muses of the moment

June 22, 2012

Jim Sinclair

Jim had some good news links on his In the News Today post this morning if you haven’t already read it. Click here. Lots of uncertainty out there.

It is looking more and more like a European Banking crisis will trigger the next global systemic crisis. Any crisis will happen more quickly than in 2007-2008. Investors have a heightened sense of losses now. They will not “wait and see” as some did last time around. They know that nothing has fixed the possibility of another systemic breakdown. Be prepared, anything could start the ball rolling again.

Charting the global debt

Filed under: Global Debt, Odds 'n ends — totallygroovygirlfriday @ 11:21 am

The free Chart of the Day is kind of interesting. Click here.

This leads to a very interesting case study that is Japan. With a debt to GDP ratio of over 200%, the Japanese 10-year bond yield is a relatively low 0.83%. Why? At the moment, the bond market feels that the Japanese have the ability to repay their debts — in part due to Japan’s perceived ability to raise taxes.

So it’s not just the amount of debt but also convincing your banker that you are good for it.

Groovygirl has a couple of comments regarding Japan and this chart in general. Martin says Japan may to next debt crisis point. This chart illustrates it is all a confidence game.

And how does a country that is importing most of their electricity, raising energy costs on their people, in the middle of an economic decline because of the natural/man-made disasters, raise taxes on their people? Japan also has the same problem as the US: an older population. Hard to get more money from people on a fixed income or unemployed.

Side musing: gg still stands by her call regarding a low in gold at around $1550, stumbling along the bottom ($1550-$1650) until the fall of 2012 when it starts to rise again. As you know, this is what gg is doing, and she buys physical gold (and silver) to hold long-term. She doesn’t trade, so she is not concerned with the volatility. You are responsible for your own investments.

John Williams on financialsense.com

Financialsense.com has changed their free format a little. You have to purchase the Newshour insider’s audio during the week, click here.

However, the summary paragraph is very enlightening (bold is gg’s):

Jim welcomes back John Williams from Shadow Government Statistics. John sees no real economic recovery, as his work shows the government is understating the inflation rate, which overstates the already feeble GDP. John can’t see a way to avoid the hyperinflation scenario for 2014. He believes the real US budget deficit, on a GAAP accounting basis, is over $5 trillion per year, heading to $6 trillion. He also notes that real wages have been declining since the 1970’s, and the Net Present Value of all future government liabilities now exceeds $100 trillion.

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