Both Euro & Japanese Yen to Weaken Against US Dollar, Oct. 31, 20117:47AM
Japan Intervened in Euro market Last night big time and we believe this is start of a big move for Yen currency going down against dollar.
The result will be big competition to both Europe and USA. Stock markets in both Europe and USA ( in fact around the world) will start declining in 3rd of the 3rd step down which will be the beginning of multi month decline.
See USD/JPY chart USD /Japanese yen from 2007 to 2011
See Euro /USD chart Euro Vs US Dollar Monthly Chart From 2008 to Present
Euro went up from 1.20 to 1.50 after the federal Reserve printed money big time under QE2.
Finally from May 2011, Euro went down from 1.50 to 1.32 in step 1. In month of Oct , 2011 it went up from 1.32 to 1.4250
in step 2 up. It has started going down in step 3 on Oct 28 and it will have major implications for stock markets around the world. This is very similar to what happened to DJI in early 2008. We had a short rally in step 2 and then a big decline lasting several months.DJI 2007 to 2011-10-31_0505 We do not have to wait . The big decline probably started on Friday Oct 28, 2011. We are also afraid that Gold in US dollar terms made a high Friday.
We had warned last Friday that market is ready to start declining. The failure of the European Governments to solve their problems can be seen by the fact that bond auction by Italy cost them the highest rate ever. Leaders can agree on anything but if the people in those countries are not willing to participate, nothing can improve. We expect more riots in all European countries.
The best solution for Greece is to separate from Euro and declare bankruptcy like what Iceland did and like Argentina did.Iceland is starting to build up again and Argentina had 7% GDP increase last Quarter. ( they have 25% inflation but that is a different problem)The ruling party won a thumping victory in recent elections.
Intervention By Japan In Currency Markets-This is Huge Like August 2011
Japan Intervenes to Tame Soaring Yen Ahead of G20
Published: Monday, 31 Oct 2011 | 5:42 AM ET Text Size
By: Reuters
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Japan sold the yen for the second time in less than three months after it hit another record high against the dollar on Monday, intervening to counter speculation that officials say is hurting the world’s No. 3 economy.
Gyro Photography | AmanaimagesRF | Getty Images
The dollar vaulted more than 4 percent higher, heading for its biggest one-day gain in three years, and Finance Minister Jun Azumi said Tokyo would continue to intervene until it was satisfied with the results.
Still, some worried that the impact of the intervention would prove fleeting. Previous intervention since September 2010 had failed to prevent the yen from resuming its rally to hit fresh record highs against the dollar.
Japan’s latest foray followed repeated warnings that its patience with the yen’s strength was wearing thin, and came just days before the Group of 20 leaders’ summit in Cannes, France.
The summit will focus on Europe’s efforts to contain its sovereign debt crisis and avoid a repeat of the financial shock that roiled markets after the Lehman Brothers collapse in 2008.
But Tokyo is keen to win G20 understanding that a strong yen[JPY=X 77.80 2.07 (+2.73%) ]is one challenge too many for an economy grappling with a nuclear crisis, a $250 billion rebuilding effort from a March earthquake and tsunami and ballooning public debt.
Japan also says investors buy the yen as a safe haven from the euro zone debt crisis and stuttering U.S. growth. It argues such demand has nothing to do with the fragile health of the Japanese economy.
“We started currency intervention this morning in order to take every measure against speculative and disorderly moves and to prevent risks to the Japanese economy from materializing,” Prime Minister Yoshihiko Noda told parliament.
The intervention came after the dollar touched a record low of 75.31 yen and pushed the world’s main reserve currency up past 79 yen.
Noda, who took over as Japan’s sixth premier in five years last month, served as finance minister in the previous cabinet and led three past interventions between September 2010 and August, including joint action with G7 partners in March 2011. The September 2010 intervention was Japan’s first in six years.
Azumi said that while Japan acted solo on Monday, he remained in close contact with his international counterparts.
Several G20 nations, including Japan’s exports rival South Korea, have intervened frequently in markets. But Japan is under more scrutiny as an issuer of one of three global currencies and does not want to be labeled as a currency manipulator.
Azumi has indicated after his past meetings with Group of Seven and G20 partners that they appreciated Japan’s special circumstances.
Still, many voiced doubts about how long the impact of the intervention would last, including Honda Motor Chief Financial Officer Fumihiko Ike.
RELATED LINKS
Japan Sounds Intervention Alarm on Strong YenBOJ Eases Policy With Eye on Yen, Europe CrisisJapan Missed Its Window to Revive Economy: Expert
A dollar at 79 yen is helpful, Ike said, but he wanted the dollar to rise to at least 80 yen. “Frankly, my reaction was: ‘finally, they intervened.’ But I’m also aware that a solo intervention has a limited impact,” he said. “Will we be able to keep these levels” I’m not at all hopeful.”
