Global Correction

[cloudhopper]

Japan Says Economy Deteriorating, Signals a Recession (Update2)

By Jason Clenfield

Aug. 6 (Bloomberg) -- Japan's government said the economy is ``deteriorating,'' acknowledging for the first time that the country's longest postwar expansion has probably ended.

``There is a high possibility the economy has entered a recession,'' Shigeru Sugihara, head of business statistics at the Cabinet Office said in Tokyo today. The government bases its assessment of the economy on the coincident index, its broadest indicator of economic health.

The worsening outlook may pressure Finance Minister Bunmei Ibuki and Economic and Fiscal Policy Minister Kaoru Yosano, in their jobs less than a week after a Cabinet reshuffle, to scrap a target to balance the budget by 2011 and cut the world's largest public debt.

``The recognition that a recession is possible makes it more likely that the new cabinet will weaken its stance on fiscal reform,'' said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo.

The yen traded at 108.36 against the dollar at 4:31 p.m. in Tokyo from 108.35 before the report. The Nikkei 225 Stock Average rose 2.7 percent after crude oil prices dropped.

Japan's economy expanded at an average annualized pace of about 2.2 percent during the six years of growth that began in February 2002. During the five-year expansion that ended in 1970, the economy grew on average by 11.5 percent.

Stagflation Risk

Ibuki said yesterday the economy is at risk of falling into a state of stagflation, a combination of slowing growth and spiraling prices. Yosano said Aug. 4 he plans to announce measures this month to help consumers and companies cope with rising energy costs.

Although the economy has yet to contract for two straight quarters -- one definition of a recession -- falling exports and soaring energy and material costs have squeezed profits, compelling companies to cut production, investment and hiring.

A Toyota Motor Corp. subsidiary that builds sport-utility vehicles and Lexus sedans fired 800 workers in June and August because of falling demand for the vehicles in the U.S., the company said yesterday.

Exports fell in June for the first month in more than four years, the jobless rate rose, and factory output has fallen for two consecutive quarters.

Sony Corp.

Sony Corp. Chief Executive Officer Howard Stringer said last month the company's sales growth in the U.S. and Europe would probably slow and demand from China looked set to falter.

The coincident index, a composite of statistics including production and the ratio of jobs to applicants, fell to 101.7 in June from 103.3 a month earlier. A three-month moving-average of the index fell for a fourth month in June to 102.2 from 102.5.

The Cabinet Office declares the economy has worsened if the index has fallen for one month and the three-month moving-average has declined for three or more months.

The leading index, which signals the direction of the economy for the next three to six months, fell to 101.7 from 103.3.

Still, economists say the current slowdown is likely to be moderate relative to past recessions because companies have shed excess capacity and expanded sales in emerging markets.

Business Survey

The Bank of Japan's most recent business survey showed labor demand is close to a 16-year high. The jobs-to-applicants ratio was at 0.91 in June, meaning almost every person who wants a job can get one. During the previous recession in 2001, there were two applicants competing for every position.

``The economy is still in relatively good shape compared to similar points in previous downturns,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``If there is a recession, we expect it to be relatively shallow and short-lived.''

To contact the reporter on this story: Jason Clenfield in Tokyo at [email protected]

Last Updated: August 6, 2008 03:34 EDT

[Naam]

One of the ways that you guys are smarter then the average investor many people don't realize that historically commodities go down in (real) prices over time. They expect that commodities are a hedge against inflation but for more periods than not this isn't the case. There are cycles when commodities outperform and we're in one right now.

What this really proves is the benefit of diversification of asset classes - don;t get attached to any single class - be ready to jump at a moment's notice - be open-minded to buying into every asset class and to selling them too.

that's exactly what i am avoiding since years for the simple reason that the follow-up and keeping in touch amounts to [YUCK! ] work. even me -who's activities are limited to cash and bonds- find it quite bothersome to watch half a dozen currencies and nearly 5 dozen bonds. how many hours a day can one work without falling back into the old rut/rat race and sacrificing quality of life? besides, it's impossible to be a master of all trades and knowledgeable as far as the different asset classes are concerned.

not doing own research but making decisions which depend on the opinions of @n@l-ysts? thank you, but NO, thank you!

the lazy way to do it Naam is just hold an equal proportion in every asset class via ETFs

Paul

once i thought ETFs would be a solution Paul. however i couldn't find any to suit my individual demands.

