News that Moves: Japan/U.S. Debt Forgiveness & India/Pakistan Unrest

RCM Comment: Two new developments on the international front that could significantly shape the investing climate in the new year. Both add to the appeal of gold as a safeguard of wealth.

Dec. 24 (Bloomberg) -- Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.
The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said.
“It’s difficult for the U.S. to borrow its way out of this problem,” Mikuni, 69, said in an interview with Bloomberg Television. RCM Comment: Can you imagine the response of other nations that hold a significant amount of U.S. debt? What will China's reaction be to U.S. debt forgiveness?

Pakistan moves troops toward Indian border - AP
AP reports Pakistan began moving thousands of troops away from the Afghan border toward India on Friday amid tensions following the Mumbai attacks, intelligence officials said. The move represents a sharp escalation in the standoff between the nuclear-armed neighbors and will hurt Pakistan's U.S.-backed campaign against al-Qaida and Taliban taking place near Afghanistan's border. Two intelligence officials said the army's 14th Division was being redeployed to Kasur and Sialkot, close to the Indian border. They said some 20,000 troops were on the move. Earlier Friday, a security official said that all troop leave had been canceled. The officials spoke on condition of anonymity because of the sensitivity of the situation... Prime Minister Manmohan Singh met Friday with the chiefs of the army, navy and air force to discuss "the prevailing security situation," according to an official statement.