lol ...
Correct me if I am off base on this one.
Most times when the "sh!t hits the fan" everything falls.
Commodities, oil, financials etc,......AND gold and silver.
US dollar and Treasuries rise a lot. Flight to safety.
I can't remember when a market shiver didn't cause gold/silver to fall?
This is an anomoly for me.
Who is now buying gold?? Other than me??
Most times when the "sh!t hits the fan" everything falls.
Commodities, oil, financials etc,......AND gold and silver.
US dollar and Treasuries rise a lot. Flight to safety.
I can't remember when a market shiver didn't cause gold/silver to fall?
This is an anomoly for me.
Who is now buying gold?? Other than me??
Oopsie had a bit too much fun with the alcoholic beverages I see 
---------------
Submitted by Robert Ross of Casey Research
Cashing In On Japan's Debt Conundrum?
On the heels of Fitch's sovereign credit downgrade to A plus (the fifth-highest investment grade), Japan's government debt continues to swell. With its debt at over 200% of its GDP, the Land of the Rising Sun appears to be embarking on a trek into the debt-laden unknown.
(Click on image to enlarge)
A ballooning government debt is often associated with sovereign debt crises, as market shocks can send the interest rate paid on the debt to unsustainable levels. Coupled with Japan's shrinking population (and thus tax base), the country is setting itself up for a hairy situation (data for both charts are from the IMF's World Economic Outlook Database).
(Click on image to enlarge)
As with any well-known macro-trend, there are speculators eager to capitalize on it.
Enter Kyle Bass, one of the few hedge fund managers who made a killing when he bet against housing during the subprime mortgage bust. He and his fund have now set their sights on Japan, specifically shorting Japanese yen and Japanese government debt.
His thesis is simple: with a debt-to-GDP ratio over 200% and a contracting population, it's only a matter of time before a sovereign debt crisis sets in, thus triggering a rise in Japanese interest rates – which the government would be unable to service with a shrinking and aging tax base.
So far this strategy hasn't worked as Bass intended: according to ValueWalk, Bass' fund lost 29% of its value in April alone.
That's not to say Bass' assumptions are incorrect. But there are alternative ways of looking at Japan's situation.
Many blame the 2011 earthquake and subsequent reconstruction efforts for the ballooning debt, while some, like Business Insider columnist Joe Weisenthal, think Japan will never implode.
Weisenthal's main point is that Bass' analysis is simplistic and incorrect. He says that the debt-to-GDP ratio is a lousy measure of anything because "it's measuring a stock (total debt) to a flow (a country's national income for the year)." And "beyond that, debt-to-GDP just doesn't tell you anything about interest rate risk or credit risk."
Weisenthal is entitled to his opinion, but we think Bass will eventually be proven right – although his fund could go broke in the meantime.
The Japanese problem is real, and a sovereign default – outright or inflationary – along with the rising rates that lead up to it are inevitable. But as we have said many times before, just because something is inevitable doesn't make it imminent.
---------------
Submitted by Robert Ross of Casey Research
Cashing In On Japan's Debt Conundrum?
On the heels of Fitch's sovereign credit downgrade to A plus (the fifth-highest investment grade), Japan's government debt continues to swell. With its debt at over 200% of its GDP, the Land of the Rising Sun appears to be embarking on a trek into the debt-laden unknown.
(Click on image to enlarge)
A ballooning government debt is often associated with sovereign debt crises, as market shocks can send the interest rate paid on the debt to unsustainable levels. Coupled with Japan's shrinking population (and thus tax base), the country is setting itself up for a hairy situation (data for both charts are from the IMF's World Economic Outlook Database).
(Click on image to enlarge)
As with any well-known macro-trend, there are speculators eager to capitalize on it.
Enter Kyle Bass, one of the few hedge fund managers who made a killing when he bet against housing during the subprime mortgage bust. He and his fund have now set their sights on Japan, specifically shorting Japanese yen and Japanese government debt.
