Archive - Mar 17, 2011

The US is now being run by an oligarchy, with lip service being paid to the electorate in allowing the people to vote for the candidates that the parties and the powers will put forward. There will be no recovery for the middle class until they assert themselves. I know I have stated this often in my tag phrase, “The banks must be restrained…”

Minutes after the United Nations announced it would vote on imposing the No Fly Zone over Libya, which is probably merely a formality at this point with virtually no hold outs on the Security Council, Libya has immediately retaliated by saying that it such a decision would open counterstrikes by Libya against any "air and maritime traffic in the Mediterranean Sea" as well as "civilian and military facilities in the country." Whether this means that Gaddafi will promptly attack his oil infrastructure as Zero Hedge first suggested 3 weeks ago is unclear, but the Crude market is not taking any chances: Brent is now up almost $4 on the day having snapped its several day losing streak.

Ben Bernanke has surrounded all of earth’s inhabitants within a Ring of Fire that will create a monetary earthquake that will very soon ravage the livelihoods of billions (the tremors have already started in MENA). While the headlines are now focused on Japan, the dominos continue to fall in the Middle East and Saudi Arabia and Iran seem to be fighting a proxy war in Bahrain. All of the themes I have discussed in earlier emails are only exacerbated by the Japanese quake as the response has been and will be to print infinite amounts of confetti money and try to secure resources to rebuild with it. The problem is that EVERY nation is doing the same thing. So worthless fiat is being expanded exponentially and will compete for real things and why should the holders of the necessities of life, gold and silver (real money and true financial security) as well as food and energy sell their goods for colored confetti or even worse digital entries in a bank account. If you don’t think the governments of all countries that posses massive resources will not export less and in order to keep more internally to quiet their restless populations you aren’t paying attention. This liquidation selloff in commodities since the Japanese earthquake is probably already over and I expect a HARD reversal to the upside to new highs in food and especially oil. The Asia Tapis benchmark is closed at just under $117/b last night and it a whopping 3% off of the high. Wholesale gasoline prices traded here in the U.S. are down about 4% from the high but are a terrifying 15% higher than a month ago. I expect another major surge in the price of oil imminently. Remember last week I wrote that I thought the Dow and gold would ultimately meet at around 5,000. Can’t imagine how this can happen? Watch the next few months. - Mike Krieger

Ironically, hot on the heels of the earlier report by the Union of Concerned Scientists that the NRC had been lax in its oversight of various US nuclear facilities, noting the Indian Point NPP where the UCS alleged there had been a potentially dangerous seal leak since 1993, two democratic senators have asked the NRC to review the safety of all US Nuclear Plants.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 17/03/11

Earlier today we received an email from one of our readers aboard the aircraft carrier group off Japan performing evacuation efforts for US citizens in Japan, that it had turned around and is now going back. While we are trying to validate this, we have just noticed breaking news from Sky News that US and UK search teams are pulling out of Japan tomorrow. We were wondering what may have brought about this (so far unconfirmed) evacuation of the evacuators until we saw the next breaking news from Sky News: "Japan Admits Nuclear Problem Is 'Severe'" - "This is a severe incident that is occurring right now," the spokesman said at a news conference. "We have vented and used seawater as cooling, followed the accident management plan but this is a very severe operation." The admission comes as plant operator Tokyo Electric Power Co (Tepco) continues attempts to stop the six-reactor Fukushima 1 complex from going into nuclear meltdown. "We have to keep cooling the fuel so it doesn't reach criticality," the Tepco spokesman said, adding that radiation levels have barely fallen at the site." Translation: if operation "Irrigation" fails, TEPCO itself confirms the chance of a critical reaction in the nuclear fuel is very high. Which of course would explain why everyone who knows more than the average peasant who just watches manipulated media, is getting the hell out of dodge.

