Monday, August 27, 2012

Turkey's gold reserves rise 1/5 to 9.3 million oz/ Bundesbank President Widemann warns of debt monetization/ The Netherlands and Austria have had enough with Greece/ China's industrial profits plummet/

Good evening Ladies and Gentlemen:


Gold closed up today to the tune of $2.60 with the final comex closing coming in at $1672.40.  However the star of the day still belongs to silver closing up  43 cents finishing the session at $31.04.  However in the access market, the bankers are getting ready for a raid as they whacked our two precious metals:

Access market closing prices:  gold....$1663.60
                                               silver....$30.72

Our regulator clowns are nowhere to be seen!!

In physical news, Turkey announced that it had increased by 20% its reserves to  9.3 million oz or 289 tonnes of gold.  They are getting up there.  Generally Turkey is the gateway for purchases of gold by the Arabs.

In paper news, over the weekend we learned that the Bundesbank President Weidmann has warned about debt monetization by central banks as the war of words continue between the ECB and Weidmann.
China reported industrial profits were down hugely last month as their stock exchange, the Shanghai flounders.  Today, Europe stocks rose with the hope of Eurobond purchases by the central banks.
Dexia, the big Belgian, French bank saw another 16 billion euro loss which must now enter the balance sheet of both countries.  Portugal saw its revenue plunge another 3% and they are facing a budgetary deficit of 4.5% this year.  We will go over these and other stories but first.....

Let us now head over to the comex and assess trading in the futures market with respect to gold and silver.

The total gold comex OI rose by 6477 contracts from 410,679 to 417,156.  It seems that we have a few brave souls willing to take on the bankers. I wish them luck. The OI in gold has advanced smartly these past few days.  If you couple this fact with the high OI in silver, you can bet that the bankers are anxious for another raid.  The weakness in gold and silver equities have given us a strong hint of a raid tomorrow.  However the biggest clue is the whacking of the both metals in the access market.  So prepare for a raid tomorrow.

The August gold delivery month saw its OI fall from 131 to 99 for a loss of 32 contracts.  We had 35 notices filed yesterday so in essence we gained 3 contracts or an additional  300 oz of gold standing.  The September gold month saw its OI fall 40 contracts down to 1044.  The next official delivery month is October and here the OI rose 543 contracts from 27,836 to 28,379.  The estimated volume at the gold comex was atrocious coming in at only 66,825.  The confirmed volume on Friday was also weak at 109,400. To have a low volume day like Friday (109,400) and a high OI gain speaks volumes as to what is going on behind the scenes in gold.

The total silver comex OI saw its OI fall a bit from 129,496 to 127,108 for a loss of 2388 contracts.  Please note again how different silver plays as opposed to gold.  The August silver month saw it's OI falter by 79 contracts from 104 to 25.  You will recall that we had a very big notice on Friday of 103 contracts.  So in essence we gained 24 contracts or 120,000 oz of additional silver  standing this month. We are now 4 days away from first day notice which is this Friday.  Thursday night we will get first day deliveries and if I am up to it I will report on it for you.  On Friday, we get to see how many silver longs will stand for delivery in September.  In gold, September is an off month.

The estimated volume today was extremely large at 84,933 compared to Friday's level of 64,304.  However we did have several rollovers which aided the numbers.




August 27-.2012   August/gold







Ounces
Withdrawals from Dealers Inventory in oz
nil 
Withdrawals from Customer Inventory in oz
60,105.829 (HSBC,JPM,Manfra)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
275,095.21 (HSBC,JPM)
No of oz served (contracts) today
(7)  700 oz 
No of oz to be served (notices)
(92) 9,200
Total monthly oz gold served (contracts) so far this month
(9716) 971,600 oz
Total accumulative withdrawal of gold from the Dealers inventory this month
23,956.16 oz
Total accumulative withdrawal of gold from the Customer inventory this month


 
189,225.52

Finally, we had some activity in the gold vaults.

We had the following customer deposit:

i) 64,195.21 oz into HSBC
ii) 192,900.000 oz enter into JPMorgan. ( If it is physical that represents exactly 6,000 kilo bars).

total deposit:  257,095.21 oz

we had the following withdrawal of gold;

i) From HSBC:  128.60 oz
ii) from Manfra:  128.60 oz

iii) From JPMorgan:  59,848.629 oz

thus JPM brings in 192.900.000 oz of gold and withdraws out an odd lot of 59,848.629 oz
It seems that JPMorgan can do whatever it wants as the regulators are totally blind to all activities.

We had one tiny adjustment of 482.25 oz of gold which left the dealer to repay a customer at Manfra for a prior liability.
The total registered or dealer gold rests tonight at 2.754 million oz.


The CME notified us that we had 7 notices filed for 700 oz of gold.  The total number of notices filed
so far this month is represented by 9716 or 971,600 oz of gold.  To obtain what is left to be served upon our longs, I take the OI standing for August (99) and subtract out today's notices (7) which leaves us with 92 notices or 9,200 oz left to be served upon our longs.

Thus the total number of gold ounces standing in August is as follows;

971,600 oz (served)  +  9,200 oz (to be served upon)  =   980,800 oz or 30.51 tonnes of gold.
this is quite a showing for deliveries. Everyone wonders how they are settling with no gold entering as a deposit at the gold comex to the dealer.


August 27.2012:  silver  

Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 949,571.19 (Brinks,Scotia  )
Deposits to the Dealer Inventorynil
Deposits to the Customer Inventory958.1 (Delaware)
No of oz served (contracts)103  (515,000)
No of oz to be served (notices)25 (125,000)
Total monthly oz silver served (contracts)304 (1,520,000)
Total accumulative withdrawal of silver from the Dealers inventory this month310,045.28
Total accumulative withdrawal of silver from the Customer inventory this month6,823,394.2

The CME reported brisk activity inside the silver vaults.
We had one tiny deposit of 958.1 oz into Delaware.

We had the following silver withdrawal:

i) 275,267.04 oz into Brinks
ii) 674,304.15 oz into Scotia
total withdrawal:  949,571.19 oz

we had no adjustments

Thus the dealer or registered inventory rests tonight at 36.157 million oz
The total of all silver rests at 138.97 million oz


The CME reported that we had another good delivery notice day for silver to the tune of 25 for 125,000 oz
The total number of notices filed so far this month registers 304 contracts or 1,520,000.  To obtain what is left to be served upon, I take the OI standing for August (25) and subtract out today's delivery notices (25) which leaves us with 9 notices or 45,000 oz left to be served upon our longs.

Thus the total number of silver ounces standing in this delivery month of August is as follows;

1,520,000 oz (served)  +  45,000 oz (to be served upon)  =  1,565,000 oz.

Early in the month , I promised to you a 1 million plus in delivery notices.  We may end up close to 2 million oz.

end

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.


Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.


August 27.2012:



Total Gold in Trust

Tonnes:1,286.50

Ounces:41,362,338.79

Value US$:68,928,598,670.37






aug 25.2012:



TOTAL GOLD IN TRUST

Tonnes:1,286.50

Ounces:41,362,338.79

Value US$:68,930,858,673.82






aug 23.2012:


TOTAL GOLD IN TRUST

Tonnes:1,286.50

Ounces:41,362,338.79

Value US$:68,859,227,931.90






august 22.2012:



TOTAL GOLD IN TRUST

Tonnes:1,281.98

Ounces:41,216,874.37

Value US$:67,659,450,898.13







The GLD boys decided in their fine wisdom, not to add any more gold into the GLD.









And now for silver:  


August 27.2012:


Ounces of Silver in Trust314,292,483.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,775.59



aug 25.2012:


Ounces of Silver in Trust315,746,223.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,820.81




aug 23.2012:

Ounces of Silver in Trust314,583,226.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,784.63



august 22.2012:

Ounces of Silver in Trust312,935,630.400
Tonnes of Silver in Trust Tonnes of Silver in Trust9,733.39



aug 21.2012:


Ounces of Silver in Trust312,935,630.400
Tonnes of Silver in Trust Tonnes of Silver in Trust9,733.39


aug 20.2012:

Ounces of Silver in Trust312,935,630.400
Tonnes of Silver in Trust Tonnes of Silver in Trust9,733.39


With silver roaring, the powers to be decided to remove 1.454 million oz from the SLV inventories. Go figure!!


end 



And now for our premiums to NAV for the funds I follow:



Sprott and Central Fund of Canada. 


(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)



1. Central Fund of Canada: traded to a positive 5.0percent to NAV in usa funds and a positive 5.3%  to NAV for Cdn funds. ( Aug27-.2012)

2. Sprott silver fund (PSLV): Premium to NAV  rose to  4.25% to NAV  august 27 2012   :
3. Sprott gold fund (PHYS): premium to NAV rose big time  to 5.92% positive to NAV August 27 .2012). 

Note:  have you noticed that slowly Sprott's gold fund has been rising in positive to NAV. today it rests at its high point of 5.92%. .  Even now the Central fund of Canada is gaining in its positive to NAV. as we now see CEF at a positive 5.0% in usa and 5.3% in Canadian. Investors are seeking out physical supplies.  And for the first time in over a month, the premiums on the Sprott silver rose above 4% to 4.25%.  

It looks like England may have trouble in finding gold and silver for its clients.
It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.



end

Bill Murphy on GATA reports the following with respect to silver.  GATA is such a worthwhile group and it is well worth it for you to become members.  They have gone after the Fed with respect to the Freedom of Information on gold swaps etc.  This has been very costly so I urge you to become members and help them out.

(courtesy GATA and Bill Murphy..)