His thesis is simple: with a debt-to-GDP ratio over 200% and a contracting population, it's only a matter of time before a sovereign debt crisis sets in, thus triggering a rise in Japanese interest rates – which the government would be unable to service with a shrinking and aging tax base.
So far this strategy hasn't worked as Bass intended: according to ValueWalk, Bass' fund lost 29% of its value in April alone.
That's not to say Bass' assumptions are incorrect. But there are alternative ways of looking at Japan's situation.
Many blame the 2011 earthquake and subsequent reconstruction efforts for the ballooning debt, while some, like Business Insider columnist Joe Weisenthal, think Japan will never implode.
Weisenthal's main point is that Bass' analysis is simplistic and incorrect. He says that the debt-to-GDP ratio is a lousy measure of anything because "it's measuring a stock (total debt) to a flow (a country's national income for the year)." And "beyond that, debt-to-GDP just doesn't tell you anything about interest rate risk or credit risk."
Weisenthal is entitled to his opinion, but we think Bass will eventually be proven right – although his fund could go broke in the meantime.
The Japanese problem is real, and a sovereign default – outright or inflationary – along with the rising rates that lead up to it are inevitable. But as we have said many times before, just because something is inevitable doesn't make it imminent.
Good read ...basicially explaining how I feel that for the past 3 years they managed to counteract the massive deflationary forces via "printing" but eventually we will reach a we turning Japanese point at which it won't do no good... Cause in the end all the are doing is creating a bigger long term debt bubble (economy and money spent inefficiently as they given a "free ride" vs the pain they need to cleanse and evolve) that eventually has to deflate
--------------
Guest Post: Debt Is Not Wealth
Submitted by Tyler Durden on 06/03/2012 18:31 -0400
Central Banks Creditors Excess Reserves Fail Fisher Guest Post Home Equity Hyperinflation Japan Monetary Base Moral Hazard Shadow Banking Trading Strategies United Kingdom
Via John Aziz of Azizonomics,
Here’s the status quo:
*
These figures are staggering; the advanced nations typically have between three and ten times as much total debt as they have economic activity. In the United Kingdom — the worst example — if one year’s economic activity was devoted entirely to paying down debt (impossible — people need to eat and drink and pay rent, and of course the United Kingdom continues to add debt) it would take ten years for the debt to be wiped clean.
But the real question is why? Why are both debtors and creditors willing to build a status quo of massive unprecedented debt?
*
From the side of the creditors, I think the answer is the misconception that debt is wealth. Debt can be used as collateral, or can be securitised and traded on exchanges (which itself can become a form of shadow intermediation, allowing for a form banking outside the accepted regulatory norms). To keep the value of debt high, and thus keep the debt illusion rolling along (treasury yields keep falling) central banks have been willing to swap out bad debt for good money.*But debt is not wealth; it is just a promise, and in today’s world carries huge counter-party risk. Until you convert your debt-based promissory assets into real-world tangible assets they are not wealth.
From the side of the debtors, I think the answer is that debt is easy. Why work for your consumption when instead you can take out a home equity loan or get a credit card? Why buy the one car that you can afford when instead you can buy two with debt?
But there is another side in this world: the side of the central planners. Since the time of Keynes and Fisher there has been an economic revolution:
*
*
Deflation has effectively been abolished by central banking. *And so we get to where we are today: the huge and historically unprecedented outgrowth of debt. Deleveraging necessitates economic contraction, which produces the old Keynesian-Fisherian bugbear of debt-deflation, which the central planners abhor. So they print.*Where once deflation often made debts unrepayable, and resulted in mass defaults, liquidation and structural transformation, today — thanks to money printing —*debtors get their easy lunch of cheap debt, and creditors get their pound of flesh, albeit devalued by the inflation of the monetary base. It has been a superficially good compromise for both creditors and debtors. Everyone has got some of what they want. But is it sustainable?
