Baltic Dry Index. 3933 -108
LIR Gold Target by 2019: $3,000
"A Horse! A Horse! my kingdom for a horse!"
Shakespeare
We open this morning with the Journal on a wobble in China. In China’s still largely centrally controlled command economy, has the government there overdone the crackdown on the real estate market. If it has, will China’s real estate market impact the rest of the global economy. In our world now run on fiat currency, everything is now a command economy as authorities everywhere struggle to keep the fiat currency economy running. With no real economics anymore, and no fiat currency worth more than another, all decisions are now political, as a handful of central banksters keep trying to rig the failing fiat currency system to keep it from collapsing. Stay long precious metals for what comes next. The next Lehman drops us into the next great depression. Unlimited fiat currency creation risks setting off a run into tangible assets that have long term intrinsic value. We are all pawns of crooked banksters now.
"Horse sense is the thing a horse has which keeps it from betting on people."
W. C. Fields
JUNE 3, 2010
China's Property Market Freezes Up
Actions Taken by Economic Planners Worried About a Real-Estate Bubble May Have Gone Too Far
BEIJING—Government policy changes have thrown China's booming property market into a period of paralysis that some industry executives say will last for several months, weighing on global growth prospects already battered by the turmoil in Europe.
A rebound in China's property market has been central to the nation's rapid recovery from the financial crisis, but surging housing prices had led to increasingly open discontent from middle-class families in major cities. After months of indecision, Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases.
Officials may have gotten more than they bargained for. Though still too recent for their effect to show up in official economic statistics, early indications are that the new measures have sharply cooled the property market. Arriving around the same time as the debt crisis in Greece, China's new restrictions caused many investors and businesses to question the strength of the global recovery. Domestic steel prices are down 7.4% since the April measures, and as of Thursday China's main stock market index is down 19.4%.
The housing market in many—though not all—Chinese cities seems to have nearly ground to a halt after the government moves. On average, the number of residential property transactions in the four weeks after the restrictions were announced is down 40% compared with the four weeks before the measures, according to figures covering 24 major cities from real-estate consultancy Soufun.com.
China's economic growth was already widely expected to slow in coming months, as the impact of last year's stimulus policies fade. Some forecasters, seeing weaker prospects in a key industry, are now further marking down their numbers for this year. China International Capital Corp. now expects the economy to expand 9.5% in 2010 as a whole, rather than the 10.5% it previously forecast.
But the key variable for how things unfold in coming months is difficult to forecast: What the government will do next. Analysts are divided about whether the government is more likely to take additional measures to push down prices, or start to reverse itself to restore confidence in the market.
Investors are focused on whether the government will impose new taxes on residential property, a move that is being discussed by big cities including Shanghai and Chongqing. On Monday, China's State Council signaled support for such changes, approving a set of economic-reform priorities including "gradually advancing reform of real-estate taxation." Even though no specific plans have been announced, the issue is weighing on markets since higher taxes would push down the value of properties.
http://online.wsj.com/article/SB10001424052748704025304575284442742333032.html
In the Gulf of Mexico, finally some “good news” on BP’s blow out oil well. BP should know later today if their latest cap attempt really will draw off much of the spewing oil and gas to waiting ships at the surface. We open with the latest from the NY Times on latest developments.
If an ass goes travelling, he'll not come back a horse.
Thomas Fuller
Obama Cancels Asia Trip as Concern on Spill Mounts
By PETER BAKER Published: June 4, 2010
WASHINGTON – President Obama canceled his trip to Australia, Indonesia and Guam late Thursday night as oil continued to stream into the Gulf of Mexico in what he has called the worst environmental disaster in American history.
His decision came as officials reported progress containing the oil leak at the bottom of the Gulf of Mexico.
Mr. Obama is to visit the Gulf Friday to assess the situation and meet with officials responding to the crisis. While the White House statement offered no reason for scratching the Asia trip this time, officials in recent days had grown increasingly convinced that it was untenable for the president to leave the country for a week with the oil spill still unchecked.
----In the Gulf, officials reported making some headway in the latest effort to place a cap over the well that would funnel at least some of the oil and gas to a ship at the surface. Earlier Thursday, 20-foot-long shears were used to snip the damaged riser pipe at the wellhead, and technicians began to lower the cap over it.
Late Thursday, Adm. Thad W. Allen of the Coast Guard, who is commanding the federal response to the disaster, announced that the cap had been put in place, but warned that “it will be some time before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment.”
