By John Galt
September 12, 2011 – 02:10 ET
Uh, this morning could get brutal….let the beatings commence…
Just wow. This is getting ugly or I need to consume more cigars and adult beverages….
Published: Monday, 12 Sep 2011 | 1:54 AM ETFTSE -74
European stocks are expected to fall sharply at the market open on Monday amid renewed fears about the euro zone debt crisis.
ian stocks traded lower overnight with the Nikkei in Tokyo falling by close 2 percent as the euro traded below 1.36 against the dollar.The losses follow a sell-off on Wall Street on Friday after Juergen Stark resigned from the European Central Bank (ECB). The German is said to have walked out after opposing the ECB buying up Italian and Spanish bonds.
Germany has put forward deputy finance minister Joerg Asmussen to replace Stark, a decision that was welcomed by the chair of the euro group, Jean-Claude Juncker.
Meanwhile, the Independent Commission on Banking said on Monday that the UK’s banks should ring-fence their retail operations from riskier investment banking and increase their capital requirements beyond what is required by the Basel III directives.
The ICB said its proposed reforms could result in a pre-tax cost of between 4 billion pounds ($6.4 billion) and 7 billion pounds for Britain’s banks.
The news flow over the weekend did little to shore up confidence in the European debt crisis, although Greece did announce a new property tax which Athens hopes will raise 2 billion euros ($2.7 billion). The tax was welcomed by the European Commissioner for Economic and Monetary Affairs, Olli Rehn, and is expected to help Greece in talks over its next tranche of aid with the IMF.
On Sunday Der Spiegel reported that Germany’s finance ministry is studying the potential impact of a Greek default and looking at scenarios which include Greece leaving the euro and defaulting in a disorderly way.
That’s just brutal. Then they publish this hours earlier…..
Published: Monday, 12 Sep 2011 | 12:58 AM ET
The recent gyrations in global stock markets are just the beginning, says U.S.-based economist and author Harry Dent, who believes the Dow will fall below 10,000 in the near term before crashing to around 3,000 in 2013.
I think the stock crash started in late April. This is just the first wave down…I think the crash really starts some time in early 2012,” said the Founder and CEO of economic research company HS Dent and author of upcoming book “The Great Crash Ahead”.
He noted the selloff of a similar extent during the last global financial crisis, when the Dow
lost around 8,000 points in the period between October 2007 and early 2009.
Dent puts his bearish predictions squarely on the changing spending habits of global consumers.
“Baby boomers around the world, and all the developed countries — Europe, North America, Australia — they have peaked in their spending cycles…they’ve been driving up real estates prices and stock prices and the economy for decades, and now they’re going to be saving and not borrowing,” Dent said.
Accentuating the problem is the deleveraging of the U.S. private debt, which has doubled to $42 billion from $20 billion in the last eight years, and now valued at three times the size of the nation’s public debt.
“That debt is deleveraging, and that’s actually causing deflationary trends. It won’t matter how much stimulus the government throws at the system, because baby boomers with their already huge debt burdens will not want to borrow money and spend more,” said Dent.
Translation? The noise is loudest near an intermediate term top. Get ready for one MOTHER of a decline…