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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (22936)	12/6/2004 10:54:02 AM
From: Wyätt Gwyön	Read Replies (4) \| Respond to of 110194

America's masters tell Bush to "heel"... Japan threatens huge dollar sell-off Japan is warning the White House that there will be 'enormous capital flight' from the dollar if the Bush administration maintains its laissez-faire approach to the mounting currency crisis. Tokyo fears that Japan's strongest economic recovery in a decade could be derailed by the sudden appreciation in the yen against the greenback. The criticism of President Bush's inaction, by a senior member of the ruling Liberal Democratic Party, will be taken as a veiled threat that Japan could start to sell off its multi-billion-dollar holdings of US Treasuries. 'The Japanese government is going to ask for a strong dollar policy; if it continues to fall, there would be enormous capital flight from the dollar,' said Kaoru Yosano, chairman of the LDP's policy council, adding that Japan would be calling on its fellow G7 governments to demand the US deal with the massive fiscal deficit that has helped to prompt the dollar's decline. Yosano's remarks echoed a warning from a senior Japanese Ministry of Finance official that if the US does not push up interest rates to make the dollar more attractive, 'the one-way sentiment on the dollar will have a negative impact on the flow of capital into the US.' He added that Japan is urging its European counterparts to join a campaign of coordinated currency-market intervention, saying: 'If the dollar is depreciating, we should have coordinated action: that has already been communicated to my European counterparts.' Like Japan, the eurozone fears that its tentative recovery could be choked off by the fall in the dollar, which European Central Bank president Jean-Claude Trichet has called 'brutal'. However, the ECB has so far dismissed the idea of intervening. Japan is taking a double hit from the decline in the dollar because the Chinese renminbi is pegged to the US currency, so Japanese exports are simultaneously becoming sharply dearer in both their major markets. Takeo Fukui, the chairman of Honda, admits, for example, that an appreciation of 1 yen against the dollar, if it lasts for more than three months, knocks 10 billion yen off the carmaker's profits. observer.guardian.co.uk

To: Knighty Tin who wrote (22936)	12/6/2004 11:26:56 AM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 110194

surely morgan stanley... being the kind of guys they are... told him to back off on his bearish posture, don't you think? that they have let him have thus far this much free speech is rather amazing in itself.

To: Knighty Tin who wrote (22936)	12/6/2004 12:06:19 PM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

Maybe Roach was told to put wording out that hedges both ways to cover their ass in either way kind of like comments made lately from Greenspan lately from the other side. These comments from Roach sound like financial armageddon is inevitable. Just a question of timing. <The most serious downside risk to our new baseline forecast remains concentrated in the US, in my view -- where we have raised our 2005 growth estimate to 3.7% (from 3.3%) and look for further acceleration to 4.3% in 2006. The US, in my view, remains on a dangerous and reckless course -- consuming out of asset-based saving at a point in its demographic life-cycle when it should be building up income-based saving to fund the looming retirement of 77 million baby-boomers. Record lows in the personal saving rate and the current account deficit, to say nothing of record highs in household sector indebtedness, all speak of a US that is living dangerously beyond its means. Subsidized by unusually low interest rates, in large part underwritten by equally myopic foreign investors and governments, America has managed to keep the magic alive. But there’s nothing sustainable about that arrangement. If America stays this course, the endgame will not be pretty. The day will come when US interest rates rise -- driven by either domestic or foreign developments. That would undoubtedly spark a painful unwinding of the Asset Economy -- all the more conceivable now that the US housing market is firmly in bubble territory (see my 2 December dispatch, “Bubble Day”). Equally worrisome is America’s anemic job creation and the related shortfall of organic income generation. November’s disappointing employment report was hardly an aberration; it marked the 31st month in this now 36-month old recovery, when job growth failed to live up to cyclical standards of the past. So much for the timeworn consensus view that the Great American Job Machine is finally on the mend. Like it or not, the United States remains mired in the mother of all jobless recoveries -- making the perils of excess consumption all the more worrisome. >