Japan Economy Minister: “Yen’s Excessive Strength Has Been Largely Corrected; Further Weakness Could Be Harmful”
by ilene - May 19th, 2013 3:32 pm
Submitted by Tyler Durden.
As if sniffing at the threat the ongoing collapse in JGBs, culminated by Toyota pulling a bond issue on soaring yields, which forced even JPM to come out with an ominously titled piece called the "VaR Shock" driven by the epic plunge in the Yen, Japan's economy minister Akira Amari has hit the wires saying "the yen's excessive strength has been largely "corrected," and further weakness could be harmful, Japan's economy minister said Sunday, suggesting the Japanese government may be happy with the currency's current level.
Economy minister Akira Amari, responding to a question on how far the yen should weaken, replied that while he couldn't comment himself, "it's being said that the correction of the strong yen is largely completed. If the yen keeps on weakening a lot more, it will have a negative impact on peoples' lives." Now the question is will those millions in Mrs. Watanabe housewives suddenly stuck in margin calls scramble to take profit, which could send the USDJPY soundly back into double digit territory, or will the momentum machine, facilitated by Getco's relentless scramble to perpetuate momentum ignition and drift, mean Japan has officially lost control of the Yen, and in a world in which only the BOJ's actions matters, will USDJPY 120 be next, together with the even greater "negative impact on people's lives" such a move would have (but not for those buying apartments at the yet to be built 432 Park).
Mr. Amari was speaking on a Sunday television talk show on national broadcaster NHK.
His comments come after the dollar appreciated past Y103 for the first time in four years Friday, marking a 3% gain in the past week alone, and a 30% rise since mid-November, when Prime Minister Shinzo Abe started his successful campaign for office on a pro-growth, weak-yen platform.
Mr. Abe and his ministers had argued that the yen had been too strong versus currencies like the dollar and euro since the global financial crisis sent the currency soaring in 2008, pummeling Japan's big exporters, which found their Japan-made goods suddenly much costlier in the world's markets. "Correcting" that problem — as Mr. Abe and his cohorts put it — was an important goal of the government's economic growth policies, which called for aggressive monetary easing,
by ilene - May 19th, 2013 2:40 pm
Submitted by Tyler Durden.
To those who have already submitted their applications to launder their cash buy an apartment or better yet, have already wired the money to purchase any of the still to be built residences at 432 Park, the 84-story giant that is set to become the tallest residential building in the Western hemisphere, congratulations.
Although that is technically inappropriate: for full effect we would have to say "congratulations" in the buyers' native tongue, be it Russian, Mandarin, Spanish or Arabic, because it sure won't be English in the ongoing scramble to park trillions in cash away from a global banking system now hell bent on confiscating it, especially away from Europe's insolvent and massively levered banks as shown yesterday, and in the Cyprus template aftermath, the cleanest dirty shirt has once again emerged as midtown Manhattan real estate just as we said would happen last September.
However, to call the emerging, full-blown panic scramble to park cash sight unseen, with zero regard for asking price "a bubble", would a slap in the face of all calm, cool and collected bubbles everywhere. Because any time someone is willing to pay $95 million for a non-duplex one-floor apartment, $44.8 million for a 4-bedroom apartment, $10 million for a two-bedroom, or a paltry $3.9 million for a maid's quarters studio (no really), something far more profound is going on beneath the surface than a simple asset bubble.
The NYT explains:
Only 10 floors have been completed in what is intended to be the tallest residential building in the Western Hemisphere — a slender, 84-story tower on Park Avenue at 56th Street in Manhattan. But the top penthouse is already under contract for $95 million.
Other buyers have snapped up apartments on lower floors for prices that are almost as breathtaking. While their identities are not known, it is likely that many are the rootless superrich: Russian metals barons, Latin American tycoons, Arab sheiks and Asian billionaires.
Ultraluxury housing and construction is booming across Manhattan, which is now beginning to rival London in popularity with the world’s wealthy. The number of condominium buildings in the borough with apartments selling for more than $15 million has risen to 49, up from 33 in 2009, according to CityRealty.
by ilene - May 19th, 2013 2:27 pm
Canada's oil sand mines will eventually produce up to 2 trillion barrels of oil and what that could mean for the environment has been debated for years. What's often overlooked though is a coke byproduct that results from refining the tar-like bitumen of the oil sands into oil.
