisis than it cares to admit.

More.

http://www.spiegel.de/international/germany/0,1518,715138,00.html#ref=nlint

If peak oil is the problem, renewable energy is the solution, and with it e-mobility via electric bikes, scooters, cars, vans and trucks. I write regularly on the subject over at the rare metal blog, (http://www.raremetalblog.com/) where many better writers than me cover the subject in depth, but the following press release caught my interest at the end of last month, if only for the part about Magna International. If Magna’s Frank Stronach, the Henry Ford of our day, is getting involved with e-mobility and EVs, it’s very likely to be “the next big thing”.

A modern electric car has only about five main moving parts compared with hundreds in an internal combustion engine. There are no regular visits to the dealership for an EV. No oil changes, no filters – even brake pads last two-to-three times longer than in conventional cars, because EVs like the THINK City use regenerative braking to recapture the energy that would otherwise be lost while braking. Your first trip to the dealership with an EV for scheduled maintenance is at 40,000 miles to check the brake pads. Eventually, you’ll need new wiper blades and tires. But that’s about it!

Celadon Applications Announces the Release of the Road2™ Mobile Application to Eliminate Range Anxiety for Electric Vehicle Drivers

Celadon Applications, (www.CeladonApps.com ), creator of intelligent green energy and transportation software applications for the electric vehicle and alternate energy markets, is announcing the release of their newest application for eliminating "range anxiety" in electric and hybrid vehicles, Road2™.

Iowa City, IA (PRWEB) August 25, 2010

Celadon Applications, (www.CeladonApps.com ), creator of intelligent green energy and transportation software applications for the electric vehicle and alternate energy markets, is announcing the release of their newest application for eliminating "range anxiety" in electric and hybrid vehicles, Road2™.

Road2 is an advanced vehicle simulator that enables drivers of electric and hybrid vehicles to determine accurately and easily how far they can drive on specific battery charge level over a route of their choice. The application is essential for electric and hybrid vehicles of all types. Road2 is not a theoretical calculation like many rudimentary approaches, but uses specific sensor data, individual vehicle characteristics, weather, topographic and road conditions and other elements to provide an accurate measure with which the driver can feel confident.

Drivers must know they can drive somewhere and get home again, never being stranded. The EV market will require many elements for growth, but most important to a driver's buying decision is eliminating driver "range anxiety".

Road2 is an application which drivers can use with their Smartphones, desktops, on the internet, and even in their vehicles. Simply select where you want to go, and Road2 will tell you which route is fastest, shortest or uses the least battery energy while insuring you get there and back. Locations and specifications of charging station opportunities along the way are provided. Road2 bases all calculations on your specific vehicle configuration, route, weather, topology and many other factors, every 0.1 meter.

-------Top tier auto supply companies such as Magna International have purchased Road2. Celadon is in discussions with other manufacturers and suppliers. The Iowa Department of Economic Development and the Pappajohn Entrepreneurial Center (http://www.iowajpec.org/) have recognized Celadon as a high potential company and in the forefront of providing applications for the blossoming electric car market such as Nissan Leaf, GM Volt, Tesla, Honda, Toyota Prius, etc.

http://www.prweb.com/releases/2010/08/prweb4422784.htm

With $1-billion windfall, Stronach plunges into new ventures

Published On Wed Sep 1 2010

When Frank Stronach touched down aboard a corporate jet in Vienna near Magna International’s European headquarters on Wednesday night, his mind wasn’t much on clinching a $1-billion payoff from the company.

Like a secret agent feverishly hop-scotching across the world’s hot spots, the legendary entrepreneur was already deep into another mission. Not much time to count cash.

This time, Stronach was in pursuit of what he considers the next big thing: electric cars.

The part-time Magna chairman and full-time visionary wants to make sure the manufacturing powerhouse gets in front of the pack and stays there.

A $1-billion gain would likely cause pause for even some of the world’s richest people, but not for the 77-year-old Austrian immigrant and former tool-and-die maker who started a small Toronto shop in 1956 and turned it into the fourth-largest auto parts company in the world.

“I wasn’t too interested,” Stronach said in an interview after arriving at the head office in Oberwaltersdorf, Austria. “I don’t see much of a difference.”

While lawyers battled in an Ontario court this week over whether Stronach and his family trust should get the windfall in cash and stock plus other lucrative benefits in exchange for his controlling stake in Magna, he was busy with talks in the Far East.

It was the middle of a three-week trek by a Magna team studying and scouting opportunities on what can and can’t work in the emerging world of electric vehicles for the masses.

http://www.thestar.com/business/companies/magna/article/855718--with-1-billion-windfall-stronach-plunges-into-new-ventures

I am a big believer in our new arriving electronic age, I see e-vehicles now as the equivalent of autos in about 1908. By 1920 they were on their way to dominate the world. If we can come up with enough Neodymium and dysprosium to make it all happen, I expect the transition to renewable energy, megawatt grid storage, e-mobilty, and build-out of the recharging industry, the new “gas stations of the 21^st century”, to be the driver of our way out of the current recession/depression. Below, latest developments in EV.

Electrical vehicles emit no tailpipe emissions while driving. We are not counting grams. We simply have no tailpipe at all, and no local CO2, nitrous oxide, or particle emissions. Driving electrical vehicles will even reduce noise pollution. It is both clean and silent.