Takuji Okubo, chief economist at Societe Generale in Tokyo, said the government’s goal appeared to be to halt the yen’s further gains rather than weaken the currency and saw the yen resuming its climb sooner or later.
“I do think this is one of many interventions to come,” Okubo told Reuters Insider.
Some, however, said Monday’s action that followed Bank of Japan’s monetary easing last week, could keep the yen off its peaks for quite some time.
“It was very good timing. The BOJ has prepared the ground by easing last week. Speculators’ yen-buying position has piled up, and intervention is most effective in such cases,” said Yunosuke Ikeda, senior FX strategist at Nomura Securities.
BOJ Governor Masaaki Shirakawa was also hopeful the intervention — conducted by the central bank on behalf of the finance ministry — would have an impact.
“The BOJ strongly hopes that such moves will lead to currency market stability,” he said in a speech.
Persistent Intervention
Azumi would not comment on the size of the intervention, but one trader said the authorities were intervening “quite persistently”.
“My sense is that they might not quit very easily,” a trader said. The amount of intervention could match the 4.5 trillion yen ($59 billion) Tokyo sold on Aug. 4 in its biggest single-day intervention so far, said Mitul Kotecha, head of global currency strategy at Credit Agricole.
Even though the yen’s exchange rate measured against a trade-weighted basket of currencies and adjusted for inflation is not far from its 30-year average, its dollar rate is much stronger than that used by Japanese exporters in their earnings projections.
That has led to a flurry of warnings from car makers, electronic firms and others that they might have no choice but to move more production abroad to cope.
Chipmaker Elpida warned it might have to move production overseas and Honda’s chief executive said earlier this month that the company would half exports from Japan over the next decade because of the strong yen.
Last Thursday, acting in part out of concern that such “hollowing out” of the industry could derail Japan’s recovery, Japan’s central bank eased its monetary policy by boosting government bond purchases.
Japan’s economy has been recovering from its post-quake recession with companies swiftly restoring production and supply chains and Tokyo has counted on reconstruction spending and robust emerging markets demand to sustain the momentum.
However, the yen’s pressure on exporters’ earnings and slowing global growth spurred them to act to prop up the recovery.
Copyright 2011 Thomson Reuters. Click for restrictions.
What Prechter of Elliottwave Theory is Saying
The markets may be peaking soon
Dji 2011-10-27_0520
Analysis from www.Elliottwave.com
SPX 2011-10-27
Markets May Start Going Down
We have seen the stock markets around the world go up since Oct. 4 on the BACK of HOPE from Europe.
In fact in the month of Oct we have had the largest gains in DJI, S&P and Nasdaq in over 20 years.
This rally looks very similar to what happened in 2008.We may be ending this rally and we may start the largest decline starting now or within the next one or two months. It is better to be early than late.
Europe is in more trouble than people can imagine. It requires approval from 17 countries to get any
major improvements and it will not happen.Eventually all of us have to pay the pied piper.
In US , the can has been pushed down the road too long. The states in USA owe more than 4 Trillion
Dollars in debt. They will not solve this problem merely by cutting jobs.Many Cities will declare bancruptcy.
DJI Till May 24, 2011
Nasdaq Till 102411
On September 23, 2011 we predicted that stock markets in USA will hit a new low and it will be followed by a big rally. The DJI made a low on Oct. 4 and has had a 1500 point rally from a low of 10400 to 11930 yesterday. We now believe a decline will happen like you have not seen in a long time.No matter how much the Fderal Reserve tries to manipulate the markets, they will not succeed. It is like pushing on a string.
The public will turn increasingly negative and we will have riots here like we are having in Europe as we predicted in our book “Dodging The Depression”
Here is the chart from 2007 to 2011 & future
DJI 2007 to 2011
SIGNS of Extreme Crisis Everywhere
Bill board Signals of Collapse By Jim Willie CB (www.GoldenJackass.com)
” Wow!! The billboard signals of extreme crisis are overwhelming. Three years of near 0% with no recovery. A full year of ample US Treasury and mortgage bond monetization with no recovery. Tons of cash aid deliveries to the big US banks with no recovery. Some key corporate nationalizations with no recovery. Oodles of errant stimulus programs with no recovery. Some important misdirection in home loan aid initiatives with no recovery. The US Federal Reserve admits it can do nothing more as a recovery remains elusive. The US Govt is paralyzed by disguised fascist warmongers opposed by disguised marxist collectivists, but intent on maintaining the status quo among bank fraud. An approved accounting fraud directive is kept in place to present a picture of bank solvency. Intermediate credit markets have come to a standstill. The US stock market is in tatters. The US Treasury Bond market is the only conventional rally at work. And with all these programs, developments, and events, the US Economy moves toward a recession with relentless determination and purpose, In today’s age of lying about price inflation by at least 5%, that means the recession is about to turn into a Minus 5% Recession after never exiting the recession recognized in 2009. The billboard messages are dire, ugly, dreadful, dangerous, and full of destruction, typical of systemic failure. Too bad the Keynesian textbooks do not have a chapter on banking system insolvency, or one quarter of the households living in negative equity, or central bank toxic paper pits, or global currency war, or confiscation of tyrant accounts. The ineffective monetary & fiscal policy has ushered in the nightmarish systemic failure. That is what is occurring.
