Monday, October 24, 2011

Head Of China Sovereign Wealth Fund Voices Displeasure With China's Debt Slaves, Calls Europeans "Lazy" And "Entitled"

Two weeks ago, Marc Faber provoked the fury of a broad segment of the population by daring to tell America that it is lazy, needs to work more, and is overly-reliant on a welfare government which is an eager parasite of the welfare system cocoon in which it has wrapped the majority of the population knowing full well it can get away with anything due to threats it can pull the (otherwise insolvent) social safety net at any given moment if the status quo is threatened. Needless to say, European readers were delighted and amused by Faber's statements. We wonder, then, what the US (and correspondingly, European) response will be to the news that last week it was the turn of Jin Liqun, chairman of the China Investment Corporation (CIC), the sovereign wealth fund all too often (by the overeager European media) tasked with bailing out, to channel Faber: "Europe is not really short of money. Europe needs to give a clear picture to the Europeans themselves and to the rest of the world that their problems could be worked out. The root cause of the trouble is the over-burdened welfare system, built up since the Second World War in Europe - the sloth-inducing, indolence-inducing labour laws. People need to work a bit harder, they need to work a bit longer, and they should be more innovative. We (the Chinese) work like crazy." Translation: China is finally announcing that it is unhappy with the work output of its debt slaves. And since China, courtesy of its trade surplus or something, will sooner or later also have to apply the same bailout hypermathematics which indicate that despite having to bail out its own banking system it can bail out the world, expect comparable announcements about its latest shipment of debt slaves situated conveniently between the Atlantic and Pacific oceans.

Trichet Repeats Call For European Finance Ministry, Abdication Of National Sovereignty

The outgoing ECB president has just released an extremely long-winded speech titled "Tomorrow and the day after tomorrow: a vision for Europe" in which he once again makes the simple case that without someone paying for the European experiment (ahem Germany), and without a Finance Ministry being created (read fiscal union), there is not much future to the creature known as the EMU (and parodied earlier). To wit: "This European finance ministry would, first, oversee the surveillance of both fiscal policies and competitiveness policies, and when necessary, have responsibility for imposing the “second stage” I just described. Second, the ministry would perform the typical responsibilities of the executive branches regarding the supervision and regulation of the EU financial sector. And third, the ministry would represent the euro area in international financial institutions. Since my Karlspreis address, it seems to me that the case for such an approach has strengthened." He reiterates his call for the United Empire of Europe: "Increasingly, it seems that it is not too bold to consider a European finance ministry, but rather too bold not to consider creating such an institution." Naturally he concludes: "Exactly how these new institutions would eventually evolve one cannot say." So don't worry about the details (typical Europe) just promptly sign off your independence to those who know better than you what to do (and can afford to pay for what is best for you). Wonderful. Now have fun selling the proposal of abdicating sovereignty to those European countries which are not Germany, with a particular focus on France and Italy.

Trichet Interrupts Speech Calling For Formation Of European Finance Ministry, Booed Off By German Students

Earlier today we transcribed the speech by outgoing ECB president Trichet in which he called for the formation of a European Ministry of Finance coupled with what is essentially a requirement for the abdication of national sovereignty of those less than worthy countries, together with some less than flattering commentary. It appears a few people at least were not too happy with the call for the formation of the United Empire of Europe, at Humboldt University where the speech was delivered. Bloomberg reports that the "ECB president interrupted during speech in Berlin. Banners held up by students in audience reading “no more money for banks,” and “say no to debt tyranny.” We hope to bring readers a video as soon as one is available.

