After they were downgraded in early August, US government bonds gained upward momentum and yields fell. Japan, which has danced the downgrade tango for years, is contemplating the next step, from AA- to A+, yet 10-year Japanese Government Bonds are yielding below 1%. Downgrades of sovereign bonds of developed countries make good headlines, but the impact on bond markets has been nil. With one exception: the Eurozone.
Tokyo, April 1996. Our fingers laced together, we mosey from the Imperial Palace through Hibiya Park to Ginza’s shopping avenues. She picks a café on the second floor, and we settle into Viennese-coffeehouse armchairs by a floor-to-ceiling window. I’m the only male in the place. On the menu, only the prices are legible.
On January 9, I posted “The Systemic Nature of Medicare Fraud” —“the kind of Medicare fraud that makes your skin crawl.” On January 10, I received an email from the Chief of Staff at Alvarado Hospital. He strongly objected to this sentence: “Its Alvarado Hospital Medical Center in San Diego already appears to be under investigation.” And it kicked off a learning process.
Consumer optimism has been rising from the morose multi-year low in August and has reached levels not seen since, well, May. It whipped hope into a froth. Rising confidence would pump up consumer spending, which would pump up everything else. But the inexplicable American consumer, the toughest creature out there that no one has been able to subdue yet, had other plans.
Austerity measures are taking their daily toll on Greece. Suicides and attempted suicides have jumped by 22.5%. Unemployment rose to 18.2%. Pharmacies are having difficulties obtaining medications. More cuts are coming. If there is no agreement with the bailout Troika, Greece will default in March. But now, even the Troika is in disarray.
150 factory workers in China threatened to jump off the roof of an iPhone factory unless they received a raise. Similar stories are accumulating. To make ends meet, desperate workers sometimes take drastic measures. These anecdotes underscore a major trend in China: skyrocketing cost of labor. But in the US, it’s the opposite—and now part of the official White House strategy.
Christine Lagarde, managing director of the IMF, told the South African Business Day that the Eurozone might avoid a recession in 2012, an inexplicable bout of optimism in light of some ugly trends. Germany, economic superstar with unemployment at a 20-year low and exports at an all-time high, produces 34% of the Eurozone’s GDP—and it has smacked into a wall.
It’s the kind of Medicare fraud that makes your skin crawl. And it’s part of a vast scheme. After investigative reporters detailed the case, the FBI finally got serious. But no insurance company would have fallen prey to it. Only Medicare cannot defend itself. It doesn’t even know when it’s happening because, inexplicably, it doesn’t analyze the bills. And so an industry has sprung up.
Tokyo, April 1996. 4:45 a.m. Daylight shines through the opaque windows. I slide one open. My new neighborhood: sheds pieced together from rusting corrugated iron, green corrugated plastic, and weathered wood; tiny yards cluttered with junk; and concrete buildings finished with brown tiles. Windows are opaque for a reason. You don’t want to be confronted with this on a daily basis.
During the financial crisis, Germany’s export orders fell off a cliff. GDP plunged 2.1% in the 4th quarter of 2008 and a horrid 3.8% in the 1st quarter of 2009. The worst quarters in the history of the Federal Republic. But the recovery was enormous. So it’s natural that the German media would gloat over the “German success recipe.” But now the first shadows have appeared.