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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?


To: RealMuLan who wrote (19956)12/30/2004 6:22:28 PM
From: RealMuLan  Read Replies (1) | Respond to of 116555
 
Dollar Weakens on Speculation Demand for U.S. Assets Will Wane

Dec. 30 (Bloomberg) -- The dollar fell against the euro and the yen in Asia, heading for a third yearly loss, on speculation demand for U.S. assets is waning.

Bids for two-year U.S. Treasury notes at an auction yesterday from investors including foreign central banks was the lowest in a year. The dollar is down 7.6 percent against the euro and 3.3 percent against the yen this year, fueled by expectations the U.S. and Europe will refrain from halting its drop.

U.S. policy makers ``are perfectly happy with the dollar declining,'' said Kenneth Landon at JPMorgan Chase & Co. in New York. ``They're very happy with the current trend.''

Against the yen, the dollar fell to 103.68 at 2:26 p.m. in Tokyo from 103.86 in New York yesterday, according to electronic currency trading system EBS. The dollar was at $1.3628 per euro, from $1.3608, having yesterday fallen to a record for a fifth day, weakening as low as $1.3647.

The dollar may fall to $1.40 per euro and 93 yen in the first six months of 2005, Landon said.

Moves may be exaggerated because trading will be less than usual in the daily $1.9 trillion currency market, said Robert Rennie, a currency strategist in Sydney at Westpac Banking Corp.

``There's business going on, but not much,'' he said. ``Dealing rooms are working with holiday staff.''

A weakening dollar has reduced returns for foreign investors on U.S. Treasuries, which this year ranked among the lowest of the world's debt markets. At a two-year note auction yesterday, indirect bidders, which include foreign central banks, bought 34 percent of the $24 billion of securities, compared with 43.5 percent last month.

`Buying Power'

Treasuries due in more than a year returned 2.9 percent including reinvested interest, according to the European Federation of Financial Analyst Societies. Of 26 indexes, only Japan returned less.

Investors based outside the U.S. in September held $1.85 trillion of the $3.8 trillion in marketable U.S. notes outstanding during that month, according to Treasury Department statistics.

``The depreciation of the U.S. dollar means the buying power of Treasuries for foreign investors is reduced,'' said Kazuaki Oh'e, a Tokyo-based bond salesman at CIBC World Markets Corp.

Foreign purchases of U.S. financial assets rose at the slowest pace in a year in October, Treasury Department figures showed on Dec. 15. Foreigners bought a net $48.1 billion in Treasuries, corporate debt, stocks and other financial assets, down from $67.5 billion in September.

`Other Side'

The yen fell to a record against the euro in Asia on speculation Japan will sell its currency during the New Year's holiday period as Europe refrains from acting to halt the European currency's rally.

The Bank of Japan sold record amounts of its currency in the first quarter, helping limit the yen's gains versus the dollar this year. The BOJ also sold yen the last three days of 2003, while the European Central Bank hasn't sold euros since 1999.

``If you're bearish on the dollar, as everyone is, it's best not to do it through the yen,'' Westpac's Rennie said. ``At the end of the year, there's some concern the other side of a trade is going to be the Japanese authorities.''

Finance Minister Sadakazu Tanigaki on Dec. 28 said Japan ``will closely watch the exchange rate'' during the holidays. Bond and stock markets in Tokyo closed for the year after morning trading, and Japan has holidays tomorrow and Jan. 3.

The Nikkei 225 Stock Average rose for a second year, gaining 7.6 percent, raising speculation overseas investors will add to their holdings of Japanese shares. Investors based outside Japan have been net buyers of stocks in all but nine weeks this year.

`Some Action'

A weaker local currency inflates the value of exporters' dollar-denominated sales. Japan sells more of its exports to the U.S., the world's largest economy, than any other country. Fuji Heavy Industries Ltd., the maker of Subaru-brand vehicles, last month said it had a 43 percent decline in second-quarter net income in part from the yen's rise against the dollar.

The Bank of Japan, at the behest of the Ministry of Finance, sold 14.8 trillion yen ($142.1 billion) from January to March and hasn't sold since, according to data through Nov. 26. The ministry will release figures for December at about 7 p.m. today in Tokyo.

``There may well be some action from the BOJ'' during the holidays, said Chris Loong, manager of foreign exchange at AMP Capital Investors in Sydney, who helps oversee about $3.5 billion.

Pressure

The U.S. is seeking a weaker currency to shrink its current- account deficit, said analysts including Landon.

Federal Reserve Chairman Alan Greenspan told the European Banking Congress in Frankfurt on Nov. 19 that foreigners will grow weary of financing a gap in the current account and will eventually diversify their holdings into currencies other than the dollar.

