Monday May 28, 2012

JAPAN NEWS AND DISCUSSION

Euro crisis deepens as France, Spain, Italy, 6 other nations downgraded

World Jan. 14, 2012 - 08:00AM JST ( 20 )

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Greece is under intense pressure to strike an agreement on a major writedown of privately-held Greek debt,

A man looks at a screen displaying index and share prices outside a bank in Milan

A protestor sets fire to copies of Euro banknotes outside the Bank of Greece

French Economy minister Francois Baroin (C) leaves the Elysee palace

Greek Premier Lucas Papademos (L) speaks with Greek Finance minister Evangelos Venizelos

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20 Comments

0

Elbuda MexicanoJan. 14, 2012 - 07:39AM JST

Great! And my savings that are in Euros at Citibank?? Oh crap!
0

globalwatcherJan. 14, 2012 - 09:09AM JST

Japanese currency debt rating is at AA- April 2011, but I would predict that it may be down graded again if nothing is done to keep a house in order. Critical.

S&P predicted that rebuilding will cost as much as 50 trillion yen ($611 billion), with 30 trillion yen its “central forecast.” That will require more borrowing, boosting net government debt to 145 percent of gross domestic product in fiscal 2013, compared with an earlier forecast of 137 percent, S&P estimated.

Much will depend on Japan’s political leadership and its ability to forge a political consensus on how to offset fiscal measures in the future,” S&P said. “A downgrade is possible if Japan’s public finances weaken further over the next two years in the absence of fiscal consolidation
-1

smithinjapanJan. 14, 2012 - 09:16AM JST

I can't believe how much the Euro has fallen in such a short time. The outlook is not good at all. Depressing, really.
0

unreconstructedJan. 14, 2012 - 09:29AM JST

Shorting the Euro has hit a record high.

Seems like just yesterday that Paul Krugman ,Dean of Donk Economics and self-appointed Conscience of America's Liberals, was telling us how badly we needed to become like Europe and that the Euro project was sound.

That distant but loud gasping, sucking sound you hear? That's ZeeNeuFrankenReich, in its death throes.
5

ubikwitJan. 14, 2012 - 10:30AM JST

The ratings agencies should be investigated and prosecuted for manipulating the market for political purposes.

The amount of influence that they seem to be able exert without agreement as to the objectivity of their "ratings" is undue and, basically irrational.

I wonder if there is hedge fund money with advance notice of these downgrades that is involved in the "record high" shorting the euro?
0

globalwatcherJan. 14, 2012 - 10:58AM JST

ubikwitJan. 14, 2012 - 10:30AM JST

I cannot speak for other rating agencies, but the S&P rating criteria is all UNIFORMED (private and public sectors) for an underwriting purpose and the government debt reduction policy is also coming to play. We are following certain rules and regulations for risk exposures. A good example is the US automatic debt reduction policy that will kick in 2013 if the US congress cannot come up with any debt reduction plan. What I meant to tell you is that this is a very objective and a streight forward analysis to tell you a financial health of each country.. I would take this evaluation to my saving bank. along with other two.
0

JapanGalJan. 14, 2012 - 11:09AM JST

Very suspicious indeed.

However, it appears that Europe will break up faster than China will eventually.
0

skipbeatJan. 14, 2012 - 11:10AM JST

It's a sad day that a person and a country only worth is by a credit rating when it should not be. What's wrong with this picture. The conclusion get rid of the credit rating because it is bias and unhealthy.
-1

kwattJan. 14, 2012 - 11:37AM JST

Euro common currency system seems to be at a big failure. Some nations have rich economy and some have poor with very different cultures. situation is very similar to complicated international marriage. They are potentially hiding/holding some kind of deep problems / troubles like with love affair, financial debt , criminal record, etc of the present / past before the big wedding. I'm sure they will face breakup of the marriage or already broke up? Eurozone seems to be impossible from the beginning.
0

globalwatcherJan. 14, 2012 - 11:42AM JST

The conclusion get rid of the credit rating because it is bias and unhealthy.

skipbeatJan. 14, 2012 - 11:10AM JST

Global bond investors use this analysis to determine what is a fair price to pay for the sovereign debt bond;.a blood supply (money supply) for each country. If the risk is high, then the yield goes up higher.
-2

WilliBJan. 14, 2012 - 02:17PM JST

kwatt:

" Euro common currency system seems to be at a big failure. "

Not "seem", it IS. All the current problems were predicted by the Euro sceptics already before the scheme started. No better proof of who is right than reality.

