Weekend Update – June 26, 2010

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

The New World Order. The Elite Meet.

Baltic Dry Index. 2502

LIR Gold Target by 2019: $3,000

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

Grouch Marx.

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

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

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

Grouch Marx.

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

The Ottawa Citizen June 25, 2010

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

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

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

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

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

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

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

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

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

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

He said the changes were demanded by Toronto police.

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

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

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

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

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

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

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

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

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

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

Trans-Atlantic Tiff Brewing Ahead of G-20 Summit

06/25/2010

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

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

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

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

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

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

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

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

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

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

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

More than 150,000 remain homeless amid Brazil floods

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

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

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

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

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

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

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

China has also been suffering from disastrous flooding.

Heavy rains to pound China's flooded south regions again

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

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

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

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

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

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

Greece starts putting island land up for sale to save economy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Grouch Marx.

GI.

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

Oil Catastrophe Looms.

Weekend Update – May 1, 2010

Baltic Dry Index. 3354 -05

LIR Gold Target by 2019: $3,000.

Tomorrow, the euro-zone finance ministers meet to finalise the hardship terms for tax and work shy Greeks, in return for their getting 120 billion euros of loans. In return, the hapless Greeks must use it to pay off Germany, France, Spain and Italy’s banks who largely hold their debt, plus a Swiss listed bank that’s just decamped to Luxembourg, presumably to ensure it isn’t left out of the bailout. In reality, the terms are all German, since it’s Germany putting up the largest part of the money, and the German press has taken an intense dislike to the Greeks. I am sceptical that the Greeks will do more than implement phase one of the hardship deal, before realising that national suicide won’t work and Greece exiting the Euro early next year. More next week on Greece mangled in a German wringer.

Today we update what is still just short of an ecological catastrophe in the Gulf of Mexico. By Monday morning’s opening it may be. I suspect that it will soon be a catastrophe for BP and its hapless owners, no matter what happens next. What happens next is a matter of some dispute, since there now seem to be far too many chiefs and bureaucrats involved, rather than oil engineering experts. With lawsuits already filed and the US tort bar from Los Angeles to Boston preparing more, what happens next will all too likely now be driven by a need to keep the bureaucrats and lawyers happy.

We open with a report that the well if not capped soon could go on to become a massive environmental disaster. Below that, roughly the state of things this Saturday morning.

Leaked report: Government fears Deepwater Horizon well could become unchecked gusher

By Ben Raines April 30, 2010, 2:18PM
A confidential government report on the unfolding spill disaster in the Gulf makes clear the Coast Guard now fears the well could become an unchecked gusher shooting millions of gallons of oil per day into the Gulf. "The following is not public," reads the National Oceanic and Atmospheric Administration's Emergency Response document dated April 28. "Two additional release points were found today in the tangled riser. If the riser pipe deteriorates further, the flow could become unchecked resulting in a release volume an order of magnitude higher than previously thought."

Asked Friday to comment on the document, NOAA spokesman Scott Smullen said that the additional leaks described were reported to the public late Wednesday night. Regarding the possibility of the spill becoming an order of magnitude larger, Smullen said, "I'm letting the document you have speak for itself."In scientific circles, an order of magnitude means something is 10 times larger.

In this case, an order of magnitude higher would mean the volume of oil coming from the well could be 10 times higher than the 5,000 barrels a day coming out now. That would mean 50,000 barrels a day, or 2.1 million gallons a day. It appears the new leaks mentioned in the Wednesday release are the leaks reported to the public late Wednesday night. "There is no official change in the volume released but the USCG is no longer stating that the release rate is 1,000 barrels a day," continues the document, referred to as report No. 12.

"Instead they are saying that they are preparing for a worst-case release and bringing all assets to bear."The emergency document also states that the spill has grown in size so quickly that only 1 to 2 percent of it has been sprayed with dispersants.
http://blog.al.com/live/2010/04/deepwater_horizon_secret_memo.html

May 1, 2010
Five-year clean-up fear as huge slick comes ashore
Rising winds and 10ft-high seas threatened last night to overwhelm a desperate effort by the US military and thousands of commercial fishermen to contain the giant oil slick creeping hour by hour into some of the world’s most sensitive wetlands.

As BP accepted full responsibility for the Gulf Coast disaster for the first time, President Obama kept open the option of increased offshore drilling. Locals in the Mississippi delta said that federal help had come too late and wildlife officials forecast a clean-up that could take up to five years after the explosion on the Deepwater Horizon oil rig.

The first filmy layers of oil, floating on the sea’s surface, reached the coast on Thursday night near the Pass a l’Outre, the northernmost of three major outlets for the Mississippi on the east side of the delta. Heavier oil is expected to start pushing up the creeks and canals over the weekend, driven by a stiff onshore wind that yesterday was creating 5ft swells even in partially protected waters.

Hundreds of oil workers recruited by BP and the US Government gathered in Venice, the delta’s major oil town, ready to deploy. Further east, the US Air Force mobilised Hercules transport planes equipped with chemical spraying systems. The navy sent inflatable skimming equipment and 66,000ft of booms to its main staging point in Gulfport, Mississippi.

----Sea-bed gushers left by the explosion are pumping 210,000 barrels of crude into the Gulf a day. If the leaks are not capped — and BP was still unsure yesterday what had caused them — the scale of the disaster will eclipse the Exxon Valdez tragedy within weeks. The slick is already 600 miles (965km) in circumference, posing a $2.5 billion threat this year alone to the Louisiana fishing industry and the risk of $3 billion (£1.9 billion) in lost revenues for the state’s tourist sector.

For the region’s wildlife, the timing could hardly be worse. It has come at spawning time for the Atlantic blue-fin tuna, and migration time for Gulf sea turtles. It is feared that hundreds of turtles may already be trapped in the slick.

----In a separate incident yesterday, a mobile rig turned over in a Louisiana canal as it was being taken to a scrapyard. It was not reported to be leaking oil.
http://www.timesonline.co.uk/tol/news/environment/article7113267.ece

Gulf of Mexico oil spill could involve heavier grade of oil, making cleanup more difficult
By From the Times-Picayune April 30, 2010, 3:31PM
The potential environmental damage from the Gulf of Mexico oil spill as it washes into Louisiana coastal estuaries increased Friday with the news that the petroleum involved might not be the light, easily treated Louisiana Sweet Crude, but a thicker, more viscous type that will be harder to remove from the marsh.

