[eXpat]

If Japan is dumping its US treasuries, this lady is preparing an Aria!

Japan plans to dump overseas assets to help finance reconstruction
$this->bbcode_second_pass_quote('', 'U')pdated Tuesday, March 15, 2011 9:55 pm TWN, ANALYSIS By Burton Frierson, Reuters
NEW YORK -- Shaken by the prospect of nuclear meltdown after a devastating earthquake and tsunami, Japanese investors will dump overseas assets on Monday and bring their money home to help finance reconstruction
Positioning for this could send the U.S. dollar plummeting versus the yen on Monday and lead to a sharp slide in Treasuries since U.S. government bonds are a favorite asset of Japanese investors, market analysts said.

Stocks also are likely to come under pressure.

Japanese insurers will probably sell some of their most liquid foreign assets such as U.S. Treasuries so they can respond to the worst disaster since World War II.

The crisis could lead to insured losses of nearly US$35 billion, risk modeling company AIR Worldwide said, making it one of the most expensive disasters in history and nearly as much as the entire worldwide catastrophe loss for the global insurance industry.

Traders braced for just such an outcome on Friday, when the yen surged and Treasuries fell. The Bank of Japan probably will add money to the system to limit the liquidation of assets. But the big question remains of how much follow-through selling is yet to come.

[Cloud9]

Thought this might happen.

[PrestonSturges]

Yeah, but it's nothing individuals can take advantage of in the short run.

I put 70% of my holdings in a $USD stable value fund day before yesterday, and despite long term weakness in the dollar, I already saved loosing a couple points on stocks.

The REAL threat are the Republicans determined to crash the dollar asap, which with the weaked Euro, would probably trigger a global currency crisis greater than 2008.

[eXpat]

Uh Oh!
Japanese nuclear fears freeze German real estate fund
$this->bbcode_second_pass_quote('', '[')b]Fears of a nuclear crisis in Japan have spilled into the commercial property sector with a large German institution suspending a €2.2bn fund as it said its holdings in Tokyo were now impossible to value.
Union Investment, one of the largest German fund managers with €177bn under management, said that the nuclear fallout in Japan has made valuation of its properties too difficult as its surveyors had never had to deal with the threat of nuclear contamination before.

It said that while there is no physical damage to any of Union's Tokyo properties, the threat of nuclear contamination is unknowable.

It said that it therefore had "no option" but to freeze all buying and selling of units in its Unilmmo Global fund. This means investors can neither withdraw their money nor put any extra in.

[kiwichick]

moral of the story ; don't put money in funds where someone else can decide whether you can get it back again

[eXpat]

2008 crash deja vu: We’ll relive it, and soon
Commentary: New bubble is hotter, bigger than the last one
$this->bbcode_second_pass_quote('', 'S')AN LUIS OBISPO, Calif. (MarketWatch) — Warning, the stars are aligning, again. Much faster. We’re repeating the run-up to the 2008 meltdown, leading up to the next election.

Yes, another crash is coming, unavoidable, just like 2008. Not because our totally dysfunctional government is collapsing into anarchy, thanks to the 261,000 Super-Rich Lobbyists. Not just because our monetary system is run by the Bernanke Printing Press Company. And not just because a soulless conspiracy of Wall Street CEOs cares nothing for democracy and the public interest, only for their stockholders and their year-end bonuses.
Another crash is coming soon because we’re back playing the same speculative games as we did for years prior to the 2008 crash. When we collapse, it will be because America’s leaders never learn the lessons of history. Never. In a BusinessWeek editorial, Peter Coy and Rouben Farzad described the bubbles:

“It’s as if 2008 never happened. Once again the worlds investors are pumping up bubbles that will probably explode in their faces.
...
7 reasons leaders always fail to see catastrophes, till too late

Please listen closely: For emphasis, let’s repeat Grantham’s warnings so you can see why a guy who is making $100 billion bets on the future of America’s economy, the dollar, our securities and commodity markets should be listened to. His psychological insights into the minds of America’s leaders deserve everyone’s attention.

So whatever you do, commit these seven key points to memory as a guide to your thinking and financial decision-making in the next 18 months:

* Many, many experts did predict and warn of the 2008 meltdown years in advance.
* Wall Street banks, corporate executives and Washington politicians are short-term decision-makers.
* Most business, banking and financial leaders are short-term thinkers, focused on today’s trades, quarterly earnings and annual bonuses. Long-term historical thinking is a low priority.
* As a result, it is virtually certain that America’s leaders will focus on upbeat, good news and always miss the next meltdown because warnings of a coming catastrophe are ignored.
* Warnings from the few with a long-term perspective will always be dismissed during every investment cycle and every future recession/recovery cycle. Always. It’s in their DNA, trapped in their brain cells and demanded by their followers.
* If you are a typical left-brain Wall Street or corporate executive, it’s virtually certain that you will miscalculate the timing/impact of the next meltdown, the next big collapse that’s off your radar. As a result, your company’s assets are at risk of suffering massive losses that are “predictable, not random.” But because you’re in denial, you will not deem it necessary to take steps to protect your assets.
* If you’re a right-brain thinker, your longer-term historical perspective will give you a clear advantage in preparing for the next crash and the depression that follows.

