We Found The 'Other' Greater Fool

Tyler Durden's picture

We have recently explained (here and here) just how dismal the outlook for France is. The gaping divide between French and German perspectives on austerity, growth, and policy is widening by the day. And yet French credit spreads (and yields) have been collapsing ever tighter at the behest of a world gone mad on monetary munificence. We know who the greater fool is in Spain and Italy (the domestic banks and pension funds); and so now, thanks to SocGen, we know who the greater fool is in French debt (OATs).

The BoP data also show that Japanese institutions have been sellers of USTs every month from January to March; and buyers of European debt since Dec 11...

and France has been by far the largest recipient of Japanese debt purchases. In March alone flows into OATs rose to JPY232bn, a 3-month high. Institutions have been buying OATs for 16 months in a row for a cumulative JPY5.7trn (E43.8bn) since December 2011.


A marked 31bp decline in 10y OAT yields in April indicates that Japanese investors stepped up their purchases last month.


This will not end well...

Via SocGen:

Outflows from Japan could be curtailed in the future unless JGB yields and volatility settle down. 10y JGB yields touched a 0.70% high on Friday and spiked again overnight, to 0.80%, the highest since February. If this continues, Japanese institutions may become more reluctant to move funds overseas. This would slow and potentially cap the descent of the JPY, but also implies that the low point for eurozone peripheral funding costs would be behind us. With the ECB (and Fed) indirectly benefiting from aggressive BoJ easing, it is perhaps no wonder that G7 officials voiced their tacit approval at the weekend of Japan’s stimulus tactics.

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sitenine's picture

No, not greater fool, just simple "coordinated action."

Hedgetard55's picture

Fucking Japs. Fuck those yellow fucking monkeys, they can go fuck themselves, but I am glad the Jap PM has decided to transfer his own citizen's wealth to me via Yen debasement. My Japan fund is screaming. Free money from Nipponese cocksuckers to me, banzai!

101 years and counting's picture

So basically, the fed is monetizing all us debt allowng the would be foreign buyers of our junk to buy other shit debt. and since the ecb is impotent, Japanese printing cocksuckers are the provider for maintaining euro shit at astronomical prices.

I Cant wait for this to blow the fuck up.

Glass Seagull's picture

"Buy our debt now, and we promise to buy yours later when you're in a jam.  In the mean time, you earn the spread.  We'll have the EU taxpayers backstop these bonds if things get shaky.  Win-win, Abe...win-win.  Now let's huff this turpentine and go get some baguettes."


fonzannoon's picture

If Japan is a net seller of UST's and the fed needs to do QE just to buy our own debt, whi is going to buy those UST's if Japan keeps dumping?

Hedgetard55's picture

YOU are, you dumb fuck, via Ben's proxies, and he willprint as much as needed to fuck you in the ass 20 ways to Sunday.

fonzannoon's picture

and when he prints does he not export inflation all over the world?

Do you live in the U.S?


Hedgetard55's picture

Do you live in the real world, fonz? Wake the fuck up already.

fonzannoon's picture

This article is claiming that Japan is a net seller of UST's. We are getting bombarded with the idea that Ben will slowdown QE. So my question was a bit rhetorical in nature towards the article itself. Because I find the whole idea to be a whole bunch of bullshit.

I am trying so hard not to just tell you to go fuck yourself right now...





Hedgetard55's picture

Just go ahead and tell me. It's all good!

Hedgetard55's picture

I agree with you, it's all bullshit. Ben will print whatever he needs to.


Did you ever see the movie "Forbidden Planet"? If not, you can see it on YouTube. At the end when the ID monster is trying to enter the Krell lab and kill Commander Adams and Altaira, Leslie Nielson tells Morbius that the Krell machine will provide whatever power it takes to melt the 28 inch thick super Krell metal door so it can get in. So Ben's printing press will provide as many dollars as needed to absolutely destroy the US financial system and economy.

SeeNoEvil's picture

So everyone's buying each others bonds with electronically created zeros . Sounds legit to me what could go wrong ? 

SqueekyFromm's picture

Oh well, Irish Poem time with some pidgin French!!!


A Merde of Croesus???

There once was a country called "France."

Which found a big load in its pants.

Not "merde," nor kin. . .

It was Japanese Yen!

Sacrebleu! Voulez vous la Malchance???


Squeeky Fromm, Girl Reporter

nightshiftsucks's picture

Why do I have a picture in my mind of a bunch of GS criminals around a table going "now we'll have Japan buy French bonds then..." and when it becomes to compilicated they say fuck it and the whole system collapses.

jldpc's picture

Remember the Japs would never surrender; and while dying would reach out to kill with their last breath. So then the Gunnys went out with shotguns after the battle of failed Banzai charges and took no prisoners. So now who will they take with them to Kanji?

Hedgetard55's picture

Thank you brother.

They called it the "possum squads". Took care of the little yellow fuckers that were still breathing.

W T F II's picture

Confluence of Congruence...!!

This song says it all...http://www.youtube.com/watch?v=FzNNUI5eE80

Coldfire's picture

Break like the (divine) wind.

chinaboy's picture

Unless Japaness bond safety is below that of European, they would not buy Euro bonds like this.

Izznogood's picture

For the data to be truly transparent you should show the monthy purchases of European debt by Japan for the countries with soaring Bund spreads together with the spreads for both France and Italy. What the charts here indicate is just that Japan has bought European bonds when interest rates were high. That does not seem like such a foolish thing to do, unless you actually expect a total crash. The entire international economy is in imbalance but money has to go somewhere, why not ensure high interests and capital gains? With the plunging Yen, Japan seems to have made some good profits - for the time being

Jugdish's picture

I bet Janet Napolitano is really good in bed. I really like her ass. It's so sexy.

Element's picture

Mr President we must not have a currency war gap!

flyingpigg's picture

Not sure if I feel better now... Who's the greater fool, the Japanese institutions or muppets like me who shorted the sick man of Europe? An interest rate of 2.5 pct for 10Y debt looked already way too low to me but it's currently trading below 2 pct...