[bingobongo]

Naam can you recommend a good prune juice?

anyway, a few weeks ago, i said the $ would rally due to inflation mismanagement.........and viola, it did, this is too easy

get ready kiddies asian bourses are about to take it on the chin and the $ will continue to rally

Edited August 8, 2008 by bingobongo

[Naam]

Naam can you recommend a good prune juice?

not really, but i can recommend good Port and Sherry (which certain poor boys can't afford)

Edited August 8, 2008 by Naam

[Shotime]

Buy US $'s

[cloudhopper]

Buy US $'s

With what? Although it would certainly benefit me as a US expat, I'm curious why the $ should go up in light of the record and increasing debt there. It seems to me that if the Fed raises interest rates the $ would indeed go up, but it seems far more likely to me that the current Fed will try to print their way out of this mess, resulting in inflation and declining real interest rates. Of course this is from a(n amateur) macroeconomic perspective; I'm not addressing short term currency speculation.

[Kf6vci]

The global bust is coming and not all the liquidity, denial, and som tham in the world will prevent it........

An amazingly accurate prediction! U.S. consumers use their plastic and other types of credit to get by. At some point, this avenue won't be available any longer.

Despite the insanely low discount rate of 2% while inflation is way higher, muni bond yield have been creeping up. The FED is not controlling the long end...

[Shotime]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

[Naam]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

none of the two is a criminal. one was clever enough to enjoy blow jobs in the oral office, the other one (unfortunately) not

[BEENTHEREDONETHAT]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

none of the two is a criminal. one was clever enough to enjoy blow jobs in the oral office, the other one (unfortunately) not

[pkrv]

Naam can you recommend a good prune juice?

not really, but i can recommend good Port and Sherry (which certain poor boys can't afford)

I came across a 'white port' some time ago, served chilled, my god it was FAB - Since then I have never found it again - a good investment? I mean I can't seem to find it anywhere.

Edited August 8, 2008 by pkrv

[bingobongo]

come on folks, don't attack me just becasue your portfolios are going down faster than a bar girl on her latest "benefactor"

just wait until autumn, then it gets really fun............

China's Shanghai Composite Index falls 4.5 percent

Chinese shares fell to their lowest level in nearly 19 months on Friday on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized

http://www.cnbc.com/id/8239537/for/cnbc/

Edited August 8, 2008 by bingobongo

[LaoPo]

come on folks, don't attack me just becasue your portfolios are going down faster than a bar girl on her latest "benefactor"

just wait until autumn, then it gets really fun............

China's Shanghai Composite Index falls 4.5 percent

Chinese shares fell to their lowest level in nearly 19 months on Friday on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized

http://www.cnbc.com/id/8239537/for/cnbc/

I'm surprised Bingo you don't see the problems coming for the US, yet...as if they have not enough problems already.

If Shanghai drops further, which is not at all impossible, huge amounts of money will have washed away.

This will lead to the situation that China will have to look further to their own domestic market and economy and financial infrastructure, meaning they will have no more spare money to invest any further in US Treasure bonds, thus leading to higher yields (good for Naam) to make them continue to be interesting for buyers.

That is dangerous because it will also increase the interest rates as well as mortage rates....

....as if the Americans are waiting for such higher mortage rates but maybe they wish to have higher taxes to solve the problems.

The Bear-Show isn't over yet, by far.

LaoPo

[lannarebirth]

come on folks, don't attack me just becasue your portfolios are going down faster than a bar girl on her latest "benefactor"

just wait until autumn, then it gets really fun............

China's Shanghai Composite Index falls 4.5 percent

Chinese shares fell to their lowest level in nearly 19 months on Friday on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized

http://www.cnbc.com/id/8239537/for/cnbc/

I'm surprised Bingo you don't see the problems coming for the US, yet...as if they have not enough problems already.

If Shanghai drops further, which is not at all impossible, huge amounts of money will have washed away.

