The Black Hole

Jackson Hole 2012 and Dull Markets

The prices for stocks are now fake
So Kleptos can stay on the take
The bubbles Ben's blowing
May keep markets growing
But sooner or later they'll break

The Chinese Stock Markets are returning to the lows of 2009 and the Europe is mired in a recession. The American Stock Markets are not far off their highs and we do not think this will continue. Mark Grant is quite negative, for all kinds of reasons, about western equity markets now and would be taking profits and returning to the more assured bets of getting yield from bonds and not from dividends. 

A dividend may be reduced or cancelled by the wave of some Boards’ hand one afternoon while senior debt cannot be cancelled without the company or the municipality going into bankruptcy so that the top of the capital structure is far safer than relying upon dividends for income. In the next sixty days we are faced with Greece, Portugal, Spain, Italy and ECB issues that are quite serious both economically and politically. You may think what you like but there is a lot of risk on the table; of that you may be assured. 

When someone says, “Buddy can you spare a dime” we would like to be the one being asked and not the one doing the asking. It is here where we stand and wait.

Kondratieff : Generational Analytics

Game Over

If the cycles of the past century continue to repeat, most of the first decade (or more) of this century will experience a secular bear market – an extended period of generally down or sideways and choppy stock market conditions....That is what we propose to review in this presentation according to several technical approaches

As we are in a high risk / high volatility period typical of some secular cycle changes and long term bear markets  we proposed this presentation few weeks ago, rather it was a discussion about the fundamental forces that drive economic, financial and social environment and stock market returns. Even though it is challenging to predict the market over months and quarters or even a few years, we believe the presentation shows that the general environment (for some basic behavioral reasons we shall be glad to discuss) over some longer periods. Those periods are the secular stock market cycles of above-average bulls and below-average bears. These cycles generally take a generation to work their way through the investor public, have significant magnitudes of becoming undervalued and overvalued, and have significant implications for the way that investors should approach each of these periods. 

The short-term, somewhat random, market gyrations are the result of then-current circumstances and market forces wrestling stock prices around a gravity line of the broader cyclical trend.

Finally, we will make a connection between money printing, gold, US dollar and stocks that will give us further indications of the direction of the stock and bond market in the coming decade.

Point break A LT Technical Analysis Approach by investlogic 

Fill your bowl to the brim and it will spill.  Keep sharpening your knife and it will blunt.  Chase after money and security and your heart will never unclench.  Care about people’s approval and you will be their prisoner.  Do your work, then step back.  The only path to serenity.
- Tao Te Ching


Addendum

Peter Baxter, President of Baxter Capital Advisors, will explain why he thinks we are in a Kondratieff Winter and where the economy is headed based on this theory.

(start at 2:00 min)

Kondratieff Wave theory details how global and regional capitalist economies experience a recurring cycle pattern of boom and bust of around 60 years that coincides with a peak in credit *. We talk to Peter Baxter about the components of each of the four cycle seasons (Winter, Spring, Summer, Fall), and how each season exhibits the same unique characteristics. Once credit has peaked in the cycle, it must be choked off so that the excesses from the previous cycle can be removed. We will talk about how he foresees the Winter cycle playing out, as well as why the mainstream media has largely ignored Kondratieff Wave theory. 

*

Chronique des Emergents

Un autre regard sur la Russie

Alexandre Latsa, l'auteur du blog Dissonance et de publications régulières dans des revues spécialisées, fait part de sa vie en Russie dans une interview аccordée à Flora Moussa, correspondante de RIA Novosti.

Je suis sur la route : на дороге снова...

Gogol a dit : "En Russie, il n’y a que deux problèmes: les cons et les mauvaises routes". Bien sur je me garderais bien d'affirmer une telle chose et je laisse à l'auteur des âmes mortes la responsabilité de cette assertion pour le moins excessive sur le genre humain.

Pour ce qui est des routes je partage en partie son point de vue, même si la Russie de 1850 et celle de 2011 sont du point de vue des infrastructures certainement deux pays totalement différents.

Bien sur le pays est immense, le climat y est assez terrible, violent et les distances entre villes telles qu'il est sans doute naïf d’imaginer que le réseau routier puisse un jour être de la qualité du réseau français, par exemple. Malgré tout les routes de la Russie de 2011 c'est quelque chose. Quiconque à un peu roulé en Russie, et même pas très loin de Moscou, a pu prendre conscience des lacunes terribles du réseau routier. Je préfère ne pas parler des routes de Pétrozavodsk et de la campagne de Carélie par exemple, je ne suis pas sûr que le mot route soit approprié pour définir de ces axes de circulation.

Moscou encore une fois parade en tête de toutes les démesures puisque son ancien maire avait pour spécialité de faire refaire les routes très régulièrement, comble de l'ironie, celles-ci étaient en 2010 tout simplement 3 fois plus chères au kilomètre que la moyenne russe, 6 fois plus chères que la moyenne européenne et 9 fois plus que la moyenne américaine.