Coke is a low-quality type of coal and the Marathon Petroleum plant in Detroit has made overlooking its role in the oil sands debate impossible to ignore. The refinery was built on the Detroit River more than 70 years ago but began refining Canadian oil sand deliveries just last November.
The coke waste started accumulating then. The New York Times writes that now the mound of coke towers three stories above the street, covers an entire city block, and is owned by Koch Carbon controlled by David and Charles Koch.
Petroleum coke generates up to 10% more CO2 than coal, and new permits allowing its use are no longer issued in the U.S.
Faced with hauling the stuff away and selling at a loss, Canadian mining companies have been piling it into massive man-made mountains of their own. The immense mound of coke in the pictures below were photographed during our trip to the oil sands last year.
While coke is used widely in countries like China and Mexico where emissions are less regulated than in the U.S., it sells for 25% less than coal. That means shipping the coke from Canada only makes sense if it's pumped out in the tar-like bitumen and refined closer to where it's eventually sold.
It makes sense then that one of the largest petroleum coke dealers in the world, delivering more than 11 million tons of fuel-grade coke every year, is Oxbow Carbon owned by David and Charles' brother, William Koch.
Oxbow drew media scrutiny in 2012 after donating $4.25 million to GOP candidates and spending another $1.3 million on lobbyists in the same period.
Oxbow would undoubtedly like to see piles of petroleum coke appear along the U.S. Gulf Coast when the Keystone XL pipeline gets up and running. Then Canada will pump its oil sand bitumen to refineries there far better positioned to ship the waste to Mexico and China.
by ilene - May 19th, 2013 1:15 pm
Submitted by Tyler Durden.
Last week, Bill Gross did not mince his words when he said that he now "sees bubbles everywhere" and that "when that stops there will be repercussions" but for now Benny and the Inkjets, not to mention his band of merry statist men, who take from the poor and give to the wealthy, are playing the music on Max, and so one must dance and dance and dance. And after one legacy bond king, it was the turn of that other, ascendant one – Jeff Gundlach – to share his perspectives Bernanke's amazing bubble machine. His response, to nobody's surprise: "there is a bubble in central banking. We are drowning in central banking and quantitative easing…. And it's not ending until there are some negative consequences."
What are those negative consequences? This too should be perfectly expected for regular readers: currency devaluation leads to trade wars (as either is a zero sum game, and in a zero sum game it is very easy to blame someone else for one nation's suffering and economic malaise), trade wars lead to real wars (see the 1930s), and so on. We are not there just yet: quote Gundlach "With global growth slowing not everyone can increase their imports [indeed: observe just how it was that Spain managed to post its first "trade surplus" since 1971 - hint: not by boosting exports] you're playing a market share game." But it is rapidly approaching: "We are looking at competitive currency devaluations, which causes rancor, causes unhappiness, and fingerpointing and god-forbid tariffs and things that cause even slower economic growth a la the 1930s." Good choice of words, considering it was just a week ago that none other than stagnating metals magnate Lakshmi Mittal, head of ArcelorMittal, who was urging Europe to just go ahead already and declare trade on China asap. For his own selfish reasons of course.
by ilene - May 19th, 2013 12:18 pm
Submitted by Tyler Durden.
Despite the eagerness of Abenomics and the new BOJ head Kuroda to have their cake and eat it too, in this case manifesting in soaring stock prices, plunging Yen, rising GDP and exports, and most importantly, flat or declining bond yields, so far they have succeeded in carrying out three of the four (assuming Japanese economic data reporting is more accurate than that of its neighbor China), as it is physically impossible for any central planner to completely overrule the laws of math, economics and physics indefinitely.