This will lead to the situation that China will have to look further to their own domestic market and economy and financial infrastructure, meaning they will have no more spare money to invest any further in US Treasure bonds, thus leading to higher yields (good for Naam) to make them continue to be interesting for buyers.

That is dangerous because it will also increase the interest rates as well as mortage rates....

....as if the Americans are waiting for such higher mortage rates but maybe they wish to have higher taxes to solve the problems.

The Bear-Show isn't over yet, by far.

LaoPo

These problems are never solved by low interest rates, they're solved by higher interest rates. That's when you need CASH buyers, at the appropriate discount. Someone takes the hit and you move on. It's this meddling in the markets that's prolonging everything.

[LaoPo]

come on folks, don't attack me just becasue your portfolios are going down faster than a bar girl on her latest "benefactor"

just wait until autumn, then it gets really fun............

China's Shanghai Composite Index falls 4.5 percent

Chinese shares fell to their lowest level in nearly 19 months on Friday on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized

http://www.cnbc.com/id/8239537/for/cnbc/

I'm surprised Bingo you don't see the problems coming for the US, yet...as if they have not enough problems already.

If Shanghai drops further, which is not at all impossible, huge amounts of money will have washed away.

This will lead to the situation that China will have to look further to their own domestic market and economy and financial infrastructure, meaning they will have no more spare money to invest any further in US Treasure bonds, thus leading to higher yields (good for Naam) to make them continue to be interesting for buyers.

That is dangerous because it will also increase the interest rates as well as mortage rates....

....as if the Americans are waiting for such higher mortage rates but maybe they wish to have higher taxes to solve the problems.

The Bear-Show isn't over yet, by far.

LaoPo

These problems are never solved by low interest rates, they're solved by higher interest rates. That's when you need CASH buyers, at the appropriate discount. Someone takes the hit and you move on. It's this meddling in the markets that's prolonging everything.

"These problems"....?...I don't get it LR but it might be me...

LaoPo

[VegasVic]

come on folks, don't attack me just becasue your portfolios are going down faster than a bar girl on her latest "benefactor"

just wait until autumn, then it gets really fun............

China's Shanghai Composite Index falls 4.5 percent

Chinese shares fell to their lowest level in nearly 19 months on Friday on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized

http://www.cnbc.com/id/8239537/for/cnbc/

I'm surprised Bingo you don't see the problems coming for the US, yet...as if they have not enough problems already.

If Shanghai drops further, which is not at all impossible, huge amounts of money will have washed away.

This will lead to the situation that China will have to look further to their own domestic market and economy and financial infrastructure, meaning they will have no more spare money to invest any further in US Treasure bonds, thus leading to higher yields (good for Naam) to make them continue to be interesting for buyers.

That is dangerous because it will also increase the interest rates as well as mortage rates....

....as if the Americans are waiting for such higher mortage rates but maybe they wish to have higher taxes to solve the problems.

The Bear-Show isn't over yet, by far.

LaoPo

These problems are never solved by low interest rates, they're solved by higher interest rates. That's when you need CASH buyers, at the appropriate discount. Someone takes the hit and you move on. It's this meddling in the markets that's prolonging everything.

Spot on Lanna! I am one of those cash buyers who is cherry picking the real estate crop here stateside currently, but I must say the great bargains seem to be drying up. I have a few friends in Vegas who have been doing the same and they noticed the same thing about a month ago. I am certain that there are areas like Florida and Phoenix that will have problems for quite some time, but it looks like the stronger markets (So.Cal. , Vegas , northern AZ and Colorado) have begun to firm up and bounce off the bottom. As far as the greenback goes, I have been telling folks here to short oil and gold and go long the dollar for a while now. The dollar was artificially low for a number of reasons, but now that the oil bubble is bursting, the EU has stopped raising rates and the FED will be able to begin raising rates by years end, the greenback will continue to appreciate well into next year and beyond. The U.S. has weathered the brunt of the recession and will recover first, but as the recession rolls around the world the U.S. dollar will be the primary benneficiary. The flip side of this is also true, the Aussie dollar was way overvalued (because it was commodity linked) and hence the fall of the Aussie dollar will be quite spectactular, as we are seeing in todays market.