Folks, there’s really nothing you can do to stop the inevitable crash that is coming possibly just before the presidential election in 2012.

[copious.abundance]

So far, 75% of the people who voted in this thread are wrong.

I'm surprised doomers keep bumping it up, at this point it serves little more purpose than to embarass yourselves.

[Keith_McClary]

Pick One: SPR or Recession - ASPO-USA

[eXpat]

Nice article packed with information, a bit of everything, gold, silver, dollar and unmenployment numbers:
http://harveyorgan.blogspot.com/2011/04/gdp-growth-stalls-at-18jobless-numbers.html
$this->bbcode_second_pass_quote('', 'T')he markets, on the other hand, read through his BS. Soon after the conference the US Dollar collapsed to a three year low.


At this point, there is only one line of support left for the US Dollar. That’s one line, standing between us and the abyss of all-time lows: a point at which there is no support left.

Gold and Silver also bounced back after having been slammed by various suppression schemes last week. All those, “the rally is over,” folks got shanked in the ribs as Gold hit a new all-time high and Silver retraced almost all of its former losses in a few hours.


In other words, the great inflationary collapse of the US Dollar is in full effect. Again, there is only one line of support left for the greenback. If Bernanke was going to do ANYTHING to support the Dollar, yesterday was the day for him to have done it. Instead, we’re going to enter a mega-inflationary collapse.

Indeed, at the current pace we’re going the US Dollar will be collapsing within one month. This could change, but we’d need another 2008 type event to pull the US Dollar back from the brink. And judging from stocks and inflation hedges’ performance today, that ain’t happening.

So if you are not already preparing for mega-inflation, you need to get moving now. Because time is running out.

[eXpat]

We are living in borrowed time
$this->bbcode_second_pass_quote('', 'G')reek Prime Minister George Papandreou recently gave the following warning to the Greek people about what could happen if this debt crisis ends badly....

The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks, and the country's credibility. Not only would a Greek default be a total disaster for Greece, it would potentially be a total disaster for the entire global financial system.

Sung Won Sohn, an economics professor at California State University,recently made the following statement about the seriousness of the debt crisis in Europe.... "The European debt crisis has the potential to have as big an impact as the subprime mortgage crisis did in the United States"

So will these bailouts solve the problem? No, giving Greece more loans is only going to kick the can down the road for a little while longer. The truth is that Greece is bankrupt. Unless huge amounts of Greek debt are forgiven, Greece is going to default sooner or later.

When confidence in the finances of a nation is lost, borrowing costs can go up very quickly. Today, the yield on two year Greek bonds is up to 28.6%. Anyone that has ever been late on paying their credit cards knows how painful an interest rate like that can be.

So why doesn't Greece just slash government spending to the bone and get their financial house in order? Well, it is not that easy. Harsh austerity measures have already been implemented. As a result, unemployment is rampant and there is rioting in the streets.

The truth is that, as an article in The Guardian recently explained, austerity has taken a brutal toll on the Greek economy....

A year of wage and pension cuts, benefit losses and tax increases has taken its toll: almost a quarter of the population now live below the poverty line, unemployment is at a record 16% and, as the economy contracts for a third year, economists estimate that about 100,000 businesses have closed.

As the economy crumbles, Greece has descended into an almost permanent state of civil unrest. The fact that the EU and the IMF want even more austerity measures has sparked some wild rioting In Greece in recent days. You can see video of the stunning violence going on in Greece right here.

Not all protesters are being violent. Some of them are showing their displeasure in non-violent ways. For example, workers for Greece's state-owned electric utility are staging 48 hours of rolling strikes that are designed to create blackouts over large areas.

The frightening thing is that Greece is not alone. Ireland has already received a bailout and they are probably going to need another one at some point.

Portugal is a financial basket case and they are probably next in line for a bailout.

The employment situation in Spain is absolutely nightmarish. Spain will probably be able to squeak by without a bailout if the global economy stays stable, but if the dominoes start to fall Spain could be in a massive amount of trouble very quickly.

Not that many people are talking about Italy, but the truth is that Italy has a huge debt problem. On Friday, Moody's warned that it may downgrade Italy's Aa2 debt rating at some point within the next 90 days.

Belgium and France also have very substantial debt problems. They probably would not be the first dominoes to fall, but if the "contagion" starts to spread they could certainly have massive problems.

