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mminion

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As apparently most pundits expected, today the Bank of Japan not only goosed the markets with the equivalent of another $112b - a 12% expansion in the program - but it signalled that it will consider changing its inflation target from 1% pa (in line with the incoming government has made clear that it wants the BoJ to increase its inflation target to 2% pa).

 

This article has been floating around the internets during the day but has now been updated to confirm the bank's decisions were as expected.

 

http://www.smh.com.au/business/world-busin...1220-2boup.html

 

I guess we will see an interesting laboratory experiment in macroeconomics in 2013, with the EU / the Germans remaining committed to the idea that they can starve the EU out of recession through austerity whilst the Japanese are now taking the view that they can feed themselves into good health by printing money and inflating away its debt.

 

Ambrose leaves little room to doubt on what side he now favours (my impression is that he is somewhat of a recent convert to this view (?)).

 

http://www.telegraph.co.uk/finance/economi...hole-world.html

 

http://www.telegraph.co.uk/finance/comment...on-deepens.html

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That was excellent (thought I posted another one that I had seen), goes for about an hour. Japan gets torn to bits by Kyle and his explanation as to why is second to none as far as analysis is concerned, by the way - looks like we are up the clappers also due to our dependency on Asia.

 

Anyway Merry Christmas to all, enjoy.

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Over the cliff we go? House of Reps recesses for Christmas with no agreement. Parachutes and Tin Hats Ready :icon14:

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Dates with destiny (for all of us given we own/trade shares) up to and including Christmas Day:

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Dec 11 (Reuters) - Sharp U.S. tax increases and government spending cuts will take effect in January unless Congress and President Barack Obama can agree on a package of deficit reduction measures.With lawmakers rushing to avert events that could trigger another recession, here is a look at key dates ahead, with estimated impacts based on research by the Tax Policy Center and the Bipartisan Policy Center, both non-partisan think tanks.

 

* Dec. 14. This was the targeted adjournment date for the U.S. House of Representatives, but it has been postponed. The U.S. Senate has not set an adjournment date.

 

* Dec. 17. Unofficial optimal date to have a "framework" for a deal in place, congressional aides say, in order to permit time for review and procedural delays in Congress. Congress can go beyond this time without much trouble, however.

 

* Dec. 21. Target date for a final deal that would permit lawmakers a full holiday break, aides say

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By Ayai Tomisawa

TOKYO, Dec 21 (Reuters) - Japan's Nikkei average erased

gains and turned lower on Friday as the U.S. House of

Representatives abruptly recessed after failing to muster enough

support for a "fiscal cliff" bill, souring sentiment and

dragging down shares of exporters.

The Nikkei was down 0.4 percent at 9,999.14 in late

morning, after having risen as high as 10,175.06 earlier.

The House of Representatives will adjourn until after

Christmas, Republican Representative Peter Roskam said, after

Republican leaders conceded they could not gather enough

Republican votes to pass their tax bill designed to avert the

so-called fiscal cliff.

Analysts said investors had been ready to chase the market

higher on hopes that the U.S. fiscal talks were moving towards a

resolution, but they started pulling back after the news was

out.

"The delay in resolving the U.S. fiscal cliff problem is

raising concern as the market expected some sort of positive

direction out of the talks by the end of the year," said Fujio

Ando, a senior managing director at Chibagin Asset Management.

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  • 2 weeks later...
2 Jan from Bloomberg: House Republicans abandoned their effort to add spending cuts to the Senate's budget legislation and one member predicted the measure will be passed tonight.

 

Oklahoma Representative Tom Cole said he expects the House to pass the Senate bill unchanged with a "substantial" bipartisan vote. The House Rules Committee scheduled an 8:10 p.m. meeting to set the parameters for the vote.

 

It would seem that something will be cobbled together today, which merely kicks the can down the road fo a couple of months, but nothing has --or will change---from the overall fact the FED will have to keep manufacturing money.

 

So--what happens now for our market?

 

Things look very positive right now, but before "getting set" it might pay to wait and see how the US market reacts tonight, the next known catalyst date is this Friday with the publication of the monthly US employment stats.

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via Bloomberg:

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The House of Representatives passed legislation averting income tax increases for most U.S. workers after Republicans abandoned their effort to attach spending cuts that would have been rejected by the SenateThe 257-167 bipartisan vote breaks a yearlong impasse over how to head off $600 billion in tax increases and spending cuts that were set to begin taking effect today. The Senate passed the bill early this morning, 89-8, and it goes to President Barack Obama for his signature.

 

"This law is just one step in the broader effort to strengthen our economy," Obama said at the White House. He said he hoped Congress this year would handle budget issues "with a little bit less drama, with a little less brinksmanship."

 

The White House said Obama was leaving Washington afterward to resume his vacation in Hawaii.