Il y a une folie russe, propre à la route, je crois. Les Russes aiment conduire, ils aiment la vitesse et avec des routes en mauvais état, il s'agit de l'équation parfaite pour avoir un nombre record d'accidents et de décès. Les statistiques ne mentent pas, la Russie est encore un des pays du monde ou l'on meurt le plus au volant. En 2007, 35.000 personnes sont mortes sur la route contre 26.000 en 2010. La baisse est maintenant amorcée mais les chiffres sont encore accablants, à comparer, par exemple, aux 4.000 victimes françaises pour 2010 alors que le nombre de véhicule en circulation est sensiblement le même, soit entre 38 et 40 millions de véhicules. En 2010, les russes représentaient 1/3 des tués sur la route en Europe.

Ces dix dernières années en Russie, quelque 315.000 personnes ont été tuées et environ 2 millions blessées dans les accidents de la route.
Bien sur les choses vont s'améliorer, même si l'adoption récente d'un nouveau code de la route comprenant de nouvelles sanctions n'a pas complètement eu l'effet souhaité, près de 25% des accidents aujourd'hui sont le fait du mauvais état des routes. A cette fin, unfonds routier fédéral a été créé permettant au ministère russe des transports de réparer jusqu'à 85% des routes fédérales d'ici 2015. En 2012, le Fonds accumulera 348 milliards de roubles (8,9 milliards d'euros), tandis qu'en 2013 il atteindra 408 milliards de roubles (10,4 milliards d'euros).

La petite ville de Yaransk(Яранск)entre Nijni Novgorod et Kazan.

Ces ressources devraient permettre de financer travaux et réparations du réseau routier russe et notamment d'asphalter toutes les routes menant aux agglomérations de plus de 125.000 habitants. Lors de son dernier discours du 20 avril dernier sur le travail réalisé par le gouvernement, le premier ministre russe a confirmé l'engagement du gouvernement à  améliorer les infrastructures du pays. Il a rappelé que pour la première fois de son histoire la Russie voyait ses façades est et ouest reliées par une autoroute. On se rappelle en effet que Vladimir Poutine avait inauguré le dernier tronçon d’autoroutel’été dernier. On se souvient de sa fameuse phrase: "Pour la première fois de son histoire, la Russie est reliée d’est en ouest par une autoroute. Voilà déjà un problème de moins" ! Les dépenses autoroutières devraient en 2011 et 2012 dépasser 700 milliards de roubles (17,5 milliards d'euros), soit 40% de plus que l'année passée et permettre la construction de 10.000 kilomètres de nouvelles routes d'ici 2016 ainsi que la modernisation des autoroutes fédérales et régionales d'ici 2020.

Pour autant, contrairement à ce que certains pensent, traverser la Russie en voiture n'est pas du tout impossible, bien loin de là. Au contraire, malgré quelques tronçons difficiles, la route Ouest-Est est tout à fait faisable et ce même l’hiver, sans utiliser un 4x4 et sans être un conducteur chevronné. Vous ne me croyez pas ? Regardez ces quelques expériences enrichissantes que de simples citoyens ont vécues en choisissant de traverser la Russie en voiture. Honneur au beau sexe, il y a d’abord cette jeune femme, Uzdina, qui choisit de rouler seule et de traverser une grande partie de la Russie de Saint-Pétersbourg à Kazan puis la mer Noire, avant de rentrer en France.

Un voyage de 12.000 kilomètres en Russie, enrichi de photos et de découvertes incroyables que j’incite mes lecteurs à consulter. Ce qu’elle a le moins aimé? Les routes du nord de la Russie en images ici. Bien sur c’était en 2008, deux ans plus tard, en 2010, après la ballade de Vladimir Poutine en Kalina, Les journalistes de Drom.ru se lancent eux dans la traversée Moscou/Vladivostok avec une Lada Kalina Sport. Le résultat? Un blog intéressant et humoristique qui décrit cette épique ballade sur plus de 10.000 kilomètres, et dont la page aura été visionnée près de 200.000 fois.  Malheureusement pour les  lecteurs non russophones, il est entièrement en russe.

Il est par contre possible de simplement se faire une idée en regardant l’état des routes  puisque durant l’automne 2012 l’Apex a filmé la route Moscou-Vladivostok sur sa totalité et qu’il est possible de consulter les vidéos en accéléré de ce périple.

Comme vous allez le voir, les routes sont variées, certes, mais leur état général est de façon surprenante bien meilleur qu’on ne l’imagine.

