Koizumi to return to power by spring, says Rheinwald - General - FinanceAsia.com - The network for financial decision makers

Koizumi to return to power by spring, says Rheinwald - General - FinanceAsia.com - The network for financial decision makers: "Koizumi to return to power by spring, says Rheinwald By Dan Slater | 20 September 2007 CLSA analyst Stefan Rheinwald predicts a return to power for Koizumi by spring 2008 and the Nikkei to hit 23,000 points. CLSA analyst Stefan Rheinwald predicted the demise of Yasuo Fukuda at the general election and a triumphant return to politics for Junichiro Koizumi at the third day of the CLSA forum in Hong Kong on Wednesday. Koizumi served as leader of the Liberal Democratic Party (LDP) and prime minister of Japan between 2001 and 2006. Fukuda is the name of a candidate who has been touted as the successor of Shinzo Abe, who resigned last week on the back of disastrous personal approval ratings and ill health. The political schedule comprises an internal election for the party leadership, followed by a general election next year in spring for the post of president. As in the United Kingdom, the leader of the winning party becomes leader of the country. “Koizumi is one of the few politicians with the vision and creativity to push the country forward. Other Japanese politicians are too focussed on consensus,” says Rheinwald. 'In addition, Koizumi was brilliant at working the system. Even if it sometimes looked as if he was taking one step back for ever"

Faber: How investors can beat hyper-inflation - General - FinanceAsia.com - The network for financial decision makers

Faber: How investors can beat hyper-inflation - General - FinanceAsia.com - The network for financial decision makers: "Faber: How investors can beat hyper-inflation By Dan Slater | 24 September 2007 Commentator Marc Faber says investors could benefit from sky-high asset prices as the US stokes inflation. In a typically bearish appraisal, author of the Gloom Boom and Doom Report Marc Faber advised investors on the last day of the CLSA Hong Kong forum on Friday to stock up on physical gold and rural real estate ahead of possible global conflicts and US stagflation (inflation without growth, last seen in the 1970s.) Faber sees the US as a consumption giant unable or unwilling to make capital investments, with third-world infrastructure, and a tendency to binge on consumer goods actually produced by other people. He estimates the US GDP has shrunk from a 32% share of the world's GDP in 2000 to just 28% this year. He believes the rise of the Asian block is inexorable, and points out that in emerging markets, oil consumption is already greater than that of the G7 group of countries. The sale of semiconductor chips is also four times as great in Asia as that of semiconductor chips in the US. Faber believes the conditions for a period of higher interest rates, low growth and high inflation are now with us, rooted in recent US policy. advertisement Thus, he sees US GDP gro"

Land price report sends mixed signals / Stagnant incomes, inconvenient locations holding down increases in some areas : Business : DAILY YOMIURI ONLIN

Land price report sends mixed signals / Stagnant incomes, inconvenient locations holding down increases in some areas : Business : DAILY YOMIURI ONLINE (The Daily Yomiuri): "Land price report sends mixed signals / Stagnant incomes, inconvenient locations holding down increases in some areas Tsuyoshi Ito Yomiuri Shimbun Staff Writer The government's report on average residential and commercial land prices released Wednesday shows the land price rises that started in major metropolitan areas have now spread further afield. In some prime locations in Tokyo, there are transactions far exceeding average prices, prompting concerns among some real estate analysts that the market may be overheating in some areas. However, these concerns contrast with the expectations of some observers that the recent credit squeeze in international financial markets, caused by the U.S. subprime mortgage loan crisis, could cloud sentiment among foreign investors who have been facilitating investment in the real estate market. In some cases demand has not matched escalating land prices. Observers say the mixed news makes it difficult to predict the future direction of land prices. On the recent holiday weekend ended Monday, the upscale Chuo-dori avenue in Tokyo's Ginza shopping district was crowded with shoppers. General food retailer Meidi-ya Co.'s Ginza Building is located on the street. The benchmark land price for the plot was 83.49 m"

