It’s Over, Part Two.

Baltic Dry Index. 2562 -66

LIR Gold Target by 2019: $3,000.

"Thank God For Bank Bailouts" “There’s danger in just shovelling out money to people who say, ‘My life is a little harder than it used to be, at a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”

Charlie Munger. Winner of the Marie Antoinette Award 2010.

After Monday’s good news that the US Great Recession was over last June and that it’s time to pile back in to the US assets again, Spain’s socialist Prime Minister yesterday declared Europe’s debt crisis is over too, and it’s time to pile back in to Club Med’s debt and start once again refinancing Club Med’s Dolce Vita lifestyle. Below, “the Big Zap” on the end of the crisis, and why the United States of Europe needs to unite some more, so the German’s hard working, tax paying, savings orientated economic strengths can apply to all. “We all need to borrow on the strength of Germany’s ability to repay” apparently. The European Gospel according to Spain. Greek debt anyone? Spanish? Would anyone needing to buy a certain famous NY bridge please get in touch.

“you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?”

SEPTEMBER 22, 2010

Europe Debt Crisis Is Over, Declares Spanish Leader

NEW YORK—Spanish Prime Minister José Luis Rodríguez Zapatero declared that the European debt crisis is over but said that the governments have to work better together and with markets to stave off such events.

"I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," Mr. Zapatero said in an interview with The Wall Street Journal on Tuesday.

One lesson learned from the market turbulence that hit the euro zone in recent monthsis that a single monetary policy isn't enough for the European Union, Mr. Zapatero said. "We require further convergence to boost competitiveness, and stronger principles to implement balanced economic and fiscal policies."

Mr. Zapatero, who said he expects no contractions in gross domestic product in coming quarters, offered a robust defense of Spain's economy and the austerity package he has pushed through Parliament.

Another lesson that emerged from the crisis is the need to push for greater economic policy coordination within the European Union.

Earlier Tuesday, the Spanish leader met with senior executives from major U.S. financial-services companies and investment funds to talk about Spain's economy, in an effort to shore up investor confidence on the country's fundamentals.

Mr. Zapatero said his message is that "confidence has been restored," particularly after the country released results of tests that evaluated the soundness of its banking system in late July. The risk aversion toward Spain has also subsided as the government has shown progress in reducing its deficit. Spanish banks' reliance on European Central Bank funding fell in August from record highs in June and July as international capital markets started opening up again for Spanish institutions.

---- Mr. Zapatero reiterated his government's commitment to economic reform and fiscal austerity, including plans to cut the country's budget gap to 6% next year and to 3% in 2011. The gap is forecast to be 9.3% in 2010.

Spain plans to cut spending at its ministries by 15% to 16% next year. Mr. Zapatero's government plans to submit its 2011 budget proposal to Parliament in coming days.

http://online.wsj.com/article/SB10001424052748704129204575506182829904198.html?mod=WSJEUROPE_hpp_LEFTTopStories

I am skeptical that our “recovery” in the G-7, Germany possibly excepted, is a recovery at all, rather than just the product of government sponsored and subsidized efforts at keeping the lights on in large parts of the economy. If America and Europe double dip, as I expect that they will the moment all the subsidies end, my guess is that Asia’s boom slams into a brick wall too. Stay long precious metals, in part two of the double dip, Asia joins us in the Great Recession, new Lehman’s appear out of nowhere, and social distress walks abroad again. Fiat currency goes into meltdown.

Next more on a ticking time bomb story we’ve been covering for almost 2 years. In their greed to securitize mortgages into CDOs and all the rest of the USA “triple-A” garbage that was peddled by Wall Street to the world, the mortgage originators deliberately and with malice aforethought, short circuited the necessary legal process of recording the transfers of ownership of the mortgages involved. Such was the avarice to get hold of other people’s money and pay themselves astronomic bonuses while the getting was good, they didn’t give a damn about obeying the law and filing the change of ownership with the counties involved, and incidentally in paying the filing fees on which the counties need to hold down property taxes, instead they set up a fast track (and probably illegal) clearing house to shuffle the paperwork around unofficially. The result, it’s now often near impossible to tell who owns a mortgage alleged to be in default. Now bailed out GMAC Mortgage, now a division of Ally Financial, wants to play fast and loose in court to get back the properties it may or may not actually own. “Trust me, I’m a giant rapacious US mortgage originator. What does it matter who really owns the defaulted mortgage? It was all a giant scam from beginning to end. Give me that house now!” Somehow, unless rule of law is about to collapse entirely in the USA, I suspect that Ally Financial is about to get its GMAC head served up on a silver platter. And if rule of law is dropped in America and the holders of nearly worthless triple-A paper are about to be cheated out of their collateral, who in the world will want to buy US securitized assets?

"What do I care about the law ? Hain't I got the power."

Cornelius Vanderbilt. 1794-1877.

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

Sept. 21 (Bloomberg) -- Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.

The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement. Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said.

“The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”

State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.

“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”

-----In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.

-----In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned by Washington-based Fannie Mae.

WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.

-----Iowa Assistant Attorney General Patrick Madigan said the implications of Ally’s internal review and the GMAC employee’s deposition could be “enormous.”

“It would call into question whether other servicers have engaged in similar practices,” Madigan said in a telephone interview. “It would be a major disruption to the foreclosure pipeline.”

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

Running a financial institution on small spreads with lots of leverage is a precarious way to make a living. Eventually, competition reduces lending standards until the point where everyone must go along with the lousy lending standards or go out of business. There's a very fast race to the bottom. Anything that gets as competitive as finance has naturally goes toward excess.

Charlie Munger.

At the Comex silver depositories Tuesday, final figures were: Registered 53.71 Moz, Eligible 58.48 Moz, Total 112.19 Moz.

+++++

Crooks and Scoundrels Corner.

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

Today, an update on the developing La Nina in the Pacific. Did last year’s mild La Nina cause our severe UK and European winter? Does a another severe winter lie ahead for most of Europe? Will Europe turn into Canada? Does La Nina’s impact get magnified during periods of low sunspot numbers? I wish I knew the answers, but prudence requires planning as if it does, and the answers are likely to be: yes, yes, no, and yes. Stay around for confirmation ahead.

"I am just going outside and may be some time".

Lawrence Oates. 16 March 1912

CLIMATE PREDICTION CENTER/NCEP

9 September 2010

ENSO Alert System Status: La Niña Advisory

Nearly all models predict La Niña to continue at least through early 2011 (Fig. 6). However, the models continue to disagree on the eventual strength of La Niña. Based on current observations and model guidance, we expect the SST anomalies in the Niño-3.4 region to either persist near the present strength, or to strengthen into the winter as is consistent with the historical evolution of La Niña. Thus, it is likely that the peak strength of this event will be at least moderate (3-month average between –1^oC to –1.4^oC in Niño-3.4) to strong (3-month average of –1.5^oC or less in Niño-3.4).

Expected La Niña impacts during September-November 2010 include suppressed convection over the central tropical Pacific Ocean, and enhanced convection over Indonesia. The transition into the Northern Hemisphere Fall means that La Niña will begin to exert an increasing influence on the weather and climate of the United States. These impacts include an enhanced chance of above-average precipitation in the Pacific Northwest, and below-average precipitation in the Southwest and in portions of the middle and lower Mississippi Valley and Tennessee Valley. Also, La Niña can contribute to increased Atlantic hurricane activity by decreasing the vertical wind shear over the Caribbean Sea and tropical Atlantic Ocean (see the August 5th update of the NOAA Atlantic Seasonal Hurricane Outlook), and to suppressed hurricane activity across the central and eastern tropical North Pacific.

http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/ensodisc.html

Goldman has the best morality of any of the big banks. From this sense, it's a little crazy to be attacking our best bank.

Goldman was in a world where Congress legalized all types of derivatives. It's an inherently dangerous world. Given that world, I see no reason to think Goldman misbehaved in some horrible fashion. Everyone was doing it, and it's only natural to increase your moneymaking activities when you can do so legally.

Charlie Munger.

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: The thoughts of Charlie Munger,a proper Charlie,Spain,Zapatero,EU crisis over,GMAC scam,La Nina,global cooling,REEs,HREs,gold and silver.

America on Edge.

Baltic Dry Index. 1761 +29

LIR Gold Target by 2019: $3,000.

The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their mettle and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.

Andrew Mellon.

We open today with the latest residential real estate stats from America, where the ending of first time buyer subsidies seems to have ended American’s interest in buying homes, first time or not. Ignored by the now seriously detached ever optimistic stock market, to me it’s another red flag, like the BDI and the ECRI, warning of economic trouble ahead. And America hasn’t even started on an austerity plan. Below, the Journal on yesterday’s developments.

"…it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now."

Cyril Moulle-Berteaux. Managing partner, Traxis Partners LP. May 6, 2008. WSJ.

JULY 21, 2010

Housing Market Stumbles

Construction Slows, Inventories Build Amid Weak Job Growth, Tax-Credit End

The housing market, whose collapse pulled the economy into recession in late 2007, is stalling again.

