Has Japan Run Out Of Cans To Kick?

"Japan's Trade and Current Account imbalances appear to be hitting some kind of terminal velocity and while neither JGBs nor CDS seem to reflect the ensuing chaotic recognition that perhaps the can that has been so faithfully kicked down the "Nishi-no-michi" or the West Road may have plunged over the lip of Mount Fuji (conjuring images of Mordor), FX markets recent and abrupt weakness brought on by yet more printing (a topic we discussed in great detail recently as the chosen heretical method du decade) may well be coming face to face with reality. We assume Azumi is faithfully watching these market moves but we wonder at what point the quasi-intentional weakening of local currencies flares into a full-blown currency war - and instead of merely encouraging simpleton FX-carry strategies chasing momentum and leverage - quickly becomes the hyperinflationary super nova that many have been waiting for over the last decade. Dismal demographics aside, we wonder how long before Koo prescribes yet more of the same medicine for this constant state of deflation and at what point does inverted-Apple-looking charts for Trade and Current Account balances become simply too hot to handle...

The Japan trade balance has tipped into extreme freefall..."



at http://www.zerohedge.com/news/has-japan-run-out-cans-kick

US Trade Balance Worst In 39 Months With Largest 3 Month Drop In 20 Years

"While NFP dominated the headlines, the US Trade Balance (deficit) limped out and dropped far more than expected. At a $52.565bn Deficit, this is the worst trade balance since October 2008. Perhaps more shocking is the fact that the 3 month drop (rise in deficit) is the largest ever on record, dropping $9.4bn in that period. Unsurprisingly, the bulk of this drop is in the 'Petroleum' trade balance which has accelerated the most in the last 3 months (coincidentally dropping the most since last March and we know how that ended).

The deficit is rising..."

at http://www.zerohedge.com/news/us-trade-balance-worst-39-months-largest-3-month-drop-20-years

Why JPM Sees A "Lot More Printing" By The ECB

"While the catalyst for much of the recent rally in risk assets seems to have been on the back of Europe clambering back from the edge of the abyss (and admittedly hope for better global growth and US decoupling), JPMorgan's Michael Cembalest notes that Europe remains very much an Achilles Heel going forward. With former ECB member Stark's recent comments on the already 'shocking' quality of the ECB's balance sheet, it is the outflows (or net balance of payments) from the periphery that means the ECB will simply have to keep printing. ECB funding of Spanish and Italian banks is still a relatively small part of their liabilities and should we see even a crack in the resilience of these knife-sitting nations, the retail depositors, bondholders, and non-local wholesale/retail money is unlikely to stay put (especially if there is the continued lack of growth that seems inevitable). The latest Spanish data is dreadful, as Cembalest notes, but the economic situation in France remains weak and while JPM's analysis looks for a gradual closure of the periphery's current account deficit by 2015, the ECB's need to finance the gap in the interim raises a critical question. Since the ECB's printing has boosted the US stock market primarily, will the Fed now take the lead and return the favor (QE3 or more) to help its European partners grow their (net trade) way out of this hole?..."



at http://www.zerohedge.com/news/why-jpm-sees-lot-more-printing-ecb

Guest Post: Backing Into World War III?

"According to the doctrine of pre-emptive war, Iran can be attacked based on its alleged desire to develop nuclear weapons, just as Iraq was attacked in 2003. In fact, Congress is currently debating whether a nuclear capability alone (which Brazil, Japan, and other countries enjoy) could justify the 'preventive' attack. I believe it is time to negate this doctrine by postulating that Iran in fact has a right, as a sovereign nation, to a nuclear capability.

