Hands Up Who Thinks Things Are Worse Than Great Depression

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Apparently the following , (click on the the links for their comments)

Check out full story at ZeroHedge.


Japan In worse Shape Than Greece

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Originally reported by Bloomberg is the admission by an official at the Ministry of Finance that Japan is in worse shape than Greece. More disturbing is the line about Japan being extremely vulnerable to energy price rises. I think we all know where they are going when you look at the prospect of war in Syria and Iran this year.

In a stunning turn of events, a Japanese Ministry of Finance official admits to Richard Koo’s worst nightmare “Japan is fiscally worse than Greece“. Bloomberg is reporting that, at a conference in Tokyo, Yasushi Kinoshita says Japan’s 2011 fiscal deficit was up to 10% of GDP and its debt-to-GDP has soared to over 230%. What is more concerning is the Kyle-Bass- / Hugh-Hendry-recognized concentration risk that Kinoshita admits to also – with a large amount of JGBs held domestically, the Japanese financial system is much more vulnerable to fiscal shocks (cough energy price cough) than Europe. Of course, the market is catatonic in its reaction to this – mesmerized by the possibility of buybacks and hypnotized at big-banks-passing-stress-tests – though we do note the small reverse stronger in USDJPY has reversed as this news broke and the USD pushes modestly higher.

Source: ZeroHedge

Spain’s Woes Caused By Euro

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Spanish economist Dr. Manuel Balmaseda gave an interview with RussiaToday outling the problems Spain find itself in and relates it to its membership of the euro. The key points are:

ECB set interest rates for core of Europe but too low for Spain.

Cheap money created a real estate bubble and brought in many unqualified immigrants.

When crisis happened, the real estate bubble collapsed causing the economy to collapse.

The cuts now won’t make a difference, it’s the euro that’s causing the problem.

There is about 6 – 9 months of goodwill left in the country after that the people will feel deceived when they realize that reality doesn’t meet their expectations.

Spain’s future does not lie in the euro zone, same for the PIGs.

Spain’s exit from eurozone is a political problem. Of Spain’s’ foreign debt of €900 billion, about half is owned by France and Germany so they don’t want Spain to leave the euro. Because if you leave the eurozone you must default.

It’s very simple, if I am a bank and you owe me money, then “STOP EATING, TAKE YOUR CHILDREN OUT OF SCHOOL AND PAY ME BACK”.

Devaluing is the solution and long as you make other structural changes also, but you can do nothing if you don’t devalue.

Politicians have FALSELY said if you leave the euro you are out of the EU.

In Spain nobody is aware that the crisis is caused by the euro and lack of competitiveness it brought. The banks and media blame overspending by the administration, although that didn’t help.

Its economics 101, if you have these countries in trouble and force cuts, this will cause them to go deeper into recession. You will never reach the goal of closing public deficit because the cuts keep reducing your income.

For full interview click here.

MISH wrote further about Spains worsening economy

Conditions in Spain have deteriorated at a rapid pace. As little as a few months ago the Spanish economy was foolishly projected to grow at .7%. Now it expected to contract 1%.

Likewise, Spain’s budget deficit was supposed to shrink to 6% in 2011 and 4.4% in 2012. Instead it rose to 8.51 percent in 2011, up from a revised estimate of 8.2% which was up from a revised estimate of 6.5%.

Spain must explain soon to the European Commission why its 2011 budget deficit was substantially higher than expected and deliver clear future budget plans, the Commission said on Tuesday.

Spain’s 2011 budget deficit came to 8.51 percent of GDP, the finance minister said on Monday, up from early estimates of 8.2 percent and far above forecasts from the Commission for something nearer 6.5 percent.

Specifically, Spain’s budget deficit is 91.3 billion euros, 8.51% of GDP. So it should not take a wizard to realize the simple mathematical fact that team Rajoy has not yet begun with budget cuts and tax increases, if by 2012 Spain is to meet the 4.4% of GDP deficit target set by creditors.

The measures announced in December were only an appetizer. Instead of sharpening the blades, I think a good lawn mower would be more practical.

The announced cuts and tax increases of last December (income tax, capital gains), are expected to generate about 14,900 million.

To meet the objective of a 4.4% deficit, in 2012 the government deficit should not exceed 46,500 million euros.

To do so requires a nearly 30 billion euros hole to be filled, with the aggravating circumstance that it’s now March and those 30 billion euros need to come in the next 9 months.

This figure is double the cuts and tax increases approved last December. So Rajoy has quite imagination if he expects this to happen.

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