Central Perk: 8 aug. 2013

joi, 8 august 2013

Mish's Global Economic Trend Analysis

Reflections on "Paper Reserves" of Central Banks; Gold and the Tapering Disconnect

Posted: 08 Aug 2013 01:48 PM PDT

In Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation? I posted an interesting chart by reader Tim Wallace of the stock market vs. Fed asset holding (repeated below for convenience).

Fed Balance Sheet vs. Stock Market

But what about foreign central bank assets, especially China and Japan?

Reflections on "Paper Reserves" of Central Banks

Hugo Salinas Prices covers the topic in an excellent article Some Thoughts on 'International Reserves'

International reserves, excluding gold, as reported by Bloomberg, courtesy of Doug Noland at www.prudentbear.com on July 26, 2013, stood at $11.167 Trillion dollars.

International reserves, excluding gold, are mainly made up of dollar and euro holdings.

On August 1, 2011, holdings amounted to $10.063 Trillion dollars. One year later, holdings had increased to $10.450 Trillion dollars, an increase of $387 billion dollars.

In the most recent twelve months, holdings have increased by $717 billion dollars, to the present level of $11.167 Trillion dollars.

International reserves increase when importing countries cannot pay for their imports with exports; in other words, when the importing countries have "trade imbalances" and make up the trade imbalance by sending (mainly) either dollars or euros to the exporting countries.

The increase in "International Reserves Excluding Gold" from 1971 to the present - 42 years – has been spectacular.

It is important to note that "International Reserves" are invested in diverse Bonds, prima facie evidence that trade imbalances have not been settled since 1971. Settlement happens when a debt is paid. If a country owns Bonds, it is a holder of debt and has not been paid. Had the trade imbalances been settled, International Reserves would be not much different from what they were in 1971.

"International Reserves" thus represent credit which the exporting countries of the world have granted to the importing countries which use dollars and euros as money; when these countries tender dollars or euros in "payment", they are not settling any debt; they are simply running up more debts with the exporting countries. $11.167 Trillion dollars and counting. The Reserves earn interest – they are invested in Bonds – and so the Reserves must also grow, as interest earned accumulates.

When and how will this increase in the debt of the importing countries to the exporting countries find a limit?

10 days, 10 weeks, 10 months, 10 years – nobody knows. But this game is going to end, someday, and its ending will be painful. When the dust settles, a whole new world will replace the present one. We have no idea what it will look like, but it will be here, populated by humanity who will not cease to wonder: "What were they thinking?"

Gold and the Tapering Disconnect

It should be crystal clear this "game" cannot possibly continue forever. Yet, the doves on the Fed, notably Janet Yellen (who amazingly is even more dovish than Bernanke), act and talk as if it can.

Is any "tapering" is going to occur? Certainly the Fed is not going to hike rates, even if some small amount of tapering does occur.

This setup should be good for gold, but it sure hasn't.

Curiously, the stock market acts as if no tapering is coming, but gold acts as if the Fed is actually about to tighten, not just taper.

As with perpetually rising trade deficits, this disconnect will not go on forever, but I cannot say when it ends, and nor can anyone else.

For more on the balance of trade problem and how to permanently fix it, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

300 Tons a Day of Nuclear Waste from Japan's Fukushima Nuclear Plant Pours Into Ocean

Posted: 08 Aug 2013 03:48 AM PDT

Officials in Japan hid the fact that the Fukushima nuclear plant has been pouring hundreds of tons of nuclear waste water into the ocean every day and that a containment barrier has been breached.

Here are a few links.

On Tuesday the BBC reported Fukushima Radioactive Leak a New Emergency

Japan's nuclear watchdog has said the crippled Fukushima nuclear plant is facing a new "emergency" caused by a build-up of radioactive groundwater.

A barrier built to contain the water has already been breached, the Nuclear Regulatory Authority warned.

This means the amount of contaminated water seeping into the Pacific Ocean could accelerate rapidly, it said.

Last Friday, Energy News reported "Contaminated underground water may have moved above ground" at Fukushima plant

NHK, August 3, 2013: [...] TEPCO admitted during the [Friday] meeting that contaminated underground water may have moved aboveground along seawalls that were solidified to stop leakages. TEPCO's proposals include construction of a new facility to gather underground water flowing toward the seaside of the plant and begin pumping water in late August. Experts in the group urged TEPCO to implement the measures ahead of schedule, citing the seriousness of the problem. [...]

Asahi Shimbun, August 3, 2013: [...] The immediate concern is radioactive water seeping along the seaward side of the No. 1 to No. 3 reactors and spilling into the sea. [...] the water level in observation wells has risen sharply to about 1 meter from the ground's surface, [...] the walls can only be built with their tops at 1.8 meters beneath the surface. That means the water levels in the observation wells have already risen above the top edges. If such a situation continues, the completed barriers will be unable to prevent the water from reaching the ocean. In addition, calculations show that if the water levels continue to rise at the current pace, contaminated water will flood the surface in about three weeks. [...]