Having traveled to Iran recently, I can attest to the Joint Chiefs' General Dempsey's reference to Iran as a 'rational' actor. The Iranians have no interest in destroying America, or Israel, at the expense of one of the oldest continuous civilizations in the world, dating back about 2600 years. Iran is currently surrounded by over 40 U.S. military installations, not counting Israel's still-unaccounted nuclear arsenal. To assert that Iran would jeopardize its culture for a one-shot nuclear attack is a complete miscalculation of the Iranian spirit; that spirit gave rise to a revolution in 1979 against what they perceived as Anglo-American imperialism in the form of the Shah, much as our own revolution opposed British imperialism.

I agree with General Dempsey that an attack on Iran would not only be imprudent, it would be 'destabilizing', and for more than just Iran. What is at stake is much larger than Iran's right to become a nuclear power; and based on the attitude of the political figures I spoke with in Iran, they understand this very well -- should Israel, with or without American support, attack Iran's nuclear or military infrastructure, it would be considered an act of war that may prompt World War III.

What I believe is currently being played out is an 'endgame' scenario, by failing West European and American economies, threatening to explode what has historically been referred to by British imperialists as the Heartland of Eurasia: stretching from the Horn of Africa (guarding the shipping lanes of the Gulf) to Afghanistan and Pakistan (in Russia and China's underbelly). The Russians know this 'Great Game' well, having played it with the British since at least the Crimean War of the mid-19th Century. So when Russia says it cannot accept the ongoing destruction of the Syrian government, or an attack on Iran, it is based on the understanding that such destabilization of this 'Heartland' could ignite war between Shia and Sunni Muslims across the region, even affecting the Muslim populations of southern Russia and western China..."

at http://www.zerohedge.com/news/guest-post-backing-world-war-iii

Barack Obama 'moving closer to Israeli position on Iran'

"Barack Obama has promised to drop his opposition to military action against Iran if the Islamist regime does not abandon its nuclear programme within a year, an Israeli official has claimed..."

at  http://www.telegraph.co.uk/news/worldnews/barackobama/9129572/Barack-Obama-moving-closer-to-Israeli-position-on-Iran.html

Caught: Staged CNN Syria Interviews Faked By Activist Danny

"Syria activist Danny, the poster child to justify a military invasion in Syria, caught staging entire CNN interviews including directing fake gunfire off stage.
Raw video footage of the Syria activist Danny as he waits to do a live video interview with CNN shows him directing off-stage fake gunfire and explosions, as well as being directed to tell CNN he has been retrieving the bodies of civilians from buildings that collapse due to Syria army mortar fire. It also shows Danny totally exaggerating a sense of fear and urgency as he goes from being totally calm, smiling and even somewhat bored before the on air interview starts to acting totally scared, hysterical and pretending he is in the middle of a war zone as soon as the actual interview starts..."

at http://blog.alexanderhiggins.com/2012/03/07/caught-complete-cnn-syria-interviews-staged-by-activist-danny-91231/

Facts on the Horrific U.S. Long-Term Economic Decline

"The following are 35 shocking statistics that prove that things have gotten worse in America....
#1 Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.
#2 There are 5.6 million less jobs than there were when the last recession began back in late 2007.

#3 The U.S. government says that the number of Americans "not in the labor force" rose by 17.9 million between 2000 and 2011. During the entire decade of the 1980s, the number of Americans "not in the labor force" rose by only 1.7 million.
#4 In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
#5 In 2007, 73.2 percent of all young adults between the ages of 18 and 24 that were not enrolled in school had jobs. Today, that number has declined to 65 percent.
#6 Back in the year 2000, more than 50 percent of all Americans teens had a job. This past summer, only 29.6% of all American teens had a job.
#7 When Barack Obama entered the White House, the number of "long-term unemployed workers" in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.
#8 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.
#9 Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.
#10 According to the Obama administration, about 20 percent of all jobs in the United States were manufacturing jobs back in the year 2000. Today, about 5 percent of all jobs in the United States are manufacturing jobs.
#11 Sadly, more than 56,000 manufacturing facilities in the United States have been shut down since 2001.
#12 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
#13 The U.S. trade deficit with China during 2011 was 28 times larger than it was back in 1990.
#14 About twice as many new homes were sold in the United States in 1965 as are being sold today..."

at http://www.marketoracle.co.uk/Article33499.html

Gold Spectacular Rally Pending a Trigger

"Gold just needs a trigger to launch it for the most spectacular rally since the late 70’s. I believe that trigger is likely to be the crash (or decline) of the stock markets.