"When we analyzed the sample we got, it turned out to be stuff that was much heavier than typical south Louisiana crude," said Ed Overton, an LSU professor and one of the state's experts on oil spills. "It looks like it could be something heavier.

"South Louisiana crude is the easier type to clean up and contain. This other stuff would be a whole different ball game. A much tougher ball game."

Overton cautioned that his lab analysis was based on a single sample, and he has urgently been trying to get others. "We need to know, because this could change how we go about attacking this thing.

"I've been telling people all week that since this is Louisiana sweet crude, treating it won't be a big problem. But now we need to confirm this heavier stuff as soon as possible."
Louisiana "sweet" crude is prized by refiners because it contains a high percentage of the volatile compounds that are used for making gasoline, and a small fraction of asphaltenes, heavier, non-combustible compounds that are most commonly used for roads and roofs.

While the volatile compounds have high toxicity and can pose serious health risks to plants, fish, wildlife and humans including cancers and death, they evaporate quickly once exposed to oxygen and sunlight and are easy to treat during spills, Overton and other clean-up experts said.
http://blog.al.com/live/2010/04/gulf_of_mexico_oil_spill_could.html

Below more on errant blowout defaulter. Failure is nothing new it seems. Which rather begs the question why was the regulatory regime so lax, and why no standby plan B, required at all times?

Device to halt blowout faulted
117 preventer failures were cited in 1999 report
By LES BLUMENTHAL MCCLATCHY NEWSPAPERS April 30, 2010, 11:59PM

WASHINGTON — A 1999 report commissioned by the federal agency that oversees offshore drilling suggests failures of underwater blowout preventers designed to stop oil spills like the massive one threatening the Gulf Coast were far from unknown, the chairwoman of a key Senate panel said Friday.

Citing a Minerals Management Service report, Sen. Maria Cantwell, D-Wash., said there were 117 failures of blowout preventers during a two-year period in the late 1990s on the outer continental shelf of the United States.

“To find out the ultimate fail-safe weapon doesn't work is surprising,” said Cantwell, who as chairwoman of the Senate Commerce Committee's oceans, atmosphere, fisheries and Coast Guard subcommittee will play a role in any congressional investigation of the Gulf oil spill and the drilling rig explosion.

The unclassified version of the 1999 report said the failures involved 83 wells drilled by 26 rigs in depths from 1,300 feet to 6,560 feet.

A similar report released by the agency in 1997 found that between 1992 and 1996 there were 138 failures of blowout preventers on underwater wells being drilled off Brazil, Norway, Italy and Albania.

Both reports are highly technical. Classified versions of the reports included proprietary information that was redacted before the reports were released publicly.

Cantwell's office said there were no newer studies, but a 2007 paper from the Minerals Management Service said between 1992 and 2006 there were 39 actual blowouts.

Blowout preventers, which can weigh up to 500,000 pounds and stand 50 feet tall, are bolted on the top of a wellhead on the seafloor and in an emergency can cut off the flow of oil to prevent a gusher. The blowout preventers can be activated by throwing a switch on the drilling rig. They also sare upposed to activate automatically in the event of a major problem or, in some cases, can be activated by acoustic sound waves produced from a ship.
http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/6984731.html

We end with trouble escalating for error prone BP. Well at least as far as their North American operations seem to be involved. This might be a good time to be short BP. This might be a good time to be short the industry.

Another BP offshore operation scrutinized
19 members of Congress asking if corners were cut on Atlantis platform
By LISE OLSEN Copyright 2010 Houston Chronicle April 29, 2010, 7:59PM
BP faces an ongoing federal probe over concerns that the oil giant illegally cut safety corners in rushing completion of its massive Atlantis offshore production platform, described by BP as the deepest oil production platform in the world.

The allegations have been raised by 19 members of Congress, a Houston-based safety expert, a whistle-blowing contractor and a Washington, D.C., nonprofit organization.

BP, which calls itself the leader in deep-water offshore oil development in the Gulf of Mexico, began operations at the Atlantis platform in October 2007 at a site about 124 miles offshore in 7,000 feet of water and expanded production last year, according to government records and BP's annual report.

The allegations suggest the company rushed into production by skipping or skimping required engineering inspections, putting profits ahead of the need to protect workers from accidents and the environment from potentially catastrophic oil spills, according to allegations sent to regulators.

----Daren Beaudo, a BP spokesman, insists the company designed and built the platform to meet “global industry engineering standards, including review and approval of pro-ject design and construction procedures by professional engineers.” BP has “found no evidence to substantiate the organization's claims with respect to Atlantis project documentation,” he added.

“The engineering documents for Atlantis have the appropriate approvals, and platform personnel have access to the information they need for the safe operation of the facility,” he said in a written statement.

-----The allegations stem from a whistle-blower who worked as a contractor for BP and later provided BP documents to a Washington nonprofit called Food and Water Watch.

A local safety expert and engineering consultant, Mike Sawyer, said he prepared an independent evaluation of BP's Atlantis subsea database at the request of Food and Water Watch. Sawyer said he voluntarily reviewed the database listing of more than 7,000 design documents, reports and drawings from Atlantis and found they were “incomplete or unapproved” by engineers even after Atlantis began production.

-----The mineral service, which shares responsibility for investigating offshore platforms and drilling rigs with the Coast Guard, is conducting the current probe of BP Atlantis, according to a letter to congressional members from the service's director, Elizabeth Birnbaum.
Beaudo of BP said the company would “cooperate fully” with the investigation of Atlantis.
http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/6982554.html

Transocean and deep sea rigs.

http://www.deepwater.com/fw/main/List-by-Water-Depth-77.html

First it was Icelandic ash shutting down Europe’s airspace. Now we have BP’s oil shutting down the Gulf recreation and hospitality industries, I wonder what our third calamity is going to turn out to be. For the sake of the planet, I can only hope that it’s not Gordon Brown being re-elected next week!

"Reading out the figures in a shrill, rapid voice, Gordon Brown proved to them in detail that they had more oats, more hay, more turnips than they had had in Blair’s day, that they worked shorter hours, that their drinking water was of better quality, that they lived longer, that a larger proportion of their young ones survived infancy, and that they had more straw in their stalls and suffered less from fleas."

With Apologies to George Orwell and Animal Farm.