European Swiss Army Knife CDO Square Cubed

Remember: when in doubt, baffle with bullshit. From Dow Jones:
  • EU Paper Confirms Looking At 2 EFSF Options, May Combine Them -Senior EU Source
  • EU Paper Says EFSF Option To Set Up Special Purpose Investment Vehicle -Senior EU Source
  • EU Paper Says EFSF Bond Insurance and Special Vehicle Options Could Be Combined - Senior EU Source
  • EU Paper Says Neither EFSF Leverage Option Requires Change To EFSF Rules -Senior EU Source
  • EU Paper Says EFSF SPIV Would Combine Public, Private Capital - Senior EU Source
  • EU Paper Says EFSF Could Set Up One Central Euro Zone SPIV - Senior EU Source
  • EU Paper Says EFSF SPIVs Could Be Set Up In Several Euro Zone Countries - Senior EU Source
  • EU Paper Says EFSF SPIVs Would Be Used For Bond Purchases, Bank Recapitalization - Senior EU Source
  • EU Paper Says EFSF Bond Insurance To Be Tradable Independently Of Bonds - Senior EU Source
It also has a Phillips-head screwdriver, opens cans, serves as a flashlight, dispenses crazy pills can be used as a garrote. And if you act now, you can get get a second one free for the low, low price of €1 trillion, leveraged infinitely courtesy of the world's most complex structured credit product ever conceived.

US Treasury May Issue Debt With a Floating Interest Rate
Dealers and traders have been approached with plans to issue a floating-rate Treasury note that would let investors profit should rates go up and allow the US to restructure its debt even more.

Sudden Crude Backwardation Telegraphing Imminent Easing Episode By Fed

Commodity prices have certainly been volatile in the last few days with near-record-breaking upside shifts in some. Copper's extravaganza in the last two days was discussed earlier but it is the huge shift in the whole WTI crude complex that is perhaps more fascinating. For the first time since May 2011, Dec 11 WTI is more expensive than Dec 12 and in the last three trading days alone, the entire curve has shifted to backwardation very aggressively. This inflation-prone signal, and much chatter among Fed talking heads on 'helping' the Europeans, could perhaps help explain the strange 'strength' in the EUR as it and the USD circle the drain of fiat currencies. Gold has obviously yet to get going, but today has broken $1660 (up over $50 in the last few days).

CAT's Earnings In Context - Expectations Lowered By Over 10% In Last 3 Months

Who are we to argue with the impressive numbers that CAT delivered today - nothing jumps out as obviously dragging forward demand (though we suspect CATFI is very busy with vendor-financing and we know how well that worked out for GMAC) or forced purchases via fuel/emissions standards. Perhaps copper demand today is forced buy-ins on letters-of-credit for heavy equipment sales in China? But for some context, every talking head is noting the earnings beat and outlook changes and we thought it may be useful to consider the 'adjustments' that earnings expectations have seen over the past few months. It turns out that Q3 2011 earnings expectations (chart below) have dropped over 10% in the last three months to their lowest level since Jan11 - and Q4 expectations remain at Jan2011 lows and are also down almost 6.5% in the last three months.

Let's Play "Guess a Chart"

Trader Dan at Trader Dan's Market Views - 5 minutes ago
Take a look at the following TWO charts and see if you can notice how similar the two of them are. You can tell that both charts, while not identical, are eerily similar in the manner in which they depict the overall price action. The top chart is the S&P 500. The lower chart is Crude Oil. They both tend to move up at the same time, mover lower at the same time and grind sideways at the same time. What these charts tell us is that there is no longer any SERIOUS INVESTMENT "STRATEGY" in today's financial markets. All that they are doing is reflecting either the willingness of t... more »

Another Sign of Distribution

Eric De Groot at Eric De Groot - 2 hours ago

Recognizing distribution (from strong to weak hands) before the panic is never easy. Signs of distribution are often revealed well before the fact. History tells us that when the s*** hits the fan unlimited QE will unleashed in the heat of panic. The panic, however, will be sequential. The weaker prey must culled until only the world’s reserve currency stands against the wolf pack. Chicago Fed... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

In The News Today

Jim Sinclair`s Commentary

Please be advised of this public announcement as this group is no lightweight, having proved themselves through consistent fundamental accuracy.

