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Special Report: The deeper agenda behind "Abenomics"
- (www.reuters.com) When ill health and political
gridlock forced Shinzo Abe to quit after one dismal year as Japan's prime
minister, his pride was dented and his self-confidence battered. One thing,
however, was intact: his commitment to a controversial conservative agenda
centered on rewriting Japan's constitution. Conservatives see the 1947 pacifist
charter, never once altered, as embodying a liberal social order imposed by the
U.S. Occupation after Japan's defeat in World War Two. "What worries me
most now is that because of my resigning, the conservative ideals that the Abe
administration raised will fade," Abe wrote in the magazine Bungei Shunju
after abruptly quitting in September 2007. "From now on, I want to
sacrifice myself as one lawmaker to make true conservatism take root in Japan." Less than six years after his
humiliating departure, Abe, 58, is back in office for a rare second term. He is
riding a wave of popularity spurred mainly by voters' hopes that his
prescription for fixing the economy will end two decades of
stagnation. The policy, known as "Abenomics", is a mix of monetary
easing, stimulative spending and growth-inducing steps including deregulation
in sectors such as energy.
Veteran fears 'beginning of the end' for Japan as bond market
buckles - (www.telegraph.co.uk) Global markets face a
witches’ brew of new risks as Japan’s monetary adventure wobbles, China slows
further and the US Fed prepares to shut the spigot of dollar liquidity. Yields
on 10-year Japanese bonds (JGBs) have doubled in a month and spiked
dramatically to 1pc on Thursday, triggering a 7.3pc crash in the Nikkei stock
index. It was the biggest one-day fall since the tsunami two years ago,
comparable with wild moves seen at the height of the Asian crisis in 1998. The
contagion effect set off a retreat from stocks across the world, though Wall
Street later pared losses. The iTraxx Crossover or “fear gauge” for corporate
bonds jumped 25 points to 392. The Bank of Japan (BoJ) intervened with $20bn
(£13bn) to drive down yields again but the failure to ensure an orderly debt
market has started to rattle investors. Banks, pension funds and insurers
appear to be dumping JGBs for fear of being caught on the wrong side of a bond
rout.
Fannie
Mae Winning at the Alamo Prompts Lender Angst - (www.bloomberg.com) Fannie Mae (FNMA) is snatching
potential profits away from mortgage lenders as it posts record earnings that are fueling industry
concern the government-backed company is regaining its swagger even as
lawmakers plot its demise. The company has ramped up its purchases of home
loans from lenders for cash, in the process cutting out originatorsfrom the more profitable
business of creating and selling bonds backed by the debt. About 31 percent of
the $305 billion in new Fannie Mae-guaranteed securities in the first four
months of this year were tied to so-called cash window purchases, almost triple
the share in early 2011, according to data compiled by Bloomberg and JPMorgan Chase & Co. (JPM)analysts’
estimates. The shift is morphing Fannie
Mae into more of a middleman between homeowners and the bond
market, a role typically played by originators or the larger banks
that buy their loans such as JPMorgan and Wells Fargo & Co. (WFC)
Analysis:
Markets face rough summer ride as Fed pullback feared - (www.reuters.com) For the past few months, the
Federal Reserve has been squarely in the financial markets' corner, thanks to its massive
dollops of monetary stimulus. But signs that the central bank is discussing
reducing that support by purchasing fewer bonds mean that trading is likely to get
bumpier in coming months. The Fed's evolving stance was made apparent by
Federal Reserve chairman Ben Bernanke's remarks to Congress Wednesday, where he
laid out the conditions that might cause the Fed to reduce its $85 billion a
month buying of Treasuries and mortgage-backed bonds.
Necessary
deleveraging and a lack of HELOC abuse is keeping the economy down - (www.ochousingnews.com) In the short term, a lack of consumer spending
is keeping the economy down. Of course, everyone looking for a quick fix
decries the lack of consumer spending and blames the consumer for our woes. It
isn’t the consumer’s fault they were given too much debt during the housing
bubble. All this excess debt is causing consumers to delverage. Some are
succumbing to their debts and declaring bankruptcy to get a fresh start. Some
are walking away from their mortgage obligations and waiting for their lender
to put them out of their homes — and their debts. Some are dutifully paying off
the excesses of the credit orgy of the 00s. The first two groups, the ones that
declared bankruptcy or strategically defaulted, now have bad credit, and their
spending power is limited to their wage income — a good thing in the long term,
but a short-term drag on consumer spending. The ones that are paying off their
debts are spending less because they are paying off their debts. With so many
people deleveraging, people simply aren’t spending like they used to.
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