Cash not Ash!

Baltic Dry Index. 3001 +35
LIR Gold Target by 2019: $3,000.

“Of all the trees that grow so fair,
Old England to adorn,
Greater are none beneath the Sun,
Than Oak and Ash and Thorn.”

Rudyard Kipling on the wrong sort of ash.

Another day and yet more ash from bankrupt Iceland. Not that the UK needs any more ash, about half the population goes about all day long generating masses of home made ash, accompanied by lots of smoke, coughing and spluttering. Tobacco taxes are the major way we fund the National Health Service. Besides H.M.’s G. demanded Iceland’s cash with a “c” not ash. In the business of ash generation Great Britain is right up there with the greats, although as usual, team Germany easily beats team GB, at least as far as I could see from my little over a year in Berlin. Apparently as children there enter kindergarten, they’re handed their starter pack of West cigarettes. There may be Germans who don’t actually smoke, but I suspect that they get exported to Holland. Of course, if you go outside and stare at the sky, you can’t actually see this Icelandic ash that’s grounded planes all across northern Europe, we just have to take our betters word that it’s up there, just hanging around ready to make all our planes drop out of the sky.

But there’s a silver lining for some. With most planes to everywhere grounded, there’s been a rush to get on the trains that get stuck in the Channel tunnel at the drop of a hat, and the ferries that still connect Great Britain with the prospect of warmer climes. Stay tuned for more on this story of Iceland’s revenge. Last time Iceland did it much of Europe starved and poor Marie Antoinette lost her head.

Below, one of our planes isn’t missing. The RAF fly a German plane right up to, but not into, Iceland’s revenge on Europe. Liners and airships anyone?

Volcanic ash cloud tested by scientists
Scientists have completed a daring mission to analyse samples taken from the volcanic ash cloud sitting over Britain.
Published: 2:45AM BST 16 Apr 2010

A plane carrying the researchers flew right up to the cloud to test its contents.
The data could reveal important information about the environmental impact of the eruption.
The operation will enable experts to update existing knowledge of air circulation patterns.
The findings will then be passed on to the Met Office and could have a bearing on its immediate forecasts.

This could in turn affect the decisions made by the Civil Aviation Authority relating to the reopening of British airports, one expert said.

The plane arrived back safely at RAF Brize Norton, Oxfordshire, last night.

Speaking prior to the mission, Peter Purcell, of the Natural Environment Research Council, based at Gloucester Airport, said: ''I don't believe that anybody has really used an aircraft to sample the edge of these plumes before - it is actually very dangerous.

''If you fly into the ash and your engines stop, you crash.''

Their plane, a Dornier 228 - was equipped with instruments warning pilots how close they were to the volcanic cloud.

''We can then fly at a level which is not a level of danger,'' he said.

The mission's objective is to determine the plume's speed and direction.

The group, which set off from Oxford Airport yesterday afternoon, included two emissions scientists and two instrument operators, flown by a pilot and co-pilot.

The Dornier 228 is able to fly where commercial airlines cannot because of its ability to 'see' the volcanic plume using the research instruments on board.
http://www.telegraph.co.uk/science/science-news/7596317/Volcanic-ash-cloud-tested-by-scientists.html

We open business news this Friday, with more bad news from the real economy in America, far away from the telephone number bonuses at the great vampire squids busy doing God’s work on Wall Street, and far away from the Fed’s contrived economic recovery for banksters, Main Street is entering foreclosure again. Another great tranche of the vampire squids “Triple-A” securitizations is about to pass from Fed life support in their vault into CDO heaven or perhaps hell. Not to worry though, “God’s Work” allowed the Squids to bet against the triple-A securities they peddled. No great vampire squids were injured in the making of this outrageous financial calamity.

“In economics, the majority is always wrong.”

J.K. Galbraith.

FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN FIRST QUARTER By RealtyTrac Staff
New Quarterly Records for Scheduled Auctions and Bank RepossessionsAll Foreclosure Types Spike in March, Which Posts Highest Monthly Total for Report

IRVINE, Calif. – April 15, 2010 — RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for Q1 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.

Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.

“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”
http://www.realtytrac.com/contentmanagement/pressrelease.aspx?channelid=9&itemid=8927

Housing Crashes Again
By MIKE WHITNEY April 15, 2010

The brief period of stabilization in housing appears to be over and the next leg-down has begun. Mortgage rates are edging higher, foreclosures are on the rise, and the government programs that supported the sector, are being phased out. The uptick in bank-owned properties (REO) is adding to surplus inventory and pushing down prices. A recently released report from First American CoreLogic shows that "distressed sales accounted for 29 per cent of all sales nationwide." Nearly one-third of all home sales are distressed REOs. Also, according to a report from Clear Capital, "Home prices nationally have dropped 3.9 percent quarter to quarter, the first quarterly drop in nine months. (Thanks to Diana Olick, Realty Check, CNBC) Bottom line: More people are being forced from their homes, the banks are facing bigger losses, and the housing market is on the skids.
More.
http://www.counterpunch.org/whitney04152010.html

We end for the still chilly, weekend, with news that LIR readers have known for at least 5 years. Below, the man-made global warming from CO2, carbon tax promoting BBC, does its best to trivialize and spin away the news of a sunspot link to cold winters. Don’t confuse me with the facts, my mind’s made up, carbon tax the peons.

"History is only a confused heap of facts."

Earl of Chesterfield, 1694-1773.

Sun activity link to cold winters
By Mark Kinver Science and environment reporter, BBC News The UK and continental Europe could be gripped by more frequent cold winters in the future as a result of low solar activity, say researchers.

They identified a link between fewer sunspots and atmospheric conditions that "block" warm, westerly winds reaching Europe during winter months.

But they added that the phenomenon only affected a limited region and would not alter the overall global warming trend.

The findings appear in the journal Environmental Research Letters.

"By recent standards, we have just had what could be called a very cold winter and I wanted to see if this was just another coincidence or statistically robust," said lead author Mike Lockwood, professor of space environment physics at the University of Reading, UK.

To examine whether there was a link, Professor Lockwood and his co-authors compared past levels of solar activity with the Central England Temperature (CET) record, which is the world's longest continuous instrumental record of such data.

The researchers used the 351-year CET record because it provided data that went back to the beginning of the Maunder Minimum, a prolonged period of very low activity on the Sun that lasted about half a century.

“ Europe is particularly susceptible because it lies underneath the jet stream ” Professor Mike Lockwood

The Maunder Minimum occurred in the latter half of the 17th Century - a period when Europe experienced a series of harsh winters, which has been dubbed by some as the Little Ice Age. Following this, there was a gradual increase in solar activity that lasted 300 years.

Professor Lockwood explained that studies of activity on the Sun, which provides data stretching back over 9,000 years, showed that it tended to "ramp up quite slowly over about a 300-year period, then drop quite quickly over about a 100-year period".

He said the present decline started in 1985 and was currently about "half way back to a Maunder Minimum condition".

This allowed the team to compare recent years with what happened in the late 1600s.

"We found that you could accommodate both the Maunder Minimum and the last few years into the same framework," he told BBC News.

Big chill

Professor Lockwood said that there were a number of possibilities that could explain the link, but the team favoured the idea of a meteorological phenomenon known as "blocking".
This affects the dynamics of jet streams, which are very strong winds about 7-12km above the Earth's surface that can have a major influence on weather systems. There is one jet stream present in each hemisphere.

"Europe is particularly susceptible because, firstly, it lies underneath the (northern hemisphere's) jet stream," he explained.

A "blocking" occurs when the jet stream forms an "s" shape over the north-eastern Atlantic, causing the wind to fold back over itself.

"If you haven't got blocking, then the jet stream brings the mild, wet westerly winds to give us the weather we are famous for."

But, he added, if the jet stream is "blocked", and pushed further northwards, then cold, dry winds from the east flow over Europe, resulting in a sharp fall in temperatures.