Tazzari Zero electric car comes to the UK

Retailer EV Stores will sell the Italian-built, lithium-ion-powered Tazzari Zero for £21,500.

Wednesday 1 September 2010 16.08 BST

Specialist electric vehicle retailer EVStores has announced it will begin selling the Tazzari Zero electric vehicle in the UK from later this month.

The company said the Zero, a compact two-seat vehicle, purpose built for battery electric propulsion, will be available from its London showroom from 12 September.

The Zero is powered by lithium-ion batteries that boast a range between charges of around 140km or about 87 miles. The car is also expected to reach an electronically capped top speed of 100 km/h (62mph) and will deliver acceleration from zero to 50km/h (31mph) in less than five seconds, ensuring the Zero should feel sufficiently powerful for urban roads.

The car is built by Tazzari, an Italian firm with a background in aluminium casting and other engineering services. Unsurprisingly, the Zero makes substantial use of aluminium in its construction to provide a light and strong frame. Including its 142kg battery pack, the Zero weighs under 550kg, or about 200kg less than a petrol-powered Smart ForTwo city car.

http://www.guardian.co.uk/environment/2010/sep/01/tazzari-zero-electric-car

Think city electric car heads to the Alps

Now there is a sustainable way to enjoy the stunning beauty of the Swiss Alps this summer-drive an electric car!

Norwegian electric carmaker, Think and its Swiss distributor, M-Way, have teamed up with eco-tourism specialists Alpmobil to offer visitors to its resorts totally carbon-neutral transportation for use on their vacation.

A fleet of 60 THINK City EVs has been made available in the Goms and Haslital region of the Swiss Alps, and will be available for hire through some 30 hotels, resorts and other touristic hot spots in the area. Better still, the car’s will be recharged using electricity generated from the natural power of the area, making it truly zero emission driving. EV charging is made accessible around the region thanks to more than 20 battery charging points that have been installed in the area – powered by renewable hydroelectric generated electricity derived from local mountain waters, reservoirs and dams.

Alpmobil will be marketing the service through its website and its resorts in the region, and the EVs will be available for hire at a special rate of some €45.00 per day for Alpmobil customers.

The programme will run as a trial during peak European holiday season until end of September 2010, when the trial will be reviewed.

-----The latest generation THINK City can cover 160 kilometres on a single charge (via conventional household outlet) and has a top speed of 110 km/h.

http://www.thegreencarwebsite.co.uk/blog/index.php/2010/08/09/think-city-electric-car-heads-to-the-alps/

We end for today with food riots starting up again, in response to our weather impacted crops of wheat, barley and rice this year. If global cooling is in our future for the next 20 years, this ranks with a switch to renewable energy as the most important challenge we all face.

At least 4 die in Mozambique food riots

By the CNN Wire Staff September 2, 2010

(CNN) -- At least four people died and 27 were wounded in riots that erupted Wednesday after Mozambique's government announced increases in the price of bread, water, energy and other critical goods, the southern African nation's official news agency reported.

The exact death toll was unclear -- the news agency said other "credible sources" were reporting at least 10 people had died.

-----Police made 142 arrests, according to police spokesman Pedro Cossa, who said casualty figures were likely to rise.

Cossa said police used tear gas and rubber bullets against the rioters, but local media -- citing witnesses -- said real bullets were also used.

Three buses were burned, 32 shops were vandalized and more than five cars were burned or vandalized, Cossa added.

The price hikes are to go into effect September 6.

The violence took place in the cities of Maputo and Matola, with the deaths occurring on the outskirts of Maputo, the Mozambique News Agency reported.

Bank and electricity company offices were vandalized, and food warehouses belonging to the Sasseka and Delta Trading distribution companies were looted, the report said.

He said the government is already subsidizing the prices of food goods and gas.

Minister of Interior Jose Pacheco -- during a news conference -- had called for calm and exhorted parents to control their teenagers.

http://edition.cnn.com/2010/WORLD/africa/09/01/mozambique.violence/index.html?hpt=P1#fbid=0ZR_3t_KNP9&wom=false

TH!NK city is the world’s only crash-tested and highway-certified electric car. It is a very safe car that is designed to meet the strict safety requirements in both Europe and the US as a ‘highway safe’ road car. It is equipped with ABS brakes, airbags and three point safety belts with pretensioners. The advanced frame is designed to absorb energy and distribute it away from the passenger compartment. The dashboard and knee padding have been developed to absorb impact. Both doors have side impact bars and pusher blocks made of shock-absorbent materials.

Our engineers expect the TH!NK city to achieve a four or five star rating in the EuroNCAP frontal crash test when and if the vehicle is tested.

At the Comex silver depositories Wednesday, final figures were: Registered 51.81 Moz, Eligible 58.50 Moz, Total 110.31 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks today just the first really dangerous storm of the Atlantic hurricane season. The computer models still all show it staying out in the Atlantic, but the eastern US and Canada are taking no chances.

Island evacuations start as Earl nears East Coast

NAGS HEAD, N.C. – Hurricane Earl steamed toward the Eastern Seaboard early Thursday as communities from North Carolina to New England kept a close eye on the forecast, worried that even a slight shift in the storm's predicted offshore track could put millions of people in the most densely populated part of the country in harm's way.

Vacationers along North Carolina's dangerously exposed Outer Banks took advantage of the typical picture-perfect day just before a hurricane arrives to pack their cars and flee inland, cutting short their summer just before Labor Day weekend.

