Greece pushed a step closer to Grexit after IMF snub
Greece has been pushed a step closer to default and potential exit from the euro after one of its main lenders, the International Monetary Fund, all but ruled out allowing the cash-strapped country to delay repaying the €1bn (£722,000) due next month.
The head of the IMF, Christine Lagarde, said delaying the payments would be an unprecedented action that would only make the situation worse.
Speaking at the organisation’s spring meeting, she said: “Payment delays have not been granted by the board of the IMF in the last 30 years.”
Her intervention is likely to heighten fears that senior policymakers in the US and Europe are preparing for Greece to leave the eurozone.
She said that delays had “been granted to a couple of developing countries … and that was not followed by very productive results”.
The IMF is a rules-based institution, Lagarde said. While all options were available, she added: “It’s clearly not a course of action that could be recommended in the current situation.”
Her comments followed a report that the Greek finance minister, Yanis Varoufakis, had sounded out the IMF over whether Athens could ask for a delay on the payments it is struggling to afford. The scramble to get the funds together could leave Athens unable to meet pensions and welfare payments at the end of May.
The report in the Financial Times said that Varoufakis was rebuffed after he made an “informal approach” to discuss the issue.
Greece vigorously denied asking for leniency from the Washington DC-based lender of last resort. A spokesman for Varoufakis described the story as “lies”.
Jim Sinclair’s Commentary
All is well says Financial TV.
US Industrial Production Plunges By Most Since Aug 2012, Utility Output Drops Most In 9 Years
Tyler Durden on 04/15/2015 09:24 -0400
Mortgage Apps tumble, Empire Fed slumps, and now Industrial Production plunges… Against expectations of a 0.3% drop MoM, US Factory Output was twice as bad at -0.6% – the worst since August 2012 (and lamost worst since June 2009). This is the 4th miss in a row. What is even more stunning is that despite the coldest of cold winters that crashed the US economy, Utilities saw their output crash 5.9% – the most in 9 years (explained as follows – largely reversing a similarly-sized increase in February, which was related to unseasonably cold temperatures). Motor Vehicles saved the data from being a catastrophe with a 3.2% rise (following a 3.6% drop In Feb).
Not a pretty picture…
With Utilities output dropping by the most since 2006…
Jim Sinclair’s Commentary
A war without the US? Impossible.
US paratroops convoy to western Ukraine for training mission
Stars and Stripes
Published: April 13, 2015
U.S. paratroopers have arrived in Ukraine for Operation Fearless Guardian, a six-month effort to train Ukraine’s newly established national guard force.
The first troops from the 173rd Airborne Brigade arrived Friday in western Ukraine, delivering military cargo after completing a 1,100-mile convoy from their home station in Vicenza, Italy, the Army said.
“The equipment on the convoy consists primarily of logistics vehicles to support and enable the training effort in Ukraine,” said Capt. P.J. Hartman, a battalion transportation planner with the 173rd, in an Army news release. “This equipment will provide maintenance support as well as troop and general cargo transport to and from training areas.”
The convoy of 50 paratroops and 25 vehicles traveled through Austria, Germany and Poland before arriving in Yavoriv, Ukraine. Formal training with Ukraine’s national guard will begin later this month. About 300 U.S. soldiers will deploy for the effort, which centers on training three battalions of Ukrainian troops in a range of infantry tactics.
The initiative isn’t the first time U.S. troops have worked in Ukraine. Since Russia’s annexation of Ukraine’s Crimea peninsula last year and ongoing hostilities with Russian-backed separatists in the country’s east, U.S. soldiers — under the Operation Atlantic Resolve mission —have deployed several times to training grounds in western Ukraine.
The latest mission was initially slated to begin in March. It was delayed by U.S. officials, who wanted to allow time for a new cease-fire agreement between Ukraine and the separatists to take hold.
Last summer, turmoil in Ukraine forced the Army to postpone its Rapid Trident exercise. The mission, which included troops from the 173rd, was eventually carried out in September.
In recent months, U.S. special operations forces also have conducted medical training with Ukrainian forces.
Jim Sinclair’s Commentary
Dirty bomb central.
Thieves steal deadly radioactive material in Mexico, 5 states on alert
Published time: April 16, 2015 14:23
Authorities have issued emergency warnings to five Mexican states after it was reported that thieves had stolen potentially deadly radioactive material, the latest such heist to strike the Latin American country.
The interior ministry issued an alert in the states of Tabasco, Campeche, Chiapas, Oaxaca and Veracruz that a container holding iridium-192 – a man-made radioactive element that can cause burns, acute radiation sickness and even death – was stolen on Monday from a truck in Cardenas, a town in southern Tabasco.
"This source is very dangerous to people if it is removed from its container," the statement said.
The theft of the radioactive material was reported by the company Garantia Radiografica e Ingenieria on Monday.