This crash, if it occurs, is in anticipation of the inevitable bursting of the debt bubble. This is much like during the Great Depression when the stock markets crashed and bottomed before Total Debt as a % of GDP peaked in 1933. The Sovereign Debt-Crisis (especially in Europe) is the obvious sign that the debt bubble is bursting; with every additional unit of debt producing less or no increased GDP..."

at http://www.marketoracle.co.uk/Article33504.html

EUROZONE CONSUMER ENTERS DOUBLE DIP TERRITORY

"The tightening credit conditions in the Eurozone are taking their toll on the consumer. The unemployment rate is rising and is likely to keep rising further, given the messy labor laws in many Eurozone nations (it takes much longer to lay off employees than it does in the US for example)..."

Unemployment rate (source: Capital Economics) at http://pragcap.com/eurozone-consumer-enters-double-dip-territory

Guest Post: War With Iran Is Coming

"The rally for what could be World War III is in full swing.

In what amounts to a grotesque instance of outright pandering, Department of Defense head Leon Panetta recently spoke at the American Israel Public Affairs Committee’s annual conference and assured the audience that “we will keep all options – including military action – on the table to prevent (Iran) from obtaining a nuclear weapon.” You know you live in a kleptocracy when one of the heads of the federal government openly appeases perhaps the most influential and financially flush lobbying groups in the country.

Panetta’s assurance confirmed what the majority of Americans have long feared- that their government stands ready and willing to involve itself in another war despite public opinion being in opposition of such an excursion..."

at http://www.zerohedge.com/news/guest-post-war-iran-coming

Ex-ECB's Juergen Stark Says ECB's Balance Sheet "Gigantic", Collateral Quality "Shocking"

"The German criticism of a mess they themselves have enabled (and benefit from via peripheral current account deficits funded via TARGET2 as shown previously here) at the ECB continues, and following public protests by Bundesbank head Jens Weidmann about recent ECB activity, it is the turn of former ECB executive board member Juergen Stark to take center stage. In an interview with the Frankfurter Allgemeine, warned that following the massive expansion in the ECB's balance sheet, in which it is clear to anyone that the ECB will accept used candy bar wrappers as collateral, that "the balance sheet of the euro system, isn't only gigantic in size but also shocking in quality."

Of course, with the ECB now the bad banks' bad bank, this is not at all surprising. Keep in mind that the recent $1.3 trillion balance sheet expansion was supposedly not the equivalent of "printing money" because the ECB made the cash available in the form of a loan in exchange for collateral. The problem is that the ECB accepted literally everything that was not nailed down and proceeded to give 100 cents on the dollar for some unamortized book value associated with it. The end result was the already documented here first encroaching ECB initiated margin calls which may or may not be an added twist in the European liquidity situation. However one thing is certain: the quality of the ECB's balance sheet has deteriorated massively, as the European central bank rushes to catch up to the Fed in terms of asset "quality" backing the currency..."

at  http://www.zerohedge.com/news/ex-ecbs-juergen-stark-says-ecbs-balance-sheet-gigantic-collateral-quality-shocking

Obama Promises Bunker Busters To Israel If Netanyahu Delays Iran Invasion Until After US Elections