300 Tons a Day of Nuclear Waste Water Per Day

On Wednesday, Reuters announced Japan says Fukushima leak worse than thought, government joins clean-up

Highly radioactive water from Japan's crippled Fukushima nuclear plant is pouring out at a rate of 300 tonnes a day, officials said on Wednesday, as Prime Minister Shinzo Abe ordered the government to step in and help in the clean-up.

The revelation amounted to an acknowledgement that plant operator Tokyo Electric Power Co (Tepco) has yet to come to grips with the scale of the catastrophe, 2 1/2 years after the plant was hit by a huge earthquake and tsunami. Tepco only recently admitted water had leaked at all.

The leak from the plant 220 km (130 miles) northeast of Tokyo is enough to fill an Olympic swimming pool in a week. The water is spilling into the Pacific Ocean, but it was not immediately clear how much of a threat it poses.

As early as January this year, Tepco found fish contaminated with high levels of radiation inside a port at the plant. Local fishermen and independent researchers had already suspected a leak of radioactive water, but Tepco denied the claims.

"We think that the volume of water (leaking into the Pacific) is about 300 tonnes a day," said Yushi Yoneyama, an official with the Minister of Economy, Trade and Industry, which oversees energy policy.

Tatsuya Shinkawa, a director in METI's Nuclear Accident Response Office, told reporters the government believed water had been leaking for two years, but Yoneyama told Reuters it was unclear how long the water had been leaking at the current rate.

Shinkawa described the water as "highly" contaminated.

Tepco and the industry ministry have been working since May on a proposal to freeze the soil to prevent groundwater from leaking into the reactor buildings.

Similar technology is used in subway construction, but Chief Cabinet Secretary Yoshihide Suga said that the vast scale of Tepco's attempt was "unprecedented in the world."

The technology was proposed by Kajima Corp, , a construction company already heavily involved in the clean-up.

Experts say maintaining the ground temperatures for months or years would be costly. The plan is to freeze a 1.4 km (nearly one mile) perimeter around the four damaged reactors by drilling shafts into the ground and pumping coolant through them.

"Right now there are no details (of the project yet). There's no blueprint, no nothing yet, so there's no way we can scrutinise it," said Shinji Kinjo, head of the task force set up by the nuclear regulator to deal with the water issue.

Fukushima Nuclear Plant Video, Slide Show

The Huffington Post Has additional details as well as a video and slideshow in Fukushima Leak Is An 'Emergency,' Watchdog Official Says

Tokyo Electric Power Co. (TEPCO), the plant's operator, admitted last month that contaminated water from Fukushima had leaked into the underground water system and reached the sea. The company gave its first estimate of the extent of the leak this weekend.

According to AFP, TEPCO estimates between 20 trillion and 40 trillion becquerels of radioactive tritium have spilled into the ocean.

UPI explains a becquerel is a unit of radioactivity, "the quantity of radioactive material in which one nucleus decays per second."

TEPCO long denied radioactive water had been leaking into the ocean, the AP notes, despite reports that biologists had found traces of radioactive cesium in fish. The operator eventually admitted to both the leak and having postponed acknowledgment the crisis.

There is no credibility from TEPCO or the Japanese government on the extent of the real disaster, its effects, the ultimate cleanup costs, or how many years fish in the area will be contaminated. In addition, contaminated fish may turn up anywhere within their normal swimming range with obvious implications.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

Legendary Monsters of American Folklore
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10 Ways to Find True Love With Customers [Infographic]
Interesting Facts About The River Thames
Awesome Pet Owners

Legendary Monsters of American Folklore

Posted: 08 Aug 2013 10:35 AM PDT

The Skunk Ape

The Skunk Ape, also known as the Swamp Ape, Stink Ape, the Myakka Ape, and the Myakka Skunk Ape, is a hominid cryptid said to inhabit Florida, as well as North Carolina and Arkansas. Reports of the Skunk Ape were particularly common in the 1960s and 1970s. In the fall of 1974, numerous sightings were reported in suburban neighborhoods of Dade County, Florida, of a large, foul-smelling, hairy, ape-like creature, which ran upright on two legs

The Hodag

The Hodag is a folkloric animal of the American state of Wisconsin. Its history is focused mainly around the city of Rhinelander in northern Wisconsin, where it was said to have been discovered. It had "the head of a frog, the grinning face of a giant elephant, thick short legs set off by huge claws, the back of a dinosaur, and a long tail with spears at the end". The group that found it stated they needed to use dynamite to kill the beast.

The Hugag

The Hugag is a huge animal of the Lake States. Its range includes western Wisconsin, northern Minnesota, and a territory extending indefinitely northward in the Canadian wilds toward Hudson Bay. In size it may be compared to a moose and in form is somewhat resembles an animal. Very noticeably however are it's front joint less legs compel the animal to remain on its feet, and its long upper lip, which prevents it from grazing.

The Hidebehind

Hidebehinds are nocturnal creatures from American folklore that prey upon humans that wander into the woods and was credited for the disappearances of early colonial loggers when they failed to return to camp. As its name suggests, the hidebehind is noted for its ability to conceal itself. When an observer attempts to look directly at it, the creature hides again behind an object or the observer and therefore can't be directly seen: a feat it accomplishes by sucking in its stomach to a point where it is so slender that it can easily cover itself behind the trunk of any tree. Early accounts describe hidebehinds as large, powerful animals, despite the fact that no one was able to see them.

