Japan stocks jump as rest of Asia falls

HONG KONG (MarketWatch) — Japanese stocks extended their rally Friday as the promise of unprecedented monetary stimulus spurred a fresh wave of buying, with the property sector and exporters leading the advance.

Their performance contrasted sharply with deep losses in other regional markets as investors digested an increase in U.S. jobless claims and awaited key employment data later Friday. Stocks in Hong Kong were also hit as airlines and some other sectors got slammed amid reports of deaths linked to a new strain of avian flu.

Japan’s Nikkei Stock Average JP:NIK +1.58%  climbed sharply higher for a third straight day, ending the day 1.6% higher for a weekly gain of 3.5%.

The benchmark had jumped 4% earlier in the day, sailing above the psychologically important 13,000-point level, but let some gains slip by in afternoon trading. The advance came on top of the 2.2% rally Thursday, when the Bank of Japan’s decision to unveil bold policy easing sparked a sharp swing higher for stocks in Tokyo, also spurring shares on Wall Street later in the day, despite the downbeat jobless-claims figures.

Reuters

But markets retreated elsewhere in Asia, with Hong Kong’s Hang Seng Index losing 2.4%, South Korea’s Kospi KR:SEU -1.64%  dropping 1.6%, and Australia’s S&P/ASX 200 AU:XJO -0.45%  falling 0.5%.

Stock markets on mainland China and in Taiwan remained shut for holidays.

“It was the Bank of Japan’s aggressive stimulus measures that provided the real impetus for U.S. markets. ... Given that the U.S. jobless claims data underwhelmed, there is concern the nonfarm payrolls will follow suit and add to the recent run of bearish signals. If this does occur, another sell-off is on the cards, deepening the current correction taking place,” said CMC Markets sales trader William Leys.

Japanese property shares were among the top performers after the central bank said it would buy more real-estate investment trust securities.

Mitsui Fudosan Co. JP:8801 +12.97% MTSFF +5.20%  jumped 13%, Mitsubishi Estate Co. JP:8802 +10.51%   MITEF +2.04%  spiked 10.5% and Sumitomo Realty & Development Co. JP:8830 +12.61% SURDF +12.61%  added 12.6%.

Exporters also enjoyed heavy buying, as the Bank of Japan’s moves helped the dollar soar against the yen. After topping ¥97 earlier in the day, the dollar was more recently buying ¥96.22.

Among the major exporters, Nissan Motor Co. JP:7201 +6.14% NSANY +5.47%  jumped 6.1%, Toyota Motor Corp. JP:7203 +3.35% TM +4.71%  rose 3.4% and Hitachi Ltd. JP:6501 +3.01% HTHIF -1.56%  added 3%.

Honda Motor Co. JP:7267 +0.69% HMC +5.40%  gained 0.7% despite a Kyodo News report that it was recalling more than 145,000 vehicles in Japan.

Click to Play

Japan's aggressive stimulus dazzles U.S. stock markets

The Bank of Japan's new leaders deliver on their pledge to radically overhaul the bank's monetary-policy program, helping lift Wall Street.Photo: AP.

Also joining the rally were financials, among the sectors expected to benefit from the Bank of Japan’s latest policy actions. Mitsubishi UFJ Financial Group Inc. JP:8306 +5.02% MTU +8.10%  rose 5%, while smaller lender Shinsei Bank Ltd. JP:8303 +8.12% SKLKF +7.73%  leapt 8.1%.

Among other major movers, Seven & I Holdings Co. JP:3382 +10.03%   SVNDF +4.92%  soared 10% after posting a record net profit for its fiscal year ended in February, while forecasting another record-beating performance in the current year.

Asia ex-Japan weakens

Stocks elsewhere slid lower ahead of the U.S. monthly jobs report due later in the day, with Hong Kong shares hit particularly hard as trading resumed after Thursday’s holiday.

Cathay Pacific Airways Ltd. HK:293 -4.06%   CPCAY -1.22%  dropped 4.5% amid concerns about the impact of bird-flu deaths in China on air travel. Among mainland Chinese carriers, Air China Ltd. HK:753 -9.84% AIRYY -1.84%  slumped 8.1%, China Eastern Airlines Corp. HK:670 -8.28%   CEA +1.75%  lost 6.5% and China Southern Airlines Co. HK:1055 -8.51%   ZNH +1.54%  lost 5.7%.

