posted on Jun, 6 2013 @ 03:28 AM
First, I just want to say all of these clowns calling for a collapse of the market have been calling for it from the bottom all the way up through one
of the biggest rallies ever. They have zero credibility, and want to scare you. Eventually they will be right, but their voodoo bull# reasoning will
have nothing to do with it. I am talking about Peter Schiff and other Doom and Gloom Analysts that pick a position, are wrong for 10 years, then when
something finally happens they claim to be some kind of prophets.
As a full time trader, I make no decisions or trades based on fundamentals. If you are trading interday, "news" and fundamentals do not determine
where the market goes, they just send it there faster. That being said, I still stay informed on real possible issues.. Not CNBC talking points.
99.999% of everything you hear does NOT matter. Then there is the Japanese Bond Market. That is the only domino to watch, in my opinion. Japan just
started running a negative account balance recently, at a time when their majority bond holders(Japanese Seniors) are dying, and the population
decline in Japan is not providing new suckers to buy into the bond market(definition of a pyramid scheme). They are desperately trying to find people
to buy their debt. They are even advertising it in taxi's. How weird is that? So the Bank of Japan has been buying absurd amounts of its own bonds.
The most toxic asset on earth!!!
Japan is dealing with two lost decades now essentially. The Nekkei is down 75% in that time, Real Estate has fallen by about 75%. Japan Crossed 1
QUADRILLION yen. If you tried to count to 1 quadrillion, assuming each number took about a second, it would take you about 31 million years to get
there. Just to put this massive number into perspective. If the US's fiscal situation is "#ty", Japan's situation went far beyond ridiculous years
From 1998 to 2005, Japan issued more debt than it has ever issued on an annual basis in its history. As they issue more and more debt, their
expenditure for interest has grown to roughly 11 trillion yen! To put that in perspective, their central government tax Revenue is roughly 40 trillion
yen. They spend a quarter of their tax revenue on interest alone, today, and that's when it is almost free! Their rates have been essentially zero
for over a decade. They ARE in the zone of insolvency. They have really passed the zone of insolvency. Japanese Debt stock is about 24 times their
central government tax revenue. They are trying to achieve a 2% inflation target now, and if they have success in that area they are finished. Every
hundred basis points of cost of capital costs them 11 trillion yen. a 200 bp move would actually send their annual debt servicing above their central
government tax revenue.
For the fifth year in a row, they're going to be spending about twice what they make.They project about 46 trillion revenue this year, with an
expenditure with all of their stimulus being projected at 101 trillion yen this year.
Now, imagine my concern that the Japanese Government Bond market has tripped the circuit breaker like 6 times in the last month. If the Japanese Bond
market goes, the US is next, then everything.
I'm fairly convinced this WILL happen, at some point. This is the catalyst for the next "crash". But markets can remain irrational far longer than
you can remain solvent. So called analysts who have been predicting the end of the world through the massive rallies lately are selling you fear, if
they were putting their money where their mouth was they'd have none.