[Naam]

Naam can you recommend a good prune juice?

not really, but i can recommend good Port and Sherry (which certain poor boys can't afford)

I came across a 'white port' some time ago, served chilled, my god it was FAB - Since then I have never found it again - a good investment? I mean I can't seem to find it anywhere.

white port is hard to find. if i'm not mistaken only 2-3% of all port production is white. the white is indeed served chilled (a sin when it concerns red port). nevertheless i quite often sip my red port over crushed ice. PLEASE KEEP THIS A SECRET!

[pkrv]

Naam can you recommend a good prune juice?

not really, but i can recommend good Port and Sherry (which certain poor boys can't afford)

I came across a 'white port' some time ago, served chilled, my god it was FAB - Since then I have never found it again - a good investment? I mean I can't seem to find it anywhere.

white port is hard to find. if i'm not mistaken only 2-3% of all port production is white. the white is indeed served chilled (a sin when it concerns red port). nevertheless i quite often sip my red port over crushed ice. PLEASE KEEP THIS A SECRET!

shhhhhhh.... I chill some red wines (and the occaional sherry)

[Naam]

Naam can you recommend a good prune juice?

not really, but i can recommend good Port and Sherry (which certain poor boys can't afford)

I came across a 'white port' some time ago, served chilled, my god it was FAB - Since then I have never found it again - a good investment? I mean I can't seem to find it anywhere.

white port is hard to find. if i'm not mistaken only 2-3% of all port production is white. the white is indeed served chilled (a sin when it concerns red port). nevertheless i quite often sip my red port over crushed ice. PLEASE KEEP THIS A SECRET!

shhhhhhh.... I chill some red wines (and the occaional sherry)

not being the only criminal makes me feel less guilty

[JaiGuru]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

none of the two is a criminal...

Not true. BJ Clinton is a convicted perjurer.

[midas]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

You seriously cannot believe that just having a new President is going to solve the economic

problems that have built up over a very long time in the US ? Maybe there will be a

temporary reprieve but after the party is over reality will setin again that US has very little to

offer the world now - go ahead ---- can you describe hoe USA is going to recover ?

In which business areas will USA be able to lead the world ? Things were VERY different

globally when Clinton came to power

[pkrv]

Because we'll have a new Pes, and he will restore the confidence that was lost during the previous 8 years. My battery is dying so I'll be brief. Obama will be the next Pres. It's a vicious cycle. Didn't Clinton at least do that? Besides the blow job. Compare the two, Billy and GW. who's the criminal. Sidetracked. Anyway, buy US $'s.

You seriously cannot believe that just having a new President is going to solve the economic

problems that have built up over a very long time in the US ? Maybe there will be a

temporary reprieve but after the party is over reality will setin again that US has very little to

offer the world now - go ahead ---- can you describe hoe USA is going to recover ?

In which business areas will USA be able to lead the world ? Things were VERY different

globally when Clinton came to power

I think the problem is that they hold all the aces - as far as I can tell in a 52 card pack there are now about 13 (unlucky for some)

[bingobongo]

so much for the olympic effect........

China shares hit 19-month low on economic fears

Monday August 11, 4:58 am ET

By Elaine Kurtenbach, AP Business Writer Shanghai Composite share index falls 5.2 percent on jitters over inflation, slowing economy

http://biz.yahoo.com/ap/080811/china_markets.html

[VegasVic]

so much for the olympic effect........

China shares hit 19-month low on economic fears

Monday August 11, 4:58 am ET

By Elaine Kurtenbach, AP Business Writer Shanghai Composite share index falls 5.2 percent on jitters over inflation, slowing economy

http://biz.yahoo.com/ap/080811/china_markets.html

The only Olympic effect will be a post Olympic effect, and that will bring the shanghai composite down below the 2000 level. I have been telling everyone here since late last summer that chinese equities were extremely overvalued and would crash before the Olympics. Goldman and many other money center investment banks and large funds have been bailing out of chinese equities for quite some time now, and when you add in the double digit inflation that is rampant throughout china, it does not bode well for markets over there. The old saying that when the U.S. gets a cold the rest of the world gets the flu seems to be as true as ever(so much for the theory of disconnection). Judging from the rather adolecent reply that lao po recently gave one of my posts on another forum here, I would guess that he must have taken a huge hit in the chinese market crash. Its really sad when you think about it because all lao had to do was heed my advice last year and he could have avoided those horrific losses! Here is a tip to make back some of those losses lao, its not too late to short oil and gold and go long the U.S. dollar

[ray23]

"Thai Baht Set for Weekly Drop as Slower Growth May Damp Demand

By Shanthy Nambiar

Aug. 15 (Bloomberg) -- Thailand's baht was poised for its fourth weekly decline on speculation slowing economic growth will curb demand for the nation's assets.

