Change Comes to Japan

Most Westerners have not understood the tight grip that the alliance of business and politics has exercised in Japan.

This change in political control in Japan, for the first time in 54 years, has potentially significant implications for the US dollar as a reserve currency.

Change will be slow and deliberate. The new ruling party will not wish to upset the balance of things. But change will occur, and what has been will not, and will no longer be.

Associated Press
Japanese election upends long-ruling party
By Eric Talmadge
Associated Press Writer
August 30, 2009

TOKYO – Japan's ruling party conceded a crushing defeat Sunday after 54 years of nearly unbroken rule as voters were poised to hand the opposition a landslide victory in nationwide elections, driven by economic anxiety and a powerful desire for change.

The left-of-center Democratic Party of Japan was set to win 300 or more of the 480 seats in the lower house of parliament, ousting the Liberal Democrats, who have governed Japan for all but 11 months since 1955, according to exit polls by all major Japanese TV networks.

"These results are very severe," Prime Minister Taro Aso said in a news conference at party headquarters, conceding his party was headed for a big loss. "There has been a deep dissatisfaction with our party."

Aso said he would have to accept responsibility for the results, suggesting that he would resign as party president. Other LDP leaders also said they would step down, though official results were not to be released until early Monday morning.

The loss by the Liberal Democrats — traditionally a pro-business, conservative party — would open the way for the Democratic Party, headed by Yukio Hatoyama, to replace Aso and establish a new Cabinet, possibly within the next few weeks.

The vote was seen as a barometer of frustrations over Japan's worst economic slump since World War II and a loss of confidence in the ruling Liberal Democrats' ability to tackle tough problems such as the rising national debt and rapidly aging population.

The Democrats have embraced a more populist platform, promising handouts for families with children and farmers, a higher minimum wage, and to rebuild the economy.

"The nation is very angry with the ruling party, and we are grateful for their deep support," Hatoyama said after the polls closed. "We will not be arrogant and we will listen to the people."

The Democrats have also said they will seek a more independent relationship with Washington, while forging closer ties with Japan's Asian neighbors, including China. But Hatoyama, who holds a doctorate in engineering from Stanford University, insists he will not seek dramatic change in Japan's foreign policy, saying the U.S.-Japan alliance would "continue to be the cornerstone of Japanese diplomatic policy."

National broadcaster NHK, using projections based on exit polls of roughly 400,000 voters, said the Democratic Party was set to win 300 seats and the Liberal Democrats only about 100 — a third of its strength before the vote.

A Run On the Funds: Majority of Cerberus Investors Want Out -- Now

When investors or depositors ask for the immediate withdrawal of 71% of their money there is only one thing to call it: a run on the bank.

The selling in the markets is still quiet, and overshadowed by some of the visible bubbles in financial assets and rosy headlines. The bank bailouts are working, but only to produce a false Spring to lure in the last of the greater fools.

The economy is not improving fundamentally, the recovery is not sustainable, and the wealthy insiders are increasingly trying to liquidate investment positions to raise cash and diversify their holdings into cash and hard assets.

Risk is once again being spread from the financial sector to the public, which is what Fed Chairman Greenspan had said was one of the objectives of the Fed in their positions on the regulation of complex financial products. We were assured that the markets were sound, no additional regulation was required, the pensions were adequately funded. And finally when disaster struck and the facade fell away, that a generation's ransom was required by the banks, in order to heal themselves and avert disaster.

And then they took the money for themselves.

"He's mad, that trusts in the tameness of a wolf, a horse's health, a boy's love, or a whore's oath." The Fool, King Lear

And so they have made fools of us all.


Reuters
Cerberus clients overwhelmingly want out
Fri Aug 28, 2009 4:21pm

BOSTON (Reuters) - Cerberus Capital Management has been swamped with redemption requests with the Wall Street Journal reporting that investors are asking to pull out $5.5 billion or 71 percent of assets from its hedge funds.

Cerberus last month tried to entice investors into staying with the firm, but found that its clients overwhelmingly wanted to leave, the newspaper reported.

"We have been surprised by this response," Cerberus chief Stephen Feinberg and co-founder William Richter wrote in a letter delivered to clients late on Thursday, according to the newspaper.

A spokesman for the firm was not immediately available for comment.

The bulk of investors elected to put their money into a fund that will liquidate hard-to-sell assets over time.

The news comes as several prominent hedge fund managers have closed their funds and as investors are less willing to leave their money locked up in potentially risky hedge funds.

Last year, when the average hedge fund lost 19 percent, Partners lost 24.5 percent on investments.

US Equity Markets Look Dangerously Wobbly As Insiders Sell In Record Numbers

"Investors Intelligence's latest survey of advisory services showed an impressive 51% bullish and a meager 19% bearish...the spread hasn't been that wide since November 2007." Alan Abelson, Barrons, Aug. 29, 2009

Next week we move into September, the riskiest month of the year for financial markets, with the federals escalating preparations for a flu pandemic, while Congress considers legislation providing a 'kill switch' on the Internet for President Obama to use in the event of 'an emergency.' There are widespread rumours of a bank holiday lasting one week after a market meltdown begins in the US, during which the banks would be restructured.

Risky times indeed, and those in the best position to know what is happening behind the scenes are hitting the exits in record numbers right now, running to cash, and hard assets and currencies.

As TrimTabs reports in the attached news release, insider selling is reaching record levels, even as more speculators borrow to go long stocks. There are some obvious bubbles already formed in certain insolvent financial stocks like AIG, with disinformation rampant in the Wall Street demimonde.