The endless post-Keynesian outgrowth of debt suggests not. In fact, what is ultimately suggested is that the abolition of small-scale deflationary liquidations has just primed the system for a much, much larger liquidation later on. Bad companies, business models and practices that might otherwise not have survived under previous economic systems today live thanks to bailouts and money-printing. This moral hazard has grown legs and evolved into a kind of systemic hazard. Unhealthy levels of leverage and interconnection that once might have necessitated failure (e.g. Martingale trading strategies) flourish today under this new regime and its role as counter-party-of-last-resort. With every rogue-trader, every derivatives or shadow banking blowup, every Corzine, every Adoboli, every Iksil, comes more confirmation that the entire financial system is being zombified as foolish and dangerous practices are saved and sanctified by bailouts.
With every zombie blowup comes the necessity of more money-printing, and with more money-printing to save broken industries seems to come more moral hazard and zombification. Is that sustainable?
Already, central bankers are having to be clever with their money printing, colluding with financiers and sovereign governments to hide newly-printed money in excess reserves and FX reserves, and colluding with government statisticians to hide inflation beneath a forest of statistical manipulation. It is no surprise that by the BLS’ previous inflation-measuring methodology inflation is running at a much higher rate than the new:
*
*
Worse, in the modern financial world, we see an unprecedented level of interconnection. The impending Euro-implosion will have ramifications to everyone with exposure to it, and everyone with exposure to those with exposure to it. Not only will the inflation-averse Europeans have to print up a huge quantity of new money to bail out their financial system (the European financial system is roughly three times the size of the American one bailed out in 2008), but should they fail to do so central banks around the globe will have to print huge quantities of money to bail out systemically-important financial institutions with exposure to falling masonry. This is shaping up to be a true test of their prowess in hiding monetary inflation, and a true test of the “wisdom” behind endless-monetary-growth fiat economics.
Central bankers have*shirked*the historical growth cycle consisting both of periods of growth and expansion, as well as periods of contraction and liquidation. They have certainly had a good run. Those warning of impending hyperinflation following 2008 were proven wrong; deflationary forces offset the inflationary impact of bailouts and monetary expansion, even as food prices hit records, and revolutions spread throughout emerging markets. And Japan — the prototypical unliquidated zombie economy — has been stuck in a depressive rut for most of the last twenty years. These interventions, it seems, have pernicious negative side-effects.
Those twin delusions central bankers have sought to cater to — for creditors, that debt is wealth and should never be liquidated, and for debtors that debt is an easy or free lunch — have been smashed by the juggernaut of history many times before. While we cannot know exactly when, or exactly how — and*in spite of the best efforts of central bankers — I think they will soon be smashed again.
--------------
Guest Post: Debt Is Not Wealth
Submitted by Tyler Durden on 06/03/2012 18:31 -0400
Central Banks Creditors Excess Reserves Fail Fisher Guest Post Home Equity Hyperinflation Japan Monetary Base Moral Hazard Shadow Banking Trading Strategies United Kingdom
Via John Aziz of Azizonomics,
Here’s the status quo:
*
These figures are staggering; the advanced nations typically have between three and ten times as much total debt as they have economic activity. In the United Kingdom — the worst example — if one year’s economic activity was devoted entirely to paying down debt (impossible — people need to eat and drink and pay rent, and of course the United Kingdom continues to add debt) it would take ten years for the debt to be wiped clean.
But the real question is why? Why are both debtors and creditors willing to build a status quo of massive unprecedented debt?
*
From the side of the creditors, I think the answer is the misconception that debt is wealth. Debt can be used as collateral, or can be securitised and traded on exchanges (which itself can become a form of shadow intermediation, allowing for a form banking outside the accepted regulatory norms). To keep the value of debt high, and thus keep the debt illusion rolling along (treasury yields keep falling) central banks have been willing to swap out bad debt for good money.*But debt is not wealth; it is just a promise, and in today’s world carries huge counter-party risk. Until you convert your debt-based promissory assets into real-world tangible assets they are not wealth.
