It's Never Different This Time

Tyler Durden's picture

Japan's years of quantitative easing, forced financial repression, and Koo-nesian stimulus efforts are an altogether too accurate test-tube for the accelerated policies that Bernanke has engaged. A glance at the charts below and one wonders how many times did Japanese investors look at the equity market's exuberance relative to bond yields and scoff greedily; how many times did Japanese equity managers ask "what are you gonna do, buy JGBs?" But time and again, the Japanese equity market realized the errors of its ways and attempted to 'creatively destruct' the status quo - only to be dragged kicking and screaming into the next bubble. What awaits the US?

Japan from the 1990/1 highs - time and time again the equity market pulled away in exuberant hope only to have its Koo-nesian heart broken... The pump-priming failed as the carburettor was flooded... Since 2009, Japanese equities finally stopped kidding themselves and sank along with JGB yields...


S&P 500 from the 1999/2000 highs - one can't help but wonder where stocks go next. The timing is so similar to Japan also... (2-3 year after highs stocks decouple higher and 8 years after they recouple; then decouple again... in Japan this second decoupling was around 4 years - which is about now for US equities)... Greenspan tried to pump-prime in the mid-2000s and that ended badly, now Bernanke has tried even harder...


If history is any guide, we will see US equities revert (just as Japanese equities did) - and with current rates implying an S&P 500 below 400, that would be quite a show.

But of course - it's different this time...

Charts: Bloomberg

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Vampyroteuthis infernalis's picture

Let the crash commence!!! No more magic dollars generated on BS debt to be paid back by future generations. By the way, fuck you Bernanke!

Oh regional Indian's picture

That S&P/10Y chart looks like the gaping MAW of the Leviathan.

When it clamps shut, you better hope not to be in the midst of things, searching for a chair to park a fat ass on.

Rising interest rates and a crashing stuck markets,....and no exits as the algos rape you on the downside...


So Close's picture

I guess the good news is that we know what the bottom for rates are.  Until they go negative that is.

fonzannoon's picture

TPTB salivating over S&P 500 at 400. They will make you an offer your 401(k) can't refuse.

None of it means anything until the great bond bull market finally cracks. That's when people get a whiff of austerity.

hairball48's picture

It's gonna be a lot more than a whiff of austerity when the bond market bubble pops.

F22's picture

Gold Bitchez....


inevitablecollapse's picture

Bart: A man drink like that and he don't eat, he is going to die. 
Jim: When?

everytime is see one of these posts on comparisons to past lead ups to an 'event' reminds me of this exchange in blazing saddles

ebworthen's picture

God, those poor folks with money locked in a 401K, Pension Fund, or personal savings.

The Wall Street and Washington leeches and tapeworms have a strong blood lust for those assets.

You think 2008 was bad?  You think 2002-2012 was ten years of not much?  Just wait!  Holy Hannah.

Samsonov's picture

I consider Japan to be the best-case scenario.  When considering the numerous examples of recently collapsed economies--Zimbabwe, Argentina, Japan, Russia, Iceland, etc.--it's obvious how much better Japan has handled the inevitable than almost anyone else.  Except Iceland.  Iceland did it right, of course, by just taking their lumps and moving on, and now they're fine.  But it's too late for us to follow that model now.

So Close's picture

You make a good point.   What is the "inflation ratio" for being the reserve currency?

Jack Burton's picture

Japan started it's fall from a position of a major export economy, large trade surplus, world renowned manufacturer, net saver population, it's debt held by Japanese savers.

NOW, shall we recap where America stands as we start our fall? God help us! We are starting from a nation of debters, debt held by foreigners, net importer, massive trade deficit, net spender population, etc. etc.

We are not Japan, we are ten times worse. Perhaps our saving grace will be the US agriculture and new US energy production boom. These are our only aces in the hole. Otherwise, we are totally screwed.

Oh, not to mention Japan had no war debts, we have trillions in unpaid for war debts, with more piling up every day. God help us!

Samsonov's picture

Okay, you killed my hope.  Argentina it is.  Or Russia.  But then, who will be our Putin?

Oh regional Indian's picture

Jack Burton said:

"Japan started it's fall from a position of a major export economy, large trade surplus, world renowned manufacturer, net saver population, it's debt held by Japanese savers."

If you replaced Japan with USA, you'd be describing the United States of the 50's and to a somewhat lesser degree the 60's. Major difference being the Korean Mistake, the Vietnam mistake and the Cold war.

Add to that the fact that Japan was not allowed to spend on a military of any size/note/standing.

