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Japan Opposition Accuses Ruling Party Of Creating Stock Bubble

Tyler Durden's picture




 

Long ago, before stock markets were the only manipulated "proxy" for where the economy should be, if not where it is, and as a result confidence in the outlook for the economy was the only "fundamental" metric that mattered since everything else was, is and will be imploding (and how would it not, when it is the same market central planning that is destroying the underlying economy), there was at least some pretense that fiscal policy was as if not more important than monetary policy. The days when pretending it is not all about credit money creation are now long gone (perhaps the only good outcome from the second great depression), just as the Fed has, courtesy of global open-ended QE, finally admitted it was all about the Flow, not the Stock, destroying decades of central bank canon in the process.

One amusing side effect of this shocking (to some) realization, is that politics, and the entire fiscal process, has effectively been rendered obsolete, and politicians are now nothing but figureheads in a central banker world. Perhaps, the general public would be angry if it were to realize that the only entity left making global macro economic decisions is a private organization run by academics, who in turn are merely firgureheads for the world's private banks. That, however, would entail that the co-opted media would actually explain to the broader population just what is going on behind the scenes: a process that would entail the loss of core advertising revenue, which is why expect confusion about just who pulls the strings to linger for years.

But what is most amusing, is that politicians, now completely powerless to attack their adversary's policies in the hope of gaining political brownie points and incremental votes as those same policies are meaningless in a world in which the only thing that matters is if Central Bank X will inject another $YY billion next month, are only left with resorting to such hilarious attacks on whether or not the market is in a bubble.

Case in point Japan, where the now-opposition, Democratic Party of Japan, was left to debate on prime time TV with the ruling Liberal Democratic Party whether or not stocks are in a bubble.

As Bloomberg notes, "fluctuations in Japan’s stock market that pushed the Nikkei Volatility Index to a two-year high last week signaled a “bubble,” Mitsuru Sakurai, policy chief for the main opposition Democratic Party of Japan, said on public broadcaster NHK’s “Sunday Debate” program today."

Of course, with one party forced to resort to such cartoonish allegations as whether or not 30x P/E is indicative of a bubble, the only logical response is just as childish: the market reflects the outlook for the economy.

Ruling Liberal Democratic Party policy chief Sanae Takaichi countered by
saying Japan’s economy is responding to efforts by Prime Minister
Shinzo Abe to stimulate growth
.

Uhm, no it doesn't, as otherwise the US economy would be growing at between 4 and 8%, and not plunging the unchanged line every quarter, and forced to resort to such cheap gimmicks as including intangibles in the definition of GDP.

But never let facts get in the way of propaganda.

So here is a good sample of what political discussion will look like going forward: the political party in opposition saying there is a stock bubble...

Sakurai on Market Turbulence: “What has been behind the recent stock rally has been large inflows of hot money. As the real economy has not caught up to speed, it may be signaling a bubble. The lives of people, especially those on pensions, are becoming more difficult as import price increase.”

... while the ruling party saying there is no bubble.

Takaichi on Stock Movement: “Stock gains in the first few weeks of May had been rapid, so investors were waiting to take profits. I think more money will start to flow into the economy and exports will increase toward summer after the approval of supplementary and fiscal budgets. There are those who may be worried about the recent movement in stocks, but I think we will start to see more signs of strength in the economy as we can see large increases in car sales and construction. Companies that cut costs and overcame long periods of deflation and yen strength are being evaluated properly.”

Of course, in a world in which every G-7 central bank is injecting unprecedented amounts of liquidity into the stock market, the discussion of whether there is a bubble is complete moot: there has never been a liquidity bubble as big as what has been created now.

However, with a tiny portion of the population delighted by soaring stocks, and everyone else enjoying the largely meaningless paper increase in their retirement accounts (because if indeed stocks surge for fundamental reasons, than the coming inflation will destroy all funds locked up in long-term retirement accounts), the argument will be dominated by the party that is urging for soaring stocks, until obviously the bubble pops, and everyone who listened to the lies is left with nothing, and the opposing party (in some cases with a nationalistic aftertaste, just see Greece, Italy and the UK) soars in the polls.

Perhaps the most curious consequence of this confluence of monetary and fiscal (non) policy, is that very soon, political winners and losers will be defined only by where the stock market is, and how far it has or will crash.

 

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Sun, 05/26/2013 - 09:54 | 3599560 thewhitelion
thewhitelion's picture

"Japan Opposition Accuses Ruling Party Of Creating Stock Bubble"

 

Doesn't the word "accuses" imply some controversy or doubt?

