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"Japan's Debt Market Could Crash In Ways That Make The Collapse Of Lehman Look Like A Warm-up"
While it is remarkable that the same media organization that a week ago was fawning over the rotting carcass of Keynes' disastrous economic legacy, can today issue a warning that "Japan Creates World's Biggest Bond Bubble", we have long since given up being surprised by things that make absolutely zero sense in the New Abnormal.
So here is William Pesek with a less than Keynesian view on why Banzainomics' very own Kuroda-san will be regarded as either a genius or a madman in a decade. Spoiler alert: it won't be "genius."
Japan Creates World's Biggest Bond Bubble
Ten years from now, will Bank of Japan Governor Haruhiko Kuroda be regarded as a genius or a madman?
Kuroda's shock-and-awe stimulus move on Oct. 31 delighted markets and won him plaudits as a monetary virtuoso. Japan, the conventional wisdom tells us, has finally gotten serious about ending deflation, and isn't it wonderful. But what happens when a central bank buys up an entire bond market? We're about to find out as Kuroda, like some feverish hedge fund manager, corners Japan's. Neglected in all the celebrating: To reach a 2 percent inflation goal that's both arbitrary and meaningless, the BOJ is destroying Japan's standing as a market economy.
In announcing that it will boost purchases of government bonds to a record annual pace of $709 billion, the central bank has just added further fuel to the most obvious bond bubble in modern history -- and helped create a fresh one on stocks. Once the laws of finance, and gravity, reassert themselves, Japan's debt market could crash in ways that make the 2008 collapse of Lehman Brothers look like a warm-up. Worse, because Japan's interest-rate environment is so warped, investors won't have the usual warning signs of market distress. Even before Friday's bond-buying move, Japan had lost its last honest tool of price discovery. When a nation that needs 16 digits in yen terms to express its national debt (it reached 1,000,000,000,000,000 yen in August 2013) sees benchmark yields falling, you've entered the financial Twilight Zone. Good luck fairly pricing corporate, asset-backed or mortgage-backed securities.
Considered in relation to gross domestic product, Kuroda's purchases make the U.S. Federal Reserve's quantitative-easing program look quaint. The Fed, of course, is already ending its QE experiment, while Japan is doubling down on one that dates back to 2001. Kuroda's latest move means Japan's QE scheme could last forever. The BOJ has willingly become the Ministry of Finance's ATM; reversing the arrangement will be no small task.
All this liquidity has made for surreal events in Tokyo. Take the news that Japan's $1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds. Japan has enormous public debt and a fast-aging population, and now the world's biggest pension pool is shifting to stocks. Yet somehow, 10-year yields are just 0.43 percent. The explanation, of course, is that the parts of the market the BOJ doesn't already own are sedated by its overwhelming liquidity. The BOJ is now on a financial treadmill that's bound to accelerate, demanding ever more multi-trillion-dollar infusions to keep the market in line.
To Japan bulls, the end justifies the means. If Kuroda changes the deflationary mindset that's stalked Japan for 17 years now, then his gambit was worth it. One problem with this argument is that deflation isn't the cause of Japan's malaise, but a side-effect. Consumer prices rising at 2 percent or more will be a big problem if Prime Minister Shinzo Abe doesn’t push ahead with plans to deregulate the economy and prod companies to raise wages. That's doubly true as Tokyo mulls another growth-denting rise in the consumption tax.
Another problem is that Kuroda is turning the BOJ into the world's biggest asset-management company. The BOJ won't admit it, but it's monetizing Japan's debt on a massive scale, and probably even retiring large blocks of it -- just as the government did in the 1930s. What happens when the BOJ decides Japan needs a credible and functioning bond market in the years ahead? Kuroda's successors face terrible odds disengaging from a market he's effectively nationalized.
Perhaps history will vindicate Kuroda's genius. That depends on whether Abe musters the courage to attack structural impediments to growth in employment, industry, trade and energy. More likely, Kuroda is demonstrating that it's one thing to go long on a market, and quite another if you have to stick with that bet forever. To avoid being remembered as a madman, Kuroda had better devise an exit strategy from history's most audacious bond trade.
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Coming to a country (very) near you!
When?
A couple of years ago Kyle Bass said Japan would be the first domino. His prediction looks better every day
This will be the Fukushima of all meltdowns. No Pun intended.
