http://investmentwat...-cant-go-lower/
1929-like Crash Warning: The market totally IGNORES the reality and the interest rate can’t go lower!
October 5th, 2010
1929-33 depression was the same—numerous rallies. Everyone was buying because they knew the market will go up and there was few or no sellers in the market. It was a crisis warning.
1) Zero interest rates back in Japan
“TOKYO — Japan’s central bank cut its key interest rate to virtually zero in a surprise move Tuesday and is looking to set up a $60 billion fund to buy government bonds and other assets as it tries to inject life into a faltering economy.
The Bank of Japan’s nine-member policy board voted unanimously to set its overnight call rate target to a range of zero to 0.1 percent, returning to zero rates for the first time in more than four years.”
2) Swiss Franc Strengthens Against Dollar on Bernanke’s Signal on More Easing
“The Swiss franc strengthened against the dollar after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank’s first round of asset purchases improved the economy and that further buying may help more.
The franc continued a three-day appreciation versus the U.S. currency and reached a record. Bernanke said further asset purchases, or quantitative easing, by the Federal Reserve has “the ability to ease financial conditions” and praised the earlier round of stimulus as an “effective program.” Swiss inflation held at the lowest in almost a year in September.”
………………2A) Bernanke calls for tougher budget rules
“WASHINGTON (MarketWatch) — Federal Reserve Chairman Ben Bernanke called on Congress on Monday to adopt tougher budget rules even as the nation’s top central banker warned against taking deficit-cutting action too soon.
Still, Bernanke also warned against tightening too quickly and reportedly said more asset purchases by the Federal Reserve could help the economy.”
……………….2B) Fed boss: More securities buys could help economy
“PROVIDENCE, R.I. — Federal Reserve Chairman Ben Bernanke said Monday that the economy could be helped by another round of asset purchases by the central bank.
Bernanke’s comment reinforces analysts’ beliefs that the Fed is likely to take action at its next meeting Nov. 2-3.
The Fed is considering launching a new program to buy government debt, a move aimed at driving down rates on mortgages, corporate loans and other debt. It’s wrestling with how much it should buy.
“I do think the additional purchases — although we don’t have the precise numbers for how big the effects are — I do think they have the ability to ease financial conditions,” Bernanke said during a town-hall style meeting here with college students.”
3) US deficit is ‘real and growing’ threat: Bernanke
“WASHINGTON — Federal Reserve chairman Ben Bernanke called for quick and decisive steps to rein in the exploding US budget deficit, warning failure to act could result in a serious crisis.
Warning that surging annual deficits presented a “real and growing threat” to the US economy, Bernanke told an audience in Rhode Island that a day of reckoning would come if action is not taken.
“The only real question is whether these adjustments will take place through a careful and deliberative process… or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.”"
4) Illinois Deficit Forecast Grows as Financial Ills Deepen, Comptroller Says
“Illinois’s financial situation “continues to deteriorate,” according to Comptroller Daniel Hynes, who cited a 36 percent surge in bills from the past fiscal year that will be paid from current-year revenue.
The $6.4 billion in 2010 obligations that must be paid with 2011 revenue is $1.7 billion more than the $4.7 billion owed on June 30, when the fiscal year ended, Hynes said today in a report. The state also has accumulated $3.5 billion in obligations for 2011, he said.
The amount of unpaid bills for the current year may balloon to $8 billion by June 30, Hynes said. The state by then may be facing a $15 billion “working deficit” for fiscal 2012, he said, with prolonged payment of current debts “creating chaotic fiscal conditions as the situation snowballs.” ”
…………………4A) Illinois Pays More Than Mexico as Cash-Strapped States Sell Bonds Overseas
5) New York Pensions Set Return Expectations Too High, Mayor Bloomberg Says
“New York Mayor Michael Bloomberg said city pension funds have set unrealistically high assumed rates of return on investments, at 8 percent, which may require spending more than has been budgeted for retirement benefits.
“It’s much too high an assumption for us, I think it should be lowered,” Bloomberg said today at a news briefing, referring to the city’s five pensions holding almost $104 billion. “That’s going to require the city to put in more money. It’s very difficult to see where we could get the money to do that.”
The city, which must balance its budget or face a state takeover of operations, has to close a $3.3 billion budget gap projected for fiscal year 2012, which starts July 1. The deficit is forecast to grow to $4.8 billion in 2014, while officials expect pension costs to increase to $8 billion that year from $7.6 billion now. Last month, the state pension fund cut assumed returns to 7.5 percent from 8 percent. ”
6) EU urges faster yuan rise; China demurs
“BRUSSELS, Oct 5 (Reuters) – Euro area policymakers pressed
China on Tuesday for a faster appreciation of its currency to
help rebalance the world economy but said Chinese Prime Minister
Wen Jiabao had differed with them. The chairman of euro zone finance ministers, Jean-Claude
Juncker, told a news conference after talks with Wen in
Brussels: “China’s real effective exchange rate remains
undervalued.” He said the 16-nation European currency area had urged an
“orderly, significant and broad-based appreciation” of the yuan. Asked how Wen had responded, Juncker said the message came
as no surprise to the Chinese delegation, but added in French:
“The Chinese authorities do not share our view.” The United States and the European Union accuse China of
keeping the yuan articifically low to boost exports, undermining
jobs and competitiveness in Western economies.”