Speaking of Switzerland re the BIS, there is still the matter of JP Morgan having a big problem with their short silver position, according to one of our sources … which has been expounded upon here since early July. Don’t know when this scandal will surface, but it will and the ramifications of JPM’s sordid affair in silver are likely to fuel more buying by the bulls.


end


And now for some physical stories:

end

Turkey last month saw its gold reserves jump by 1/5.  Its total reserves are now 9.3 million oz  or 289 tonnes of gold.  Not only are the supplying the Arabs, but they are buying for themselves:

(courtesy Mineweb)


Turkey's gold reserves jump by almost a fifth



According to IMF data released Friday, Turkey's central bank raised its gold reserves to 9.3m troy ounces in July.Posted: Saturday , 25 Aug 2012http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=157661&sn=Detail


Turkey's gold reserves jump by almost a fifth

According to IMF data released Friday, Turkey's central bank raised its gold reserves to 9.3m troy ounces in July.
Posted: Saturday , 25 Aug 2012 
(REUTERS) - 
Turkey's central bank raised its gold reserves by almost a fifth in July taking its total holdings to 9.3 million troy ounces, data from the International Monetary Fund showed on Friday.
The IMF's monthly statistics report showed that Turkey's gold holdings rose by 18 percent or 1.4 million troy ounces.
The reserve is worth $15.5 billion based on a gold price of $1,670 per oz. Spot bullion hit four-month highs on Thursday.
Russia's central bank increased its gold reserves by around 0.6 million troy ounces last month, taking its total holdings to 30.1 million ounces, the bank said earlier this week.
Other central banks with significantly smaller reserves - Belarus, Sri Lanka, Moldova, Ukraine, Kyrgyz Republic and Kazakhstan - added to their reserves in July, but the increases were incremental. Kazakhstan, which purchased 45,000 troy ounces, was the largest.
Guatemala and Mexico sold a small portion of their stockpiles.
© Thomson Reuters 2012 All rights reserved





-END-



Dan Norcini is seeing some major short covering in gold and silver last week.  Speculators are rushing back into the precious metals. From my vantage point, I saw some short covering by some banks, but our two illustrious friends, JPMorgan and HSBC (from the COT report) continued to supply massive non backed paper.  Here is Dan Norinci with Eric King:



(courtesy Dan Norcini/Kingworldnews/Bill Haynes)

Major short covering in gold and silver futures, Norcini tells King World News

 Section: 
10:20a ET Sunday, August 26, 2012
Dear Friend of GATA and Gold:
In the weekly monetary metals market review at King World News, futures market analyst Dan Norcini reports major short covering in gold and silver last week as they broke out of their trading ranges. Norcini adds that speculators are rushing back into those markets. Also commenting is Bill Haynes of CMI Gold and Silver. An excerpt from the review is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

Reuters acknowledges the existence of GATA which is certainly welcomed.  The Reuters article was in reference to the new GOP platform on putting the USA back on the gold standard.  It will be difficult to engineer.

(courtesy Reuters/GATA)

Reuters finally cites GATA, but just to help disparage Republican tease about gold

 Section: 
Republicans Tease with Gold Standard, but Idea Seen Full of Bugs
From Reuters
Sunday, August 26, 2012
NEW YORK -- Republicans have all but guaranteed the backing of the "gold vote" this November by raising an idea that even the most bullish mainstream bullion boosters believe is unrealistic -- a return to the gold standard.
Gold prices would likely surge to $10,000 an ounce, the greenback's credibility would vanish, and global superpowers would risk a new trade war if Republicans were to restore the link between the U.S. dollar and gold that was severed 40 years ago.
But that isn't stopping Republicans from considering the idea, who will call for a commission to look at restoring a fixed value for the dollar, according to a draft of the party platform to be adopted at the Republican National Convention that begins on Monday in Tampa, Florida.
Gold has returned to the political discourse recently with the growing prominence of politicians like Ron Paul, the congressman from Texas who has said that he decided to enter politics on the day that President Richard Nixon shut the "gold window" in 1971, and with the Tea Party, which helped Utah pass a law last year to make gold legal tender.

But their support won't change the practical hurdles that would face such a wrenching shift in the currency system, one likely to have catastrophic effects on trade and growth.
To back the U.S. monetary base, currently at around $2.56 trillion, by the 262 million ounces of gold held by the United States government means bullion prices would soar as high as $10,000 an ounce, Capital Economics strategists said.
A sudden appreciation of the dollar's value would crush the greenback's credibility as the world's reserve currency and severely undermine the international trade balance.
"It is hard to conceive of the circumstances under which no one would want to hold any dollars," they said.
The World Gold Council, a trade group funded by gold mining companies to promote the many uses of bullion, including by investors, deems such a move "unlikely," citing international disagreement over the converting price and the fact that annual growth in gold stock may not match the monetary base.
Even the Gold Anti-Trust Action Committee (GATA), a group dedicated to exposing what its founders say is a conspiracy by Wall Street banks, the Federal Reserve, and others to depress the price of gold and silver, doesn't see it happening.
At best they're hoping that the convention will provoke an audit of U.S. holdings, proving GATA'S claim of a conspiracy.
"It really would be something for the Republican platform to call for a truly independent audit of the Fed and U.S. gold reserves," said GATA's chairman, Bill Murphy, a former Boston Patriots wide receiver who worked as a commodity broker on Wall Street before founding GATA in 1998.
Despite widespread disbelief, a reintroduction of the gold standard has gained more support in recent years amid an intensifying debate over how to tackle U.S. debt levels and spending, and increased global anxiety over the stability of fiat currencies -- a government-issued currency whose value is based on the issuer's guarantee to pay the face amount on demand.
"The idea is that it forces the U.S. to live within its means," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott, which has around $54 billion in assets under management. "Think of it as a person with a debit card rather than a credit card. The debit card holder can spend only what he or she has in the bank."
Governments abroad are also renewing their interest in owning gold as part of their reserves due to economic uncertainty. World central banks as a group became net buyers in 2010 after two decades of net sales. Official-sector purchase is on track to rise to a record high this year, WGC said.
The world official sector currently holds about 29,500 tonnes, or 17 percent of the world's above-ground stocks. This compares to 19 percent held by investors and nearly half of the stocks made into gold jewelry.
The Republican proposal is reminiscent of a Gold Commission created by President Ronald Reagan in 1981, 10 years after President Richard Nixon broke the link between gold and the dollar during the 1971 oil crisis.
Reagan's commission ultimately supported the status quo, saying "restoring the gold standard does not appear to be a fruitful method for dealing with the continuing problem of inflation."
In 1973 the U.S. government raised the official dollar price of gold to $42.22 per ounce. A year later, Americans were permitted to own gold other than just jewelry.
The Congressional Budget Office warned on Wednesday that massive government spending cuts and tax hikes due next year will cause even worse economic damage than previously thought if Washington fails to come up with a solution.
Instead of planning for a gold standard return, the Republicans are trying to placate supporters at next week's convention and to gain more firepower in the party's promoting responsible U.S. fiscal and monetary policies in the upcoming federal elections in November, analysts said.
Minutes from the Federal Reserve's latest meeting suggests the U.S. central bank will adopt stimulus fairly soon unless economic conditions improve dramatically. Some expect Fed Chairman Ben Bernanke could use his speech at the central bank's gathering in Jackson Hole, Wyoming, at the end of this month to send a strong message to markets.
"Examining a return to the gold standard is one avenue to show the public and markets a level of seriousness about the U.S dollar, monetary policy and the budget deficit," said Jeffrey Wright, managing director of Global Hunter Securities.

end

Here is the audio of Kingworld news interviewing the legendary Eric Sprott:

(courtesy Kingworldnews/Eric Sprott)


Full audio posted of King World News interview with Eric Sprott

 Section: 
8:24p ET Sunday, August 26, 2012
Dear Friend of GATA and Gold:
Technical problems delayed the posting of the full audio of the latest King World News interview with Sprott Asset Management CEO Eric Sprott, but the audio is now posted at King World News here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end


Here is a story submitted by GATA's editor Chris Powell on the huge farewell rally in Tampa for Ron Paul:

(courtesy Chris Powell)

Ron Paul feted in raucous six-hour farewell rally in Tampa

 Section: 
By Deborah Charles
Reuters
Sunday, August 26, 2012
TAMPA, Florida -- Thousands of die-hard Ron Paul supporters paid no heed to Tropical Storm Isaac on Sunday and held a marathon rally in Tampa to celebrate the 77-year-old congressman, who gave a farewell speech of more than an hour about his libertarian views.
As Republican National Committee officials scrambled to adjust the storm-shortened schedule for this week's convention to nominate Mitt Romney for president, Paul followers gathered across town at the University of Southern Florida's Sun Dome.
Paul, who is retiring from Congress this year after a colorful career and three failed White House runs, looked embarrassed as he got a prolonged standing ovation from an ear-splitting crowd as music thumped "Ron Paul, Ron Paul" in the background.
Paul, who is retiring from Congress this year after a colorful career and three failed White House runs, looked embarrassed as he got a prolonged standing ovation from an ear-splitting crowd as music thumped "Ron Paul, Ron Paul" in the background.
He praised his supporters for backing his vision of reduced government and increased personal liberties and urged them to continue the movement even now that his presidential bid had ended.
"The convention is very important this week. ... (But) there's something even more important than all that and that is the cause that we're leading, the cause for liberty and the attention that we're getting right now," said the Texas congressman.
In his last speech of the long campaign season, Paul gave a rambling, 65-minute discourse that jumped from one topic to another and made reference to novels and history. But the crowd stayed engaged, chanting "President Paul, President Paul" and cheering his belief government should be cut.
Filling seats up to the basketball arena's rafters, the sign-waving crowd had already spent most of the five hours before Paul spoke listening to speakers bashing mainstream Republicans, the Federal Reserve and calling for an end to U.S. military involvement overseas.
A favored topic was getting rid of the Federal Reserve Bank. South Carolina state Sen. Tom Davis got the crowd revved up into a frenzy when he criticized the central bank chairman. "Ben Bernanke is a traitor and a dictator," Davis said to roars from the crowd as they stood and stomped on the floor.
Paul told The New York Times this weekend that he was not speaking at the convention because he did not want to give Romney a full-fledged endorsement. His son Rand, a U.S. senator from Kentucky who is seen as the future of the "Ron Paul Revolution," is speaking at the convention and has supported Romney.
Republican officials and the Romney campaign were worried that Paul's often-rebellious supporters would stage an unlikely attempt to have him nominated at the convention, and distract attention from the party's message of defeating President Barack Obama on November 6.
But Paul backers, a unique combination of conservatives, the young, retired members of the military and independents, have been placated in part by the party putting ideas like an audit of the Federal Reserve -- something he has long supported -- onto the party platform.
Nevertheless, Paul and several of the rally's speakers Sunday afternoon blasted the national committee for changing rules to make it tougher for an outsider like him to get delegates to become a candidate with a realistic chance of advancing in the nominating process.
Paul failed to win any states in this year's Republican primary and caucuses votes but gathered up to 200 delegates, enough to cause disruption at the convention.
Paul's message of sharply reducing the role of government, scrapping the Federal Reserve and ending the U.S. military presence overseas resonated this election cycle more than in previous years. It was seen as attractive to conservatives and some disillusioned Democrats in times of a deep budget deficit and war weariness.
Paul joked about not being asked to speak at the convention.
"Today I was very excited. I got a call from the RNC," he said. "They said they changed their mind. They were going to give me a whole hour and I could say anything I want -- tomorrow night."
He paused to let the crowd realize convention events had been canceled for Monday night because of Tropical Storm Isaac. Then he said: "Just kidding, just kidding."