MANY DIRE MARQUEE MESSAGES
Big US banks remain insolvent. The claim is greater financial health versus 2008, but only because they grade their own balance sheet assets and shove much toxic paper to the USFed. As credit engines, they sputter. As USTBond carry trade mechanics, they hum along. Their REO home inventory is strangling them.
Central bankers finally see the futility of attempting to recapitalize the giant insolvent hollow trees called the big banks. The banks are losing capital faster than they can take in new capital, either from gifts by central banks (toxic bond redemption) or secondary stock issuance (long gone opportunity). BIG BANK RECAPITALIZATION RECOGNIZED AS FUTILE.
The US housing market is stuck in quicksand. Low mortgage rates mean nothing to home loan applicants who must pass very strict FICA tests. They mean nothing to home loan applicants who must refinance their loans or default, suffering under the weight of negative home equity. RESUMED HOME PRICE DECLINE IN THE LAST FEW MONTHS DESPITE FALLING MORTGAGE RATES.
The USFed enjoys falling long-term rates since their credit assets rise in value. That makes the central bank look less broken. They cannot send back the so-called Excess Reserves to the big banks (actually Loan Loss Reserves) since the central bank would look more wrecked. USFED BALANCE SHEET WORTH OVER MINUS $1.3 TRILLION.
The Shadow Banking system requires $1 trillion per year in replenishment, as the bone marrow rapidly vanishes within the US banks. Mortgage bonds and asset backed financial products lead the way in colossal erosion on their balance sheets. QE3 PROGRAM NEEDED JUST TO AID THE FALLING CAPITAL IN THE GREAT DE-LEVERAGE PROCESS.
USGovt budget process has turned into tragic comedy in a powerful stalemate. The emphasis has been on spending austerity and management of the debt limit. The reality is that the limit has been reached again, probably breached. The reality is that renewed spending for urgent economic stimulus will overwhelm any budget prudence. A WORSE $2 TRILLION USGOVT DEFICIT SET FOR NEXT YEAR.
The US leaders have squandered time, money, and political capital. They have missed the opportunity for reform and remedy. Devotion to bank redemptions and avoidance of liquidation have wasted money. Vacant vapid stimulus programs have wasted time. The nation has run out of time. Breakdown and panic have begun in earnest. The political arena has a closed door toward well conceived actions. THE POLTICAL ARENA AS GIGANTIC OBSTRUCTION TO THE USECONOMY, WITH MASSIVE DEFICITS ACTING LIKE CLOTS.
The central bank franchise system is being recognized for its failure, ineptitude, helplessness. The system is saturated with debt. The solution to treat the excess of debt is to add to the debt levels and to let loose the dogs of monetary hyper-inflation. CENTRAL BANKS SEEN AS PART OF THE PROBLEM, MAKING CONDITIONS WORSE.
A bank run has begun in Europe, with epicenter in France. The land of France belongs among the PIGS nations, since the big French banks are the primary broken shepherd creditors for the PIGS. They hold more than all the other nations combined almost in Greek debt. They own huge levels Italian debt. Siemens and Lloyds have abandoned France, yanking money out. A BANK RUN IN FRANCE GATHERS SPEED TO MAKE A CRATER IN EUROPEAN BANKING SYSTEM.
China had been gobbling up PIGS sovereign debt bought at discount. They took a truckload from Greece and Portugal, in return for consideration on key conversions of assets or gold bullion. They are in talks with Italy. But they have a different treatment for France, pulling out of the currency market forward and swap contracts in trading lines for the benefit of French banks. China is angry about the European Union decisions against a market economy. CHINA HAS BECOME A PLAYER IN EUROPEAN BANKING TO BE RECKONED WITH.
The Competing Currency War spreads like wildfire, still not properly recognized, seen as isolated actions by central banks. Nations like Brazil and Switzerland suffer from a rising currency, as their export trade is damaged on higher prices. Rate hikes backfire. Nations whose currencies are falling have seen an associated steep decline in business investment and seizures in the interbank lending. Rate cuts do not address insolvency. ALL NATIONS LOSE IN THE CURRENCY WAR.