Contradictions mount in US and world economy in wake of Fed rate cut

Contradictions mount in US and world economy in wake of Fed rate cut: "Robert Shiller, a liberal Yale economist who correctly predicted the collapse of the dot.com bubble, told the panel that “the collapse of home prices might turn out to be the most severe since the Great Depression.” The housing slump would have a major impact on consumer spending, and posed a “significant risk” of recession over the next year, he said. “Low income people will be especially hard hit,” Shiller warned, because they hold a disproportionate number of the subprime mortgages which are now being liquidated. Rising home prices have been the major factor in the steady rise of consumer spending over the past seven years, despite stagnant or declining real incomes. Homeowners extracted an average of nearly $1 trillion a year in additional spending money from 2001 through 2005, through a combination of home sales, home equity lines of credit and mortgage refinancing. One quarter of this vast sum went directly into consumer spending. Now this process is going into reverse. According to a forecast released Wednesday by Moody’s economy.com, more than three-quarters of the housing markets across the US will suffer a decline in home prices in the next several years, and price declines will average 7.7 percent nationally, exceeding 10 percent in 86 of the 379 largest markets. The wo"

House prices to drop much lower: Greenspan | Reuters

House prices to drop much lower: Greenspan | Reuters: "VIENNA (Reuters) - A big overhang of property will bring U.S. house prices down further, but it is too early to say if the economy will plunge into recession, former Federal Reserve chief Alan Greenspan was quoted as saying on Friday. Greenspan said in an interview with Austrian magazine Format that low interest rates in the past 15 years were to blame for the house price bubble, but that central banks were powerless when they tried to bring it under control. 'It's a difficult situation, there is an enormous overhang on the real estate market,' Greenspan was quoted as saying. 'Many buildings which just have been finished can't be sold ...' 'So far, prices have dropped only slightly. But it was enough to cause alarm around the world,' he said. 'Prices are going to fall much lower yet.' 'However, it is too early to answer the question about a recession. We simply don't know yet. It depends on how flexibly the economy can react,' he said. Greenspan said deregulation and the introduction of market economies in the former Communist bloc after the Berlin Wall fell in 1989 had caused a global boom and a worldwide reduction of interest rates, which both helped fuel the property bubble. 'There is no doubt about the fact that low interest rates for long-term government bonds have caused the real estate bubble"

FT.com / Home UK / UK - Crisis in S Korean building industry

FT.com / Home UK / UK - Crisis in S Korean building industry: "Crisis in S Korean building industry By Anna Fifield in Seoul Published: September 21 2007 03:00 | Last updated: September 21 2007 03:00 South Korea's mid-sized construction companies are collapsing like houses of cards, intensifying fears of a looming liquidity crunch in Asia's third-largest banking market. Korea has remained largely immune to the sub-prime woes that have afflicted international markets. But a series of smaller construction companies has been defaulting on project financing loans as they struggle to sell apartments outside Seoul. ADVERTISEMENT That has raised concern about a further deterioration in the quality of loans to construction companies and investors are beginning to worry about the impact on Korean banks. 'This is a critical moment,' said Chung Dong-joo of the Korea House Builders' Association. 'We call this a 'bankruptcy surplus', as companies have the ability to raise capital but are going bankrupt because of the high number of unsold apartment units. This hinders capital circulation and has plunged small and medium-sized companies intoa crisis.'"

New blow to dollar amid U.S. growth fears - International Herald Tribune

New blow to dollar amid U.S. growth fears - International Herald Tribune: "New blow to dollar amid U.S. growth fears By Carter Dougherty Published: September 20, 2007 E-Mail Article Listen to Article Printer-Friendly 3-Column Format Translate Share Article Text Size FRANKFURT: The world dumped the dollar on Thursday, pushing the greenback to an all-time low of $1.40 against the euro and to parity with the Canadian dollar for the first time in three decades as currency traders around the world digested the full implications of the U.S. Federal Reserve's new course for interest rates. The frenzied selling began early in the day in Europe, never let up, and reached across the Atlantic as traders concluded that the lower borrowing costs the Fed introduced on Tuesday would dampen the appeal of dollar-denominated assets like stocks, bonds and real estate just as other central banks are raising rates to create the opposite effect. Layered atop a weakening U.S. economy that is menaced as well by the prospect of a retreat by consumers who have driven growth for years, the dollar radiated instability as its traditional role as a refuge in times of crisis, one evident as recently as early August, appeared all but forgotten. 'It's pretty ugly right now for the dollar,' said Jim McCormick, the London-based chief of currency strategy for Lehman Brothers Intern"

