I'm wondering what the implications are for Japan turning into a net seller of US treasures? Will that turn the corner to the low side for the USD? Will China take steps to sure up the value of its investments? Will the US FED be the only buyer? Will the impact of the Japanese disaster have a secondary effect of killing the US (cough, cough) recovery? Any thoughts? Treasuries Drop on Speculation Insurers May Sell to Pay Earthquake Claims http://www.bloomberg.com/news/2011-...-s-retail-sales-rose-most-in-four-months.html
That's it then. If all the private buyers have exited and the 3rd largest holder (Japan, after the US FED (1) and China(2)) needs to sell to actually use these savings for legitimate reconstruction of their country . . . well it feels like this is the end of the US Bond Ponzi. Indeed, China (& Russia) is already reported to be a net seller of US Treasuries (http://www.ft.com/cms/s/0/f372a8dc-3930-11e0-97ca-00144feabdc0.html#axzz1GRFIaPHu). It could be that we have seen the "last fool" exit the market leaving it no where to go but into collapse. As you say, if the US needs to print up more money to buy back its notes from Japan so it can finance its recontruction (not to mention buying its own debt to fincance deficit spending at home!), that will have a significant devaluation effect on the USD, cutting into Chinese savings as well. I don't imagine an 8.9 Earthquake triggering infrastructure destroying tsunamis and nuclear plant melt-downs would have been factored into too many of the "risk models" in the finacial industry. While this tragedy for the Japanese people plays out and our sympathies are with them, this is going to be very interesting time for the global monetary system. Mid-east revolutions, food price inflation, Oil supply shocks pending, Earthquakes, Cyclones, floods, volcanoes going off, nuclear melt-downs, paper ponzi markets (US Bonds & Silver) under extreme pressure . . . This is going to be very interesting indeed.
When the US is already buying 2/3rds of their issuance, all they really need to do is pause for a day or so.. don't expect a normal market response to anything these days.
looks like Japan will not sell their bonds. not only are they not selling, but they are buying more!! this world is so F&%KED up its not funny! [youtube]http://www.youtube.com/watch?v=4vz345JnZUo[/youtube]
But it's fun to watch unfold. Let's face it. Fear of change shouldn't stand in the way of the fact these events needed to happen and were long overdue. It's just interesting to note it's a string of continual acts of nature forcing the issue. I find it enthralling myself. Like a good book you just can't put down!
I'm feeling this unfortunate scenario could be a real boost for the US economy. On the face of it wouldn't seem to obvious yet however I believe we will see unilateral support for Japan's rebuilding effort which will have major positive flow on effects for their supporters.
Unless Japan starts selling over that near 1 trillion they're holding US bonds or starts ramping up their interest rates in short order to cap inflation and supply cash for the rebuild process, I highly doubt Japan will do anything but sink. Japan cannot recover from this without some immediate, sharp and strong fiscal policy from the power brokers. Besides, I don't think this quake is the last we've heard from mother nature just yet. We're getting a string of these events unfolding now, one right after another, billions of dollars of damage every time it happens. The world has already forgotten queensland, even Christchurch is page 5 news now... who's next?
This nis a pretty impressive view of the scale of destruction.... http://www.abc.net.au/news/events/japan-quake-2011/beforeafter.htm
Yes it seems to be flashing around the ring of fire. Chile is in that picture too, along with Hawaii and California. On Japan - who prospers if it collapses economically? Very short list of powerless people. They'll save Japan and I would expect to see hyperinflation in Japan in next 5 years once they start printing money against their T Bills. Doesn't take much to extricate yourself from an economic power and let it fold - just as Japan. And besides China is booming isn't it.
I'm surprised the news hasn't focused on all those yatchs sunk on America's west coast when that 3 foot tsunami rolled into their harbours. Mind you, I'd bet there would've been a few 'financially underwater' yatch owners that were looking at their insurance cover and yelling "Go!, you good thing! "
Just mentioned on the ABC news that Gold Coast property investors are worried that the Japanese will start liquidating their RE assets to pay for the recovery...
At least their hearts are in the right place. So sad for those Japanese folk... but don't you farking DARE sell up your property here and screw our market or we'll.... we'll.... send another tsunami towards you!!!!
ah, maybe true maybe not - sounds like a 'reason' invented by someone to depress the price even further. ( which by the way has become the 'cool' thing ) When i spoke ( a month ago) with a local real estate agent ( some 60yr old dude - he was the JP that i needed ) regards the rough sale prices in the area which i live in and the short term outlook. he said that the councils havent allocated in their budget to build the train line to where i live and than he named some other suburb which did get the train line and that is the reason he mentioned as to why the prices wouldnt be where they 'should' be. i smiled and immidately told him that back in 2007 before the POP the train tracks werent built either and yet the prices were growing, and i went on some rant about bankers printing money out of thin air and that im buying gold and silver and the bankers can continue doing what they are doing and im fine with that. he took it like a man, and i left with the JP-ed documents.
That Peter Schiff is a great one for pointing out the stupidity in conventional thinking. I read somewhere today that the US may outsource its Bond Purchases to the BOJ, to hide its QE program. Who knows what these guys are doing behind closed doors, but the world is certainly being screwed up by their antics. But here's the "spanner in the works" for the global economy: without power and with a focus and resourcing going into managing the largest national disaster of all time, how is Japan going to keep pace with manufacturing the components it produces for the world's products. I have a feeling that this is where the wheels fall off the "just-in-time" supply chain model and counter-party risks start to be realised, impacting and spreading out into the global economy. Enter the money printers! Great article here at ZeroHedge: http://www.zerohedge.com/article/guest-post-alert-nuclear-and-economic-meltdown-progress
This could get interesting if this announcement is true :| http://www.lesjones.com/2011/03/14/hacker-group-anonymous-targets-federal-reserve-bank-of-america/
Just when the Japanese survivors are at their weakest and need their savings to have the greatest purchasing power possible, the G7 central bankers go and sell the yen to drive down its value! http://www.businessday.com.au/busin...he-yen-20110318-1bzsu.html?rand=1300421944975 Instead of imports into Japan being cheap they have now become artificially expensive. Don't you love those central bankers. Printing money to inflate away your savings and then making food more expensive for people trying to get through a crisis! That's just plain disgusting.