In major markets across the country, home sales are deteriorating, inventories of unsold homes are piling up and builders are scaling back construction plans. The expiration of a federal home-buyers tax credit at the end of April is weighing on the market.

On Tuesday, the U.S. Census Bureau said single-family housing starts in June fell by 0.7%, to a seasonally adjusted annual rate of 454,000. The U.S. started 1.47 million homes in 2006, before the housing bubble popped.

Future construction looks even weaker. Permits for single-family starts fell 3% in June, following big declines in both May and April. "We're hovering at post-World War II lows," said Ivy Zelman, president of Zelman & Associates, a research firm.

While the housing downturn dragged the economy into a recession nearly three years ago, now it is the economy that is pulling down housing, says economist Patrick Newport at IHS Global Insight. Without sustained job growth, the housing market likely won't improve. That in turn will ricochet across manufacturing, retail and other trades heavily dependent on home building and consumer spending.

The Wall Street Journal's quarterly survey of housing-market conditions in 28 major metropolitan areas shows that inventory levels have grown in many markets. But inventory fell in some of the weakest ones, including several Florida markets, Atlanta, and Charlotte, N.C.

At the end of June, inventory was up 33% from year-ago levels in San Diego, and by 19% and 15% in Los Angeles and Orange County, Calif., respectively, according to data compiled by John Burns Real Estate Consulting. Rising inventory can lead to price declines later.

---- Even falling interest rates aren't enough to whet consumer appetites for housing. Last week, the average rate on a 30-year fixed-rate mortgage was quoted at 4.57%, according to Freddie Mac, the lowest since its survey began in 1971. But demand for home-purchase mortgages sits near 14-year lows, according to the Mortgage Bankers Association, down 44% over the past two months.

The government last fall extended tax credits worth up to $8,000 to home buyers who signed contracts by April 30, causing sales to surge early this year. Those buyers had until June 30 to close their sales until Congress, concerned that the backlog of sales wouldn't close in time, extended the deadline through September.

Analysts long expected the withdrawal of a federal tax credit, which had juiced sales, to lead to a slower-than-usual summer.

"It's the magnitude that's been the issue,'' says Douglas Duncan, chief economist at Fannie Mae. "The drop-off in activity has surpassed expectations.''

http://online.wsj.com/article/SB10001424052748704723604575379463676740680.html?mod=WSJ_hps_LEFTWhatsNews

Next, more on the highly entertaining battle between the spendthrift Keynesians and the dour Calvinist “Hooverites.” Ding, ding, ding, round two.

"liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”

Andrew Mellon.

Krugman versus Ferguson: Round Two

By Jeremy Warner Economics Last updated: July 20th, 2010

Not since Ken Rogoff’s famous attack on Joe Stiglitz has the dismal science of economics provoked such pompous, self-important, personalised squabbling. Professors Paul Krugman and Niall Ferguson, of course, have form; they’ve been at it on and off for nearly a year now over the efficacy of deficit spending in fighting the downturn, and today they return to the fray.

The occassion was another piece that Ferguson, an eminent economic historian, has penned for the Financial Times on the dangers of attempting to spend your way to economic recovery. Foolishly – or perhaps deliberately, for it is sometimes possible to imagine that the two have secretly agreed to slag each other off for the publicity – he mentions Krugman by name. “Those economists, like New York Times columnist Paul Krugman”, he writes, “who liken confidence to an imaginary “fairy” have failed to learn from decades of economic research on expectations. They also seem not to have noticed that the big academic winners of this crisis have been the proponents of behavioural finance, in which the ups and downs of human psychology are the key”.

Quick as flash, Krugman has risen to the bait. On his New York Times blog, he writes “Brad DeLong does the necessary on Niall Ferguson; no need for me to pile on”. But then he attempts to do precisely that, and with a ladle too. The detail of the argument need not bother us here. You can follow it by clicking on the links.

But it has to be said that as an encore, it is not nearly as entertaining as the first round, where Krugman ended up accusing Ferguson of being a racist on account of his reference to “Felix the black cat”, and of not being qualified to comment on economics since Ferguson is a “mere” historian of finance. Krugman, by contrast, is a Nobel prize winner.

------Surface cleverness? Never let it be said that Krugman might be guilty of the same. I see very little serious economic analysis on his daily blogs; what I see instead is well and consistently argued political polemic, peppered with selective use of graphs and statistics to give the veneer of dedicated research. The debate over deficit spending has always been more political than economic.

The reality is that nobody knows what cutting the deficit into a weak economic recovery is going to do to output and jobs. We won’t know until it is tried, and even if there is a double dip, it will be impossible to say whether it was the deficit reduction wot did it. The way things are at the moment, the US economy may well slip back into recession without any deficit cutting at all. As far as I can see, much of the stimulus has just been money down the drain.

And as for citing the historical evidence of the Depression, where apparently premature fiscal tightening caused the economy to dip back down again, the precise mechanisms by which this occurred are again highly debatable. Whacking up business taxes as a way of cutting the deficit not unnaturally killed the investment recovery stone dead.

What we do know about US Federal spending is that it is unsustainable at present levels, and unless something is done about it soon, America can kiss goodbye to its world leadership role. But don’t take it from me. This is what Krugman said about it in early 2006, when the deficit was not nearly as bad as it is today:

More.

http://blogs.telegraph.co.uk/finance/jeremywarner/100006939/krugman-versus-ferguson-round-two/

In European news, the great 2010 austerity band wagon rolls on. Below, Spain’s minority government limps on to another success. But will the votes still be there once the real pain kicks in?

Zapatero Wins Spending Vote, Setting up Budget Fight

July 21 (Bloomberg) -- Spanish Prime Minister Jose Luis Rodriguez Zapatero won parliamentary approval for next year’s spending plan by four votes in the first phase of a battle over the 2011 budget that could decide the fate of his government.

Aided by 13 abstentions, Zapatero’s Socialists carried the vote 170 to 166, Speaker Jose Bono said yesterday in Madrid. Smaller groups including the Basque Nationalist Party that Zapatero relied on to pass his minority government’s program voted against the spending limit, which is the first stage of the budget process.

Zapatero also lost a separate, non-binding vote yesterday calling on the government to scrap a freeze next year on pensions, part of the austerity plan passed in May. The motion was carried 178-163, increasing pressure on the government to backtrack on the measure.

As a 20 percent unemployment rate and the deepest budget cuts in three decades erode support for the government, Zapatero has also lost the backing of smaller parties in parliament that he relied upon. He pushed through emergency austerity measures with a margin of one vote on May 27, and failure to pass the 2011 budget by the end of the year would probably bring down the government.

Zapatero has riled unions and some members of his Socialist party with a policy U-turn aimed at cutting the third-largest budget deficit in the euro region and stemming a surge in borrowing costs.

The budget shortfall was 11.2 percent of gross domestic product last year and the government aims to cut it to 6 percent in 2011 by paring public workers’ pay by 5 percent, reducing infrastructure investment and raising taxes.

http://noir.bloomberg.com/apps/news?pid=20601095&sid=ahtM9S.ZcUs0

Next, more from Bloomberg on the rising real estate tension in China. It’s not just America on edge.

Tianjin Says ‘Wait a Minute!’ to Wen as China Property Slumps

July 21 (Bloomberg) -- Three dozen cranes tower over the Tianjin West Railway Station, part of a 501-billion yuan ($74- billion) government-funded building boom in this city of 9.8 million southeast of Beijing.

Like hundreds of other local Chinese projects, Tianjin’s construction is financed in part by land sales that are dropping as China’s real-estate slump takes hold. Property sales slid at an annual 8 percent rate in June. Selling land produced 41 percent of Tianjin’s income last year, according to China Index Academy, a Beijing real-estate research firm.

A cascading collapse in local finances could force the central government to shore up banks that lent to local government entities, said Jim Walker, chief economist at Hong Kong-based Asianomics Ltd., in a June 7 interview. Banks could “easily” be saddled with bad loans of more than $400 billion over the next two years, he said.

“These local-government vehicles probably hope their projects will be able to service their debts,” Walker said. “If they don’t I doubt they’ll worry about repaying the loans; they will just assume that somewhere else in government will have to take on the bad debt.”

After their success in propelling growth, local authorities are now faced with the consequences of Premier Wen Jiabao’s crackdown on the real-estate bubble. Falling property sales risk an erosion of revenue accounting for as much as 30 percent of local budgets, according to Standard Chartered Bank.

Must Do Something

The China Se Shang Property Index has tumbled 42 percent in the past year, underperforming the 23 percent drop in the benchmark Shanghai Composite Index.

“Local governments were encouraged to invest in these projects and now they’re feeling like, ‘Hey, wait a minute!’” said Barry Naughton, author of the 2007 book “The Chinese Economy: Transitions and Growth” and a China specialist at the University of California San Diego. “They will be taking their funding platforms to Beijing and saying: ‘We’re going to go bankrupt. You have to do something about it.’”

http://noir.bloomberg.com/apps/news?pid=20601089&sid=aOxoWUVhVLzA

While Eur-Asia struggles though one of the hottest summers in a century, in South America it’s one of the coldest winters in years. Another sign of our lingering sunspot minimum ushering global cooling and a new Dalton Minimum, or merely background noise to an ever changing natural world? It’s way too early to tell, but my take is that it tends to support the case for global cooling. What will the coming winter bring to us snow challenged Brits and the UK?