From the side of the debtors, I think the answer is that debt is easy. Why work for your consumption when instead you can take out a home equity loan or get a credit card? Why buy the one car that you can afford when instead you can buy two with debt?
But there is another side in this world: the side of the central planners. Since the time of Keynes and Fisher there has been an economic revolution:
*
*
Deflation has effectively been abolished by central banking. *And so we get to where we are today: the huge and historically unprecedented outgrowth of debt. Deleveraging necessitates economic contraction, which produces the old Keynesian-Fisherian bugbear of debt-deflation, which the central planners abhor. So they print.*Where once deflation often made debts unrepayable, and resulted in mass defaults, liquidation and structural transformation, today — thanks to money printing —*debtors get their easy lunch of cheap debt, and creditors get their pound of flesh, albeit devalued by the inflation of the monetary base. It has been a superficially good compromise for both creditors and debtors. Everyone has got some of what they want. But is it sustainable?
The endless post-Keynesian outgrowth of debt suggests not. In fact, what is ultimately suggested is that the abolition of small-scale deflationary liquidations has just primed the system for a much, much larger liquidation later on. Bad companies, business models and practices that might otherwise not have survived under previous economic systems today live thanks to bailouts and money-printing. This moral hazard has grown legs and evolved into a kind of systemic hazard. Unhealthy levels of leverage and interconnection that once might have necessitated failure (e.g. Martingale trading strategies) flourish today under this new regime and its role as counter-party-of-last-resort. With every rogue-trader, every derivatives or shadow banking blowup, every Corzine, every Adoboli, every Iksil, comes more confirmation that the entire financial system is being zombified as foolish and dangerous practices are saved and sanctified by bailouts.
With every zombie blowup comes the necessity of more money-printing, and with more money-printing to save broken industries seems to come more moral hazard and zombification. Is that sustainable?
Already, central bankers are having to be clever with their money printing, colluding with financiers and sovereign governments to hide newly-printed money in excess reserves and FX reserves, and colluding with government statisticians to hide inflation beneath a forest of statistical manipulation. It is no surprise that by the BLS’ previous inflation-measuring methodology inflation is running at a much higher rate than the new:
*
*
Worse, in the modern financial world, we see an unprecedented level of interconnection. The impending Euro-implosion will have ramifications to everyone with exposure to it, and everyone with exposure to those with exposure to it. Not only will the inflation-averse Europeans have to print up a huge quantity of new money to bail out their financial system (the European financial system is roughly three times the size of the American one bailed out in 2008), but should they fail to do so central banks around the globe will have to print huge quantities of money to bail out systemically-important financial institutions with exposure to falling masonry. This is shaping up to be a true test of their prowess in hiding monetary inflation, and a true test of the “wisdom” behind endless-monetary-growth fiat economics.
Central bankers have*shirked*the historical growth cycle consisting both of periods of growth and expansion, as well as periods of contraction and liquidation. They have certainly had a good run. Those warning of impending hyperinflation following 2008 were proven wrong; deflationary forces offset the inflationary impact of bailouts and monetary expansion, even as food prices hit records, and revolutions spread throughout emerging markets. And Japan — the prototypical unliquidated zombie economy — has been stuck in a depressive rut for most of the last twenty years. These interventions, it seems, have pernicious negative side-effects.
Those twin delusions central bankers have sought to cater to — for creditors, that debt is wealth and should never be liquidated, and for debtors that debt is an easy or free lunch — have been smashed by the juggernaut of history many times before. While we cannot know exactly when, or exactly how — and*in spite of the best efforts of central bankers — I think they will soon be smashed again.
Are Low Interest Rates Good?