UK General Election polls. The hung Parliament Approaches.
http://www.ukpollingreport.co.uk/blog/

Odds Checker. UK General Election Betting Odds.
http://www.oddschecker.com/specials/politics-and-election/next-uk-general-election/most-seats

More on Monday. Have a great May Day weekend, or was that Mayday!

GI.

The Bottomless Pit.

Baltic Dry Index. 3329 +126

LIR Gold Target by 2019: $3,000.

The promise given was a necessity of the past: the word broken is a necessity of the present.

Niccolo Machiavelli

Another day, and two very different disasters dominate. In Europe, the Greek disaster now threatens to cost Germany 25 billion euro. Is the true scale of tiny Greece’s debts now 120 billion Euro? Who knows, each day brings yet another massive escalation of the size of the problem. I can’t wait until we try to uravel the finance black hole of Spain or Italy. Elsewhere, in the Gulf of Mexico, BP’s rig disaster also escalates by the day. Federal Reserve style, the blowout and oil leak has gone from being contained on Friday, to a modest leak of 1,000 barrels a day on Monday, to a worrying leak of 5,000 barrels a day yesterday. A change in winds today is expected to push the oil towards very sensitive shores.

Below, the Telegraph covers the transformation of Greece into Germany’s bottomless pit. From London it’s quite easy to see that the real solution lies in Greece leaving the Euro and restructuring its debt, perhaps by as much as a 50% haircut. Instead the Germans are trying to enforce a suicidal extreme austerity regime on a nation in no mood to accept additional cuts. This is a nation where the airforce pilots just went on strike after all. I suspect that the Greeks know the answer too. I suspect that they just want as much exit cash and good terms as they can get as they head out the door marked exit. Stay long gold and silver, it’s over for the euro as we knew it. The new Euro will either be a slightly harder version of the old Italian Lira or a slimmed down Teutonic Euro-zone operating on a renamed D-Mark. Right now the French leaders of the ECB and IMF plus President Obama, are trying to force Germany into the Lira solution. If Chancellor Merkel holds her nerve, she may yet get to dominate western Europe with the rise of a new international D-Mark.

Most people still believe in a hard day's work, but they also believe that it should be spread out over the course of a week.

Mad Magazine.

EMU domino fears as Spain downgraded, Germany drags feet on rescue
German leaders have agreed in principle to a rescue package of up to €135bn for Greece in emergency talks with EU and IMF officials, but failed to offer any clarity on the conditions for such aid.
By Ambrose Evans-Pritchard, in Berlin Published: 8:10PM BST 28 Apr 2010

Hopes for a respite for Southern Europe's battered bond markets were quickly dashed as Standard & Poor’s downgraded Spain.

Rainer Brüderle, Germany’s economy minister, said the Greek bail-out would be much larger than first thought, acknowledging that Greece cannot hope to tap the private debt markets for three years.

The heads of the European Central Bank and the International Monetary Fund made a joint pilgrimage to Berlin, pleading with lawmakers in the Bundestag to throw their full weight behind rescue efforts before the chain-reaction spreads to Portugal and the rest of the EMU periphery. Their presence as supplicants in Berlin marks the symbolic moment when Germany appears the undisputed master of Europe.

Dominique Strauss-Kahn, the IMF’s chief, said the stability of the eurozone itself is in danger. "We need to act swiftly and strongly,” he said.

German Chancellor Angela Merkel once again refused to give concrete assurances, leaving the markets as wary as ever over the real intentions of Berlin. "This is about the stability of the euro overall, and we won't avoid this responsibility. But the challenge is for Greece to accept an ambitious program," she said.

“Europe risks the biggest coordination failure in modern history,” said David Simmonds, research chief at RBS. The Berlin talks are as vague as ever. “We believe that markets will remain very sceptical.”

-----The Greek debt market came close to disintegration yesterday. Yields on two-year bonds rose briefly to 38pc. “This no longer has anything to do with interest rates: it is a forward contract on the return of the Greek Drachma,” said Charles Dumas, head of Lombard Street Research.

Markets are already looking beyond Greece to Portugal where spreads on 10-year bonds rose to 330 points -- higher than the level that first prompted Athens to invoke aid -- before falling back on pledges of further austerity.

Premier Jose Socrates is to bring welfare cuts planned for 2011 and 2012, accepting that the markets will not give Portugal another year to tackle its deficit of 9.4pc of GDP.
S&P cut Spanish debt one notch to AA with a negative outlook, warning that the fall-out from the housing bust will keep the country trapped in near slump until 2016. It said private sector debt of 178pc of GDP was a major concern.

Daniel Cohn-Bendit, leader of the European Greens, said Europe’s handling of the crisis had been “catastrophic” and rebuked Germany for resorting the “discipline of the whip”.

But Mrs Merkel is treading on eggshells. She faces a crucial election in North Rhine-Westphalia on May 9 that will decide control of the Bundesrat, and risks a court challenge if any rescue breaches the EU’s no `bail-out clause’. David Marsh, author of `The Euro: The Politics of the New Global Currency` said the moment of truth has come when Germany must decide whether to accept the burden of propping up Europe’s southern ring or let Greece fail and endanger its strategic investment in Europe’s post-War order.

“There are some senior figures who would like so see the gangrenous leg of Greece chopped off, to set an example. But they want to avoid leaving any German fingerprints on the blood-stained knife,” he said.

It is far from clear whether Athens will agree to further austerity as strikes hit the country day after day. Andreas Loverdos, Greece’s labour minister, said the EU-IMF team wants further wages cuts. “We cannot accept that.”

Greece knows it can opt for default at any time, setting off an EMU-wide crisis and bringing down Europe’s banks. It also knows that key figures in the Bundestag favour debt restructuring.
“Those who chased high yield by purchasing Greek debt must share the costs,“ said Volker Wissing, chair of Bundestag’s finance committee. Leo Dautzenberg from the Christian Democrats said banks should prepare for a `haircut’ of up to 50pc.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7647645/EMU-domino-fears-as-Spain-downgraded-Germany-drags-feet-on-rescue.html

Next, Bloomberg on the rising reality that the best course is to let Greece exit and restructure.

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

Ludwig von Mises.

Greece Turning Viral Sparks Search for EU Solutions
April 29 (Bloomberg) -- European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.

With Greece’s budget turmoil infecting markets from Rome to Madrid, economists are urging German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and other officials to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks, the economists said.