GEAB N°58 is available! Global systemic crisis – First half of 2012: Decimation of the Western banks - Public announcement GEAB N°58 (October 16, 2011) –
As anticipated by LEAP/E2020, the second half of 2011 is seeing the world continuing its unstoppable descent into global geopolitical dislocation characterized by the convergence of monetary, financial, economic, social, political and strategic crises. After 2010 and early 2011 which has seen the myth of a recovery and exit from the crisis shattered, it’s now uncertainty that dominates the States’ decision-making processes just like businesses and individuals, inevitably generating increasing apprehension for the future. The context singularly lends itself: social explosions, political paralysis and / or instability, return to the global recession, fear over banks, currency war, the disappearance of more than ten trillion USD in ghost-assets in three months, widespread lasting and rising unemployment…
Besides, it’s this very unhealthy financial environment that will cause the "decimation (1) of Western banks" in the first half of 2012: with their profitability in freefall, balance sheets in disarray, with the disappearance of trillions of USD assets, with states increasingly pushing for strict regulation of their activities (2), even placing them under public supervision and increasingly hostile public opinion, now the scaffold has been erected and at least 10% of Western banks (3) will have to pass that way in the coming quarters.
However, in this environment, increasingly chaotic in appearance, trends emerge, the outlook sometimes appears positive… and most importantly, the uncertainty is much less than one might think, if only one analyzes the changes in the world within the framework of the world after the crisis rather than with the criteria of the world before the crisis.
In this GEAB issue, our team also presents its 2012-2016 "country risk" forecast for 40 States, demonstrating that one can depict the situations and identify strong trends through the current "fog of war" (4). In such a context, this decision-making tool is proving very useful for the individual investor as well as the economic or political decision-maker. Our team also presents the changes in the GEAB $ Index and its recommendations (gold-currencies-real estate), including of course the means to protect oneself from the consequences of the coming "decimation of Western banks".
For this GEAB issue, our team has chosen to present an excerpt from the chapter on the decimation of Western banks in the first half of 2012.



Jim’s Mailbox

Dear Jim,

It was here on 4 years ago where I read this first:
“Europe could return to the old national currencies“
Well, it looks like it is going to happen faster than anyone was expecting.
I am buying more gold and gold shares

CIGA Luis Ahlborn Sequeira



Inflation Up Globally

By Greg Hunter’s

Dear CIGAs,

The meeting yesterday in Europe to come up with a plan to stem the sovereign debt crisis turned sour.  Zero was accomplished, except to put even more fear into the world over an impending financial meltdown that will likely be worse than the 2008 mushroom cloud.  The Telegraph UK is reporting, “During two hours of bitter exchanges during a meeting of all 27 EU leaders before a crisis summit of the Eurozone’s 17 members on Wednesday, President Sarkozy fought hard to get the Prime Minister barred from talks that would finalise a 100 billion euros cash injection into banks.  ”We’re sick of you criticising us and telling us what to do. You say you hate the euro, you didn’t want to join and now you want to interfere in our meetings,” the French leader told Mr. Cameron, according to diplomats.”  (Click here to read the complete Telegraph UK article.) It appears members of the EU are having a hard time coming up with a plan which will, no doubt, be some sort of combination of bank failure, steep haircuts in sour sovereign debt, and money printing to pick winners. 
So, what does Europe have to do with global inflation?  I figure if there is no plan soon, things may get out of control.  In this scenario, the ECB may be forced to print euros like crazy.  Meanwhile, the Fed would rev up its printing press at the same time to help fight off another out-of-control systemic failure.  This latest possible money dump falls against a backdrop of accelerating global inflation caused by multiple rounds of currency creation since 2008.
How bad is inflation around the world right now?  In Asia, Bloomberg recently reported, “Singapore’s decision to slow its currency’s advance rather than halt gains shows the dilemma facing Asian nations trying to tame inflation while protecting exporters from faltering economies in Europe and the U.S. . . . Singapore’s inflation will average about 5 percent this year and 2.5 percent to 3.5 percent in 2012, the central bank said yesterday. Consumer prices rose 5.7 percent in August from a year earlier.”  (Click here to read the complete Bloomberg report.)
In the Middle East, Business Intelligence reported last week, “Saudi Arabian inflation accelerated to 5.3% last month, its fastest pace since January . . . the Saudi Press Agency reported today, compared with 4.8% in the previous month. The cost of living index increased 0.9% in September from August, the report said. Annual inflation in January was also 5.3%.” (Click here to real the complete report.)

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