Europe and Germany: Europe's economies are faltering, and Germany can't prop-up every pathetic European Socialist.
A Closer Look At Today's German Stock Market Flash Crash
Submitted by Tyler Durden on 04/17/2013
http://www.zerohedge.com/news/2013-04-17/closer-look-todays-german-stock-market-flash-crash
While most of the US was in deep REM sleep, the
Germany stock index, the DAX, had a flashback to May 2010: starting at 3:44 am
EDT, in the span of 6 minutes or much faster than the gradual drop that led to
the US flash crash from three years ago, the DAX went from well and solidly-bid
to having zero liquidity... and dumping nearly 200 points in the process.
Whether it was rumors of a (subsequently validated) rating agency downgrade, or
just an algo testing its quote stuffing ability, the moves showed vividly that
when the current rosy paradigm shifts abruptly and violently, all those hoping
to be the first out of the door and hit the sell button, simply won't be able
to do so. Because sadly there is no such thing as a free "4 year long zero
volume levitation" - one must always pay the piper in the end.
Japanese stock market tumbles 7%
Good morning. The Japanese stock market has tumbled
over 7% in a dramatic day's trading in Asia, and heavy losses are expected in
Europe when the markets open.
A roller coaster ride saw the Nikkei finish 7.3%
lower at 14483, down 1143 points, having earlier hit its highest level since
December 2007.
It's the biggest daily fall on the Japanese stock
market since March 2011, following the Tōhoku earthquake and tsunami.
The Japanese Knew Something That Foreign Investors
Didn't
By Matthew Boesler | Business Insider – Fung Global
Institute
In his latest piece, Nomura economist Richard Koo
examines the recent crash in the Japanese stock market, which has tumbled 15%
since just March 22.
"The prevailing view is that we are finally
seeing a reaction to this excessively rapid move, and if so this is a healthy
correction," he begins. "The reality, however, may be somewhat more
complicated..."
…Domestic mortgage rates have increased for two consecutive
months as a result. This is clearly an unfavorable rise in rates driven by
concerns of inflation, as opposed to a favorable rise prompted by a recovery in
the real economy and progress in achieving full employment.
The more the market senses the BOJ’s determination to generate inflation at any cost, the more interest rates—and particularly longer-term rates—will rise, adversely impacting not only Japan’s economy but also the financial positions of banks and the government...
Since there is no increase in bank earnings from additional lending activity and no increase in tax revenues from a recovering economy, the financial positions of banks and the government deteriorate in direct proportion to the rise in long-term interest rates….
The more the market senses the BOJ’s determination to generate inflation at any cost, the more interest rates—and particularly longer-term rates—will rise, adversely impacting not only Japan’s economy but also the financial positions of banks and the government...
Since there is no increase in bank earnings from additional lending activity and no increase in tax revenues from a recovering economy, the financial positions of banks and the government deteriorate in direct proportion to the rise in long-term interest rates….
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