Really changes everything.

What I'm saying is that the US has actually been on a slide ever since the end of WWII, all appearences to the contrary notwithstanding. The 50's were the happy spillover effect of a war economy wealth effect.

Also, Japan funded the rest of the world's speculative bubles via the yen carry trade, sort of the Petrodollar effect...

No easy answers.

Butt, to samsonovs question, no Putin perhaps, but I can see Sarah Palin as your Poon-tin saviouress....



Orly's picture

Palingensia, (or Palingenesis...)

These people are not chosen at random.  Ever wonder why she moved from Alaska to Scottsdale, Arizona- to the middle of the desert from an outdoor paradise?  It wasn't for the weather!  Scottsdale just happens to be along the 33rd degree north parallel.  (Masonic significance...)

33°30?N 111°56?W

In the Gospel of Matthew[1] Jesus is quoted in Greek (although his historical utterance would most likely have been in Aramaic) using the word "????????????" ("palingenesia") to describe the Last Judgment foreshadowing the event of the regeneration of a new world. Palingenesia is thus as much the result of, or reason for, the Last Judgement as it is directly the Judgement itself.


P.S. I hope everyone who uses it on a regular basis gave five dollars to the Wikipedia.  Yeah, you prolly go there five times a day, don't you?

Oh regional Indian's picture

You remember, eh Orly.

Palingenisis indeed. She will be back, no doubt. Probably tied in, in some twisted fashion, to give her Sheik-in-Awe blessings to Moar Mayhem in the desert sands.


Oh regional Indian's picture


I remember, when her candidacy was first announced, the most common word-association with her, here on ZH, was MILF.Gun toting hunters would vote for her. Fer Shure.

Interesting times indeed, what with her and McCain (and Able..... Danger) good neigh-bores now!


Zgangsta's picture

To be fair, America has MUCH better military than Japan.

akak's picture

You mean a vastly more EXPENSIVE (i.e., ultimately unsustainable) military than Japan.

When will people finally realize that having a bloated military is a liability, not an asset?

Karlus's picture

You say that until OPEC gets the bright idea to sell oil in something other than dollars. Right about that time a military comes in handy


Zgangsta's picture

No, I mean a military that has the ability to blow up more stuff than any other.

Expense doesn't matter if you can take over every other nation in the world whenever you wanted to.

akak's picture


Expense doesn't matter if you can take over every other nation in the world whenever you wanted to.

Yeah, and that is why the Roman Empire continues to rule the world to this day.  Likewise, how the sun never sets on the British Empire, and how the USA won the Vietnam War in a cakewalk.

The shallow simple-mindedness of your "argument" positively underwhelms me.  Honestly, have you EVER studied or read any history at all?

Oh regional Indian's picture

Akak, it seems that when you have the MotherOfAllBombs (MOAB) to Shekinah the world, you make history as you go along.

Manifest DENSIty perhaps?

Or some such.


akak's picture

ORI, can you clarify the above post?

I am not sure what you are getting at there.

Oh regional Indian's picture

Was agreeing with you while attemptng word play humor simultaneously.

It looks like having the largest military in the world makes you writers of history, so why bother learnin' any?

The MOAB and Shekinah is actually true history, replayed by the warmongers at DC.

Saddam, who has delusions of being Nebuchadnezzar, was done in by the Moab-ites...with the blessings of Shekinah....again. Convoluted reference, I know, but an interesting truth-dig, if you are so inclined.


Orly's picture

Also, ORI, if I may overstep any invitation here, what you are saying has many ironic aspects and the statement is quite clever and humourous.

Shekinah is the Hebrew word for the effiminate aspect of God.  Since MOAB (the Mother of all Bombs...) represents the "effiminate" aspect of the US military, it follows that to some, the military is all-powerful and it has even named one of its more potent weapons as a woman.

The ancient city of Moab is located in modern Jordan and ancient myth declares that it was founded by Lot, In the ancient myth, Lot's wife was turned into a pillar of salt when she turned to look back at the destruction of Sodom, not unlike those who perished in the nuclear holocausts at Nagasaki and Hiroshima, Japan at the hands of the mighty God, the US military.

In other words, the firm belief in the power of the military is hubristic at best and decidedly silly at least.  For such true power, they're looking in the wrong place and are certainly misguided.


Oh regional Indian's picture

:-) See above orly. You said it better.

I'll cast my Lot with you.

And interestingly enough, the planners of such military escapades know the power of these words and the his-story they are attempting to re-play.