"This... 'blocking' does seem to be one of the things that can be modulated by solar activity," he said.

Recent studies suggest that when solar activity is low, "blocking" events move eastwards from above north-eastern North America towards Europe, and become more stable.

A prolonged "blocking" during the most recent winter was responsible for the long spell of freezing conditions that gripped Europe.

Written observations from the period of the Maunder Minimum referred to the wind coming from the east during particularly cold winters, which strengthened the team's "blocking" hypothesis.

The way in which solar activity affects the behaviour of blocking episodes is linked to the amount of ultraviolet (UV) emissions being produced by the Sun.

Solar UV heats the stratosphere (20-50km above the surface), particularly the equatorial stratosphere. This results in a temperature gradient, which leads to the formation of high level winds.

"The change in solar activity undoubtedly changes the stratospheric winds," said Professor Lockwood.

Studies have shown that the state of the stratosphere can make a considerable difference to what happens in the troposphere, which is where the jet stream occurs, Professor Lockwood explained.

"There has been some quite simple modelling that indicated that heating the equatorial stratosphere with more UV would actually move the jet streams a little bit, by just a few degrees.

"That, of course, has the potential to change the behaviour of the jet streams - and that is the sort of thing that we think we are seeing."

'Blocking central'

Professor Lockwood was keen to stress that "blocking" only affected a limited geographical region, and would not have a widespread impact on the global climate system.

To illustrate the point, he said that while the CET record showed that this winter was the UK's 14th coldest in 160 years, global figures listed it as the fifth warmest.
He said that one of his colleagues at the University of Reading referred to Europe as "blocking central".

"The reason is largely because the jet stream has to come to us over the Atlantic Ocean and it is slowed down when it hits the land in Europe.

"You don't quite have the same combination of circumstances anywhere else in the world that gives you such strong blocking."

While the current decline in solar activity is expected to continue in the coming decades, he cautioned that more frequent "blocking" episodes would not result in Europe being plunged into sub-zero temperatures every winter.

"If we look at the last period of very low solar activity at the end of the 17th Century, we find the coldest winter on record in 1684, but the very next year - when solar activity was still low - saw third warmest winter in the entire 350-year (CET) record."

A number of other meteorological factors also influenced the weather systems over Europe, so a number of parameters had to be met before a "blocking" occurred, he observed.

Responding to the team's findings, Dr Peter Stott, head of climate monitoring and attribution at the UK Met Office, said: "This paper provides some additional evidence that what happens in the stratosphere could be important for climate at the surface."

But he added: "The findings are suggestive of a possible effect but more research is needed to pin down the mechanisms and determine how significant such effects could be for determining the probability of cold winters in the UK.

"At the Met Office, we are already working on research into incorporating better representation of the stratosphere into our seasonal and decadal forecasting models."
Professor Lockwood said he now planned to examine the influence of low solar activity on European weather during the summer months.
http://news.bbc.co.uk/1/hi/sci/tech/8615789.stm

“Professor Lockwood said he now planned to examine the influence of low solar activity on European weather during the summer months.” Better late than never, I suppose, although tossing an Icelandic volcano spewing ash into this year’s equation, my guess is that a large part of Europe will turn out to be unseasonably colder than usual. In trading terms, It’s probably a reasonable punt to buy a few calls on grains and possibly cattle and hogs.

THE SUN'S CHILLY IMPACT ON EARTH
-----During the Little Ice Age, access to Greenland was largely cut off by ice from 1410 to the 1720s. At the same time, canals in Holland routinely froze solid, glaciers advanced in the Alps, and sea-ice increased so much that no open water was present in any direction around Iceland in 1695.
http://www.gsfc.nasa.gov/topstory/20011207iceage.html

At the Comex silver depositories Thursday, final figures were: Registered 48.89 Moz, Eligible 66.69 Moz, Total 115.58 Moz.


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Crooks & Scoundrels Corner.

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

The envelope please. And the winner is Greece. This morning, the WSJ covers the reality of doing business in modern Greece. Yesterday the tax and work shy Greeks wrote to the EU and IMF to inquire about details of getting access to rescue cash. No word yet on whether they included a magic envelope along with their letters to speed along the process.

"Anybody has the right to evade taxes if he can get away with it. No citizen has a moral obligation to assist in maintaining the government."

J.P. Morgan.

APRIL 15, 2010
Tragic Flaw: Graft Feeds Greek Crisis
ATHENS—Behind the budget crisis roiling Greece lies a riddle: Why does the state spend so lavishly but collect taxes so poorly? Many Greeks say the answer needs only two words: fakelaki and rousfeti.

Fakelaki is the Greek for "little envelopes," the bribes that affect everyone from hospital patients to fishmongers. Rousfeti means expensive political favors, which pervade everything from hiring teachers to property deals with Greek Orthodox monks. Together, these traditions of corruption and cronyism have produced a state that is both bloated and malnourished, and a crisis of confidence that is shaking all of Europe.

A study to be published in coming weeks by the Washington-based Brookings Institution finds that bribery, patronage and other public corruption are major contributors to the country's ballooning debt, depriving the Greek state each year of the equivalent of at least 8% of its gross domestic product, or more than €20 billion (about $27 billion).

"Our basic problem is systemic corruption," Greece's Prime Minister George Papandreou said after he took office late last year, vowing to change a mentality that views the republic as a resource to plunder. He later berated the chief of public prosecutions, saying Greeks believe "there is impunity in this country." The chief prosecutor said that wasn't so.

Greece moved closer to a bailout Thursday, requesting aid talks with the International Monetary Fund and the European Union. Many investors and economists say aid would buy Greece time, but wouldn't solve its underlying problems.

The Brookings study, which examines the correlation between corruption indicators and fiscal deficits across 40 developed or nearly developed economies, highlights how corruption has hurt public finances in parts of Europe, especially in Greece and Italy, and to a lesser extent in Spain and Portugal.

Greece's budget deficit averaged around 6.5% of GDP over the past five years, including a 13% shortfall last year. If Greece's public sector were as clean and transparent as Sweden's or the Netherlands', the country might have posted budget surpluses over the past decade, the study implies.

"If Greece had better control of corruption—not to Swedish standards, but even at Spain's level—it would have had a smaller budget deficit by 4% of gross domestic product," on average over the past five years, says Daniel Kaufmann, senior fellow at Brookings and the study's author.

Greece places last in the 16-nation euro zone in a ranking by World Bank researchers of how well countries control corruption, and last in the 27-nation European Union, tied with Bulgaria and Romania, in corruption-watchdog group Transparency International's survey of countries' perceived graft.

Last year, 13.5% of Greek households paid a bribe, €1,355 on average, according to a Transparency survey published last month. Ordinary citizens hand out cash-filled envelopes to get driver's licenses, doctor's appointments and building permits, or to reduce their tax bills, according to the organization's Greek chapter.
http://online.wsj.com/article/SB10001424052702303828304575179921909783864.html?mod=WSJEUROPE_hps_MIDDLETopStories

"You can get much farther with a kind word and a bribe than you can with a kind word alone."

With apologies to Al Capone and guns.

Another weekend, and spring here is displaying all its glory. Our hedgerows are a glorious display of white blackthorn blossom. Wild daffodils and primroses are still in delayed display. Here in the woods on the hills between the River Thames and River Pang valleys, the first of the bluebells are coming into flower. In another two weeks, I think, the great carpets of blue will begin. To walk the dog on a sunny Sunday morning the woods are a joy of birdsong, passing deer and the bells of St James the Less in distant Pangbourne village on the Thames. There is much more to God’s world than the great vampire squid will ever know. Have a great weekend everyone, be sure to check with the new blogsite over the weekend.