The IAEA is currently holding a press conference in Vienna with its findings on Fukushima. Since there is very conflicted reporting on the issue over the past week, the supposedly unbiased event will likely get substantial attentiont. Among the early disclosures, which should not come as a surprise is that the reactor 3 core at Fukushima is damaged, and no cooling units are functioning. Considering the destruction at that reactor, it is not surprising.

During QE 1 (2009-2010) the Fed was pumping, on average, $50 billion or so into the markets per month. Today’s it’s north of $100 billion. And the stock market is nearly 100% higher than it was when QE 1 was announced.So stocks have doubled, but instead of lowering the liquidity infusions, the Fed has DOUBLED them. This alone should tell you that the Fed is losing its grip on the market. The fact it’s taking more and more money pumps just to keep the markets afloat should be a MASSIVE red flag for all investors.

From a just released report by the Union of Concerned Scientists, focusing on US Nuclear Power Plant oversight by the Nuclear Regulatory Commission. "Many of the serious safety or security lapses at U.S. nuclear power plants in 2010 happened because plant owners -- and often the Nuclear Regulatory Commission (NRC) -- failed to address known safety problems." And something potentially concerning to Buchanan, NY residents where Indian Point NPP is located: "the NRC did not always serve the public well in 2010. This report analyzes serious safety problems at Peach Bottom, Indian Point, and Vermont Yankee that the NRC overlooked or dismissed. At Indian Point, for example, the NRC discovered that the liner of a refueling cavity at Unit 2 has been leaking since at least 1993. By allowing this reactor to continue operating with equipment that cannot perform its only safety function, the NRC is putting people living around Indian Point at elevated and undue risk." The report's conclusion: "when the NRC tolerates unresolved safety problems -- as it did last year at Peach Bottom, Indian Point, and Vermont Yankee -- this lax oversight allows that risk to rise. The more owners sweep safety problems under the rug and the longer safety problems remain uncorrected, the higher the risk climbs."

According to sources, a Japanese Ministry of Finance official has said that it is now ready for a "Bettle on the Yen." Just headlines for now. Much more will be revealed later when the G-7 meets to discuss how to further weaken the currency in a coordinated effort. An immediate pop in the USDJPY above 79 follow this statement. The fact that we are getting nothing but posturing from the BOJ instead of actual intervention, such as we saw last when the USDJPY hit 80.30 in late October continues to be quite troubling. In the meantime, the NZDUSD, another funding pair has been taking on some water in early trading.

A funny thing happened along the way -- just when investors got comfortable with the idea of a sure thing -- somebody or something pulled the rug out from underneath them.

Dramatic images from Fukushima as TEPCO releases yet another perspective of the crippled nuclear power plant, this time from a Helicopter overflight from March 16 at 4pm local time. Too bad there is no Geiger counter caption to go with all the other ones.

MSNBC presents an immersive 360 panorama view from the middle of the Japanese earthquake devastation. As usual, a picture is worth a thousand explanatory columns.

The much anticipated hearing on "The Relationship of Monetary Policy and Rising Prices" chaired by Ron Paul and includes such witnesses as James Grant has started. It should be quite interesting because the last time we checked, Grant had refused to drink the Kool Aid.

Following on yesterday's report of Easterly migrating radiation through the Gulfstream, today's Reuters chimes in with an update of their own. To wit: "Low concentrations of radioactive particles from Japan's disaster-hit nuclear power plant have been heading eastwards and are expected to reach North America in days, a Swedish official said on Thursday. Lars-Erik De Geer, research director at the Swedish Defence Research Institute, a government agency, was citing data from a network of international monitoring stations set up to detect signs of any nuclear weapons tests. He said he was convinced they would eventually be detected over the whole northern hemisphere." The good news is that the dosage is very limited: "It is only a question of very, very low activities so it is nothing for people to worry about," De Geer said." Naturally, with the credibility of every government around the world shot, it is no surprise that most consumer Geiger counter stores are sold out of inventory at this point, at virtualy all price points. For those who managed to get their hands on one when we first noted the coming Geiger bubble, congratulations.