Will Japan Default? – Credit default swaps (CDS) bet on the default probability of individual companies and nations. The sovereign CDS of Japan gives us the best estimation of the probability that Japan will default in the next 5 years: … At a current spread of 70 bps and assuming a 40% recovery rate , that implies that Japan has default probability of 6% in the next 5 years. … – Surly Trader
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Federal Reserve Super Low Rate Policy Crushes Savers And The Elderly – By Bill Zielinski – … The Fed’s low interest rate policy effectively represents a massive wealth transfer from savers to debtors. FDIC insured deposits of bank savings and CDs currently total $4.8 trillion and there is approximately $5 trillion in money market funds for a total of $10 trillion that is earning at best 1% compared to 5% in 2006. The drop in interest rates from 5% to 1% represents an annual income loss to savers of $400 billion dollars per year. … – Mortgaged Future
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3 great charts – Foreign Treasury Holders – What is China Doing Now? – Andrew Horowitz – TIC Data and the U.S. Current Account Deficit: Foreign Investors Still Buying Treasuries – That is what it looks like. With all of the huffing and hooting by Brazil, Russia, India and China, we are still seeing inflows. That’s important because someone has to foot the bill for all of the money that is being spent on bailing out the sinking ship know as the U.S. Economy. – The Disciplined Investor
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Chart of the Day – … the US dollar continues to trend lower. After all, a virtual collapse of the banking sector does have its consequences. For some perspective, today’s chart illustrates the current trend in the US dollar (blue line) as well as that other world currency, gold (gray line).
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Black Friday: Boom or Bust? – By Paul Kedrosky – interesting charts – hattip John Cervarich – Infectuous Greed Blog
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Big Gov’t Spending–>Big Inflation – Will all the big spending, big borrowing and big monetary expansion occurring now cause inflation once again? – Plan B Economics
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G.M. Is Taking Taxpayers for a Ride – General Motors raised more than a few eyebrows last week by announcing plans to repay what it describes as $6.7 billion in outstanding loans to taxpayers. So provocative was this announcement that it all but overshadowed the real news of the day: G.M. had lost $1.2 billion since exiting bankruptcy in July, and its fourth-quarter results were expected to be worse. – NY Times Dealbook
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Budget Gap Charts – Plan B Economics
Chart One: Outlays oustrip receipts by a very wide margin
Chart Two: USA Inc. is increasingly reliant on creditors
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Should America worry about its deficit? – THE easy answer is yes, America should worry about its deficit. The hard question is how much should it worry about it relative to other potential problems. Tyler Cowen attempts to make the case that the deficit should be given some priority: The Economist Free Exchange
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The Ides of March and the Fed exit strategy – the author puts forth a way that the Fed’s huge expansion of money supply could be unwound. – Bronte Capital
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Another V-sign – Scott Grannis – … Back to the chart above. What it shows is that the downturn in spending has been much deeper (with the negative growth lasting longer) than in other recessions. But it also shows that the turnaround has been just about as sharp as in other recessions, hence my claim that this is a V-sign. … – (goes into how this recovery will be different with cautious optimistic overtones) – Calafia Beach Pundit