The shortfall in the U.S. current account widened to a record $164.7 billion in the last quarter, meaning the U.S. needs to attract $1.8 billion each day to keep its currency from dropping.

``The U.S. current-account deficit is increasing, and that's going to keep pressure on the dollar,'' Landon said.

To contact the reporter on this story:
John Brinsley in Tokyo at jbrinsley@bloomberg.net.
quote.bloomberg.com



To: RealMuLan who wrote (19956)12/30/2004 7:54:19 PM
From: mishedlo  Read Replies (1) | Respond to of 116555
 
One of the best posters is ignored by 26 ignorant people.

Mish



To: RealMuLan who wrote (19956)12/31/2004 3:55:42 AM
From: maceng2  Read Replies (2) | Respond to of 116555
 
I see the Western Press is already making an issue of why India etc governments do not have tsunami warning networks. I think they are looking in the wrong direction, and should be asking a slightly different question... Why aren't our Western governments planning for tsunamia warning networks?..

libertypost.org

Title: WARNING: US also faces tsunami threat
Source: news24.com
URL Source: news24.com
Published: Dec 27, 2004
Author: news24.com
Post Date: 2004-12-27 09:28:17 by thinking4me
23 Comments

US also faces tsunami threat 27/12/2004 08:16 - (SA)

Paris - Cities on the US East Coast and in the Caribbean could be wrecked by a tsunami unleashed by the collapse of a volcanic island in the eastern Atlantic, British scientists believe.

A massive chunk of La Palma, the most volcanically active island in the Canaries archipelago, is unstable, says Simon Day, of the Benfield Grieg Hazard Research Centre at University College London.

He calculates that its flank could collapse the next time the volcano, Cumbre Vieja, erupts.

If so, that would send a dome-shaped wall of water up to 100 metres high racing across the Atlantic at 800 kilometres per hour, hitting the western coast of Africa and southern coast of England within a few hours.

Some eight hours after the collapse, the US East Coast and Caribbean would bear the brunt.

Cities from Miami to New York would get swamped by waves up to 50 metres high, capable of surging up to 20 kilometres inland, according to Day's research.

Tsunamis are commonly caused by earthquakes that occur under or beneath the sea.

But around three decades ago, the theory was born that these gigantic waves can also be caused by collapsing islands. The evidence for this came from debris in the mid-Pacific believed to have been strewn from a titanic landslide in Hawaii.

'Could blow any time'

Day published his findings on Cumbre Vieja in 1999 after a two-year study into the volcano, which occupies the southern half of La Palma.

He identified dozens of volcanic vents formed by successive eruptions over the past 100 000 years and collected samples of lava to built up a detailed geological picture.

He found that the volcano's vents are laid out in the shape of a three-pointed "Mercedes star", whose western flank - a mass comprising some 500 billion tonnes of rock - is gradually becoming detached as volcanic activity forces magma to the surface.

The flank is very slowly falling into the sea, but a major eruption by Cumbre Vieja could cause it to fall with catastrophic effect.

The big question is when this might occur. Some geologists say the threat cannot be assessed accurately because of the way in which volcanic pressures build up in the volcano's porous rock.

"Eruptions of Cumbre Vieja occur at intervals of decades to a century or so, and there may be a number of eruptions before its collapse," Day said, in a follow-up study in 2001 that estimated the astonishing speed at which the tsunami could travel.

La Palma reaches 6 500 metres from the surrounding ocean floor and to a height of 2 426 metres above sea level.

The island has had seven known eruptions, the last of which was in 1971, at a location on the island's southern tip and well away from an unstable ridge at the summit which is Day's biggest fear.

In August this year, one of Day's colleagues, Bill McGuire, told a conference on global geophysical disasters that Cumbre Vieja could blow "any time" and warned that there was insufficient watch on the volcano.

Edited by Ilse Arendse

news24.com

AND Mega-tsunami: Questions and Answers

1. When will the volcano on La Palma collapse? The collapse of the western flank of the Cumbre Vieja volcano, on the southern half of La Palma, is not going to happen tomorrow or next week. Tourists should not cancel their holidays to the Canary Islands, or to the east coast of the United States or the Caribbean.

What scientists are predicting is that the collapse is likely to happen any time within the next few thousand years. Scientists also know that a collapse will not happen without any warning. They will be able to alert people to possible danger several weeks in advance.

2. How do scientists know? Scientists have discovered that La Palma will collapse at the time of some future volcanic eruption on the summit of the Cumbre Vieja volcano. Eruptions on the summit occur on average every 200 years or so. The last summit eruption was in 1949, so it may be many decades before the next summit eruption takes place.