Deux périples m’ont particulièrement étonné, tout d’abord l’incroyable Paris-Pékin de Marc Weinberg donc la traversée de la Russie d’Est en Ouest en quatre-chevaux et ce l’hiver, non vous ne rêvez pas, c’est faisable, et les images et le récit du voyageur sont là pour en témoigner. Je vous conseille aussi, pour ma part, la traversée en plein hiver de la Sibérie orientale, les photos valent leur pesant d’or. Les deux roues ne sont pas oubliés, puisque récemment Arthur, que mes lecteurs connaissent, vient de parcourir plus de 3.000 kilomètres avec un authentique side-car Ural, de Irbit dans l’Oural jusqu’à Novorossisk sur la mer Noire.

Berlin....you have a problem !

Merkel and The Juggling Group

German newspapers sets out 5 major problems for Mrs Merkel, now that she has returned from holiday. 

a) Increasing reluctance to provide further aid to Greece from members of the FDP (her coalition partner) and the CDU's Bavarian sister party (the CSU). In addition, there is the matter of the decision by the German Constitutional Court as to whether the German President can sign off on the fiscal compact and the ESM – generally, the German press is raising the issue of conditionality;

b) Issues in respect of renewable energy, childcare and gay rights;

c) The weakening support for her coalition partner the FPD – now has just 4.0% of the vote in recent polls. You need at least 5.0% to gain any representation;

d) Mrs Merkel's sister party the CSU is getting more populist, given impending State elections next year. They are opposed to a further Greek bail out;

e) Recently, Mrs Merkel had to rely on support from the opposition SPD and the Greens to get her EZ/Euro rescue efforts passed in Parliament, due to defections from her own coalition. However, Peer Steinbruck, a leading member of the SPD and former Finance Minister, states that Mrs Merkel cannot count on their continued support, without offering "concessions";

Hold on, you guys! I’m here ...LOL!

Dutch retail sales decline materially. June retail sales rose by +1.0% Y/Y, as opposed to expectations of +2.5% and +1.6% in May. The markets have ignored Holland – dangerous. The Dutch are becoming more Euro sceptic, given their economic problems and general elections are due in mid September. They are also one of the remaining 4 countries in the EZ, which has a AAA rating, the others being Germany, Finland and Luxembourg. However, Moody's have stated that Germany, Holland and Luxembourg risk losing their AAA status. The Dutch have been particularly hawkish on Greece.

Over the weekend, I read numerous articles which (for, effectively, the first time) keep bringing up the subject of a referendum (in respect of the EZ/Euro) in Germany. Yes, the SPD has proposed a referendum and Schaeuble, a month or so ago, talked about it. However, the increase in calls for a referendum has surprised me. In addition, there is increased speculation (including on Bloomberg today) that whilst the the Constitutional Court will allow the German President to sign off on the fiscal compact/ESM, they may impose conditions which (severely?) impact the ability of Mrs Merkel/Germany to act. As you know, I believe that the Constitutional Court will allow the President to sign off on the fiscal compact/ESM, but remain concerned about (restrictive?) conditions. Any such conditionality will clearly be a major negative. In addition, the ECB have stated that they will only act if the relevant countries first seek support from the EFSF/ESM. Any material limitations wh ich, for example, do not allow the ESM to be leveraged, due to conditions imposed by the Constitutional Court (it's far too small at present), will be a major problem.

As you know, one of my biggest concern remains that Mrs Merkel has not sold the idea of the EZ/Euro to the German's, preferring to do deals in dark, smoke filled rooms with the doors firmly bolted. I continue to believe that this is a very dangerous and high risk strategy. In addition, a number of German politicians report that Mrs Merkel says one thing in public, but does the opposite in private. That game has ended – the spotlight is on her and on her actions. There is no question that Mrs Merkel and most German politicians are keen to support the EZ/Euro. However, with increasing opposition from her own party and coalition partners and the SPD's statement that they want (presumably political) "concessions" for on going support, (which Mrs Merkel will clearly need), the Risk/Reward situation is changing.

Recent polls suggest that the Germans understand that the costs to their economy will be far greater if the EZ/Euro breaks up, but it looks as if the support is slipping. Populist politicians are playing to the crowds, which will aggravate the situation.

The impending Dutch elections remains a serious threat and is being ignored – dangerous.

EZ: The Drama Ahead in September

By Megan Greene, Roubini Global Economics (www.roubini.com)

As usual, this has been a lazy August, but we do not expect the quiet to last. Indeed, for the second September in a row, developments in the eurozone (EZ) have the potential to be highly dramatic.

Summer in Europe : The ring of fire

Greece: The troika is due to return to Athens in September and make a ruling on whether to release additional tranches of funding to Greece. If the troika decides to cut the taps off—and we don't think it will—then Greece would default and exit the EZ. The Greek government aims to renegotiate the second bailout program when the troika returns to town in September. If the troika plays hardball and does not grant the Greek government any concessions, then the governing coalition would likely collapse. Also in September, the Greek parliament will have to pass a number of measures to generate €11.5 billion in savings for 2013-14. With a high degree of austerity fatigue in Greece, we can expect social unrest.