Energy stocks also dropped as U.S. benchmark crude-oil prices remained under $94 a barrel. Shares of Cnooc Ltd. HK:883 -3.88% CEO +0.06%  tumbled 4% and PetroChina Co. PTR +0.52% HK:857 -4.18%  lost 3.7% in Hong Kong, while Australia’s Woodside Petroleum Ltd. AU:WPL -2.03%   WOPEY -0.13% gave up 2% in Sydney.

Financial stocks were also hit outside Japan, with Commonwealth Bank of Australia AU:CBA -1.54%   CBAUF +1.74%  down 1.7%, while KB Financial Group Inc. KB -1.07%   KR:105560 -2.16%  lost 2.2% in Seoul, and China Construction Bank Corp. HK:939 -3.65% CICHY +0.27% dropped 2.9% in Hong Kong.

The weakness for bank stocks kept the Australian market in negative territory, in spite of gains for the largest miners. Helped by a rise in metal futures overnight in London, BHP Billiton Ltd. AU:BHP +1.54% BHP +0.71%  added 1.5% and Rio Tinto Ltd. AU:RIO +1.83% RIO +0.77% gained 1.8%, after the sector took a beating in the previous session.

South Korean car makers fell sharply, in contrast with the auto sector’s strong show in Tokyo, on mounting worries about the impact from a weakening yen that aids their Japanese rivals. Hyundai Motor Co. KR:005380 -4.35%   HYMTF -6.47%  sank 4.4%, and affiliate Kia Motors Corp. KR:000270 -4.69%   KIMTF -1.81% skidded 4.7%.

Samsung Electronics Co. KR:005930 -0.07%   SSNLF +0.71%  slipped 0.1%, outperforming the broader market after issuing a first-quarter forecast for a sharp rise in operating profit.

Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar. Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.

CRISIS ALERT: Companies Are Expanding Without Adding Jobs, DOW Hit Record High But Corporate Earnings Are Shrinking, And Private Clients Are Propping Up The Stock Market While Everyone Else Is Selling

Empty Walmart Shelves Show The Biggest Problem With The US Economy

Walmart customers across the country are complaining that many stores have trouble keeping items stocked.
This is being reported by Renee Dudley at Bloomberg News, who notes that the workforce has fallen by 120,000 since 2008, and that in the same time the company has added several hundred locations.
This actually speaks trend at Walmart represents a bigger problem with the U.S. economy.
Companies have expanded a lot since the downturn, but haven’t hired that many additional workers, leading to high unemployment.
Bloomberg News reportedly received thousands of emails about the empty shelves at Walmart.
Dudley interviewed Bob Shank, a Tucson, Arizona man who said his local store had “bare shelves” with “yards of empty spaces” and “few employees visible, especially at the check-out counters.”
…

Another high for Dow

Stocks held near their best levels Tuesday, with the Dow hitting a new intraday record and the S&P 500 within striking distance of its all-time high, boosted by gains in the health care sector.

	Name	Price		Change	%Change
DJIA	Dow Jones Industrial Average	14668.31		95.46	0.65%
S&P 500	S&P 500 Index	1572.22		10.05	0.64%
NASDAQ	Nasdaq Composite Index	3264.04		24.87	0.77%

The Dow Jones Industrial Average hit a fresh intraday high of 14,684.49….

Second-quarter earnings preview: Trouble ahead?

The first quarter of 2013 was one of the best first quarters on record, with the DJIA and S&P 500 both closed at new all-time highs. Corporate earnings, however, don’t appear to have fared quite as well. According to FactSet, year-over-year earnings growth will shrink by 0.7% in the first quarter, partially explaining why cyclical P/E ratios now stand near all-time highs. So a bit of caution for investors is certainly advisable.

US Markets, a Different Kind of Triple Threat: Pro

There are at least three takeaways from this first-quarter financial anomaly.
1. The U.S. economy is leading the global pack—despite fiscal headwinds. U.S. economic momentum in early 2013 positively surprised, and is greater than economic growth occurring overseas. This, in turn, is leading capital to the U.S. and supporting local assets. That same relative view of the world is also boosting U.S. yields, as investors price in tighter U.S. monetary policy over time. Consider equities: in the first quarter, global equity mutual funds and ETFs saw some $107 billion in total inflows, the strongest quarterly flow since 2000 and with capital biased towards the U.S. (EPFR Global data, including March 2013 estimates).