The Euro was a political scheme from the start, and it is high time the politicians admitted defeat and gave up. Returning fiscal souvereignity to countries by returning to national currencies will of course of be painful in the short term, but it is the ONLY solution.
0

WilliBJan. 14, 2012 - 02:19PM JST

JapanGal:

" However, it appears that Europe will break up faster than China will eventually. "

Not Europe, the Euro. Not the same thing. A EU makes sense, as long as it is a community of free nation states (the model that the British always suggested). The EU as a European empire ruled by an unelected elite from Brussels (the French model) is what brought us this disaster, and this has to end.
1

Antonios_MJan. 14, 2012 - 08:38PM JST

Indeed, Eurozone and EU are two totally different things not to be confused. Europe tried its best to follow a vision similar to the USA but apparently it forgot that each nation state has its own political, social and economic status quo. I hope that Euro won't collapse though. It will be catastrophic if it does...
0

ubikwitJan. 14, 2012 - 11:04PM JST

globalwatcher

what international agency is involved in making the "standards" used by the ratings agencies?

whether they are applied across the board or not is a separate issue from the evaluative criteria applied.

i don't hear 100% harmony in relation to these matters, and there are people protesting these decisions, which come at a sensitive time and have serious political consequences.
0

globalwatcherJan. 15, 2012 - 12:44AM JST

@ubikwit

what international agency is involved in making the "standards" used by the ratings agencies?

Are you talking about other agencies? Fitch and Moody.

whether they are applied across the board or not is a separate issue from the evaluative criteria applied

I hope I understand your questions properly, if so, each agency has their own criteria for underwriting. Many financial data are compiled electronically every day/every minutes/every second from all over the world.

there are people protesting these decisions

As I have mentioned above, this is a financial data and it does not have a feeling. Objective.
0

ubikwitJan. 15, 2012 - 01:04AM JST

globalwatcher

what you're saying is that these agencies are unregulated companies, at least as far as setting criteria go.

it seems to be the case that their criteria favor the anglo-american axis in the finance world.

and high level german and french officials are highly critical of the perceived bias in the criteria.

my point is that there is no international regulatory body that sanctions the criteria in use as being fair and objective.

by the way, how do you account for the AAA rating they all had on mortgage backed securities that were perhaps the main factor in the financial crisis?

it seems to me that these "agencies" need to be subjected to a much higher degree of scrutiny and regulation.

china recently talked about setting up an alternative system based on a completely different system of remuneration.
0

globalwatcherJan. 15, 2012 - 02:33AM JST

@ubikwit, Credit Dafault Swap (mortgage backed securities) was certainly a mess. They were traded over the counter. It is still being traded as an insurance product. I believe US needs a big financial system overhaul. There are too many different criterias for S&P Blue Chips, Russel, Over-the-counter, Nasdaq, Chicago commodity trading........this is where the systems are broken down. Stocks traded on Nasdaq may not qualify to be listed on the NY Stock Exchange as they have to satisfy certain financial criterias first I believe Olympus was traded over the counter.

I believe Obama and the US Treasury Dept have been working on this issue including global banking. I can go on and on for more details on this issue if I am allowed to.

Speaking about China setting up the system, well good luck to China.. First, their currency needs to be freed in the global floating system. They can set it up if they want to, but their success depends on how the global investors interpret China's data. They are well known for data manipulation including GDP, unemployment, and CPI. They have not earned the trust from global investors yet.in my humble opinion. I hope my short brief clarify your questions.
0

globalwatcherJan. 15, 2012 - 06:46AM JST

I need to add this to my post listed above to show how critical this issue is.

Breaking News dated 1/12/12

Merkel says eurozone must act fast German chancellor Angela Merkel has called on eurozone governments speedily to implement tough new fiscal rules after Standard & Poor’s downgraded the credit ratings of France and Austria and seven other second-tier sovereigns. Ms Merkel on Saturday called on governments to implement rules outlined in December, and to activate “as quickly as possible” the €500bn-European Stability Mechanism, currently scheduled to succeed the old eurozone rescue fund EFSF midyear.
0

ubikwitJan. 15, 2012 - 12:53PM JST

the following article i found very interesting

http://www.guardian.co.uk/commentisfree/2012/jan/13/eurozone-credit-crisis-parties-of-austerity

and the following comment appears thereafter:

The ratings agencies are just one of a number of factions that would love to see the euro fail, and the European project to fail with it. Some are just disgruntled neo-liberals with a politico-economic axe to grind. They don't like the EU's social chapter, nor its anti-monopoly regulations. Others are simply market players who have a financial interest in the euro's demise. In the case of the ratings agencies, we see participants in a failed neo-liberal economic system who have every reason to fear that a resurgent EU would clip their wings and reduce their absurd unchecked power as de facto setters of the interest rates that governments are obliged to pay. Politicians should wise up and treat the self-fulfilling prophecies of these naked emperors with the contempt that they deserve.

a lot of people have strong, yet highly articulated and well informed opinions on this issue that are polar opposites...
0

JeremiahWJan. 16, 2012 - 12:42PM JST

It depresses me to think the econ guys who predicted the collapse of the Euro are of the same school that tells ya pump priming and keynes- remedies will not work for America.