end


Over the weekend, Weidmann describes debt monetization as nothing but an addictive drug. Once you rely on central banks buying of debt, there becomes the need for more and more until the body (the economy) breaks down:

(courtesy Bundesbank's Weidmann/zero hedge/Spiegel/)


Bundesbank's Weidmann Warns: Debt Monetization Is An Addictive Drug

Tyler Durden's picture




It is one thing for various anti-Central Planning (and thus central bank) outlets to warn, over 3 years ago, that easy monetary policy is merely an enabling substance, and is addictive as any drug to a dysfunctional political establishment which is more than happy to avoid fiscal prudence if monetary policy is readily available to delay the inevitable day of reckoning when monetizing the debt will no longer work. It is a different matter entirely when the head of the world's only solvent central bank -  the German Bundesbank, which happens to be the biggest guarantor of that other mega hedge funds the ECB, and which of all developed economies also happens to have had the closest recent encounter with hyperinflation (unlike all the "other" theoretical experts who enjoy talking extensively about matters they have zero experience with). In an interview with German Spiegel magazine, Buba head Jens Weidmann, once again has loudly warned what as recently as 2009 very few dared to even think: namely that rampant and gratuitous deficit plugging using central bank debt issuance, and thus explicitly monetizing the debt, "can be addictive as a drug." Obviously, like any drug overdose, the aftereffects are always fatal.
Bundesbank President Jens Weidmann has strongly criticized of the plans of the European Central Bank to launch a new program to purchase government bonds. "Such a policy is for me too reminiscent of public funding via printing," Weidmann warns in an interview with SPIEGEL. "In democracies it is parliaments that should decide on such an extensive pooling of risks, and not central banks."

If you buy the Euro-banks government bonds of individual countries, "the papers end up in the balance sheet of the Eurosystem," Weidmann warns: "Ultimately, the taxpayers of all other countries pay." The basic problems are not solved in this way, the Bundesbank president - on the contrary: "The blessing of the central banks would raise persistent monetization demands," said Weidmann in SPIEGEL. "We should not underestimate the risk that central bank financing can be addictive like a drug."
Is Weidmann insane? After all, central banks are known to always end their futile unconventional and massive monetization programs on cue and when promised, because they are always so well attuned to the threat of runaway inflation when the assets of global cental banks account for 30% of global GDP. Naturally, this explains why after two failed Quantitative Easing episodes, and two additional Curve shaping, flow-facilitating exercises by the Fed, there is not even a peep of more NEW QE on the horizon - after all Ben has certainlylearned his lesson that the Fed is powerless to do anything when the political authorities are bickering and will do nothing to reach a consensus until the market is in free fall mode, as it was in August 2011 when the only catalyst that led to a debt ceiling hike was a market plunge.
Oh wait...
Spigel continues. 
Weidmann also provides for the independence of the ECB at risk. At second glance, to trap it in the plans "amounts to concerted actions of government bailouts and the Federal Reserve. This creates a link between fiscal and monetary policy." He wanted to "avoid, that monetary policy is under the dominance of fiscal policy."
Does the BUBA head see an imminent inflationary threat? No, and thank god. Because if the time comes that real inflation does finally arrive (as opposed to soaring prices only in things that "nobody" needs like food and energy) and the major central banks have to some how offload about $20 trillion in asset between them, then say goodbye to the status quo.... and any fiat reserve status. 
Weidmann does not see an immediate threat of inflation. "But if the monetary policy can be pegged as comprehensive political problem solvers, the central banks' real goal is threatening to drift more and more into the background." Weidmann warns therefore against commitments of the ECB to "guarantee the whereabouts of member countries in the euro zone at any price". When deciding on a possible exit of Greece "must surely play a role that no further damage is done to the trust framework of monetary union and keep the economic conditions of the assistance programs credibility."
All of the above, and the fact that German now singlehandedly calls all the shots in Europe, also explains why the ECB's latest rumored actions have slipped into the twilight zone: bond yield thresholds, though not just any bond yield thresholds, but of dodecatuple "secret" type which are completely not public (and thus do not hinder reelection chances): in other words,Schrodinger monetary policy, where CBs get the effect of the policies they (but not Germany) would like to enact, but are terrified to launch the cause.
According to recent SPIEGEL information, European central bankers would establish interest rate thresholds above which the ECB would intervene with bond purchases. This would ensure that interest rates on government bonds issued by countries such as Spain and Italy do not rise above a certain level. This proposal was, however, missing some central bankers' and the federal government's approval. A spokesman for Finance Minister Wolfgang Schaeuble called the discussed variant as "burdened with problems." Therefore, some central bankers argue now apparently for the caps to be set internally, and remain unpublished. Some central bankers would prefer this approach to a recently discussed official ceiling, the newspaper reported.

The Governing Council will decide at its 6 September meeting what the promised bond purchases could look like.
Spoiler alert: they will look like nothing, because the ECB willnot go ahead and enact any bond caps, secret or otherwise. Unless they want to conduct monetary policy in the absence of Germany, who have about had it with the Goldman alumnus' attempt to make European monetary policy merely an add on to Goldman year end bonus policy.
Finally, for those who think the US is immune from any of this, look at the chart below. It shows that most recently, a whopping 40% of US funding needs were "met" through debt issuance.




end



In the following commentary, Merkel defends Weidmann on the monetization of debt.  Merkel says that she will OK this as long as there is a fiscal treating and budgets are moved to Brussels, the head of the EU.

We also learn that Michael Noonan, Finance Minister of Ireland is demanding the ECB to make public a secret letter issued to Ireland's former Finance Minister Brian Lenihan by the ECB's Trichet.  They demanded that Ireland must go along with the bailing out bondholders and if they did not agree, there would be no money coming into the emergency ELA.  Noonan believes this is nothing but blackmail.

(courtesy zero hedge)




With Vacation Over, Europe Is Back To Square Minus One: Merkel Backs Weidmann, Demands Federalist State

Tyler Durden's picture




Earlier today we showed for the nth time that with insanity and insolvency ravaging the old continent, at least one person has the temerity to avoid sticking his head in the sand of collectivist stupidity and denial. That person is Bundesbank head Jens Weidmann, who until now may or may not have had the backing of Germany's elected leader, Angela Merkel. Moments ago it became clear whose side Merkel, who recently came back from vacation and is set to spoil the party that the (insolvent) mice put together in her absence, is on. From Reuters, who quotes Merkel in her just released interview with German ARD: "I think it is good that Jens Weidmann warns the politicians again and again," Merkel said. "I support Jens Weidmann, and believe it is a good thing that he, as the head of the German Bundesbank, has much influence in the ECB."
Merkel also has some additional words about the Grexit.
Merkel allies, particularly the Bavarian Christian Social Union (CSU), have stepped up criticism of Greece in recent weeks, with senior CSU lawmaker Alexander Dobrindt saying at the weekend that he expected Athens to be out of the euro zone next year.

Last week, Greek Prime Minister Antonis Samaras visited Merkel in Berlin and issued an impassioned plea for German politicians to tone down their rhetoric, saying it was making it impossible for Greece to win back confidence and launch its privatizations drive.

Merkel said she believed Samaras was making a serious attempt to turn Greece around and issued a similar warning to her fellow politicians in Germany, saying Europe was in a "very decisive phase" in its three-year old crisis.

"My plea is that everyone weigh their words very carefully," she said.
Which she certainly did when Samaras came to Germany begging for more money. She very definitely said absolutely nothing. What she did say, is that after all the posturing, masquerade, and outright lies, Germany now demands precisely what it demand months ago, a year ago, and when this whole European implosion started. A European Federalist state. Againfrom Reuters:
German Chancellor Angela Merkel wants an EU 'convention' to draw up a new treaty for closer European political unification to help overcome the bloc's sovereign debt crisis, weekly Der Spiegel said on Sunday.

Germany, the European Union's biggest economy, has long argued for more national competences, including over budgets, to be transferred to European institutions but faces strong resistance from other member states.

Merkel hopes a summit of EU leaders in December can agree a concrete date for the start of the convention on a new treaty, Spiegel said.

The idea, which Spiegel said Merkel's European affairs adviser floated at meetings in Brussels, recalls the 100-plus strong convention of EU lawmakers set up in 2001 - inspired by the Philadelphia Convention that led to the adoption of the U.S. federal constitution - charged with the task of preparing a European constitution.

The charter that finally emerged was rejected by French and Dutch voters in 2005 and it became instead the basis of the EU's Lisbon Treaty which is still in force today.