St James the Less, Pangbourne.
http://www.pangbournechurches.info/bells.html

"I see you don't understand, and I must explain it to you. Well, very long ago, on the spot where the Wild Wood waves now, before ever it had planted itself and grown up to what it now is, there was a city - a city of people, you know. Here, where we are standing, they lived, and walked, and talked, and slept, and carried on their business. Here they stabled their horses and feasted, from here they rode out to fight or drove out to trade. They were a powerful people, and rich, and great builders. They built to last, for they thought their city would last for ever."

"But what has become of them all?" asked the Mole.

"Who can tell?" said the Badger. "People come - they stay for a while, they flourish, they build - and they go. It is their way. But we remain. There were badgers here, I've been told, long before that same city ever came to be. And now there are badgers here again. We are an enduring lot, and we may move out for a time, but we wait, and are patient, and back we come. And so it will ever be."

The Wind in the Willows. Kenneth Grahame. Pangbourne.



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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Volcanic Ash Cloud – North America Cut Off.

Baltic Dry Index. 2966 +38

LIR Gold Target by 2019: $3,000.

http://www.londonirvinereport.blogspot.com/

“The repercussions of the Laki Volcano eruption in Iceland resonated throughout Europe for the next few years. The summer of 1783, having been turned to winter was followed by an extreme, harsh winter in 1784, even in North America where it was reported as one of the coldest on record.

The Laki Volcano eruption in Iceland can also be said to have contributed significantly to the French Revolution. After several years of extreme weather in Europe caused by the Laki eruption, the ensuing destruction of crops and livestock brought famine and poverty that built up in France, triggering the Revolution which began in 1789.”

We open today with the news that the North American continent has been cut off from air travel with Great Britain and civilization, by a 7 mile high volcanic ash cloud from Iceland. Probably with Europe too, which is scary given continental Europe’s inclination to rush off into inexplicable wars in the absence of US troops to end them. Don’t you just love Iceland, they can’t or won’t pay off their banksters debts yet send free useless ash to everyone in Britain instead. Supposedly, the cut off is to end a 1 pm BST later today, which should be enough to prevent total panic descending on North America, once the realization of their eastern isolation sinks in. Hapless Americans headed for the watering holes of Great Britain and Europe are advised instead to head off to Las Vegas, where many fine scaled down replicas of some of Europe’s finest buildings and drinks have been replicated. Distressed Brits unable to withstand the wait to reach North America are advised to check in at the Heathrow Dude Ranch and retirement home for seaside donkeys, nestled in the picturesque bucolic rolling fields between the M4/M25 interchange and Heathrow Airport’s Perimeter Road.

Below, the Journal covers the growing catastrophe for North America. I suspect, given the Icelandic track record above, returning to normality by 1 pm BST might prove to be slightly optimistic.

APRIL 14, 2010
FAA Says Most North Transatlantic Flights Hit by Volcano Danger

U.S. authorities said Wednesday that they had frozen most transatlantic flights because of the danger posed by a volcanic ash cloud drifting south from Iceland.

The Federal Aviation Administration said it was keeping some Europe-bound aircraft on the ground at U.S. airports, while carriers such as Continental Airlines Inc. opted to cancel services until the situation was resolved.

The volcanic eruption in Iceland sent an ash cloud drifting south across the main airline corridor for transatlantic services. The particles reduce visibility and can even cause aircraft engines to shut down.

FAA spokeswoman Laura Brown said "essentially all traffic" had been halted on the affected routes, with authorities expecting the disruption to run through between 0700 and 1200 GMT, the peak-time for arrivals to the U.K. from North America.

A Continental spokeswoman said it had cancelled eastbound flights from Newark to Glasgow, Edinburgh and Manchester, though anticipated normal operations on other services, albeit with potential air traffic control delays.

The Houston-based carrier operates one of the largest transatlantic networks, and said on its website that westbound flights "will most likely be rerouted around the ash cloud", with the move causing delays because of fuel stops.

U.K. airlines including Easyjet PLC adearlier warned travelers of potential disruption.

"Following the eruption of a volcano in Iceland earlier today, the Met Office have advised airlines that the ash plume may reach U.K. air space overnight. As a result this may cause significant disruption to flights departing the U.K. [Thursday]," the airline said in a statement.

The U.K air traffic control authority, NATS, earlier Wednesday said it was "restricting flights within the area affected by the ash cloud generated by the Icelandic volcanic eruption -- at present, this is the northern region of Scotland but is expected to move south."
http://online.wsj.com/article/SB10001424052702303348504575184930036984968.html

In other news yesterday, the Fed’s big man of Dallas Texas, spoke out yesterday against the semi official central banks actual owners. Mr Fisher thinks that banks that are too big to fail, are banks that are too big to run or supervise. I suspect that Mr. Fisher is probably looking for a career change. My money is on Mr. Blankfein and his chilling threat below.

"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

Big banks should be broken up, Fed's Fisher says
Too-big-to-fail is too-big-to-manage or supervise
NEW YORK (MarketWatch) -- Large financial institutions should be dismantled before their risky behavior creates another financial and economic crisis, a top Federal Reserve official said Wednesday.

The largest banks and pseudo-banks are too big to supervise and they are too big to manage, said Richard Fisher, president of the Dallas Federal Reserve Bank. The costs imposed by these banks are greater than the benefits society gets from having them.

"The risk posed by coddling TBTF [too-big-to-fail] banks is simply too great," Fisher said at a conference about creating a new financial structure. "A truly effective restructuring of our regulatory system will have to neutralize what I consider to be the greatest threat to our financial system's stability" -- large financial institutions.

At some point, large banks don't have efficiencies of scale, Fisher said, but "disefficiencies of dysfunctionality."

"There are limits to size and to scope beyond which global authorities should muster the courage to draw a very bright, red line," Fisher said. "I think the disagreeable but sound thing to do regarding institutions that are TBTF is to dismantle them over time into institutions that can be prudently managed and regulated across borders."

"The existence of institutions considered TBTF exacerbated a crisis that has cost the world a substantial amount of potential output and a whole lot of employment," Fisher said. The world has lost more than $60 trillion in output because of the 2008 crisis, he said.

It would be better to have "an international accord to break up these institutions into ones of more manageable size," Fisher said, but "if we have to do this unilaterally, we should."
Fisher spoke at a conference sponsored by the Levy Economics Institute of Bard College in honor of economist Hyman Minsky, who taught that an unfettered financial system would inevitably create asset bubbles and subsequent financial crises. Markets are efficient only at creating crises, he said.

Minsky's ideas have gained new respect after the collapse of the dot-com bubble and the housing bubble proved how prescient he was. Four other top Fed officials are scheduled to speak at the conference, as well as former Fed Chairman Paul Volcker.
http://www.marketwatch.com/story/big-banks-should-be-broken-up-feds-fisher-says-2010-04-14

Below, another US great vampire squid makes its living by massive prop trading. In JP Morgan’s case it’s all down to “record fixed-income trading,” for the house account. What could possibly go wrong, that yet another taxpayer bailout couldn’t put right? Banksterism, not capitalism still rules.

“Fraud and falsehood only dread examination. Truth invites it.”

Samuel Johnson.

JPMorgan Earnings Increase 55% on Outlook for Economy
April 14 (Bloomberg) -- JPMorgan Chase & Co. said a “broad-based” economic recovery boosted first-quarter earnings 55 percent, surprising analysts with record fixed-income trading revenue and a better-than-expected outlook for consumer credit.

Net income at the second-biggest U.S. bank by assets climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier and from $3.28 billion in the fourth quarter, the New York-based company said today in a statement. Record fixed-income trading revenue and a reduction in provisions for credit losses helped the bank beat the average estimate of 64 cents per share projected by 21 analysts surveyed by Bloomberg.