In this vein, we have described on numerous occasions in the past several days the shock to the system that the massive one-way transfer out of all asset classes and into equities has engendered, and resulted in several JGB futures trading halts in an attempt to normalize a market where bond volatility has suddenly exploded. Volatility aside (and it shouldn't be as the below section from JPM explains), the recent surge in yields higher is finally starting to take its tool on domestic bond issuers. As Bloomberg reports, already two names have pulled deals from the jittery bond market due to "soaring" borrowing costs.
The first is Toyota Industries which as NHK reported, canceled the sale of JPY20 billion debt. Toyota is among Japanese firms that put off selling debt as long-term yields on government debt have risen, increasing borrowing costs, public broadcaster NHK says without citing anyone. Last week JFE Holdings announced it would delay plans to sell bonds due to market volatility. Two names down… and the 10 Year is not even north of 1%.
What happens to corporate bond funding when the one way slide that it the USDJPY continues on its way to 105, then 110, then 120, and so on, as equities explode on their way to doubling in 2013 (the NKY225 should surpass the DJIA in absolute terms in tonight's trading session), and how will corporation raise that much needed capital to fund CapEx (if one believes Abe of course) if they can't even handle a 10 Year that is well shy of 1%? Maybe they can all just fund their capital needs with equity going forward?
by ilene - May 19th, 2013 11:47 am
Courtesy of Mish.
The Local, a website with German news in English reports Economists warn against German euro exit.
“Even a believable rumour that Germany would exit the euro would result in a massive capital flight from the countries of southern Europe to Germany.”
The southern European banking system would then collapse, bringing down entire economies with them, Schmieding said.
The consequences for Germany would be severe. The crisis countries could no longer pay back their debt and Germany’s important export markets would drop off. On top of that German taxpayers would be burdened with immense costs, he said.
On the other hand if you add up the expected growth advantages of euro membership between 2013 and 2025 there would be a profit of nearly €1.2 trillion – or about half Germany’s gross domestic product in a year.
Thomas Straubhaar of the Hamburg HWWI economic institute thinks a return to the D-mark would be “a worst possible scenario.”
“An upward valuation of the D-mark and an accompanying devaluation of the euro would result in a massive debt forgiveness of all other euro-countries – with the costs of that picked up by Germany. This could lead to a currency war and the end of monetary stability.”
As is typically the case in such articles, the eurozone proponents ignore the costs of staying in the euro and overly trump up the benefits. The article perpetuates the myth that German taxpayers will suffer the consequences of a breakup, but suffer no costs if the eurozone stays intact.
Nothing could be further from the truth. As I have pointed out on many occasions, Germany is going to pay a steep price either way, and so will Europe.
The cost to Europe on the current path will be another decade of Southern European depression, resentment, and capital controls. Somewhere along the line, citizens in one or more countries will decide they have had enough, and vote to exit the Euro anyway.
It is a huge mistake to believe Germany can impose its will on Southern Europe forever while not paying through the nose with eurobonds or other transfer mechanisms. If Germany returns to the D-mark, it will get paid back in cheaper Euros, but it least its stands a chance of getting paid back.
by ilene - May 19th, 2013 6:59 am
Courtesy of The Automatic Earth.
The waiting room of Union Station in Chicago
Why do we do it? Sure, we discount the future, and consensus is that's genetic, but it's not just our own future we discount. In fact it's not even the one we discount most: that would be our children's future. We don't just take what we need, we take all we can, and leave them with the consequences. After us the deluge. Even though love and protection for our children, and their children, is supposed to be at least as hard-wired into our genes as discounting the future is. Science even suggests that our main subconscious aim in life is simply to propagate our genes. Go forth, multiply and go away.
So, assuming this love for our children thing is valid, why is it that we burden the children we apparently love so much with these endless heaps of waste left over from our activities, many of which have nothing to do with our survival as such? At best it's a strange way of showing our love, at worst it looks more like the exact opposite of love. If mere survival was the goal, we could take it a lot easier, put on an extra sweater, walk to the store, that basic sort of thing, and build our communities to fit that kind of lifestyle.