Submitted by Tyler Durden on 06/03/2012 - 21:27
In a perfectly succinct follow-up to Last Friday's Santelli-Kaminsky CNBC-aberration discussion of the now status quo financial repression (low interest rate / QE environment), this two-and-a-half minute clip asks and answers the seemingly simple question of whether low interest rates are good. Borrowing and saving are really about whether to consume more now or later (or more later and less now) and we agree with Professor Antony Davies that these decisions are best left to individuals - and not the nanny-state/Fed. Each person's judgment of what is best for them is replaced by the Federal reserve's judgment and the free market interest has become a thing of the past (for now). Lower rates don't mean more spending; they mean more spending now and less in the future.
Submitted by Tyler Durden on 06/03/2012 - 21:27
In a perfectly succinct follow-up to Last Friday's Santelli-Kaminsky CNBC-aberration discussion of the now status quo financial repression (low interest rate / QE environment), this two-and-a-half minute clip asks and answers the seemingly simple question of whether low interest rates are good. Borrowing and saving are really about whether to consume more now or later (or more later and less now) and we agree with Professor Antony Davies that these decisions are best left to individuals - and not the nanny-state/Fed. Each person's judgment of what is best for them is replaced by the Federal reserve's judgment and the free market interest has become a thing of the past (for now). Lower rates don't mean more spending; they mean more spending now and less in the future.
Don't forget property taxes which keep going up and up as local governments go broke
My parents place fully paid off but still gotta fork over a big check every year plus all the upkeep costs /hassle
Problem I see with housing beyound the obvious problems are societal in nature as well
Breakdown in the family ... "kids" these days don't want the hassle of up keeping a lawn and shit like that ... Condos probably better target then traditional big yard house IMO
I'll probably "buy" (debt slave till I pay it off or find another "buyer" ... later on in this depressionary bust) ... On the low upkeep end of things but no way yet ...
Housing shouldn't be an " investment" unless that is your profession/area of expertise ... It should be a place to live that and nothing else ....
My parents place fully paid off but still gotta fork over a big check every year plus all the upkeep costs /hassle
Problem I see with housing beyound the obvious problems are societal in nature as well
Breakdown in the family ... "kids" these days don't want the hassle of up keeping a lawn and shit like that ... Condos probably better target then traditional big yard house IMO
I'll probably "buy" (debt slave till I pay it off or find another "buyer" ... later on in this depressionary bust) ... On the low upkeep end of things but no way yet ...
Housing shouldn't be an " investment" unless that is your profession/area of expertise ... It should be a place to live that and nothing else ....
Also another problem with housing is quality of housing
They were making low quality, cheaply made homes as people didn't give a damn about that it was a huge bubble and people weren't thinking straight ... Gonna take a long time for the market to correct
Also another factor for housing as far as societal goes ... Is owning a home make u much less mobile as far as moving around for your job prospects and such ... Most people will have many different jobs in many different cities before they are done and it's too risky to be tied to a home if your job goes poof and u gotta skip town to find something else
They were making low quality, cheaply made homes as people didn't give a damn about that it was a huge bubble and people weren't thinking straight ... Gonna take a long time for the market to correct
Also another factor for housing as far as societal goes ... Is owning a home make u much less mobile as far as moving around for your job prospects and such ... Most people will have many different jobs in many different cities before they are done and it's too risky to be tied to a home if your job goes poof and u gotta skip town to find something else
Housing overall is going to hit rock bottom and skid along the pavment for a while and then revert back to what it was prior to the bubble with slight steady increase with time ... There will be no V shaped bounce IMO
Good hard lessons like in housing is what the evonomy needs to mend long term ... Ben trying his best to rejuvenate the bubble with low financing costs to no avail ....
Good hard lessons like in housing is what the evonomy needs to mend long term ... Ben trying his best to rejuvenate the bubble with low financing costs to no avail ....
Deflation can happen with printing like crazy if the money being printed keeps directly going to the same pockets and does not move around through the whole economy.
How else can you explain the average middle income wage is going down while the money in the system is at its highest level ever.