(Read More: Fed Keeps Easing, Not Worried About Stock Bubble)
2. The American investor remains cautious: we are a long way from needing to worry about irrational exuberance. Despite the first-quarter move towards stocks, we are not seeing similar capital shifts into other assets that would reflect a stronger cyclical view. Commodities, for instance, which should at least partially reflect demand expectations, fell more than 1 percent in the first quarter, using the Dow Jones-UBS index.
…

BofA: The Great Rotation We Almost Saw In The First Quarter Really ‘Ended With A Whimper’

Her post-mortem on the first quarter: “ Started with a bang, ended with a whimper.”
“Private clients have been the primary driver of BofAML client flows into US stocks this year, with strong inflows in January that tapered off in February and turned to net sales in March,” says Subramanian. “Hedge funds and institutional clients have both been cumulative net sellers, with outflows during all three months of the quarter.”

Bank of America Merrill Lynch

…
Smart Money buys Treasurys, Fast Money buys stocks

Small Caps momentum….Big-Time overbought, at resistance!

CLICK ON CHART TO ENLARGE
Russell 2000 broke to all-time highs a few weeks ago.  Now this key index’s relative momentum is reaching levels that has caused this index to at least take a pause over the past 7 years. 
At the same time relative momentum is overbought, the Russell 2000 is up against a line that has been in place for the past 7-years, marking several key emotional turning points.
At least, small caps are due a breather because of these conditions!  Could a breather in the relative strength winner impact the S&P 500?  Could!

Marc Faber: This Rally Will End Badly

Overwhelming Majority of Americans Want to Break Up Big Banks

50% In Favor of Directly Breaking Them Up … Many More In Favor of Stopping Artificial Support and Letting them Shrink On Their Own

A new Huffington Post/YouGov poll finds:

Sixty-one percent of respondents said that banks and other financial institutions have become too large and powerful ….

A Rasmussen poll conducted last month found that:

A new Rasmussen Reports national telephone survey shows that 50% of U.S. Adults favor a plan to break up the 12 megabanks, which currently control about 69% of the banking industry. Twenty-three percent (23%) oppose breaking up the largest banks, while another 27% are undecided.

While polls show that Democrats favor breaking up the big banks more than Republicans, many Republicans point out that the big banks would fail on their own if the government stopped bailing them out. Indeed, a Harris poll from last year shows that 87% of Republicans (87% of independents, and 81% of Democrats) are against bank bailouts.
In other words, the percentage of Americans who favor breaking up the big banks – either directly through government intervention or indirectly by pulling the plug on their artificial, taxpayer-funded perpetual-bailout life support – is in the 80%-90% range.
The Americans who don’t yet have enough information to decide whether they are for breaking up the big banks may want to note that the following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:

• Current chairman of the Federal Reserve, Ben Bernanke

• Former chairman of the Federal Reserve, Alan Greenspan

• Former chairman of the Federal Reserve, Paul Volcker

• Former Secretary of Labor Robert Reich

• Current Vice Chair and director of the Federal Deposit Insurance Corporation – and former 20-year President of the Federal Reserve Bank of Kansas City – Thomas Hoenig (and see this)

• Chief Stability Officer at the Bank of England, Andrew Haldane (and see this and this)

• Nobel prize-winning economist, Joseph Stiglitz

• Nobel prize-winning economist, Ed Prescott

• Nobel prize-winning economist, Paul Krugman

• Former Federal Reserve Bank of New York economist and Salomon Brothers vice chairman, Henry Kaufman

• Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard

• Former chief economist for the International Monetary Fund, Simon Johnson (and see this)

• President of the Federal Reserve Bank of Dallas, Richard Fisher (and see this)

• President of the Federal Reserve Bank of St. Louis, Thomas Bullard

• Deputy Treasury Secretary, Neal S. Wolin

• The Congressional panel overseeing the bailout (and see this)

• The former head of the FDIC, Sheila Bair

• The head of the Bank of England, Mervyn King

• The Bank of International Settlements (the “Central Banks’ Central Bank”)

• The International Monetary Fund

• The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz

• Economics professor and senior regulator during the S & L crisis, William K. Black