Bonds and stocks plunged across Europe in the past week as Merkel’s government delayed approving a rescue plan for Greece and Standard & Poor’s downgraded Greece, Portugal and Spain. As OECD head Angel Gurria likens the crisis to the Ebola virus, Europe may need to come up with a plan equivalent to the $700 billion Troubled Asset Relief Program deployed by the U.S. after the collapse of Lehman Brothers Holdings Inc.

“It is perhaps time to think of policy options of the last resort in the current sovereign crisis,” said David Mackie, chief European economist at JPMorgan in London. “It may now be time for the euro area to do something much more dramatic in order to prevent the stress from creating another broad-based financial crisis which pushes the region back into recession.”

----Nouriel Roubini, the New York University professor who anticipated the economic collapse of 2008, said yesterday that the national debt crisis that’s spreading out from Greece is a warning sign for countries ranging from the U.S. to Japan and the U.K.

“Greece is just the tip of the iceberg,” Roubini said. “There’s been a massive releveraging of the public sector.”

------A Greek agreement may not be enough to end a crisis that’s ricocheting through all euro-region markets and governments may have to come up with a blanket plan for the bloc as a whole, said Mackie. He calculates that in a worst-case contagion scenario, supporting Spain, Portugal and Ireland and Greece may require aid worth 8 percent of the gross domestic product of the rest of the region. That’s equivalent to about 600 billion euros.

“This is a big number, but the region has the fiscal capacity to backstop both banks and these countries,” said Mackie. Governments also could guarantee each other’s debt for a limited period such as three years, an “attractive form of support because no money is needed up front,” he said.

The ECB may also have a role to play even if the crisis has its roots in fiscal policy. With Greek debt now rated as junk by S&P, the Frankfurt-based central bank may need to dilute its collateral rules again so as it can keep accepting the country’s bonds when making loans, said economists led by Juergen Michels at Citigroup Inc.

Under current rules, Greek bonds will be ineligible at money-market operations if Fitch Ratings and Moody’s Investors Service cut them to junk as well.

-----A default by “rich” Greece on its debt would be the best way to ease the European fiscal crisis and help allay fears of a contagion, said Mark Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management Ltd. Greece should consider restructuring its debt to pay 25 cents to 50 cents for every dollar, helping to cut its debt level to a more sustainable level, he said in an interview with Bloomberg Television in Singapore today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCW0uYHW707A&pos=3

Elsewhere in Europe, way off the radar screen, Hungary has a similar problem to Greece.

IMF Trust in Hungary Budget Data ‘Distressing,’ Matolcsy Says
By Zoltan Simon
April 29 (Bloomberg) -- The International Monetary Fund’s trust in the credibility of Hungary’s budget data is “distressing,” said Gyorgy Matolcsy, who is the main candidate to become economy minister, according to Heti Valasz.

“It’s distressing that the IMF is a prisoner of the budget figures of the outgoing government,” Matolcsy told the weekly newspaper. “Besides them, everyone is aware that the 3.8 percent budget deficit is unsustainable. Even if they sense this at the IMF, they can’t say it publicly until the new government is formed.”

Incoming Prime Minister Viktor Orban, whose Fidesz party won this month’s elections, has said the government falsified budget data and that the gap may be double the 2010 target. The IMF and the European Union, which gave the bulk of a $26.4 billion bailout in 2008 that helped Hungary avert a default, say the target is “achievable,” though additional measures may be warranted.

The budget gap for this year “belongs to the past” and the new cabinet’s priority will be to jumpstart growth and create jobs in the recession-hit economy, Orban said on April 26. Generating growth is a precondition of further fiscal consolidation, he said.
http://www.bloomberg.com/apps/news?pid=20601095&sid=a.WyoD8_3Idg

In oil news, the Gulf of Mexico oil spill gets worse. Below the latest updates from the Houston Chronicle and Wall Street Journal. If the oil enters the Gulf wetlands, the resulting reaction is likely to highly populist and very bad for the offshore drilling industry. BP is probably just days away from a trip through hell.

Well springs third leak; officials raise spill estimate
By BRETT CLANTON, MATTHEW TRESAUGUE and MONICA HATCHER HOUSTON CHRONICLE
April 28, 2010, 11:01PM

BP said Wednesday night that a third leak has developed in an undersea oil well and government officials raised their estimate of how much oil is leaking into a growing slick that threatens the Gulf Coast.

Rear Adm. Mary Landry, commander of U.S. Coast Guard District 8, said the government has offered BP access to Defense Department technology that may not be available in the commercial sector in its efforts to address the increasingly serious spill resulting from a deadly drilling rig explosion last week.

Earlier Wednesday, the Coast Guard set fire to portions of the advancing slick, hoping to limit the amount of crude that reaches this particularly vulnerable coastline.

The new leak is near the wellhead 5,000 feet down, and like the other two, is in a now-tangled pipe called a riser that connected the well to the rig on the surface.

Officials have been estimating the well is leaking at least 1,000 barrels, or 42,000 gallons, every day, but on Wednesday night raised the top range to 5,000 barrels.

----A 1,000-member task force with the British oil giant has so far failed to stanch the flow.
The huge slick — estimated to be 600 miles in circumference — began when the Deepwater Horizon drilling rig sank into the Gulf after an apparent blowout sent it up in flames April 20. The rig, owned and operated by Swiss-based Transocean, had been drilling a well at BP's Macondo prospect some 40 miles off the Louisiana coast when the accident occurred. Eleven of 126 workers aboard are presumed dead.

The Mississippi forks in three directions from Venice. Through the river's southern pass, it's about 30 miles to the Gulf — two hours' sail for a large cargo ship.
Teams scrambled to create a buffer zone from the mouth of the Mississippi to Mobile Bay in Alabama, with officials acknowledging in the frankest terms yet that the spill will likely reach shore.

“It's premature to say it's catastrophic. I will say it's very serious,” Landry said earlier Wednesday.

The Coast Guard started a controlled burn of thick, clumpy pockets of crude within the slick late Wednesday afternoon and stopped at nightfall. Weather permitting, burns were to resume this morning.

The process involves boats using 500-foot sections of containment boom to tow oil to remote areas, where the Coast Guard said several thousand gallons of oil would be burned in about an hour.

But a storm system developing in the central U.S. is forecast to bring strong winds from the southeast today, raising concerns that if the burns aren't finished by then, they will send black smoke and a pungent odor of oil toward New Orleans.

-----Walter Chapman, a chemical and biomolecular engineering professor at Rice University, said a controlled burn can help reduce the size of the spill and break up some of the heavier components in the oil.

