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Thursday, 24 April 2014
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.
Lets not forget; QE Japan style
Monday, 21 April 2014
Friday, 18 April 2014
Thursday, 17 April 2014
Wednesday, 16 April 2014
Don't Be Surprised
If This Is The Start Of A
Stock Market Crash ...
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.
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.
Even after the recent drops, stocks appear to be very
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).
Lots of Talk Out There
Tuesday, 15 April 2014
Greek Bonds A Bad
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.
Monday, 14 April 2014
This Chinese City’s Property Market Is Even Chillier Than Its -22-Degree Weather
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.
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