Portugal: With Portugal starting to slip on its fiscal targets, we expect Portugal to begin negotiations on a second bailout package. Currently, Portugal is meant to return to the markets in 2013 but, with bond yields well above sustainable levels, we regard this as highly unlikely.

Spain: The auditors Deloitte, KPMG, PwC and Ernst & Young are due to present their full reports on the capital needs of Spain's financial sector in September. The findings of this report will be used to determine the exact amount the Spanish banking sector will need to borrow from the EZ's bailout fund, the European Financial Stability Facility (EFSF).

Italy: The Italian general election campaign will begin in earnest in September. Although polls point toward a center-left-led coalition, Italian politics is at its most fluid state since the early 1990s and, with so many voters still undecided, it is impossible to call the election.

Germany: The German constitutional court is due to vote on the legality of the ESM (the successor to the EFSF) and the fiscal compact on September 12. We expect the court will deem the ESM legal but, if this does not occur, it would serve a major blow to EZ policy makers, who have committed the ESM to potentially purchasing sovereign debt in the primary markets.

France: The French government is scheduled to unveil its 2013 budget in September. Markets will be disappointed if it does not include large spending cuts, but the announcement of further austerity risks riling trade unions and stoking civil unrest.

Netherlands: A general election is scheduled for September 12. Recent opinion polls suggest the ruling right-of-center VVD will be unable to form a right-of-center majority government. Consequently, coalition negotiations are likely to be protracted. The left-wing, euro-skeptic SP may win enough votes to be the second-biggest party. This would make it more difficult for the new Dutch coalition to secure parliamentary support for additional support measures for peripheral EZ countries.

Eurozone: There is a progress report on establishing the ECB as a single banking supervisor due out in September. Given that many details have not been hammered out yet, there is a chance that the progress made on this first step toward a banking union will disappoint.

In terms of the broader EZ developments, we expect the Greek government to collapse by the end of the year, and a Greek exit in early 2013, followed by an exit by Portugal by end-2014. Moreover, we expect Spain to receive official support from the EFSF/ESM in late 2012 after the ESM has been fully ratified (the second half of September at the earliest), while Italy will hang on longer but will eventually need support as well.

Some Pieces of Arts

A Thin Edge Separating Reality and Simulation

Now that almost all the volume on markets are initiated through and by the machines which are now shaping it in the form of algorithm we think it is interesting to  review one older post mentioning the artist Michael Najjar work showing the thin edge separating reality and simulation

In January 2009 Michael Najjar stood on the summit of Mount Aconcagua, at 6,962 meters the highest mountain in the world outside of the Himalayas. The photographic material gathered in the course of the three week trek forms the basis of the "High Altitude" work series, which visualizes the development of the leading global stock market indices over the past 20-30 years. The virtual data of the stock market charts are resublimated in the craggy materiality of the Argentinean mountainscape. Just like the indices, mountains too have their timeline, their own biography. The rock formations soaring skywards like so many layered folds of a palimpsest bear witness to the life history of the mountain – stone storehouses of deep time unmeasureable on any human scale. The immediate reality of nature thus becomes a virtual experience. Such experience of virtuality is strikingly exemplified by the global economic and financial system. If the focus used to be on the exchange of goods and commodities, it is now securely on the exchange of immaterial information. The information society has brought about a tectonic shift in our understanding of space and time. Humankind is confronted with a process of such dynamic complexity that the borderlines we seemingly identify at one moment are already sublimated in the next. In future the virtual value system could demand its proper reincarnation in the real world. The jagged rock formations of “high altitude” are emblematic of the thin edge separating reality and simulation.

Gallery 

More : Go to Micheal Najjar's site then launch the site and click high altitude and you see the charts of major stock market indexes in nature. 

Unsinkable or Unthinkable

Ten Minutes After the Titanic Struck the Iceberg

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: the idea that the ship will sink is beyond belief.

As we all know, the "unsinkable" Titanic suffered a glancing collision with an iceberg on the night of April 14, 1912. Ten minutes after the iceberg had opened six of the ship's 16 watertight compartments, it was not at all apparent that the mighty vessel had been fatally wounded, as there was no evidence of damage topside. Indeed, some eyewitnesses reported that passengers playfully scattered the ice left on the foredeck by the encounter.

But some rudimentary calculations soon revealed the truth to the officers: the ship was designed to survive four watertight compartments being compromised, and could likely stay afloat if five were opened to the sea, but not if six compartments were flooded. Water would inevitably spill over into adjacent compartments in a domino-like fashion until the ship sank.

We can sympathize with the disbelief of the officers, and with their confused reaction, simultaneously reassuring passengers and attempting to goad them into the lifeboats. With the interior still warm and bright with lights, it seemed far more dangerous to clamber into an open lifeboat and drift off into the cold Atlantic than it did to stay onboard.