The governors of North Carolina, Virginia and Maryland declared states of emergency, sea turtle nests on one beach were scooped up and moved to safety, and the crew of the Navy's USS Cole rushed to get home to Norfolk, Va., on Wednesday ahead of the bad weather. The destroyer was supposed to return later this week from a seven-month assignment fighting piracy off Somalia.

Farther up the East Coast, emergency officials urged people to have disaster plans and supplies ready and weighed whether to order evacuations as they watched the latest maps from the National Hurricane Center — namely, the "cone of uncertainty" showing the broad path the storm could take.

Earl was expected to reach the North Carolina coast late Thursday and wheel to the northeast, staying offshore while making its way up the Eastern Seaboard. But forecasters said it could move in closer, perhaps coming ashore in North Carolina, crossing New York's Long Island and passing over the Boston metropolitan area and Cape Cod.

That could make the difference between modestly wet and blustery weather on the one hand, and dangerous storm surge, heavy rain and hurricane-force winds on the other.

----As of early Thursday, Earl was a powerful Category 4 hurricane centered more than 460 miles south of Cape Hatteras, N.C., with winds of 140 mph. The most powerful category is 5 with winds 155 mph and higher.

http://news.yahoo.com/s/ap/tropical_weather

It is September 2^nd and here in warm southern England’s Thames Valley I saw my first Vee flight of incoming geese this morning, about the earliest I can remember. Of course the might have been a flight of geese that stay here all the time, although they never fly around in Vee formations. It might mean nothing, but our visiting House Martins all left back for Africa at the end of July, the earliest I can recall too. Even the 50 strong flock of Swifts left for Africa last month, before the fields above the Pang valley where I walk the dog were harvested, another first. Do they know something we don’t?

Graeme takes the last Friday off for the summer, tomorrow, the next update will be on Monday, America’s Labour Day holiday. Hopefully hurricane Earl will stay out to sea. Have a great weekend everyone, whether celebrating Labour Day or just heading towards a regular working Monday.

The monthly Coppock Indicators finished August:

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

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

Technorati Tags: Peak oil,Electiric vehicles,Magna International,Frank Stronach,Food riots,hurricane Earl,global cooling,rare earths and metals

The Fed’s Casino.

Baltic Dry Index. 1840 -62 (Down 56% since May 26.)

LIR Gold Target by 2019: $3,000.

"We will have a world government whether you like it or not. The only question is whether that government will be achieved by conquest or consent."

James Paul Warburg. Testimony before the U.S. Senate on February 17, 1950.

For more on the Fed’s new casino scroll down to Crooks’ Corner. We open this morning pointing out the obvious, the Baltic Dry Index has fallen 56% from its May 26 high of 4200, and is now less than 3 times its post Lehman crash low of a then mind numbing mere 663. I have no idea what nuanced message the BDI is signaling, but I do know that its waving red flags like a banshee, firing distress rockets faster than the Titanic, and ringing bells and sounding klaxons loud enough to wake the dead. For me it is time to be 100% out of stocks and probably worth buying a few deep-out-of-the-money put options on year end.

Below, China says it’s going to stay the course on what passes for austerity for one sixth of mankind. Stay long precious metals. If China stays the course, the west’s double dip will generate masses of Professor Krugman advocated, Greenspan style, monetization.

China reiterates policy-tightening bias on property sector

July 13, 2010, 12:23 a.m. EDT

HONG KONG (MarketWatch) -- Chinese government ministries signaled late Monday there would be no backtracking from the course of policy tightening in the near future, according to reports, dashing hopes that some of the measures rolled out in mid-April to cool the housing sector would be relaxed.

China Banking Regulatory Commission and the state-owned Assets Supervision and Administration Commission reportedly reiterated their resolve in pushing ahead with tightening measures and other policies designed to curb speculation.

The Ministry of Housing and Urban-Rural Development also said the government would not make any significant adjustments to its tightening policies.

"Many analysts are underestimating China's determination in curbing property prices," said Bank of America-Merrill Lynch analysts in research note Tuesday.

Data released the Statistics Bureau on Monday showed Chinese house prices edged lower in June from the preceding month, marking the first month-on-month decline since February 2009, suggesting cooling steps did have some effect.

http://www.marketwatch.com/story/china-reiterates-policy-tightening-bias-2010-07-13

In European news, tiny Slovakia just poked “Herman Who” and Jean-Claude Junker (who?) in the eye and gave them a follow up “Glasgow kiss.” In the democratic way that the EU operates, the Slovaks are about to get called into Brussels to get the rules explained again. Well rule number one for small EU countries anyway, “do what we say and no one will get hurt.” An amazing Slovak groveling U-turn can be expected before the end on the month. I mean, really, just who does Ms Radicova think that she is, Angela Merkel?

JULY 13, 2010

Slovakia Resists EU in Aid Talks

BRUSSELS—The new Slovak government remains opposed to a rescue package for Greece, Prime Minister Iveta Radicova said Monday, after a meeting with European Union Council President Herman van Rompuy.

"The position of our minister of finance and also my personal and our political party [position] is as it was before, that we really do not agree," Ms. Radicova said when asked about her view of the Slovak contribution to aid for Greece.