Japan has been crashing last 2 decades. They are kind of used to it. way past the grief stage.
Americans are the ones who will be shocked that the world is not what the hollywood says it is....they are still stuck in denial.
For sure. What could go wrong? Any financial vehicle that starts to bog down will be purchased by the BoJ. There's no end to it.
Brokers seem to be doing fine these days with the high volatility. First it was Interactive Brokers now Armada Markets also reporting strong October trading results:
http://armadamarkets.blogspot.com/2014_11_01_archive.html
Japan's problem is not a deflationary mindset.
It is that Japan's economy cannot function properly because it is so distorted by prolonged easy-money policies.
Interest rates need to rise and easy money needs to stop to solve the problem.
#Austrian School #time preference
It's too late. Once you're easy money too long you can't raise rates without blowing up the system.
Exactly the same place the US is likely at now.
Print MOAR electronic yen and buy MOAR DEBT, Kuroda-san!
http://headlines.ransquawk.com/headlines/japan-s-gdp-declines-for-the-fi...
News Headline Summary
Japan's GDP declines for the first time since April, according to Nikkei
- Japan's gross domestic product for September likely dropped 0.3% on the month in real terms, falling for the first time in five months, the Japan Center for Economic Research said Tuesday.
Update details:
- As a guide, Japan's next GDP announcement is scheduled on the 16th of November.
Print 18:16 - Economic Commentary - Source: BBG
Seek : there does need to be an orderly restructuring of the bond market. .
Minimum 50% haircut. And shuttered TBTF banks with 15:1 leverage.
... we have long since given up being surprised by things that make absolutely zero sense in the New Abnormal —
Slo-mo crash - like a dream with two lights inexorably speeding towards each other in a tunnel. And then, without so much as a ceremonious bow, they crash headlong together, steel giants separating themselves from each others wheels and smashing mightily into the walls that contain them. The JYP and US economies will do this dance, no?
I keep thinking about one of his comments that was effectively: "it's not inflate OR default for Japan, it's inflate AND default."
Inflate IS default.
Japan will never default on their bonds. They will simply destroy the yen completely.
Inflating it away helps with the accounting books, just keep adding zeroes till it goes to zero.
Defaults causes a lot of complications in accounting terms.
Japan is going to implode sooner than even many Japan bears expected.
Japan is a real life test case and model of Krugmanomics! Enjoy the show!
If Japan implodes does the rest of the world go with them? If so, how long? Days, weeks, months?
They just need a bit more time to ready the strike against Russia/Iran/China, plus get the finishing touches on the FEMA camps and for whomever lives through it.....implant chips and a new "global" digital currency. Sounds fun right?
Japan can easily bring everyone else down with them. Their economy is too big not to ignore.
Unlike Greece and the rest of the PIIGS, you can't bail out Japan.
After the crash - we'll all manage one way or another.
The FEMA camps aren't for us, we could be so lucky. No, the camps will be for the DHS troops...we will be managed like a wild animal park and the camps will be the "rangers stations". Eventually they will restart the system when you get "chipped" you will get "loaned" like a million digital NWO units. But there will be entertainment, that's a human right. Expect large drive in movie sized flat screens scattered around where Big Brother updates will be squealed across the landscape and the odd Taylor Swift video...
US economy is being bailed out, and it's larger than the japanesse.
The "critical size" for an economy to be bailed out or not is not decided by rational procedures by the ones who decide it.
The rational "critical size" for an economy to be bailed out is infinite (not real nor rational).
Each successive bailout implies incremental undermining of the social structure. Bailouts move the dial toward fascism where the state enforces the success of corporations. You work for them and they set the terms.
One day, three hours, seventeen minutes and thirty seven seconds. Plus or minus 172 milliseconds.
Oh, an HFT algo player, huh?
Seven days. Why?
After one buys a JGB, one has seven days before that creepy girl crawls out of ones terminal and gets whacked. One has to sell the bond to someone else before then, at which point they have seven days ... its ... "The Ring" ...
Regards,
Cooter
they never thought of making a tape and sending it to themselves to just loop the curse.
with Kuroda's brilliant plan, now you get to live with the creepy girl and make creepy babies with her, genius.
BOJ holds $2 trillion of the $10 trillion in Japanese debt. The remaining $8 trillion loss will sink the banks, pensions, and insurance companies. I don't understand why anyone other than the BOJ would buy Japanese debt at this point.
