ALERT -Japan's Bonds Risk Default; Sakakibara

Failure to up sales tax risks crash of JGBs: Sakakibara

 

 

Bloomberg News

 

The government should prioritize expanding its recent sales tax increase or risk an eventual collapse of sovereign bonds, former Finance Ministry official Eisuke Sakakibara said.

 

 

 

A failure to raise the consumption levy “could trigger massive dumping” of the nation’s debt, Sakakibara said in an interview in Tokyo last week. “We must not derail from boosting the levy to 10 percent. The bond market’s collapse would be more dire than a tax increase.”

 

Prime Minister Shinzo Abe has indicated he will decide by the end of this year whether to go ahead with the sales tax increase to 10 percent in 2015, weighing the economic fallout of the 3-percentage-point gain to 8 percent this month. Gross domestic product may contract an annualized 3.3 percent in the second quarter, the sharpest drop since the first three months of 2011, according to a Bloomberg News poll of economists.

 

“Ten percent is still not enough” and Japan may have to eventually increase it toward 20 percent, in line with other developed nations, said Sakakibara, who is now a professor at Aoyama Gakuin University in Tokyo. “If we increase spending, we need to radically boost revenue.”

 

Economy minister Akira Amari said earlier this month the decision to hike the levy to 10 percent will not be easy. Sixty percent of respondents in a survey by Nikkei newspaper and TV Tokyo oppose the move, while 32 percent support it.

 

Domestic investors hold more than 90 percent of the government’s debt, which means the country is relying on the world’s fastest-aging population for financing. A quarter of Japanese will be over 65 years old by the end of 2014. That’s the highest ratio globally, according to U.S. census bureau figures compiled by Bloomberg.

 

 

Read More

 

Lets not forget; QE Japan style

 

 

Worst Financial Bubble Ever - Worried Yet?

The Potential Bubble the Federal Reserve Cares Most About     

By ANDREW FLOWERS

In the aftermath of the 2008 financial crisis, economists debated whether the Federal Reserve should be involved — at all — in pricking bubbles. The housing bubble, and subsequent financial crisis, had led to a disastrous result: Hundreds of banks had failed and millions of Americans had lost their jobs. At the time, many still believed the emergence of future bubbles could only be prevented through financial regulation, and not through interest rate hikes.

 

Today, however, as interest rates remain at historically low levels and are expected to stay low at least into next year, there is growing concern among investors, economists and central bankers that a new bubble has emerged, and that increased regulation isn’t enough to stop it. Led by a powerful Fed governor, there’s a growing call for the Federal Reserve to raise interest rates to prevent this bubble from growing.

So what bubble are we talking about? It’s not the one you might expect.

Read More 

Comments

This is very bad for future generations as there is no connection any more between money and a physical capability to deliver  tangible value of any sort over time. Sowing the seeds of hyper-inflation and thus complete debasement. This also puts more and more pressure on the US hegemony to continue geo-political  engagements in order to protect natural  resource interests; thus what is left of the  dollar's physical value and its image and status as a reserve currency.

Coming generations are hence unwittingly being conscripted into future conflicts around the world as a consequence of these policy actions. The total system's inertia now however is  so great that there are almost no other choices.  When this ride began, there was just no way to disembark halfway or otherwise . Perhaps.

On reflection one might ask - when did it begin? Why?



Because there... ain't no stopping us now!    


Investors' Insights
April 21, 2014 

China ALERT: Super Rich "KASH-lNG" Out

The Richest Man in Asia is Selling Everything in China

By Simon Black

Here’s a guy you want to bet on– Li Ka-Shing.

Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor.

Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.

Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago. 

Once the deal concludes, Li will no longer have any major property investments in mainland China.

This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody

Read More

Getting to know you

2014 Charts Mirror 1987 Black Monday

Black Monday Stock Market Crash Returns to Haunt 2014

By DAVID ZEILER,

Chart watchers have noticed an eerie pattern - the bull market of 1982, which ended in the Black Monday stock market crashof 1987, looks way too much like the current bull market.

The stock market crash on Black Monday - Oct. 19, 1987 - was the worst one-day fall in history. The Dow Jones Industrial Average plunged 508 points - a 22.6% drop, while the Standard & Poor's 500 index lost 58 points for a loss of 20.4%.