“There is clear and broad-based improvement in the economic factors in the United States and around the world,” Chief Executive Officer Jamie Dimon, 54, told reporters on a conference call.
Dimon cited signs including stabilizing U.S. home prices that signal the economy may be poised for a “strong recovery.” Chief Financial Officer Mike Cavanagh said delinquencies for credit cards and mortgages in which the borrower is behind by just one payment also improved in the first quarter, indicating that consumers’ finances are gaining strength after the worst recession in more than 70 years.

“Nobody saw those types of numbers coming,” said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia.
JPMorgan’s earnings bode well for Bank of America Corp. and other banks, which report earnings later this month, Miller said. “Credit remains a wild card here, but Jamie talked very, very positive about credit and the consumer,” he said.

----- “China’s growing, India’s growing, Japan is growing, home prices have stopped going down, consumer income is up, consumers are spending, service and manufacturing indexes are up, inventories are still low, I could go on and on,” Dimon said. “This could be the makings of a good recovery. We don’t know for sure, but if you look at those factors, it’s pretty good.”

-----Dimon and Cavanagh didn’t give shareholders immediate hope of restoring the quarterly dividend, which was cut to 5 cents from 38 cents in February 2009.

“We want to see continued sustained improvement in employment, continued sustained improvement in delinquencies” and a better understanding of new bank capital rules before the dividend will increase, Dimon said, reiterating what he told shareholders in his annual letter last month.

Cavanagh said that increasing the payout to shareholders is “going to be down the road a little more.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.Zv027iZigM

Below, George Soros is on something of a public campaign against another bankster generated bust. My guess is that it is already too late, with the banksters all trading up a storm of renewed derivatives gambling.

Markets could be derailed again, warns Soros
Apr 14, 2010 07:11 EDT
Railway porter-turned-billionaire financier George Soros delivered a stark warning last night that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.

The man who ‘broke’ the Bank of England (and who is still able to earn a cool $3.3 bln in a year) said the same strategy of borrowing and spending that had got us out of the Asian crisis could shunt us towards another crisis unless tough lessons are learned.

Soros, who worked as a porter to pay for his studies at the London School of Economics after emigrating from Hungary, warned us to heed the lesson that modern economics had got it wrong and that markets are not inherently stable.

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist at the City of London’s modern and impressive Haberdashers’ Hall.

“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.

“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”

http://blogs.reuters.com/fundshub/2010/04/14/markets-could-be-derailed-again-warns-soros/

We end for the day with Soc Gen’s Dylan Grice pointing out the troubling fact that Greece was only different in one respect, it’s debt problem was still small enough to be bailed out. The others, the US and UK included, aren’t too big to fail, merely too big to bailout in any meaningful sense of the pre-bailout financial system. Another way of saying Von Mises is all too likely to be right. Stay long precious metals.

Greece – ‘It’s not that different’
SocGen’s Dylan Grice is one person not bored with Greece. In fact, he believes it is the beginning of a wave of government funding crises, not the end.

The reason? The colossal amount of government debt that needs to be issued.

I’m not a bond strategist and I’ve not done anything sophisticated or clever, but by taking Bloomberg’s data for existing debt maturity for each government (red) and using the OECD’s projected 2010 deficits as a proxy for net new issuance (grey) my numbers shouldn’t be too far out. But if my numbers are even roughly right and issuance is the problem, Greece should have had almost the least to worry about!

This concerns Grice because of the unavoidable arithmetic behind debt sustainability, namely; the interest a country pays on its debt must equal the nominal growth rate of that country.
If it does, the incremental government revenue generated by the economic growth will pay for the coupons on the debt. If it doesn’t, a shortfall develops between incremental revenues and incremental coupon payments and in the absence of further austerity, more debt is required to finance the deficit.

This might sound abstract, but it’s exactly what happened in Greece. When the first austerity plan was presented, Greece cut public sector wages by a painful 10% causing angry protest and social unrest, although it saved the government EUR650m. But the same austerity plan assumed Greece’s interest cost would be 4.7% and by late February it was paying 6.25%. According to the WSJ, this has blown a EUR700m hole in its budget, more than offsetting the savage public sector wage cuts already enacted.

Given that everyone is subject to these iron-clad laws of budget sustainability then everyone is vulnerable to a reassessment of sovereign risk by the market, says Grice.

And if you thought Greece was somehow different from the UK, US et al think again, says Grice.
But it’s not just about getting this year out of the way. If it can happen in Greece, it can happen everywhere else too, because Greece just isn’t that different.OK, so it misrepresented the size of its liabilities … but so too do most other governments; its real fiscal problems are hidden off-balance sheet in the enormous welfare obligations it can’t afford to pay and so are most other governments; its debt maturity isn’t notably different from the rest of the OECD’s (at about eight years it’s actually longer than those of the US and of Japan); and its projected budget deficit is lower than those projected in the UK and the US (third chart inside).

So there you have it – if can happen in Athens if can happen anywhere.
http://ftalphaville.ft.com/

Email me for a copy of Mr Grice’s excellent scary report.



“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

At the Comex silver depositories Wednesday, final figures were: Registered 48.89 Moz, Eligible 66.55 Moz, Total 115.44 Moz.


+++++

Crooks & Scoundrels Corner.

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

Today, more on the race to get into the UK’s House of Crooks. The Tory leaning Telegraph thinks the Conservative Party has a shot at beating a hung Parliament.

"A low voter turnout is an indication of fewer people going to the polls."

George W Bush

General Election 2010: Conservatives lead in 100 key seats, Telegraph poll shows
The Conservatives are on course for a convincing election victory after a new poll for The Daily Telegraph showed the party is leading Labour by 12 points in crucial marginal constituencies.
By Andrew Porter, Political Editor Published: 10:30PM BST 14 Apr 2010

On the eve of tonight’s first ever leaders’ television debate, the most comprehensive survey of swing seats since the campaign began showed David Cameron comfortably ahead.
The poll by Crosby/Textor was carried out in 100 marginal seats; 80 held by Labour and 20 by the Liberal Democrats.

43 per cent of voters questioned said they would vote Conservative, 31 per cent Labour and 20 Lib Dem.

Labour have dropped five points since the 2005 election in these seats, while the Tories have gained seven points, the poll showed.

The results suggest the Conservatives are much more likely to achieve an outright majority at the election than previously thought.

One recent poll indicated that the Tory lead had narrowed to just three points, making a hung parliament the most likely result.

However, it is in the marginal constituencies - where pollsters believe the election will be won or lost - that the Conservatives have concentrated most of their efforts.

This latest poll appears to suggest that the strategy - masterminded by Lord Ashcroft - is paying off.

The new poll also predicts that turnout in the marginals is likely to be better than many have predicted with 65 per cent of those questioned saying they would definitely vote.
http://www.telegraph.co.uk/news/election-2010/7591249/General-Election-2010-Conservatives-lead-in-100-key-seats-Telegraph-poll-shows.html

"Blessed are the young, for they shall inherit the National Debt."

Herbert Hoover


UK General Election polls. – Why a hung Parliament looks increasingly likely.
http://www.ukpollingreport.co.uk/blog/

Below, what a surprise, a UK enquiry into the UK’s University of East Anglia’s dodgy Climate Research Unit’s “climategate” scandal, found nothing of any concern to worry about. Though the US Professor who came up with the infamous “hockey stick” global warming chart, ought to have been more careful in picking his methods. Phew, what a relief, for a moment there we almost thought that a Brit was going to pick on a British institution. With more and more sign of global cooling arriving, the lunatic left are going to carry on with their socialist agenda, promoting man made global warming from CO2. If it wasn’t so serious it would be funny.

“Patriotism is the last refuge of the scoundrel.”

Samuel Johnson.