She also said she would need to further discuss with her cabinet and Parliament the EU's plans for a permanent Financial Stability Facility as an emergency support mechanism for member states in financial trouble.

The Financial Stability Facility, which was supposed to become active July 1, is awaiting Slovakia's approval. Slovakia is supposed to contribute €4.4 billion ($5.56 billion) to the facility, backed by euro-zone member states.

Asked later about Ms. Radicova's comments, Jean-Claude Juncker, the prime minister of Luxembourg and head of the euro group of finance ministers, said he had talked to Slovak Finance Minister Ivan Miklos and expected the new government to follow through on the previous administration's commitments.

"We made it clear in today's discussion that our expectation was that the Slovak government will sign the framework agreement and will take on board all the commitments which have been taken by the previous Slovak government," he said after a meeting of euro-zone finance ministers.

----Ms. Radicova said it was a sign of the level of importance of the issue that she was spending her first working day in office in Brussels discussing it with European officials. But she said any decision wouldn't be hers alone.

"The government and Cabinet will meet on Wednesday and I will open the question, but if I have [a] result it's not only on my decision, it's the decision of my colleagues in the government and my coalition partners," she said.

Ms. Radicova leads a coalition of center-right parties that won parliamentary elections in June, campaigning on pledges to cut spending and oppose big-ticket, euro-zone bailout projects.

http://online.wsj.com/article/SB10001424052748703283004575363542818747372.html?mod=WSJEUROPE_hps_SECONDTopStories

In other European news, the big man of France fought back last night. “I am not a crook,” he said with unintended irony, adding the hilarious “that it [France] had got into "bad habits" regarding ministerial perks and should follow the lead of "Anglo-Saxon" countries in this regard.” Presumably he had something other in mind than cheating on expense claims, padding the payroll with wives and family, traipsing off around the world with the family on all expense paid sightseeing vacations, aka fact finding missions, subsidizing the members bars and restaurants and getting too drunk to attend late night votes in the Mother of Parliaments, plus operating the most generous pension plan in the country while giving themselves enormous exit bonuses when irate voters tell them to get lost at general elections. For the record, I believe him, Mr Sarkozy is an honorable man.

Never believe anything in politics until it has been officially denied.

Otto Von Bismarck.

Nicolas Sarkozy suggests cash allegations plot to undermine him

Nicolas Sarkozy has intimated allegations he had "picked up envelopes" of illegal cash donations, as well as rumours he and his wife were both having affairs, were part of a plot to undermine him

By Henry Samuel in Paris Published: 6:30AM BST 13 Jul 2010

The embattled president came out fighting last night, blasting as a "disgrace" allegations that he had "picked up envelopes" of illegal cash donations from the country's richest woman.

"Can you imagine, during a dinner, in front of other table guests, leaving with money?" he asked in a live prime time television appearance to wrest national attention away from the most damaging scandal of his presidency and onto key reforms.

The French President was referring to allegations that he might have received cash from Liliane Bettencourt, the 87-year old heiress to the L'Oréal cosmetics empire made by her former accountant.

He said the claims were as baseless as the "lies" published three months ago that he and his wife Carla Bruni-Sarkozy and intimated that they were part of a plot to undermine him as he sought to push through a controversial pension reform to raise the official retirement age from 60 to 62.

"Now with the pension reform, I am described as someone who for the past 20 years, went to Mrs Bettencourt's home to pick up envelopes. It's a disgrace," he said during the hour-long interview on state channel France 2.

He also stood by his labour minister, Eric Woerth, following allegations he took 150,000 euros (£125,000) of cash from Mrs Bettencourt to fund the President's UMP party during his 2007 electoral campaign.

But he said that he would set up a cross-party commission of inquiry to see whether there had been any conflict of interest in Mr Woerth's ministerial duties and his post as UMP party treasurer and fund-raiser and added he had "advised" Mr Woerth to give up his party treasurer position.

Mr Sarkozy said that France was "not a corrupt country" and that party and election financing had been cleaned up. But he admitted that it had got into "bad habits" regarding ministerial perks and should follow the lead of "Anglo-Saxon" countries in this regard.

http://www.telegraph.co.uk/news/worldnews/europe/france/7886411/Nicolas-Sarkozy-suggests-cash-allegations-plot-to-undermine-him.html

We close today with good news for banksters. Well European banksters anyway. Remember all those American “triple-A” securities we couldn’t understand but bought anyway from their London spivs back in the go-go-all-gone decade, well good news, put them back in the accounts at face value and keep taking the public’s money on deposit. Who needs real reserves when we’re all operating on fiat currency. It’s only token money after all, a mere mind over matter construct of money. We don’t mind and we’ll construct money out of whatever we say is money, for that matter.

I can resist anything except temptation.

Oscar Wilde.

European Banks Poised to Win Reprieve in Basel on Capital Rules

July 13 (Bloomberg) -- European banks, rattled by investor uncertainty about their ability to withstand a sovereign-debt crisis, are poised to win a reprieve in Basel, Switzerland, this week as regulators from 27 countries shape new capital rules.

A push to water down stringent standards proposed last year by the Basel Committee on Banking Supervision, and to allow more time to implement them, is led by France and Germany, according to bankers, regulators and lobbyists involved in the talks. Representatives from the U.S. and the U.K., who have sought to rein in risk-taking, are willing to compromise on how capital is defined to reach an agreement at a committee meeting that begins tomorrow, the people said.

