Uranium

It seems you can't turn your back on the Middle East for more than a few minutes without something going bump in the desert. Sure enough, a few shorts hours after we reported that the leader of Iran's Revolutionary Guards is certain war with Israel is coming, here comes Iran again with the stunning admission that none other than German industrial conglomerate, and occasional maker of nuclear power plants, Siemens was reponsible for "implanting tiny explosives inside equipment the Islamic Republic purchased for its disputed nuclear program. Prominent lawmaker Alaeddin Boroujerdi said Iranian security experts discovered the explosives and removed them before detonation, adding that authorities believe the booby-trapped equipment was sold to derail uranium enrichment efforts. "The equipment was supposed to explode after being put to work, in order to dismantle all our systems," he said. "But the wisdom of our experts thwarted the enemy conspiracy." Expert wisdom aside, what is stunning is not the ongoing attempts by everyone and the kitchen sink to terminally corrupt the Iranian nuclear power plant: after Stuxnet one would expect nothing less than every form of conventional and "new normal" espionage thrown into the pot to cripple the only peaceful argument Iran would have for demanding nuclear power, which by implication would mean that all ongoing nuclear pursuits are geared solely toward aggressive, military goals, of the type that demand immediate military retaliation by the democratic superpowers. No, what is stunning is the implicit admission that Germany's, and Europe's, largest electrical engineering company, has been not only quietly transacting with none other than world peace (as portrayed by the MSM) enemy #1, Iran, but instrumental in its nuclear program.

If you wanted to sum up the just-concluded Casey Research/Sprott Inc. Summit titled Navigating the Politicized Economy, you could say "The situation is hopeless but not serious." More than 20 speakers – many of them world-renowned financial experts and best-selling authors – gathered in Carlsbad, CA, from September 7 to 9 to ascertain exactly how hopeless, and what investors can do to protect themselves.

The heightening tension between the United States government and Iran’s is based off of the fallacious notion that nuclear weapons have a legitimate purpose outside of killing enormous amounts of people.  Yet they have no other real purpose in the end.  Governments possess nuclear weaponry because there is little recourse for state-sanctioned murder.  The millions of innocent lives that stand to be vanquished off the face of the Earth have little meaning to the power-tripping political elite.  So while the Iranian government’s pursuance of nuclear weapons should be condemned, the United States government, the Israeli government, and others capable of waging nuclear war are in no place to criticize.

Doug Casey is of the opinion that the Hubbert peak-oil theory is correct. In the 1950s, M. King Hubbert projected that US oil production would start declining in the 1970s, and he was accurate. Then he projected that in the mid-2000s, the world's production of light, sweet crude would start declining. He was quite correct about that, too. There will always be plenty of oil at some given price, but to produce oil – even conventional, shallow, light sweet crude – now costs close to $40/bbl in many places. Drilling in politically unstable jurisdictions with sparse infrastructure is neither cheap nor fun. We're talking about production costs of at least $80/bbl in many cases. In an industrial world with seven billion people, the only energy source that makes sense is nuclear power. Sure, you can use wind and solar from time to time and in certain places. But those technologies are extremely expensive, and they absolutely can't solve the world's energy problems.

• Ringing endorsement: Lithuania to Adopt Euro When Europe Is Ready, Kubilius Says (Bloomberg)
• Credit Agricole net plunges 67% on losses in Greece and a writedown of its stake in Intesa Sanpaolo SpA (Bloomberg)
• Europe finally starting to smell the coffee: ECB Urging Weaker Basel Liquidity Rule on Crisis Concerns (Bloomberg)
• Japan Cuts Economic Assessment (Reuters)
• France’s Leclerc Stores to Sell Fuel at Cost, Chairman Says (Bloomberg)
• China Eyes Ways to Broaden Yuan’s Use (WSJ)
• Berlin and Paris forge union over crisis (FT)
• Brezhnev Bonds Haunt Putin as Investors Hunt $785 Billion (Bloomberg)
• Republicans showcase Romney as storm clouds convention (Reuters)
• ECB official seeks to ease bond fears (FT)
• German at European Central Bank at Odds With Country’s Policy Makers (NYT)

• UK is closed today
• Weidmann Says ECB Purchases Could Become ‘Addictive Like a Drug’ (Bloomberg)
• Dutch Premier Rutte Defends Austerity, Says No to More Greek Aid (Bloomberg)
• Storm Isaac forces Republicans to rework convention script (Reuters)
• Christie chose NJ over Mitt's VP role due to fears that they'd lose (NYPost)
• Ayrault warns EU fiscal pact rebels (FT)
• Is Canada's New $100 Bill Racist?  (BusinessWeek)
• Will Fed Act Again? Sizing Up Potential Costs (WSJ)
• Samsung Slumps Most in 4 Years on U.S. Sales Ban Concerns (Bloomberg)
• States may require insurers to hold more capital (WSJ)
• Wen Says China Need Measures to Promote Export Growth (Bloomberg)
• Economist Appearing On Max Keiser Show Forced To Resign (Forbes)

Kirk Sorensen, NASA-trained engineer, is a man on a mission to open minds to the tremendous promise that thorium, a near-valueless element in today's marketplace, may offer in meeting future world energy demand. Compared to Uranium-238-based nuclear reactors currently in use today, a liquid flouride thorium reactor (LTFR) would be:

• Much safer - no risk of environmental radiation contamination or plant explosion (e.g. Chernobyl, Fukushima, Three-Mile Island)
• Much more efficient at producing energy - over 90% of the input fuel would be tapped for energy; vs <1% in today's reactors
• Less waste-generating - most of the radioactive by-products would take days/weeks to degrade to safe levels, vs centuries
• Much cheaper - reactor footprints and infrastructure would be much smaller, and could be constructed in modular fashion
• More plentiful - LFTR reactors do not need to be located next to large water supplies, as current plants do
• Less controversial - the byproducts of the thorium reaction are pretty useless for weaponization
• Longer-lived - thorium is much more plentiful than uranium and treated as valueless today. There is virtually no danger of running out of it given LFTR plant efficiency 

Most of the know-how and technology to build and maintain LFTR reactors exists today. If made a priority, the US could have its first fully-operational LFTR plant running at commercial scale in under a decade.

