Japan: Bubble prophet fears new disaster


Completely agree.

But I think they think that it can work. Foolishly.

Disagree. The government bond market can never go bust because all the debt is JPY denominated. Rates are picking up but that’s because the market thinks the stimulus plan might work. Proof that it has would be higher interest rates! They are wetting themselves because there’s a small chance they are actually dragging themselves out of the doldrums. The last time they got a year of positive inflation prints they freaked out as well and cut it all back… submerging themselves again.


Oh it can go bust. Maybe not for very long, but it can go bust while violins are played and meeting rooms filled and emptied. Thereafter volatility becomes embedded and it ceases to have private sector involvement - it is broken.


BOJ announce tomorrow that the 10Yr Yield will be capped at 1% for the next two years (by their balance sheet if required) and voila: it is capped at 1%.
Your point about private sector involvement is an interesting one - it would be diminished perhaps - but I expect it actually wouldn’t matter.


I think it will matter, though. Without private sector purchases, JGB issue is fiscal printing. It is no longer borrowing support, but printing to spend. That will generate the wrong type of inflation, that is, inflation that is purely a loss of confidence in the currency.


Then all the Mrs Wantanabes will be buying foreign currency for security rather than yield.


full story here


Some interesting charts


Japan : It’s Not A Bet If You Can’t Win - -> theautomaticearth.com/Finance/ja … t-win.html


Japan’s Fiscal Condition - Ministry of Finance -> mof.go.jp/english/budget/bud … 013/02.pdf
January 2013

The graphs tell the story.


We are very influenced by the American gaze over the world here on the pin, a consequence is the amount of shite people write and link to about Japan’s ‘lost decade’. I like Eamonn Fingleton as an antidote. Though Irish he has lived in Japan for decades.

fingleton.net/the-myth-of-ja … #more-1526

Or this rebuttal of the declinist view of Japanese electronics manufacturing.
fingleton.net/the-japanese-e … #more-1509


Lost for whom… ask the temp generation what they think…


You mean the temp/intern/part-time generation in the EU or the US?


Hey, I’m not the one saying there aren’t lost generations…


But very similar processes have happened in the US/EU labour markets yet noone mourns a ‘lost decade’ as in the case of Japan. The real issue is not about labour market change or even monetary policy, it is about competing economic models. The Asian model of protectionism and state led industrial planning is in the ascendency. Fingelton points this out I think fairly coherently. China is an interesting example, rather than the activity of western corporations and the emergence of a consumer oriented bourgeoisie forcing China to more closely align to western shibboleths of market freedoms and democracy, it is the corporations like Google, Yahoo and microsoft who are transforming their model to more closely align with the authoritarianism of the Chinese communist party. At root is the crumbling myth that it is markets that guarantee freedom, as if capitalism has not proven time and again that it is compatible both with authoritarian state communism and with fascism.


Banzai! Banzai! Banzai! -John Mauldin -> mauldineconomics.com/frontli … zai-banzai


As Japan seeks revival, hedge funds bet on horrifying bond bust - -> japantimes.co.jp/news/2013/0 … bond-bust/


Meet the Japanese girlband whose skirts get shorter when the Nikkei rises

:exclamation: :open_mouth:

I’ve heard of the hemline index, but this is just silly.


Japan Is a Model, Not a Cautionary Tale - JOSEPH E. STIGLITZ -> opinionator.blogs.nytimes.com/20 … nary-tale/


boj.or.jp/en/statistics/boj/ … /index.htm


blogs.telegraph.co.uk/finance/am … lion-debt/


Ex-Govt Official Slams Japan’s Rosy Fiscal Outlook - -> blogs.wsj.com/japanrealtime/2013 … l-outlook/

More signs Abenomics is working as Japan prices, output rise - -> uk.reuters.com/article/2013/08/3 … 4U20130830