'Hockey stick' graph was exaggerated
The 'hockey stick' that became emblematic of the threat posed by climate change exaggerated the rise in temperature because it was created using 'inappropriate' methods, according to the head of the Royal Statistical Society.
By Louise Gray, Environment Correspondent Published: 2:52PM BST 14 Apr 2010

Professor David Hand said that the research – led by US scientist Michael Mann – would have shown less dramatic results if more reliable techniques had been used to analyse the data.
Prof Hand was among a group of experts charged with investigating the "climategate" email scandal that engulfed the University of East Anglia's Climatic Research Unit (CRU) last year.

Sceptics claimed that the hacked messages showed scientists were manipulating data to support a theory of man-made global warming.

However the review, led by Lord Oxburgh into the research carried out by the centre, found no evidence of ''deliberate scientific malpractice".

Lord Oxburgh said the scientists at the research unit arrived at their conclusions ''honestly and sensibly''.

But the reviewers found that the scientists could have used better statistical methods in analysing some of their data, although it was unlikely to have made much difference to their results.

That was not the case with some previous climate change reports, where "inappropriate methods" had exaggerated the global warming phenomenon.

Prof Hand singled out a 1998 paper by Prof Mann of Pennsylvania State University, a constant target for climate change sceptics, as an example of this.

He said the graph, that showed global temperature records going back 1,000 years, was exaggerated - although any reproduction using improved techniques is likely to also show a sharp rise in global warming. He agreed the graph would be more like a field hockey stick than the ice hockey blade it was originally compared to.

"The particular technique they used exaggerated the size of the blade at the end of the hockey stick. Had they used an appropriate technique the size of the blade of the hockey stick would have been smaller," he said. "The change in temperature is not as great over the 20th century compared to the past as suggested by the Mann paper."

----The graph used data from hundreds of studies of past temperatures using tree rings, lake sediment, and glacier ice cores and then merged these with more reliable recent temperature records.

Prof Hand said many of the reproductions of the graph do not make clear when these different sets of data are used.

"It is only misleading in the sense they merged two different things," he said.

Prof Hand praised the blogger Steve McIntyre of Climate Audit for uncovering the fact that inappropriate methods were used which could produce misleading results.

"The Mann 1998 hockey stick paper used a particular technique that exaggerated the hockey stick effect," he said.

Prof Mann, who is Professor of Earth System Science at the Pennsylvania State University, said the statistics used in his graph were correct.

"I would note that our '98 article was reviewed by the US National Academy of Sciences, the highest scientific authority in the United States, and given a clean bill of health," he said. "In fact, the statistician on the panel, Peter Bloomfield, a member of the Royal Statistical Society, came to the opposite conclusion of Prof Hand."
http://www.telegraph.co.uk/earth/environment/climatechange/7589897/Hockey-stick-graph-was-exaggerated.html


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.

+++++

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 April 14
Current Stretch: 0 days
2010 total: 7 days (7%)
2009 total: 260 days (71%)
Since 2004: 777 days
Typical Solar Min: 485 days
http://www.spaceweather.com/
The long minimum seems to have ended.

New Solar Cycle Prediction
http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm

Is the Sun Missing Its Spots?
http://www.nytimes.com/2009/07/21/science/space/21sunspot.html?8dpc

Are Sunspots Different During This Solar Minimum?
-----But something is unusual about the current sunspot cycle. The current solar minimum has been unusually long, and with more than 670 days without sunspots through June 2009, the number of spotless days has not been equaled since 1933.

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

----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.http://www.leif.org/EOS/2009EO300001.pdf

Big freeze could signal global warming 'pause'
The Arctic conditions which have brought Britain to a standstill over the past week could be the start of a "pause" in global warming, some scientists believe.
Published: 9:20AM GMT 11 Jan 2010
http://www.telegraph.co.uk/earth/environment/globalwarming/6965342/Big-freeze-could-signal-global-warming-pause.html

Sunspot cycle 24: Together with sunspot cycle 25, the next two global cooling cycles. The new “Dalton Minimum?” Twenty Nine months now with low sunspots numbers, and counting. March was the 29th month of yet another low number of 15.4 http://en.wikipedia.org/wiki/Dalton_Minimum

Smoothed sunspot numbers (SSN). 2007, Oct. 0.9. The end of cycle 23.

Sunspot cycle 24: Nov 1.7. Dec 10.1. Jan 3.4. Feb 2.2. Mar 9.3 April 2.9. May: 2.9. June 3.1. July 0.5. August 0.5. Sep 1.1 Oct. 2.9. Nov. 4.1 Dec 0.8. Jan 1.5. Feb 1.4. Mar 0.7. Apr 1.2. May 2.9. June 2.6. July 3.5. Aug. 0.0. Sep 4.2. Oct 4.6. Nov 4.2. Dec 10.6 Jan 13.1 Feb 18.6 Mar 15.4.

Sunspots. http://solarscience.msfc.nasa.gov/SunspotCycle.shtml

The count. http://sidc.oma.be/products/ri_hemispheric/

Why a New Minimum. http://sesfoundation.org/dalton_minimum.pdf

The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm

Current Space Weather.
http://www.swpc.noaa.gov/

What happened to global warming?
http://news.bbc.co.uk/1/hi/sci/tech/8299079.st

++++

This week’s featured links: Silver & Gold Miners + Rare Metals.

With US trillion dollar deficits stretching as far as the eye can see, and voodoo economics the order of the day at the central banks, I think it is now time to begin selectively scaling into precious metals companies that mostly meet the following criteria:

Adequate cash reserves. Good management. Strong in-ground reserves or prospects. NAFTA based, or else located in countries with strong rule of law.

Endeavour Silver Corp. TSX: EDR. http://www.edrsilver.com/s/Home.asp

Semafo TSX: SMF http://www.semafo.com/home_company_intro.php

ATW Gold Corp. TSX.V: ATW. http://www.atwgold.com/

US Silver Corp. TSX.V: USA. http://www.us-silver.com/s/Home.asp

Excellon Resources Inc. TSX: EXN. http://www.excellonresources.com/

First Majestic Silver Corp. TSX: FR http://www.firstmajestic.com/s/Home.asp

New Jersey Mining Company. OTCBB: NJMC
http://www.newjerseymining.com/index.html

Atna Resources Ltd. TSX: ATN. http://www.atna.com/s/Home.asp

Barkerville Gold Mines TSX.V: BGM. Formerly International Wayside Gold Mines Ltd.
http://www.barkervillegold.com/s/Home.asp

Shoreham Resources Ltd. TSX-V: SMH
http://www.shoreham.ca/

ATAC Resources Ltd, TSX.V: ATC. http://www.atacresources.com/s/home.asp

Evolving Gold Corp. TSX.V: EVG http://www.evolvinggold.com/

Lydian International Ltd. TSX: LYD. Note: LYD operates in Armenia, a region carrying higher risk than our usual safer picks in NAFTA lands. http://www.lydianinternational.co.uk/

The story of rare earths and metals is mostly one of China producing and exporting, Japan, America and everyone else importing. Vital to our new technologies, and lifestyle, and critical to hybrid and electric cars, Rare Earth Elements and Heavy Rare Earths, are a strategic choke point held in China’s hands. Lately China has been squeezing that choke point. I think that AVL at Thor Lake Canada, has a property of global importance. A property with the ability to offer NAFTA access to REEs and HREs for the decades ahead. As America and the west move to reduce over dependence on oil from unstable regions, we will see demand for rare metals take off.

Avalon Rare Metals Inc. TSX: AVL. http://www.avalonraremetals.com/

We will be adding more REEs as appropriate.

Warning.

Sadly we are all in unexplored territory. The world has never before suffered a severe recession/depression while operating on fiat currency. As is widely apparent, the central banks haven’t a clue and are making up the rules as the flounder along. They never saw it coming they claim, although it was obvious to many fine writers though not unfortunately in the mainstream media, that a giant financialised derivatives gambling economy would always end badly. There are no experts now, for the simple reason that we have never before faced such a sudden synchronised and deep collapse in the global economies.