Such a loss today would slice over 3,200 points off the Dow and about 365 points from the S&P 500.

And while no one can predict the markets for certain, the chart lines for the two bull markets have given many market analysts pause.

"The bull market that started in March 2009 is now up 169% through Friday. That's nearly step for step with the rally that began in 1982," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

The reason people are getting worried now is that the Black Monday stock market crash happened 1,311 trading days after the start of that bull market. The current bull market will reach that milestone approximately one month from now.

But Fitz-Gerald isn't quite ready to hit the panic button.

Read More

Trip down Memory Lane

Fed Tightening Can Trigger Market Crash - No Kidding

 



Don't Be Surprised

 If This Is The Start Of A 

Stock Market Crash ...

 

Business Insider

 


Stocks are tanking again. 

The sudden dives in recent weeks have taken the tech-heavy Nasdaq down 7% from its highs and the S&P and Dow about 3% from their highs.

Drops like that are no big deal. 

But some signs suggest that this pullback — or another one sometime soon — could get much more severe.

Why?

Three basic reasons:

• Stocks are still very expensive
• Corporate profit margins are at record highs
• The Fed is now tightening
•  

Let's take those one at a time.

First, price.

Even after the recent drops, stocks appear to be very 
expensive.

The chart below is from Yale professor Robert Shiller. It shows the cyclically adjusted price-earnings ratio of the S&P 500 for the last 130 years. As you can see, today's P/E ratio of 25X is miles above the long-term average of 15X. In fact, it's higher than at any point in the 20th century with the exception of the peaks of 1929 and 2000 (you know what happened after those).

Read More

Lots of Talk Out There

 

Does Evil Lurk In Greek Bonds?

Callaway: New 

Greek Bonds A Bad

 Sign

 David Callaway, USA Today

WASHINGTON D.C. — Forget tech stocks. Greek debt is the story of the week on Wall Street, proving once again that nobody can remember anything more than four years old.

Less than 50 months after Greece crashed out of global debt markets, having brought Europe and its single currency to the brink of destruction and shaken American investment portfolios to the core, the tiny sun-splashed nation was shamelessly back on the world stage Thursday. Greece raised more than $4 billion with a new bond sale, purchased almost entirely by investors outside the country and at a relatively low payback rate of 4.75%. Investors had pledged almost seven times that amount to try to get a piece of the offering, according to Bloomberg News, citing a Greek government official.

The search for profit is difficult right now for investors. Interest rates in the U.S. and other major countries remain low following the global financial crisis of 2008 and early 2009. Stocks, especially in tech in the last year, have pushed new highs, at least until the last week. But the rush to buy Greek debt again is a clear sign of the absurdity of the bull market as it begins its sixth year.

Spring is for dreamers. Baseball season begins. In Chicago, Cubs fans are happy. In Silicon Valley, teenagers are fielding offers of billions of dollars for products they haven't built yet. Here in Washington, D.C., the cherry blossoms are blooming, Congress is getting along, kind of, and the International Monetary Fund is staging its spring meeting with a rosy prediction of global growth in the coming year.

Read More

Deep, Dark, Cold in China's Ghost Cities

This Chinese City’s Property Market Is Even Chillier Than Its -22-Degree Weather

 

Wall  Street Journal - China Real Time

Here in the frigid, wind-battered northeast Chinese port city of Yingkou, real-estate developer Zhang Wang is hoping that weather might be a selling point for potential apartment buyers.

Temperatures in the region plunge to -30 degrees Celsius (-22 Fahrenheit) in the winter. But in Yingkou, they bottom out at a mere -20 degrees, he says. Maybe he can get some buyers looking for a better climate.

Cities like Yingkou in China’s northeast rust belt were among the earliest cities in the country to be overbuilt. In 2005, now-Premier Li Keqiang was party secretary of Liaoning province, where Yingkou is located. He pushed a massive restructuring project to wean the region from its reliance on steel, coal and mining. 

As Mr. Li moved up the government ranks, developers counted on his endorsement as an implicit government backing of the region’s future development, developers and analysts say. Yingkou, along with other cities, sold vast tracts of lands to developers to build apartments for the workers who – they hoped –  would populate the new factories, malls and industrial parks to come.

Read More