Posted on March 25, 2011
Vikash-Jain submits:
I read an article that would please Malthus. “Demographic economist” Richard Hokenson sees world population peaking at 8 billion and then falling. Good news for the planet. But there are implications for investors who’ve only known growing populations (ie. all of us).
Hokenson believes a shrinking population will mean a shrinking global economy and low interest rates.
Japan is a prime example. Its population, unchanged since 1990 at about 125 million, will fall by 20% by 2050. Japanese economic growth since 1990 has been tepid. Repeated efforts to re-start the economy have failed. Even with interest rates at nil, inflation is flat.
Hokenson says: “Aging populations don’t borrow money. It doesn’t matter what the price of money (interest rate) is. You can push out money but it doesn’t go anywhere.”
Rebuilding after the quake may add to Japan’s GDP, but still, Japan is in decline. (Of course, they may find
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Posted on March 25, 2011
Money Morning submits:
By David Zeiler
Disruptions caused by Japan’s March 11 earthquake and tsunami could further encourage Japanese auto parts makers to relocate factories to China – an eventuality already being driven by explosive growth in the Chinese auto market.
Japan’s Big Three automakers – Toyota Motor Corporation (TM), Honda Motor Co. Ltd. (HMC) and Nissan Motor Co. Ltd. (NSANY.PK) – all already operate assembly plants in China. And while 60% to 70% of the parts those plants need come from within China, the rest must be imported from Japan. So if the assembly plants run out of the parts from Japan, production will halt.
Although no plant in China has yet reached that point – Toyota, Nissan and Honda have all said their factories have enough parts to sustain production for at least two more weeks – the possibility has led some to contemplate a more localized supply chain.
“Companies were
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Posted on March 25, 2011
Mercenary Trader submits:
Do you remember the “Cash for Clunkers” program enacted by the U.S. government to help the U.S. Car industry? It offered a generous cash rebate to car buyers who traded in their old car.
While there were lots of cars sold during Cash for Clunkers, all it did was pull sales from future months. Everyone who thought about buying a car in the next 3 months pushed the car purchase forward to get a check from the government.
(Click charts to expand)
Car sales plummeted after “Cash for Clunkers”
How does this relate to G-7 interventions in the yen? Anybody who is thinking about buying yen in the next few months will want to do it when there is a huge Government program selling yen. Why wait and potentially lose another 5%?
My view on Bank of Japan (BoJ) intervention in the yen is that it is more likely to
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Posted on March 24, 2011
Madhusudan Rao submits:
What good are your U.S. Treasuries if you can’t use it during a crisis? It seems almost stupid to get deeper into debt than to sell the U.S. Treasuries and rebuild your economy.
The U.S. owes Japan $ 885 billion. According to the initial estimates, the cost of rebuilding the Japanese economy is over $300 billion. The Japanese debt is already at 225% of the GDP (some $8 trillion!!). Common Sense tells me that if I have lent someone money and at the same time if my own debt levels are high, then I would ask my money back atleast when I am in crisis.
The truth is accumulating foreign reserves (USD) used to be a good idea when your reserves had some value. Now the dollars are only supported by U.S. military and tomahawk missiles. Ironically, those very factors may cause its decline in the next few years.
Officially,
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Posted on March 24, 2011
Lou Basenese submits:
I’ll admit that in the wake of the earthquake, I wasn’t the first analyst to slap a “Buy” rating on Japanese stocks. Nor will I be the last.
Heck, even Warren Buffett jumped into the mix this week. On his recent trip to South Korea, he said:
Frequently, something out of the blue like this, an extraordinary event, really creates a buying opportunity. I’ve seen that happen in the United States, I’ve seen that happen around the world. I don’t think Japan will be an exception.
Here’s the problem, though …
The People Have Spoken … But Are They Making Sense?
The latest issue of Barron’s sends an emphatic message to investors. Its cover headline simply reads, “Buy Japan Now.”
The publication isn’t alone. Many others have featured similarly urgent, pro-Japan stories. And, true to the “herd mentality,” investors are lapping up the advice and blindly acting on it.
In
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Posted on March 24, 2011
Rougemont submits:
Just after the earthquake, tsunami, and nuclear crisis unfolded in Japan, I wrote about some stocks and ETFs that could benefit from the changing headlines in Japan. You can read that article here. Every single stock and ETF mentioned in that article is higher now. That shows how quickly the headlines went from doom and gloom to what is now an overly optimistic outlook on Japan. The cover of Barron’s this week was “Buy Japan”. Some are even calling this the buying opportunity of a lifetime. See where famed investor Marc Faber says those words.
Everyone is in such a rush to be a contrarian these days that a massive tragedy, with huge economic consequences, has been viewed by some as a huge buying opportunity without much thought. The Nikkei Index in Japan is not down enough to be called the buying opportunity of a lifetime, nor was it ever,
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Posted on March 23, 2011
Pater Tenebrarum submits:
Everybody Has a Plan
Before we go into medias res, here is our usual, quasi-mandatory disclaimer on the whole thing, one that will undoubtedly be familiar to regular readers, but we repeat it always for the benefit of those who may have just stumbled upon this site:
We do not believe there should even be such a thing as a banking cartel with a central bank at its center, possessing nigh unlimited money creation power. We don’t even think the State should be involved in the business of money production at all. There should be free banking, and what is used by the market as money and in what quantity should be up to the free market itself.
Having gotten this objection to the monetary system as it is unfortunately constituted today out of the way, we are still left with the fact that things are what they are. Within
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