…………………..6A) Chinese Premier Blasts US for ‘Politicizing’ Trade Deficit
7) Moody’s puts Ireland on review for rating cut
“LONDON (MarketWatch) — Ireland’s Aa2 credit rating is on review for possible downgrade, Moody’s Investors Service announced Tuesday, citing the rising cost of recapitalizing the nation’s crippled banking sector, as well as an uncertain domestic outlook and rising borrowing costs.
“Ireland’s ability to preserve government financial strength faces increased uncertainty as a result of three main drivers, which together would further increase its debt and aggravate its debt affordability,” said Dietmar Hornung, the ratings agency’s lead sovereign analyst for Ireland.”
Residents afforded chance to speak on Pittsburgh’s pension woes
“Beginning tonight at the first of six public hearings, Pittsburgh residents get a chance to have their voices heard on proposals to increase funding for the city’s pension system.
Doing nothing would allow the state to assume control of the system.
“They’ll hear the pros and cons, the good and the bad,” City Council President Darlene Harris said. “We need to do something, and the residents should be a part of our decision.”
The pension funds contain 27 percent of $1 billion in obligations for 8,000 active and retired city employees. The funds must have 50 percent by the end of the year to avoid a takeover.”
9) Economic boom times are over, Flaherty says (Canada)
“OTTAWA—Canada’s economic boom times are over, Finance Minister Jim Flaherty says.
“We’re in a different world today,” he said Monday, following a meeting with private sector economists.
In a blunt assessment, the usually optimistic Flaherty said Canadians need to rein in their hopes for the economy.
“This is not a time of booming economic growth, it’s a time of modest growth and there needs to be some adjustment of expectations.
“We’re not going to see the boom times that we saw before in the shorter term,” he said.
He said Canada’s prospects are being held hostage by the weak, uneven economic recovery in the rest of the world. “We’re in a time of high uncertainty, particularly with respect to the United States’ economy,” he said.”
10) California Has to Delay Bills to Avert IOUs, Controller Says
“Oct. 4 (Bloomberg) — California may have to issue IOUs unless lawmakers agree to delay paying some of the bills that accumulated as Governor Arnold Schwarzenegger and legislative leaders negotiated a budget compromise, a spokeswoman for the controller’s office said.
The deferrals are needed because California racked up $8.4 billion of delinquent bills as it operated without a spending plan for more than three months, said Hallye Jordan, spokeswoman for Controller John Chiang. That’s more than the $5 billion bridge loan Treasurer Bill Lockyer is lining up from a group of Wall Street banks to tide the state over.”
11) Treasury Sees U.S. 2010 Budget Gap at Almost 10% of Gross Domestic Product
“The U.S. government’s deficit in the fiscal year 2010, which ended Sept. 30, will be almost as big a share of the economy as the $1.4 trillion 2009 shortfall, a U.S. Treasury official said today.
“Due to the deep economic recession, there has been a large imbalance between revenues and expenditures, which caused the fiscal deficit to reach nearly 10 percent of GDP in fiscal year 2009,” said Mary Miller, assistant secretary for financial markets, referring to the economy’s size as measured by gross domestic product. “We expect this year’s deficit to be a similar or slightly lower percentage of GDP,” Miller said.
Miller also said that the Federal Reserve’s decision to purchase Treasury securities in the secondary market will not affect debt management. She spoke in the text of remarks prepared for a Futures Industry Association conference in New York.”
12) Perth mint inundated as gold price soars
“DEMAND for gold investment products at the Perth Mint has risen as much as 25 per cent in the past month.
The demand follows the yellow metal continuing its bull run to new record highs.
“When the gold price soars we get inundated. We would have seen a 25 per cent increase in business just in the past month,” said Perth Mint Depository treasurer and manager Nigel Moffatt.”
13) Debt woes dealt setback to financial stability: IMF
“(Reuters) – The International Monetary Fund said on Tuesday that sovereign debt risk in Europe and continued real estate woes in the United States have dealt a setback to global financial stability in the past six months.
The IMF said risks to the financial sector could be reduced if legacy problem assets were cleaned up, if governments improved their fiscal positions and if more clarity were provided on global financial regulation.
“The global financial system is still in a period of significant uncertainty and remains the Achilles’ heel of the economic recovery, the IMF said in its semi-annual Global Financial Stability Report.
“The recent turmoil in sovereign debt markets in Europe highlighted increased vulnerabilities of bank and sovereign balance sheets arising from the crisis,” the fund added.”
14) Headed for a Depression?
“[This chart] depicts how the stock market over the last year and a half has followed a path eerily similar to that of 1937. This week corresponds on the chart to mid-August 1937, when the cumulative effects of massive hikes in personal and corporate tax rates, severe monetary tightening, and aggressive business-bashing by the Roosevelt administration tipped the economy into the “depression inside the Depression.” From there, stocks were in for the longest and second-deepest bear market in history.”