Risk-off trade is firmly dominating price action this morning in Europe, as weekend reports regarding Spanish regions garner focus, shaking investor sentiment towards the Mediterranean. The attitudes towards Spain are reflected in their 10yr government bond yield, printing  Euro-era record highs of 7.565% earlier this morning and, interestingly, Spanish 2yr bill yields are approaching the levels seen in the bailed-out Portuguese equivalent. As such, the peripheral Spanish and Italian bourses are being heavily weighed upon, both lower by around 5% at the North American crossover.

Malaysia's state-owned oil and gas company just made a multibillion-dollar bet that Canada will choose to export its shale gas riches. Even though the odds of securing permission to export liquefied natural gas (LNG) from the Canadian west coast are still pretty poor, the costs of such an endeavor immense, and the timeline in question very long, Petronas is putting $5.5 billion on the table – far more than it has ever spent on an acquisition before – to secure a large foothold in the British Columbia shale gas scene.

It's yet another sign that things are getting serious in the global race for resources.

Forty five years after the War on Poverty began, there are 49 million Americans living in poverty. That’s a solid good return on the $16 trillion spent so far. It’s on par with the 16 year zero percent real return in the stock market. We have produced a vast underclass of ignorant, uneducated, illiterate, dependent people who have become a huge voting block for the Democratic Party. Politicians, on the left, promise more entitlements to these people in order to get elected. Politicians on the right will not cut the entitlements for fear of being branded as uncaring. The Republicans agree to keep the welfare state growing and the Democrats agree to keep the warfare state growing -bipartisanship in all its glory. And the middle class has been caught in a pincer movement between the free shit entitlement army and the free shit corporate army. The oligarchs have been incredibly effective at using their control of the media, academia and ideological think tanks to keep the middle class ire focused upon the lower classes. While the middle class is fixated on people making $13,400 per year, the ultra-wealthy are bribing politicians to pass laws and create tax loopholes, netting them billions of ill-gotten loot. These specialists at Edward Bernays propaganda techniques were actually able to gain overwhelming support from the middle class for the repeal of estate taxes by rebranding them “death taxes”, even though the estate tax only impacts 15,000 households out of 117 million households in the U.S. The .01% won again.

Despite already being engaged in drone wars in Pakistan, Somalia, Yemen, and still occupying Afghanistan, the U.S. is being duped into yet another war based on shaky evidence and at the behest of deep-pocketed special interests.  This is coming even while a secretive cyber war already being waged to damage Iran’s nuclear capability.  According to the Pentagon, “computer sabotage coming from another country can constitute an act of war.”  Not only that, but the draconian sanctions thus far placed on Iran are doing enormous harm to the citizens who hardly have a say in what their government does.  The Belgium-based SWIFT payment system that facilitates most international payments has already denied service to many Iranian banks.  With the imposing of an oil embargo from the European Union just around the corner (July 1^st) that will all but make it impossible for oil tankers to be insured by Lloyd’s of London, an actual naval blockade is being floated by U.S. lawmakers.  Much like the Antebellum South and Japan, Iran too is being pushed into a corner.... Then and now, wealthy special interests are a driving force behind American imperialism.  Lies will be spun till they are seen as facts.  When the truth comes out, the irreparable damage will already be done.  Like anything the state lays its filthy hands on, war is a racket.  The beneficiaries of the ruling class’s gleeful foray into mass murder are few in number.  The masses, still brainwashed into feverish nationalism, end up paying the costs with their pilfered income, eroded liberty, and, ultimately, their own lives.

All you need to read.

Equity markets have traded with moderate volatility so far today as peripheral news concerning Spain and Italy continues to be keenly watched by market participants. Overnight the Italian PM Mario Monti said he does not see any need for a bailout either now or in the future with the Italian and Spanish 10yr yields seen off their highs yesterday, lower by 9.8bps and 7.6bps respectively. On a sector breakdown tobacco stocks saw some slight support after US firm Philip Morris announced a new USD 18bln 3yr share buyback program, however, industrials have lagged as a whole following a profit warning from Swedish firm SKF. In terms of fixed income, the bund has continued yesterday's slide with the Bundesbank coming to market with a July 2022 tap. In initial reaction to the results, bunds saw a 20 tick spike higher, off session lows, following what was perceived to have been a "smooth" auction despite some concerns about the eventual credit worthiness of Germany given the recent bailout of the peripheral nations. Meanwhile, the long end of the EUR curve steepened in early trade as reports from the Danish government who have agreed to change the discount rate that pension funds estimate liabilities being noted. In FX, EUR/USD trades higher into the N.American cross-over with an Asian sovereign name being a touted buyer this morning. In other news the AUD also caught a bid shortly after comments from the German central bank who said that they are considering buying the antipodean currency.

We will get a test once again as to the effectiveness of the central bank/MoT confidence game.

When Iran's nuclear facilities were publicly crippled in 2011 by what then was considered a revolutionary computer virus which destroys physical equipment, many immediately assumed the virus originated in Israel for obvious reasons. They were wrong. In what can be described as the first presidentially-mandated and condoned act of cyberwarfare, one circumventing the War Powers Act of course, the NYT informs us that the order to physically impair Iranian sovereignty came from none other than the Nobel Peace prize winning president: Barack Obama.