As a result, the first lifeboats left the ship only partially full. Only when it became undeniable that the ship was doomed did people attempt to "make other arangements," but by then it was too late.

The tragedy was a cruel mix of human error (entering an ice field at nearly top speed, 23-25 knots), hubris-soaked planning (only enough lifeboats for half the passengers and crew) and design flaws: the high-sulfur iron hull plating did not bend when struck by the ice, it shattered like china.

As noted above, the watertight compartment design was also flawed; indeed, some studies have found that the ship would have stayed afloat an additional six hours had there been no watertight compartments, as water would have sloshed evenly along the entire length of the vessel.

QR CODE FOR SOS

I think this perfectly describes the present. Our financial system seems "unsinkable," yet the reliance on debt and financialization has already doomed it, whether we are willing to believe it or not.

Maybe the illusion that the ship is unsinkable can be maintained for another year or two; the Status Quo's success in masking the ultimate fate of the financial system for the past four years supports the belief that there is literally no limit to the Federal Reserve and Treasury's power to keep the ship afloat, regardless of the cost. In other words, the Fed and Treasury are perceived as "unsinkable."

That illusion has cost trillions of dollars, trillions of dollars of new debt that now burden the taxpayers: $2 trillion added to the Fed balance sheet, $1.2 trillion in secret giveaways to the banking cartel, and $6 trillion in additional Federal debt/spending.

Yet few of us are willing to entertain an exit from the belief system that supports the Status Quo. We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: we can't believe this grand ship could sink, so we do nothing while it is still possible to influence our fate.

Structural flaws doom the financial system and government finances alike to either default or destruction of the nation’s currency. There are no other end-points.

We could insist on changes to these doomed policies, but we do not; why?

Some of our reluctance can be attributed to disbelief, as the gap between what we know is inevitable--the ship will sink beneath the waves--and what we currently see--a proud, mighty ship, apparently only lightly damaged--is so wide.

But if we delve deeper, we discern how calculations of risk and gain yield faulty assessments of self-interest. While the ship appears structurally sound, it seems risky to clamber into an open lifeboat and drift away into the freezing night, while the supposed gain (saving our life) is questionable: from the warm deck of the ship, it seems that climbing into a small lifeboat would place our life far more at risk than staying on board the mighty ship.

This assessment of self-interest was tragically flawed, and by the time the impossible (sinking) had become the inevitable, it was too late to change the fate we’d selected back when all seemed permanent and secure.

The point of this exercise is to reveal just how illusory our assessment of self-interest and security can be, and how prone we are to making decisions based on the present even when our rational minds are well aware that it is unsustainable.

The financial system of the United States of America is like the Titanic. Hubris led many to declare it financially unsinkable even as its fundamental design was riddled with fatal flaws and the human pilots in charge ran it straight into the ice field at top speed.

We have some time left before the ultimate fate is visible to all. Ten minutes after the collision, the Titanic's passengers had 2 hours and 30 minutes before the "unsinkable" ship sank. How much time we have left is unknown, but the bow of the ship will be visibly settling into the icy water within a year or two--and perhaps much sooner.

Resistance, Revolution, Liberation: A Model for Positive Change

Libor : Analyse de Myret Zaki

Tous les taux sont manipulés

Ces points méritaient d'être soulignés (voir nos précédents commentaires et "Is Gold Manipulated?".

Analyse de Myret Zaki :


Pour notre part nous sommes convaincus de la fuite en avant orchestrée par les dirigeants sans retour possible, avec les conséquences inéluctables :  inflation, baisse du dollar, crise monétaire, hausse de l'or, crise pour l'accès aux ressources naturelles, conflits.

De manière cynique, on peut se demander si les États ne sont pas en train de corrompre leur monnaie et leur crédibilité à l'insu de leur plein gré sachant qu'il n'y a pas d'issue -voir Ten Minutes After the Titanic Struck the Iceberg-. Ne font ils pas fait un calcul en deux, voire trois temps, qui consiste à baisser les taux d’intérêt au plus bas (Libor scandal), afin de refinancer leurs dettes à des conditions exorbitantes tout en pouvant les escompter auprès des banques centrales, avant de voir l’inflation déprécier ces mêmes dettes (draghi monétisation) et/ou permettre leur rachat à des conditions avantageuses, et d’appauvrir ses citoyens par un impôt inflationniste lancinant (démantèlement social. Est-ce un scénario improbable ? Il ne faut pas l’exclure, d’un point de vue strictement théorique.

