Global Economy Bursting?

[Randolph Kinney]

Proposed nationwide gas standard might ease prices in California slightly

I see that the Obama administration is hoping to bring national gasoline standards in line with California's. Wouldn't that be nice? ... The Environmental Protection Agency is proposing a requirement to reduce sulfur in gasoline like we have done in California.

For nearly two decades, gas in California has cost as much as 35 cents a gallon more than in the rest of the U.S. because we have our own special blend and cannot get gas from the rest of the country when supplies here run short.

Putting in the same California standards for gasoline across the nation will marginally lower prices here. The real impact is that prices will increase across the nation to be similar to California's prices.

 

[Terrel L. Shields]

I have no doubt therefore that California will now INCREASE their gasoline standards in excess of the EPA proposed standards...

 

[Restrain]

Unemployment figures out - stocks fall this morning.

The Unemployment figures show 88K new jobs vs a projected of 220K. Big slowdown. Unemployment declined 0.1%. It's when you start looking at the data that it gets real scary.
1. Many jobs added were part-time.
2. 663K people left the work force
3. Workforce participation is now at 1979 levels. Population in 1979 was 225M. Population now is 308M.

 

[Randolph Kinney]

Largest Dutch bank defaults on physical gold deliveries to customers

http://www.examiner.com/article/lar...physical-gold-deliveries-to-customers?cid=rss

 

[Randolph Kinney]

Bank of Japan Policy Is Huge, Risky Experiment

http://www.cnbc.com/id/100616942

Japan is wagering its future on a massive experiment by essentially doubling its monetary base.

 

[Workbox]

Largest Dutch bank defaults on physical gold deliveries to customers

http://www.examiner.com/article/lar...physical-gold-deliveries-to-customers?cid=rss

Bank of Japan Policy Is Huge, Risky Experiment

http://www.cnbc.com/id/100616942

Japan is wagering its future on a massive experiment by essentially doubling its monetary base.

They can default because they know that someone will print money. m2: While shopping at SamClub is not adventitious as it used to be. I shop in the lower income grocery stores where the quality is better and 30-40% cheaper.

 

[Randolph Kinney]

The ultimate QE is printing Yen and buying foreign bonds of your international competitor, not the Japanse bonds. This way, the value of an asset is maintained at the expense of your competitor.

Japan is flooding its own asset markets with Yen and will soon embark on flooding the foreign markets too. The Yen exchange rate will plummet.

Yen Plunges Most in Three Years on Japan Stimulus

http://www.bloomberg.com/news/2013-...ree-years-on-japan-stimulus-dollar-drops.html

The yen slid the most against the dollar in more than three years after the Bank of Japan outstripped forecasts and announced unprecedented measures to fight deflation, spurring concern the currency will be debased.

The yen fell the most against the euro since 2010 as Japan’s central bank said it would double its bond buying.

 

[Randolph Kinney]

George Soros: Japanese Policy Dangerous, Yen Could Collapse

http://www.valuewalk.com/2013/04/george-soros-japanese-policy-dangerous-yen-could-collapse/

George Soros was on CNBC tonight for a rare interview. George Soros mostly spoke about Japan and the BOJ’s new aggressive pro inflation policy. He thinks Japan should have acted long ago to fight deflation while Europe is now making many of the mistakes Japan made 20-25 years ago.

European austerity program is actually leading the eurozone into exactly same policy Japan is now trying to escape after 25 years

George Soros noted that the total amount of quantitative easing underway in the Japan is the same as America. However, Japan is only one third the size of the USA. Therefore, the QE in Japan is three times as large as the Fed’s QE in the US.

What Japan is doing is actually quite dangerous…They may not be able to stop it. “If the Japanese yen starts to fall in value and the people of Japan lose faith and don’t want to invest their money in the Yen, they may put their money abroad, which could cause the Yen’s fall to become an avalanche.

When asked about reports that Soros has made a billion by shorting the Japanese Yen, Soros responded ”I think the Bank of Japan is eager to have people do that.”

 

[Terrel L. Shields]

For Japanese savers it means their money will soon be worth half what it was. How long before Bernanke has to do the same....

Kyle Bass is one of the more shrewd fellows out there - made a ton on the financial crisis while telling the big bankers that they were on the road to L if they didn't change. They didn't and it all blew up.

 

[Randolph Kinney]

China the Big Loser from Yen’s Bank of Japan Driven Weakness

http://blogs.barrons.com/emergingma...oser-from-yens-bank-of-japan-driven-weakness/

The dramatic change in the BoJ’s monetary stance has led to a sharp devaluation of the JPY against other currencies but given the prolonged period of appreciation experienced against major currencies such as the USD and EUR the JPY is still on the expensive side of its historical range….

The same is not true with regards to China. Since 1999 the CNY/JPY exchange rate has had a well defined range between roughly 12 and 16.5. At the lower band Chinese exports are very competitive with Japanese exports and at the higher band the opposite is true. As recently as last September the CNY/JPY was at 12.4, but the last 6 months have seen a dramatic move in the rate up to 15.5, meaning that Japanese exports are starting to become very competitive with Chinese.

China appears to be the big loser in Japan’s sudden change of monetary tack. With political tensions already running high between these two nations we would expect the exchange rate to become a matter of considerable tension in the months ahead.