But sustaining a burn won't be easy with ocean water sapping heat needed to feed the flames. And dense “tar balls,” too heavy to float on the water's surface, will probably not be consumed in the fire and could still wash ashore, Chapman said. “We're still going to see some environmental damage.”

Whatever its size, people in Venice are watching the advancing slick with concern. Steps away from the response staging area are dozens of shrimp boats. Shrimping season opens May 17, but it's possible that the spill could force closures.

-----BP, as owner of the offshore lease where the well was being drilled, is required by a 1990 oil pollution law to cover the costs of regaining control of the well and the cleanup. The company has estimated the effort is costing it $6 million per day.
http://www.chron.com/disp/story.mpl/business/energy/6979467.html

APRIL 29, 2010
Leaking Oil Well Lacked Safeguard Device
The oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills.
The lack of the device, called an acoustic switch, could amplify concerns over the environmental impact of offshore drilling after the explosion and sinking of the Deepwater Horizon rig last week.
The accident has led to one of the largest ever oil spills in U.S. water and the loss of 11 lives. On Wednesday federal investigators said the disaster is now releasing 5,000 barrels of oil a day into the Gulf, up from original estimates of 1,000 barrels a day.

U.S. regulators don't mandate use of the remote-control device on offshore rigs, and the Deepwater Horizon, hired by oil giant BP PLC, didn't have one. With the remote control, a crew can attempt to trigger an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated.

The efficacy of the devices is unclear. Major offshore oil-well blowouts are rare, and it remained unclear Wednesday evening whether acoustic switches have ever been put to the test in a real-world accident. When wells do surge out of control, the primary shut-off systems almost always work. Remote control systems such as the acoustic switch, which have been tested in simulations, are intended as a last resort.

Nevertheless, regulators in two major oil-producing countries, Norway and Brazil, in effect require them. Norway has had acoustic triggers on almost every offshore rig since 1993.
The U.S. considered requiring a remote-controlled shut-off mechanism several years ago, but drilling companies questioned its cost and effectiveness, according to the agency overseeing offshore drilling. The agency, the Interior Department's Minerals Management Service, says it decided the remote device wasn't needed because rigs had other back-up plans to cut off a well.
The U.K., where BP is headquartered, doesn't require the use of acoustic triggers.

----Tony Hayward, BP's CEO, said finding out why the blowout preventer didn't shut down the well is the key question in the investigation. "This is the failsafe mechanism that clearly has failed," Mr. Hayward said in an interview.
http://online.wsj.com/article/SB10001424052748704423504575212031417936798.html?mod=WSJ_hps_LEFTTopStories

“Paper money eventually returns to its intrinsic value - zero.”

Voltaire.

At the Comex silver depositories Wednesday, final figures were: Registered 51.17 Moz, Eligible 63.83 Moz, Total 115.00 Moz.

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Crooks & Scoundrels Corner.

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

"Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess.”

Professor Irving Fisher.

Today, has the WSJ found an honest Wall Street firm? Well, New Jersey Wall Street anyway. Can the Journal put away its Diogenes lamp having found a nice great vampire squid? Below, the firm that turned down Goldman’s invite to create synthetic CDOs designed to fail. The “fabulous Fab” got turned down and sent on his way to ACA. Below that, another Brownian blunder for Britain.

The Duke of Dunstable had one-way pockets. He would walk ten miles in the snow to chisel an orphan out of tuppence.

P.G. Wodehouse.

APRIL 29, 2010
SEC Questions 'Not Us' Firm
Executives of Investment Company Had Rejected Goldman Deal as Too Risky
The Securities and Exchange Commission in recent weeks has questioned executives of a little-known firm that played a key role in the business of arranging mortgage investments, as part of the agency's probe into now-controversial deals struck at the height of the housing bubble.

GSC Group Inc. was one of several firms that helped banks including Goldman Sachs Group Inc. put together deals that allowed investors to bet on the housing market.

The New Jersey investment firm turned down Goldman's request to select assets for the debt deal at the center of the agency's fraud lawsuit against Goldman, according to a person familiar with the matter and an email released by a Senate subcommittee this week. The concern: The deal was too risky for investors, according to the person and the email.

GSC received a subpoena from the SEC last summer and held subsequent discussions with the agency, including in recent weeks, according to an executive at the firm.
"GSC's involvement here is strictly as a witness, and we're cooperating with the SEC," said Daniel Ross, a lawyer for the firm.

----In January 2007, Goldman bankers approached GSC to select mortgage-backed securities for a complex deal known as a synthetic collateralized debt obligation that it was creating at the behest of hedge-fund manager John Paulson, At the time, Mr. Paulson was bearish on the mortgage market, according to an email released this week by a Senate subcommittee questioning Goldman executives and according to the SEC complaint. GSC turned away the business.

"As you know, a couple of weeks ago we had approached GSC to ask them to act as portfolio selection agent for that Paulson-sponsored trade, and GSC had declined given their negative views on most of the credits that Paulson had selected," said the email, from Mr. Tourre in late-January 2007.

Goldman eventually tapped ACA Management LLC to select the securities for the deal, which was named Abacus 2007-AC1. The SEC alleges Goldman and Mr. Tourre didn't inform investors that Mr. Paulson's firm, Paulson & Co., played a role in picking the assets and that Goldman and Mr. Tourre misled ACA about Paulson's position.

The deal quickly lost value, leading to investor losses in excess of $1 billion and gains to Paulson of about $1 billion.
http://online.wsj.com/article/SB10001424052748703648304575212641381556412.html?mod=WSJ_hps_MIDDLESecondNews


April 29, 2010
Brown’s ‘bigot’ blunder plunges Labour campaign into crisis
Gordon Brown prostrated himself as a “penitent sinner” yesterday after a brush with a voter triggered a calamitous chain of events that threatened to derail Labour on the eve of tonight’s pivotal TV debate.

The Prime Minister spent an unscheduled 45 minutes inside the terraced house of Gillian Duffy apologising to the Labour-supporting widow for insulting her behind her back.

His muttered description of her as a “bigoted woman”, picked up by a microphone as he drove off from their combative but apparently friendly encounter, plunged Labour’s high command into its most serious crisis of the campaign.

