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Realistbear

F. T.: Japanese Recovery Is Good News Unless You Have Debt

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Lex: Japanese debt

Published: April 30 2006 19:45 | Last updated: April 30 2006 19:45

Japan's economic renaissance is good news all round – unless you happen to be a borrower.
That puts the government in a pickle. A one percentage point rise in interest rates means that when the developed world's most indebted country refinances, it will have to pay an extra $43bn a year.
Depending how you measure it, Japan's debt pile comprises 150-160 per cent of gross domestic product. This is the legacy of years of pump-priming and waning revenues. Currently, one quarter of government revenues are drained by interest payments and bond redemptions alone.

:o

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Looks like IR hikes have sent OZ into a fever pitch of excitement! Anyone who does not get on the bandwagon and raise the rates will suffer pain on the foreign exchnage markets--US$ not just falling but crashing as UK pounds skyrockets--but wait a minute, the BoE are getting left behind unless they raise the rates. How long before the market see through HPI/MEW and the "Miracle Econpomy" it has created and the pound tanks.

http://afr.com/articles/2006/05/01/1146335661984.html

Rates fever drives $A through US76¢

May 01 16:51

Afr

A newly energised Australian dollar shot up to seven-month highs above US76¢ on Monday, taking its cue from a weaker United States dollar and intense speculation that the Reserve Bank of Australia will raise official interest rates this week for the first time in more than a year.
The greenback is under pressure across the board because the Federal Reserve last week signalled it may soon pause its two-year campaign of increasing rates.
At the same time, central banks elsewhere - Japan, Europe and perhaps even Australia - are contemplating raising rates.

Can the US and UK afford to be left behind in the rush to raise the rates??? :o

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Seen cable RB? Up over 1.84.

Yes, its going to hit 2.00 unless the Fed raise the rates. The UKP is soaring up up and away which will have an effect on exports to the US and other markets at a time when the UK economy is slowing. Not good. Looks like the ECB miss stepped the last call on rates and will be hiking this summer which will send the Euro even higher against the dollar which may similalry affect the fragile economy in Germany and France.

Overall, I think we are headed for recession caused by the US contracting and the fall in the US currency. Once the consumption drops in the US the world economies will all contract and currencies will find their equilibrium. As of this moment, the US economy is very healthy will a strong GDP and personal spending up. That is good news for its importers but I doubt it will last much beyond the summer.

Some very rocky times ahead I am afraid and the possibility of a dollar crash may bring on a rather nasty wordwide recession--mix in $100bbl on oil and who knows what's in store for us all :o

http://www.nasdaq.com/aspxcontent/NewsStor...nternational.na

UPDATE: Economists Watching Fed, Dollar In May

By Dow Jones

SAN FRANCISCO (Dow Jones) -- The Federal Open Market Committee meeting on May 10 will be the highlight of the economic calendar reporting for the month of May, according to MarketWatch's Washington Bureau Chief Rex Nutting.
A rate hike is all but guaranteed at the May 10 meeting. Once again, economists and investors will have to focus on the Fed's statement announcing the increase for clues to the future. Speculation will only become more intense given Fed Chief Ben Bernanke's recent comments suggesting a pause in rate hikes is possible.

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Why will the BoE have to raise rates to support the GBP if the downtrend has been broken? We have to remember that Japans IRs are still very low and Australia may have other reasons for raising their rates (commodities).

I don't see anything pressuring the BoE to raise or cut rates in the near future.

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Why will the BoE have to raise rates to support the GBP if the downtrend has been broken? We have to remember that Japans IRs are still very low and Australia may have other reasons for raising their rates (commodities).

Because there's the chance we will import inflation, it depends if the rise in oil is directly offset by the falling dollar, YoY it is not.

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Because there's the chance we will import inflation, it depends if the rise in oil is directly offset by the falling dollar, YoY it is not.

Yes but we could end up with the inflationary/deflationary arguments about rising oil prices. People will cut back on spending in other areas if energy costs are too much, the BoE will be just as worried about this scenario also.

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ISM figures just released from US--it points to MUCH higher US IR. It will be interesting to see how the markets take the news.

Seen cable RB? Up over 1.84.

Dropped back to 1.83--possibly on the ISM data this morning showing US economy is still hot and one of the factors Bernanke said would influence IR decision this month. A week is, indeed, a long time in economics?

Just dropped another .5 cent while posting this!

Edited by Realistbear

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CABLE was headed toward 1.85 earlier today. One set of data and down went the pound. Volatility will be making some FOREX traders a lot of money.

GBP/USD 1.8294 / 01 high: 1.8419 low:1.8228

http://www.forex.com/

Edit:

GBP/USD 1.8280 / 85

Edited by Realistbear

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Why will the BoE have to raise rates to support the GBP if the downtrend has been broken?