The ministry added the material “could cause permanent injuries to the person who handles it or who has been in contact with it for a brief time (minutes or hours)."
"Being close to this quantity of unprotected radioactive material for hours or days could be fatal," the statement warned.
Luis Felipe Puente, head of Mexico’s civil protection agency, emphasized that anybody who finds the source should establish a 30-meter perimeter around it and contact the authorities immediately.
Mexico has been shaken by a string of incidences involving radioactive materials.
Jim Sinclair’s Commentary
Totally appropriate for Ben!
Ben Bernanke To Join World’s Most Levered Hedge Fund: HFT Powerhouse Citadel
Submitted by Tyler Durden on 04/16/2015 06:37 -0400
Several years ago, Zero Hedge first, and to our knowledge only, reported that when it comes to unofficially executing trades in the equity market the NY Fed – through a slightly more than arms-length arrangement – does so using Chicago HFT powerhouse Citadel. In other words, while Citadel was instrumental in preserving the smooth, diagonal ramp in stocks since 2009 and igniting upward momentum just as everyone else stared to sell when the Markets Group of the NY Fed called, it was also paid handsomely: after all, nobody checks the Fed’s broker commission statement. In fact according to some, indirect Fed compensation to what is the world’s most leveraged hedge fund has been in the billions over the past decade.
Well, now it’s payback time, and as the NYT reported overnight, the Brookings Institution’s favorite blogger, former Fed Chairman Ben Bernanke, has joined none other than Citadel as an advisor.
According to the NYT, "while Mr. Bernanke will remain a full-time fellow at the Brookings Institution, the new role represents his first somewhat regular job in the private sector since stepping down as Fed chairman in January 2014. His role at Citadel was negotiated by Robert Barnett, the Washington superlawyer who also negotiated a deal for his book, “The Courage to Act,” which Mr. Bernanke recently submitted to his editor and will be published in October."
From the NYT:
Mr. Bernanke will become a senior adviser to the Citadel Investment Group, the $25 billion hedge fund founded by the billionaire Kenneth C. Griffin. He will offer his analysis of global economic and financial issues to Citadel’s investment committees. He will also meet with Citadel’s investors around the globe.
It is the latest and most prominent move by a Washington insider through the revolving door into the financial industry. Investors are increasingly looking for guidance on how to navigate an uncertain economic environment in the aftermath of the financial crisis and are willing to pay top dollar to former officials like Mr. Bernanke.
Mr. Bernanke joins a long parade of colleagues and peers to Wall Street and investment firms. After stepping down, Mr. Bernanke’s predecessor, Alan Greenspan, was recruited as a consultant for Deutsche Bank, the bond investment firm Pacific Investment Management Company and the hedge fund Paulson & Company.
Citadel Head Bond Trader (And TBAC Member) "Leaves" After Losing $1 Billion
Tyler Durden on 04/16/2015 12:44 -0400
It is almost too coincidental to be a coincidence: on the day Ben Bernanke, who until a year ago was the biggest fixed income portfolio manager in the world courtesy of the Fed’s $4.5 trillion in assets, joins Citadel as an advisor, the massively levered "market-neutral" hedge fund which as we showed earlier has $176 billion in regulatory assets, "loses" its global head of fixed income, senior managing director Derek Kaufman. Well not exactly loses. The reason for his "voluntary" departure: according to Bloomberg Kaufman is leaving Citadel not because he is about to be replaced by the former Fed chairman but because last year he lost $1 billion "in a variety of trades."
Some more details on Derek from his Linkedin Profile:
Derek Kaufman is [ZH: was] Head of Global Fixed Income and a member of Citadel’s Portfolio Committee.
Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase,where he most recently served as Global Head of Fixed Income in the Proprietary Positioning Business. He started at J.P. Morgan in 1996.
Mr. Kaufman is a member of the Treasury Borrowing Advisory Committee and the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets. He is a member of the Economic Club of New York, on the Board of Trustees for Third Way, an innovative think-tank in Washington, D.C., and on the Leadership Council of Robin Hood.
Jim Sinclair’s Commentary
Sanctions might go both ways.
EU Unable to Substitute Russian Gas If Moscow Abandons Ukraine Transit
BRUSSELS (Sputnik) —The European Union will not be able to find another source to substitute Russian gas transiting through Ukraine, if Russia rejects the Ukrainian transit route, Janez Kopac, the Director of the Energy Community Secretariat, said.
The Energy Community is an international organization, which mission is to extend the EU internal energy market’s legal framework to South East Europe and beyond. Secretariat is the only Energy Community’s permanent institution.
Kopac told RIA Novosti:
"No, there is not enough capacity at the moment. I think, this will not change in the coming years, even by the end of 2019."
On Monday, Russian Energy Minister Alexander Novak said Russia will most likely refrain from transiting gas through Ukraine to Europe once the current contract expires in 2019.