Sun, 05/26/2013 - 11:14 | 3599668 emsolý
emsolý's picture

It's one of those rare chances again to say:

Please do not worry.

Sun, 05/26/2013 - 11:54 | 3599722 markmotive
markmotive's picture

Nikkei is a bubble. China is a bubble. Vancouver is a bubble.

Look at these $1million crack shacks in Vancouver:

http://www.planbeconomics.com/2013/05/the-million-dollar-crack-shack-man...

Sun, 05/26/2013 - 09:59 | 3599563 eigenvalue
eigenvalue's picture

The biggest bubble is in the precious metals market!

Gold and silver to ZERO!

Die, gold and silver bugs!

Sun, 05/26/2013 - 10:01 | 3599568 damage
damage's picture

I lol'd.

Sun, 05/26/2013 - 10:24 | 3599596 Urban Redneck
Urban Redneck's picture

You are aware that in an actual deflation the purchasing power of gold tends to increase relative to its drop in nominal price - which might have something to do with its being unencumbered money which can be (relatively) freely exchanged?  Whereas in an inflationary environment- gold is merely keeping up the tangible Joneses... 

 

Sun, 05/26/2013 - 10:21 | 3599598 joego1
joego1's picture

Everything to zero!

Sun, 05/26/2013 - 10:42 | 3599622 Doña K
Doña K's picture

That includes troll brain power

Sun, 05/26/2013 - 10:52 | 3599641 disabledvet
disabledvet's picture

that's not very nice. what if this "brain power" were to say "your gold is now moving armies, navies, air forces and marine corps"? would that make you feel better?

Sun, 05/26/2013 - 12:28 | 3599773 Doña K
Doña K's picture

A politician will say in this case, I am sorry if I offended anyone. /s

As I posted before, I am not a racist, I hate everyone equally. <jk>

Mon, 05/27/2013 - 08:09 | 3600756 Terp
Terp's picture

SOD ftfw

 

+1 for the reference

Sun, 05/26/2013 - 10:48 | 3599632 orez65
orez65's picture

"Die, gold and silver bugs!"

Meaning that you are a "US Dollar bug"?

Well, it's hard to wipe your ass off with gold and silver but US Dollars will do the trick for you.

Sun, 05/26/2013 - 11:05 | 3599659 Seasmoke
Seasmoke's picture

Each one of my gold coins says $50. So they can never go to Zero !!!!!

Sun, 05/26/2013 - 11:33 | 3599697 Balanced Integer
Balanced Integer's picture

Sure. But if the day comes when $50 "might" buy you a six-inch Cold Cut Combo from Subway™, are you really that much better off?

Sun, 05/26/2013 - 12:19 | 3599766 lunaticfringe
lunaticfringe's picture

When the day comes that a 6 inch sandwich costs 50 bucks, I will just take it. 

Sun, 05/26/2013 - 11:16 | 3599671 Silverhog
Silverhog's picture

And a good morning to you Mein Wenig Troll

Sun, 05/26/2013 - 11:25 | 3599685 DIgnified
DIgnified's picture

Is that a Pikachu Hitler?

Sun, 05/26/2013 - 13:04 | 3599805 Rustysilver
Rustysilver's picture

eigenvalue,

You're are going to dead and gone before any of the gold and silver bugs.  That's my bet even though I am not a gold/silver bug: far from it.

Sun, 05/26/2013 - 14:41 | 3599910 Peter Pan
Peter Pan's picture

Your call to ZERO is enough to render your call ridiculous and your fiailure to recognise the government debt bubble is proof enough that you are ridiculous.

Either make a comment that is either adding to the debate or at least say something witty or funny.

Calls for gold to go to ZERO just reveal a perverse streak born out failure to either own or understand the essence of gold.

Oh, and by the way, you can thank governments and central banks meddling with markets and the printing press for the rise in gold.

Sun, 05/26/2013 - 10:00 | 3599566 markettime
markettime's picture

They are just pissed they didn't create the bubble first. Now instead of saying the Dow hit 21,000 during my time as a politician they will say Japan created a bubble and blew the system up. Sociopaths. 

Sun, 05/26/2013 - 10:09 | 3599578 AnAnonymous
AnAnonymous's picture

What opposition party is it? The one that was for fifty years in power?

Sun, 05/26/2013 - 10:38 | 3599619 chindit13
chindit13's picture

Pardon me, but the DPJ hasn't spent a whole lot of time in power since the 1950s.  They are to Japanese politics what the Washington Generals are to the Harlem Globetrotters (LDP).