Los Angeles Times - latimes.com

Los Angeles Times - latimes.com: "From the Los Angeles Times: September 21, 2007 MARKETS Fed's move called into question Rising bond yields and a slumping dollar fuel inflation worries after the rate cut. By Walter Hamilton, Los Angeles Times Staff Writer NEW YORK — Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve's move this week to stimulate the economy could backfire. Though the central bank's cut in short-term interest rates on Tuesday stoked the stock market, it has spooked some other markets -- mainly by raising fears of higher inflation that could undermine the economy. Those concerns were in focus Thursday in the Treasury bond market, where long-term yields rose for a third day. The annualized yield on the 10-year Treasury note, a benchmark for mortgages, surged to 4.70% from 4.54% on Wednesday and 4.47% on Tuesday. A major fear is that higher long-term borrowing costs, particularly in the mortgage market, could damp the positive effects the rate cut was expected to have. 'The markets certainly are testing Mr. Bernanke,' said Tom Di Galoma, head of Treasuries trading at brokerage Jefferies & Co. in New York, referring to Fed Chairman Ben S. Bernanke. After two days of higher prices, the stock market on Thursday gave back some of it"

Greenspan: Higher inflation to warrant double-digit rates in future - USATODAY.com

Greenspan: Higher inflation to warrant double-digit rates in future - USATODAY.com: "Greenspan: Higher inflation to warrant double-digit rates in future Updated 1d 12h ago | Comments 213 | Recommend 40 E-mail | Save | Print | Reprints & Permissions | Subscribe to stories like this Former head of the Federal Reserve Alan Greenspan sits in his Washington D.C. office. He has written a book titled The Age of Turbulence. Enlarge image Enlarge By H. Darr Beiser, USA TODAY Former head of the Federal Reserve Alan Greenspan sits in his Washington D.C. office. He has written a book titled The Age of Turbulence. By Barbara Hagenbaugh, USA TODAY WASHINGTON — Former Fed Chairman Alan Greenspan predicts in a new book out Monday that the Fed will have to raise interest rates to double-digit levels in coming years to thwart inflation. Greenspan, 81, says in The Age of Turbulence that the inflation-damping effect of globalization, which has led to lower wage pressures, inflation and interest rates worldwide, will recede. At some point, the flow of people into the workforce in developing countries such as China, which has seen a movement of workers from farms into factories, will slow, leading to stronger wage pressures and prices, he says. The impact will be global. And the shift 'may be upon us sooner rather than later,' he says. Evidence: P"

Double Warning That a Recession May Be on the Way

clipped from www.nytimes.com Off the Charts Double Warning That a Recession May Be on the Way By FLOYD NORRIS Published: September 15, 2007 THE employment statistics and the bond market are combining to send out a warning that has been heard only rarely in the past two decades: A recession is coming in the United States. The two charts show the double warning. Both charts warned of an economic downturn before the 1990 and 2001 recessions, and they are doing so again. While each has arguably registered false warnings, they have never done so together. The first chart shows the difference between the yield on two-year Treasuries and the Federal Reserve’s target rate for federal funds — the rate on loans between banks. In normal times, the Treasury rate is usually higher.

Intesting article about 1987 Black Monday

Here is a long discussion about the Black Monday in 1987. During that day the Dow Jones index made a new loss record. http://simplearticle.blogspot.com/2007/09/black-monday-1987.html

Dollar's retreat raises fear of collapse - International Herald Tribune

Dollar's retreat raises fear of collapse - International Herald Tribune: "Dollar's retreat raises fear of collapse By Carter Dougherty Published: September 13, 2007 FRANKFURT: Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result. But for longer than most economists would have been willing to predict a decade ago, the world has been a willing partner in American excess - until a new and home-grown financial crisis this summer rattled confidence in the country, the world's largest economy. On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week. 'This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar,' said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. 'We could finally see the big kahuna hit.'"