Another concession may involve granting transition periods of up to 10 years to ease concerns of some member countries that their banks and economies won’t be able to bear the burden of tougher capital requirements until a recovery takes hold. As a result, the amount of capital European banks will be forced to raise in the next two years won’t be as much as investors fear.

“Politicians in France and Germany are worried about the impact of the rules on their economies,” said Chris Bates, a regulatory lawyer at Clifford Chance LLP in London. “Basel has managed to bring diverging banking systems and economies together. It’s more than just a capital regime. It’s a showcase of global cooperation. So the U.S. and the U.K. cannot let it break down.”

G-20 Request

The 36-year-old Basel committee, a body of central bankers and regulators that sets capital standards for banks worldwide, was asked by the Group of 20 nations to draft new rules after the worst financial crisis in 70 years caused lenders to write off $1.8 trillion. G-20 leaders urged the committee to improve the quantity and quality of bank capital, strengthen liquidity requirements and discourage excessive leverage. They set a deadline of December for making the rules and originally gave countries until the end of 2012 to implement them.

Three months ago, European leaders and finance ministers, including those from Germany and France, were as adamant as their American and British counterparts in pushing back against banks’ objections to proposed rules that UBS AG estimated could force banks to raise $375 billion of capital, according to the regulators and bankers, who asked not to be identified because they weren’t authorized to speak. Fifty-five percent of that would have to be raised by European banks, UBS said.

Then Greece’s debt woes unnerved investors, making European leaders more receptive to what the banks were saying, according to the people.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=ayS1LW35dtRo&pos=1

U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion

February 16, 2010 ISSUE 46•07

WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.

"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."

"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."

According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, "Oh my God, he's right. It's all a mirage. All of it—the money, our whole economy—it's all a lie!"

Screams then filled the Senate Chamber as lawmakers and members of the press ran for the exits, leaving in their wake aisles littered with the remains of torn currency.

As news of the nation's collectively held delusion spread, the economy ground to a halt, with dumbfounded citizens everywhere walking out on their jobs as they contemplated the little green drawings of buildings and dead white men they once used to measure their adequacy and importance as human beings.

At the New York Stock Exchange, Wednesday morning's opening bell echoed across a silent floor as the few traders who arrived for work out of habit looked up blankly at the meaningless scrolling numbers on the flashing screens above……

http://www.theonion.com/articles/us-economy-grinds-to-halt-as-nation-realizes-money,2912/

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

At the Comex silver depositories Monday, final figures were: Registered 52.32 Moz, Eligible 60.46 Moz, Total 112.78 Moz.

+++++

Crooks and Scoundrels Corner.

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

Today, back to the great vampire squids again. Below, ZeroHedge does an excellent job in highlighting all that is wrong with today’s casino US stock markets. Forget all that was taught in the text books about stocks being one step removed long term investments in capital and management of companies engaged in commerce and trade. With 73% of US stock trading now comprised merely of Ebenezer Squids high frequency trading geeks desperately gaming the other HFT geeks operating in the same US stocks trading pool. Front running the “flash” order stream, which is now made up of mostly other “bot programs” designed to trigger the HFT programs watching the “flash” order stream. Once triggered, all the great squids programs then kick in a self reinforcing feedback loop.

"The secret of life is honesty and fair dealing. If you can fake that, you've got it made."

Groucho Marx

Scientific Proof That High Frequency Trading Induces Adverse Changes In Market Microstructure And Dynamics, And Puts Market Fairness Under Question

Up until recently, any debate between proponents and opponents of High Frequency Trading would typically be represented by heated debates of high conviction on either side, with discussions rapidly deteriorating into ad hominem attacks and the producer screaming 'cut to commercial' to prevent fistfights. Luckily, all this is about to change. In a research paper by Reginald Smith of the Bouchet Franklin Institute in Rochester titled "Is high-frequency trading inducing changes in market microstructure and dynamics?" the author finds that he "can clearly demonstrate that HFT is having an increasingly large impact on the microstructure of equity trading dynamics. Traded value, and by extension trading volume, fluctuations are starting to show self-similarity at increasingly shorter timescales. Values which were once only present on the orders of several hours or days are now commonplace in the timescale of seconds or minutes. It is important that the trading algorithms of HFT traders, as well as those who seek to understand, improve, or regulate HFT realize that the overall structure of trading is influenced in a measurable manner by HFT and that Gaussian noise models of short term trading volume fluctuations likely are increasingly inapplicable."

----- Given the complex nature of HFT trades and the frequent opacity of firm trading strategies, it is difficult to pinpoint exactly what about HFT causes a higher correlation structure. One answer could be that HFT is the only type of trading that can exhibit trades that are reactive and exhibit feedback effects on short timescales that traditional trading generates over longer timescales.
---- Unfortunately, as the paper requires slightly more than first grade comprehension and math skills, it will never be read by anyone at the SEC, or those in Congress, who are pretending to be conducting Financial Regulation Reform, when the items described in this paper are precisely the things that any reform should be addressing.