To what end?


chump666's picture

So well said Orly.  Have you seen this Carl Sagan on the madness of self annihilation.

Orly's picture

I love Carl Sagan.  When my mind was being formed from being a selfish kid and growing toward looking at the "outside," I was lucky enough to stumble upon Cosmos.  I have never been the same since.


tango's picture

Considering the manner in which we treat our resources today - physical and social - I am firmly convinced that our massive advantages in both energy and food will somehow be squandered by the political class.  Either we will  regulate/tax/ban oil/gas exploration and greatly reduce its effectiveness or we will export food nations that "need" it or something destructive I have not even considered.

The political class is unable to step back and let the productive juices flow. They see what works and what doesn't and they inevitably choose the path that doesn't. I just don't get it.


marathonman's picture

They are paid to pass rules that limit competition to existing business.  Lobbying is effective in killing off competition even if it means a little higher operating cost.  Politics is about creating the illusion that you are helping people while your actively making rules that are against their interest.  Once you get your head around it, it's not hard to get.  Getting your head around the idea that those SOB's are out for themselves exclusively was hard for me at first (oddly enough).  Now I accept it and it all makes sense.

rawsienna's picture

I am no equity fan but real rates in japan were never negative - so our situation is somewhat different.  In Japan, you earned real returns in bonds - In the US you are getting your pocked picked in bonds. Gold should outperform. 


Sad reality is the is no evidence that QE works or has ever worked -- meaning a successful policy is one that is BOTH implemented and unwound - Nobody has ever escaped the QE trap.  As the lyrics of one of the great songs on Raw Sienna "When you are married to H you are married for life". 

Cyclerider's picture

Keep updating this chart periodically.  Can't wait to see if your prediction comes true.

It looks like it will only be 2-3 years before we hit 400.

Mr Lennon Hendrix's picture

Let's all buy bonds and get a yield that doesn't beat inflation.

That sounds like the winning trade.

edb5s's picture

Good news is we all know what to do when it recouples:  BTFD

dolph9's picture

If one accepts the premise that the Fed will ultimately have to choose between the equity vs bond market (just as the government has to choose between warfare and welfare), then the equity market will be sacrificed.


If this is true, it means equities are vastly overpriced and make poor investments.  It also means bonds are an even worse investment, because they are the last bubble, government supported.

gjp's picture

US dynamics will likely be very different than Japan, partly because of the debtor/creditor contrast between their positions but more because with the US the global fiat system is at stake. Japan is very much a best case scenario, and unfortunately a low probability one.

besnook's picture

everyone assumes japan has been crushed by 20 years of deflation but never in that entire time did they suffer anywhere near the cataclysm the usa economy has suffered in the last 5 years or what europe is facing now.

AynRandFan's picture

Hasn't Japan always maintained a positive trade balance?  The U.S., on the other hand, has been exporting its wealth for a long time and won't be nearly as resilient.

Quinvarius's picture

I don't see it.  I see the Japanese market moving in tandem with the US stock market starting with the tech bust.  For evey down arrow, you could draw an up arrow, but did not.  What I see is every time we blew up our money supply, and everyone elses, Japan got a rally to match ours until the tsunami/nuke.  Treasury and JGB yields have been dropping the whole time.

Besides, there are plenty of examples where the printing press has exploded the markets rather than imploded them...

orangegeek's picture

SP500 weekly below shows pretty much the same thing.



1eyedman's picture

somebody's hot for euro's right now, 1.311 to 1.3124 in 12 min straight up....several days now, straight the f up....gotta be swap rollover time...


Orly's picture

And the EURUSD and the USDJPY are trying to decouple here.  If my charts are correct, the spring-loaded U/J could rocket, retesting new highs from mid-March 2012 @~83.7.

Could be they're losing their grip on the Euro.  No other reason to make such drastic, blatant and dramatic ramps in the pair than to try to draw in more and more longs to keep the ponzi going.  It may be breaking down here.  If it does, it won't stop until it reaches 1.27.

We'll see.


q99x2's picture

Oh, snapdragons, my favorite flower how long before you close your petals unto me?

skepsis101's picture

Samy, our "Putin" was going to be "Betrayus", until it wasn't.  Do not think that alot of those 4-stars didn't get the message. The real question now is, does the POTUS have the balls to continue to tighten our noose around central asia and the arabian peninsula and hold the entire rest of the world at bay, hostage to the petrodollar/world reserve currency, or not.  We do indeed live in interesting times, god forbid!