The Pope Lick Monster

The Pope Lick Monster is a legendary part-man, part-goat and part-sheep creature reported to live beneath a Norfolk Southern Railway trestle over Floyd's Fork Creek, in the Fisherville area of Louisville, Kentucky. According to some accounts, the creature uses either hypnosis[1] or voice mimicry to lure trespassers onto the trestle to meet their death before an oncoming train. Other stories claim the monster jumps down from the trestle onto the roofs of cars passing beneath it. Yet other legends tell that it attacks its victims with a blood-stained axe. It has also been said that the very sight of the creature is so unsettling that those who see it while walking across the high trestle are driven to leap off.

The Sidehill Gouger

Sidehill gougers are North American folkloric creatures adapted to living on hillsides by having legs on one side of their body shorter than the legs on the opposite side. This peculiarity allows them to walk on steep hillsides, although only in one direction; when lured or chased into the plain, they are trapped in an endless circular path.

Wampahoofus

A Vermont variation of the sidehill gouger is known as the Wampahoofus. It was reported that farmers crossbreed them with their cows so they could graze easily on mountain sides.

Tailypo

Tailypo is a creature of North American folklore, particularly in Appalachia. The Tailypo is usually described as being the size of a dog. Depending upon the native culture of the storyteller, the Tailypo is said to have either yellow or red eyes. The Tailypo also has pointed ears and a long tail. The creature is covered in black or dark brown fur and as it appears only during the night, it is even harder to see. The Tailypo usually only ever uses its sharp claws to attack, suggesting that the Tailypo is merely a powerful animal, and not a demon or spirit.

While probably not sapient, the Tailypo does speak, demanding the return of its tail. "Taily-po, Taily-po...all I want is my Taily-po..."

Piasa

The Piasa is a Native American dragon depicted in one of two murals painted by Native Americans on bluffs (cliffsides) above the Mississippi River. In 1673 Father Jacques Marquette saw the painting on the limestone bluff and stated this "While Skirting some rocks, which by Their height and length inspired awe, We saw upon one of them two painted monsters which at first made Us afraid, and upon Which the boldest savages dare not Long rest their eyes. They are as large As a calf; they have Horns on their heads Like those of a deer, a horrible look, red eyes, a beard Like a tiger's, a face somewhat like a man's, a body Covered with scales, and so Long A tail that it winds all around the Body, passing above the head and going back between the legs, ending in a Fish's tail. Green, red, and black are the three Colors composing the Picture. Moreover, these 2 monsters are so well painted that we cannot believe that any savage is their author; for good painters in France would find it difficult to reach that place Conveniently to paint them. Here is approximately The shape of these monsters, As we have faithfully Copied It."

The Squonk

The Squonk is a legendary creature reputed to live in the Hemlock forests of northern Pennsylvania. The legend holds that the creature's skin is ill-fitting, and covered with warts and other blemishes, and so it hides from plain sight and spends much of its time weeping. Hunters who have attempted to catch squonks have found that the creature is capable of evading capture by dissolving completely into a pool of tears and bubbles when cornered.

A hunter once claimed to have coaxed one into a bag, which, while he was carrying it home, suddenly lightened. On inspection, he found that the bag contained only the liquid remains of the sad animal.

The Jersey Devil

The Jersey Devil is a legendary creature or cryptid said to inhabit the Pine Barrens of Southern New Jersey, United States. The creature is often described as a flying biped with hooves, but there are many different variations. The common description is that of a kangaroo-like creature with the head of a goat, leathery bat-like wings, horns, small arms with clawed hands, cloven hooves and a forked tail. It has been reported to move quickly and often is described as emitting a "blood-curdling scream."

The Mothman

Mothman is a legendary creature first reportedly seen in the Point Pleasant area of West Virginia from 15 November 1966 to 15 December 1967. The first newspaper report was published in the Point Pleasant Register dated 16 November 1966, titled "Couples See Man-Sized Bird...Creature...Something".

Some ufologists, paranormal authors, and cryptozoologists believe that Mothman was an alien, a supernatural manifestation, or an unknown cryptid. Now the mothman has made its way into popular culture. Point Pleasant held its first Annual Mothman Festival in 2002 and a 12-foot-tall metallic statue of the creature, created by artist and sculptor Bob Roach, was unveiled in 2003

Russian Brides Meet Their New Foreign Husbands

Posted: 08 Aug 2013 09:57 AM PDT

10 Ways to Find True Love With Customers [Infographic]

Posted: 08 Aug 2013 08:42 AM PDT

There are many differences between business relationships and personal ones, but there are surprisingly a lot of similarities when it comes to being successful in either. Whether you're looking for a long term relationship with a loved one (or potential loved one), or having a successful business; being able to nurture a relationship in just the right way is key to achieving that goal. Here are 10 rock solid tips to live by if you're looking for true love in your personal life, or building a strong business relationship with your customers.

Click on Image to Enlarge.