• Leading British economist, John Kay

• Economics professor, Nouriel Roubini

• Economist, Marc Faber

• Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales

• Economics professor, Thomas F. Cooley

• Economist Dean Baker

• Economist Arnold Kling

• Chairman of the Commons Treasury, John McFall

• The Director of Research at the Federal Reserve Bank of Dallas, Harvey Rosenblum

• Director, Max Planck Institute for Research on Collective Goods, Bonn, and Professor of Economics, University of Bonn, Martin Hellwig

And the head of the New York Federal Reserve Bank – and former Goldman Sachs chief economist – William Dudley says that we should not tolerate a financial system in which certain financial institutions are deemed to be too big to fail.
Federal Reserve Board governor Daniel Tarullo also backs a cap on the size of banks, and Former Treasury secretary under Reagan and George H.W. Bush, Nicolas Brady, says that we need to put a cap on leverage.
The undecideds may also want to note that many top bankers are themselves calling for a break up, including:

• Former Citi CEO Sandy Weill

• Former Citi CEO John Reed

• Former Citi chairman Richard Parsons

• Former Merrill Lynch chairman and CEO David Komansky

• Former Morgan Stanley CEO Philip Purcell

• Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London- Nomi Prins

• Numerous other bankers within the mega-banks (see this, for example)

• Founder and chairman of Signature Bank, Scott Shay

• Former Natwest and Schroders investment banker, Philip Augar

• The President of the Independent Community Bankers of America, Camden Fine

Click here for background on why so many top bankers, economists, financial experts and politicians say that the big banks should be broken up.

US Financial Sanctions Against the DPRK As the Godfather of Nuclear Tests on Korean Peninsula

