Tears For Japan Will Lead To A Boom

The fears that this will be devastating to the global economy are overblown...

Japan was already in a world of hurt, financially speaking. Their tremendous deficits are estimated at over 210% of Gdp, and the world was no longer turning a blind eye as every person from traders to the prestige agencies were essentially putting them on notice. However, now the Japanese government has an excuse to borrow and spend and will be given consent to do so. They will be required to borrow trillions to heal their infrastructure...and who would fault them. Sure, it will only growth their debt load and generate a worse economic situation years down the road, but investors and the financial markets do not look that far. The fact of the matter is that trillions will be spent by the government which will put citizen to work and indubitably be a boom for Japan, albeit a mini one, and they will be given a hall pass to do so.

News From Japan

The bigger photograph is that we are naturally in the middle of a restorative phase in this bull shop rally (within a larger cyclical bear market), and this could very well be the capitulation that pushes the sellers over the edge (exhausts supply). As I have said in previous client newsletters, corrections come from the evil that you do not know and are not ready for. The world events of the last month indubitably qualify as that! A correction needs about 5-7% to ease the excesses. We only had about 2-3% following the Mid-east turmoil. With this new crises we now have gotten to the 5 ½% level, which is probably enough. The stock shop has absorbed the worlds new meltdown (yes, pun intended) resoundingly well and should resume the uptrend shortly.

My bigger fear will come when the Federal retain ends its easing programs. The shop is indubitably addicted to stimulus and absent of government intervention, the economy could indubitably roll back over. My best guess is that Bernanke will end the program and see what happens. When the stock shop sends a message to Bernanke by selling off like it did last time, he and the Fed will be military to found Qe3 or something of a distinct name.

Please understand, I do not intend to be cold or indifferent to the tremendous suffering going on in Japan, my heart goes out to them. I am naturally trying to take a top-down tactical (Tdt™) investing arrival to this situation.

Tears For Japan Will Lead To A Boom

Friends Link : todays world news headlines