Many member states, recalling the lengthy disputes and setbacks that preceded the Lisbon treaty's entry into force, are reluctant to embark on another prolonged process of institutional reform.
Which is funny because as we were reminded earlier today by the Independent, it was none other than Europe, i.e. the Troika that forced Ireland into a bailout courtesy of a secret letter that is about to be unsealed (one can hope). Why: so European bankers aren't forced to mark to market the value of their insolvent loans either in Ireland or anywhere else.
Finance Minister Michael Noonan has said a secret "threatening" letter from the European Central Bank to his predecessor Brian Lenihan, which forced Ireland into the troika bailout in 2010, should now be released.

The letter has to date remained top secret and both the Department of Finance and the ECB have repeatedly refused to make it public.

Now Mr Noonan has said he favours it being made available, putting him on a potential collision course with the ECB, which is adamant that it remain "strictly confidential".

The controversial letter from the then ECB president Jean Claude Trichet to Mr Lenihan dated November 19, 2010, is said to have threatened the withdrawal of emergency liquidity assistance (ELA) to Ireland if the then government refused to accept the bailout, that included a ban on burning bondholders.
It is these same people that are now expected to not only continue footing the bill for the banker bailout, but to hand over their sovereignty, together with rest of insolvent Europe, over to Berlin, because the alternative is once again simply "unspeakable" (thank you Hank Paulson and 3 letter term sheets). Maybe not:
Some countries such as Ireland would have to hold a referendum on any new treaty and the process would increase pressure in Britain - where opposition to closer EU political union runs high - for a complete withdrawal from the EU.

However, Germany believes a much closer fiscal and political union - with EU oversight of national budgets - is needed to ensure that member states get their public finances fully in order and to restore stability to the euro currency.
All of the above summarized in one word: "volatility" which is what is about to come back to Europe with a vengeance as the fundamental problem at Europe's core is made all too clear once more: 17 countries in the "Union", 17 different languages, 17 election cycles, and 17 different rates of going broke, all of which, however, are converging toward unity with each passing day.




end

Here is Mark Grant giving us a lesson in how to interpret the various phrases coming out of Europe:

It is self explanatory:

(courtesy Mark Grant)





The Up-To-The-Minute Guide For Understanding Europe

Tyler Durden's picture



From Mark Grant, author of Out of the Box
THE UP-TO-THE-MINUTE GUIDE FOR UNDERSTANDING EUROPE
From the Merriam-Webster Dictionary: "To express in different terms and especially different words: Paraphrase (2): to express in more comprehensible terms: Explain, Interpret"
EUROSPEAK:
“I hail, I congratulate”—little or no meaning; words spoken by every politician in Europe when someone does something, anything and has an actual value of about zero. A reference to Roman times where Caesar hailed the conquering heroes which is a species that has been extinct on the Continent for some years now. 
“I (we) will do everything to save the Euro”---we got ourselves into this mess and we will try to do something/anything to get out of it; rhetoric, hyperbole and more zero value talk. I am the head of the European Central Bank and this sentence was found in Chapter 18, paragraph three, “what to say to the Press when you have run out of things to say.” Chapter 18, paragraph four, by the way, is “divine right” and “the full support of God” so you may expect this shortly.
“End corruption, a more efficient tax system, sell government assets, debt to GDP ratio by (pick a date/any date), stop government waste, just asking for a delay, need more time, extension”---these are all Greekspeak for “Give us more money” and no other meaning should be appended to these phrases. These are all terms of the first sentence and then since any/all might be granted the second sentence will be since this or that has been granted that more money will be required to get there (about $50 billion at the present time).
“The debt to GDP ratio (pick a country/any country) will be X by the year (pick a year/any year)” has no bearing to anything in the real world and is not a mathematically based conclusion. These statements are manufactured by the IMF and created in the special secret room there built by Walt Disney & Co.
An example of practical usage:
“Christine what number should we use this time?”
“I don’t know Angela what does Mario think?”
“To which Mario are you referring Christine?”
“Do you think it really matters Angela?”
“Where is the Ouija Board anyway?”
“We are waiting for the Troika report.”---Of course we have seen the Troika report. It makes you want to throw up. We have everyone from the Finance Ministry to the janitor looking at it trying to figure out if there is anything at all that can be spun positively without invoking laughter in the Press. We have sent it to every government on the Continent and so far the best suggestion has been to use it for wallpaper in the lieu. We are using the computer at the Particle Accelerator in Cern, Switzerland in hopes that they can find something and the process time ends October 16 so we are waiting until then to make any announcements.
“We will decide after we have seen the Troika report.”---Is it cheaper to give them another $50 billion or tell them “no more money?” If we give them more money they will ask for another $50 billion in three months and we have elections coming up. We must balance the economic cost against the political cost. I like being Chancellor and don’t intend to lose the job because of the idiots in Athens.
“It is a great victory for Europe…we are not negotiating with either the IMF or the EU…the money is for the banks and not the country…we have valued the Real Estate correctly…the numbers are accurate;” all from the Prime Minister of Spain. Here we have proof positive that Spain is a major drug producing country. They are not only producing various white powders but strong hypnotics, hallucinogens and other mind altering substances. Don Quixote has been found in Valencia and he is living with Timothy O’Leary and Elvis has returned to the house.
“We will raise the tax on the rich to 75%...we will increase Real Estate taxes for anyone that has had some success...all new taxes will be retroactive…everyone making any money will have to give most of it to everyone else so they can sit in the cafes and enjoy the croissants.” The President of France once took a course in economics at the Acadamie du Comedie but flunked it which is not public information and protected by the French courts. It turned out that the professor was from Marseilles and Hollande could not understand his accent. “Let them eat cake” worked for Marie Antoinette and it might work again. Where is Robespierre when we need him? Find Madame Defarge and offer her the Finance Ministry. 
“There will be no Referendum in Britain.” I know the country is a democracy but as Prime Minister this is an inappropriate question. The people in Dover and Manchester can’t spell Referendum much less understand what it means. The British people hated taking Latin in school and it is bad politics to remind them of the experience. I won’t get invited anymore to the fancy dinners in Brussels and our laws don’t allow for Champagne on the dinner vouchers. Britain doesn’t make any decent red wines and I will be cut-off and have to suffer. I am not a “Bangers and Mash” kind of chap.
“Mark Grant is writing mischievous comments.” This was found on the official government website of Ireland eighteen days before they went bankrupt. This phrase may soon appear on the Spanish website (“Mark Grant está escribiendo comentarios maliciosos”) and after that perhaps on the Italian website (“Mark Grant scrive commenti maliziosi”). The translation of “mischievous” here is quite tricky.  It means reading the writing on the wall, utilizing the complex mathematical propositions of addition and subtraction, having a rational basis for a conclusion and stating the obvious when those in power do not wish to hear it. [Please refer to “Eurospeak for Foreign Dummies” for a further explanation.]
“I want Greece to remain part of the Eurozone…”---Merkel, Hollande, Rajoy, Cameron, Kenney, Coelho, Katainen et al. This phrase is taken from the movie, “The Wizard of Oz,” and is generally attributed to Judy Garland and her famous song, “Somewhere over the Rainbow.”
Someday I'll wish upon a star
And wake up where the clouds are far behind me.
Where troubles melt like lemon drops,
High above the chimney tops,
That's where you'll find me.
"We are not asking for more money. We are asking for air to breathe as we plunge to the depths."
              -Greek Prime Minister Antonis Samaras on August 24, 2012
Here we have the new revival, the newest rendition of the Trojan horse; the play made famous by Odysseus, the famous Greek actor. It is a time tested Athens stratagem where, having gained admission, Pandora’s Box is unleashed. You will recall Virgil's famous line "Timeo Danaos et dona ferentes" (I fear Greeks even those bearing gifts). So it is not all Greek to you; the correct translation of Mr. Samaras’ comment is “Knock, Knock; Please let me in.”
"I don’t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda. We have to respect Greek democracy…
and
"When it becomes serious, you have to lie."
                 -Jean-Claude Juncker
No translation necessary

end





The best commentary of the day belongs to the Mark Grant's second offering called the Tempest has Left the Teapot:

His first topic of discussion is Greece.  Greece has asked for more time and in so doing it needs more money so as to continue functioning in the Euro. France and Germany will always state that they want Greece in the Euro.  However Greece must abide by the terms and there will not be any more money advance. If they do advance money, it will disappear faster than you can say boo. Any advanced money only kicks the can down the alley for a few months.  Sooner or later, the alley runs into a dead end. The German populace have had enough and over the weekend, the Dutch Prime Minister stated that he has had enough as well.

The second topic is Dexia and today they announced another 16 billion euros of losses.  This must be shared:  60.5% France, 36.5% Belgium and 3.0% Luxembourg.  As Mark Grant pointed out on many previous occasions on this subject, many contingent liabilities are now coming to the surface and rearing its ugly head on this huge bank.  The problem here of course, is that the debt now must be added to the central bank of France and Belgium's liabilities.

The third topic is Portugal.  These guys were one of the first to be bailed out.  This year they were scheduled to have a positive revenue of 2.5%.  Well sorry to tell you folks, but they again came in with a negative 3.5% growth in revenues.  Unemployment in that country hovers around 15%. With a budget deficit in the neighbourhood of 4.5 billion euros, these guys will need another bridge loan of about 3 billion euros.  Portugal's largest trading partner is Spain.

Next Grant talks about China hitting the wall  (see below)
Sales of mining equipment have come to a complete standstill. As well, the coal industry has come to a complete halt.

Grant advises us to stay away from companies that have a major export to China.

and finally, we talks about the Dutch Prime Minister and the Austrian Finance Minister who stated over the weekend that they have had enough with Greece.

This is your important read of the day..