175 people killed in South America cold spell

20.07.2010 08:22

At least 175 people have died in the coldest winter in South America in recent years, officials in six affected countries said, dpa reported.

The cold was worst in southern Peru, where temperatures in higher altitudes of the Andes dropped to minus 23 degrees Celsius. Officials said Monday that since the beginning of last week 112 people died of hypothermia and flu.
Argentina measured the coldest temperatures in 10 years. Sixteen people froze to death and 11 died of carbon monoxide poisoning due to faulty heaters.
In Bolivia, 18 people died, in Paraguay five and two each in Chile and Uruguay. Nine people died of the cold in southern Brazil.
Thousands of cattle also froze to death on their pastures in Paraguay and Brazil. There are no stables for the animals as temperatures usually do not drop that low.

Several regions in Bolivia and Peru closed schools until the end of the week and larger cities opened emergency shelters for homeless people.

Electricity and gas networks are operating at capacity limits in many of the affected regions. Argentina reported natural gas shortages in several provinces.

The poorest population groups are worst affected by the cold spell with their homes poorly equipped to deal with the cold, lack of heating and access to health care.

http://en.trend.az/regions/world/ocountries/1723309.html

We end for the day with bad news from Bosnia. It’s not just the whole world that’s against the people who occupy the Balkans, now Aliens are getting in on the sport too. Below, MSN UK News covers all the news that’s fit to print in the UK’s silly-season of high summer. I think I can help out the unfortunate, long suffering, meteorite challenged Mr. Lajic. I think the aliens want him to move. He’s obviously living on top of something they need.

MSN UK News, 20/07/2010 08:30

Man hit by six meteorites; blames 'aliens'

A Bosnian man insists he is being targeted by extra-terrestrials after his house was hit by meteorites six times in three years.

Radivoje Lajic, 50, who lives in the northern village of Gornji Lajici, believes aliens are responsible for the meteor strikes.

"I am obviously being targeted by extra-terrestrials," he insists. "I don't know what I have done to annoy them but there is no other explanation that makes sense.

"The chance of being hit by a meteorite is so small that getting hit six times has to be deliberate."

The strikes, which experts at Belgrade University have confirmed are all meteorites, always happen when it is raining heavily.

"I have no doubt I am being targeted by aliens," the Metro reports Lajic as saying. "They are playing games with me. I don't know why they are doing this. When it rains I can't sleep for worrying about another strike."

Lajic has had to reinforce his roof with a steel girder for fear of the strikes causing lasting damage.

He paid for the girder by selling one of the meteorites to a university in the Netherlands.

http://news.uk.msn.com/odd-news/features/articles.aspx?cp-documentid=154165831

"The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States."

Shi Jianxun. China People’s Daily. September 16, 2008

At the Comex silver depositories Tuesday, final figures were: Registered 51.77 Moz, Eligible 58.89 Moz, Total 110.66 Moz.

+++++

Crooks and Scoundrels Corner.

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

Today it’s the crooks and scoundrels that work for America’s SEC watchdog. With a watchdog like this, can the next Lehman be very far away?

“The world is a place that’s gone from being flat to round to crooked.”

Mad Magazine.

JULY 21, 2010

SEC Had 'Window Dressing' on Radar for Years

Federal regulators were aware of and concerned about potentially questionable accounting of short-term trades on Wall Street long before Lehman Brothers' collapse raised the issue, a report indicates.

Since 2004, the Securities and Exchange Commission has questioned 115 transactions by 102 different companies to assess if they accounted properly for repurchase agreements, or "repos," among other short-term trades, according to AuditAnalytics.com. The research firm reviewed more than 115,000 comment letters the SEC sent to companies asking questions about their securities filings.

An SEC spokesman declined to comment on the report.

In March, a bankruptcy examiner said Lehman improperly moved $50 billion off its balance sheet by misclassifying short-term trades as "sales," when they should have been classified as borrowings.

The strategy, dubbed, "Repo 105," triggered an SEC inquiry.

The new report suggests that the SEC has for years been concerned about potential Wall Street "window dressing"—finding ways to shed debt before reporting finances to the public. Since the financial crisis, window dressing has increased, according to a Wall Street Journal analysis, as banks have grown more sensitive about showing high levels of debt and risk.

"The SEC at least knew of this issue and tried to inquire when they could," said Don Whalen, AuditAnalytics.com's director of research.

Though window dressing isn't illegal, intentionally masking debt to deceive investors violates regulatory guidelines. In recent weeks, Bank of America Corp. and Citigroup Inc. have said they mistakenly booked some repo trades as sales when they should have been borrowings, but said the amounts were immaterial.

The SEC's questions don't indicate the companies did anything wrong, or that the SEC took any action against them, except for a few instances in which the regulatory request apparently prompted companies to restate earnings.

Among the 102 companies to which the SEC posed such questions are Bank of America and Citigroup. The BofA and Citi transactions the SEC questioned that are part of the new report's figures apparently were accounted for properly, and the SEC didn't take any action against the banks.

A BofA spokesman didn't provide any comment. A Citi spokesman declined to comment.

http://online.wsj.com/article/SB10001424052748704723604575379633816181998.html?mod=WSJ_hps_MIDDLESecondNews

"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."

Bear Stearns CEO Alan Schwartz. March 12, 2008. Failed March 17^th, 2008.

The monthly Coppock Indicators finished June:

DJIA: +269 Down. NASDAQ: +460 Down. SP500: +290 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators.

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.

Technorati Tags: US real estate,Krugman v Ferguson,China real estate bubble,Spain austerity,Balkan meteorites,Andrew Mellon,SEC scoundrels,missing sunspots,global cooling,mining stocks.

The “S” hits the “PIG”.

Baltic Dry Index. 1709 -81 (Down 59.3% since May 26.)

LIR Gold Target by 2019: $3,000.

'St. Swithin's day if thou dost rain
For forty days it will remain
St. Swithin's day if thou be fair
For forty days 'twill rain nae mair.

July 15^th. That’ll be rain then.

Today we focus on the sorry state of Europe, or more correctly, the sorry states of Europe lead by Club Med’s Spain. But first this latest news from China. Even on the official figures China is clearly slowing. What does the shipping industry know that the Fed and their Wall Street cronies don’t? At last night’s closing value of 1709, the Baltic Dry Index is now just two and a half times its post Lehman Brothers crash lows.

“Poverty is not socialism. To be rich is glorious.”

Deng Qiaopeng

China's economy and inflation cooling, data show

July 14, 2010, 10:56 p.m. EDT

HONG KONG (MarketWatch) -- China reported a slowdown in second-quarter gross domestic product growth, as well as in a number of other economic indicators for June on Thursday, indicating the nation's rapid expansion was beginning to cool as Beijing withdrew some expansionary policies.

The annualized first-half GDP growth came in at 11.1% higher than in the same period a year ago, but slower than the 11.9% annual growth recorded in the first quarter. The size of the nation's economy grew to 17.284 trillion yuan ($2.553 trillion) as a result, according to the National Bureau of Statistics of China.

Second-quarter GDP data wasn't immediately available, though Reuters and Dow Jones Newswires put the figure at 10.3%. That's lower than the 10.5% expansion estimated by economists surveyed by FactSet Research.

The country's consumer price index for June increased 2.9%, while its producer price index expanded 6.4% from the year-earlier month. Both measures fell below economists' expectations for 3.3% and 6.8%, according to a Dow Jones Newswires survey.

In May, China's consumer and producer prices rose 3.1% and 7.1%, respectively.

June retail sales grew 18.3% and monthly industrial production expanded 13.7%, also slowing from May and dropping below estimates. China's May retail sales had expanded 18.7% while the nation's industrial production grew 16.5%.

http://www.marketwatch.com/story/chinas-economy-and-inflation-cooling-data-show-2010-07-14

Now back to the sclerotic bureaucratic states of Europe, home of 3 EU Presidents and Baroness Whatsit, dodgy accounts that the auditors can’t make heads nor tails of and a dodgy fiat currency that everyone knows is going to fail once the Germans tire of paying for Club Med’s lifestyle. Home to more useless Commissioners and flunkies than BP has beach remediation workers. Below, the big “S” of the European PIGS.

Spanish Banks Boost ECB Borrowing to Record in June

July 14 (Bloomberg) -- Spanish banks borrowed a record 126.3 billion euros ($161 billion) from the European Central Bank in June as investors shun the debt-ridden nation’s lenders.

Spanish banks increased borrowing 48 percent from 85.6 billion euros in May, according to daily averages compiled by the Bank of Spain. That compares with a drop of 4 percent to 496.6 billion euros provided to lenders by the ECB in the whole euro area.