Among the concerns was that the cap would not fit tightly and would allow seawater into the oil. That could lead to the formation of icelike hydrates that could block the flow. But the cap was outfitted with pipes for injecting methanol, which acts as a kind of antifreeze to prevent hydrates from forming.
-----Mr. Obama’s decision to cancel his Asia trip underscored the way the oil spill is forcing the White House to recalibrate plans for this summer. BP and the government have given up trying to plug the leak and are focusing now on siphoning or containing it until relief wells can be completed, perhaps by August. As a result, the president faces another two months in crisis management before he can even turn his focus exclusively to cleanup and recovery.
http://www.nytimes.com/2010/06/05/us/politics/05obama.html?hp
Plan for Relief Wells Spurs Hope Amid Caution
By HENRY FOUNTAIN Published: June 3, 2010
As engineers made headway Thursday in containing the oil leak at the bottom of the Gulf of Mexico, crews on two floating rigs flanking the spot where the Deepwater Horizon exploded and sank were doing what rig crews normally do: drilling wells.
The two wells, aimed at the bottom of the runaway well that has spewed millions of gallons of oil into the gulf, represent the most conventional solution to the disaster and the one that experts say is all but certain to succeed. Once either of the relief wells strikes pay dirt, the plan is to pump heavy drilling mud and cement down it to bring the blowout under control and permanently seal the damaged well.
------Doubters have pointed to past problems with relief wells, including one drilled during a blowout off southern Mexico 30 years ago that was unable to stop the gusher for three months after it was completed, and another off Australia last fall that did not hit its target until the fifth try.
BP officials say that the first relief well already extended more than 12,000 feet below sea level, about halfway to the target, but because drilling gets slower as a well gets deeper, it is not expected to be finished before August. The second well was started later and is not yet as deep. President Obama said federal officials ordered BP to drill the second well as a backup shortly after the rig exploded on April 20; the company said it was planning two wells anyway.
------The wells cost about $100 million each and are being drilled from rigs owned by Transocean, the company that owned the Deepwater Horizon.
The work could be delayed by hurricanes or by equipment or drilling problems, and the wells might initially miss the target, causing further delays as the drill bits are backed up and redirected. But BP officials and outside experts say that the relief wells will work. It is a matter of when, they say, not if.
“This is the answer,” said Walt Warchol, a retired drilling engineer in Houston. “It’s just going to take some time.”
http://www.nytimes.com/2010/06/04/science/earth/04relief.html?hp
But BP is living on borrowed time in fixing its Gulf of Mexico problem. It’s the start of the Atlantic and Caribbean hurricane season and there is simply no way to know if this will affect the relief wells timetable. In 2005 two major hurricanes passed almost directly over the site of BP’s oil leak disaster. Below, the latest from Accuweather
BP Running Out of Time in the Gulf of Mexico
Jun 3, 2010; 11:30 AM ET
The arrival of hurricane season and the warmest months of the year translate to rough waters and trouble for containment operations of the massive oil leak in the northern Gulf of Mexico.
Water temperatures have warmed considerably over the Gulf of Mexico in recent months. The warm waters will favor the formation of thunderstorms, rather than lead to their demise like that of the cold water season
The period of calm seas is coming to a close as well. Tropical waves of low pressure roll will soon drift farther north on their westward trip across the Atlantic from Africa. The waves of low pressure, which can breed tropical storms or hurricanes, can also bring intense squalls that kick up seas.
Approximately 1,900 vessels ranging from skimmers to tugs, barges and recovery ships were involved in containment and cleanup operations to date.
Skimming vessels have been circling the oil slick in recent weeks in an attempt to keep the contaminated area as small as possible. However, this operation can only be done in calm or nearly calm seas.
As winds increase from thunderstorms, squalls or tropical storms in the coming weeks, interruptions of containment operations will become more frequent.
If and when capping of the damaged well is successful, the oil is pumped onto a platform. First a temporary platform is brought in, followed by a more permanent platform. Only this heavy duty platform is designed to handle hurricanes.
AccuWeather.com Hurricane Expert Meteorologist Joe Bastardi remains concerned about multiple hurricanes affecting the Gulf of Mexico this season.
Depending on the strength and track of the hurricanes, vast amounts of the existing oil slick and dispersant agents could be captured by the storm and driven well inland by the storm surge.
Similar to the problems facing vessels during stormy conditions, containment and absorbent booms are ineffective during choppy seas. Approximately 4.1 million feet of booms have been deployed to date.