Sun, 05/26/2013 - 10:09 | 3599580 AssFire
AssFire's picture

Gee, they actually discuss this there? Where is the media compliance and low information individuals?

They need some diversity so they can start teaching bullshit cultural propaganda instead of basic math.

Send ships loaded with FSA members to enlighten them..

Sun, 05/26/2013 - 10:17 | 3599585 ebworthen
ebworthen's picture

When all moral and ethical solutions are abandoned - complete and utter bullshit must be employed to ensure the wealthy elites can get to the lifeboats and that the third class passengers go down with the ship.

"Please, do not worry."

Sun, 05/26/2013 - 10:33 | 3599609 Crash Overide
Crash Overide's picture

They are already starting to eat each other, the whole no honor among thieves thing... Wait until we start hearing about yachting accidents, mansion fires or even banking collapses!

Now that the light is on, lets see what the cockroaches do.

Sun, 05/26/2013 - 11:41 | 3599705 Offthebeach
Offthebeach's picture

Well of course the Muppets go down with the ship! It's were they work, live, rut. There are no jobs for them on the life boats. My God Man, what would they do with themselves? They'd take to malt liqueur, and pleasuring themselves. Besides, us elite make them uncomfortable. So, let's,be humain and let them have their last Muppet moments together.

Sun, 05/26/2013 - 10:25 | 3599603 buzzsaw99
buzzsaw99's picture

on the bright side your average jiro sake sixpack couldn't care less

Sun, 05/26/2013 - 10:43 | 3599624 Vlad Tepid
Vlad Tepid's picture

Hopefully the DPJ won't be so inept next time.  Maybe if Abe gaffes soon enough, the world bubble will pop on something other than Japan...

 

In the same news column as Pravda recently saying that the US is sinking into tyranny, the most libertarian party in Japan is the Communist Party of Japan (the largest Communist party in the world not in actual control).  I think I'm in bizarro world...

Sun, 05/26/2013 - 10:48 | 3599631 i-dog
i-dog's picture

We're certainly not in Kansas anymore!

Sun, 05/26/2013 - 11:05 | 3599658 22winmag
22winmag's picture

Summary judgment is granted on this one... now let's roll out the orange jumpsuits and leg irons for Obama and pretty much anyone above the rank of file clerk in the executive, legislative, and judicial branches.

 

You know it's coming. As sure as the the sun will rise in the east, the jumpsuits and leg irons are coming.

Sun, 05/26/2013 - 11:37 | 3599701 Balanced Integer
Balanced Integer's picture

Fuck it, let's do this...

Sun, 05/26/2013 - 11:17 | 3599672 the grateful un...
the grateful unemployed's picture

investors in the stock market are buying TIP bonds, which is logical since all stock gains since 2008 are based on CB additions to the monetary base. the new TIP bonds have some advantages, they're not tied to CPI, or CP(L)I(E), but they also place the principal at risk. (dimes in front of a bulldozer). there was some overenthusiasm at the start that YOY gains would be just like the old times, (8%), instead of the real inflation target they  put on the market (2%) plus or minus incidental GDP growth (aided by  royalties for selling old episodes of the Beverly Hillibillies overseas) but as a going away present Bernanke gave them a 15% half year, and now he shushes his little ducking stock market out into the wild (tapering off his committment to QE and jawboning the bears)...

if Japan doesn't match the wealth creation machine in the US we are enriched at the expense of everyone else (so pardon me if i suggest Abe is a reactionary, he has to satisfy Japanese consumers, but they don't need as much as their US counterpart, and keep Japanese workers and industry competitive - stocks are the new currency - but the race is to reflate their value cross border, and bonds are the new cash, or trash - note currency and cash are not the same thing, one is  an international bargaining chip, the other is consumer script - and really they should be floated one against the other)

so ABErnanke, is a shadow warrior, fighting the west, embracing the west. its all good in the war against China, which has never been a dominant Asian (or global) power. this is like the end of Casablanca when the police chief and bar owner leave to join the resistance, the start of a beautiful friendship.

 

Sun, 05/26/2013 - 11:31 | 3599695 Pareto
Pareto's picture

+1 for stocks are the new currency.  We were talking about this around the office a couple of weeks ago - the notion that you get the feeling that CB's are chasing everyone out of cash and fixed income into stocks and real estate to the point where it feels like stocks/real estate are king and cash (as well as short term equivalents) are ....meh.  Taleb talked about this several months ago when he suggested that CB's are forcing people to take on risk they don't understand - that its not a durable commitment to generating economic productivity, thus any gains made from this move are essentially insecure since none of the risk has been internalized....yet.  Is the implication then that you buy something that is durable like a hard asset, or, a productive asset, even if it is"overpriced?"