And while we again urge everyone to read the full paper, below we present the section of the paper that does a terrific job in explaining the arrival of HFT, its development over the ages, and its parasitic role in market structure.

http://www.zerohedge.com/article/scientific-proof-high-frequency-trading-induces-adverse-changes-market-microstructure-and-dy

Is it any wonder that a US stock can be trading at $40 one minute and at 1 cent the next, or that by priming the NYSE “flash” order stream near the close, the NY Fed can trigger a 900 point reversal from down to up by the close. Given that stock prices are a component of the many Confidence Indexes that attempt to predict the future health of the US economy some months ahead, a self reinforcing ludicrous bot-trading feedback loop, is now routinely used by the NY Fed’s fix-its and manipulators, to dress up the future health of the US economy. When the Fed’s promised fantasy land never arrives, stocks experience another falling elevator like plunge, almost certainly triggered by one of the squids bot programs trying to game the others, perhaps backed up by a leak here and there and the internet rumor mill, before the NY Fed has to hit the re-set button again by dressing up the flash order stream again, possibly the next day, probably with a nod and a wink to their favorite Squids, in return for a telephone number paying job for life, once they exit the great offices of state. It doesn’t take a genius to see where this all ends. One day one of the Squids gets to wipe out most of the others while the others get recapitalized by new magic money from the Fed. The BDI may have fallen 56% in six weeks, but stock markets rally 5 to 6 percent in a week. Rent seeking is “God’s work,” and the only game in town for Wall Street squids.

“Overheard at Goldman Sachs”:

“We assume that you know what you’re doing,
In this ill-advised trade you’re pursuing,
But the opposite bet
That we place on your debt
May eventually hasten your ruin.”

http://blogs.wsj.com/economics/2010/03/17/celebrate-st-patricks-day-with-some-economic-limericks/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Feconomics%2Ffeed+%28WSJ.com%3A+Real+Time+Economics+Blog%29

Cash not Ash – Part 2.

Baltic Dry Index. 2998 -04

LIR Gold Target by 2019: $3,000.

“A clever man commits no minor blunders.”

Goethe.

We open this morning to the sound of roaring jet engines, as millions of distressed and immensely poorer travelers begin the process of flying in or out of the UK’s airports. Cash, or the European airlines rapidly arriving lack of it, has triumphed over Iceland’s ash. This morning it now looks like the six day closure of Europe’s airspace was a monumental blunder of Brownian proportions! Someone, most likely someone in England, grossly over reacted last week to Iceland’s ash, and abruptly closed the UK’s airspace, triggering similar gross over reaction panic across most of Europe. By yesterday with airlines on the brink of collapse, stranded passengers running out of money to buy alcohol and places to stay, and with airport owners staring bankruptcy down the road, someone finally noticed that the alleged ash had traveled thousands of miles by the time it reached Europe, dissipating and diluting along the way. In finest Gilbert and Sullivan tradition, Her Majesty’s Government of incompetents, nincompoops, and serial muddlers, simply reversed themselves and declared the UK’s airspace was now an ash free zone, safe for the world’s airplanes to fly in. Of course, by now no one really knows what the truth is about the great European 21st century flying fiasco. You really couldn’t make this sort of incompetence up. Below, the Telegraph takes up recent developments. Con trails are back in our skies again.

“There are few, very few, that will own themselves in a mistake.”

Jonathan Swift.

Iceland volcano: UK airports reopen as BA claims shutdown 'unnecessary'
The blanket ban on flights has been lifted, as of 10pm on Tuesday, as British Airways claimed the unprecedented shutdown was unnecessary.

By Gordon Rayner, David Millward and James Kirkup Published: 8:29PM BST 20 Apr 2010

After six days without flights, which have cost the economy more than £1.6 billion, left 500,000 passengers stranded and disrupted schools, the no-fly zone was lifted.

The decision was made after ministers were put under pressure to explain why British flights were being stopped while most of European air space was open, despite the cloud of volcanic ash from Iceland. After a meeting between the Civil Aviation Authority, Lord Adonis, the Transport Secretary, and airlines it was agreed to open most British air space, including all airports, from 10pm last night.

Lord Adonis said: “Safety remains my paramount concern. Since the flight restrictions were imposed, the Civil Aviation Authority has been working around the clock with the aircraft manufacturing industry, the airlines and the research community to better understand how different concentrations of ash affect aircraft engines. As a result, the Civil Aviation Authority has now established a wider area in which it is safe to fly, consistent with the framework agreed by the EU transport ministers yesterday.”

Willie Walsh, the British Airways chief executive, said it could take “weeks” for the airline industry to return to a “normal level of operation”.

“I do not believe it was necessary to impose a blanket ban on all UK air space last Thursday,” he said.

Mr Walsh said he was “pleased” with the decision to reopen airports, but added: “We will have plenty of time to look back on what could have been done better and I do believe lessons can be learned from this.”

Aviation experts said the Government had previously ignored calls for an urgent review of the no-fly zone, which threatened to bankrupt several airlines.

Despite bold statements from the Prime Minister about emergency transport for tourists, fewer than 300 Britons were directly helped, after being allowed to board a Navy vessel in Spain, to the dismay of those left behind. As the crisis entered its seventh day:

Thousands of schoolchildren faced major disruption to lessons and exam preparations because they or their teachers could not get home

Airlines were facing a compensation bill from stranded passengers of at least £250? million
Tourists were warned it could take “weeks” to repatriate everyone.

Airports dealt with 200 flights yesterday, eight per cent of usual operations, but only in Scotland and the North East.

The restrictive regime compared with 60 per cent of normal services taking off and landing in mainland Europe, amounting to 14,000 flights from hubs including Paris and Amsterdam. More than 20 long-haul British Airways flights took off from abroad yesterday, expecting to land in Britain later today.