A few weeks ago I was invited to comment on what I felt the change in China’s government and the Communist Party leadership will mean for the future of China and for the UN. (1) I am not an expert on China, but I have by now had the experience of observing China’s activity at the UN and particularly in the Security Council for almost seven years.
What I have observed recently, is that in some areas, like the Syrian conflict, China continues to insist on its long standing principle to support negotiations and to work toward a political settlement of the conflict. But in other areas, particularly the situation with the Democratic People’s Republic of Korea (DPRK) China has seemed to be subordinating its emphasis on the peaceful settlement of conflicts to go along with the coercive actions proposed by the US government against the DPRK. (2)
One recent example occurred when the DPRK launched a satellite in December 2012. Some members of the Security Council complained that this was a violation of a resolution forbidding the DPRK from launching a ballistic missile. Though both a satellite launch and a ballistic missile launch use a rocket to do the launch, these forms of launches are not the same.
As Professor Bruce Cumings, the noted historian on the subject of the Korean Peninsula, explained in a talk he gave at Columbia University on March 2, 2013 (3):
1. A ballistic missile needs a reentry shield
2. A ballistic missile has to have targeting on reentry
3. A ballistic missile has to have a warhead.
The satellite launch by the DPRK did not have these three characteristics. As such, the satellite launch was significantly different from a ballistic missile launch.
The DPRK submitted statements to the Security Council and to General Assembly meetings explaining that there is an international treaty recognizing all nations right to the peaceful use of space. (4) The DPRK is a signatory of that treaty. The DPRK notes that there have been many satellite launches but only their satellite launch is classified as that of the launch of a ballistic missile. This is an indication, they explain, of the hostility of the US toward the DPRK.
In this situation neither China nor any other member of the Security Council asked that the DPRK be invited to present its view of this conflict to the Security Council members as provided for in Article 31 of the UN Charter. Instead the Security Council expanded the sanctions it has imposed on the DPRK by issuing a new resolution against the DPRK, Resolution 2087( S/RES/2087(2013)), on January 22.
Instead of the members of the Security Council providing a process to engage the DPRK in negotiations, as China and other members of the Security Council had done in a few instances in the past, (5) all the members of the Security Council went along with the US government program of coercion and punishment of the DPRK.
The DPRK has explained that in response to hostile actions by the US and the use of the Security Council to support hostile action by the US, the DPRK needs to develop its nuclear defense capability. On February 12, 2013, the DPRK conducted its third nuclear test. The Security Council then issued Resolution 2094( S/Res/2094(2013)) on March 7 imposing additional sanctions on the DPRK, including a set of financial sanctions which are intended to reimpose substantial financial hardship on the DPRK. These financial sanctions are part of the focus of Resolution 2094.
These sanctions, journalists were told, were negotiated by the US and China and then accepted by the other 13 members of the Security Council. This is a process similar to that which was used in creating Resolution 2087 punishing the DPRK for launching a satellite.
There is prior experience with what the US puts forward as its use of financial sanctions against the DPRK, which has been called coercive diplomacy. It is significant to recognize that the imposition of such US financial sanctions against the DPRK preceded the first nuclear test undertaken by the DPRK. In September 2005, the US government used a little known provision of the US Patriot Act, Section 311 to blacklist a bank, the Banco Delta Asia, because the DPRK had $25 million of its funds in the bank. This resulted in the funds of this bank being frozen and the DPRK losing access to the funds in its account for two years. These financial sanctions were imposed in a such a manner that they represented a threat that any bank doing business with the DPRK would be vulnerable to similar sanctions, effectively denying the DPRK access to the international banking system. (6)
Prior to the imposition of these financial sanctions against the DPRK by the US, the DPRK had not tested any nuclear device. And it was only after the DPRK carried out a nuclear test that the US State Department became willing to negotiate about ending these financial sanctions.
So the US blacklisting of the Banco Delta Asia, an action taken by the US Treasury Department against the DPRK, was the Godfather of the DPRK’s determination to develop its nuclear capability. There are present and past US government officials, however, who erroneously claim that the Banco Delta Asia sanctions were effective in stopping the DPRK’s nuclear program.(7) The opposite is the reality. The US financial sanctions against the DPRK were one of the significant factors which the DPRK cites which convinced them of the need for a nuclear weapon as a defense against such US hostility.
Hence the financial sanctions wielded by powerful nations are the thrust to spread nuclear proliferation not a means to contain proliferation. The focus on the form of financial sanctions in Resolution 2094 demonstrates the failure of the UN Security Council to learn from past experience. The DPRK has documented how it has been the victim of a hostile policy on the part of the US since its origin as a result of the US imposed division of Korea after WWII.(8)
Over 60 years ago, the US artificially divided Korea, a nation which prior to this division had a history of over 1000 years as a single nation. After WWII, Korea was divided into two states using a US manipulated UN General Assembly process in 1948 to consolidate the division.(9) That division continues until today .
Under the Patriot Act Section 311 provision used to justify the blacklisting of the Banco Delta Asia bank, a bank in Macao, China, the US government had no obligation to present evidence to back up its claims. But in documents submitted to the US government, Stanley Au, the chief stockholder of the Banco Delta Asia, effectively demonstrated that the claims presented by the US government against his bank were fallacious.(10)
Furthermore, it is important to recognize that the action taken against the Banco Delta Asia has been described in testimony presented at US government hearings, as a politically motivated action targeting China. According to one of the former government officials who helped to plan this action, the Banco Delta Asia was intended as a “symbolic target.” Describing this action at one of several hearings discussing the blacklisting of Banco Delta Asia, David Asher said (11):
