Japan: Bubble prophet fears new disaster


What inflation are you talking about? CPI? That’s for those who still believe in Santa.


Under a gold standard there is also inflation, but it is restrained by the resources it takes to extract the metal from the ground. In cases like the Spanish looting of South America they brought back so much gold that they created an inflation problem for themselves at home that undermined their economy and bankrupted them. If the quantity of money did not increase then as more goods are produced the purchasing power of money improves and peoples standard of living rises. The price changes in wheat from year to year are set at the margin, so one year a poor harvest will likely mean constrained supply and prices rise so some is available to everyone, if you were to set price controls then you tend to constrain the supply along with the consequences for the population.


’12 trade deficit at record ¥6.9 trillion - -> japantimes.co.jp/news/2013/0 … -trillion/


Japan’s Debt Time Bomb Is Ticking: Kyle Bass -> cnbc.com/id/100391704

Kyle Bass reckons Japan with go down within the next 18-24 months and is long US housing.


Japan posts record $17.4B trade deficit in Jan. - ELAINE KURTENBACH -> news.ino.com/headlines/?newsid=686547328478793


Analysis: Japan’s mission impossible: to spend $100 billion in 15 months - -> newsonjapan.com/html/newsdesk/article/101104.php

of course they need the revenue from somewhere, time for a shakedown.

Kahala billionaire arrested in Japan for tax evasion; does he pay in Hawaii? -> newsonjapan.com/html/newsdesk/article/101339.php


Japan Core Machine Orders Plunge In January -> rttnews.com/2073697/japan-co … ?type=aeco


If Japan needs money it just creates it. That’s how modern money works.


It creates the money as debt, which is all well and good as long as they can roll over the debt while continuing to pay increasing amounts of their tax revenue on servicing the interest payments due. So there is a finite limit to it, before you can no longer make the interest payments, there comes a period of austerity - i.e. more revenue is diverted to interest payments while the money for the services you provided is cut back, even though the tax revenue per capita is increasing.

Don’t forget money is a unit of exchange so someone has to produce goods and services and sell them down along the chain in order to pay the taxes that service the interest payments. Now picture a nation that once had a high savings rate, they get zero interest from the banks, but government debt (JGBs) offers a better rate of return, where are they going to park their savings? Now imagine the country runs a trade surplus with the rest of the world, through putting up barriers to limit imports and devalues it’s currency versus the dollar to maintain competitiveness while maintaining ZIRP to fight off the alleged deflation and low and behold, it’s a miracle, they can keep piling on the debt with apparently no consequences, well at least if you can live with concreting every river bed and surface you can find. The Bank of Japan also found a way to recycle dollars by buying American treasury debt and built up a huge “sovereign wealth” fund on the back of that, most of the other SE Asian countries saw what they were up to and China went all out on it also.

Of course best laid plans of mice and men never run that smoothly. The policy of ZIRP and currency devaluation led to the Japanese YEN carry trade which blew up asset bubbles worldwide, in the USA, New Zealand, Australia and Iceland. Once the YEN started rising the trades had to unwind quickly and this led directly to the panic in 2007-2008. Of course troubles always come in threes, a major Tsunami, wrecked the infrastructure and led to the shut down of their nuclear energy grid and that minor matter of radiation poisoning (at least that’s the way their government sees it), which meant they have to import more energy to make up the difference, while at the same time calling capital home to repair the damage forcing up the value of the YEN. To top it all a lot of their production is offline and their once world leading consumer companies are producing stuff no one wants while missing out on the the latest consumer products which the Chinese (latest Apple iGizmo) and Koreans (Samsung) are winning market share. So they need to restructure.

At the same time there are more nappies being sold for adults than children per annum, more of their population is retiring and wanting to draw down their savings, who is going to buy their debt and work to make the interest payments? Do you know how many governments and finance ministers the Japanese have been through in the last few years? Is it any wonder that capital is fleeing to safety when the government is leading a banzai charge to devalue the YEN while at the same time trying to pick a fight with the Chinese over some rocks in the sea. Without capital, where is the future investment and job creation going to come from?


Toyota Helped by Yen Detroit Sees as $5,700-Per-Car Bonus - Keith Naughton & Craig Trudell -> bloomberg.com/news/2013-03-1 … bonus.html

In economics, a beggar-thy-neighbour policy is an economic policy through which one country attempts to remedy its economic problems by means that tend to worsen the economic problems of other countries.

Bernanke Backs Japan’s Anti-Deflation Effort as BOJ Pick Looms -Christopher Anstey -> bloomberg.com/news/2013-02-2 … looms.html


Game changer for Japan???
To my limited knowledge there is large quantities of methane hydrate off ireland

nytimes.com/2013/03/13/busin … .html?_r=0


I think they’ve got a few quid to spare. Their net wealth is $35 Trillion. 95% of their debt is owed to themselves. They own more private assets than anyone on the planet except the US. But hey, Peter Schiff says they’re fucked so they must be, right? I mean, Peter only wants you to protect your wealth and is very generously offering to sell you some of his precious gold stash in exchange for worthless fiat currency so Peter couldn’t have any possible reason for doom-mongering, right? These clowns only want your money, I hope you wake up and see that. Don’t be a mug.


The Setting Sun – Japan’s Forgotten Debt Problems - Satyajit Das -> economonitor.com/blog/2013/0 … -problems/


Soros Joins Gross in Warning Kuroda Plan Risks Yen Rout - -> bloomberg.com/news/2013-04-0 … -rout.html

Soros: The BOJ “did something so dramatic … people can’t ignore it!” -> blackswantrading.com/currenc … ore-i.html




The Promise of Abenomics - Joseph E. Stiglitz -> project-syndicate.org/commen … --stiglitz


Could just as easily fit into our Paul Krugman Thread.
Debt doesn’t pose a problem … until it does !


Banking insider: The Japanese have lost control of their bond market - -> examiner.com/article/banking … ond-market


Fears over US stimulus highlight Japan’s fragility - Liam Halligan -> telegraph.co.uk/finance/comm … ility.html


Attempting to spur economic recovery by goosing the stock market is such patent bullshit it has to be hiding something. What, though? That the bond market is bust? Because the banks and insurance funds can’t suck up any more? Not sure how that helps.