The truth is that Europe's entire financial system is extremely vulnerable right now. Big banks all over Europe (and especially in Germany) are leveraged to the hilt. All it would take to topple many of them is a stiff breeze.

When Lehman Brothers collapsed, it was leveraged 31 to 1. Today, German banks are leveraged 32 to 1. German banks are also holding a massive amount of Greek debt. That is why there is so much fear that the crisis in Greece could spread across the rest of Europe and start toppling dominoes.

The sovereign debt crisis in Europe did not happen overnight and it is going to be with us for a long, long time even if the global economy remains relatively stable.

[eXpat]

Italian Banks Plunge, German Yield Spread Widens on Debt Concern
$this->bbcode_second_pass_quote('', 'I')taly’s markets watchdog said it will investigate trading in bank shares after the country’s biggest lenders posted their largest decline in two years.

Part of the slump was due to automatic stop-loss trades, an official for the regulator said by telephone today. The watchdog hasn’t ruled out market manipulation. UniCredit SpA (UCG), Italy’s biggest bank, and Intesa Sanpaolo SpA (ISP), the second-largest, led lenders lower, falling 5.5 percent and 4.3 percent respectively. Both stocks were briefly suspended after breaching limits on intraday swings.

Bank stocks tumbled amid concern the European debt crisis may spread just as lenders face scrutiny from regulators over capital levels. Italian 10-year bonds also fell, increasing the additional yield investors demand to hold the securities over benchmark German bunds to the most since the euro was introduced in 1999. European leaders meeting in Brussels today attempted to staunch the crisis, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week.

“Contagion fears keep re-emerging as long as credible, lasting solutions in Greece are pending,” said Christian Weber, a Munich-based strategist at UniCredit.

[eXpat]

Euro in Crisis: Is the Italian Domino Falling?
$this->bbcode_second_pass_quote('', 'T')here have been some rumbles about Italy for a while. Italy's budget deficits are relatively modest compared to, say, Ireland, but their debt is about 120% of GDP. The government has passed a plan that will balance the budget by 2014, but as with most such plans, most of the cutting comes later, while the current cuts are small. This may well be sensible fiscal policy, given the current economic climate, but it is not reassuring to the markets. Mike Shedlock estimates that Italy needs to borrow about €356 billion ($500 billion) in 2011 to cover its deficit, and roll over outstanding debt. Their 10-years are now trading at something north of 5%. Most of the estimates I've seen say that a debt death spiral becomes likely when rates hit somewhere between 6-7%, because the debt service costs start blowing up the budget deficits.

If Italy goes, it's not clear that the rest of Europe can save them. In the FT, Neil Dennis says people are talking about doubling the euro bailout fund to €1.5 trillion--or about three times the size of TARP. And you may have noticed that the bailout fund has not actually stopped Greece's descent into debt madness. Italy's public debt is not much smaller than Germany's, even though the latter obviously has a much bigger (and richer) economy. In the event that things really go south on the Italian peninsula, I don't think there's enough money in the rest of Europe to provide a rescue package.

Meanwhile, conditions in the other PIIGSs are worsening. European leaders seem to be giving up on the notion of some sort of voluntary debt swap after the ratings agencies noted that they would be forced to call this what it is: a default. Since the Greek debt load does not seem to be in any way sustainable, they're going to have to do something. Riots in Athens seem to be making it increasingly clear that over the long term, "something" is not going to be indefinitely decreasing their government consumption in order to make debt service payments. That leaves making bondholders take some sort of a haircut, aka default. It sounds as if the continent's financial leaders are starting to decide that if Greece's only option is some kind of default, they might as well bite the bullet and do the thing.

This will not be pretty. For starters, if they default, but stay in the euro, then unless really considerable aid is forthcoming from the rest of Europe, they're going to lose most of the advantages of the euro (low debt premium) while retaining the disadvantages (excessively tight monetary policy for a country that is going to be experiencing capital flight and even deeper recession). Countries like Argentina got at least some tourism and export boost from very cheap prices after they defaulted and went off their currency peg; Greece won't even get that if the euro remains at an ouchy 1.4 to the dollar. (If it doesn't remain there, but instead sinks . . . well, that means the euro zone will be having all sorts of other problems. More on which in a minute.)

