LIR – Recovery? What Recovery?

Baltic Dry Index. 784 -24 

LIR Gold Target by 2019: $30,000.  Revised due to QE programs

'John Bull can stand many things, but he cannot stand two per cent.'

Walter Bagehot.

For more on John Bull and two per cent scroll down to Crooks Corner.  Are ultra-low interest rates helping or hurting the global economies? Is ultra-low, too low to stimulate growth? Are ultra-low interest rates self-defeating?

Is America’s relative boom real? While Europe stays mired in what looks to be a double dip recession, America had shown weak signs of building on a recovery. Yesterday that recovery was shaken, stirred and rocked. 

New Home Sales in U.S. Fell in December
By Alex Kowalski - Jan 26, 2012 3:48 PM GMT
Sales of new U.S. homes unexpectedly declined in December for the first time in four months, capping the slowest year on record for builders.

Purchases (NHSLTOT) of single-family properties decreased 2.2 percent to a 307,000 annual pace, figures from the Commerce Department showed today in Washington. The median forecast in a Bloomberg News survey of economists called for a rate of 321,000 home sales. Last year marked the worst year for the industry in records going back to 1963.

The threat of further price declines may be dissuading some Americans from buying a new home even with mortgage rates near all-time lows and more people finding work. Following a lull in 2011, a wave of foreclosures may hamper the recovery in real estate as more distressed properties are put on the market.

----Today’s figures underscore the Federal Reserve’s view that the housing market is holding back the U.S. expansion. In 2011, builders sold 302,000 homes, down 6.2 percent from 2010. Sales in the Northeast and West were also the lowest on record, while purchases in the South were the weakest since 1966.
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In European news, more of the same. Doom, gloom and yet more doom.

JANUARY 26, 2012, 10:55 A.M. ET
Rehn: Lenders May Need to Boost Greek Aid
DAVOS, Switzerland—European Union economics commissioner Olli Rehn said euro-zone governments may have to increase their contribution to Greece's debt deal and declared he was hopeful agreements could be struck soon to increase euro-zone bailout funds and International Monetary Fund resources.

He also made an appeal to the U.S. and other countries not to block an expansion in IMF resources—even if they didn't want to contribute directly themselves.

"It's in the interests of all concerned that we conclude a voluntary deal [for Greece] in the coming days, preferably in January rather than February," he said in an interview while attending the World Economic Forum in Davos.

He said once a deal was reached in Greece's debt-restructuring talks, a revised debt-sustainability analysis would follow—after which the contribution of other euro-zone member states might have to be adjusted. "I don't rule out a small adjustment of lending needs of the euro-area member states," he said.

Germany's Chancellor Angela Merkel on Thursday shrugged off suggestions that public creditors to Greece should increase their contribution, stressing that debt restructuring talks with Greece must first of all focus on a voluntary restructuring deal.
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Spain's Finance Minister Cristobal Montoro admits unemployment rate has jumped to 24pc
Spain's unemployment rate has jumped to nearly 24pc in the fourth quarter, Finance Minister Cristobal Montoro said on Thursday, confirming that the country is still in the throes of a long and painful economic crisis.
AP 3:18PM GMT 26 Jan 2012
Mr Montoro told a parliamentary commission on Thursday that official figures due out Friday will show 5.4m people were out of work at the end of December, up from 4.9m in the third quarter, when the jobless rate was 21.5pc.

Spain already has the highest unemployment rate in the 17-nation eurozone and is near its record of 24.5pc unemployment, set in 1993.

The new conservative Popular Party government has pledged major labor reforms in a desperate bid to halt further job losses. A similarly-aimed reform in 2010 by the previous Socialist government appears not to have had a major effect on the labor market.

The economy is expected to fall back into recession this quarter - GDP fell 0.3pc during the last three months of 2011 and is expected to slide further through March.

"The government's policy must be to overcome, and do so as quickly as possible, the worst economic crisis in our history, the biggest destroyer of employment, the one that has most sapped our youths' confidence in their future," said Mr Montoro.

Spain, which also has a swollen deficit, is battling to avoid being dragged further into a debt crisis that has already forced Greece, Ireland and Portugal to seek financial bailouts.
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We end for the week with China. China must save capitalism, say the elite 1% partying in Davos. But is China all it seems? Is China already in its own bust?

It's now up to China to save capitalism
It's official. Britain is sinking back into recession. OK, so technically we are not yet in one. A recession is defined by two successive quarters of economic contraction. We've only had one quarter formally confirmed. But not many would now bet on a positive outcome for the first three months of 2012.
By Jeremy Warner, Davos 9:25PM GMT 25 Jan 2012
-----Of course it is right that markets are made more responsible, and of course better ways of sharing the spoils of economic growth more equally have to be found. But advanced economies are finished unless they relearn some of the free market disciplines from which they sprung.

The contrast between Western gloom and Eastern optimism is again striking this year, and it is something that goes beyond the immediate challenges of the eurozone crisis
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