Central bankers met in Poland to address the worsening chronic global financial crisis. They agreed on nothing except they despise US Treasury Secy Geithner. The European bankers believe the Financial Stability Fund for bailouts is adequate, a very wrong view. THE EURO BANKERS FEEL HELPLESS LIKE THEIR AMERICAN COUNTERPARTS.
Grandiose aid to PIIGS nations failed to halt their momentum into the pits. A ripe $360 billion in collective aid failed to put these broken nations on a proper footing off cloven hoofs. The aid was actually bank aid to the Central European and London bankers. The key is the Poison Pills forced down the PIIGS throats in the pigpen. Now comes a string of sovereign debt downgrades, extending to Italy. NO REMEDY TO THE PIIGS NATIONS SINCE THE ENTIRE AID PROCESS IS MISDIRECTED.
The USFed does not comprehend the principles of capitalism. They believe that the USEconomy is driven by disposable cash in consumer hands, and by stock market investment trickle down. Economists and banking officials are ignoramuses one and all. The reliance upon Panhandle Doctrine for consumers and Parasite Doctrine for banks has killed the nation. THE UNITED STATES LOST ALL CONCEPT OF CAPITAL FORMATION.
The deep acceptance and tolerance of constant war and preoccupation with security has led to $2.5 trillion in squandered war costs and $600 billion in squandered security agency costs. The United States embrace of Fascism has killed the nation. HALF THE USGOVT DEBT FROM WAR, HALF THE USGOVT DEBT FOREIGN OWNED, AN ENTERPRISE DIRECTED AT DESTRUCTION.
The USDollar is losing its secure status of global reserve. The Chinese Yuan is expanding in bilateral trade accords and supporting currency swap facilities. The London bankers aid China in creating viable off-shore Yuan trading centers. Times are really bad when even Nigeria diversifies away from US$-based assets. THE CHINESE YUAN TO BE CONVERTIBLE IN A COUPLE YEARS AHEAD OF SCHEDULE, A GREAT CHALLENGE TO THE USDOLLAR.
Raids on foreign national accounts continue unabated. The funds in Egypt were taken ($60 billion) as London offered sanctuary, while Mubarek faces a bizarre court procedure for murder and theft. The funds in Libya were frozen ($90 billion) as the US, London, and Europe did confiscations through freeze, but give assurance that it will be returned when the stated 348 requirements are met, as in never. US & ANGLO BANKS SO DESPERATE FOR CASH THAT THEY TAKE IT FROM DESPOTS, AS NATIONS ARE DISRUPTED AND THE FIRE OF WAR IS LIT.
The entire system from numerous different corners attempts to translate the list of ailments into simple terms of confidence and volatility. The actual watchwords are insolvency and deterioration, with momentum gathering toward systemic collapse. The implication is that the monetary system is breaking down. THE CRITICAL CATCH PHRASE IS CONFIDENCE, THE MAIN REQUIREMENT TO A FIAT PAPER BASED MONETARY SYSTEM.
The interconnection of financial firms extends within continents and across the vast oceans to render them tied to the same global fate. If one big bank fails, or one nation fails, then the contagion will be rapid. GREECE PUSHED THE WESTERN BANKS TO THE EDGE, BUT ITALY AND FRANCE PUSH THEM OVER THE EDGE.
The central banks of Shanghai Coop Org (SCO) member states, observer states, and dialogue partners are almost all purchasing gold, overtly or covertly. Or else they are demanding the return of their gold bullion from the US & London centers. The latest demand was from Chavez of Venezuela. Russia is accumulating gold, shutting off its export. China is accumulating gold, making citizen ownership easier. SCO LEADERS IN RUSSIA & CHINA ORCHESTRATE A POLICY TO ACCUMULATE GOLD AND PRESSURE THE WEST.
The rally to ruin is in the USTreasury Bond market. Despite the downgrade slapped on the USGovt debt by Standard & Poors, the long-term bond yield has fallen well below the benchmark 2.0% level. It is under 1.8% today. The official government bond market is crowding out the business credit market. The end of the road is around 1.5%, at which point little if any profit potential will be perceived. The role of Interest Rate Swaps is critical, but not well understood to start a phony process that the public joins. The machete slices doled out to the saving community in puny interest yield is harsh and cruel. Gold will be seen as taking in diverted profits from USTreasury Bond proceeds. END OF USTREASURY CARRY TRADE IS NEAR, AS BIG BANKS TO BE FORCED TO FIND ANOTHER EASY MONEY RIGGED TABLE”