"Two days ago Obama held a press conference in which he openly prevaricated and disinformed the world about the true nature of his meeting with Israel PM Netanyahu. Today we find what was truly discussed, courtesy of Israel's Maariv newspaper, Spiegel and Reuters, which all tell us that it was a simple case of quid pro quo, namely that Barack Obama would supply Israel with bunker-busters and refueling planes if Bibi promised to delay an Iran attack until after the presidential election. The implication is simple - avoid an oil price shock this summer and delay it until next winter when Obama will be safely in his throne for another 4 years, at which point US citizens can fuel their cars with combustible urine following nights of binging on Everclear in hopes of ending their sorrows with alcohol poisoning, or better yet, all be in possession of the heavily subsidized flaming half ton block of metal known as the Obama Pinto, er, Volt.
Some more details on the latest horse trade from Israel Insider:..."

at http://www.zerohedge.com/news/obama-promises-bunker-busters-israel-if-netanyahu-delays-iran-invasion-until-after-us-elections

'When the Real Margin Call Arrives, the Carnage Will Be Unimaginable'

"The Associated Press is out with a report (via Business Insider), "David Stockman: You'd Be A Fool To Hold Anything But Cash Now," featuring a no-holds-barred interview with an individual (and former White House budget director under Ronald Reagan) who is no stranger to the pages of Financial Armageddon.
Here is a brief excerpt:

Q: Why are you so down on the U.S. economy?

A: It's become super-saturated with debt.

Typically the private and public sectors would borrow $1.50 or $1.60 each year for every $1 of GDP growth. That was the golden constant. It had been at that ratio for 100 years save for some minor squiggles during the bottom of the Depression. By the time we got to the mid-'90s, we were borrowing $3 for every $1 of GDP growth. And by the time we got to the peak in 2006 or 2007, we were actually taking on $6 of new debt to grind out $1 of new GDP.

People were taking $25,000, $50,000 out of their home for the fourth refinancing. That's what was keeping the economy going, creating jobs in restaurants, creating jobs in retail, creating jobs as gardeners, creating jobs as Pilates instructors that were not supportable with organic earnings and income.

It wasn't sustainable. It wasn't real consumption or real income. It was bubble economics.

So even the 1.6 percent (annual GDP growth in the past decade) is overstating what's really going on in our economy..."

at http://www.financialarmageddon.com/2012/03/when-the-real-margin-call-arrives-the-carnage-will-be-unimaginable.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+financialarmageddon+%28Financial+Armageddon%29

Eurocrats and Their Vassals

"Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market" (Aucontrarian.com, 2009)

On February 29, 2012, the European Central Bank (ECB) lent €529 to European banks, most of it, in three-year loans. This was the second such operation, launched with another mind-numbing acronym: LTRO (long-term refinancing operation). In the first LTRO (December 2011), €489 was lent to European banks. In the February 29, 2012, operation, 800 banks borrowed. According to the Financial Times, "broader collateral rules drew in smaller banks."
In the spring of 2011, the number of securities accepted by the ECB as acceptable collateral for loans to European banks was expanded from 19,000 to over 28,000. That was a desperation maneuver to save the euro. Since, the ECB has expanded the collateral list at least twice. Leading up to the latest LTRO, the ECB added over €7 trillion of previously forbidden collateral – that is, €7 trillion, if one accepts the value at which this nuclear waste was carried on European bank balance sheets. Now, it sits on the ECB’s balance sheet, which has risen to €3.02 trillion ($3.96 trillion), 30% larger than the Federal Reserve’s Pandora’s Box.
In this entirely fraudulent paper chase, the banks that borrowed LTRO money put some of it to work in sovereign carry trades. The banks have borrowed at 0.25% from the ECB and are buying sovereign bonds with much higher yields. Intesa Sanpaolo SpA received €24 billion and "said they would use part of the cash to buy Italian sovereign bonds. Bank Civica SA did the same with Spanish sovereign bonds." Italian 10-year bond yields fell on February 29 from 5.33% to 5.17%. Spanish 10-years fell from 5.03% to 4.98%. Interestingly, Portuguese 5-years rose from 15.75% to 16. 54% on the same day, which may indicate the next default.
Market commentators are saying how well the LTRO worked: their proof being lower sovereign bond yields, which show "market participants have been reassured the Euro Project is back on track." (This is not a single, direct quote, but the form in which dozens of market commentators have reassured the banks that employ them of their added value.) There is some truth to that claim. The euro bureaucrats will do anything to prevent the euro’s failure. Deceptions such as the LTRO may reassure market participants, even though the additional debt burden (that will not produce a single gumball) sinks Europeans into a deeper crypt.
It should be understood that the LTRO produced nothing other than more finance and inflation. (Gasoline in Europe now costs 9% more than in 2008. Andy Lees (AML Macro Limited) estimates that, converted into U.S. dollars, gas now costs $9.65 a gallon in Europe.) European businesses and the little people are not target audiences.
The Eurocrats continue to dine well in Brussels while adding another layer of debt under which their vassals are crushed. Returning to a long-term theme here, trustworthy collateral in proportion to the stated value of paper assets continues to fall. When the world once again understands the importance of collateral in relation to the worth of the paper it is printed on, the price of trusted collateral will soar..."