We don't. We do the opposite. The more energy we have access to, the more we feel the urge to burn. And we produce children to help us do it, and raise them accordingly. There seems to be a pattern here. We make sure every next generation is even more dependent on burning even more energy, and less capable of doing without. Not because we don't understand this can only end in tears and blood and piles of corpses; we do. All the evidence says we simply can't help ourselves. So wearing that extra sweater is useless; we'd just come up with something like keeping it on in summer and jacking up the airco, so at least we can keep burning that oil and gas and electricity, in increasing amounts.
Still, not every human being and society seem to have done this all the time. For a long
by ilene - May 18th, 2013 9:59 pm
On the Billl Moyers Show
Public health historians discuss thwarted efforts to hold the lead industry accountable for toxic exposure threatening American children.
Science can be a battleground — witness the politics of climate change, the teaching of evolution, the uncharted terrain of genetic modification and stem cell research, among other contentious issues. But when industries release untested chemicals into our environment — putting profits before public health — our children are the first to suffer. Nowhere is this more troubling than in the ongoing story of lead poisoning.
Bill talks with David Rosner and Gerald Markowitz, public health historians who’ve been taking on the chemical industry for years — writing about the hazards of industrial pollution and the neglect of worker safety — despite industry efforts to undermine them. Their latest book, Lead Wars: The Politics of Science and the Fate of America’s Children, is the culmination of 20 years of research. Markowitz and Rosner warn that, for young children, there’s no safe level of exposure to this dangerous toxin still lurking in millions of homes. More here >
by ilene - May 18th, 2013 9:37 pm
Courtesy of Pater Tenebrarum of Acting-Man
Full Court Press
Not a day passes without the financial media denouncing gold as an investment option and hailing the bureaucrats heading the world's monopolist monetary central planning agencies as superheroes. It began prior to gold's recent breakdown, with widely cited bearish reports on gold published by Credit Suisse and Goldman Sachs, among others. Never mind that most of their arguments were easily unmasked as spurious. It should be no wonder though: gold's rise was the most conspicuous evidence of faith in central banking being slowly but surely undermined. The banking cartel relies on the fiat money system remaining intact; the legal privilege of fractional reserve banking provides it with what is an essentially fraudulent profit center unparalleled by any other in the world (fraudulent in terms of traditional legal principles, but not in terms of the current law of course). Not surprisingly, ever since the completely unrestrained fiat money system became operational in the early 1970s, the financial sector's share of corporate profits has inexorably risen and finally eclipsed all other sectors of the economy.
The share of financial profits of total corporate profits – a direct result of the fractional reserve banking privilege and the central bank monopoly on money (via Ed Yardeni) – click to enlarge.
In other words, the banks have to protect a major franchise. It is a good bet that if gold had continued to rise in the face of money printing being accelerated all over the world, the inevitable loss of faith in central banks would have happened sooner rather than later. That it will eventually happen is unavoidable – the modern monetary system was fated to self-destruct the moment it was conceived. This is so because central planning and price controls cannot work in the long run, even though central banks are socialistic institutions adrift in a capitalist sea, so to speak. They can to some extent observe prices in the market, but the problem is that the market price most relevant to them – namely the ratio of future against present goods as expressed in interest rates on the credit markets – is not independent of their actions. There is therefore nothing that can tell them whether their administered interest rates are too high or too low. It is a system that is condemned to fail…
by ilene - May 18th, 2013 7:48 pm
Courtesy of Mish.
By a wide margin, but not quite a majority (yet), Let’s quit EU say 46 per cent of voters in poll.
Asked the exact question Conservatives want to put the public in the 2017 referendum – “Do you think that the UK should remain a member of the EU” – 46 per cent opt to come out, a higher figure than in other recent surveys.
Just 30 per cent say they want to remain.
In a further boost for the eurosceptic cause, 44 per cent want an “in/out” referendum immediately, although 29 per cent are prepared to wait until 2017, David Cameron’s preferred option.
The headline figure using ICM’s “Wisdom Index” method – which asks voters to predict the result of the next general election rather than which party they support – puts Labour just three points ahead of the Tories, the party’s narrowest lead since the index was launched last year.
Cameron is hurting himself by not agreeing to a referendum now. For further discussion, please see Cameron Faces Cabinet Crisis of His Own Making; Purposely Self-Inflicted Wounds
Mike “Mish” Shedlock