Russia has repeatedly expressed concerns over Ukraine’s lack of trustworthiness as a transit country. Currently, up to 40 percent of Russian gas is delivered to Europe through the Ukrainian territory.
Kopac also said Ukraine will remain a transit country for Russian gas supplies to the European Union.
Jim Sinclair’s Commentary
Into consumer debt hell with credit either approaching or maxed out.
Where Have All the Consumers Gone?
Retail sales rose less than expected in March after declining for three consecutive months. Since the U.S. began collecting data in 1967, only twice has it seen three-month stretches of waning retail sales in non-recessionary times.
This is puzzling. Why would consumers spend less as the economy picks up steam? And why haven’t consumers gone shopping with the one percent extra income that collapsing oil prices have handed them?
Last year, most forecasters assumed consumers would promptly spend their energy savings, resulting in a blowout Christmas season. Because it makes up 70 percent of gross domestic product, consumer spending was the only sector that could push the economy from its tepid 2.3 percent real growth rate to the 3.5 percent to 4 percent rate some economists had been predicting since the recovery started. Forecasters also pinned their hopes on consumer confidence readings, which hit a 10-year peak as shown by the University of Michigan survey.
Those prognosticators must not be aware of the low correlation between consumer confidence and spending. Our work shows that changes in consumer sentiment often lag, rather than precede, shifts in outlays.
Investors, too, have been optimistic. The consumer discretionary component of the Standard & Poor’s 500 Index, which includes retailers, auto producers and media companies, is up 19 percent in the last six months, compared with 10 percent for the broader S&P 500. Many of these companies are domestic-only and aren’t suffering from the strong dollar and weak foreign sales the way multinationals are. The ratio of stock prices to earnings for consumer discretionary stocks over the last year is 19.7, up from a five-year average of 16.5.
Jim Sinclair’s Commentary
How many times do you need to be told by how many people until you believe?
FDIC Plots a Bank Heist Involving YOUR Accounts
There’s a new front opening up in the war on your wealth. If you haven’t heard yet of the “bail-in,” you will. Even if you have, you need to know the latest…
The bail-in is another weapon in the government’s arsenal of capital controls meant to reward Wall Street cronies and separate you from your money.
We’ve long been familiar with capital controls, such as daily limits on bank withdrawals. Add that to seven years of microscopic interest rates cannibalizing savers’ nest eggs combined with planned inflation stealing your money while you sleep. But unlike the drip-drip we’re used to, the bail-in will come upon you quickly, harshly, and with finality.
As the world faced a complete financial meltdown in 2008, Congress ponied up fresh taxpayer money – $800 billion for openers and trillions since – to bail-out favored banks and industries. Out-of-favor institutions were allowed to fail. Jobs, fortunes, and futures disappeared while unborn generations were saddled overnight with unpayable debt.
Congress and bankers noted the sharply disagreeable taxpayer reaction. So they recycled an old idea from the Great Depression’s playbook – next time, just steal bank depositors’ life savings.
That tried and true tactic took a new name: the bail-in. The easy part – the laws they needed had been in place for decades. But for added cover, they passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a 1930′s-styled, bank heist blueprint with a feel-good name.
Those laws altogether say your money in your bank account in your name is not your money. Those laws say the bank owns your deposited money, not you.
Author: Bill Holter
Published: April 16th, 2015
A catchy title this “$5,000 Silver?” don’t you think? Am I crazy? Is this even possible? In who’s lifetime? Ours or our great, great grandchildren long after we are dead and buried? The best way to look at this I believe is to briefly look at silver’s big brother gold and then postulate whether it’s possible or not.
To begin, let’s look at what happened in 1980 and why gold traded up to $875 in the first place. As Jim Sinclair has said many times, gold “moved in a manner to cover the value of foreign held debt of the U.S.”. He has also said “$50,000 gold is possible and it may turn out that this figure is far too low”. Before you laugh and start firing spitballs at me or Mr. Sinclair, I remind you of his call of “gold at $1,650 per ounce by Jan. 2011″. He said this when gold was $350 per ounce or so and the year was around 2004 if memory serves me correctly. He was called a nut job and far worse …he was correct in retrospect and off in his timing by about eight months …SEVEN YEARS AHEAD OF TIME!
To refresh your memory, let’s do some basic mathematics. The U.S. purportedly has 262 million ounces of gold. (As a side note, if you understand how much gold China has imported just over the last six years and compare that to global production, then you understand the U.S. has in all likelihood “dishoarded” much of this gold). We can compare this 262 million ounces to our national debt rounded off at $18 trillion. Doing the math, if we had to back our debt with the gold we supposedly have, the number currently comes up to $68,700 per ounce!