(courtesy Mark Grant/ Out of the Box and onto Wall Street)





The Tempest Has Left The Teapot

Tyler Durden's picture




Via Mark J. Grant, author of Out of the Box,
The Greasy PIIG
 
No, not some new Barbecue restaurant in Kansas City or Memphis but our old favorite haunt including and surrounding Athens. In the last few days they have trooped around Europe, Aegean Fiddler’s hat in hand, asking for more time to implement their agreed upon austerity programs. That is what they claimed of course as it was one more fabricated tact to get more money. It is nothing other than that.
 
 
 
The strategy was to ask for an extension of time in sentence one and then follow up in sentence two with the argument that since they needed more time that they would need more money until the various programs were implemented. Implementation, however, is obviously not a word to be found in the Greek language or if it is then it is to be found under the heading of “old Greek legend” or “tales of brave Ulysses” or “myths of the Greek gods.”
 
 
 
Merkel and Hollande both had the same retort to all of this pretense which was that they wanted Greece to remain in the Eurozone but that there would be no extensions and that Greece had to stick to the bailout agreement. Consequently no second sentence was spoken which was the purpose of the European walk about and so the mission was a failure. There will never come a time when Berlin or Paris will say anything else other than they want Greece to remain in the Eurozone; so never expect it. The showdown will come over money and whether it will be given or not which will then either be one more bundle of Euros down the rabbit hole where its value will decrease like a shrinking Alice or the end to the handout which would force the return of Greece to the Drachma. All of this will ostensibly be decided sometime in October after the Troika report except they already have the report in all but its formal version and they are agonizing between tossing good money after bad or turning over one more losing hand in resignation. This card game cannot continue ad infinitum and it is now really a question of the politics in Germany and what that will force Ms. Merkel to do. There is increasing displeasure in Germany with this little party and the political pressures may well force an end to this game of charades where the debt to GDP ratio of Greece is thought of as anything other than an unmitigated disaster and where bills cannot be paid along with the promises. Over the weekend the Netherlands Prime Minister said he was done and the German Finance Minister has said he was done so we shall all watch how long the Faustian deal with the Devil remains in force.
 
 
 
The time has come to prove by deeds
 
that man will not quake before the pit where fantasy
condemns itself to tortures of its own creation
 
when he advances to the narrow passageway
 
about whose mouth infernal flames are blazing
 
Approach the brink serenely and accept the risk
 
                   -Goethe, Faust 57
 
 
 
Dexia
 
The carnage continues. I recall vividly when the Prime Minister of Belgium stated that Dexia would only affect the debt to GDP ratio for Belgium by one percent. He did not count the contingent liabilities in his calculation of course and I called him out on his projection at the time stating that it was some Belgian waffle type of fantasy. Now the fantasy is proving itself to be just that as the losses continue to mount and are $16 billion in the last eighteen months which will have to be borne by Belgium (60.5%) and France (36.5%) and Luxembourg (3.0%). The guarantees for Dexia, I predict, will continue to rise and will exceed more than $125 billion and perhaps much more than that. As contingent liabilities become real losses they will hit the balance sheets of these three countries and I think that both Belgium and France will be forced to take material hits to their ledgers which will cause both downgrades and increased costs of funding. I would be avoiding or selling the credits of these two countries now.
 
 
 
Portugal
 
I have been saying for about a year that Portugal will be forced back to the PIIGS’ trough and you may expect it now to come sooner rather than later. The projections for Portugal during the past year have been whims and fanciful merriment meant to lull the watchers into sleep and they have been fairly effective. Now, however, the real numbers begin to roll out and they are dismal. Portugal, the EU and the IMF had projected a revenue increase of 2.6%, which I have often disputed, and Portugal finally reported out actual receipts that were -3.5% as the economy continued to contract and as unemployment hit 15%. With a deficit target of 4.5% Portugal will now need to find another $3.5-4.0 billion to bridge the gap. Much of the projections for Portugal were based upon ending the 13th and 14th month salary bonuses but this was declared unconstitutional and was never corrected by the legislature. The Troika arrives today in Lisbon and we are already hearing the echoes of Greece calling for more time, extensions and diminished austerity measures. As is the case for Greece you may expect a second sentence which is the asking for additional funding. Expect Portugal to be back in the headlines soon.
 
 
 
China & the American Infection
 
Prepare yourself and not just for some news from a far off land but for data that will absolutely affect the United States and Europe. China is hitting the wall and whether it is caused by Europe or of their own making; the wall is no less real. Caterpillar, one of America’s bellwether companies, who relies upon China for 25% of their revenues is going to be one of the affected companies and in a major fashion. Their sales of mining equipment have plunged the most since January 2009 and this is the fifteenth month of decline. Sales of machinery for the building and construction industries are also in a serious slump. In the coal industry, now at a virtual standstill, machinery sales were off 53% in July and the total fixed income asset investments in this sector have plummeted from 19% to 3% giving you some idea of the severity of the situation.
 
 
 
If you are smart you will take a look at your holdings and note which companies receive a significant portion of their earnings from China. I make no specific recommendations but I point to any and every company where the Chinese revenues make up a meaningful part of their corporate revenues and earnings and factor in a meaningful decline because that is what I think will be occurring. I believe the decline will take place across all sectors and all industries as the growth engine that has driven so many of the markets grinds to much lower levels which I have projected to be around 4.0% and may be worse than that. We are facing a Europe in recession and China perhaps approaching one several quarters out and here is one more drag upon the United States that I think will drive the world into a global recession by the end of the first quarter of 2013.
 
 
 
Genug!
 
This is German for “Enough” and I think this will be the operative word for the rest of this year. The Prime Minister of the Netherlands over the weekend already used the Dutch word “Genoeg,” which is their equivalent word, in reference to Greece as he stated clearly and unequivocally that the Netherlands would not fund any proposed third Greek bailout. The entire concept of the protection of Firewalls has failed with the forthcoming capitulation of Spain proving that some sort of supposed protection against speculators does nothing to cure or help the nations that were meant to be protected. Spain will require around $350-400 billion in my view to right itself and the problem is actually squared as a country receiving money then can no longer contribute to the funding of other countries and so the burden then rests upon Germany, France and Italy with Italy like to be the next nation in line for assistance. Then Germany and France with a combined GDP of $6.2 trillion just do not have enough capacity to fund all of Europe without serious downgrades and vastly increased costs of funding. The first instance reaction to move capital out of the troubled nations and into the strongest of the core nations in Europe will be followed by a capital flight from even these countries as the storm clouds darken and as the financial tempest begins in Europe.
 
 
 
Aug. 26 (Bloomberg) -- Austrian Finance Minister Maria Fekter says donor states and Austrian taxpayers have reached the “uppermost limit” of their capacity to absorb bailouts for other nations.
 
 
 
I advise you to take note of the political opposition that is coalescing in Europe. The cry across the Continent, in various languages, is “Enough.” All of the grand designs speculated about for the ECB rest upon the use of the EFSF and/or the ESM as stated specifically by Mr. Draghi. Over the weekend the Bundesbank was absolutely critical of any such plans and they were supported by several statements made by Ms. Merkel. It is now dubious, in my view, whether Austria, the Netherlands, Finland and perhaps Germany would support not pledges but more actual money to be used for Greece, Portugal and Spain. The rub is on and the size of these potential programs will, without doubt, affect the funding nations in Europe along with the nations that need the capital. Muddling is no longer possible, delay has run out of road, postponement is no longer an option as recession grips the Continent and as each solvent nation seeks to defend itself.
 
 
 
“Our revels now are ended. These our actors,
 
As I foretold you, were all spirits and
 
Are melted into air, into thin air:
 
And, like the baseless fabric of this vision,
 
The cloud-capp'd towers, the gorgeous palaces,
 
The solemn temples, the great globe itself,
 
Yea, all which it inherit, shall dissolve
 
And, like this insubstantial pageant faded,
 
Leave not a rack behind. We are such stuff
 
As dreams are made on
 
                       -William Shakespeare, The Tempest

end

Bruce Krasting weighs in on the Greece matter.  In order for the Euro to survive, Greece must leave:

(courtesy Bruce Krasting)



Draghi Needs Greece Out to Succeed

Bruce Krasting's picture





Merkel said that Greece was going to stay in the Euro on Friday:

.

Hollande said the same thing on Sunday:


Merkel added that all of the folks who have a seat at the table just shut up about Greece (This was a weird one to me):


I don’t get it.

To “fix” Greece, Greece must decouple from the Euro. There is no other option. It is only a question of when, how much it will cost and whom will pay. The EU deciders know that this is true; they just don't admit to reality in public. An important question to ask:

What are the implications to Mario Draghi/the ECB of “Merkande’s” public support for Greece staying with the Euro (and dying) for a few more years?

Draghi changed the game on 8/2 when he put the issue of “convertibility” (the risk of a return to legacy currencies) on the table. Markets have been reacting ever since he drew a line in the sand with these carefully chosen words:

Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner. The euro is irreversible.

Draghi shouts out:

“Don’t worry! No current member of the EU will leave! There will be no Euro breakup!

How can Mr. Draghi eliminate the risk of convertibility in the EU when the weakest sister in the EU has to be kicked out for its own good? “He can’t”, is the answer. Not when everyone (including the IMF) agrees that sustaining the Greek Euro link is impossible (and harmful to all).

As long as Merkel and Hollande talk nice about Greece, the convertibility issue will hang in the air. The market will continue to fret:

“What happens when Greece goes?”
or
“When Greece goes, does that mean Spain will too?”

The issue of Greece’s status must be resolved before the question of convertibility for the rest of the EU members can be laid to rest. Draghi can’t eliminate the risk until Greece is out,and the resulting fallout is contained.

Draghi is a market savvy guy. He knows he can’t stand in front of the capital markets and succeed unless he has a credible position that can be defended. Greece is the broken wheel of his cart. It has to be jettisoned before the other wheels have a chance to prove they can roll on their own. He says he wants to reverse the market psychology on convertibility risk, that can’t happen until Greece is gone.

The EU political leaders are screaming, “It’s all, or nothing!”That stance takes the cards out of Draghi’s hands.
.

