Living4Dividends

Watching the USD Drop? Here's What You Should Really Be Watching

Currencies are notoriusly difficult to predict. Soros made his billions by being BOTH smart and lucky.

Emphasizing my point: BOTH smarts and luck.


On Nov 09 12:01 PM Shishir Nigam wrote:

> skwestorange,
>
> Around 30% of the US national debt is owned by foreign holders, of
> which around 24% is held by China.
>
> The points that you make are all on the mark, but I emphasize that
> currency crosses are all about how one economy is doing RELATIVE
> to the other in question. Yes the US is doing pretty horribly right
> now...but Japan is in a much more worse situation - hence I see the
> current lows of the USD-JPY cross as an opportunity.
>
> For more analysis, check out my blog: youngandinvested.com
>

Watching the USD Drop? Here's What You Should Really Be Watching

the Japanese have been accepting horribly low yields for years. What makes you think that all of the sudden their will be a sudden massive cultural change and that the Japanese will start investing overseas in order to seek higher yields?


On Nov 09 09:16 AM JS Partners wrote:

>
> Be advised that although Japanese residents hold a lot of domestic
> assets and debt, they are earning next to nothing on their holdings.
> This is all OK because there is no incentive to seek yield overseas
> because all other central banks have lowered rates. However, once
> this changes which is already the case with RBA - then many more
> people will begin to sell Yen holdings in order to get a higher percentage
> return on their investments.
>

Watching the USD Drop? Here's What You Should Really Be Watching

Shishir - Yes it is worrisome that Japan has a high Debt/GDP ratio.This is cause for some concern. The fact that Japan is a net creditor nation more than outweighs the fact that Japan has a high Debt/GDP ratio.

Still, I would not invest in Japan - not because of high debt/GDP, but because of low yields.


On Nov 09 07:48 AM Shishir Nigam wrote:

> User 143167,
>
> You make a very good point. Indeed, that is one thing working in
> the favour of the Japanese. However, like any government that has
> debt more than 100% of GDP, at some point in the near future, they'll
> either need to raise taxes or cut spending in order to bring their
> budget into somewhat of a balance. And that cannot be good for the
> economy at any point.
>
> Also, as would hold true for any highly indebted organization, the
> Japanese government will have to continue selling its debt to parties,
> be it external parties outside Japan or Japanese citizens and corporations,
> who will want less and less for it just as the government wants more
> and more. There will eventually be a tipping point..
>
> For more analysis, check out my blog: youngandinvested.com
>

Watching the USD Drop? Here's What You Should Really Be Watching

I agree with User 143167 - The key point is that Japan is a net creditor nation. The US is a net debtor nation. Japan can depreciate its currency and try to inflate away its debt, but that would not solve anything, because most of its debt is owed to itself.


On Nov 09 05:29 AM User 143167 wrote:

> It is Foreign debt to GDP that matters. In Japan's case, most of
> its debts are actually owned by Japanese residents. So government
> debts will cancel out with the private assets, which makes the Yen
> remain stable. In the US, over half of the debts are not held by
> US residents, which is the key why the USD should depreciate.

Inflation Under Control, Despite the Rise in Gold

Good article.
The monetary stimulus that has been directed at the problem has been unprecented. Saying the Fed has had an "Easy Money" policy is putting it mildly. It is better to call it a "SUPER Easy Money Policy"
The Fed's Super Easy Money Policy has consisted of of an unprecented balooning of the Fed's balance sheet, ZIRP, and Quantitative Easing (Fed's purchases of both T Bonds and MBSes). Despite the Super Easy Money, inflation remains under control.

This is due to high unemployment, restricted bank lending and consumers who refuse to spend.

Once employment returns to normal, banks start lending and the consumer reappears (even to a shadow of previous years levels), then inflationary pressures will resume, unless the Fed promptly and fully reverses it's super Easy Money policy.

How quickly and fully the Fed reverses its policy is the million dollar question (to be more accurate: it is a $2 Trillion dollar Question). Many doubt the Fed will pull back quickly enough, and others doubt that the Fed can reverse all the asset purchases.