“(T)here’s an old saying in Chinese, ‘You kill the chicken to scare the monkeys’. We didn’t go out and cite a multitude a Chinese financial institutions that have been publicly identified as working with North Korea over the years….We did need to designate one small one though, and that one small one sent a message to all the other ones….”
Asher explained that the purpose of the action by the US government against the Banco Delta Asia was to target North Korea and its access to the international banking system. An even more important purpose for the US government officials planning this action, he clarifies, was to issue a threat to the Chinese banking system.
The imposition of similar financial sanctions by the UN Security Council in Resolution 2094 demonstrates its surrender to US pressure to create a resolution based on illegitimate processes previously undertaken by the US government. The US government action against the Banco Delta Asia in 2005 was an early foray into creating a system of punishment that its advocates falsely claim was effective to stem proliferation. But in reality, the opposite is the case. The blacklisting of the Banco Delta Asia represented an abusive use of the international finance system against a victim nation.
Financial sanctions as imposed on nations like the DPRK not only harm that nation and its people, but they also end up creating havoc in the international financial system. The international financial system was being used as a political weapon, rather than being protected so that its integrity could be maintained.
With the US Treasury Department blacklisting the Banco Delta Asia, it was not only the DPRK that lost access to its funds, but also private bank account holders at the bank had their funds frozen.
After the US Treasury Department actions against the DPRK in 2005, only one mainstream US media organization, the McClatchy Newspapers carried stories investigating the actions by the US Treasury Department against the Banco Delta Asia. Also a blog called China Matters and several other online publications like OhmyNews International, then an English edition of the Korean online publication OhmyNews, carried articles which helped to expose the US Treasury Department’s false claims and the support of these US government actions by the mainstream US media.
The acquiescence by UN Security Council members to sanctions designed by the US against a smaller nation like the DPRK, both in 2006 when the Security Council passed Resolution 1718 condemning the DPRK, and more recently when the Security Council passed Resolution 2094 supporting similar sanctions, demonstrates the need for a vibrant watchdog media and for netizens who will monitor what is being done by the Security Council. It is important to have a netizen media that will probe what is behind the actions taken by the Security Council and what the real effects of such actions are on the peoples and nations that such sanctions target.
The example of the US blacklisting of Banco Delta Asia demonstrates that the use of financial sanctions by nuclear powers like the US against small nations like the DPRK will not stop nuclear proliferation. Instead, it will serve to convince small nations that they need a means to protect themselves against abuse by powerful countries like the US and UN Security Council actions supporting such abuse. It will also hasten efforts by other nations to create an alternative architecture to the current US dominance of the international financial and banking systems.
Notes
1. A shortened and edited version of an article written in response to the request appeared in a Chinese translation in the Hong Kong Commercial Daily.
An html version: http://www.hkcd.com.hk/content/2013-03/11/content_3159378.htm
A pdf version: http://www.hkcd.com.hk/pdf/201303/0311/HA05311CGCC.Pdf
2. See Ronda Hauben, “US Proposed UN Security Council Resolution Against DPRK Can Only Increase Tension on the Korean Peninsula”
http://blogs.taz.de/netizenblog/2013/03/06/us-proposed-unsc-resolution-against-dprk/
3. See Bruce Cumings, “The Fruits of Engagement with North Korea, 1994—2008”, University of Chicago, talk given at Unify Korea Common Ground Conference, Korea Art Forum, Columbia University, March 2, 2013.
4. See for example, the Statement by Kim Yong Song, on Agenda item “Report of the Special Committee on the Charter of the United Nations and on the Strengthening of the Role of the Organization”, New York, February 19, 2013, p. 3.
5. Ronda Hauben, ”Two Precedents for UN Security Council Action to Calm Tension in the Korean Peninsula.”
http://blogs.taz.de/netizenblog/2013/03/04/two-precedents-unsc-korean-peninsula
6. Ronda Hauben, “North Korea’s 25 Million and Banco Delta Asia”
http://english.ohmynews.com/ArticleView/article_view.asp?no=351525&rel_no=1
“Behind the Blacklisting of Banco Delta Asia: Is the policy aimed at targeting China as well as North Korea?”
http://english.ohmynews.com/articleview/article_view.asp?no=362192&rel_no=1
7. Hearing, US House of Representatives, March 5, 2013, House Committee on Foreign Affairs. The testimony of the three witnesses, and the Chairman demonstrate that there are those making the false claim that the blacklisting of Banco Delta Asia was an effective way to stop proliferation.
http://foreignaffairs.house.gov/hearing/hearing-north-korea%E2%80%99s-criminal-activities-financing-regime
8. KCNA, “DPRK Terms U.S. Hostile Policy Main Obstacle in Resolving Nuclear Issue”, Memorandum by the Foreign Ministry of the Democratic People’s Republic of Korea, August. 31, 2012. Also submitted by the DPRK to the Security Council to be listed as an official UN document.
http://www.kcna.co.jp/item/2012/201208/news31/20120831-21ee.html
9. See the article by Jay Hauben, “People’s Republic of Jeju Island 1945-1946″
http://www.columbia.edu/~hauben/jeju/Jeju_Island_1945-1946.doc
A version of the article appears in PEAR, Yonsei Journal of International Studies, Volume 3, Issue 2, Fall/Winter 2011, pp. 277-284
http://sinonk.files.wordpress.com/2012/06/people_s-republic-of-jeju-island-1945-1946.pdf
10. China Hand, “Stanley Au Makes His Case for Banco Delta Asia, China Matters”, May 15, 2007
http://chinamatters.blogspot.com/2007/05/stanley-au-makes-his-case-for-banco.html
11. US Government, “China’s Proliferation to North Korea and Iran, and its role in addressing
the nuclear and missile situations in both nations,” Hearing before the US-China Economic and Security Review Commission, 109th Congress, November 2006, p. 115-116.
http://www.uscc.gov/hearings/2006hearings/transcripts/sept_14/06_09_14_trans.pdf
See also China Matters, “David Asher’s Dead End”
http://chinamatters.blogspot.com/2007/04/david-ashers-dead-end.html
“Banco Delta was a symbolic target. We were trying to kill the chicken to scare the monkeys. And the monkeys were big Chinese banks doing business in North Korea…and we’re not talking about tens of millions, we’re talking hundreds of millions.” David Asher, oral testimony, April 18, 2007
Asher’s opening statement and subsequent responses taken from House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade, April 18, 2007

