In a single day we make up 40% of the week-long drop on the Dow and the S&P and this morning we're up again in the Futures, despite Putin making a speech in which he says Russia WILL annex Crimea – despite all threats of sanctions, etc.
In fact, Russia is now sanctioning US, banning our officials from visiting their country and freezing any assets our Congresspeople may have in Russia. Whether or not this spreads to Corporate assets – who knows? But what difference would it make – the market would still go up anyway because no news seems to matter.
Japan has a looming sales tax increase in two weeks that most analysts say will be a complete disaster in the World's 3rd largest economy, China's Yuan is dropping and it's killing local companies and investors in China and it's already showing up in slowing home prices as well as property defaults. Like Japan, China's debt is now 238% of their GDP and economist Diana Choyleva notes:
"Debt in China over the past five years has grown much faster than in Japan at the same stage of development. Studies show the rate of increase in debt is as important, if not more important, in precipitating a crisis than the absolute level of debt. On that front, China scores extremely poorly. Japan’s debt didn’t start to rise at a similar speed until the mid-1980s. China’s debt has surged sooner because its economy is much bigger than Japan’s was. The world is just not big enough to let China continue to increase its income per capita and waste its savings on a vast scale for years to come. The financial crisis was the beginning of the end of China’s export and investment-led growth model."
She says China is rapidly approaching a "Bear Stearns Moment." Meanwhile, the US is experiencing 3.5% food inflation, which is more than twice the rate at which salaries are increaseing and 5 times faster than Social Security…
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