Instead of pressing the party’s record on the economy before tonight’s final trial by television, the election machine was reduced to desperate firefighting as Lord Mandelson led a series of Cabinet ministers on to the airwaves. The Business Secretary said that Mr Brown had been wrong to criticise Mrs Duffy, whose mistake, on her way to buy a loaf of bread, had been to buttonhole the Prime Minister over the deficit, immigration and student debts.

A mortified Mr Brown issued six apologies over the next six hours, including one by e-mail to Labour supporters for letting them down. Despite saying sorry to Mrs Duffy over the telephone, he ignored aides and insisted on driving back to Rochdale from Manchester, abandoning his preparation for tonight’s third and final leaders’ debate, to atone in person for his blunder.

He emerged from her house smiling fixedly, saying that he had misunderstood her earlier words.
http://www.timesonline.co.uk/tol/news/politics/article7111086.ece

It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine.

P.G. Wodehouse.

Why A UK Hung Parliament is Likely. Stay long precious Metals.
http://www.ukpollingreport.co.uk/blog/


The monthly Coppock Indicators finished March:

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

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Help the LIR fight Banksterism, the EU, and for sound money.
If you can, help the LIR stay around and make a difference. Please make a donation at the PayPal link on the website or better still become a sponsor for what looks like an exciting 2010. Capitalism not banksterism. Many thanks to all who have helped.

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The EU Chernobyl.

Baltic Dry Index. 3203 +183

LIR Gold Target by 2019: $3,000.

“I've fallen, and I can't get up!" Euro-zone captive state.

"We're sending help immediately, Club Med." German dispatcher.

PANIC! While Americans were being entertained yesterday by the effortless Bankster win in the match between the Odious Banksters versus the Loathsome Senators, the Euro-zone fell off a cliff and couldn’t get up. There are cries now for the ECB to use its nuke option and follow the US Fed and the Bank of England and start monetizing the Eurozone governments’ debt. Of course there’s no need (yet) to monetize Germany’s sovereign debt, but their interest rate will rise once the ECB starts monetizing Club Med. Below, the Telegraph covers Europe starting to panic. Stay long precious metals. The great Nixonian error of fiat currency is entering another more disastrous phase on the path to western ruination. Greece is already gone, bring on Portugal and Spain.

"Anything that can go wrong will go wrong." This piece of wisdom, known as Murphy's Law, currently applies extraordinarily well to economic policy in the euro zone.

Der Spiegel.

ECB may have to turn to 'nuclear option' to prevent Southern European debt collapse
The European Central Bank may soon have to invoke emergency powers to prevent the disintegration of southern European bond markets, with ominous signs of investor flight from Spain and Italy.
By Ambrose Evans-Pritchard, International Business Editor

Published: 7:09PM BST 27 Apr 2010

Greece’s fortunes were dealt yet another blow as Standard & Poor’s slashed its credit rating to junk status - BB+ - the first time that has happened to a euro member since the single currency was created, pushing yields on 10-year Greek bonds up to a record 9.73pc.

The credit-rating agency also cut Portugal’s sovereign debt ratings by two notches to A-, as the swirling storm hit the country with full-force.

“We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.

-----Mr Cailloux said the ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.

This is prohibited in normal times under the EU Treaties but the bank can buy a wide range of assets under its “structural operations” mandate in times of systemic crisis, theoretically in unlimited quantities.

Mr Cailloux added: “This feels like the banking crisis in late 2008 post-Lehman, though it has not yet spread to other asset classes. The ECB will have to act it if does.”

Yields on 10-year Portuguese bonds spiked 48 basis points to 5.67pc, replicating the pattern seen as the Greek crisis started.

Portugal’s public debt will be just 84pc of GDP by the end of this year, far lower than that of Greece, at 124pc. However, its private debt is much higher and data from the IMF shows that its external debt position is worse.

Interest payments on foreign debt will be 8pc of GDP this year. Portugal’s net international investment position is minus 100pc of GDP, the worst in the eurozone.

-----The issue of the ECB buying bonds is a political minefield. Any such action would inevitably be viewed in Germany as a form of printing money to bail out Club Med debtors, and the start of a slippery slope towards in an “inflation union”.

But the ECB may no longer have any choice. There is a growing view that nothing short of a monetary blitz — or “shock and awe” on the bonds markets — can halt the spiral under way.

-----The bond markets are already “pricing in” a default of some kind in Greece, where rates on 2-year debt spiked close to 15pc in panic trading yesterday. The European Commission and the International Monetary Fund both insist that restructuring is out of the question but investors have become cynical after months of EU rhetoric and foot-dragging by Berlin.

The ECB cannot lightly risk a second sovereign crisis erupting, with dangers of a spillover into Spain.

The exposure of Spanish-based banks to Portuguese debt exceeds $80bn, according to the Bank for International Settlements. There were early signs of strain in the Spanish banking system yesterday.

Banks were forced to pay a premium in the domestic “repo” market on fears of counterparty risk, although the Bank of Spain has so far won plaudits for ensuring that banks have large safety buffers.
http://www.telegraph.co.uk/finance/economics/7640783/ECB-may-have-to-turn-to-nuclear-option-to-prevent-Southern-European-debt-collapse.html

A good politician is quite as unthinkable as an honest burglar.

H.L. Mencken.

Back across the English Channel, Perfidious Albion would never do anything as foolish as tax and work shy Greece, would they? Below, the Telegraph covers a story LIR readers are all too familiar with. Nine days out from the UK general election, all 3 major parties are still misleading the electorate on the scale of the financial disaster team Blair-Brown’s socialists inflicted on dumbed down Britain. Perhaps it’s why the worst Prime Minister since Lord North lost the American colonies now seems to have virtually given up campaigning to win re-election.

General Election 2010: multi-billion black holes in all three parties' spending plans
Voters are being kept in the dark by all three main political parties, which have failed to disclose the scale of tax rises and public sector cuts required to tackle the financial crisis, Britain’s leading economic forecaster has warned.
By Robert Winnett and Edmund Conway Published: 10:00PM BST 27 Apr 2010

The Institute for Fiscal Studies criticised Labour, the Conservatives and the Liberal Democrats for not being frank with the public about the drastic measures needed to repair the government’s finances.

The institute claimed that the parties have black holes of up to £52 billion in the economic plans they have published as part of the election campaign.

The average family already faces tax rises of more than £500 a year in the face of the £1 trillion deficit. But, according to the IFS, Labour will need to increase taxes by another £7 billion a year under its economic plan and the Conservatives will need to raise taxes by about £3 billion.