The southern European country’s banks haven’t sold any bonds publicly in the past two months amid investor concerns about the country’s ability to cut its deficit without hurting the economy. The yield on 10-year Spanish government debt relative to benchmark German bonds has more than tripled to 200 basis points since the start of the year. A basis point is 0.01 percentage point.

“The pressure for Spanish banks will keep rising as they can’t raise cash in the bond markets at reasonable prices,” said Thomas Nyegaard, a London-based analyst at F&C Investments, where he helps manage 4 billion euros of assets including Spanish bank debt. “The lenders can hardly provide any new lending under these conditions.”

The cost of insuring against losses on Spanish sovereign debt rose five basis points to 213 basis points in the credit- default swap market, according to data provider CMA. The contracts rose as high as 274 basis points in May.

The country’s lenders are increasing their dependence on the ECB as the European Union starts to examine banks’ resilience to losses after the debt crisis pummeled the bonds of Spain, Greece and Portugal. Europe’s deficit woes sparked concern about banks’ losses from sovereign debt holdings on top of the 438 billion euros already written down since the start of the global credit crisis in 2007.

http://noir.bloomberg.com/apps/news?pid=20601085&sid=aUMqxvUBVV8I

Spain 'relying on short-term funding' as councils go bust

A third of Spain's city councils are in dire straits and may be forced to suspend payments by the end of the year, replicating the woes in the US, where many states are bearing the brunt of fiscal tightening.

By Ambrose Evans-Pritchard, International Business Editor

Published: 9:59PM BST 13 Jul 2010

The great majority of councils in Andalucia are already in deep crisis – either insolvent or muddling through from day to day. More than 400 of the 8,000 councils across the country have stopped paying electricity, water and telephone bills, according to Spanish newspaper El Economista.

"I am deeply ashamed to know that I won't be able to pay our staff. They have got mortgages, children. What am I supposed to do?" said Jesus Manuel Ampero, mayor of Cenicientos, near Madrid. "We were not able to cover our payroll in June. Neither I nor our councillors have received anything for two years. I've had two heart attacks. My health is cracking. If we cannot solve this, I'm resigning."

Spain's federation of regional governments said councils were heading for slow "asphyxiation", with many facing a payroll cut-off next month. Pedro Arahuetes, mayor of Segovia and head of the federation's finance committee, told The Daily Telegraph that councils had lost up to 30pc of tax revenues because of the property and construction crash, and a further 20pc in funding cuts by Madrid.

The body has called for a moratorium until 2012 on debts to central government, which is itself slashing wages by 5pc as a quid pro quo for backing from the EU's €750bn (£626bn) rescue.

Council debt is just 3pc of Spanish GDP, so default risk is modest. The greater worry is political as Spain's depression grinds on. The latest Consenso Económico survey forecasts that GDP will contract by 0.8pc this year, with zero growth next year. Unemployment is already 19.9pc. The lesson of the early 1930s is that once slumps last much beyond two years they start to engender serious social tension.

------Analysts are split on the country's prospects. Goldman Sachs and Morgan Stanley say the economy is starting to turn the corner. Spain's €6bn bond auction last week drew large bids from Asian investors, including China's foreign exchange fund SAFE – a powerful stamp of approval.

However, RBS warned in a new report – Stress Testing Spain – that the country is caught in an "unstable equilibrium", relying on short-term funding from the European Central Bank to keep rolling over debts.

RBS said Spanish banks need to raise €50bn in fresh capital to weather the crisis under its soft test and €90bn under a severe test.

This is regardless of the EU stress tests, which may limit "haircut" simulations on Club Med debt to the trading buckets of banks rather than their much larger investment portfolios – rendering the exercise pointless.

Jacques Cailloux, the report's lead author, said a severe haircut of 30pc on all such bonds would lead to losses of €400bn for Spain (40pc of GDP) and €1.3 trillion for the rest of the eurozone (15pc of GDP). It may require "overwhelming policy intervention" by the EU in good time to prevent such a catastrophic chain of events.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7888637/Spain-relying-on-short-term-funding-as-councils-go-bust.html

In Euroland’s top economy, a lame duck government just got lamer. Below, Chancellor Merkel life just got a whole lot more complicated when it comes to defying the voters and bailing out Club Med. For the foreseeable future, Europe lacks a strong government anywhere.

Who do I call when I want to call Europe?

Van Rompuy, Sir.

Who?

With apologies to Henry K.

Blow for Merkel as Key State Elects Center-Left Government

07/14/2010

In a further setback for Chancellor Angela Merkel's center-right coalition, power in Germany's most populous state, North Rhine-Westphalia, shifted to the center-left on Wednesday. The state assembly elected Social Democrat Hannelore Kraft as regional governor at the head of minority government.

The center-left Social Democrats (SPD) and Greens took control of Germany's most populous state on Wednesday with the election of a minority government in North Rhine-Wesphalia that spells further trouble for Chancellor Angela Merkel.

The state -- Germany's most-populous, with some 18 million people -- had been ruled since 2005 by a center-right coalition of Merkel's conservative Christian Democrats and the pro-business Free Democrats headed by former Governor Jürgen Rüttgers, but it lost its majority in a regional election on May 9 and failed to build a workable coalition after weeks of negotiations with other parties.

------Wednesday's vote has deprived Merkel's center-right alliance in Berlin of a majority in the Bundesrat, the upper legislative chamber in which Germany's 16 states are represented, and will make it harder for her to get some legislation through.

The defeat of the CDU in the North Rhine-Westphalia election was a sign of growing public disenchantment with Merkel's government, which has been riven by in-fighting and suffered a series of setbacks since she won re-election last September.

Wednesday's parliamentary vote in North Rhine-Westphalia, home to the industrial Ruhr region and the cities of Cologne and Düsseldorf, has fuelled speculation that the center-left may try to form a minority government at the national level, tolerated by the Left Party, after the next general election in 2013.

SPD leader Sigmar Gabriel declined to rule out the option. In an interview published in Bild am Sonntag newspaper on Sunday, he said: "Such minority governments which work well together are better than governments that have a numerical majority but can't agree on anything. The best example of that is the current government."

However, Gabriel's statements drew fire from all other parties including the Greens. Renate Künast, the co-leader of the Greens in the Bundestag , Germany's federal parliament, dismissed the idea. "The heat must have gotten to him," she said. No federal government has ever started without a majority and Germans are fearful of such unstable governments.

http://www.spiegel.de/international/germany/0,1518,706532,00.html#ref=nlint

Up next, the 4 “Bs”. Blair and Brown’s bankrupt Britain. Pounds anyone? Stay long precious metals. Perfidious Albion is going to do everything in its power to devalue and inflate away as much of its unrepayable debt as possible. For the record, of course, Britain’s politicians, corrupt central banksters, and any civil servant wanting to hold on to their over generous pension pot, will swear black is white that they won’t.

But if, as we now read, the then prime minister, Tony Blair, declared that his chancellor, Gordon Brown, was "mad, bad and dangerous," might he not have considered it his duty to ensure that such an individual did not remain as chancellor, let alone get hold of the keys to Number Ten?

WSJ. 15/7/2010

Part-time workforce at record levels

The part-time workforce has reached record levels in the three months to May as people struggled to find permanent jobs in the recession, official figures showed.

Published: 10:13AM BST 14 Jul 2010

At the same time, long-term unemployment - those out of work for more than a year - grew nearly 50pc to a 13-year high of 787,000, Office for National Statistics data shows.

Part-timers rose by 148,000 over the quarterly rise to 7.82 million, the highest level since records began in 1992. The number of full-time employees is now 18.2m.

The ONS said that a record 27pc of the total workforce was now in part-time employment, with the category accounting for the vast majority of the 160,000 rise in total employment - the biggest quarterly jump since August 2006.

Long-term unemployed rose by 61,000 over the quarter and is now up 47.5pc compared with the same quarter last year.

The figures overshadowed a 34,000 fall in unemployment to 2.47 million in the three months to May and a fifth successive fall in the claimant count, which was down by 20,800 to 1.46 million in June.

The number of economically inactive workers - which hit record levels in the quarter to April - edged down by 0.2pc to 8.1 million. This is the first fall in this category since March last year.

But those classing themselves as "long-term sick" reached 2.04 million, the highest level since March

http://www.telegraph.co.uk/finance/economics/7889389/Part-time-workforce-at-record-levels.html

Britain’s debt: The untold story

By Sean O'Grady, Economics Editor Wednesday, 14 July 2010

The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.

It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.

The debt primarily consists of the cost of public sector and state pensions, and of payments promised to private contractors under private finance initiatives. It far exceeds any of the figures so far published for the national debt, the largest current estimate for which is £903bn. That is projected to rise to £1.3trn by 2015.