US housing gets worse

clipped from business.timesonline.co.uk Robert Shiller, Economics Professor at Yale University, told The Times: “People are so accustomed to rising house prices, they do not believe it when someone tells them it will come to an end . . . What we have may be the makings of an economic crisis. We may be at a unique point in world history, like 1929, but this time it would be the housing market. Prices are still going up in Canada and the UK, but the US may lead the way.” One of the main speakers at today’s annual central bankers’ symposium in Jackson Hole, Wyoming, will tell his audience that there may be an American housing crisis to match any in history – and that Britain and Canada are likely to follow suit.

Danger: Steep drop ahead - September 17, 2007

Danger: Steep drop ahead - September 17, 2007: "Danger: Steep drop ahead Even if the credit crunch passes without a major catastrophe, the prices of stocks, bonds and real estate have a long way to fall. FORTUNE Magazine By Jeremy Grantham, Fortune September 5 2007: 9:27 AM EDT (Fortune Magazine) -- Credit crises have always been painful and unpredictable. The current one is particularly hair-raising because it's occurring amid the first truly global bubble in asset pricing. It is also accompanied by a plethora of new and ingenious financial instruments. These are designed overtly to spread risk around and to sell fee-bearing products that are in great demand. Inadvertently (to be generous), they have been constructed to hide risk and confuse buyers. How this credit crisis works out and what price we end up paying has to be largely unknowable, depending as it does on hundreds of interlocking and often novel factors and how they in turn affect animal spirits. In the end it is, of course, the management of animal spirits that makes and breaks credit crises. house_real_estate_for_sale.03.jpg Grantham: Home prices are well above the normal four times family income and will have to come down. More from FORTUNE Remembering Black Monday The hipster in the gray flannel suit The many faces of Ralph Lauren FORTUNE 500 Current Issue Subscribe to Fortune But even if this crisis is"

Employment development

clipped from www.contraryinvestor.com Over the past decade and one half, temp employment has both peaked and troughed ahead of the headline payroll trend.  As such, it has been a very important indicator to follow.  By the way, as you can see in the chart above, over the last few months, the year over year change in temp employment has gone negative.  Not a good thing in terms of foreshadowing forward headline payroll employment trends.  As per historical experience, negative rate of change trends in temp employment occurred just prior to the early 1990’s and 2001 recession, but not during the mid-cycle economic slowdown of the mid-1990’s.  Are current temp employment numbers and trends telling us the next recession is simply not far off?  We’ll just have to see what happens ahead, but for now we take this message seriously.

Unexpected Loss of Jobs Raises Risk of Recession

clipped from www.nytimes.com Unexpected Loss of Jobs Raises Risk of Recession By DAVID LEONHARDT and JEREMY W. PETERS Published: September 8, 2007 The job market took a serious and unexpected turn for the worse last month, raising the risk of a recession and putting added pressure on the Federal Reserve to move more aggressively to keep the ailing housing industry from infecting the rest of the economy. The Labor Department reported yesterday that 4,000 jobs were lost from July to August, and the deepest cuts were in industries that are connected to the housing market, like construction and manufacturing. It was the first employment decline since 2003, when the job market was still struggling to emerge from the slump after the 2001 recession.

Bloomberg.com: Commodities

Bloomberg.com: Commodities: "Sept. 6 (Bloomberg) -- Gold rose to the highest in almost four months in London on signs credit-market turmoil is spurring traders to seek a haven in the precious metal. Silver gained. Investment in StreetTracks Gold Trust, the biggest exchange- traded fund backed by the metal, climbed 2.5 percent to a record 528.36 tons yesterday, figures from the London-based World Gold Council show. The European Central Bank today lent emergency cash to banks for the fifth time in a month, a day after the Bank of England injected funds to reduce the cost of credit. ``It seems the gold market is ready to go higher,'' said Gerry Schubert, a director of metals at Fortis Bank in London. ``The whole upset in the financial markets will ultimately lead to gold strengthening its status as a safe haven.'' Gold for immediate delivery gained $6.03, or 0.9 percent, to $687.58 an ounce as of 1:48 p.m. in London, after earlier today gaining to $688.93, the highest since May 8. Prices have climbed 8 percent this year."