at http://www.creditwritedowns.com/2012/03/eurocrats-and-their-vassals.html

LPS Home Price Index Shows U.S. Home Prices Accelerated Decline; Psychology Change and Demographics Suggests Bubble Mentality Shattered for Decades to Come

"U.S. home prices declines to a new low for the move and are back to a level last seen in September-October 2002 according to a LPS News Release.

The LPS HPI national average home price for transactions during December 2011 reached a price level not seen since September 2002. This is the sixth consecutive month of price decreases.

Price changes were largely consistent across the country during December, increasing in only 8.0 percent of the ZIP codes in the LPS HPI. Price changes were also consistent across price tiers with a uniform decline of 1.0 percent..."

at   http://globaleconomicanalysis.blogspot.com/2012/03/lps-home-price-index-shows-us-home.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Germany to Review Bundesbank Gold Reserves in Frankfurt, Paris, London and New York Fed

"The German Federal Audit Office has criticised the Bundesbank’s lax auditing and inventory controls regarding Germany’s sizeable gold reserves – 3,396.3 tonnes of gold or some 73.7% of Germany’s national foreign exchange reserves.

There is increasing nervousness amongst the German public, German politicians and indeed the Bundesbank itself regarding the gigantic risk on the balance sheet of Germany's central bank and this is leading some in Germany to voice concerns about the location and exact amount of Germany’s gold reserves.

The eurozone's central bank system is massively imbalanced after the ECB’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week, 31% bigger than the German economy, after a second tranche of three-year loans.

The concern is that were the eurozone to collapse, Bundesbank's losses could be half a trillion euros - more than one-and-a-half times the size of the Germany's annual budget.

In that scenario, Germany’s national patrimony of gold bullion reserves would be needed to support the currency – whether that be a new euro or a return to the Deutsche mark.

The German lawmakers are following in the footsteps of US Presidential candidate Ron Paul who has long called for an audit of the US’ gold reserves.

It is believed that some 60% of Germany’s gold is stored outside of Germany and much of it in the Federal Reserve Bank of New York.

Germany and other central banks may follow in Hugo Chavez’s footsteps and repatriate their gold to Germany so as to have direct possession of and ownership of their gold reserves in order to be better prepared for a systemic or monetary crisis..."

at http://www.zerohedge.com/news/germany-review-bundesbank-gold-reserves-frankfurt-paris-london-and-new-york-fed

Marc Faber : In 2012 Invest In Gold & Stocks

"Marc Faber : "Political risk was high six months ago and is higher now. I think sooner or later, the U.S. or Israel will strike Iran - it's almost inevitable,"
"Say war breaks out in the Middle East or anywhere else, (U.S. Federal Reserve chairman) Mr Bernanke will just print even more money -- they have no option...they haven't got the money to finance a war,"
"You have to be in precious metals and equities ... most wars and most social unrest haven't destroyed corporations - they usually survive,"
"If you can't live with volatility, stay in bed,"
"The Americans and the western powers know very well they cannot contain China economically.... but one way to contain China is to switch on and switch off the oil tap from the Middle East,"
"I happen to think the Middle East will go up in flames," Dr Marc faber told Reuters on Tuesday on the sidelines of an investment conference.."