A méditer…

« Pour détruire le régime bourgeois, il suffit de corrompre sa monnaie ». Lénine
(Pic : Window in Museum of Political History, St Petersburg)

Mongolia Flash

La Mongolie, futur émirat des steppes

C’est le futur «émirat des steppes». La Mongolie est au seuil d’une des plus fulgurantes transformations qu’un pays ait jamais connues, avec un incroyable «boom minier» attendu dès 2013. Dans ce pays grand comme trois fois la France, moins de trois millions d’habitants sont assis sur un tas d’or. La Mongolie sera peut-être un émirat est-asiatique, mais un émirat sans émir. Dans un environnement régional où la démocratie peine à fleurir, le pays a un régime parlementaire dont il n’est pas peu fier. «Cela ne fait que 22 ans que notre démocratie existe, et elle a ses insuffisances comme la corruption, mais elle progresse et la tendance est irréversible», assure Jargalsaikhan Dambadarjaa, l’analyste économique vedette du pays.

Si l'image de la Mongolie est celle d'une terre d'éleveurs et d'agriculteurs, les ressources du pays résident en réalité davantage dans son sous-sol. Au sein d'immenses mines à ciel ouvert qui creusent le désert de Gobi, ce pays, grand comme trois fois la France, dispose non seulement d'assez de charbon pour alimenter l'énorme demande de la Chine dans les cinquante prochaines années, mais aussi de vastes trésors de cuivre, d'or, d'uranium et autres minéraux que le monde entier convoite. Au point d'attirer massivement les investisseurs étrangers, sous la pression de ses deux puissants voisins, Pékin et Moscou.

Un pays en tenaille entre la Chine et la Russie

Gâtée par la géologie, la Mongolie l’est un peu moins par la géographie, puisque totalement enclavée. Entre deux poids lourds, la Russie et surtout la Chine, qui fait porter une ombre immense sur Oulan-Bator. Quelque 90 % des exportations mongoles se font à destination de la Chine. L’an dernier, la Mongolie est devenue le 1er fournisseur de charbon de la Chine, passant devant l’Australie. Il faut dire que Pékin achète aux Mongols entre 30 et 40 % en dessous des prix du marché. Le ressentiment populaire monte aussi contre l’afflux d’ouvriers chinois sur les chantiers de construction.

Au printemps, la tentative de rachat par le chinois Chalco des houillères de SouthGobi a été un choc national. Toutefois, la marge de manœuvre du gouvernement reste faible. Sans l'aide étrangère, qui se chiffre en milliards de dollars, les mines resteraient en effet inexploitées. La Mongolie se sait en outre vulnérable au quasi-monopole de Pékin sur ses exportations (90 %), au point d'avoir accepté une réduction de 30 % sur ses produits miniers par rapport aux prix du marché. Et si Oulan-Bator s'est récemment tourné vers les Etats-Unis pour diversifier ses clients, l'enjeu de la protection de ses ressources et de sa souveraineté reste le même tant les Américains, à l'instar des Russes ou des Chinois, sont d'intenses consommateurs d'énergie.

Jeunesse dorée et bidonvilles

Ce qui se passe en Mongolie est unique dans l’Histoire, confie Jan Hansen,chef économiste de l’Asian Development Bank, on n’a jamais vu un pays connaître un tel bouleversement en aussi peu de temps. La croissance a bondi à 17,5 % l’an dernier, et devrait grimper à 20 % l’an prochain. En 2005, le PIB par habitant était de 700 dollars, et il est déjà monté à 3 000 dollars. Il devrait doubler tous les deux ans. Les grandes enseignes de luxe, de Louis Vuitton à Ermenegildo Zegna, ont fait leur apparition dans la capitale aux rues encore défoncées et boueuses. Mais cette folie a aussi apporté avec elle une inflation galopante, qui a atteint 16 % en avril, et creuse un abyssal fossé social. Le grand risque vient de la dépendance à l’excès de la ressource minière, qui représente 90 % des exportations et 30 % des revenus du pays. On sait que les pays ainsi dépendants progressent moins vite que les autres. Et le secteur est peu créateur d’emplois, avec seulement 1,6 % de la population y travaillant.

Néanmoins, cette course à l'exploitation du sous-sol n'est pas sans poser de problèmes. Au-delà de la question de la pollution liée à l'intense extraction minière, cadet des soucis d'un pays qui cherche à se développer économiquement, le principal enjeu se révèle être  la répartition des richesses produites. Car si la Mongolie est assise sur cette manne fantastique qui représente un tiers de son PIB, 30 % de sa population vit en-dessous du seuil de pauvreté. L'an dernier, l'investissement étranger n'a profité qu'à une faible minorité des 2,8 millions de Mongols tandis que des fortunes colossales s'édifiaient. La frustration et l'irritation se sont alors fait sentir au sein de la population. Et face à l'appétit croissant des entreprises étrangères, le gouvernement a dû adopter en urgence une loi qui limite à 49 % l'investissement étranger dans trois secteurs stratégiques, les mines, les banques et les télécommunications.