Furthermore, the collapse will not necessarily happen during the next summit eruption. It may well take five, ten or more summit eruptions before the collapse occurs. But scientists simply do not know how many eruptions it will take.

3. What effects would the collapse have? The western flank of the Cumbre Vieja volcano would slide down westwards into the Atlantic ocean. There would be very strong earthquakes across La Palma while the flank was sliding. As the flank slid into the sea, it would create a very large wave called a mega-tsunami. This wave would move rapidly westwards.

Most of the energy of the wave would head straight out across the Atlantic towards the United States, Bahamas and the Caribbean, but a smaller wave or waves would head in other directions too. All these waves would get smaller as they cross the Atlantic. However scientists believe that they could still be as much as 50 metres high, for example, when they reach the east coast of the United States.

4. Is there anything we can do to stop the collapse from happening? Scientists say that although the risk of a collapse happening in the next few decades is small, when it does happen, it will cause great destruction, both on La Palma itself and wherever the mega-tsunami from La Palma strike land.

Although nothing can be done to stop a collapse, scientists point out there is a lot that can be done to prevent loss of life when a collapse does eventually happen. With suitable monitoring, warning and evacuation, people can be moved out of the areas at risk.

5. Is there a similar danger anywhere else in the world? La Palma is the island where the clearest warning signs of a coming collapse have been found. However there are dozens of large active volcanoes across the world’s oceans. Most of these have collapsed in the past, and most will collapse in the future. On each island, collapses only occur at intervals of 100,000 years or more.

Most of these islands have not been studied in as much detail as La Palma, but one exception is the big island of Hawaii in the Pacific Ocean. Here too there are some signs that it might collapse in the next few thousand years.

6. Should I be worried by mega-tsunami? As an individual, you have much more chance of being killed in a car accident than by a mega-tsunami. Mega-tsunami are very rare. However, it is important for governments to understand the potential risk, so that they can decide what hazard preparations, if any, are required. bbc.co.uk

AND Mega-tsunami: Wave of Destruction BBC Two 9.30pm 12 October 2000 Revisited: BBC Four 7pm 24 May 2003

En español / In Spanish

Scattered across the world’s oceans are a handful of rare geological time-bombs. Once unleashed they create an extraordinary phenomenon, a gigantic tidal wave, far bigger than any normal tsunami, able to cross oceans and ravage countries on the other side of the world. Only recently have scientists realised the next episode is likely to begin at the Canary Islands, off North Africa, where a wall of water will one day be created which will race across the entire Atlantic ocean at the speed of a jet airliner to devastate the east coast of the United States. America will have been struck by a mega-tsunami.

Back in 1953 two geologists travelled to a remote bay in Alaska looking for oil. They gradually realised that in the past the bay had been struck by huge waves, and wondered what could have possibly caused them. Five years later, they got their answer. In 1958 there was a landslide, in which a towering cliff collapsed into the bay, creating a wave half a kilometre high, higher than any skyscraper on Earth. The true destructive potential of landslide-generated tsunami, which scientists named "Mega-tsunami", suddenly began to be appreciated. If a modest-sized landslide in Alaska could create a wave of this size, what havoc could a really huge landslide cause?

Scientists now realise that the greatest danger comes from large volcanic islands, which are particularly prone to these massive landslides. Geologists began to look for evidence of past landslides on the sea bed, and what they saw astonished them. The sea floor around Hawaii, for instance, was covered with the remains of millions of years’ worth of ancient landslides, colossal in size.

But huge landslides and the mega-tsunami that they cause are extremely rare - the last one happened 4,000 years ago on the island of Réunion. The growing concern is that the ideal conditions for just such a landslide - and consequent mega-tsunami - now exist on the island of La Palma in the Canaries. In 1949 the southern volcano on the island erupted. During the eruption an enormous crack appeared across one side of the volcano, as the western half slipped a few metres towards the Atlantic before stopping in its tracks. Although the volcano presents no danger while it is quiescent, scientists believe the western flank will give way completely during some future eruption on the summit of the volcano. In other words, any time in the next few thousand years a huge section of southern La Palma, weighing 500 thousand million tonnes, will fall into the Atlantic ocean.

What will happen when the volcano on La Palma collapses? Scientists predict that it will generate a wave that will be almost inconceivably destructive, far bigger than anything ever witnessed in modern times. It will surge across the entire Atlantic in a matter of hours, engulfing the whole US east coast, sweeping away everything in its path up to 20km inland. Boston would be hit first, followed by New York, then all the way down the coast to Miami and the Caribbean.

bbc.co.uk