The baht extended this month's loss to 0.7 percent after a finance ministry official yesterday said growth in the Southeast Asian economy may weaken further in the second half of the year. Global funds have cut their stock holdings on concerns political turmoil will delay policies to boost growth.

``The currency will be affected by the stock market'' outflows, said Carol Chan, a currency analyst in Hong Kong at CFC Seymour Ltd. ``Politics is sapping investor confidence. In the near term we could see a little bit of depreciation in the baht.''

The Thai currency fell 0.2 percent to 33.78 per dollar as of 10 a.m. in Bangkok, according to data compiled by Bloomberg. It has declined 0.2 percent this week. The currency may trade between 33.60 and 33.90 next week, Chan said.

Overseas fund managers sold $191 million more Thai stocks than they bought this week, according to data compiled by Bloomberg.

Thailand's economic growth slowed to 5.7 percent in the second quarter and that may give the central bank the opportunity to lower interest rates, Finance Ministry spokesman Somchai Sujjapongse said yesterday. The economy expanded 6 percent in the first quarter.

The nation's Supreme Court issued arrest warrants for former Prime Minister Thaksin Shinawatra and his wife after the couple fled to London and failed to appear this week before a court on corruption charges.

There have been anti-Thaksin street protests since May, with protesters claiming current Prime Minister Samak Sundaravej is his proxy.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at [email protected]. "

Last Updated: August 14, 2008 23"

[midas]

so much for the olympic effect........

China shares hit 19-month low on economic fears

Monday August 11, 4:58 am ET

By Elaine Kurtenbach, AP Business Writer Shanghai Composite share index falls 5.2 percent on jitters over inflation, slowing economy

http://biz.yahoo.com/ap/080811/china_markets.html

The only Olympic effect will be a post Olympic effect, and that will bring the shanghai composite down below the 2000 level. I have been telling everyone here since late last summer that chinese equities were extremely overvalued and would crash before the Olympics. Goldman and many other money center investment banks and large funds have been bailing out of chinese equities for quite some time now, and when you add in the double digit inflation that is rampant throughout china, it does not bode well for markets over there. The old saying that when the U.S. gets a cold the rest of the world gets the flu seems to be as true as ever(so much for the theory of disconnection). Judging from the rather adolecent reply that lao po recently gave one of my posts on another forum here, I would guess that he must have taken a huge hit in the chinese market crash. Its really sad when you think about it because all lao had to do was heed my advice last year and he could have avoided those horrific losses! Here is a tip to make back some of those losses lao, its not too late to short oil and gold and go long the U.S. dollar

You would have to be smoking something to want to do that

U.S. Home Foreclosures rose 55% in July. Bank seizures almost tripled according to RealtyTrac Inc.

[lannarebirth]

The only people I know who consistantly lose money in markets are idealogues. Actually, they are right some of the time, but seldom cash in on their success, assuming things will get even worse/better.

Edited August 15, 2008 by lannarebirth

[glyph]

"U.S. Home Foreclosures rose 55% in July. "

Your statement is incomplete. The 55% rise is year-over-year, NOT month-over-month.

[bingobongo]

first residential took it on the chin..........but now.....holy som tham somchai!.....commercial RE spreads are collapsing.

are you paying attention Naam? you may get another financial colonic, get ready kiddies..............

CMBX or Commercial Real Estate (you know, shopping malls, apartment buildings)

The important point is the direction of the graph. Higher = worse (inverse of the others i posted in this thread as these are quoted as spreads, or basis points, over the benchmark which is a swap)

Since June the direction of those spreads have been straight up

Edited August 16, 2008 by bingobongo

[Naam]

yaaaawwwwwwnnnnn...