Les immenses ressources minières  âprement convoitées

Deux sites géants devraient à eux seuls assurer la fortune du pays pendant des décennies. Le premier, Talvan Tolgoi (littéralement "les cinq collines"), est le plus grand gisement de charbon de haute qualité au monde avec plus de 7 milliards de tonnes de réserves. Cette mine, située à seulement 200 km de la frontière chinoise, doit pouvoir alimenter les sidérurgistes – chinois essentiellement – pendant deux siècles, selon le quotidien français. L’an dernier, la Mongolie est ainsi devenue le premier fournisseur de charbon de la Chine, passant devant l’Australie. Trois groupes sont sur la brèche pour exploiter Talvan Tolgoi : l'entreprise d'Etat chinoise Shenhua Energy, le géant minier américain Peabody Energy et un consortium russo-mongol.

Avec plus de 7 milliards de tonnes de réserves, cette mine est le plus grand gisement de charbon de haute qualité au monde. Elle devrait pouvoir alimenter les sidérurgistes - chinois essentiellement - pendant deux siècles. Le gouvernement prévoit d’en introduire 30 % en Bourse, à Londres ou Hongkong.

Le second, Oyu Tolgoi ("la colline turquoise"), est une immense mine renfermant les plus grandes réserves au monde de cuivre et d'or : 36 millions de tonnes de cuivre et 1 275 tonnes d'or selon les estimations. La production sur le site, détenu à 66 % par le groupe canadien Ivanhoe (contrôlé par le mastodonte anglo-australien Rio Tinto) et à 34 % par le gouvernement mongol, doit démarrer début 2013, avec un objectif de 450 000 tonnes de cuivre par an et 10 000 kg d'or.

L'exploitation de ces colossales réserves devrait être à l'origine du grand "boom minier" attendu pour 2013, qui pourrait changer la face du pays. Déjà l'an dernier, l'investissement étranger a quadruplé à 4 milliards d'euros, faisant bondir la croissance à 17,3 % contre 6,4 % en 2010. Et la tendance devrait se poursuivre, avec des prévisions de 20 % de croissance pour l'an prochain et un PIB qui doublerait tous les deux ans.

Marc Faber Forecasts : Video

 Massive Market Crash in the Fall

The editor of the Gloom, Boom, and Doom Report got fired up in an interview with Fox Business News. After another day of lows in the market, and record lows in U.S Treasuries, Marc Faber expressed his concern with the stock market, gold, and more money printing.

Here are some quotes from his interview found below:

“We could easily drop below 1000 on the S&P.”

“If you print as has been printed in the U.S. over the last 2, 5, 10, 20 years, it's very beneficial for corporate profits because it flows mostly into the comforts of companies but eventually the money printing stops and corporate profits don't grow anymore.”

“I like physical gold but I think we are still in a correctional period but like the stock market, I think gold has been oversold.”

Go Gold

Since the record high in gold price hit in August at 1,889.70, prices have slowly dipped, especially over the past few months. Investors looking to cash in on the gold market could jump in now and wait out the prices. Faber points out that gold is not in a bear market but rather, is “still in a correction phase.”

“Individual investors should gradually accumulate gold,” Faber explained. “Hold some cash, hold some precious metals, hold some equities, and hold some real estate. If one asset class or the other declines substantially move money into that asset class.”

It sounds much easier said than done. But with the recent spike in gold prices coming off of the U.S. government's lousy jobs reports, the correction phase looks to be the time to get on board.

Many felt – and still feel – that if the Fed moves forward with quantitative easing that the gold prices will most definitely rise against the dropping price of the dollar. We have seen it before and it looks to happen again.

Even the big investment banks are still riding the precious metal train amid all of this uncertainty. In one Goldman Sachs' analyst's research note to Reuters, they explained, “We still prefer gold despite an extended period of profit taking in 4Q11 and renewed volatility in 1Q12.”

Don't let the price correction of gold impact your long term outlook on your investments. Follow Faber and Goldmans' lead and gradually add to your gold portfolio.

The Death March : Thunder Road Report

Approaching a New Financial System

This is an excellent report by Paul Mylchreest, Thunder Road Report. He is of the opinion that the current financial system will implode within 6-12 months, to be replaced by a new system backed by gold. At bottom my  excerpts  (emphasis mine):

In this Thunder Road Report (below) and going forward, I will discuss this middle class theme and highlight positions I have in individual stocks, etc. The only good thing that can  come out of this is a rise in awareness. It’s just awful

A bit  of  a  problem,  to  put  it  mildly!  

The obscene amount of debt which has built up over decades and been reflected in GDP numbers, is obviously reflected in the prices of all assets you can see on your Bloomberg screen.