Hint: the pound isn't rising (at least, not by much), the dollar is sinking like a rock.

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Hint: the pound isn't rising (at least, not by much), the dollar is sinking like a rock.

US bond market is skyrocketing (yields) on very strong US data released today--Dollar has reversed itself by about 1.5 cents. The pound is rising against the world's most influential currency and with the UK's number one trading partner which may dampen exports to the US.

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The pound is rising against the world's most influential currency

So, I believe, is pretty much every other currency. In other words, 'the world's most influential currency' is being dumped by the 'smart money'.

And any increase in the pound relative to other currencies is probably due to expecations of a rate rise later in the year.

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Yes, its going to hit 2.00 unless the Fed raise the rates. The UKP is soaring up up and away which will have an effect on exports to the US and other markets at a time when the UK economy is slowing. Not good. Looks like the ECB miss stepped the last call on rates and will be hiking this summer which will send the Euro even higher against the dollar which may similalry affect the fragile economy in Germany and France.

Overall, I think we are headed for recession caused by the US contracting and the fall in the US currency. Once the consumption drops in the US the world economies will all contract and currencies will find their equilibrium. As of this moment, the US economy is very healthy will a strong GDP and personal spending up. That is good news for its importers but I doubt it will last much beyond the summer.

Some very rocky times ahead I am afraid and the possibility of a dollar crash may bring on a rather nasty wordwide recession--mix in $100bbl on oil and who knows what's in store for us all :o

http://www.nasdaq.com/aspxcontent/NewsStor...nternational.na

UPDATE: Economists Watching Fed, Dollar In May

By Dow Jones

SAN FRANCISCO (Dow Jones) -- The Federal Open Market Committee meeting on May 10 will be the highlight of the economic calendar reporting for the month of May, according to MarketWatch's Washington Bureau Chief Rex Nutting.
A rate hike is all but guaranteed at the May 10 meeting. Once again, economists and investors will have to focus on the Fed's statement announcing the increase for clues to the future. Speculation will only become more intense given Fed Chief Ben Bernanke's recent comments suggesting a pause in rate hikes is possible.

spot on with your synopsis so far realist,but don't forget that we have a housing boom that can be engineered to fail.....the result of this,cable will FALL!!!!!....yes it looks like peaking somewhere around $1.90ish but when UK PLC would rather have a housing crash than an earnings crash.....the earnings when converted from dollar to sterling are the key.....if they stay good so does the stockmarket.

....pay close attention to stakeholdings in LSE by NYSE/NASDAQ and defence stocks like BAE......where they lead the government will be forced to follow!

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spot on with your synopsis so far realist,but don't forget that we have a housing boom that can be engineered to fail.....the result of this,cable will FALL!!!!!....yes it looks like peaking somewhere around $1.90ish but when UK PLC would rather have a housing crash than an earnings crash.....the earnings when converted from dollar to sterling are the key.....if they stay good so does the stockmarket.

....pay close attention to stakeholdings in LSE by NYSE/NASDAQ and defence stocks like BAE......where they lead the government will be forced to follow!

Can you explain this more? It sounds quite interesting. Thanks. :)

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spot on with your synopsis so far realist,but don't forget that we have a housing boom that can be engineered to fail.....the result of this,cable will FALL!!!!!....yes it looks like peaking somewhere around $1.90ish but when UK PLC would rather have a housing crash than an earnings crash.....the earnings when converted from dollar to sterling are the key.....if they stay good so does the stockmarket.

....pay close attention to stakeholdings in LSE by NYSE/NASDAQ and defence stocks like BAE......where they lead the government will be forced to follow!

Seems there are a lot of countries between the proverbial rock and a hard place. You read constantly that the UK Pound is underpinned by a strong housing market, low inflation and healthy employment figures. It seems to me that this is no longer the case and that sterling should be reflecting the downturn in the economic cycle. If there is visible HPC (the world only reads the VI reports it seems) sterling may crash and it will take down the rest of the economy with it thereby forcing IR down as the recession deepens. THis will trigger a sterling sell off making the cost of imports and oil expensive fuelling inflation which will require an IR hike!

This may be why the BoE are frozen in their tracks. Either way they go can cause a problem. If they stay frozen the worldwide trend upwards will eventually force the BoE to hike or sterling will crash. When they hike the HPC accelerates undermining the pound in any event. Its the perfect nightmare scenario and the price we are all paying for inflating the economy with cheap money instead of actual production. Rather than a miracle its been a bloody awful disaster! At least we are not alone as the US and OZ are in the same boat and misery loves company. :)

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....pay close attention to stakeholdings in LSE by NYSE/NASDAQ and defence stocks like BAE......where they lead the government will be forced to follow!

Sorry can you explain you point about defence stocks etc in more detail?

Thanks,

Mr Joe.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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