A government run by any of the main parties would find it impossible to cut public services as sharply as they have proposed and would have to raise billions more in taxes, it claimed.

Tory plans to cut the deficit by more than £70 billion over the next parliament would result in a squeeze on government spending not seen since the 1920s, figures produced by the institute suggested.

Under Labour and Lib Dem policies, public spending would face the biggest cuts since the 1970s, because they intend to raise more tax than the Conservatives, the IFS calculated.

The damning analysis was released ahead of tomorrow’s final television debate, on the theme of economic affairs. Gordon Brown, David Cameron and Nick Clegg were accused of clashing over peripheral issues so far, while failing to address the major economic problems they will face over the next five years.

The IFS said it was “striking” how reticent the main parties had been in explaining the “defining task of the next administration”. The economists warned that none of the parties had come “anywhere close” to identifying how their spending plans might be achieved.

----The IFS said that welfare benefits may have to be cut, raising the prospect of means-testing for universal payments such as child benefit. Last night, Robert Chote, the director of the IFS, said: “For the voters to be able to make an informed choice, the parties need to explain clearly how they would go about achieving it. Unfortunately, they have not.

-----According to the IFS, the Conservatives have the biggest black hole in their economic plans. Mr Cameron has set out plans to cut borrowing by more than his rivals over the next few years. He has set out public spending cuts of only £11.3 billion and tax rises of about £11 billion. However, there is a £52.4 billion gap in the spending plans, according to the IFS.
The Labour black hole is estimated at £44.1 billion, while the Lib Dems have the smallest unexplained gap, estimated at £34.5 billion.

However, the IFS described some of the Lib Dem plans as “highly speculative”.
http://www.telegraph.co.uk/news/election-2010/7641517/General-Election-2010-multi-billion-black-holes-in-all-three-parties-spending-plans.html

Below, the ever excellent analysts at Zero Hedge thinks the UK’s next government is in for a rude, Greek style, awakening. The CDS traders are on to the UK’s politicians weakness, and one way or another the UK’s free lunch is about to come to its end.

Red Lights Flashing For UK Credit Spreads According To CDS Market
By Tyler Durden Created 04/27/2010 - 23:42

The CDS market, as always, is prophetic to the dot: after main deriskers in the past two weeks were Spain, Portugal and France, so far the spread blow out in these markets has materialized like a Swiss watch. Which is why Ambrose Evans-Pritchard better be looking at this week's DTCC data, because the credit market is flashing a bright red warning light over his favorite bankrupt country - the UK (incidentally, the week's largest net derisker, just after Goldman Sachs). Second in order of sovereign implosion - Ireland. The British Isles, at least according to CDS traders who time after time prove they have far more sense than their equity equivalents, are about to become a hotbed of credit activity, and not in a good way.
http://www.zerohedge.com/article/red-lights-flashing-uk-credit-spreads-according-cds-market

In other news, China says it is preparing another massive stimulus package. Presumably, when the bean counters in Beijing look at the real economic figures for China, they see the bubble bursting before year end.

China May Announce 4 Trillion Yuan Stimulus, China Business Says
April 26 (Bloomberg) -- China will announce in August a new stimulus package of possibly 4 trillion yuan ($586 billion), the China Business newspaper reported on its Web site, citing unidentified sources.

The plan, from China’s National Development and Reform Commission, will likely cover nine industries including information technology and new energy, the report said.
http://www.bloomberg.com/apps/news?pid=20601089&sid=ajsv6gEJ15Nw

We end for the day with more on the oil spill that was largely “contained” on Friday, according to the US Coastguard and today is about to become an ecological disaster if it hits sensitive shores.

Spill is near endangered species, fisheries
By MATTHEW TRESAUGUE HOUSTON CHRONICLE April 27, 2010, 10:56PM

The growing oil spill in waters near Louisiana is a threat to an astonishing range of life, from endangered sperm whales and sea turtles to migratory birds and prized shrimp and oysters.
With thousands of gallons of crude pouring into the Gulf of Mexico each day, the leading edge of the spill had crept Tuesday within 20 miles of Venice, La. — although forecasts indicate it won't hit the coast before Friday, if at all.

The crude gushing from the rig Deepwater Horizon's well can be diluted quickly in open water, and scientists say it's best to try to contain it in the Gulf. In habitats like marshes and mangroves, oil's effects can be disastrous because it is tougher to remove.

“If this oil reaches the coast, there will be some pretty severe impacts to these habitats,” said Tom Minello, a Galveston-based ecologist for the National Marine Fisheries Service.

Of immediate concern are areas like the Breton Sound on the eastern side of the Mississippi River's mouth. It's one of the most productive fisheries for shrimp and oysters in the nation.

Threat to oysters, shrimp

Louisiana's reefs produce roughly 250 million pounds of oysters and generate $300 million a year for businesses dependent on the harvest, said Mike Voisin, president of oyster processor Motivatit Seafoods in Houma, La.

If the spill moves into the sound, officials could close it to harvesters. The oil might not kill the oysters, but the contamination would strip them of commercial value, Voisin said.

-----The spill also threatens havens for migratory birds. Louisiana has asked the Coast Guard to protect the Pass-a-Loutre Wildlife Management Area near the Mississippi from the spill with floating boom lines.

Also east of the river, brown pelicans, royal terns and laughing gulls are among dozens of species nesting on the Breton and Chandeleur barrier islands.

If oil gets on the birds, cleanup crews will find the islands hard to reach, accessible only by boat.
“It's a pristine area,” said Eugene Turner, a Louisiana State University ecologist. “I can't think of anything good that could come from this.”

The spill is still spreading because Coast Guard and BP crews cannot cap the leaks created by last week's collapse of the Deep­water Horizon.

-----Some environmentalists said more should be done for marine mammals at risk.
A crew spotted three sperm whales in the spill's vicinity this week. Planes dropping chemicals to break down the oil were to avoid the endangered species, which number 300 to 500 in the Gulf.
The area is also the only known spawning ground for the western Atlantic bluefin tuna, a protected species.
http://www.chron.com/disp/story.mpl/metropolitan/6978806.html

Coast Guard may set oil slick on fire
Published: April 27, 2010 at 9:07 PM
HOUSTON, April 27 (UPI) -- An oil slick in the Gulf Mexico has come with 20 miles of the coastline and Coast Guard officials said Tuesday they are considering setting the slick on fire.
The slick resulted from last week's oil rig explosion near Louisiana, which left 11 workers missing and presumably dead. Oil was leaking from a Deepwater Horizon well in the gulf, 50 miles off the Louisiana coast, at a rate of 42,000 gallons a day, officials said.