Before you call me nuts, I have one question for you. Were foreigners to decide that “dollars” for any (many!) reason was no longer acceptable, what would we “pay” with? Remember, since the dollar is the reserve currency, the U.S. holds almost NOTHING in foreign reserves. Why should we have to hold foreign reserves, we issue THE reserve currency?! And yes, I understand the debt is “contracted” in dollars so all we have to do is print more to make the payment. All I am saying is this, if the U.S. was forced somehow to actually settle the debt …in gold, our gold would need to be valued at $68,700 per ounce “now”. I say “now” because our debt burden will only grow larger, our gold holdings (IF they truly still exist) will not grow or “breed” making our stash larger with new little goldlings. My point is this, $68,700 is a credible number only assuming we do have the gold we claim to have.
Now let’s look at silver. Silver is taken out of the ground at roughly a 10-1 ratio to gold production. This number includes “by-product” silver. The current price ratio is 70-1 or thereabouts, nonsensical when you factor in the price to produce silver is higher than the market price. This situation argues for severe supply cutbacks in the future unless the price goes higher to allow for a mining profit. Silver is also a very miniscule market when looked at from a dollar standpoint. There are roughly 800 million ounces produced globally which in dollar terms is less than $15 billion. In today’s world, $15 billion is nothing! Individual companies are bought and sold for more every day.
Another aspect to silver is the “low hanging fruit” has already been found and mined. Many companies have high graded production just to stay in business. New silver deposit exploration has found very little over the last 5-10 years, current new exploration today is almost non existent because the funds from operations have turned into losses. The capital to look for new silver deposits simply does not exist.
It’s Not The Weather: Industrial Production Is Rolling Over, Yet The Fed Is Clueless About Its Own Index
by David Stockman • April 15, 2015
Another day of “incoming data” and still more evidence that this isn’t your father’s business cycle. This time it comes from the Eccles Building itself, but don’t expect the Keynesian money printers domiciled there to recognize that the industrial production report they issued today constitutes yet another rebuke to their entire macro model.
The March index slipped badly (0.6%) and thereby predictably elicited a “do not be troubled” assurance from the talking heads. It was just aberrant weather again. Well, that’s actually right. March was so much warmer than February that the utility component of the index plunged by 5.9%.
Indeed, as another branch of the Fed revealed a few days ago, March was actually warmer than normal for the month. Presumably this means the punk economic data for March can’t be explained by winterish weather-since it is the very opposite condition which explains last month’s steep drop in utility production.
So the better part of wisdom would be to keep the weather and its unpredictable impact on monthly power plant demand out of it. And, as it happens, the trends in the other two components of the index-mining and manufacturing-do offer some very pertinent clues about the dismal state of the US economy.
In a word, both of these indices are rolling over on a short-term basis and reflect trend lines which implicate the destructive doings of bubble finance, not the Fed’s pretension that it is rejuvenating the main street economy.
In the case of mining, the March index was down 4% from its December level, yet the decline in actual shale patch output has not yet even started. The recent rollover in the index is mainly attributable to the plunge in coal production, which is now down 20% from it peak three years ago.
In sum, the 30% gain in mining production since the pre-crisis peak is all in the rearview mirror. Mining accounts for about one-seventh of the industrial production index, and, as George W. Bush once said in another context, this sucker is going down.
Jim Sinclair’s Commentary
Always good news to see market expansion and a move await from pure dollar trading.
SGE to start fixing gold price denominated in yuan
The Shanghai Gold Exchange will try to start offering the renminbi-denominated gold-fixing price this year, as an alternative to the dollar-denominated gold-fixing in London, a top bourse official said on Wednesday.
SGE head Xu Luode said that the bourse has been researching the pros and cons of the yuan-denominated gold-fixing price, and will strive to launch it by the end of this year as market conditions have laid "foundations" for the new price-fixing.
"The yuan-denominated price for gold will not compete with the current dollar-denominated price. Instead, it will be complementary, offer one more choice, and the yuan-denominated and US dollar-denominated systems can be cross-referenced," said Xu, adding that the yuan-denominated benchmark price will only make gold prices more reasonable. It will also reflect the existing supply and demand situation, as China accounts for about 40 percent of the global physical gold demand.
China is also the world’s biggest producer and second-largest consumer of gold. Currently global gold prices are decided by the century-old London fix, which has been under scrutiny because of alleged price-manipulation and will soon be replaced by a new mechanism involving more participants.
Analysts said the move, if successful, will help popularize global use of the renminbi, which has already become world’s fifth most-used settlement currency and reserve currency for some banks.
"If the yuan-gold-fixing in Shanghai is launched, it can use the model of the international board of the SGE within Shanghai’s Free Trade Zone, which allows foreign investors and banks to settle and trade in offshore yuan, while domestic ones to use onshore yuan as the currency is yet to be fully convertible," said Yang Fei, a gold investment analyst with See-wonder Financial Information Technology Co Ltd.