Note: My long held position is that the best course of action is for a Grexit. I do not believe that Grexit necessarily means Spaxit (or Itaxit). Too many years have passed in this story for a “crisis” to happen when the final chapter for Greece is written. It’s in the ‘print’ already.
.


 end

Graham Summers discusses the German situation with respect to Greece:

(courtesy Graham Summers/Phoenix Research Capital)



Angela Merkel Just Revealed the Real Situation in Europe

Phoenix Capital Research's picture





For several months now, I’ve been stating that the world’s central banks are in a bind. That bind is that their monetary policies are becoming less and less effective at placating the markets while the consequences of said policies (higher costs of living, the targeting of troubled banks in the credit market, etc.) are increasing.

As a result of this, central banks have begun resorting to more and more “verbal intervention” or promises to “act” without ever acting.

We received confirmation of this over the weekend when Angela Merkel chastised Germany Bundesbank Head Jens Weidmann for stating that an ECB policy of buying bond was like a dangerous drug.

Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.

The comments, from central bank chief Jens Weidmann and a senior figure in the Bavarian Christian Social Union (CSU), Alexander Dobrindt, point to mounting unease in Germany with the policies being used to combat the three-year old debt crisis.

Domestic criticism has narrowed Merkel's room for maneuver at a time when Greece is in dire need of more aid and policymakers are scrambling to prevent contagion from enveloping big countries like Spain and Italy.

Two days after Greek Prime Minister Antonis Samaras visited Berlin and made an impassioned plea for politicians there not to talk up the possibility of a Greek euro exit, Merkel herself sent a warning to allies who have said the euro zone would be better off without its weakest link.

"We are in a very decisive phase in combating the euro debt crisis," Merkel told public broadcaster ARD in an interview. "My plea is that everyone weigh their words very carefully."


For over two years now, we’ve been hearing time and again that the European crisis was “solved” and that things would improve. It’s obvious now that all of those claims were lies. Indeed, we’re now at the point that politicians are openly asking central bankers not to discredit attempts to prop up the markets.

Let me ask you, how desperate do things have to be that a politician asks a central banker not to use certain words during public appearances?

The answer: very, very desperate.

Indeed, the situation in Europe is fast approaching a crescendo.  The German Constitutional Court votes on whether the ESM bailout fund is even legal on September 12. If it doesn’t, it’s the end of the EU as we know it.

Could this happen? The majority of Germans are fed up with Greece, worried about inflation, and want the Deutsche Mark back. Also bear in mind that Angela Merkel is up for re-election next year. So the courts could in fact rule the ESM is unconstitutional which would end the EU right then and there.

But, for the sake of argument, let’s say that Germany doesratify the ESM and the ESM is given a banking license (which Germany says will never ever happen). Even then Spain and Italy are supposed to fund 30% of it!

So even in a best case scenario, the bankrupt nations asking for bailouts are going to fund 30% of the very bailout fund that will bail them out!?!?

You couldn’t make this stuff up if you tried.

Make no mistake, the crisis in Europe is far from over. If anything, we’re fast approaching the REAL storm over there: when countries actually start defaulting and leaving the Euro.

When this happens, we will see the return of systemic risk. And the US will not prove immune to it. Europe is the single largest economy in the world. It’s also China’s single largest trade partner. If the EU goes down, it will send ripple effects around the globe. And with China entering a hard landing and the US re-entering a recession the potential for another 2008 type event is higher than at any point in the last three years.


Good Investing!

Graham Summers



 end

Your opening Spanish 10 yr bond yield followed by the Italian 10 yr bond and the USA 10 year bond:  (at 7 am est)




SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

Add to Portfolio

GSPG10YR:IND

6.389000.03000 0.47%
As of 06:30:00 ET on 08/27/2012.


end  (at 7 am)



Italy Govt Bonds 10 Year Gross Yield

 Add to Portfolio

GBTPGR10:IND

5.707000.00700 0.12%
As of 06:30:00 ET on 08/27/2012.

end

USA 10 year bond yield:  (at 7 am)

US Generic Govt 10 Year Yield

 Add to Portfolio

USGG10YR:IND

1.669400.01710 1.01%
As of 06:34:00 ET on 08/27/2012.


end


Your early morning currency crosses:


Euro/USA  1.2525  up .0013
USA/Can: .9891 (down .0021)  i.e. Canadian dollar up.
USA/Japan Yen:  78.71 up .05

Early morning bourse results:

FTSE down 5.5 points or .10% down
CAC up 12.75 points or .37%
DAX up 15.23 or .22%

Ibex Spanish  down 14.5 points or .2%


end

Results from China showed stocks continue to flounder as profits for China's industrial sector in July are dismal. This is the 4th consecutive month that profits dropped sending a strong signal to the western world that this nation is in a serious recession.  In the bizarro world we are facing, stocks in Europe are up with the hope that Germany bails out everyone. 



(courtesy zero hedge)

China Stocks Drop To Fresh Post-2009 Lows Following Plunge In Industrial Company Profits

Tyler Durden's picture





Today the Chinese stock market did something unthinkable: it plunged to fresh post 2009 lows on news so bad they would have been enough to send the stock markets of such "developed" bizarro economies as the US and Europe limit up. The catalyst, as Bloomberg reports, was that Chinese industrial companies’ profits fell in July by the most this year, a government report showed today, adding to evidence the nation’s economic slowdown is deepening. Income dropped 5.4 percent last month from a year earlier to 366.8 billion yuan ($57.7 billion), the fourth straight decline, National Bureau of Statistics data today showed. That compares with a 1.7 percent slide in June and a 5.3 percent drop in May. What is disturbing is that the slide persisted even as revenue in the first seven months increased 10.6 percent to 50 trillion yuan, today’s report showed. Which means that cost and wage pressures are starting to truly bite Chinese corporations, that the US ability to export inflation to China is much more limited, and that one can forget the PBOC easing monetary conditions any time soon for many of the reasons discussed in the past week. It also means that China is now stuck hoping that Wen Jiabao will at least implement some fiscal stimulus. The reality however, judging by the SHCOMP's reaction, is that the benefit from fiscal programs in China, and everywhere else, is far more limited than monetary policy intervention. End result: SHCOMP down 1.74%,to 2,055, a three year low.
From Bloomberg:
Today’s data add pressure on the government to step up policy easing to reverse a slowdown that may extend into a seventh quarter. On an inspection of Guangdong province from Aug. 24 to 25, Premier Wen Jiabao said difficulties in stabilizing the expansion are “still relatively large” and called for measures to promote export growth to help meet the country’s annual economic targets, the Xinhua News Agency reported.

“The economy is slowing faster than what had previously been expected,” said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. The profit outlook is for “further weakness throughout the year,” he said.

Industrial companies’ profits in the first seven months of the year declined 2.7 percent to 2.7 trillion yuan, according to today’s statement. That compares with a 2.2 percent drop in the first half and a 28.3 percent gain in the same period in 2011.

Bank of America and Deutsche Bank AG this month reduced their forecasts for full-year economic expansion to 7.7 percent, which would be the slowest pace since 1999. Wen in March set a target of 7.5 percent.

Company profits are declining amid falling prices, higher costs and slower demand.

Xinjiang Goldwind Science & Technology Co. (2208), China’s second- biggest maker of wind turbines, said last week that first-half profit slumped 83 percent as competition intensified and market growth slowed.
Deutsche Bank's Jim Reid had this to add:
Asian equities are weaker despite the positive US lead on Friday. The Hang Seng and the Shanghai Composite are down 0.15% and 1.32% as we type as China‘s latest industrial profits dropped 5.4%yoy in July (-2.4% year-to-date). Chinese Premier Wen was quoted by state media over the weekend as saying that “negative factors…will affect stable economic operations in the second half” and the difficulties of estabilising growth are “relatively large”. Adding to the negative sentiment, BHP Billiton CEO commented that he expects ''long-term'' price declines for the miner's commodities as slower economic expansion in China weighs on demand. Iron ore prices continue to fall with the spot benchmark down for its 8th consecutive day on Friday.
We showed the iron ore collapse previously here.
Finally, the Telegraph adds some more color on what is now China's last recourse, namely more fiscal stimulus, since courtesy of the risk of soaring Soybean prices first predicted here over a month ago, and since confirmed, the PBOC's hands are tied:
 The Telegraph has travelled to the south of China over recent days to witness a slowdown in the coastal economy and in the export sector, and also to areas which are flourishing with new investment, and where the local economy is booming. The picture appears mixed. China, geographically almost the same size as the Eurozone, appears to be struggling in some areas and flourishing in others. A new inland corridor, running from Liaoning in the north to Guizhou in the south, through cities such as Wuhan and Changsha, is booming.

In response, Guangdong has unveiled 177 "core projects" worth 1 trillion yuan, joining a long list of local governments to announce "stimulus" plans. The huge cities of Chongqing and Tianjin, meanwhile, both said they would spend 1.5 trillion yuan, while Guizhou, one of China's poorest provinces, has said it will spend 3 trillion yuan on eco-tourism and creating a series of national parks.

The central government, meanwhile, said it would spend to plough 2.4 trillion yuan into reducing carbon emissions and energy conservation programmes over the next three years, and has already set aside 26bn yuan in subsidies to encourage consumers to switch to low-energy appliances.

The role call of announcements may be a signal that after half a year of fine-tuning monetary policy, the government is preparing to take more drastic measures.

While the Communist party had pencilled in slower growth of 7.5pc for this year, in order to restructure and rebalance the economy, there are indications that China may suffer, or may already have suffered, a "hard landing", where growth would fall to below 7pc.

"A hard landing in China would look like the fourth quarter of 2008 and the first quarter of 2009 when exports collapsed, factories had no orders and migrant workers were laid off by the tens of millions," says Wang Tao, an economist at UBS.