------The ONS itemised the public sector's main liabilities as:

* Future payments for the state old age pension: £1.1trn to £1.4trn

* Unfunded public sector pensions for teachers, NHS staff and civil servants: £770bn to £1.2trn

* Payments under private finance initiative contracts: £200bn

* Contingent liabilities (eg bank deposit guarantees): £500bn

* Nuclear power plant decommissioning: £45bn

* Impact of financial sector interventions: £1trn to £1.5trn

Leaving aside the possibility of another financial meltdown that would leave the taxpayer with the liabilities of a substantial part of the banking system, the figures suggest that the realistic total liabilities of the public sector could be as much as £3.8trn (£3,800,000,000,000).

-----In research published alongside the ONS data, the National Institute of Economic and Social Research (NIESR) said that current taxpayers ought to be paying around 30 per cent more in tax to relieve future generations of that "unfair" burden. That also takes account of the additional health needs of the baby boomers as they reach their autumn years.

Failure to cut back now or raise taxes – and there is little sign of the population clamouring to make life easier for the as-yet-unborn – will leave future taxpayers with an additional burden of £200,000 each over their lifetimes to pay for the public services enjoyed by this and previous generations. Even with current plans to reduce the deficit, the tax bill would still be as high as £150,000 over the life of someone born in 2011.

http://www.independent.co.uk/news/uk/politics/britainrsquos-debt-the-untold-story-2025979.html

Over on the other side of Europe, it’s Poland joining the micro states in economic distress. Below Bloomberg covers yesterdays bad news from the Bug.

Polish Bond Draws Fewest Bids in 10 Months on Faster Inflation

July 14 (Bloomberg) -- Poland’s sale of five-year bonds attracted the lowest investor demand in 10 months after an unexpected acceleration of inflation fueled speculation the central bank will increase borrowing costs.

The government sold 2.03 billion zloty ($635 million) of the fixed-coupon security due in April 2015, according to the Finance Ministry’s Bloomberg page. Bids totaled 2.81 billion zloty, compared with 1.5 billion to 3 billion zloty offered by the ministry. That was the lowest auction demand for Polish five-year debt since the Sept. 9 offering of April 2014 paper.

The consumer price index rose 2.3 percent in June from the same month a year earlier, compared with a 2.2 percent inflation rate in May, the statistics office in Warsaw said yesterday. The median forecast of economists and a July 1 estimate by the Finance Ministry were both for inflation to slow to 2.1 percent.

“The higher-than-expected June CPI released yesterday is likely to intensify rate-hike speculations, which could dampen interest in Polish bonds for now,” Societe Generale SA analyst Esther Law in London wrote in a report before today’s auction.

The average yield at today’s auction rose to 5.37 percent from 5.14 percent on May 12, according to the ministry. The five-year bonds dropped after the auction, sending the yield up five basis points to 5.41 percent as of 1:42 p.m. in Warsaw.

http://noir.bloomberg.com/apps/news?pid=20601095&sid=a4hyitm63nR0

Below, the European “government” at its bungling bureaucratic best. Long suffering German and British taxpayers will just have to work harder for longer to keep paying for the Brussels way of life. Three EU Presidents and counting, how unlucky can a European taxpayer get?

"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."

Mikhail Gorbachev

JULY 14, 2010, 11:15 P.M. ET

EU's Rocky Regulatory Road

Just a week ago, the European Parliament was clear: the three new European supervisory authorities it plans to establish to oversee the financial markets should all be based in Frankfurt. It was important, claimed the parliament, that the three should be in the same place "to ease interaction between the ESAs."

Never mind that this is an age when internet communication across continents is constant; when video-conferencing has reached a level of sophistication that can make thousands of miles vanish into inches, physical proximity was what the parliament demanded. Perhaps this attitude should not be surprising, since this is an institution which makes a monthly trek, at huge expense, from Brussels to Strasbourg.

The MEPs, however, are being overruled. At this week's Ecofin meeting of European finance ministers, U.K. Chancellor George Osborne won support for his argument that one of the three, the European Banking Authority, should be located in London. He had logic on his side, since London is Europe's largest financial centre and the Committee of Banking Supervisors, for which the EBA is a beefed up replacement, is currently based there.

Logic, however, is not the force that always prevails in the horse trading that goes on as legislation winds its way through the myriad corridors of Brussels. The last faint hopes of getting an agreement over the final shape of the three institutions—the other two will cover securities and markets and the insurance sector —before the summer break were finally dashed Wednesday. The parliament and EU finance ministers could not agree on the extent of the powers to be given to the new bodies. Not surprisingly, the parliament wants them to have more, the finance ministers less.

That financial supervision failed in most of Europe is unarguably the case. The parliament's position is that "the only option for effective financial supervision is one based on a thorough reform of the current system, with the establishment of European authorities capable of taking effective action to avert crises and avoid taxpayer bailouts."

Yet national authorities are being strengthened to give them the power and duty to do just that. To what extent should the new EU bodies be able to interfere with their efforts? That is the area of contention it will be hard to thrash out, even after a summer break to allow tempers to cool. In the U.K., for instance, the government is clear that the new EU regulators should not be able to overrule the current Financial Services Authority or the new regulatory regime being established under the auspices of the Bank of England.

The EU Parliament, though, wants the new bodies to be able to dictate directly to individual financial institutions where it deems a national regulator to be failing. It also wants them to have direct powers concerning important cross-border financial institutions.

National regulators warm to neither proposition. However, they do recognize that there is a potentially major problem with cross-border institutions. Banks have varying structures, inspired by various considerations, not least taxation. If their operations in a particular jurisdiction are merely deemed branches, then the national regulator's powers are limited. And as has been seen in instances such as the collapse of the Bank of Credit & Commerce, a bank that has a prime regulator elsewhere can inflict significant damage in a market place. So where there is an operation of any significance, as many "branches" in the City are, then the regulator wants their status to be changed to that of subsidiary. There are already negotiations under way as to how far and how fast such changes can be affected.

Back in Brussels, once the MEPs return from their summer break, the negotiations will resume. Behind the scenes, these are likely to take the line of "If you want the European regulator and all those jobs in your country, then how much power are you prepared to give it?"

http://online.wsj.com/article/SB10001424052748704220704575367081355994238.html?mod=WSJEUROPE_hps_MIDDLETopStories

Below, Portugal shows the future for Club Med, suggests the Journal. Portugal like Greece, will eventually figure out that they are far better off outside the Germanic Euro than in it. Unfortunately for the hapless Ports, everything else will be tried first before events make the inevitable obvious.

JULY 14, 2010

Portugal Feels Austerity's Bite

After Years of Budget Cuts, Its Economy Isn't Healed; Scenario for Others in Europe

BRAGA, Portugal—Indebted European countries from Greece and Italy to Spain have in recent weeks set off down a common path toward fiscal recovery, promising to slash spending and raise taxes.

One sobering scenario of what they may be up against comes from Europe's southwestern edge: Portugal, which embarked a decade ago on a similar journey of austerity, higher taxes and intermittent spending cuts, is still cutting—and still struggling.

On Tuesday, Moody's Investors Service cut Portugal's sovereign debt rating by two notches, to A1, citing the country's sluggish growth prospects and concerns that economic reforms in areas like labor markets won't bear fruit.

Moody's "remains concerned about the economy's medium-term growth potential," said Anthony Thomas, senior analyst at the rating agency, adding that Portugal's government debt, as a percentage of gross domestic product, has risen rapidly in the past two years.

The experience of Portugal—an early beneficiary of the euro zone's economic benefits and one of the earliest to experience the problems of being tied to a common currency—offers what some economists call a blueprint for what could be a long road to recovery for Spain, Greece and others.

"You have to be prepared that you are in for stagnant times," says Antonio de Sousa, who was Portugal's central banker in the late 1990s when the euro was created.

---- Meanwhile, after Portugal adopted the euro in 1999, its dominant textiles industry wasn't able to use cheaper loans and a large common market to build a foundation for longer-term growth. Portugal's textiles were too expensive to compete with cheaper goods from China or Eastern Europe, but also lacked the high-fashion credentials of those from France or Italy.

Portugal's deficit soon exceeded the zone's limit. In 2002 it became the first euro-zone member to be slapped with an excessive-deficit warning.

At a time when Spain, Ireland and Greece were sailing through the early years of the euro on housing bubbles and debt-fueled spending, Portugal began to retrench.

Lisbon went through modest austerity drives every few years beginning in the early 2000s. These included civil-service wage freezes and increases in value-added taxes that further weighed on the economy. When that wasn't sufficient, Lisbon also pushed through pension changes, including greater penalties for early retirement.

Portuguese voters tired of the measures, leading to political upheaval. The country had four prime ministers from 2001 to 2005.

Many economists say the cuts haven't gone far enough.

Government spending still accounts for more than half of Portugal's GDP. Portugal's budget deficit last year, at 9.4% of GDP, is lower than those of Greece, Ireland or Spain, but still more than three times as high as euro-zone rules permit.

---- Portugal's central bank on Tuesday raised its growth forecast for 2010 but cut its 2011 forecast to 0.2% from 0.8%, citing deficit-reduction efforts and an ailing labor market.