If we use the Lehman collapse as a guide...
A year after the collapse, it was said the US was within 2-3 hours of a complete financial collapse on September 18th. There's a lot of different "start dates" you can pick, but I think September 9th is the best -- that's when the market freaked out over Lehman and sold it off. Lehman filed for BK on 9/15. FYI gold dropped rapidly to a recent low on 9/12/08 as banks sold tier 1 assets to cover, so that was a big clue something was going on behind the scenes.
So 9 days from the point of major market recognition they're fucked, and 3 days from filing BK, 6 days from the gold signal.
And that was Lehman, who was way smaller than Japan.
I think under a month is a near certainty, and less than two weeks is highly probable. It could be as little as three days. I would lean towards shorter timeframes because since the collapse there have been all sorts of legal and regulatory changes made to allow them to slam the doors shut faster. If you read the bowels of Dodd-Frank you realize it was written with the next collapse in mind.
For planning purposes, I assume "instantly" to 24 hours, meaning that's how long you'll have to do final preparations. My guess is you'll be able to fill your car's gas tanks and make on trip to the store and then we go into a multiday bank hold until the revaluation occurs, like we say in the depression. I wouldn't count on being able to acquire cash in time either.
I agree with this. The last stage is when their markets go parabolic a la Zimbabwe, which is in progress now.
And the last stage is always the fastest and most dramatic, with heavy volatility.
We'll see how long they can pump it though. The madness always seems to extend much further than anyone expects.
On another note:
After things do roll over and the Gov. collapses who's power actually increases? The answer is usually the debt holders depending on what provisions are written into the debt contracts. It's the majority debt holders that wield power after a systemic collapse, just as the debt holders are the ones at the head of the negotiation table when a corporation collapses. Unless of course the people of said country get together and decide to repudiate said debt.
And who holds most of the debt now?
Why the Central Banks of course. By design of course.
"depending on what provisions are written into the debt contracts."
And as a government apparatus, how those contracts are enforced will be up to the government.
In the future, when debating the cause of the Japanese economic & financial implosion, Krugman will insist that his advice to Kuroda to go "all in" was in jest, just as he had "joked" about his 2002 advice to the Fed to inflate a housing bubble to replace the busted 1999 equity "market" bubble.
Paul Krugman, he so funny.
Think about the age old axiom that the stock market is a discounting mechanism.
The markets always look out into the future and start pricing in the future before it happens. Always.
Sometimes the anticipators think they see the future with clarity and look out about 6 months into the future. That is about the max.
Sometimes the market is murky and 'on the edge', in which case the market prices in things only weeks into the future.
The fact that lower oil prices have not sparked a huge rally in equities is a red flag waving in front of the market. Therefore think about deflation through forced debt liquidation resulting in a contraction in the money supply.
Precious metals continue to react to deflation fears rather than moving higher while seeking a safe haven which is now US bonds and the US dollar. At least for the next 90 days IMO.
so is mr bass a multi billionaire yet? corner the nickel market? wish he would try gold...
Also, lower oil prices mean fewer dollars exported, and an international dollar squeeze.
The problem is that our "markets" do not reflect the reflect what a willing buyer (not under duress) would pay to a willing seller (not under duress). In other words, technical analysis is basically useless. This is the equivalent of the steroid era in baseball. Put a big asterisk beside any chart.
The steroid era in baseball mirrored the broader society: the steroid era in Financialization, debt, bubbles, McMansion size, SUV size and obesity
You said market. Funny! Get your head out of the textbook nerd. None of that exists anymore.
There once was a time when the stock market was a discounting mechanism. Too much manipulation these days to know what will happen. The markets have decoupled from the real economy
I love how tyler uses the same maniacal photo of kuroda in every article.
being as japan is mostly old people who for the most part are concerned with having the money NOW, while they are still alive, it is understandable that they have no problem endebting their young people in the future.
Looks like its all going towards December
Everything, for the last two years, has been pointing to this December.
Most paper claims, on real wealth ,are going to burn.
This is all planned.
Gold at any price is a bargain right now.Silver I'm not so sure about.
any moment gold goes up, silver will outdo it. same going down. only time gold will be better is when ratio is uner 25-1
Wish I could agree. The GSR is history.Silver has acted like copper during the 1930's depression(pre rearmament).Its industrial demand is actually its weak spot, not a strength during a deflationary
collapse, which is what we are seeing now.Maybe very long term its a winner,but that will be decades
behind gold.
nothing a few trillion more yen of QE can't fix!?!