This leads to great uncertainty about the times to come.

Paul Tudor Jones: Gold's Undervalued and Bonds Are a Curve Flattener Play

Gold isnt worth $1200 nor $2400 per ounce.

One ounce of Gold is worth what it has always been worth: it is worth one ounce of Gold.

It is better to say that one dollar is worth 1/1000, 1/1200 or 1/2400 of an ounce of Gold.

How and When Will the Fed Reverse the Huge Addition to Bank Reserves?

"How and When Will the Fed Reverse the Huge Addition to Bank Reserves? "

That's the One Trillion Dollar Question !

Fixing GMAC: Paging JPM

GMAC bottomless pit

GMAC's Deal with Sheila Bair

It is not just GMAC that is a bottomless pit, it is all of Detroit. So far, the US Govt has bailed out Detroit massively:
1. GMAC with 12.5B via TARP
2. The GM bailout #1
3. Cash-For-Clunkers

The American consumer is encouraged to buy a shiny new car while she/he is seeing his net worth plummet. Many homeowners are strapped and in danger of losing their houses.

According to the government, cars are more important than houses. When the banks foreclose on the houses, the people can sleep in their shiny brand new cars.

When will the madness of Detroit bailouts stop?

GMAC Plan Is Bad - Blodget's Alternative

So far, the US Govt has bailed out Detroit massively:
1. GMAC with 12.5B via TARP
2. The GM bailout #1
3. Cash-For-Clunkers

The American consumer is encouraged to buy a shiny new car while she/he is seeing his net worth plummet. Many homeowners are strapped and in danger of losing their houses.

According to the government, cars are more important than houses. When the banks foreclose on the houses, the people can sleep in their shiny brand new cars.

When will the madness of Detroit bailouts stop?

Smaller Social Security Checks for 1947-Born Boomers

Hmm. I agree that checks will get smaller for successive generations. I am not so sure if they will be restored for Gen Y


On Oct 16 03:55 PM Graham and Dodd Investor wrote:

> And successively smaller checks for later "classes" of Boomers until
> they disappear sometime in Generation. X. Before being restored for
> Generation Y.

Contrarians Denninger, Dent, Faber and Hoye Looking for Dollar Rebound

I pay no heed to what Dent and Faber say.

It seems that not too long ago, Faber was claiming that hyperinflation was coming to the US. Now he is saying that the he is bullish on the USD ?

This is why I don't trust Faber.

Homebuyer Tax Credit: Update

Hmmm .. alot of thumbs down on that comment. I guess people dont like the homebuyers credit.


On Oct 28 12:18 PM Living4Dividends wrote:

> It's about time that they a) renew the program and b) extend the
> program to include step-up buyers (those selling one house and buying
> another)
>
> So far, the US Govt has bailed out:
> 1. The banks (to the tune of 700B+ as well as 7T in loan guarantees
>
> 2. The credit card companies (buying credit card receivables)
> 3. Detroit (The GM bailout #1, Cash-For-Clunkers, possible bailout
> #2)
> 4. Foreign Central Banks with currency swaps.
>
> The only thing they have done for homeowners is a $8000 credit.
>
> $8000 for a $160,000 house is 5% of the purchase price
> $4500 for a $18,000 car is 25% of the purchase price.
>
> According to the government, cars are more important than houses.
> When the banks foreclose on the houses, the people can sleep in their
> shiny brand new cars.
>
> I am glad they upgraded and renewed the program, however they have
> lowered the credit limit. They arent doing enough to help the housing
> market. Everyone has been bailed out except homeowners.

Homebuyer Tax Credit: The Moneypit Is Alive and Well

Clearly, the shiny new truck is more important to the Fed Govt

On Oct 28 10:47 AM Joseph L. Shaefer wrote:

> it's just too easy to walk away when it gets "too hard" to make the
> payments or you need to choose between making home payments or getting
> that shiny red new truck.
>

Revival of the Petrodollar Recycling Machine

Just curious if
a) that is the crux s the author's argument ...and...
b) If others agree with the author's argument

Curious to hear what others have to think