"If Portugal is a blueprint, we have to look for several years of underperformance in Spain," says Ralph Solveen, economist at Commerzbank.

http://online.wsj.com/article/SB10001424052748704111704575355072331978794.html?mod=WSJ_hp_us_mostpop_read

We end for the day with Europe sleepwalking its way to reinventing the old Soviet Union. Below, “are you now or have you ever been a member of a Swizz Bank?”

They seek him here. They seek him there. They seek that tax cheat everywhere. Is he in heaven? Is he in hell? Is he in a Zurich tax hotel?

With apologies to Charles Dickens and The Scarlet Pimpernel. (???)

Credit Suisse’s German Offices Raided in Tax Probe

July 14 (Bloomberg) -- Credit Suisse Group AG’s offices in Germany were searched today in a probe into allegations that its employees may have helped clients evade taxes.

Thirteen Credit Suisse (Deutschland) AG locations were raided as part of the investigation, Johannes Mocken, spokesman for the Dusseldorf prosecutors’ office, said in a phone interview. Investigators seized substantial amounts of data during the day, Mocken said.

“There is a lot of material to go through, so we won’t be able to finish all searches today,” said Mocken. “At least in the Frankfurt Credit Suisse offices, we will have to continue to work tomorrow.”

Germany has been rattled by probes that showed people hid assets in accounts in Switzerland and Liechtenstein to avoid paying taxes. Former Deutsche Post AG Chief Executive Officer Klaus Zumwinkel in January received a two-year suspended sentence and must pay a 1 million-euro ($1.27 million) penalty for avoiding about 970,000 euros in taxes.

German government officials bought disks containing bank data that have helped them locate possible tax evaders. The purchases stirred debate over whether it is legitimate to acquire data that must have been stolen from the banks and use it for law enforcement.

Data Disk

The case that prompted today’s raids began after German authorities obtained a disk with data that prompted probes against some 1,100 customers of Zurich-based Credit Suisse, Switzerland’s second-biggest bank. Dusseldorf prosecutors are investigating 175 cases, including some against Credit Suisse employees. The rest of the cases were referred to other prosecutors based on where the suspects live.

The bank is cooperating with the authorities, Credit Suisse spokesman Bjoern Korschinowski said by telephone.

http://noir.bloomberg.com/apps/news?pid=20601090&sid=a4kz9KrVbY8Y

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

Ludwig von Mises

At the Comex silver depositories Wednesday, final figures were: Registered 52.47 Moz, Eligible 60.11 Moz, Total 112.58 Moz.

+++++

Crooks and Scoundrels Corner.

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

No crooks today just scoundrels, but what scoundrels! Today, US Senators get all worked up over BP’s dealings with Libya. While they are investigating BP’s actions regarding the release of convicted Lockerbie bomber Megrahi, they might want to look a little closer at home into what the CIA knows of the dodgy fabricated forensic evidence that was used to convict him, and at the eye witness testimony that was used that changed over time, groomed until it eventually matched Mr. Megrahi. But why stop there. What about the CIA’s Cyprus connection to Hezbollah in the Bekka Valley, that allegedly caused the Agency to alter its agents travel plans to avoid Pan Am planes at Frankfurt airport. And just why was Megrahi forced to irrevocably drop his appeal in the Scottish courts that was nearing hearing and would have brought up the many other inconsistencies that point to Iran? As time has gone by, the whole case against Libya has weakened and that against Iran has strengthened. Someone has a whole lot to hide but it doesn’t look from London that it’s BP playing fast and loose with the American public’s emotions. Libya paid out, but never admitted responsibility, exactly as the US paid out for the Vincennes shooting down Iran Air flight 655. In our new-world-order age of fiat money, it’s now cheaper just to pay off the victims and move on. Another unintended consequence of fiat money.

The US government issued notes of regret for the loss of human lives and in 1996 paid reparations to settle a suit brought in the International Court of Justice regarding the incident. The United States government never admitted wrongdoing, nor apologized for the incident. In August 1988 Newsweek quoted the vice president George Bush as saying "I'll never apologize for the United States of America. Ever, I don't care what the facts are."

http://en.wikipedia.org/wiki/Iran_Air_Flight_655

BP to Start Drilling Off Libya as Senators Seek Lockerbie Probe

July 14 (Bloomberg) -- BP Plc plans to start drilling off Libya’s coast in the next few weeks as its links with the North African country come under scrutiny from U.S. lawmakers.

The London-based company has a rig in place to start a well in the Gulf of Sirt after completing a seismic survey last year. BP also plans to drill onshore in the 13,000 square kilometer Ghadames basin by the end of the year, Robert Wine, a spokesman for BP, said today.

BP, under political pressure to stop and clean up the worst oil spill in U.S. history, signed an exploration agreement with Libya’s National Oil Corp. in May 2007 during a visit by then U.K. Prime Minister Tony Blair. Four U.S. senators yesterday asked Secretary of State Hillary Clinton to investigate whether BP helped secure the release of Lockerbie bomber Abdelbaset al- Megrahi from a Scottish jail to facilitate the drilling deal.

“Evidence in the Deepwater Horizon disaster seems to suggest that BP would put profit ahead of people,” Senators Frank Lautenberg and Robert Menendez of New Jersey and Charles Schumer and Kirsten Gillibrand of New York wrote in the letter. “The question we now have to answer is, was this corporation willing to trade justice in the murder of 270 innocent people for oil profits?”

Libya has proved oil reserves of 44.3 billion barrels, the most in Africa, according to the BP Statistical Review of World Energy. BP’s worldwide operations have come under examination after an unstable well caused an explosion on the Deepwater Horizon rig in the Gulf of Mexico on April 20, killing 11 and starting an oil spill.

‘Checks Underway’

“Libya due to start in a matter of weeks,” Wine said today in an e-mail. “Rig is being made ready, final preparations and checks are underway.”

In August 2009, the Scottish government freed al-Megrahi on compassionate grounds. He was the only person found guilty of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, that killed 270 people.

“It is a matter of public record that in late 2007 BP discussed with the U.K. government our concern at the slow progress in concluding a Prisoner Transfer Agreement,” the company said today.

“We were aware that a delay might have negative consequences for U.K. commercial interests, including ratification of BP’s exploration agreement. However, we did not express a view about the specific form of the agreement, which was a matter for the U.K. and Libyan governments,” it said in statement e-mailed to Bloomberg News.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=ap8M5AS3HAVo&pos=6

“Those who don't know history are destined to repeat it.”

Edmund Burke.

The monthly Coppock Indicators finished June:

DJIA: +269 Down. NASDAQ: +460 Down. SP500: +290 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators.

Technorati Tags: EU,PIGS,Blair & Brown,mad bad and dangerous,Spain debt,Portugal,Germany,BP,Libya or Iran,USS Vicennes,Edmund Burke

US Pots and EU Kettles.

Baltic Dry Index. 4209 +22

LIR Gold Target by 2019: $3,000

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

Dr. Bernanke. November 2005.

While the world awaits news from the Gulf of Mexico on the success or otherwise of BP’s “top kill” attempt to end the spilling oil well disaster in the Gulf, we open the morning with the US pot calling the EU kettle black. US Treasury Secretary Geithner back from eating humble pie in China, rides his high horse across Europe this week, starting in London. Our failed Nixonian experiment with fiat money gets more bizarre by the week. Below the Telegraph on tax challenged Timmy’s European infatuation with Keynesianism. Most European nations are doing the exact opposite as they impose iffy government austerity programs intended one way or another to bailout Europe’s increasingly dodgy banks. Oh what a tangled web we weave when first we practice Goldmanite Greek government accounting. Below Mr. Geithner goes to Berlin.

"the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."

US Treasury Secretary Paulson. March 13th, 2007

MAY 26, 2010

U.S. Chides Europe's Crisis Response

LONDON—U.S. Treasury Secretary Timothy Geithner landed in Europe and reasserted a traditional American role of dispenser of financial advice to the world, telling European governments to get their fiscal houses in order.

After two years in which an historic financial crisis seemed to deprive the U.S. of its self-confident global economic leadership, Mr. Geithner signaled a new-found willingness to reassert American authority on the future of the world economy. "What Europe should do is implement the program they laid out," Mr. Geithner said Wednesday. "The basic lesson of financial crises is that you have to come in and act quickly and with force."

Inside No. 11 Downing Street, the home of his British counterpart, Mr. Geithner pushed continental Europe to speed up the rescue of debt-laden economies, and to not stint on fiscal stimulus. Thursday, in Frankfurt and in Berlin, he will chide the Germans about their recent move to ban certain financial practices, which has spooked markets.

The resumption of U.S. fiscal lecturing marks a turnaround from late 2008, when Asian and Europeans largely blamed the U.S. for dumping the world into a recession.

Mr. Geithner's visit came as the euro fell to $1.22 in New York trading, just above its four-year low, while U.S. stocks tumbled late in the day to close below 10000 for the first time since Feb. 8. New data showed that European banks are increasingly hoarding cash rather than lending, and are borrowing less in short-term lending markets— a sign that investors may be reluctant to do business with banks in countries such as Spain, Portugal and Italy.