[Timo]

Something in that story above caught my eye, and that is a reference to a "bond holder default." Reading that got the wheels in my head spinning, and i want to offer a comment that i'm not sure if it's good or bad. When i think or bonds, i think of Wall Street. This is the simplistic view, granted, since a whole lot of ordinary people have bonds as part of some retirement financial scheme, but i think we can all agree that bonds are held more by rich folk than by ordinary folk. I could be wrong about that, though. But in the sense that i started with, maybe (that's a BIG MAYBE) this entire global economic crisis is actually nothing more than a market corrcection the size of which no human has ever seen before. Housing prices have been going up for decades, and now the prices are going down. Economists say this is a market correction to reflect the actual worth of a house rather than simply what someone is willing to pay for it. The same principle applies to stocks, too. Stocks rise and everybody is happy, and then it collapses back down to a more realistic, practical value. Maybe this even applies to the very concept of money, regardless of its form as dollars, pounds, euro's, yen...... Maybe this economic turmoil is simply a "correction" in the real, actual value of money. It's not actually worth all that much since all it can do is serve as a currency in financial transactions. As i see it (again, MAYBE), this global economic correction can serve to level the playing field and actually reduce the wealth gaps between rich and poor. If the global economic system breaks, than billionaires don't really have any more wealth than i do, and i'm trying to save enough for my own, meager retirement. The real value of money has a lot less importance in a global economic meltdown, while goods and services have a lot more vlaue. Goods can be bought with services while money loses its charm if it can't be backed up with an actual service of actual value. Sorry for this. I just have this nasty ear worm in my head, trying to always look on the bright side of life.

[EnergyUnlimited]

$this->bbcode_second_pass_quote('Timo', ' ')Maybe this economic turmoil is simply a "correction" in the real, actual value of money. It's not actually worth all that much since all it can do is serve as a currency in financial transactions.

[Pops]

$this->bbcode_second_pass_quote('Timo', 'E')conomists say this is a market correction to reflect the actual worth of a house rather than simply what someone is willing to pay for it.

[eXpat]

Despite all the the debt crisis will not die.
UPDATE: Euro-Zone Finance Mins Break; Greek Plans Hit Deadlock
$this->bbcode_second_pass_quote('', ' ')BRUSSELS -(Dow Jones)- Euro-zone finance ministers have taken a break in their meeting in Brussels, after discussions revealed that a proposal mapped out for private-sector participation in Greece's next bailout may face impossible hurdles.

The ministers will reconvene after meeting with their countries' delegates.

In a June 19 Luxembourg meeting, leaders agreed on private-sector participation in the rescue, so long as it is voluntary, substantial and wouldn't result in selective default.

"The voluntary participation is not going forward," said one euro-zone official. "It's over."

Another official said: "They now see all three are not possible." He was already separating himself from the strategy, adding: "We never thought it was a good idea."

Arriving in Brussels Monday, officials offered widely divergent views on how to proceed.

The Dutch finance minister said sharing in the burden by private-sector creditors was a pre-condition to fresh aid; the Spanish finance minister warned of "instability in the markets" and said the Continent ought to think first of preventing the crisis from spreading beyond Greece, Ireland and Portugal.

At the heart of the issue: Credit-rating companies have made clear that any significant effort to make private creditors feel pain would be treated as a debt default by Greece. Most top officials--chief among them European Central Bank President Jean-Claude Trichet--have said letting that happen is unacceptable. However, many officials doubt the ECB would precipitate a banking crisis in Greece by rejecting government debt as collateral.

That leaves Europe with a stark choice: Either make European taxpayers responsible for funding Greece indefinitely, or shift some of the burden to private creditors and suffer a debt default.

After months of trying to find a middle ground, none has emerged.

[Timo]

EU, no big disagreement with your response, other than to simply remind you of what happened in France a yew years back when they started chopping people's heads off. That, and to raise the possibility that even the military might not go along with enforcing the new aristocracy's rule against the masses. Mercinaries? Sure, but the national military? Either way, though, if the people revolt against the new ruuling class, that same military technology could be used for massive acts of genocide, simply to maintain the control of the surviving few, and that gets the discussion back to the actual value of money. Any military, public or private, needs to get paid for their services. If money has no real value, a gun to protect your own interests is more valuable than any amount of money. Instead of the scenario you suggest, i think it'd be more likely that the military would use their guns to secure the natural resources necessary for survival instead of protecting their possession by the very few.

Oddly enough, our previous president made me a newfound believer in the 2nd Amendment. The only reason i don't own a gun right now is that i'm afraid of my wife. If she knew i'd bought a gun, she'd be so mad at me that she'd shoot me with it.

[EnergyUnlimited]

$this->bbcode_second_pass_quote('Timo', 'T')hat, and to raise the possibility that even the military might not go along with enforcing the new aristocracy's rule against the masses. Mercinaries? Sure, but the national military?

[oddone]

$this->bbcode_second_pass_quote('Timo', '.').. to raise the possibility that even the military might not go along with enforcing the new aristocracy's rule against the masses...

[EnergyUnlimited]

$this->bbcode_second_pass_quote('oddone', '')$this->bbcode_second_pass_quote('Timo', '.').. to raise the possibility that even the military might not go along with enforcing the new aristocracy's rule against the masses...