 

The measure isn't the grand bargain on deficit reduction lawmakers wanted when they created the tax-and-spending deadlines over the past three years. While it averts most of the immediate pain, it is only a small step toward controlling the federal deficit -- an issue that will return with a February fight over raising the $16.4 trillion debt limit.

 

The deal was worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican. Eighty-five Republicans and 172 Democrats voted for the measure while 16 Democrats and 151 Republicans opposed it.

 

 

Not 'Weakness'

"I realize that some argue that compromise is a sign of weakness," Rules Committee Chairman David Dreier, a California Republican, said during floor debate. "I hope that this bipartisan agreement can lay the foundation for continued work to address the tremendous challenges that we face as a nation."

 

California Republican Darrell Issa said he opposed the bill because it contains "$4 trillion of new debt and deficit and there's no pay-for."

 

The plan will make the George W. Bush-era income tax cuts permanent for most workers while letting them expire for top earners.

 

"This legislation breaks the iron barrier that for far too long has prevented additional tax revenues from the very wealthiest," said Michigan Democrat Sander Levin.

 

House Republicans had opposed higher tax rates for any income level, and a number of them objected today that the Senate bill didn't cut spending enough.

 

 

Jobless Benefits

The legislation will continue expanded unemployment benefits and delay automatic spending cuts for two months. It will let a 2 percent payroll tax cut expire.

 

The Senate vote early today shifted the pressure to House Speaker John Boehner of Ohio, who didn't speak during debate on the bill. In his two years as speaker, Boehner has had to quell rebellions among fellow Republicans backed by the anti-tax Tea Party.

 

Boehner's second-in-command, Majority Leader Eric Cantor of Virginia, voted against the measure. Budget Committee Chairman Paul Ryan of Wisconsin, this year's Republican vice presidential nominee, voted for it "to protect as many Americans as possible from a tax increase," he said in a statement.

 

 

Bipartisan Agreement

The plan marks a rare bipartisan agreement for lawmakers who have been trying for more than two years to reach an accord on taxes and spending, hurtling from deadline to deadline. Even this least-common-denominator agreement required brinkmanship and came after weeks of partisan bickering.

 

Still, Republican Alan Simpson and Democrat Erskine Bowles, co-leaders of Obama's 2010 deficit-reduction commission, said in a statement, "Washington missed this magic moment to do something big to reduce the deficit, reform our tax code and fix our entitlement programs."

 

The budget deal will raise taxes on 77 percent of U.S. households, mostly because of the expiration of the payroll tax cut, said the nonpartisan Tax Policy Center in Washington.

 

The heaviest new burdens in 2013, compared with 2012, will fall on top earners who face higher rates on income, capital gains, dividends and estates. The top 1 percent of taxpayers, or those with incomes over $506,210, will pay an average of $73,633 more in taxes, the Tax Policy Center said.

 

Compared with continuing current policies, the legislation will increase taxes by $620 billion.

 

 

Individual Income

It will raise tax rates on income of individuals above $400,000 and married couples above $450,000. That's double the individual threshold Obama campaigned on and 80 percent higher than his preferred level for married couples.

 

The top rates on capital gains and dividends will increase to 23.8 percent starting at the same income thresholds, including a 3.8 percent tax that starts today on top earners. Limits on personal exemptions and itemized deductions for top earners that had been phased out will return, for individuals starting at $250,000 and married couples starting at $300,000.

 

Estates will receive an exemption of more than $5 million and a 40 percent top rate, splitting the difference on rates between Republicans and Democrats. The exemption will be indexed for inflation. The alternative minimum tax will be permanently fixed to prevent it from expanding to more households.

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The fiscal cliff has not been averted. If anything, the U.S. faces an even more ominous deadline in a few months.

 

The debt ceiling was hit as of New Year's Eve. The U.S. Treasury will dip into its tool bag to keep the country's borrowing ability going, but that will last only about two months.

 

Also in early March, the sequestration -- $110 billion in across-the-board spending cuts, half in defense and half in domestic programs -- springs back, unless Congress finds a way to offset it with other spending cuts.

 

Weeks later, the law that keeps the government funded expires. It all means that, in late February and early March, Congress will face a sequestration, a government default and a government shutdown. Republicans say they'll use the leverage created by the debt ceiling to force Obama to accept spending cuts, particularly in entitlement programs.

 

Obama resisted that notion on Dec. 31, saying he wants more tax increases and won't accept Republican plans to "shove" spending cuts past him. "If they think that's going to be the formula for how we solve this thing, then they've got another thing coming," he said.

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The fiscal cliff was reached years ago when the U.S. could no longer re pay its debt obligations. They are trying like mad to inflate, but that is still a while off - prior to that, interest rates will begin to rise and they then are absolutely screwed.
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