Former Goldman Sachs exec in line to be next U.S. envoy to Canada

 

Bruce Heyman, a Chicago-based Goldman Sachs executive and one of Barack Obama’s top fundraisers, is in final talks to become the next U.S. ambassador to Canada, according to sources.
Mr. Heyman would be the second ambassador to Canada to hail from Chicago, replacing David Jacobson.
A person familiar with the selection process confirmed Mr. Heyman was “in the mix,” adding that he has long been an ardent supporter of the U.S. President. However, the source added that the process is not over and no final decision has been made.

Mr. Heyman and his wife, Vicki, have been a political power couple for three decades. They were among Mr. Obama’s top fundraisers, collecting and contributing $1.7-million to the President’s bid for a second term. Mrs. Heyman helped run the President’s 2012 re-election campaign, and the couple were major contributors to the campaign.
They attended Mr. Obama’s inauguration and were among an exclusive group of powerful and politically well-connected guests at a glittering White House State dinner hosted by Mr. Obama and his wife, Michelle, for visiting German Chancellor Angela Merkel two years ago.
Mr. Heyman was also one of the few executives at Goldman’s to support Mr. Obama openly, with many others abandoning the campaign over what they construed as attacks on business. “I am sensitive to the emotions” of Wall Street, Mr. Heyman told the Wall Street Journal before Mr. Obama was re-elected in November, 2012. “But if you look at the facts, Mr. Obama is pro-business.”
The new ambassador will arrive at a pivotal moment in Canada-U.S. relations.
Mr. Obama must decide whether to approve the Keystone XL pipeline, which would bring bitumen from the Alberta oil sands to U.S. refineries. Federal cabinet ministers and provincial premiers have paid repeated visits to Washington to stress how crucial the new pipeline is to both the Canadian economy and U.S. energy security.
The Harper government has made it clear that rejecting the pipeline would send Canada-U.S. relations into a deep freeze that would last for as long as Mr. Obama is President or Mr. Harper is Prime Minister.
A Keystone decision is expected in September. The next U.S. ambassador to Canada will likely head north about the same time.
If Mr. Heyman gets the job, it won’t be his first involvement with Canada. As a managing director with Goldman Sachs in Chicago, he ran the private wealth management group and covered a big chunk of the United States and Canada.
The Heymans met as graduate business students at Vanderbilt University in Nashville in the late 1970s. “Our first date was Lamar Alexander’s governor’s ball,” Mr. Heyman recalled for his university’s alumni magazine, referring to the former Republican governor of Tennessee.
The Heymans have three adult children; a son David and two daughters, Liza and Caroline.

German Economic Output 'at Near Stagnation'

TEHRAN (FNA)- Germany's economy slowed to "near stagnation" last month, while France's recorded its biggest contraction for four years, according to a closely watched survey.

The Markit composite purchasing managers' index (PMI), which measures both the manufacturing and services sectors, declined to 50.6 in Germany last month, from 53.3 in February, BBC reported.

Any figure above 50 indicates growth.

France's reading fell to 41.9 points, its worst since March 2009.

For the eurozone as a whole, the index fell to 46.5 from 47.9 in February.

Chris Williamson, chief economist at Markit, said the latest data painted a gloomy picture.

"The (eurozone) recession is deepening once again as businesses report that they have become increasingly worried about the region's debt crisis and political instability," he said.

"The unresolved election in Italy was commonly cited as a key factor clouding the economic outlook in March, and the botched bail-out of Cyprus could well filter through to a further worsening of business sentiment across the region in April. "

Williamson added that the weak showing from Germany "suggests that the only source of bright light in an otherwise gloomy region has once again begun to fade".