It is astonishing that the Japanese debt market has held up so well for so long. Who wants 20 year bonds paying about 1.2% a year while the currency is depreciating 5% a week. That is a horrible investment. What happens if the yen crashes to 120 or 130 per dollar? You have lost about 5 to 10 years worth of returns. That can happen in a week. So who are the idiots buying Japanese bonds but the Central Bank?
The Federal Reserve
bond trading, fun you should try it. which nut is under which schell?
BOJ is buying all of it now. It's 100% monetization of their debt. The Yen will drop to post-WWII lows.
I agree. This is serious poop. For the first time in a long time, a first world country has crossed over into serious do do. Let's see how this plays out.
These laws of finance and gravity - what are those just exactly??
Related to the laws of Accounting. Used to be a law, now some quaint old thing that little ladies used to care about....
That growth thing rears its ugly head again
What's the circumference of earth these days - has to be more than it used to be to support the infinite growth that economists blabber on about.
The sky is falling, the sky is falling!
The Titanic is unsinkable!!!
Wasn't it trying to avoid the iceburg that sealed their fate, rather then run into it a 10 MPH and lick their wounds of embarassment?
Kuroda's latest move means Japan's QE scheme could last forever. The BOJ has willingly become the Ministry of Finance's ATM; reversing the arrangement will be no small task...
A semicolon you dolt! [/miss shields]
http://www.youtube.com/watch?v=q8L86Z8YgeQ
Tease....
If you know your history, Japanese are extremely stubborn. It will take a Hiroshima type event on an economic stage to change their course.
BBBBBBBBOOOOOOOOOOOOOOOOOMMMMMMM!
One will not be enough, you will also need Nagasaki.
Sumo Wrestling & Yen currency deprecation. Could be a cable channel blockbuster series.
/lmfao
The Keynesian Kamikazes, hard at work...
Its a nice move to get rid of there FED ponzi masters, just print to infinity and crash the hole thing.
Japan has become a disposable piece of used toilet paper.
Japan will soon look to China for help.
Even Japan would side with China to avoid America.
Of course, this has nothing to do with Americans.
It has a lot to do with the Chinese who control America.
They are a clever group of slanty eye'd son's of bitches, yes?
About 40 of those bitches were bred by Rockefeller himself.
I think Jack Ma is half breed.
Look in the mirror and see that Caucasoid looking back.
Japan Inc. needs to sue GE, for MOAR cash flow.....ZeroHedge #Fukushima....https://www.facebook.com/groups/nucleartracktown/
So here is William Pesek with a less than Keynesian view on why Banzainomics' very own Kuroda-san will be regarded as either a genius or a madman in a decade. Spoiler alert: it won't be "genius."
I wouldn't be surprised to see the "main event" in less than a year, and Abe and Kuroda's heads on pikes shortly afterwards. I hope those (2) clowns have good accidental death insurance.
there is some potential genius in there from a math view. i hope they get a chance to play it out so we can see where it goes. i haven't bought the doomsday analysis yet. if they just created a lincoln style greenback through the boj then there is real potential genius and we have the trillion yen coin while maintaining the mionetary math model.
someone has to sell the bonds to disrupt the market. no one is selling and no one is going to sell.
the question no one is asking is this one. is it possible that the logical end to an interest dependent fiat money system is zirp? zirp is the end of the road for a post industrial economy? totally dependent upon cb printing to muddle along at a slowly decreasing standard of living for a decreasing population?
I think you have in short nailed it..... I think you could argue the difference between Interest dependent, and Growth depended, or actually the relativeness of same. If bonds had a 1% negative yield, and deflation ran at 5%, in that environment return of investment is still well an investment.
Japan is under attack, and that idiot is laughing?
Japan is so alone, at this point it's sad to watch.
China has wanted you for such a long time.
Now you're being delivered to them of a platinum platter.
So sad.
Land of the Samurai, what happened to you?
The rape on Nanking has come home, finally.
"The Fed, of course, is already ending its QE experiment, while Japan is doubling down on one that dates back to 2001."
Japan is the US in a short time. We are on the exact same path. QEn will not end, it will morph into an alternate method of the same thing.
