Japan should ditch its US debt?
Good morning. If you enjoy Christmas, you may want to let this rest for a while, and come back to it later.
No theme; this is kind of a potpourri. Sorry, I've been distracted, digging out of snowstorms and such.
The stock market had a little mini-rally today for no very good reason other than hopes that after-Christmas sales will be better than before-Christmas sales. Good luck with that, guys. retail space rents are falling sharply, so I'm pretty sure that whole idea is ex recto.
Christmas week is traditionally a no-news week with very little economic activity outside of retail, but we had some rumblings this week, starting with Akio Mikuni, president of credit ratings agency Mikuni & Co., saying the US should dump its dollar assets and that the US dollar could fall to 円50 or so without "drastic measures" taken by Japan and other countries. He also calls for a reverse-Marshall plan to rebuild US infrastructure; it's an interesting set of comments. This sort of thing is coming out as Toyota warns of its first-ever loss. Japan has a lot to worry about with exports falling 27% year-to-year in November. China's feeling it too. Oh, and after bouncing back over 800, the Baltic Dry Index has been falling again, down on the 24th to 774.
Currencies are being reasonably stable, for the moment.
Japan's not the only one worried about fundamental insanity in US policy; writers in the UK are getting cranky too. Headlines finally hit the mainstream US press that nobody's willing to talk about where all that bailout money has been going, which is about time. flashfire pointed out this article pointing out that some US$1B of it went to GM towards work on a factory there. It's a drop in the bucket, but it's still taxpayer-funded outsourcing.
Mish Shedlock, writing over at Minyanville, points out that US households have lost over US$7 trillion in notational wealth through 3Q this year (in 401Ks, housing losses, and so on), and it'll probably be $10 trillion once the 4th quarter data is out. He sees quite a bit of downward pressure on wages, as well. Meanwhile, house prices are falling at a rate not seen since the Great Depression, despite surging mortgage applications. (Most of these are refi attempts, and note that "applications" are not "acceptances" anymore.) The massive oversupply of inventory is expected to get worse, not better, despite builder cutbacks as huge numbers of foreclosures start entering more markets. Detroit, as always, has some of the worst data as crime rates are falling because there's nothing left work stealing. Criminals are trying to find ways to say in jail, like something out of a goddamn O. Henry story.
Ignore the comments, but this interview with Jim Rogers is interesting in that O SHI kind of way.
Karl Denninger thinks that the US government is facing a fundamental crisis of legitimacy, with news of yet another case where a regulator was helping a bank - in this case, IndyMac - hide and perpetuate fraud. And with trillions and trillions being thrown out the window, you have to assume that as with everything else the last decade, it's mostly being stolen. Karl talks about rule of law and the importance thereof, but, well, this isn't a country of law, so I think Karl can keep dreaming. On a related note, Spain's banking chief says confidence is at zero, and really, that's about right.
Oh, and the Fed is now moving to backstop... automobile dealerships. But hey, why not. We're already insuring gift cards. Marketwatch has noticed the "unprecedented risks" taken on by the Feds; well, "risk" implies that failure is not certain, but otherwise we can go with that. It's about the trillions, plural, the Fed has lent out/handed out over the last few months, all as part of its various "easing" and "backstopping" and so on efforts.
Karl Denninger talks about why he thinks quantitative easing as being performed will completely fail in the US.
I'd write more, but I'm very sleepy. Things will be quiet over the holiday week, but I'll keep a weather eye out for anything particularly amazing. (My holiday was over the weekend.) I hope everyone has a good whatever you're celebrating, and expect things to get more interesting in the new year. Particularly when sales data comes out. I'm expecting that to be ugly.
No theme; this is kind of a potpourri. Sorry, I've been distracted, digging out of snowstorms and such.
The stock market had a little mini-rally today for no very good reason other than hopes that after-Christmas sales will be better than before-Christmas sales. Good luck with that, guys. retail space rents are falling sharply, so I'm pretty sure that whole idea is ex recto.
Christmas week is traditionally a no-news week with very little economic activity outside of retail, but we had some rumblings this week, starting with Akio Mikuni, president of credit ratings agency Mikuni & Co., saying the US should dump its dollar assets and that the US dollar could fall to 円50 or so without "drastic measures" taken by Japan and other countries. He also calls for a reverse-Marshall plan to rebuild US infrastructure; it's an interesting set of comments. This sort of thing is coming out as Toyota warns of its first-ever loss. Japan has a lot to worry about with exports falling 27% year-to-year in November. China's feeling it too. Oh, and after bouncing back over 800, the Baltic Dry Index has been falling again, down on the 24th to 774.
Currencies are being reasonably stable, for the moment.
Japan's not the only one worried about fundamental insanity in US policy; writers in the UK are getting cranky too. Headlines finally hit the mainstream US press that nobody's willing to talk about where all that bailout money has been going, which is about time. flashfire pointed out this article pointing out that some US$1B of it went to GM towards work on a factory there. It's a drop in the bucket, but it's still taxpayer-funded outsourcing.
Mish Shedlock, writing over at Minyanville, points out that US households have lost over US$7 trillion in notational wealth through 3Q this year (in 401Ks, housing losses, and so on), and it'll probably be $10 trillion once the 4th quarter data is out. He sees quite a bit of downward pressure on wages, as well. Meanwhile, house prices are falling at a rate not seen since the Great Depression, despite surging mortgage applications. (Most of these are refi attempts, and note that "applications" are not "acceptances" anymore.) The massive oversupply of inventory is expected to get worse, not better, despite builder cutbacks as huge numbers of foreclosures start entering more markets. Detroit, as always, has some of the worst data as crime rates are falling because there's nothing left work stealing. Criminals are trying to find ways to say in jail, like something out of a goddamn O. Henry story.
Ignore the comments, but this interview with Jim Rogers is interesting in that O SHI kind of way.
Karl Denninger thinks that the US government is facing a fundamental crisis of legitimacy, with news of yet another case where a regulator was helping a bank - in this case, IndyMac - hide and perpetuate fraud. And with trillions and trillions being thrown out the window, you have to assume that as with everything else the last decade, it's mostly being stolen. Karl talks about rule of law and the importance thereof, but, well, this isn't a country of law, so I think Karl can keep dreaming. On a related note, Spain's banking chief says confidence is at zero, and really, that's about right.
Oh, and the Fed is now moving to backstop... automobile dealerships. But hey, why not. We're already insuring gift cards. Marketwatch has noticed the "unprecedented risks" taken on by the Feds; well, "risk" implies that failure is not certain, but otherwise we can go with that. It's about the trillions, plural, the Fed has lent out/handed out over the last few months, all as part of its various "easing" and "backstopping" and so on efforts.
Karl Denninger talks about why he thinks quantitative easing as being performed will completely fail in the US.
I'd write more, but I'm very sleepy. Things will be quiet over the holiday week, but I'll keep a weather eye out for anything particularly amazing. (My holiday was over the weekend.) I hope everyone has a good whatever you're celebrating, and expect things to get more interesting in the new year. Particularly when sales data comes out. I'm expecting that to be ugly.