The unfortunate fact that we are operating on fraudulent currencies is highly likely to mean it all ends many months from now, in a fiat currency revulsion, but only after the monetary authorities have first tried pouring in endless amounts of newly created money. A derivatives gambling world with an estimated quadrillion dollars of face value has to be unwound and the losses absorbed. In this sort of investing environment, cash, gold and silver and tangible assets are favoured over stocks and intangible assets.

As always if thinking about making an investment, it’s important to do one’s own due diligence. No one has more at risk in an investment than you do yourself. In these difficult economic times, there will likely be several false bottoms before the real one arrives and hindsight allows us to confirm that the bottom is in. Even then, a “V” shaped rebound is highly improbable. A double dip recession seems likely. Beware the false "statistical" government subsidised "recovery." It is a "recovery" bought from a future of fiat currency collapse.

Graeme Irvine

London Irvine Report: www.londonirvinereport.com/

Graeme@londonirvinereport.com

The Bottomless Pit.

Baltic Dry Index. 2911 -02

LIR Gold Target by 2019: $3,000.

"In the short-term this may calm things but within 10 years the eurozone is not going to exist any longer in its current form"

Professor Ekkehard Wenger from Würzburg University.

Two days on from the great European bailout of Greece, Eurozone unity got tossed right out of the window as German politicians quickly backtracked on the idea of funding the bottomless pit. The fact that hard working German voters were expressing outrage at being forced to subsidize the tax and work shy Greeks, only added to the speed of the German retreat. I agree with the good Professor from Wurzburg U. I think that the Eurozone is finished and will cease to exist in its present form. Club Med’s bottomless pit, will be separated from the Teutonic Euro at some point ahead, though I doubt that the two Eurozone camps have the luxury of 10 years of dithering and drift.

Below, the reality sinks in about the famous Euroland bailout of the Greek way of life. The Greeks meanwhile, at least those with any sense and wealth, will continue to move their wealth over to Switzerland. To get any of the EU and IMF cash, the Greek government first has to impoverish most Greeks. Now it looks likely that even if they do the EU’s wallet will stay closed. Don’t you just love the EU way of government.

We stand today at a crossroads: One path leads to despair and utter hopelessness. The other leads to total extinction. Let us hope we have the wisdom to make the right choice.

Woody Allen.

Euphoria over Greek rescue fades as first cracks appear
Euphoria over a joint EU-IMF rescue deal for Greece worth €45bn (£39.8bn) has given way to caution after angry reactions in Germany and continued concerns among bond investors that any bail-out merely delays the day of reckoning.
By Ambrose Evans-Pritchard Published: 10:30PM BST 12 Apr 2010

Greek borrowing costs have fallen from post-EMU highs last week but still remain at stress levels. The yield spread on 10-year bonds over German Bunds dropped by 45 basis points to 6.75pc on Monday.

"This is a short-run fix, not a long-run solution," said David Owen at Jefferies Fixed Income. "At the end of the day, Greece has to carry out monumental fiscal tightening even as it slides deeper into recession. They risk chasing their tale."

Mohamed El-Erian, head of the US bond fund Pimco, doused hopes that his firm would soon step in to buy Greek debt, saying the rescue package at rates near 5pc does not address the underlying "solvency challenges" facing the country.

The German taxpayers' union accused Chancellor Angela Merkel of caving into pressure, saying Germany would be left on the hook for huge liabilities.

Christoph Steegmans, spokesman for the finance ministry in Berlin, insisted that "nothing had changed" as a result of the weekend pledge by eurozone states for €30bn of loans. Help is "not automatic" and cannot be activated if any state objects. "The fact that the fire extinguisher has been primed says absolutely nothing about the probability of a fire," he said.

Frank Schäffler, a Free Democrat finance expert in Mrs Merkel's coalition, said the rescue deal is "clearly a subsidy" and violates the EU summit deal in March. "We're on very thin ice legally," he said, hinting at likely court challenges.

Professor Ekkehard Wenger from Würzburg University said the aid for Greece is "another step on the slippery slope downwards. All rational economic rules are being thrown out of the window. This is a bottomless pit."

"In the short-term this may calm things but within 10 years the eurozone is not going to exist any longer in its current form," he told Handelsblatt.

----- Dominique Strauss-Kahn, managing director of the IMF's, said that neither default nor EMU exit were options for Greece. "The only effective remedy that remains is deflation. That will be painful. That means falling wages and falling prices. There is no other way for Greece to become competitive," he said.

Fitch Ratings yesterday downgraded mortgage bonds issued by three Greek banks. This followed a move last Friday to cut Greek sovereign debt to by two notches to BBB-, the minimum required by the European Central Bank for loans.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7583304/Euphoria-over-Greek-rescue-fades-as-first-cracks-appear.html

APRIL 13, 2010
Trichet's Voice Is Drowned Out in Rescue Effort
FRANKFURT—Jean-Claude Trichet, an architect of European monetary union, has found himself in an unfamiliar place as Europe confronts its biggest fiscal crisis in decades: the sidelines.

As Europe has struggled to cope with Greece's debt troubles, culminating in Sunday's agreement on a potential aid package, Mr. Trichet's efforts to shape the response largely failed.

On key issues, ranging from his opposition to International Monetary Fund involvement in a bailout to his call for governments to speak with a unified voice, Mr. Trichet appeared out of sync with euro-zone capitals, and his advice often went unheeded.

"The problem now is he's in charge of an institution which is supposed to be the guardian of the euro, but a lot of the decisions that are going to affect the future of the single currency are out of his hands," says Philip Whyte, senior research fellow at the Centre for European Reform, a pro-European think tank based in London.

Mr. Trichet's lack of influence over the response to a crisis central to the stability of the euro and Europe's economic future could weaken the office of ECB president and prompt broader questions about the ECB's ability to effectively respond to future flareups, analysts say.
The ECB declined to comment.

-----In contrast to the ECB, the U.S. Federal Reserve has seen its influence grow in the aftermath of the financial crisis, economists say. Fed Chairman Ben Bernanke gets his share of criticism, but his views on the economy, regulation and fiscal policy a carry substantial weight with policymakers, elected officials and the public at large. That image gap could put more pressure on the value of the euro.

"The ECB has an outstanding reputation, but the governments have pretty much ignored it and then dragged it along, and you lose faith in euro-zone policy making if what looks like the strongest institution is marginalized," says Marco Annunziata, chief economist at UniCredit Group.
http://online.wsj.com/article/SB10001424052702304506904575180161026558300.html

Up next, Iceland’s report into the collapse of its banks, except that it now appears that they weren’t really banks, just something closer to out of control hedge funds operating on the Bernie Madoff rules of accounting. So why are the poor Icelanders being forced to pay off 100% of the losses? There were plenty of writers writing of the insane risks that Iceland’s banksters were racking up. Plenty of writers covering the insider dealing that seemed to be going on. Plenty of warning that these “banks” had little in the way of internal controls. I look forward to reading America’s “Truth Report” into how Wall Street peddled hundreds of billions of “triple-A” securities to the world that weren’t, even as some of the great vampire squids bet against them.

"Part of the $10 million I spent on gambling, part on booze and part on women. The rest I spent foolishly."

George Raft

Iceland lifts lid on banks 'excessive loans' to billionaires
Iceland’s banks gave “excessive” loans to a handful of powerful billionaires, including Robert Tchenguiz, the property entrepreneur, Jon Asgeir Johannesson, the retail tycoon, and Bjorgolfur Gudmundsson, the former owner of West Ham FC, according to a damning inquiry.
By Rowena Mason Published: 6:00AM BST 13 Apr 2010

Its parliamentary investigation – The Truth Report – found numerous potential cases of illegality, including possible share price manipulation and exaggeration of asset values, within the island nation’s three banks – Kaupthing, Glitnir and Landsbanki.