Airlines and airport operators said the CAA and Nats, the air traffic control centre, had “over-reacted” to the crisis caused by the ash cloud over Europe and the Atlantic.

David Henderson, of the Association of European Airlines, said Britain had taken a stricter approach than other parts of Europe.

“We had hoped there would be genuine co-ordination across Europe,” he said. “We are disappointed that this has not happened.

“There are probably 100 to 150 airlines in Europe, some large, some small, some tiny and some that are not going to be around in a week or two, that’s for sure.”

Boris Johnson, the Mayor of London, questioned the science behind the lockdown.
http://www.telegraph.co.uk/travel/travelnews/7612109/Iceland-volcano-UK-airports-reopen-as-BA-claims-shutdown-unnecessary.html

My guess is that now a monumental UK and European cover up will begin. Who is going to foot the bill for the most expensive bureaucratic blunder in history? How could one relatively small volcanic eruption in Iceland produce enough volcanic ash to cover a continent wide multi-thousand feet high European airspace? The search for a suitable disposable scapegoat begins. Ominously, the ECB and the IMF fly into Greece today to tell them just how high they must jump to get access to the 45 billion of bailout cash. My guess is that sensible Greeks will follow the sensible Icelanders and tell ECB and IMF where to go. Below, some more collateral damage from the British blunder of the new century?

“You are a worthy representative of the new democracy in Brazil.”

Old Labour Prime Minister James Callaghan, welcoming the President of Portugal to Britain.

Volcanic eruption threatens disruption for elite London Marathon field
It is meant to be the ultimate endurance test over 26.2 miles but for many of the leading runners due to compete in Sunday's Virgin London Marathon, the race to the finish line could be thousands of grueling miles long.
By Simon Hart Published: 9:09PM BST 19 Apr 2010

The cloud of volcanic ash that has turned Britain into a no-fly zone has forced athletes from as far afield as Kenya, Ethiopia, Japan and the United States into a race against the clock just to make it to the start-line. Unless the flight ban ends and air travel returns swiftly to normality, they face punishing journeys on planes, trains and automobiles every bit as energy-sapping as the race from Blackheath to The Mall.

One athlete, Ethiopian Tsegaye Kebede, who was runner-up in last year’s race, is booked on a nightmarish trip that begins in Addis Ababa on Tuesday and then takes him by air to Tel Aviv, followed by another flight to Madrid and then a gruelling overland trip to London, via Paris.

Kebede has had the added problem of having to obtain new visas for his re-routed journey. He will deserve a medal just for making it to the capital.

As other runners contemplate trips every bit as difficult, race organisers were on Monday drawing up emergency travel arrangements to smooth their passage to London and ensure a top-quality field for the world’s richest marathon.

Among the options being considered was chartering a jet to pick up athletes from Kenya and Ethiopia, who form the bedrock of the men’s elite field. Money would be appear to be no object to save a race that has been billed as the strongest men’s marathon in history.

But if the flight ban continues, even a charter flight from east Africa would still involve flying the athletes to Madrid and then transporting them overland by bus or train to London, with the prospect of just a couple of days’ rest before the big race.
http://www.telegraph.co.uk/sport/othersports/athletics/london-marathon/7608517/Volcanic-eruption-threatens-disruption-for-elite-London-Marathon-field.html

In Goldman news, “The Fab” has been barred from working in the City. I sense “let’s make a deal” comes next. Goldman seems to think so too, as it appears to be about to sacrifice The Fab. Having allegedly trashed the clients for filthy lucre, Goldie now seems to be positioning to trash the employee. Doing God’s work up at Goldman, will soon have the workers paranoid. Soon who is bugging who, will come down to everyone.

“It is important for Britain and France to work closer together, and, of course, our relationship with Germany is immensely important.”

Prime Minister Tony Blair, welcoming German Chancellor Angela Merkel to Downing Street.

Goldman Sachs trader barred from the City over SEC charges
Fabrice Tourre – the bond trader at the heart of Goldman Sachs' fraud case – was on Tuesday barred from working in the City of London in the first 'victory' for financial regulators on both sides of the Atlantic.

By James Quinn in New York and Philip Aldrick Published: 9:06PM BST 20 Apr 2010

Mr Tourre – accused of mis-selling a complex parcel of toxic mortgages to the bank's own clients while another client was shorting them – was removed from the Financial Services Authority's register, in a move which overshadowed Goldman's bumper $3.46bn (£2.25bn) profits in the first quarter.

Although the request to remove him emanated from Goldman, it is understood that the City regulator placed pressure on the investment bank to effectively ban him from working in the Square Mile in a regulatory function.

The decision will however have been a difficult one for Goldman, given the negative signals it sends about Mr Tourre's culpability in relation to the Securities and Exchange Commission's charges, which the bank has consistently denied.

The US regulator has charged both Mr Tourre – who remains on extended leave but has been cleared of any wrongdoing by the bank – and Goldman itself with actively misleading its own clients over the sale of a complex $1bn parcel of toxic derivatives tied to the downfall of the US housing market.

An FSA spokesman would say only Mr Tourre's removal from the register was "a matter for the firm". A source close to the situation said the financial services watchdog is "content with the outcome."