New Concerns in Europe About Credit Fallout - New York Times

New Concerns in Europe About Credit Fallout - New York Times: "The Organization for Economic Cooperation and Development, a Paris-based group of 30 industrial nations, issued a report warning that the credit crisis had dimmed prospects for economic growth, especially in the United States. It scaled back its growth forecasts for many leading economies and urged central banks to keep interest rates stable and low to stem further damage. And it recommended that the Federal Reserve consider trimming its benchmark interest rate by a quarter of a percentage point when it meets on Sept. 18. “You cannot rule out a recession” in the United States, said Jean-Philippe Cotis, the O.E.C.D.’s chief economist."

BCA Research - Independent Investment Research Since 1949

BCA Research - Independent Investment Research Since 1949: "About BCA Our Services Contact Info Careers Help BCA In the News Home U.S. Subprime Losses To Total /$200 Billion 11:22:00, August 30, 2007 The losses related to bad U.S. mortgage paper could end up being larger than the 1980s S&L losses in dollar terms. About 60% of subprime mortgages carry an adjustable rate, and $650 billion will reset at a higher interest rate in the next 16 months. Even without factoring in a recession, we estimate that the losses on bad subprime and alt-A paper could amount to about $200 billion over the 2007-2011 period (1.5% of today’s GDP). This compares with $153 billion (2.5% of 1990 GDP) in losses associated with the S&L meltdown in the late 1980s. Spread out over several years, such losses do not seem overwhelming on their own. However, it is the knock-on effects that are the larger risk to the economy, including a hit to consumer confidence and wealth, a curtailment of credit availability, and increased selling pressure in the housing market. Bottom Line: Fed rate cuts cannot solve the subprime mess, but can limit the negative impact on the economy."

BCA Research - Independent Investment Research Since 1949

BCA Research - Independent Investment Research Since 1949: "A Maturing Equity Bull Market 12:21:00, August 28, 2007 According to our Global Investment Strategy service, the recent shakeout in risky assets should be regarded as part of the maturing process of the equity bull market. This episode is very similar to the recession fears of 1998, which prompted Fed easing. The subsequent rally in stocks was powerful but led to increased volatility and ultimately ended in a crash two years later. We suspect that a similar pattern could play out this time around. Equities still offer reasonable value and should receive significant upside as investment capital gets funneled into fewer assets. Narrowing breadth of asset price inflation is a typical characteristic of a maturing market. In this cycle, commodities, government bonds, real estate and credit products have already largely been inflated but stocks still have room for further multiple expansion once the current turmoil in the credit market subsides. However, investors should be prepared for permanently higher volatility, which tends to accompany richer valuations. Bottom line: The bull market in equities, while in a maturing phase, should offer investors significant upside over the next two years."

Bush, Bernanke launch subprime assault: Financial News - Yahoo! Finance

Bush, Bernanke launch subprime assault: Financial News - Yahoo! Finance: "Bush, Bernanke launch subprime assault Friday August 31, 5:38 pm ET By David McMahon and Mike Peacock NEW YORK/LONDON (Reuters) - The Federal Reserve on Friday reassured investors it would take any steps needed to shelter the U.S. economy from a global credit squeeze, while President George W. Bush promised to help struggling homeowners refinance their mortgages. ADVERTISEMENT Chairman Ben Bernanke also said the central bank would not bail out investors who had made mistakes, but overall his comments reinforced the view that the Fed will cut interest rates by a quarter percentage point at its meeting on September 18. Bush urged lenders to work with homeowners to renegotiate their mortgages to prevent default and called on Congress to approve legislation that would provide mortgage insurance to borrowers through a network of private-sector lenders. 'It's very light on detail and limited in scope,' Jeff Schappe, chief investment officer at BB&T Asset Management in Raleigh, North Carolina, said of Bush's proposal. 'The important news today is that Bernanke is saying the Fed is going to do whatever it will take to limit the impact.'"

clipped from www.nytimes.com Pay at Investment Banks Eclipses All Private Jobs By DAVID CAY JOHNSTON Published: September 1, 2007 Top money managers earn such huge incomes that even when their compensation is mixed with the much lower pay of clerks, secretaries and others, the average pay in investment banking is 10 times that of all private sector jobs, new government data shows. Investment banking paid an average weekly wage of $8,367, compared with $841 for all private sector jobs, the Bureau of Labor Statistics said in a routine report issued Thursday. The report also showed how far ahead hedge fund managers are of other investment bankers in making money.