Germany's index reading was the worst in the country for three months.

The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse

by Michael

 

Have you ever wondered how the big banks make such enormous mountains of money?  Well, the truth is that much of it is made by gambling recklessly.  If they win on their bets, they become fabulously wealthy.  If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”.  Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts.  So if they win, they win big.  If they lose, someone else will come in and clean up the mess.  This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks.  If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street.  But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened.  In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed? Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them.  In a recent article, Ron Paul explained how the situation played out once the bets started to go bad…

The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.

If those bets had turned out to be profitable, the bankers would have kept all of the profits.  But those bets turned out to be big losers, and private bank accounts in Cyprus are now being raided to pay the bill.  Unfortunately, as Ron Paul noted, what just happened in Cyprus is already being touted as a “template” for future bank bailouts all over the globe…

The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one’s money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?
Unfortunately, all of this is the predictable result of a fiat paper money system combined with fractional reserve banking. When governments and banks collude to monopolize the monetary system so that they can create money out of thin air, the result is a business cycle that wreaks havoc on the economy. Pyramiding more and more loans on top of a tiny base of money will create an economic house of cards just waiting to collapse. The situation in Cyprus should be both a lesson and a warning to the United States.

This is an example of what can happen when the dominoes start to fall.  The banks of Cyprus failed because Greek debt went bad.  And the Greeks were using derivatives to try to hide the true scope of their debt problems.  The following is what Jim Sinclair recently told King World News…

When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.
Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives.

As I have written about so many times, the global quadrillion dollarderivatives bubble is one of the greatest threats that the global financial system is facing.  As Sinclair explained to King World News, when this derivatives bubble bursts and the losses start soaring, the big banks are going to want to raid private bank accounts just like the banks in Cyprus were able to…

What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole. What Cyprus will reveal is that losses do not stop with the bank’s capital. Losses roar right through bank capital and take depositors’ money.

This could have all been avoided if we had allowed the big Wall Street banks to collapse back in 2008.  Reckless behavior would have been greatly punished and banks would have chosen to do business differently in the future.
David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, says that because we bailed out the big banks it was a signal to them that they could go back and freely engage in the same kind of reckless behavior that they were involved in previously…

Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that$16 billion of salaries and bonuses, 95% of it which was bonuses.
Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.

The lessons that we were supposed to learn from the crisis of 2008 have not been learned.
Instead, the lure of huge returns and big bonuses has caused a return to the exact same behavior that caused the crisis of 2008 in the first place.  The following is one example of this phenomenon from a recent articleby Wolf Richter…

The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back.
This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.
What bubbled to the surface is that Citigroup is selling synthetic securities that yield 13% to 15% annually—synthetic because they’re based on credit derivatives. Apparently, Citi has a bunch of shipping loans on its books, and it’s trying to protect itself against default. In return for succulent interest payments, investors will take on some of the risks of these loans.

Yes, the Dow hit another new all-time high today.  But the derivatives bubble that hangs over the global economy like a sword of Damocles could burst at literally any moment.  When it does, the damage is going to be incalculable.
In a previous article entitled “Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers“, I noted a couple of statistics that show why derivatives are such an enormous problem…
-$212,525,587,000,000 - According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
When the derivatives bubble finally bursts, where are we going to get the trillions upon trillions of dollars that will be needed to “fix” things this time?
And sadly, the reality is that we are quickly running out of time.
It is important to keep watching Europe.  As I noted the other day, the European banking system as a whole is leveraged about 26 to 1 at this point.  When Lehman Brothers finally collapsed, it was leveraged about 30 to 1.
And the economic crisis over in Europe just continues to get worse.  It was announced on Tuesday that the unemployment rate in the eurozone is at an all-time record high of 12 percent, and the latest manufacturing numbers show that manufacturing activity over in Europe is in the process of collapsing.
So don’t be fooled by the fact that the Dow keeps setting new all-time record highs.  This bubble of false hope will be very short-lived.
The unfortunate truth is that the global financial system is a complete and total mess, and at this point a collapse appears to be inevitable.

Read more at http://investmentwatchblog.com/the-big-banks-are-recklessly-gambling-with-our-money-and-it-will-cause-the-global-financial-system-to-collapse/#x0pTQrUCGOqvm7EQ.99