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This Is Where The Developed World's Households Have Invested Their Money
Yesterday we presented what the balance sheet of the developed, or better known as insolvent, world- recall there was over $21 trillion in excess debt as of 3 years ago, looks like, and the curious to some observation that trillions in liabilities also double up as assets, in what is easily the world's most confounding (to central bankers at least) global circle jerk. After all, one can not inflate liabilities, without also destroying the assets these double count as at the same time. Yet while informative, that chart did not tell us anything we did not already know. However, the next chart we will present today will show a different aspect of the developed world, namely by indicating how the households of the three "richest" economies - Japan, the US and the Euro Area, have invested their money in various financial assets. And while this is merely the asset side of the ledger it shows how distinctly different the approach to capital allocation has been for countries in different stages of growth or ungrowth. What is most notable is the distinct distribution of capital in shares and equities within the three regions: it also shows why a sustained downtick in the US stock market is the deathknell of the modern economic experiment. What is also curious is that the investment of Japanese households into Insurance and Pension reserves, which in turn are then funneled into JGBs, is no larger than the US or European equivalent: it means that the true funding cost of the welfare state is roughly a third of all modern financial assets.
What is different about Japan, unlike the US, is that whereas in the US pension and insurance reserves are recycled into 401(k), in Japan these go to prop up the bond market. In essence, the weakest link for Japan is the bond market, while for US it is stocks. Unfortunately, since the US is now well on its way to becoming Japan, and retail has given up on stocks (just today we had yet another consecutive outflow from domestic equity stock funds, soaring markets be damned) we expect increasingly more capital to be reallocated from equities and into currency and deposits, as the fear of deflation pushes more and more to keep cash well-invested in the First Bank of Mattress City. And as the rotation out of stocks and into other financial assets accelerates, prepare to see what true Japanification means for yet another increasingly aging society.
The assets of the developed world's households:
And the offsetting financial liabilities - nothing but another circular pyramid scheme.
Source: BOJ
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i'm not a math guy, but on a per capita basis the US seems better off than the other two populations with $!63,333 followed by Japan with $145,302, and Europe with $60,000 in financial assets; I'm surprised by this so I hope someone checks my math. I used an arbitrary 400 million as the population of Europe because I don't know what 'euroland' we'are talking about.
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You're right-math aside-people need to look beyond the US for the first sign of a major bond market failing and also a currency crises erupting in a major currency-
The USD/bond market in its present form will be the last to go-but go it will-
I believe a sudden black swan will make Japan first but if things go as they are Italy will be the first major bond failure. But then again Spain and Portugal may fight for the actual first bond failure distinction.
That's not where I got mines at. Paper currency is a religion. Metal's real.
Found on a blog
"From Athens News:
‘Six of the country’s universities say they face immediate closure after the recent bondswap reduced their assets to zero. An emergency meeting of university rectors on Tuesday heard that only 33m euros remained of 120m euros that 17 Greek universities had deposited with the Bank of Greece for their operating expenses, while six university accounts were now completely empty meaning they would soon be unable to stay open.’#
That's how Assets and Liabilities look to those parking operating funds
Occupy!
Occupy some bulllion bars :D
Helium balloons would make a good choice for residents of Clintonville to invest in. What happens is that when the earth cools hugh gaps form between the crust and the upper mantle. Every so often (millions of years) portions of the earths crust the size of continents collapse in a matter of seconds and form mountain ranges, vertical layered uplifts like those seen off Topanga Cyn Blvd and new oceans. Think relative when thinking of today's market actions.
That jive ass turkey Obama really fucked things up
He got a lotta help from the bushies and wouldn't of been able to do it without clinton.
I stopped listening to any of them after nixon.
May I ask a dumb question....aren't Insurance and pension reserves also primarily in equities? (I say primarily, because some life insurers invest in ag operations, such as Hancock).
In other words equity exposure is actually far higher than shown on the charts...or am I wrong???
In other words equity exposure is actually far higher than shown on the charts...or am I wrong???
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No you're not wrong -bernankes zirp has flushed out "so called" secure investment and chased it into higher risk/equities-where gs etc. can scoop it up-upside down pension funds etc. need to deliver returns and negative growth in secure investments wont do it-
The trend is building-
http://bit.ly/GY94x9
Best apply for a name change by deed poll before the rush. Papadapapandropoulous is still free.
Try harder, dumbfuck. You logged on to say this, and I logged onto LOL. We both have issues, no?
http://www.youtube.com/watch?v=eGpivJnITbM
I'll see your Katy Perry and raise you a Lily Allen.........
http://www.youtube.com/watch?v=OK4fJhbRL1g
My issues are bigger than both of ya's put together.
i don't have issues, i have subscriptions.
You sure do. I don't know what the fuck you are on about. Taken your meds? My point was, we are all going down the Greek path. Watcha got?
Here's a real woman.
http://www.youtube.com/watch?v=Uai7M4RpoLU
You are exactly right. When setting up a new insurance policy & given choices about where the money would be invested to grow that accrues from the premiums you better believe I asked if it could be focused on precious metals. Naturally you know that's a non-starter.
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays, Propaganda, 1928
Where is residential RE? Seriously, I am not sure this could be accurate. I've got two rentals that are cash flow positive. Seems like better than cash and Greek bonds
snap!
Retail customers are not leaving equities in spite of soaring prices. Prices are soaring because retail customers are leaving -- and thus leaving the markets to the state-sponsored manipulators. Less real customers in the market means easier manipulation.
They may feel lucky to be leaving at higher prices, but they are leaving nonetheless, because 2008 made them aware of how thin the ice is. They know how little they can tolerate risk. And even boomers are not quite dumb enough to believe that equities can rise forever.
The Federal Reserve must be the only one buying stocks either directly or indirectly:
Execs are dumping stock. As stocks have soared, top executives and other insiders appear to have turned bearish.(The Fiscal Times)http://money.msn.com/top-stocks/post.aspx?post=7f78b648-7b50-4159-8b1c-0...
So we (the US) are the least liquid, highest risk investors of the 3 both on a relative and absolute basis? Swell.
Regardless though, an increase in market interest rates will decimate all 3 zones, just at slightly different speeds. Now you see another reason, from a different perspective, why CBs worldwide are pursuing ZIRP. It's not right, but it is understandable.
Was Gandhi, famous caucasian racist pedophile, born in Kenya, too ? As far as Gandhi's anti-black sentiments we must not judge him too harshly....he lived in a more primitive, pre-necklacing, Africa ! Maybe Gandhi had his racism ass raped into him by a racist father ? Monedas 2012 We need more debt and welfare to smooth over life's rough edges !
Organic parrot farms, for the next best investment.
Pay it forward.
> ... why a sustained downtick in the US stock market is the deathknell of the modern economic experiment. <
I thought the same think when I saw yestarday graph of the Asset/Liabilities of the CB.
US CB will be hit much harder if stock market drop. Now it seems US household will be hit alot harder if the stock market drops.
Relative to bond market, deposits..etc..
This graph also clearly shows that the Europeans will fare much better of prolonged crisis, they have more deposits.
But also probably shows the inflation will come first there, if we suppose it is easier to withdraw you money quickly from the bank when the roll start rolling.
How do you think the different economic zones will fare in different scenarios ?