The FSA has begun an investigation against Goldman's London branch, and has been in contact with its general counsel in New York, who said he would be as helpful as possible in helping the City regulator understand the transaction under scrutiny.

The situation overshadowed Goldman's stellar financial results, which were largely a result of strength in the division on which the SEC probe centres – the bank's fixed income, currency and commodities division.

The Wall Street bank generated a post-tax profit of $3.46bn, up 91pc on the same period last year, on revenues of $12.8bn, up from $9.43bn a year ago.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7612047/Goldman-Sachs-trader-barred-from-the-City-over-SEC-charges.html

Goldman Sachs Says SEC Case Hinges on Actions of One Employee
April 21 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. fraud case against the firm hinges on the actions of the employee it placed on paid leave this week.

Fabrice Tourre, the 31-year-old Goldman Sachs executive director who was accused of misleading investors about a mortgage-linked investment in 2007, will also be de-registered from the Financial Services Authority, a spokeswoman at the firm in London said yesterday.

“It’s all going to be a factual dispute about what he remembers and what the other folks remember on the other side,” Greg Palm, Goldman Sachs’s co-general counsel, said in a call with reporters yesterday, without naming Tourre. “If we had evidence that someone here was trying to mislead someone, that’s not something we’d condone at all and we’d be the first one to take action.”

By characterizing the case as a dispute involving a single employee, Goldman Sachs may be taking its first steps to publically distance itself from Tourre in the case, some lawyers said. That could reduce bad publicity and ultimately make it easier for the company to settle the case.

Goldman Sachs may also want to separate itself from Tourre if it’s concerned he will cooperate with the SEC or implicate more senior employees, said Onnig Dombalagian, a professor at Tulane University Law School in New Orleans and former attorney fellow at the SEC.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4wQK24j3.Mo&pos=2

Below, the IMF agenda for the upcoming G-20 finance ministers meeting. The IMF feels a tax coming on.

“It’s nice to be in Devon Again.”

Liberal Democrat leader Paddy Ashdown speaking in Cornwall.

April 20, 2010
Leaked IMF document urges two new taxes for banks

The IMF wants two separate taxes on banks to address the huge burden of support after the 2008 financial crash

The IMF is proposing a double-tax regime for banks that would fund future bailouts and penalise both the profits and pay of lenders.

The proposal emerged in a leaked confidential document prepared for the G20 meeting of finance ministers to be held this week in Washington.

The IMF wants two separate taxes on banks to address the huge burden of support after the 2008 financial crash.

According to the fund, unrecovered costs of bank rescues in the most affected G20 countries represent 4 per cent to 5 per cent of GDP.

The first tax, a Financial Stability Contribution, would be a levy to fund any future government support. The second would be a Financial Activities Tax on the sum of the profits and remuneration of financial institutions.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7103244.ece

“This is a great day for France.”

Richard Nixon, attending the funeral of Charles De Gaulle.

At the Comex silver depositories Tuesday, final figures were: Registered 50.19 Moz, Eligible 64.44 Moz, Total 114.63 Moz.

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Crooks & Scoundrels Corner.

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

This morning, yet another scandal in the world of outrageous front running the order flow, aka high-frequency trading.

“The President is going to lead us out of this recovery. It will happen.”

Vice President Dan Quayle.

Ex-Societe Generale Trader Accused of Stealing Code
By Thom Weidlich - Apr 19, 2010
Former Societe Generale trader Samarth Agrawal was charged by the U.S. with stealing the company’s computer code for high-frequency trading.

Agrawal, charged with one count of theft of trade secrets, is accused of making copies last June of one part of the code he’d been given access to and another part he hadn’t. Agrawal was arrested today, according to federal prosecutors in New York.

“Over the past several years, the financial institution has spent millions of dollars to develop and maintain a computer system that allows the financial institution to engage in sophisticated, high-speed trading on various securities markets,” according to a criminal complaint unsealed today.
Agrawal was hired by Societe Generale in New York in March 2007 to work as a quantitative analyst in the high-frequency trading group, according to the complaint. He was promoted to trader last April and resigned in November, prosecutors said.

Agrawal’s lawyer, Steven M. Statsinger, didn’t immediately return a call seeking comment.
The Paris-based bank discovered the misappropriation after conducting an internal probe, informed law enforcement and has been cooperating with the investigation, according to a company statement e-mailed by spokesman James Galvin.

“No client information or funds were involved in the incident,” according to the statement. “SG vigorously protects its propriety information and intellectual property.”

After he submitted his resignation, the bank tried to get Agrawal to stay, according to the complaint. He said he wanted to return eventually to his native India to start his own high- frequency trading firm, according to the complaint.

Societe Generale is France’s second-largest bank by market value. BNP Paribas SA is France’s biggest bank.
http://preview.bloomberg.com/news/2010-04-19/ex-societe-generale-trader-accused-of-stealing-computer-code-u-s-says.html

"Forward, the Light Brigade!

"Was there a man dismay'd?

Not tho' the soldier knew

Someone had blunder'd:
Theirs not to make reply,

Theirs not to reason why,

Theirs but to do and die:

Into the valley of Death

Rode the six hundred.”

Alfred, Lord Tennyson

The monthly Coppock Indicators finished March:

DJIA: +168 UP. NASDAQ: +370 UP. SP500: +196 UP. The great Bull market goes on with the all three continuing higher in positive numbers.

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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.

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