The long-awaited report also suggests that the banks were effectively controlled by five investors wielding “unlimited influence”, with some acting as shadow directors. The report accuses the bank’s owners of pressuring management into awarding loans to their companies and friendly clients, with little or no collateral.

The UK lost £8bn in the Icelandic collapse of October 2008, and charities and councils are still waiting for £1bn in compensation. Most controversially, the Treasury bailed out 300,000 British savers with Landsbanki’s high-interest Icesave accounts, sparking a diplomatic row over the responsibility for the £2.3bn bill this produced.

It emerged in the report that companies connected to Mr Gudmundsson, whose family owned 40pc of Landsbanki, had borrowed almost as much as the entire £2.3bn Icesave debt to finance their own private investments. The loans amount to 140pc of the bank’s equity.
The report quotes Sigurjon Arnason, ex-chief executive of Landsbanki, as saying: “Resisting the requests from the owners of the banks would have equalled quitting from my position.”
The report also criticises Kaupthing’s loans to London-based property entrepreneur Mr Tchenguiz, whose companies received £1.4bn.

“We consider that Kaupthing’s loans to Robert Tchenguiz and companies have been in excess of that which could reasonably be considered a commercial assumption. Rules on large exposures were not followed,” it says. The report adds that it is “difficult to see how loans of this magnitude were taken with the bank’s interests in mind”.

Mr Tchenguiz, who owned large stakes in Sainsbury’s and Mitchells & Butlers before they were seized by Kaupthing’s winding-up committee, was not a direct shareholder. However, he sat on the board of Exista, an investment firm that owned 23pc of the bank. He denies any wrongdoing and said his loans were not against the rules.

Mr Johannesson, the former boss of failed British retail giant Baugur, a current director of House of Fraser and chairman of Iceland Foods, also comes under ­scrutiny for his role at Glitnir. Companies connected to Mr Johannesson, one of Glitnir’s biggest shareholders, borrowed £3.5bn.

The 2,000-page document is heavily critical of Iceland’s former ruling political party.
It says ex-Prime Minister Geir Haarde acted with “gross ­negligence” and reveals that former central bank manager David Oddsson turned down help from his UK counterpart Mervyn King.
The banks’ owners and key shareholders have all repeatedly denied any wrongdoing.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7583268/Iceland-lifts-lid-on-banks-excessive-loans-to-billionaires.html

Stay long precious metals. Our banksters are all still gambling like there’s no tomorrow. All still operating on mark to fantasy accounting rules. All still effectively betting the ranch to rack up telephone number bonuses before “the next Lehman” hits. There appears to be no will anywhere to reform the system before the next Lehman hits. We are deliberately flirting with crashing the G-20 fiat currency financial system.

We end for today with a warning from AFP on Japan. Japan floats on a sea of new debt that it continuously sells to its citizen savers. But Japan’s population is rapidly aging and the savers appetite and ability to buy up the new debt is approaching its limit. Japan may soon have to compete in the global market for access to funds. But no one in the global market will lend to Japan at anything like the low interest rates Japan pays to its captive savers. If Japan has to start paying even Germany’s interest rate Japan will probably go broke. Is Japan the ultimate financial weapon of mass destruction? In the next 5 years we are about to find out.

If that's art, I'm a Hottentot!

Harry S. Truman.

Risk of Japan going bankrupt is real, say analysts
Sun Apr 11, 12:56 AM
TOKYO (AFP) - Greece's debt problems may currently be in the spotlight but Japan is walking its own financial tightrope, analysts say, with a public debt mountain bigger than that of any other industrialised nation.

Public debt is expected to hit 200 percent of GDP in the next year as the government tries to spend its way out of the economic doldrums despite plummeting tax revenues and soaring welfare costs for its ageing population.

Based on fiscal 2010's nominal GDP of 475 trillion yen, Japan's debt is estimated to reach around 950 trillion yen -- or roughly 7.5 million yen per person.
Japan "can't finance" its record trillion-dollar budget passed in March for the coming year as it tries to stimulate its fragile economy, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"Japan's revenue is roughly 37 trillion yen and debt is 44 trillion yen in fiscal 2010, " he said. "Its debt to budget ratio is more than 50 percent."
Without issuing more government bonds, Japan "would go bankrupt by 2011", he added.

----Standard & Poor's in January warned that it might cut its rating on Japanese government bonds, which could raise Japan's borrowing costs amid the faltering efforts of Prime Minister Yukio Hatoyama's government to curb debt.

The system of Japanese government bonds being bought by institutions such as the huge Japan Post Bank has been key in enabling Japan to remain buoyant since its stock market crash of 1990.

"Japan's risk of default is low because it has a huge current account surplus, with the backing of private sector savings," to continue purchasing bonds, said Katsutoshi Inadome, bond strategist at Mitsubishi UFJ Securities.

But while Japan's risk of a Greek-style debt crisis is seen as much less likely, the event of risk becoming reality would be devastating, say analysts who question how long the government can continue its dependence on issuing public debt.

-----Instead, the most realistic hazard brought by huge Japanese debt is prolonged deflation under a shrinking economy, say analysts.

"Regaining fiscal health needs fiscal austerity, which could weigh on economic growth," said Kiuchi.

"And when the economy is bad, people don't spend money as they are worried about their future, which in turn intensifies the deflational trend," he said.

Continued deflation could further worsen Japan's fiscal health because of less tax revenue and more stimulus spending, stirring fears over big tax hikes, which in turn weigh on demand and again reinforce deflation, analysts said.
http://ca.news.finance.yahoo.com/s/11042010/24/f-afp-risk-japan-bankrupt-real-say-analysts.html

There was a dithering PM from Fife,
Who was greatly distrusted in life;
They sang him a ballad,
And fed him on salad,
And sent the dithering PM back to Fife.

With Apologies to Edward Lear, and the Poor People of Fife.

At the Comex silver depositories Monday, final figures were: Registered 49.50 Moz, Eligible 65.56 Moz, Total 115.06 Moz.

+++++

Crooks & Scoundrels Corner.

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

Today, more on Nu Labour’s dodgy MPs charged with having difficulty with the concept of honest accounting and the idea that reimbursement of expenses is supposed to mean that the expenses claimed actually occurred. Unbelievably, and only in Gordon Brown’s socialist wrecked, EU run, upside down modern Britain, the House of Crooks crooks are to get legal aid, and so get to victimise hapless UK taxpayers yet again.

"Politics is the art of choosing between the disastrous and the unpalatable."

J.K. Galbraith.

MPs' expenses: Politicians granted legal aid
Three politicians accused of fiddling their expenses have won a bid to get the public to pick up their legal bill.

Court officials said that the trio of Labour MPs will receive taxpayer-funded legal aid.
David Chaytor, Elliot Morley and Jim Devine are due to go on trial later this year accused of theft by false accounting

They are accused of stealing almost £60,000 in allowances through false mortgage applications, rent claims and invoices for services.

The cost of preparing their defence and of their legal representatives is likely to run into six figures, depending on the length of the trial.

But it could spiral far higher as the men threaten to take their battle to have the case against them thrown out to the Supreme Court.

Lord Hanningfield, who is accused of making false claims for travel allowances, has not made an application for legal aid, the court official added.

The three MPs have brought together some of the country's most eminent barristers, who can charge hundreds of pounds an hour, to fight their cases.

They have already told judges they should be dealt with by Parliamentary authorities instead of the courts.

Barrister Julian Knowles QC said the defendants will claim to be protected by parliamentary privilege, covered in the 1689 Bill of Rights.

There is now likely to be protracted legal argument over whether the men should face trial at all later this year.

The opening exchanges will be made a two-day hearing before trial judge Mr Justice Saunders at Southwark Crown Court from May 27.

An HM Courts Service spokesman confirmed an application for legal aid for the three men was granted last Friday.

Legal argument was originally due to take place from May 4 onwards, but this was rescheduled because some representatives were unavailable.