The Obama Economics and Regulatory Team, in conjunction with the Federal Reserve, have accomplished no serious reform of the fiancial system. They have enabled the type of market inefficiency, soft fraud and price manipulation that is undermining global confidence in the integrity of US markets and financial products. And they have advanced a proposal to consolidate a huge amount of regulatory power under the Federal Reserve, a private banking agency that was at the root of our unfolding financial crisis.

The time has passed when Obama could have pointed to the past mistakes of his predecessors as the fault for our problems. Thanks to Tim Geithner, Barney Frank, and Larry Summers he now owns the financial crisis, and the coverups, policy errors, scandals, conflicts of interest and bailouts that have occurred since he has taken office. His reappointment of Ben Bernanke as Federal Reserve chairman most surely tied a bow on his ownership package for the crisis, which is in danger of becoming his 'financial New Orleans.'

Wall Street insiders and their enablers pig out on public money while the nation suffers. This is not change, this is business as usual.

TrimTabs
Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top

Insider Selling in August Soars to 30.6 Times Insider Buying, Highest Level Since TrimTabs Began Tracking in 2004. NYSE Short Interest Plunges 10.3%, While Margin Debt Spikes 5.9%

SAUSALITO, Calif., Aug. 28 /PRNewswire/ -- TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.

"The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon," said Charles Biderman, CEO of TrimTabs.

TrimTabs' data on insider transactions is based on daily filings of Form 4, which corporate officers, directors, and major holders are required to file with the Securities and Exchange Commission.

In a research note, TrimTabs explained that insider activity is not the only sign the rally is about to end. The TrimTabs Demand Index, which tracks 18 fund flow and sentiment indicators, has turned very bearish for the first time since March.

For example, short interest on NYSE stocks plummeted by 10.3% in the second half of July and margin debt on all US listed stocks spiked 5.9% in July, while 51.6% of advisors surveyed by Investors Intelligence are bullish, the highest level since December 2007.

"When corporate insiders are bailing, the shorts are covering and investors are borrowing to buy, it generally pays to be a seller rather than a buyer of stock," said Biderman.

TrimTabs also reports that the actions of U.S. public companies have been bearish. In the past four months, companies have been net sellers of a record $105.2 billion in shares.

"Investors who think the U.S. economy is recovering are going to get a big shock this fall," said Biderman. "Companies and corporate insiders are signaling that the economy is in much worse shape than conventional wisdom believes."

TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit www.TrimTabs.com.

Where Are the World's Safest Banks?

The primary functions of the Federal Reserve Bank as a regulator is to maintain the integrity of the US banking system. It is also the responsibility of the Federal Open Market Committee to oversee the management of the United States Money Supply.

In this annual list by Global Finance, not one US bank is in the top 30 of the Safest Fifty Banks in the world.

It was the poor regulation of the banking system, and the reckless management of the money supply, that has brought the US, and by extension of the dollar contagion, a greater part of the world, to the financial crisis which threatens the global economy today.

Would this imply that we should give the Fed the latitude to regulate more elements of the US financial sector, elements with which it has little or no experience and certainly no successful track record?

The US must reform its financial system and restore a balance to its economy. The rest of the world must take strong measures to guard against a potentially disastrous currency crisis should the US fail to successfully reform.


Global Finance
The World's 50 Safest Banks

New York, August 25, 2009 — With bank stability still high on corporate and investor agendas,Global Finance publishes its 18th annual list of the world’s safest banks. After two tumultuous years that saw many of the world’s most respected banks drop out of the top-50 safest banks list, the dust appears to be settling. Those banks that kept an iron grip on their risk exposure before the financial crisis blew up have consistently topped the table and maintain their standing among the top echelon in this year’s ranking.

The Top Banks (until you find a US bank) Are:

1. KFW (Germany)
2. Caisse des Depots et Consignations (CDC) (France)
3. Bank Nederlands Gemeenten (BNG) (Netherlands)
4. Landwirtschaftliche Rentenbank (Germany
5. Zuercher Kantonalbank (Switzerland)
6. Rabobank Group (Netherlands)
7. Landeskreditbank Baden-Wuerttemberg-Foerderbank (Germany)
8. NRW. Bank (Germany)
9. BNP Paribas (France)
10. Royal Bank of Canada (Canada)
11. National Australia Bank (Australia)
12. Commonwealth Bank of Australia (Australia)
13. Banco Santander (Spain)
14. Toronto-Dominion Bank (Canada)
15. Australia & New Zealand Banking Group (Australia)
16. Westpac Banking Corporation (Australia)
17. ASB Bank Limited (New Zealand)
18. HSBC Holdings plc (United Kingdom)
19. Credit Agricole S.A. (France)
20. Banco Bilbao Vizcaya Argentaria (BBVA) (Spain)
21. Nordea Bank AB (publ) (Sweden)
22. Scotiabank (Canada)
23. Svenska Handelsbanken (Sweden)
24. DBS Bank (Singapore)
25. Banco Espanol de Credito S.A. (Banesto) (Spain)
26. Caisse centrale Desjardins (Canada)
27. Pohjola Bank (Finland)
28. Deutsche Bank AG (Germany)
29. Intesa Sanpaolo (Italy)
30. Caja de Ahorros y Pensiones de Barcelona (la Caixa) (Spain)
31. Bank of Montreal (Canada)
32. The Bank of New York Mellon Corporation (United States)

You may read the rest of the list, and the method by which safe banks were selected, here.