Though the U.S. is still burdened with a large deficit, officials argue that its ambitious stimulus program has helped spur growth. Meanwhile, markets and governments are blaming Europe for the renewed tensions in financial markets and the cloud over the nascent global recovery. The deeper Europe's debt problems now grow, the more self-assured U.S policy makers become about what Europe should do next.

----At an economic and strategic summit in China the previous few days, the difference was marked; U.S. confidence remains at low ebb there. Mr. Geithner and other U.S. officials were publicly reticent on the question of revaluing the China's currency, a top priority for some U.S. lawmakers, fearing it could backfire politically.

Mr. Geithner's European tour is reminiscent of the Asian financial crisis of a decade ago when many current Obama economic officials, including Mr. Geithner and White House economic adviser Lawrence Summers, traveled Asia doling out advice and worked behind the scenes at the International Monetary Fund to keep bailout cash flowing. Time magazine dubbed a trio of U.S. officials "the Committee to Save the World."

Mr. Geithner traveled from London to Frankfurt Wednesday, for a working dinner with European Central Bank President Jean-Claude Trichet. On Thursday morning Mr. Geithner is scheduled to meet with President of the German Bundesbank Axel Weber before travelling to Berlin for talks with German Finance Minister, Wolfgang Schäuble.

------ An even larger program for other troubled European nations—as much as $1 trillion—hasn't eased market concerns. Part of the reason, Mr. Geithner believes, is that European nations haven't spelled out the details of how the procedure would work.

The U.S. believes that without the heavy involvement of President Obama and Mr. Geithner, Europe wouldn't have been willing to put together the size of bailout package that would impress markets that government had a handle on the problem.

The U.S. is also advising European countries that can afford it—the U.K., Germany, France—to keep pumping stimulus into their economies. That would help ensure the European economy can continue to expand while economically troubled countries like Spain and Greece make wrenching cutbacks to reduce out-of-control deficits.

http://online.wsj.com/article/SB10001424052748704717004575268284276354448.html?mod=WSJEUROPE_hps_MIDDLETopStories

Clearly preoccupied by keeping China buying US debt and watching the slow motion BP oil disaster in the Gulf of Diesel, Mr. Geithner hasn’t noticed that the UK is firmly in the deficit camp of deadbeat Spain and Greece. Pumping stimulus into the UK economy wasn’t an option even in our Alice in Wonderland former Nu Labour pre election economy. It would be interesting to hear the great man’s thoughts too, on where France is supposed to come up with extra cash for stimulus. Nor, I suspect, will the great man’s socialist largess with Germany’s taxpayer money be much in tune with the mood in Berlin. The Greek way of life is completely expendable to Hans, Fritz and Brunehilde. I wonder what they smoke in Club Obama?

"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." "All the signs I look at" show "the housing market is at or near the bottom,"

US Treasury Secretary Paulson. April 20th, 2007

Germany Tries to Plug Gaping Hole in Its Budget

By Ralf Beste, Christian Reiermann and Merlind Theile 05/26/2010

The task of putting together next year's budget is presenting German Chancellor Angela Merkel with a huge challenge. The government urgently needs to cut costs in order to comply with the country's new debt ceiling rule and to help stabilize the euro. The chancellor wants to set an example for Europe on how best to cut costs.

It was the afternoon of Sunday, May 16 when Germany's coalition government of the center-right Christian Democrats (CDU/CSU) and the liberal Free Democratic Party (FDP) finally got down to the business of governing -- six months after taking office. In her office on the eighth floor of the Chancellery in Berlin, Chancellor Angela Merkel met with Finance Minister Wolfgang Schäuble, who had just been released from the hospital.

The chancellor briefly asked about the health of her finance minister, who for several weeks had only been able to perform his official duties with difficulty. After being plagued with a surgical wound that refused to heal properly, Schäuble had to be readmitted to the hospital when he had an adverse reaction to a medication.

The two politicians eventually turned to a similarly urgent case, Germany's national budget, which is currently faring almost as poorly as the minister who is in charge of it. By the end of June, Merkel and her finance chief will not only be called upon to assemble an austerity package, but will also have to restructure the government's finances from the ground up.

It's an enormous challenge. The German government faces an ongoing gap of €75 billion ($93 billion) between what it takes in and its expenditures, something that economists refer to as a structural deficit. Contrary to previous assumptions, this deficit has risen by another €5 billion because projected tax revenues have turned out to be lower than expected, as the most recent forecast by the relevant experts showed. The need to cut costs is growing, partly as a result of the new "debt brake" or debt ceiling provision that has been incorporated into Germany's constitution, which will require Merkel and Schäuble to reduce the government's budget by an additional €10 billion a year between now and 2016.

http://www.spiegel.de/international/germany/0,1518,696760,00.html#ref=nlint

In other European news its high noon time for Spain. Mr. Geithner and his horse won’t be visiting Madrid. Below, Spain’s minority socialist government has a Damascene conversion and attempts some overdue Thatcherite reform. Below that, another Spanish bank gets near the wall. Below that, PIMCO’s Mr. Gross states the obvious. But will the restructuring come before more riots and strikes turn Greece into an unsolvable basket case?

'The worst is likely to be behind us"

US Treasury Secretary Paulson. May 7, 2008

Zapatero Bets Future on Austerity as Political Support Wavers

May 27 (Bloomberg) -- Spain’s deepest budget cuts in 30 years may be just the start of a U-turn by Prime Minister Jose Luis Rodriguez Zapatero that’s already sent his popularity plunging and prompted calls for a general strike.

As parliament debates the first wave of cuts today, his minority administration is preparing the ground for further measures that his traditional Socialist allies may oppose. After cutting civil servants’ salaries by 5 percent, the government now plans to rein back some of the best worker protection in Europe and raise the retirement age.

Zapatero’s latest steps to reduce the euro region’s third- biggest deficit won applause from the International Monetary Fund as the government tries to reassure investors that Spain can avoid the same fate as Greece. With smaller parties still refusing to guarantee support for those measures in today’s vote, the risk for Zapatero is that he’ll struggle to push through further cuts.

-----At least three Socialist lawmakers refused to join the rest of the party in a standing ovation when Zapatero first announced the cuts on May 12 and the opposition, pro-business People’s Party says it will vote against them today. With 169 seats in Spain’s 350-member assembly, Zapatero’s Socialists are seven short of a majority and pass legislation on a vote-by-vote basis.

The debate starts at 9 a.m. local time and a vote will be held later today. As four parliamentary groups plan to vote against the measures, Zapatero is depending on the abstention of 10 lawmakers from the Catalan Convergencia i Unio party. A spokeswoman said late yesterday they would probably do so though no decision has been taken yet.

Even if the measures are approved, Zapatero will still have to patch a coalition together to get the 2011 budget through parliament.

----Zapatero’s policies mark a turnaround for a prime minister who has raised pensions, courted unions, and created subsidies for new mothers since coming to power in 2004.

Finance Minister Elena Salgado said as recently as February that Spain wouldn’t cut wages for government workers. A public sector strike is planned for June 8 and the largest union, Comisiones Obreras, has said a general strike is getting closer.

http://www.bloomberg.com/apps/news?pid=20601085&sid=azgZJAxLv9sw

BBVA Pares Gains on Report It Can’t Renew Funding

May 26 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, pared gains after the Wall Street Journal reported the lender was unable to renew about $1 billion of short-term funding.

----The Bilbao, Spain-based lender hasn’t been able to renew the funding in the U.S. commercial paper market this month, according to the newspaper. The bank still has substantial European-based funding and deposits and about $9 billion in U.S. commercial paper, the newspaper said today.

Spanish bank shares have plunged this year on concern over the government’s ability to restore economic growth after the worst recession in 60 years and bring down a budget deficit that the government expects will be 9.3 percent of gross domestic product this year. Shares in BBVA, which last month reported first-quarter profit of 1.2 billion euros ($1.5 billion) as its bad loans stabilized, have dropped 36 percent this year, valuing the lender at 31 billion euros.

http://www.bloomberg.com/apps/news?pid=email_en&sid=a_05F28lJ8D8

Greece Debt Restructuring Is Inevitable, Gross Says

May 26 (Bloomberg) -- Pacific Investment Management Co.’s Bill Gross said restrictive lending rates and austerity measures that slow growth will leave Greece with “no way out” of a debt restructuring.

“The growth required in order to shoulder Greece’s debt burden is so excessive and the fiscal restrictiveness being imposed on the country is so restrictive they there will be no way out,” Gross said, in an interview with Bloomberg Television. “Restructuring at some point down the road -- perhaps a year or two years down the road -- will take place.”

Pressured by a sliding euro and soaring bond yields, European leaders agreed this month to an unprecedented loan package worth almost $1 trillion to keep the sovereign-debt crisis that originated in Greece from spreading. Greece pledged to implement austerity measures equal to almost 14 percent of gross domestic product in exchange for rescue funds from the European Union.