There has already been speculation that the total cost of prosecuting the four could exceed £3 million.

Scotland Yard said its inquiry into the expenses scandal has cost £508,500 so far, with the final bill likely to be considerably higher.

Mr Knowles, a leading junior barrister who represented the three MPs at their first magistrates' court appearance, declined to comment.

A spokesman for Edward Fitzgerald QC, who is due to represent at least two of the MPs at the crown court, said he was not aware of a legal aid decision.

Bury North MP Chaytor, 60, of Todmorden, Lancashire, is accused of falsely claiming rent on a London flat he owned, falsely filing invoices for IT work and renting a property from his mother, against regulations.

Scunthorpe MP Morley, 57, of Winterton, North Lincolnshire, allegedly falsely claimed £30,428 in interest payments between 2004 and 2007 towards a mortgage on his home which he had already paid off.

Livingston MP Devine, 56, of Bathgate, West Lothian, is said to have wrongly submitted two invoices worth a total of £5,505 for services provided by Armstrong Printing Limited.
He also faced a second charge alleging that he dishonestly claimed cleaning and maintenance costs of £3,240 by submitting false invoices from Tom O'Donnell Hygiene and Cleaning Services.
Former Essex County Council leader Lord Hanningfield, 69, faces six charges of making dishonest claims for travelling allowances.

The politicians could face up to seven years in jail if found guilty of stealing taxpayers' cash. Each defendant will be tried separately.
http://www.telegraph.co.uk/news/newstopics/mps-expenses/7582362/MPs-expenses-Politicians-granted-legal-aid.html

UK General Election polls. – Why a hung Parliament looks likely.
http://www.ukpollingreport.co.uk/blog/


"An empty taxi arrived at 10 Downing Street, and when the door was opened, Gordon Brown got out"

With Apologies to Churchill on Atlee.

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

Spotless Days April 11
Current Stretch: 1 days
2010 total: 7 days (7%)
2009 total: 260 days (71%)
Since 2004: 777 days
Typical Solar Min: 485 days
http://www.spaceweather.com
The long minimum seems to have ended.

New Solar Cycle Prediction
http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm

Is the Sun Missing Its Spots?
http://www.nytimes.com/2009/07/21/science/space/21sunspot.html?8dpc

Are Sunspots Different During This Solar Minimum?

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

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

----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.http://www.leif.org/EOS/2009EO300001.pdf

Big freeze could signal global warming 'pause'
The Arctic conditions which have brought Britain to a standstill over the past week could be the start of a "pause" in global warming, some scientists believe.
Published: 9:20AM GMT 11 Jan 2010
http://www.telegraph.co.uk/earth/environment/globalwarming/6965342/Big-freeze-could-signal-global-warming-pause.html

Sunspot cycle 24: Together with sunspot cycle 25, the next two global cooling cycles. The new “Dalton Minimum?” Twenty Nine months now with low sunspots numbers, and counting. March was the 29th month of yet another low number of 15.4 http://en.wikipedia.org/wiki/Dalton_Minimum

Smoothed sunspot numbers (SSN). 2007, Oct. 0.9. The end of cycle 23.

Sunspot cycle 24: Nov 1.7. Dec 10.1. Jan 3.4. Feb 2.2. Mar 9.3 April 2.9. May: 2.9. June 3.1. July 0.5. August 0.5. Sep 1.1 Oct. 2.9. Nov. 4.1 Dec 0.8. Jan 1.5. Feb 1.4. Mar 0.7. Apr 1.2. May 2.9. June 2.6. July 3.5. Aug. 0.0. Sep 4.2. Oct 4.6. Nov 4.2. Dec 10.6 Jan 13.1 Feb 18.6 Mar 15.4.

Sunspots. http://solarscience.msfc.nasa.gov/SunspotCycle.shtml

The count. http://sidc.oma.be/products/ri_hemispheric/

Why a New Minimum. http://sesfoundation.org/dalton_minimum.pdf

The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm

Current Space Weather.
http://www.swpc.noaa.gov/

What happened to global warming?
http://news.bbc.co.uk/1/hi/sci/tech/8299079.st

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This week’s featured links: Silver & Gold Miners + Rare Metals.
With US trillion dollar deficits stretching as far as the eye can see, and voodoo economics the order of the day at the central banks, I think it is now time to begin selectively scaling into precious metals companies that mostly meet the following criteria:

Adequate cash reserves. Good management. Strong in-ground reserves or prospects. NAFTA based, or else located in countries with strong rule of law.

Endeavour Silver Corp. TSX: EDR. http://www.edrsilver.com/s/Home.asp

Semafo TSX: SMF http://www.semafo.com/home_company_intro.php

ATW Gold Corp. TSX.V: ATW. http://www.atwgold.com/

US Silver Corp. TSX.V: USA. http://www.us-silver.com/s/Home.asp

Excellon Resources Inc. TSX: EXN. http://www.excellonresources.com/

First Majestic Silver Corp. TSX: FR http://www.firstmajestic.com/s/Home.asp

New Jersey Mining Company. OTCBB: NJMC
http://www.newjerseymining.com/index.html

Atna Resources Ltd. TSX: ATN. http://www.atna.com/s/Home.asp

Barkerville Gold Mines TSX.V: BGM. Formerly International Wayside Gold Mines Ltd.
http://www.barkervillegold.com/s/Home.asp

Shoreham Resources Ltd. TSX-V: SMH http://www.shoreham.ca/

ATAC Resources Ltd, TSX.V: ATC. http://www.atacresources.com/s/home.asp

Evolving Gold Corp. TSX.V: EVG http://www.evolvinggold.com/

Lydian International Ltd. TSX: LYD. Note: LYD operates in Armenia, a region carrying higher risk than our usual safer picks in NAFTA lands. http://www.lydianinternational.co.uk/

The story of rare earths and metals is mostly one of China producing and exporting, Japan, America and everyone else importing. Vital to our new technologies, and lifestyle, and critical to hybrid and electric cars, Rare Earth Elements and Heavy Rare Earths, are a strategic choke point held in China’s hands. Lately China has been squeezing that choke point. I think that AVL at Thor Lake Canada, has a property of global importance. A property with the ability to offer NAFTA access to REEs and HREs for the decades ahead. As America and the west move to reduce over dependence on oil from unstable regions, we will see demand for rare metals take off.

Avalon Rare Metals Inc. TSX: AVL. www.avalonraremetals.com

We will be adding more REEs as appropriate.

Warning.

Sadly we are all in unexplored territory. The world has never before suffered a severe recession/depression while operating on fiat currency. As is widely apparent, the central banks haven’t a clue and are making up the rules as the flounder along. They never saw it coming they claim, although it was obvious to many fine writers though not unfortunately in the mainstream media, that a giant financialised derivatives gambling economy would always end badly. There are no experts now, for the simple reason that we have never before faced such a sudden synchronised and deep collapse in the global economies.

The unfortunate fact that we are operating on fraudulent currencies is highly likely to mean it all ends many months from now, in a fiat currency revulsion, but only after the monetary authorities have first tried pouring in endless amounts of newly created money. A derivatives gambling world with an estimated quadrillion dollars of face value has to be unwound and the losses absorbed. In this sort of investing environment, cash, gold and silver and tangible assets are favoured over stocks and intangible assets.

As always if thinking about making an investment, it’s important to do one’s own due diligence. No one has more at risk in an investment than you do yourself. In these difficult economic times, there will likely be several false bottoms before the real one arrives and hindsight allows us to confirm that the bottom is in. Even then, a “V” shaped rebound is highly improbable. A double dip recession seems likely. Beware the false "statistical" government subsidised "recovery." It is a "recovery" bought from a future of fiat currency collapse.

Graeme Irvine

London Irvine Report: www.londonirvinereport.com/
Graeme@londonirvinereport.com