Mr Wen said many "negative factors" would continue "to affect stable economic operations in the second half" and that the difficulties of boosting growth are "still relatively large".

"Facing the current difficulties, we have to improve the operating environment for companies and enhance the corporate confidence," he said.
At this point all we can add is that we are jealous and envious of China, where men are men, women are women, bad news are no longer not good news, and things are finally starting to make sense. As reported earlier, expect US stocks to soar on the realization that for China a hard landing now looks inevitable.


end

Then we hear from the UK Telegraph rumours that the Chinese may be planning to put forward a
1.25 trillion usa (800 pounds) worth of stimulation to the Chinese economy.  That stimulation would lift all risk assets in price as this would be celebrated around the world.

This is the reason for the European markets strength today.


(courtesy James Sinclair/Yra Harris)

Notes From Underground: Putting Significant Stories In Perspective

Dear CIGAs,
Just as I wrote in the headline, there is a story in the UK TELEGRAPH that the Chinese plan to put forward a 800 billion POUND stimulus program of major projects in the provinces. At this time, the Telegraph is the only outlet with the story and has otherwise not been confirmed. If the story is true and the amount is correct then the effect should put upward pressure on all risk assets as this stimulus will be celebrated worldwide. The industrial metals, which have lagged the recent risk on profile, should get a huge boost so I would advise watching copper as an indicator of the veracity of the Chinese stimulus story. Again, if the story has any veracity all asset classes except debt should receive a bid sunday night.
China announces £800bn stimulus to boost confidence China has announced a total of 8 trillion yuan (£800bn) of "stimulus projects" to try to boost confidence in an economy that appears to be cooling faster than expected. By Malcolm Moore, in Beijing
7:00PM BST 26 Aug 2012
One Chinese province after another has stepped forward over the last fortnight to announce their plans, in what appears to be a propaganda effort to reassure the public that the economy is still on track.
Meanwhile, Wen Jiabao, the Chinese premier, promised over the weekend that the Chinese government would intensify its efforts to boost the economy in the second half of the year.
On a visit to Guangdong, the heartland of China’s export industry, Mr Wen warned that "there will still be a lot of problems and uncertainties in exports going forward. The third quarter is a crucial period".
Analysts said the government could now steer the value of the yuan lower, after a gain of 4.7pc last year against the dollar. Further export tax rebates could also be used to bail out manufacturers.
China’s export sector is suffering from anaemic demand from Europe and the United States. In the first seven months, exports rose 7.8pc, while imports rose 6.4pc, leaving China in danger of missing its 10pc target for trade growth this year. July’s exports grew at the lowest pace since 2009 and there are reports of factory workers leaving and returning to their home provinces for the first time since the financial crisis.

end

War drums are pounding away between Israel and Iran

(courtesy Paul Alster:)

Taking the pulse of Armageddon as Israel-Iran showdown looms By Paul Alster
Published August 25, 2012
HAIFA, Israel –  It is just an 18-mile journey from Israeli Prime Minister Benjamin Netanyahu’s private residence in luxurious Caesarea on the shores of the Mediterranean, to Har Megiddo – Armageddon, the hilltop ancient ruins of one of King Solomon’s palaces from where the Bible suggests the final battle between good and evil will be viewed.
The road between the two points is populated by Israeli Jews and Arabs of widely differing religious beliefs and political opinions, and the No. 1 topic of conversation these days is whether Israel should bomb Iranian nuclear facilities. The people who live in the small, picturesque villages along the route recently talked to FoxNews.com about the looming showdown.
"Israel must not allow another Holocaust to happen. We must act first."
- David, in the Israeli city of Har Megiddo, or ‘Armageddon’
A man who identified himself as Mordechai, who was giving away copies of a free newspaper outside local shops in Caesarea, said he fears the seemingly inevitable confrontation.
“I’m frightened” Mordechai said. “I don’t think we should attack Iran; it will start another world war. It’s also a big mistake to be talking about it here in the media.”
Haya, a well-dressed elderly lady, took a paper from him and offered a different view. “I’m happy with Bibi,” she said. “He won’t make the decision alone. He’ll listen to his advisors then he’ll do what he has to do.”

end


And now for European trading:


German confidence falters for the 4th consecutive month.



Germany Loses Confidence For The Fourth Month In A Row

Tyler Durden's picture





As the European double, and in some cases triple, dip, continues to take its toll on the periphery (in some cases retroactively, with Spain realizing that 2010 and 2011 GDPs were mysteriously lower than expected, previously printing at -0.1% and 0.7%, revised to -0.3% and 0.4%), the core continues to be dragged ever more into the quicksand of insolvency. The latest confirmation came from Germany, where for the fourth month in a row the IFO survey showed that firms have grown more pessimistic for the 4th month in a row in August, declining from 103.3 to 102.3, on expectations of a 102.7 print, with the Current Assessment dropping from 111.6 to 111.2, while Expectations declining from 95.6 to 94.2. What is disturbing is that this is happening even as the EURUSD continues to be at multi-year lows, which is certainly beneficial to German exporters. The obvious implication is that the higher the EUR rises, the less confident German businesses will be, which also explains why to Germany the best Nash (dis)equilibrium in Europe is to keep the periphery on the edge as long as possible, and the EURUSD as low as possible.
A summary assessment of the IFO print via SocGen:
The IFO survey confirmed that the euro debt crisis is gradually taking its toll on German firms' expectations. Although the present remains good and points to continuing growth, German firms are clearly growing more pessimistic about the outlook. This is a gentle reminder that the German economy is not immune to a major downturn in its partners' economic background

Overall, the business climate fell to 102.3 from 103.2. At this level, the business climate remains above its long-run average (by 0.2 standard deviations). More worryingly, expectations deteriorated markedly to 94.2 after 95.5 - the worst figure since June 2009- and stand now 1.0 standard deviation below average.

However, the IFO survey should go some way towards tempering expectations of a sharp economic downturn in Germany. Current conditions decreased slightly in August (111.2 after 111.5) and remain 0.9 standard deviation above historical average. Once again, the IFO business climate index tells a totally different message from the PMIs, which were respectively 1.2 and 1.1 standard deviations below its long-run average in August for the manufacturing and the services sectors. This is an exceptional divergence between the two surveys. In our views, the IFO current conditions component still points to upside risks to our Q2 GDP forecast (0.1% qoq, after 0.3% in Q1).

Across sectors, changes in the business climate were quite diverse: echoing the PMI surveys last week, manufacturing sentiment improved somewhat (by 0.8 pt). Other sectors carried on falling. Interestingly, business confidence now stands close to its long-run average in all sectors. In a nutshell, the more domestically-oriented sectors are losing steam which will raise concerns about the resiliency of the German economy.
And from Goldman:
Overall, German companies are worried about the medium-term outlook. These concerns are presumably related to the Euro crisis and the possibility of a deterioration in the tensions in financial markets and the periphery. The actions of policy makers in the coming weeks will determine whether or not these concerns increase further - with an increasing risk that these negative expectations become self-fulfilling.
end

Here are your closing Spanish and Italian 10 yr yield bonds:



SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

Add to Portfolio

GSPG10YR:IND

6.384000.03500 0.55%




end


Your Italian 10 yr yield bond:



Italy Govt Bonds 10 Year Gross Yield

 Add to Portfolio

GBTPGR10:IND

5.708000.00600 0.11%


end



Your 10 yr USA bond yield:



US Generic Govt 10 Year Yield

 Add to Portfolio

USGG10YR:IND

1.650600.03590 2.13%




end


Your major closing currency crosses:

Euro/USA: 1.2498
USA/Japan : 78.76
USA/Can;  .9908

Your major bourse closing indices:

Dow: down 33 points
FTSE:  5.50 down or .1%
Paris CAC: up 26.75 or .63%
DAX up 76.38 or 1.1%
Ibex Spain up: 1.21% or 88.60 points.






Here are some USA stories which you may find of interest:

American incomes are falling and retirees are getting crushed.
A good article written by Henry Blodget of the Daily Ticker

(courtesy Henry Blodget/Jim Sinclair)

American Incomes Are Falling And Near-Retirees Are Getting Crushed: Study By Henry Blodget | Daily Ticker – Fri, Aug 24, 2012 11:01 AM EDT
Annual incomes in the United States have dropped sharply in recent years, and near-retirees are getting hit the worst.
That’s the conclusion of a new study by Sentier Research, which looked at the trend in median U.S. household incomes since 2000.
Twelve years ago, after adjusting for inflation, the median household in the United States earned about $55,000 per year, reports Catherine Rampell of the New York Times, citing Sentier’s data.
Now, the median income has fallen to about $51,000.
The two age-groups that have been hit the worst in this period are households led by those in the 55-64 age group and those in the 25-34 age group. The incomes of the near-retirees have fallen by nearly 10% in the past three years.
This data explains why our economic recovery is so sluggish.
The problem with the US economy is not that the richest Americans and
end




The libor manipulation may mean 176 billion liabilities to our big banks. There is no way they can cover this:

(courtesy zero hedge)





"This Is Just The Beginning" As LIBOR-Manipulation Liabilities May Top $176bn

Tyler Durden's picture




Forget the few hundred million dollars in wrist-slap fines the banks face from regulatory discipline over the Libor rate manipulation 'conspiracy fact'. As the WSJ reports this morning, the number of suits and potential liabilities are rising rapidly as cities, insurers, investors, and lenders all jump on the cabal-beating band-wagon. From individual investors claiming lost returns due to low rates to hedge funds squeezed in derivatives trades, liabilities could exceed $176bn as the blood-suckerslawyers note "this is just the beginning" as "scores of interested potential clients" have called. While, obviously, it won't be easy to win in court, the ongoing costs of litigation and potential liability (which will be largely ignored by Messrs. Bove et al. we are sure) range from Macquarie's $176bn estimate to Morgan Stanley's $7.8bn (quite a range) and it will likely take years for the lawsuits to see resolution. Notably though, floating-rate bond-holders are likely to have the most success (and easiest claim) as Darrell Duffie notes "assuming they can convince a jury Libor was too low, it's pretty easy to then show they were paid too little interest" but in the meantime, as CalPERS adds, "we await the regulatory investigations, which will drive the outcome" of litigation.


