Socio-Economics History Blog

Socio-Economics & History Commentary

Daniel Estulin on Bilderberg 2009

  • What are these global elite planning for the world. Will it be a short but sharp economic depression? Or a decade long economic depression? What are their plans for a global carbon tax? Are they still pushing for de-population?


May 21, 2009 Posted by | GeoPolitics | , , | 9 Comments

Japan’s Economy in Record Plunge !

  • This is repeated across the world as economies collapse. This is no recession. This is a worldwide multi-years depression. BBC reports :
    Japan’s economy during the first three months of 2009 shrank at its quickest pace since records began, as exports slumped, officials figures have shown.
    Output in the world’s second largest economy contracted by 4% during the period, or by 15.2% on an annual basis. Japan’s economy, which depends heavily on exports, has been hit hard by the global downturn.
    But economists predict a modest growth in the coming months, after a small rise in production in March. The figures from the Cabinet Office show that this is the fourth quarterly fall in gross domestic product (GDP) in a row, after a 3.8% contraction between October and December 2008.
    ‘Weakness spreading’
    The BBC’s Roland Buerk in Tokyo says people around the world are buying fewer of the cars and electronic gadgets that Japan is renowned for. In the first quarter of this year, Japanese exports declined by 26%.
    “Weakness in the corporate sector is gradually spreading to households,” Prime Minister Taro Aso said during a budget hearing to Parliament. “This is a very serious situation, so we need to respond appropriately.”
    Investment in factories and equipment dropped by 10.4% in the first quarter, a sign that firms are reducing their outlay. Consumer spending fell by 1.1% during the same period.
    “The savings rate has gone up and that has worsened the severity of the recession,” said Richard Jerram, head economist at Macquarie Securities in Tokyo.”It seems the public has basically panicked about job security to an an extent that hasn’t happened in previous cycles,” he added. The latest contraction is the biggest since records began in 1955.


May 21, 2009 Posted by | Economics | , , | Comments Off on Japan’s Economy in Record Plunge !

Asia will Author Its Own Destruction If It Triggers a Crisis Over US Bonds

  • The reality is: A US bond crisis is just around the corner. Once it starts, the political blame game will begin. Undoubtedly, the corrupt financial powers in America will blame somebody other than themselves. Why not blame Asia? Why not blame China? If it is only rhetoric, we have little concerns. But when corrupt empires collapse, they seldom go quietly. Such rhetoric can result in tension and confrontation and even war.
  • China and Japan are, in financial terms, screwed. They are caught in this treasury bond web trap. They will undoubtedly take some blame for ‘initiating’ a bond market collapse, though they are just protecting their countries’ financial interests. As for the rest of Asia who have lots of US treasuries: better get out fast before the stampede starts.
  • I am not in full agreement with Pritchard on his conclusions. Asia will recover despite this coming collapse. It will be long and not without pain. But Asia will learn the lesson. As for America, it will take decades to recover. The corrupt financial powers have hollowed out the country and its industrial base. America is now really only great at building weapons of war. Not a comforting thought. Ambrose Evans Pritchard reports :
    Et tu Tokyo? If Washington is counting on Japan to act as last-resort buyer of US dollar bonds, it may have to think again. Masaharu Nakagawa, finance chief of the Democratic Party of Japan (DPJ), told the BBC that his country should not purchase any more US debt unless issued in yen as “Samurai” bonds, akin to “Carter bonds” in 1978.
    We have come to assume that Japan under the Liberal Democratic Party (LDP) will always cleave to America, if only to safeguard US protection against Chinese naval expansion. Backed by Washington after the war as a rural counterweight to the urban left, the LDP has held an almost unbroken grip on power since 1955.
    But crashes have a habit of bringing regime change. Brian Reading, a Japan veteran at Lombard Street Research, predicts a “seismic shock” over the next four months as voters rebel. “With unemployment heading for 5 million by end-year, something must happen,” he said.
    The tremors from Japan follow near-weekly fulminations from Beijing, which suspects that Washington is engineering a stealth default on America’s debt by the trickery of quantitative easing. This was put bluntly in February by Luo Ping, head of China’s banking commission: “We hate you guys. Once you start issuing $1 trillion-$2 trillion, we know the dollar is going to depreciate.” Premier Wen Jiabao picked up the theme more politely, asking whether the “massive amount of capital” lent to the US was still safe. Since then the People’s Bank has floated ideas for a world currency.
    China and Japan together hold 23pc of America’s $6,369bn federal debt. This has caused alarm on the US talk radio circuit, but fears of imminent “dollardämmerung” and a collapse of American economic power may prove far off the mark. Who ultimately holds a gun to the head of whom?
    If Asia’s leaders give free rein to frustrations and crater the US bond market, they will ensure their own political destruction. Japan already risks descent into demographic death, deflation, and debt atrophy (its public debt is nearing 200pc of GDP). China’s regime depends on perma-boom for post-Maoist legitimacy. Could it survive the wrath of jobless graduates and rural migrants if it provokes America into erecting trade barriers, killing the globalisation goose that lays the golden egg?
    American can if necessary retreat into its vast home market and rebuild its industrial base, well-armed with 12 aircraft carrier battle groups.


May 21, 2009 Posted by | Economics | , , , , , , | Comments Off on Asia will Author Its Own Destruction If It Triggers a Crisis Over US Bonds

Wary of US Debt, China Shifts Gears on Investment

  • The signs are there for a collapse of the bond market. The 10 year treasury bond yield has risen by more than 1% and is hitting 3.33%. It is a oversold at the moment and will pause a bit before resuming the sell off.
  • The FedRes said they will be executing Quantitative Easing by printing money out of thin air and buying treasury bonds. IMO, not only do they have to make up the short fall in demand from the Chinese and other foreigners. They will have to buy up all the excess supply when foreigners dump their existing holdings. If they don’t bond yields will rise to well above 10%. This will put an end to all the talk of ‘green shoots’. If they do buy aggressively to depress bond yields, they will flood the world with USD and create hyper-inflation. Either way America is heading towards the major economic crisis soon.
  • China is moving to the short end of the treasury market. In the event of a USD or treasury bond collapse, they are limited in their exposure. 
  • Reuters reports :
    China has engineered a subtle yet significant shift in the investment of its foreign exchange reserves, a sign of how it is willing to act on concerns about financing an explosion of U.S. debt.
    Beijing has been far and away the single biggest foreign buyer of Treasuries over the past year, but this apparent vote of confidence belies how it has turned its back on long-term U.S. debt in favor of shorter maturities.
    China’s move to the shorter end of the U.S. debt spectrum is a defensive tactic adopted by the wider market as well on the view that the United States will have to raise interest rates down the road to control inflationary pressures when the economy recovers from the financial crisis.
    But the shift also comes after pointed comments from Beijing expressing worries over the security of its U.S. investments and calls from Chinese government economists for a tough line with Washington in return for continued access to loans.
    “The United States is making policy decisions purely according to domestic considerations and is giving little thought to the outside world,” said Zhang Ming, an economist at the Chinese Academy of Social Sciences (CASS), a leading think-tank.
    “This being so, the Chinese government should prepare its defenses,” he said. “We can keep buying U.S. debt but we have to attach some conditions.”
    But China’s leverage may be limited, despite sitting on the world’s largest stockpile of foreign exchange reserves at $2 trillion. The very surge in U.S. debt — the Treasury plans gross issuance this fiscal year of $8 trillion — means China’s heavy buying is increasingly looking like a drop, albeit a very big one, in the ocean.


May 21, 2009 Posted by | Economics | , , , , , , | Comments Off on Wary of US Debt, China Shifts Gears on Investment