Sun, 05/26/2013 - 14:07 | 3599866 the grateful un...
the grateful unemployed's picture

Is the implication then that you buy something that is durable like a hard asset, or, a productive asset, even if it is"overpriced?"

and the principle of economic growth is in overpricing assets relative to what they used to be. or as JJ said of the american economic system, "Impovernment of the Booble, by the Bauble, and for the Bubble.."

Mon, 05/27/2013 - 08:27 | 3600781 drdolittle
drdolittle's picture

Yeah, at some point once they get the little people "all in"  they'll pull the rug out and ride it down in the ultimate shearing of sheep. That or it's zimbabwe, take your pick.

Sun, 05/26/2013 - 11:25 | 3599679 Pretorian
Pretorian's picture

They are not inflating enough, increase that mass speed correlation. Fuck austrian school have virtual life, sintetic 1. Better than this shit human life span of 80years...no time to save and spend, only spend.

 

 

Sun, 05/26/2013 - 11:29 | 3599693 q99x2
q99x2's picture

Jerry Brown and the Democrats created a budget surplus in California.

California Has New Problem: Too Much Money On Hand

I'm going to get my student loans, Pell grants and subsidies after all.

Sun, 05/26/2013 - 11:47 | 3599716 Balanced Integer
Balanced Integer's picture

Right. And all they had to do to get to surplus is raise taxes to the roof on the incomes, assests, and hemoglobin on every productive individual and enterprise in the state to get there. But hey, they're going to build a dinky little light high-speed rail, so Winning!

Sun, 05/26/2013 - 11:41 | 3599707 Silver Sativa
Silver Sativa's picture

I'm waiting for a massive bubble to burst, sometime this weekend, actually. There is still a day remaining in this 3-day weekend, so my hopes are still a little bit high.

Sun, 05/26/2013 - 11:55 | 3599727 marcusfenix
marcusfenix's picture

so many bubbles...

 

Sun, 05/26/2013 - 12:00 | 3599733 The Invisible Foot
The Invisible Foot's picture

I have a feeling central banks will severely contract the $ supply when we least expect it just to have the survivors buy up the newly foreclosed business's and consolidate even further.

Mon, 05/27/2013 - 08:30 | 3600790 drdolittle
drdolittle's picture

Get a chick Fed Governor, she tightens, market crash, get that dumb broad out of office and someone else takes over. Fast thinking Prez. Your're the greatest. Isn't there some loophole that would allow you to run for a third term?

Sun, 05/26/2013 - 12:29 | 3599775 bugs_
bugs_'s picture

they can print blame just as much as they can print yen

Sun, 05/26/2013 - 13:55 | 3599849 besnook
besnook's picture

i didn't think anyone didn't know this was all about saving the bankers. the only people who still don't know are the bottom half of the class who think reality shows are reality. unfortunately they are the ones who determine the future of society. that should scare everyone as much as the bankers because they will determine your future when the bankers lose control of this video game. it is just beginning in europe. it will soon come to a mainstreet near you in the usa.

as for the japanese, they have the easiest way out compared to the eurozone and the usa. everyone will just dress up in anime and holograph characters to create a miyazaki world in harajuku and shibuya, a real life satire of the real world. they are the ones with a grip. the rest of us still think reality is real.

Sun, 05/26/2013 - 14:15 | 3599878 world_debt_slave
world_debt_slave's picture

all in the name of altruism, yeah right

Sun, 05/26/2013 - 14:51 | 3599919 Peter Pan
Peter Pan's picture

The Japanese Prime Minister is doing the right thing.......he is picking up speed as he approaches the brick wall of reality. He is fast forwarding the whole wprld to the inescapable crash that is needed to bring to an end the madness and the misery perpetuated by fools and fraudsters.

Sun, 05/26/2013 - 17:05 | 3600112 NipponMarketBlog
NipponMarketBlog's picture

 

 

As per usual for the past 20 years of sub-par economic performance in Japan. the government is effectively a spectator trying to give the impression that it is in charge. The JGB market may be in the iron-grip of the BoJ for the moment, but that simply can not last if JGB holders decide they've lost faith in 'The Experiment'.

BoJ governor Kuroda has been ordered by Shinzo Abe to push out the boat, and that is what he has done. Now the two of them are sitting in it, praying intensely that the wind will take them in the direction they desperately need to go.

 

http://nipponmarketblog.wordpress.com/

Mon, 05/27/2013 - 02:07 | 3600622 bigprofitbuzz
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