In equities, the debt Ponzi is directly reflected in corporate earnings which have been boosted by   the   “brought   forward”   consumption.   There   is   going   to   be   tremendous   turbulence   in   equity   prices   caused   by   the   reduction   in   corporate   earnings   (certainly   in   real   terms),   punctuated   by   periods   of   hopium   from   centrally   planned   “stimulus”   and   compensated,   as   currencies   get   seriously   debased,   by   “real”   asset   backing   (unlike   bonds).   At   least   we   might   get   a   temporary   “crack-­up  boom”  at  some  point...

which  would  be  like  being  on  morphine  for  equities :

               

“There  she  goes,  there  she  goes  again 

Racing  through  my  brain

 And  I  just  can’t  contain  this  feelin’  that  remains

There  she  blows,  there  she  blows  again 

Pulsing  through  my  vein 

And  I  just  can’t  contain,  this  feelin’  that  remains”          

                                          There  She  Goes/Lee  Mavers

“All that is left (to buy) is the Dollar and Gold"

I  like reading Raoul Pal’s stuff when I can get hold of it, which is incredibly difficult. I can’t recommend his work highly enough but I do disagree with his view on the dollar (although he might be bullish on the dollar just from a trading perspective and he’s been right since May).

The two remaining “sacred cows” preserving the US dollar as the world’s reserve currency are:

1. The belief that the Chinese will continue to buy US Treasuries; and
2. The US dollar will maintain its monopoly on world trade.

Regarding number one, the Chinese have been sellers since the end of July 2011 (note the date). With regard to number two, have you noticed how China has set up currency swaps with nearly all of its trading partners? Have you noticed how Iran has been excluded from the SWIFT system and has begun selling oil to some countries in currencies other than dollars?

China has been preparing for dollar devaluation for nearly a year now, but hardly anybody has noticed. While everybody frets about the Euro, the dismantling of the US dollar’s reserve currency status is occurring within plain sight. I think a deal was done between the US and China in late Summer or early Autumn of last year. Have you also noticed how Ben Bernanke has used just about every unconventional method of monetary policy he’d discussed in his earlier writings on preventing deflation…bar one big one? Dollar devaluation. Let me repeat that, dollar devaluation.

We are heading into a truly mega-financial crisis. This is (another) classic “I hope I’m wrong, but…” report. I think the crisis is going to result in the transition to a new financial system as the current one implodes. Best guess is that it will be either happening, or perfectly obvious that it’s going to happen, within 6-12 months, i.e. within our investing time horizon.

Full report below:

…. Since debt brings forward consumption, the obscene amount of debt in western nations HAS (past tense) already been reflected in their GDP, i.e. a huge amount of GDP was “borrowed” from the future into the past AND is still being borrowed into the present (now primarily from governments and central banks, the supposed guardians of the value of currencies).
….
The relationship between debt and consumption is deceptively simple, but it has a very powerful effect on economies and financial markets which is largely ignored. For years, it could be ignored because the effects were all virtuous. Whenever the debt growth started to slow, some idiot stepped in with maestro-like precision and got all the plates spinning again. Furthermore, GDP is purely a measure of spending and not a measure of wealth or value. If we think in terms of analysing individual companies, GDP would be nothing more than the expense/outflow half of the Cash Flow statement.
….
You can’t spend your way to prosperity, but we are in an upside down world where spending and debt are considered to be “wealth”. People will look back on this period and wonder how they allowed themselves to become so deluded? Although “It’s the debt, stupid”, it’s funny how rarely central bankers mention the “elephant in the room”.
….
“Let’s take a step back for a second. Who are these people? They’re the same idiots that never saw anything coming. So whatever they think they see, or whatever they want to talk about, is meaningless because they are probably wrong about what they think…They are the cause of the problem. So why do we want to know what the idiots think about the current state of the economy?”- Bill Fleckenstein on King World News
-The only reason the “idiots” are worth listening to is to gauge the speed at which they will destroy the financial system.
…
Then there are the banks. The “asset” side of the banking system consists largely of loans to consumers and corporates (debt), bonds (debt) and the zero sum game of derivatives. The latter are opaque, but JPMorgan Chase now has a problem here. You didn’t really think that the bankers could create nearly a quadrillion dollars of notional derivatives exposure and not cause a catastrophe along the way?
….
Meanwhile the price of the only financial asset with zero counterparty risk in the biggest global debt crisis in history has been “locked down” for months. There is a reason. It must move in volume to where there is an insufficient quantity prior to the denouement of the current financial system. A new system is coming with a bigger role for gold.
….
“The only cure for a bubble is to prevent it from developing.”
Well it’s far too late for this financial system. Ten years ago, before the debt bubble became catastrophic, the free market could have resolved this issue. But Greenspan, the “Great Architect”, had to create yet another bubble in real estate and the “point of no return” was left far behind. Then the helicopter-flying monetary psychopath took over and he is creating the bubble to end all bubbles in MONEY itself.