at http://marcfaberchannel.blogspot.com/2012/03/marc-faber-in-2012-invest-in-gold.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Faber: "Middle East Will Go Up In Flames" ... "Have To Be In Precious Metals And Equities"

"Swiss money manager and long term bear Marc Faber, aka "Dr Doom", says political risk in the Middle East has increased significantly with war between Iran and Israel “almost inevitable”, and precious metals and equities investments offer some safety.

"Political risk was high six months ago and is higher now. I think sooner or later, the U.S. or Israel will strike Iran - it's almost inevitable," Faber, who publishes the widely read Gloom Boom and Doom Report, told Reuters on the sidelines of an investment conference.

Brent crude traded near $123 per barrel in volatile trade on Tuesday on fears of a disruption in Iranian supplies. Israeli Prime Minister Benjamin Netanyahu showed no signs of backing away from possible military action against Iran following a Monday meeting with U.S. President Barack Obama.

"Say war breaks out in the Middle East or anywhere else, (U.S. Federal Reserve chairman) Mr Bernanke will just print even more money -- they have no option...they haven't got the money to finance a war," said Faber.

"You have to be in precious metals and equities ... most wars and most social unrest haven't destroyed corporations - they usually survive," he said.

He said that Middle East markets had largely bottomed out, though regime changes from the Arab Spring revolutions were unlikely to be investor-friendly..."

at http://www.zerohedge.com/news/faber-middle-east-will-go-flames-have-be-precious-metals-and-equities

Explaining The European €2.5 Trillion Liquidity Catch 22 Closed Loop

"If anyone is confused about what the real issue in Europe is, the following two charts should explain it all.

Because stripping all the recent rhetoric and bluster about this insolvent nation or that, the real explanation for Europe's troubles, and the real reason why virtually every country except for Germany, is essentially insolvent (something that has absolutely nothing to do with how much liquidity the ECB can provide, and in fact by making liquidity free to fill transitory needs, the ECB enables even more destructive behavior that does nothing to fix the cause), has to do with the flow of cash. And specifically the transfer of cash within the mercantilist union.

The first chart below summarizes the various individual current account deficits (accumulated over the past decade) within the Eurozone, and how it is clearly in Germany's best interest to perpetuate a common currency, which prevents its legacy currency, the DEM from soaring, and thus crippling intraunion current account flows that benefit Germany. As for external trade flows: the weaker the Euro, the better so Europe can export its stuff to China and the US (hence the need for a perpetual threat of a PIIGS Implosion, which prevent the EUR from rising on endless concerns foa default).



Source: Diapason

Now this plan worked for many years, until about 5 years, the debt capacity of the Periphery started getting filled, and instead, via the Eurosystem Banks hub and spoke system, of which the ECB is at the hub, those countries with current accounts had to start funding indirectly, via TARGET2, the capital deficiancy of the big CA deficit countries. The second chart below shows just how far this divergence has gotten..."



at http://www.zerohedge.com/news/explaining-european-%E2%82%AC25-trillion-liquidity-catch-22-closed-loop

Stay Long Gold

"As gold pulls back under $1700, back to 6 week lows (and Silver collapses in its high beta way, reverting back in line with Gold), Morgan Stanley says 'Stay Long Gold'. The recent sell-off notwithstanding, they remain bullish through 2012 and while the current USD strength is a headwind, they expect aggressive Fed action (and other global central banks), including the likely adoption of QE3 in 1H12, to be gold positive. Deciphering the demand and supply dynamics, they forecast prices to rise on a quarterly average basis through 4Q13 as the four pillars of their bull market thesis persist..."



at http://www.zerohedge.com/news/stay-long-gold