At least on a positive note, while hurricane can be very disruptive at the surface and along the shoreline, there is no wave action 5,000 feet below the surface. As long as the new pipe, which extends to the surface, is detached or secured during a storm, no further damage should be done to the well site and capping devices down below.
A Tropical Storm in the Gulf in mid-June?
While there have been a couple of minor concerns with tropical development over the past few weeks, there now appears the long-range first computer model's rendition of a tropical storm or hurricane in the Gulf of Mexico.
The GFS, or Global Forecast System, weather computer model is developing an area in the western Caribbean Sea during the second week of June. The model then brings that system into the Gulf of Mexico and strengthens it, just past the middle of the month.
http://www.accuweather.com/blogs/news/story/32333/bp-running-out-of-time-in-the-1.asp
In other commodities news, Australia’s proposed 40% mining tax is generating a major reappraisal of future projects. Below, Xstrata puts on hold the first of many projects, I suspect, if the tax actually gets passed and goes into effect.
Xstrata puts £3.8bn of projects on hold as row over Australian mining tax deepens
Swiss mining giant Xstrata has announced that it will suspend projects worth A$6.6bn (£3.8bn) in response to the Australian government's push for a new 40pc tax on mining profits.
By Bonnie Malkin in Sydney Published: 12:17PM BST 03 Jun 2010
Development of the "globally significant" Wandoan thermal coal project and the Ernest Henry copper mine, both in Queensland, have been put on hold indefinitely, putting 3250 jobs at risk. Xstrata said that a review had found that the proposed tax, which would be levied on returns on investment above 6pc, would mean that neither projects would be viable.
Mick Davis, the company's chief executive, said the Resource Super Profits Tax (RSPT) would slash profitability.
Our Australian management teams' analysis demonstrates that the RSPT would significantly impact the value and cashflows of both of these projects.
"The impact of the tax eliminates the net present value of the Wandoan (thermal) coal project almost entirely and substantially reduces the value of the Ernest Henry (copper) underground shaft project," he added.
The news is a blow to the Queensland economy, which relies heavily on the mining industry. Kevin Rudd, who is fighting for public support over the issue, said he was not surprised by the announcement.
Mr Rudd is engaged in a public relations war with the mining companies over the controversial tax. Figureheads of the industry have launched a multi-million dollar campaign to convince the public that the tax would cripple the industry, and the country's economy. In response, Mr Rudd has gone back on an election promise not to use taxpayer funds for government advertising, and launched a campaign of his own.
Responding to the Xstrata announcement, Mr Rudd said the threat was to be expected.
"I said at the very beginning of this debate ... that there would be ... threats of project closures, there would be projects threatened to be frozen, or frozen," he said.
"This is part and parcel of what will be the normal argy-bargy of a very tense debate. No mining company I've met so far has whacked up their hand and said they'd like to pay more tax."
The tax, which was announced in the budget last month but is yet to be passed by parliament, has prompted a savage backlash from the mining sector, the country's most valuable export industry, with global giants Rio Tinto and BHP Billiton both reviewing their Australian operations.
Owning a racehorse is probably the most expensive way of getting on to a racecourse for nothing.
Clement Freud
At the Comex silver depositories Thursday, final figures were: Registered 52.45 Moz, Eligible 67489 Moz, Total 117.34 Moz.
Day 24 of Hitler’s attack in the west that almost brought down western civilization. Dunkirk the evacuation ends, day 9.
Dunkirk & the Battle of France – Day by day 70 years on.
http://londonirvinereport.blogspot.com/p/dunkirk-battle-of-france.html
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today and all weekend, meet the Bilderbergers. The ultra elitist, super secretive Lords of the Universe, who meet at least once each year to exchange secret handshakes, spells, and other quaint rituals, before getting down to the job of rigging the world economy, and I suspect markets. In 2008 they met and dispersed home right before Merrill blew up two Bear Stearns hedge funds as time was called on the Greenspan bubbles, setting in motion the process that lead to the first bank run in the UK in over 150 years, and ended when Lehman Brothers blew up, requiring central banksters everywhere to socialize all the losses on to the taxpayers and penalize and crush the working poor. I wonder what they have in store for this summer, and if they’ll at least wait until the World Cup is out of the way, which starts next Friday.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
Adam Smith. The Wealth of Nations.