-----The April 20 spill, though smaller than a huge 1979 spill near Mexico, is already worse than the 1979 Ixtoc 1 leak, if for no other reason than that 11 oil workers' lives were lost, the Houston Chronicle said Tuesday.

However, the 1979 spill released far moil oil into the environment than last week's disaster. The Ixtoc well poured about 140 million gallons of oil into the gulf for 295 days before it was capped. At its current rate, it would take nine years for the Deepwater Horizon spill to match the 1979 spill, the Chronicle reported.

The current oil spill is closer to the U.S. Gulf coast shores, and there is concern it could damage the coastline more than the 1979 spill did, scientists said.

But marine biologists say the clean-up system is better now than it was more than 30 years ago.

"We're better prepared now. If they're able to clean it up out there in the open water, that's the best thing they can do," said Wes Tunnell, a marine biologist with the Corpus Christi Harte Research Institute for Gulf of Mexico studies.

The Deepwater Horizon oil slick is about 80 miles long and 48 miles wide, the Chronicle said. For the most part, the current slick is a thin layer on the water's surface, CNN reported.

A controlled burn, using fireproof booms and conducted only in daylight, could began Wednesday, CNN said.
http://www.upi.com/Top_News/US/2010/04/27/Coast-Guard-may-set-oil-slick-on-fire/UPI-31961272389351/

Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.

Mark Twain.

At the Comex silver depositories Tuesday, final figures were: Registered 51.25 Moz, Eligible 63.90 Moz, Total 115.15 Moz.

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Crooks & Scoundrels Corner.

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

No great vampire squids today, we’re sated for now with fishy banksters. Well, you didn’t really believe that, did you. Up next, Bloomberg with more on Goldie setting up the clients to buy the “cats and dogs”. Marketeers liked what they saw, they scored it a win for the Odious Banksters.

Goldman Armed Salespeople to Dump Bonds, E-mails Show
April 28 (Bloomberg) -- Goldman Sachs Group Inc., seeking to reduce assets tied to the declining U.S. housing market, urged its sales force in 2006 and 2007 to sell those products to clients, newly disclosed internal e-mails show.

The e-mails, including communications from Chief Executive Officer Lloyd Blankfein, show that employees discussed how to “arm” salespeople to shed bonds the firm found too risky to hold.

The e-mails were released yesterday by Senator Carl Levin in connection with a hearing where current and former managers testified about the firm’s role in the financial crisis.
Levin, the Michigan Democrat who heads the Senate’s Permanent Subcommittee on Investigations, grilled the executives about the firm’s bets against the housing market and its disclosure to clients.

In one of the e-mails, Blankfein asked whether employees were doing enough to sell bonds backed by home loans including subprime mortgages.

“Could/should we have cleaned up these books before and are we doing enough right now to sell off cats and dogs in other books throughout the division,” Blankfein, 55, wrote in an e- mail dated Feb. 11, 2007.

Questioned about the e-mail at yesterday’s hearing, Blankfein told senators that his comment didn’t represent an opinion of the bonds.

“When I use the expression ‘cats and dogs’ I mean miscellaneous stuff,” he said. “This is part of my normal point about aged inventory. Part of the discipline of our business is to manage risk and sell inventory.”

Clients’ Questions

The e-mails show that as early as the fall of 2006 clients were questioning products tied to the mortgage market. On Oct. 19, 2006, Mitchell Resnick sent an e-mail to two colleagues asking whether the firm had material about “how great” BBB bonds tied to home loans were. BBB is a credit rating from Moody’s Investors Service and Fitch Ratings that indicates an asset is two levels above junk.

“A common response I am hearing” from potential investors is “a concern about the housing market and BBB in particular,” Resnick wrote. “We need to arm sales with a bit more. Do we have anything?”

Goldman Sachs Chief Financial Officer David Viniar convened a meeting of mortgage traders and risk managers on Dec. 14, 2006, according to a document prepared by the firm that the Senate panel released yesterday.

‘Net Long’

At the time, Goldman Sachs had a “net long exposure” to the subprime-mortgage market, meaning the bank was betting the market would continue to rise. At the meeting, executives agreed that the firm should “reduce its overall exposure to the subprime mortgage market,” the document said.

Goldman Sachs’s Stacey Bash-Polley sent an e-mail to colleagues six days later with the subject line “Mezz Risk,” a reference to lower tranches of collateralized debt obligations linked to mortgages. Investors in mezzanine tranches are among the first to lose money when the asset starts souring.

“We have been thinking collectively about how to help people move some of the risk,” wrote Bash-Polley, an executive in the Goldman Sachs division that sold bonds. “We need to make sure we arm” salespeople “with our pricing and have them focus on the more difficult positions.”

Targeting Clients

In targeting clients, Bash-Polley wrote that Goldman Sachs should focus on those that “can possibly do larger size at a level that would be attractive when you take into consideration the size of risk we could move.”

“Makes sense to me,” responded Kevin Gasvoda, a Goldman Sachs colleague.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoT.IqoUZk14&pos=4

Goldman Sachs Emerges From Senate Showdown Ahead $549 Million
April 28 (Bloomberg) -- Goldman Sachs Group Inc. executives endured more than 10 hours of congressional grilling in one of the most public, and most hostile, political lashings in the firm’s 141-year history. By day’s end, the investment bank’s market value had risen by $549 million.

Senator Carl Levin and members of his Permanent Subcommittee on Investigations said evidence they presented made the case for Congress to pass legislation tightening financial regulation. Goldman Sachs, the world’s most profitable securities firm, was alone among 79 stocks of the Standard & Poor’s 500 Financial Index in posting a gain yesterday.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a8TTAuOfWeXo

“We have gone past the point of no return. There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.”

Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.


Why A UK Hung Parliament is Likely. Stay long precious Metals.
http://www.ukpollingreport.co.uk/blog/

The monthly Coppock Indicators finished March:

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

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Help the LIR fight Banksterism, the EU, and for sound money.
If you can, help the LIR stay around and make a difference. Please make a donation at the PayPal link on the website or better still become a sponsor for what looks like an exciting 2010. Capitalism not banksterism. Many thanks to all who have helped.

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