This potential liability, for some context, is over 35% of the entire market cap of the Big 5 US banks... (~$489.5bn) - though of course, loan loss reserves can be rotated fungibly to litigation loss reserves and any negative implication of any suit will merely lead to positive DVA adjustments - so don't feel too bad for them!!

 end

The Dallas Fed has a upbeat print this morning with a big jump from last month.
Instead of minus 13.2 it printed at minus 1.6.  In other words this major manufacturing area of Dallas is still contracting.

(courtesy zero hedge)

Dallas Fed Beats On Hope Alone As Prices Paid Jump Most In 19 Months

Tyler Durden's picture




Following last month's plunge in the Dallas Fed Manufacturing data (which was its biggest miss in 14 months and lowest print in 10 months), today's -1.6 print was the biggest jump in 7 months. From last month's -13.2, against an expectation of -7 this month, the -1.6 'beat' was very 'impressive' though obviously still negative. Critically though, once again, much of the rise in the index is predicated on the hope-section of the survey as while current activity indices such as production, new orders, and growth rates fell (and inventories rose), their corresponding future expectation indices all rose(even though expectations of the general activity index were mixed). Notably, the Prices Paid index jumped the most in 19 months. Once again it appears that good is bad, bad is better, but terrible is awesome; as the market's entirely lost discounting mechanism has no idea what to do with this flashing red headline.
Dallas Fed beat...

on hope alone...

helped by the biggest jump in Prices Paid in 19 months...

Chart: Bloomberg

end

The Fed boys are infighting.  The hawk, Lacker states that monetary policy cannot boost growth and jobs now as the economy is too fragile.  He was interviewed by Charlie Rose:



(courtesy PBS)


DJ Fed's Lacker: Monetary Policy Can't Boost Growth, Jobs Now--PBS


Fri Aug 24 23:00:10 2012 EDT


--In TV interview, Richmond Fed president calls economy disapointing --Says bond-buying measures in 2010 likely boosted inflation
--Sees 'Long struggle' ahead for Europe
WASHINGTON--The Federal Reserve can't do much right now to help boost growth or reduce unemployment, Federal Reserve Bank of Richmond President Jeffrey Lacker said in an interview with Charlie Rose on PBS Friday night.
Mr. Lacker has said all year he is opposed to the Fed taking new steps to bolster the fragile economic recovery--a position he maintained Friday, even as minutes released earlier this week of the central bank's last policy meeting show mounting support for fresh Fed stimulus unless the economy accelerates.
"There's some sentiment around that table for doing more," Mr. Lacker said in a transcript of the interview. "Personally, my sense is that monetary policy isn't capable of having a material effect on growth, or employment, or unemployment at this point."
The Richmond Fed president has dissented at all five meetings this year of the Federal Open Market Committee, the Fed's policy-making body.
Mr. Lacker is considered one of the more hawkish Fed officials, meaning he is particularly concerned about the risk of inflation. He pointed to that worry again Friday to explain why he opposed further Fed action.
"If it did have much of an effect, it's likely it would increase inflation as well," he said. Mr. Lacker said the Fed's 2010 bond-buying program "may have increased inflation a bit."
While Mr. Lacker said inflation currently is "in a good place," he said he didn't want "to push it up any higher from where it is now."
Minutes released Wednesday from the Fed's July 31- Aug. 1 policy meeting suggested that a new round of bond buying, known as quantitative easing, was high on its list of options. Fed officials thought new support from the central bank would likely be needed "fairly soon," unless economic growth picks up substantially, according to the minutes.
Mr. Lacker acknowledged the economic recovery has disappointed Fed officials.
"It's really trying our patience. The economy's growing slowly," he said.
People may be expecting too much from central banks, which can't heal all economic problems, the Richmond Fed chief said.
"Central banks around the world are--have been asked to do too much," Mr. Lacker said, when asked about the recent actions of the European Central Bank. "Expectations about central banks has gotten a little bit ahead of...reality."
The Richmond Fed chief dismissed the argument some economists have made to let inflation rise a bit above the Fed's 2% goal to help bring down unemployment, saying such a move could imperil the Fed's hard-fought credibility.
"You don't want to drift up to 3 [percent] and then have it be in question because it'll be costly to get it back down again," he said.
Mr. Lacker praised former Fed Chairman Alan Greenspan for raising interest rates in 1994 at a time when inflation wasn't rising.
"That cemented our credibility, cemented the commitment the Fed had made to keeping inflation low and stable," he said.
Mr. Lacker said the Fed still had work to do making sure that the government is no longer expected to bail out failing firms and that banks don't become so large and interconnected that one bank's failure could imperil the whole financial system.
Fed officials have said since January that they expect to keep short-term interest rates near zero at least through late 2014. The Fed's next policy meeting is scheduled for Sept. 12-13.
-END-


A new name for QE;  counterfeiting. 
A must watch video from Rick Santelli of CNBC

(courtesy Rick Santelli,CNBC)

Santelli On Liquidity And More Central Bank 'Counterfeiting'

Tyler Durden's picture




In a little under two-and-a-half minutes, CNBC's Rick Santelli surveys the landscape of just what exactly is Quantitative Easing, why more debt does not solve the problem of too much debt, and why these actions (as even Frau Merkel has ascribed concern) are nothing but counterfeiting. He rhetorically questions how the printing of more money is the way to solve our 'problems', adding via Rick Rule, that "there's been no shortage of cash in the system; but one wonders [given] this economy seems based on liquidity, whether building an economy on what is, in fact, counterfeiting is very good for the economy in the long term?"



end.

I will close with this wrap up from Greg Hunter of USA Watchdog and his interview with Ron Hera:

(courtesy Greg Hunter/Ron Hera)

Ron Hera-We’re at 2008 crash levels

27 AUGUST 2012 5 COMMENTS
Greg Hunter’s USAWatchdog.com
“We’re at 2008 crash levels,” says Ron Hera of Heraresearch.com.   Hera thinks,“The dollar has been artificially strong . . . the dollar is due for a sharp decline.”  The Federal Reserve is likely to start printing money soon to spur the economy, and that will add to already rising commodity prices.   Hera says, “Silver is massively undervalued.  A smart investor would just buy silver and wait for the supply/demand fundamentals . . . to cause the price to rise.”  Rising food prices are especially troubling to Hera because of their negative impact on global stability.  He says, “Spiking corn, wheat and soybean prices” are leading to “political instability on a large scale.”   Join Greg Hunter as he goes One-on-One with Ron Hera.



Well that about does it for today.  I will see you tomorrow.
I will report also on Wednesday.  On Thursday I will be out of the loop for most of the day.

If I am up to it, I will at least bring you the COMEX data.  

So long for now

Harvey

11 comments:

Anonymous said...

First - but after banning Monkey Boy this blog sux.

Fred said...

Harvey-

Today's low volumes in gold are due to a bank holiday in London.

No AM or PM fixes mean lower trading volumes here along with higher volatility.

Funky Gorrilla Man said...

How about this-Harvey made me buy silver at $35 wah wah wah.He took his family of 13 on vacation-with the money he took from me. Silver is worthless-nobody wants it. There is no demand ect ect.

Ace said...

Stackers versus traders, us versus them, the white hats versus the cartel.

Metals markets a thing to behold lately and thats pure truth.

http://pennystockjournal.blogspot.ca/p/gold.html

(Harvey always here http://pennystockjournal.blogspot.ca/p/links.html)

Anonymous said...

Anonymous @5:00,
Why would you be missing Monkey Boy? He was nothing but a disinformation agent troll.

Anonymous said...

thanks for sharing.

PeaknikMicki said...

FunkeyMonkeyBoy (gorilla? naeh monkey suits better).
Did't we go through this monkey business back in April when harvey went on holidays just like I did.
It just takes income and savings to do so. But I do agree that had the $$$ spent on a holiday been put on PM's instead maybe we would be even better off later on, but aeh, got to live life as well.
I guess your part time trolling doesn't pay so much so can grasp that.

Anonymous said...

OK- we've moved into a new phase regarding the physical metals.They are becoming discovered, albeit sllooowwllyy, but none the less discovered.

Now onto the next subject to review : how much physical to accumulate to be secure ?

Any ideas out there ?
Please - no one word answers.

PeaknikMicki said...

Anon; that is a really really difficult question as it depends on 1) what you want to "spend" it on and 2) what other incomes etc you may have.
i.e. if you have a mortgage and intend to convert your hopefully nominally valued appreciated silver to pay off your loan it depends on 1) how big the loan is and 2) how much it has gone up in dollar value.
On top of that you have to decide if you think you will have a job/income in the future or if you are more on the doomerish side thinking you will need your metal to trade for things and food.

I myself simply converted a fair amount of my savings to metal some years ago and have since then been buying on an irregular basis.
I.e. I am not a hardcore stacker as I also spend on lifestyle and luxuries but no matter how much metal I have I think I could have a bit more, so if i haven't bought any for a cpl months I look at cutting unnecessary spending and getting a few more ounces....

Edward G. Talbot said...

Anon @ 6:45AM:
"OK- we've moved into a new phase regarding the physical metals.They are becoming discovered, albeit sllooowwllyy, but none the less discovered."

I actually don't think we've moved into a new phase of that sort. I think from roughly Sept 2010 to may 2011, we entered a new phase with additional discovery. Since then, I think we've lost some people from the market and in fact the general public is probably less interested in metal than it was. All the bad press about the crash of silver and the volatility caused that.

We're more like in a rebuilding phase.

Anonymous said...

This sight has lost its entertainment and comedy since the monkey is gone. First post is right. Waah I miss my monkey he was hillariously idiotic and I laughed my guts out with that shady character. Lmao.

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