Bilderberg 2010: Plutocracy with palm trees
The shadowy global elite is meeting in Sitges – and Charlie Skelton is there, hoping for a new spirit of CamCleggian openness
Another year, another Bilderberg. The first "participants" (as the delegates are known) won't be arriving until Thursday, but already the Hotel Dolce in Sitges is buzzing with anticipation. This Catalan seaside town hasn't hosted an event as large and politically sensitive as Bilderberg since the legendary 2008 Foam Party at the Mr Gay Sitges awards night.
Last year, Bilderberg was held in Vouliagmeni, on the coast just south of Athens. The Greek minister of finance attended, the minister of foreign affairs, and the governor of the National Bank of Greece. A few months later, Greece was bankrupt and Athens was in flames. So … good luck, Madrid!
Police are already stretching their red stripy tape around the hotel, and zipping up and around the local roads in their squad cars, sniffing for trouble. I'm really hoping there's none to find. The Spanish are promising a beach party and an "awareness camp", with political discussion forums and meditation zones.
I plan to spend at least part of Friday sitting cross-legged in a campsite, sending beams of white light up the hill and into the hotel. Feel my love, Marcus Agius – Chairman of Barclays and senior non-executive director on the BBC's new executive board. Let it surround you, Queen Sofia of Spain. Don't fight it, president of the World Bank. You can't beat the love
It would be nicer if the interface between Bilderberg and the world could be softer – if it could turn an open face towards us, rather than the barrel of a machine gun. What I'm hoping is that this year, in the all-new CamCleggian spirit of openness and political transparency, any British elected official who attends the meeting – and I'm talking to you, Kenneth Clarke and George Osborne – will tell us they attended, tell us what they spoke about, and tell us what the next 12 months has in store. I don't think that's too much to ask.
-----For a long and luxurious weekend at the Dolce Sitges, relishing its "new and creative buffet concepts" (a table with food on it), prime ministers will mingle with European royalty, with various EU commissioners, with representatives from Goldman Sachs, Microsoft, AIB, Deutsche Bank, Chase Manhattan and Royal Dutch Shell.
They'll clink glasses with President Obama's special envoy to Afghanistan and Pakistan, Richard Holbrooke (he is confirmed for this year). And join the Friday night conga line behind the US treasury secretary (Tim Geithner went last year; he goes a lot). We can reasonably expect the head of the Federal Reserve, the president of the World Bank, the secretary general of Nato … they've all attended in the past and many will attend again. So yes, important it is; to think otherwise is painfully naive (see below for the usual "just a big boys' club" comments …)
The conference hotel may be perched above a golf course, and boast two ping pong tables, but this four-day event isn't about who is better at table tennis, Ken Clarke or David Rockefeller (it's Rockefeller). This is about big business, global financial strategy and the economic future of Europe … if indeed it has one.
And most importantly, this four-day event doesn't start until tomorrow – and continues all the way through the weekend – so if you're a PROPER journalist reading this, or a blogger, or simply a curious citizen of a Europe teetering on the edge, then come along. Please come. I'll buy you a Catalan beer. I recommend the Rosita. It's fruity but ballsy – not unlike the winner of Mr Gay Sitges 2008.
http://www.guardian.co.uk/world/blog/2010/jun/02/charlie-skelton-bilderberg-spain
http://www.dolce-sitges-hotel.com/
“"Today Americans would be outraged if U.N. troops entered Los Angeles to restore order; tomorrow they will be grateful! This is especially true if they were told there was an outside threat from beyond whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will pledge with world leaders to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well being granted to them by their world government."
Henry Kissinger in an address to the Bilderberger meeting at Evian, France, May 21, 1992.
Another weekend and Derby day at Epsom Downs on Saturday. Time to enjoy England’s glorious summer again. Trying to plan for the future in the era of failing fiat currencies and command economies, is worse than trying to pick the winner in tomorrow’s Derby. Tomorrow is also the close of the G-20 finance ministers meeting in South Korea, as they prepare for the full G-20 summit in Toronto. Next week, the Shanghai Cooperation Organization summit in Tashkent, and the World Cup opening in South Africa. How lucky can the world get. Have a great weekend everyone. More on the weekend blog over the weekend.
"The race is not always to the swift, nor the battle to the strong, but that's the way to bet."
Damon Runyon
Investec Derby Day
http://www.epsomdownsracecourse.co.uk/racing/investec-derby-day
Derby Day 1913.
http://www.historylearningsite.co.uk/derby_of_june_1913.htm
The monthly Coppock Indicators finished May:
DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.
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