The average euro-area budget gap will widen to 6.6 percent of gross domestic product this year from 6.3 percent in 2009, the European Commission forecasts. The Maastricht Treaty stipulates that EU states should keep their budget deficits within 3 percent of GDP.

“At the now-restrictive yields of Libor plus 300-350 basis points being imposed by the EU and the IMF alike, there is no reasonable scenario which would allow Greece to ‘grow’ its way out,” Gross wrote in his June investment outlook today on the Newport Beach, California-based company’s website.

http://www.bloomberg.com/apps/news?pid=20602007&sid=aZAUNeSuGf48

Next, a US lawsuit that threatens to turn a spotlight on Wall Street’s rapacious practices during the great Lehman crash of 2008, and on JP Morgan in particular. When great vampire squids fall out, the resulting discovery is going to prove very informative for the rest of us. The regulators and Attorney Generals will watch this case like hawks. Do Lehman’s whiplash Willies, have access to a JPM whistleblower? Time will tell, but I suspect that in the months ahead, JPM will join the Goldmanites in Wall Street’s reviled sin bin. Whatever next? AIG sues Goldman? Bear Stearns ex-shareholders sue JPM?

"it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."

US Treasury Secretary Paulson. July 20th, 2008

Lehman Sues JPMorgan for Billions of Dollars in ‘Lost Value’

May 27 (Bloomberg) -- Lehman Brothers Holdings Inc. sued JPMorgan Chase & Co. to recover tens of billions of dollars in “lost value,” accusing the bank of precipitating its downfall and preventing it from winding down in an orderly fashion.

JPMorgan, which was Lehman’s main short-term lender before its September 2008 bankruptcy, helped cause the failure by demanding $8.6 billion of collateral as credit markets tightened during the financial crisis, Lehman said in a complaint filed yesterday in U.S. Bankruptcy Court in New York.

“On the brink of LBHI’s bankruptcy, JPMorgan leveraged its life and death power as the brokerage firm’s primary clearing bank to force LBHI into a series of one-sided agreements and to siphon billions of dollars in critically needed assets,” Lehman said in the complaint.

Lehman, once the fourth-biggest investment bank, has said it may spend another five years selling assets to pay unsecured creditors as little as 14.7 cents on the dollar. Any money recovered through lawsuits may increase the payout.

“The lawsuit is ill conceived, and the costly litigation will cause a further drain on the limited resources available to the Lehman bankruptcy estate,” said Joe Evangelisti, a JPMorgan spokesman.

The lawsuit follows a report by Lehman examiner Anton Valukas, who said in March that Lehman might have grounds for suing JPMorgan and other banks.

Lehman said JPMorgan’s top managers took advantage of privileged information they gained as Lehman’s primary clearing bank to “capitalize” on a Lehman bankruptcy.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a0cYmuEK7P_o

We close with rising trouble in China’s bubble. The workers want a better deal. Below, Honda gets shutdown by industrial action. In parts of China like the Pearl River delta, China now has a labour shortage which strengthens the hand of the workers. Depending how long the shutdown lasts, Honda can probably make up the lost production, but I suspect that the easy profits manufacturing phase of China’s great modernization has come to its end. Foreign manufacturers will increasingly find profits squeezed.

Honda shares slip; China production said halted

TOKYO (MarketWatch) -- Japanese car maker Honda Motor Co. stopped production at all four of its Chinese auto plants after workers at a parts factory went on strike, seeking higher wages, according to published reports Thursday. Honda closed two plants in Guangzhou, Guangdong province on May 24 and plants in Guangzhou and Wuhan, Hubei province, on May 26, after workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong province, went on strike May 17, Bloomberg News reported. In Tokyo, Honda shares were down 0.8%, while the Nikkei Stock Average was down 0.6%.

http://www.marketwatch.com/story/honda-shares-slip-china-production-said-halted-2010-05-26

“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”

Ben Bernanke. November 8, 2007

At the Comex silver depositories Wednesday, final figures were: Registered 52.60 Moz, Eligible 64.82 Moz, Total 117.42 Moz.

Day 18 of Hitler’s attack in the west that almost brought down western civilization. Dunkirk evacuation day 1.

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

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

+++++

Crooks & Scoundrels Corner.

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

Today, a crop circle article that I suspect turns tongue in cheek. Could anyone seriously be dumb enough to believe the explanation.

"'Speak English!' said the Eaglet. 'I don't know the meaning of half those long words, and I don't believe you do either!'"

Alice in Wonderland.

Crop circle season arrives with a mathematical message

By Matilda Battersby Wednesday, 26 May 2010

It is perhaps little known that the beautiful county of Wiltshire, famed for Stonehenge and the white horses carved into its hills, is the most active area for crop circles in the world, with nearly 70 appearing in its fields in 2009.

It is unsurprising then, that the appearance of a phenomenally complex 300ft design carved into an expanse of rape seed on a Wiltshire hillside has caused excitement. But it's not just the eye-pleasing shape which has drawn attention to it. The intersected concentric pattern has been decoded by experts as a “tantalising approximation” of a mathematical formula called Euler’s Identity (e ^ ( i * Pi ) + 1 = 0), widely thought be the most beautiful and profound mathematical equation in the world.

The design (pictured above) appeared beside Wilton Windmill late on Friday night. Lucy Pringle, a founder of the Centre for Crop Circle Studies, was one of the first on the scene. She says: “What has happened in this particular crop circle is that there are 12 segments and within each segment there are 8 partly concentric rings. Each of these segments indicates a binary code based on 0 and 1. If you use an Ascii Table [computer calculation system], the pattern transposes itself into a tantalising approximation of Euler’s equation.”

The average person finds such complex mathematical talk utterly confounding, so The Independent Online asked Dr John Talbot, a maths research fellow at University College London, for his take on the matter. He said: “Looking at the crop circle, the link with Euler’s most famous theory seems to make perfect sense. However, the way the formula has been executed is partially incorrect. One of the discrepancies is that one part of the formula translates as ‘hi’ rather than ‘i’, which could be somebody’s idea of a joke.”

The Wilton Windmill circle is not the first to have provoked mathematical exposition. In July 2008 a photograph of a crop circle near Barbary Castle (also in Wiltshire) caught the attention of retired American astrophysicist Mike Reed when he saw it in a national newspaper. He was struck by its shape and eventually concluded that it was a coded image representing the first ten digits of Pi (3.141592654), a conclusion declared to be a “seminal event” by Pringle at the time.

Sceptics dismiss crop circles as utter rubbish, but despite decades of research nobody knows conclusively how they’re made. As Francine Blake of the Wiltshire Crop Circle Study Group, explains: “The difficulty is that we don’t know the answer. It’s something that needs to be treated with great respect, but is too often talked about flippantly in the media which, I think, closes the subject rather than opens it.”

There has been extensive scientific exploration into the affect the circles have on nearby wildlife. Flowers and soils inside crop circles are dramatically altered, Blake explains. Pringle observed in a 2003 experiment that seed samples taken from inside a crop circle had 40 per cent higher protein levels than those taken from outside it.

Another interesting element is the nature of the soil on which the circles appear. Pringle says that 93.8 per cent of crop circles are made on chalk, "a worldwide phenomenon" recorded in 54 different countries. She says the significance may be connected to underground springs called aquifers commonly found in chalk: "It is thought that the originating force probably originates in the ionosphere (an area of atmospheric electricity). The force then spirals to earth in the form of a vortical plasma and hits the ground with some 100 of 1000's of volts per metre for just a nano second only, else the crop would be burnt. Occasionally we do see evidence of scorched flattened crop inside certain circles. The electromagnetic fields of both the underground springs and the descending force work in harmony or conjunction with each other."

Blake also remarks on the significance of the chalk, which she says the ancients often built their monuments on - an observation which the existence of Neolithic sites like Stonehenge and Avebury attest. She says the ancients also built their temples on “energy lines” and has observed that “crop circles always appear on or near these lines.” Blake was impressed with the Barbary Castle circle and its derivations because the shape itself was “like a Labyrinth,” which “gives it a spiritual as well as a mathematical tradition.”

Nobody knows for sure how crop circles are made. Reports of strange mists creating the complicated patterns in a matter of minutes, their connotations with little green men and Midwich Cuckoos and elaborate hoaxes have fostered a widespread unwillingness to take the idea seriously. This approach both feeds the mystery around the concept and prevents further exploration of it, as it is an area of research that is unlikely to be awarded large research grants or space on university courses. But, as Blake remarks: “There’s neither rhyme nor reason, they just keep coming.” And with crops nearly at their full height, the UK’s crop circle season is upon us. If you want to see for yourself Wiltshire is your best bet.

http://www.independent.co.uk/news/uk/this-britain/crop-circle-season-arrives-with-a-mathematical-message-1982647.html

"I don't believe there's an atom of meaning in it."

Lewis Carroll. Alice in Wonderland.

The monthly Coppock Indicators finished April:

DJIA: +245 UP. NASDAQ: +448 UP. SP500: +276 UP. The great Bull market goes on with the all three continuing higher in positive numbers. But how much Bull is enough?

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