I heard last night that Japan is prinnting to buy up US treasuries. Basically Japan is being used as the Fed's new proxy or the new Belgium
Remember, thefirst thing set up in Germany and Japan after their surrender was a new central bank under the control of the boys. That has never changed. It goes a long way to explain why Japan buys US treasuries and Germany ain;t upset they can't get their gold back.
Japan should try this. Fed here has issued thousands of taxpayerf unded credit cards to boost the economy. $20 Billion worth so far.
http://www.nbcwashington.com/investigations/Federal-Government-Made-20-B...
What a scam.
This justifies taking your neighbor’s items if they happen to be a Gov Employee. Including his wife and daughters if married…
All Japan has to do is cut government. Cut regulations. Let the economy function.
Government is the problem.
Coming to a country near you soon.
New Abe-normal
Japan still has that armada of robotic, Flying Monkeys stashed in Mount Aso.
Japan, the last stalwart ally of the US. What the BoJ does is just to keep the US-UK financial terrorist scheme propped up. Now that Janet Yellen has stopped QE, they have to take rounds.
1 quadrillion, kinda flows
WW III in the making.
Best make some children for the grinder right quick. “I pledge allegiance… “
Japan is lighting the fuse under China's tinderbox of said n.p.l. , the vaunted china consumer is flat-lining , .......
The strong dollar, foreign capital rushing into the us markets, hot money exiting asia ............ gulp ......
Japan is isolated.
Been betrayed by the clever Jew.
Sorry Tokyo.
Yeah...King Doelarr for the long haul, right Spaulding? The US consumer and economy is in such fantastic shape itself. What bullshit. They (China) are stacking gold for a reason.
And you do know this is the FED's version of QE 4, don't you?
At least Zero Hedge has been consistent. It has sounded the alarms over FED QE, ECB QE, and BOJ QE. But to what effect?
Stock market investors in the USA have done remarkably well; and -until some time earlier this year- so have bond market investors, Why can't the Japanese experience the same phenomenon? Why can't the Nikkei emulate the Nasdaq and soar to 30,000 over the next few years?
The last time Japan changed its economic policy in order to accomodate the New World Order, its exchange rate went from 120 Yen to the dollar to 75 Yen to the dollar. If it emulates the FED's #1 priority (to buoy the prices of stocks), and the exchange rate goes back to 120 to the dollar, then the stock market follows suit. The "Japan carry trade" will be dead.
The FED policies have hurt the little guy in America; and the BOJ's policies may do the same for "Mrs. Watanabe". So What? If yen-denominated profits and stock prices go up? The Federal Reserve has shown the way!
anachronism: repost for you' done remarkably well' if you are in the .1%
this is all you need to know about how fiat printing effects the economy:
"It stands just under 5 feet tall, a painted bronze woman atop a small platform with two wheels. But Alberto Giacometti's 1950 "Chariot" sculpture could make history Tuesday, when it goes on the auction block at Sotheby's.
With an estimated worth of more than $100 million, many dealers said it could become the most expensive sculpture ever sold and could help pull the increasingly top-heavy art market through another record-breaking auction season."
note who buys this art - while common men are without jobs, poor on welfare in highest numbers in usa history..think cabaret cabaret of 1930's berlin, money makes the world go round the world go round..
https://www.youtube.com/watch?v=i-c17FTfMDE&index=4&list=PLF74416F3B46C85BD
I share your viewpoint. Just as Zero Hedge has descried the destructive effects of our Central Bank's policies upon the nation and the common man, it is also right to point out the same regarding Japan's. But, acknowledge this: the FED policies have been great for stockmarket investors. And I believe that is the Bank of Japan's goal as well.
Look, everyone -including myself- who followed the principal train of thought of Zero Hedge over this span of QE, probably sat out waiting for this market mayhem to turn into a classic bear market. It hasn't happened; and I have come to the conclusion that it won't happen until the FED+Treasury+TBTF banks want it to. Why would they ever?
My brother's net worth doubled because he believed in the FED. My net worth has stayed the same, because I have stayed in cash, waiting for the doomsday event to occur. Who was right?
All Japan is doing under Abe and Kuroda is following the FED. Why should the outcome be different for them? As the yen gets weaker and the dollar gets stronger, "Japan Inc." itself may make a comeback. That is what Abe and Kuroda are thinking. And, frankly, there is no other way for Japan to get out of its 20-year decline.
Life is great! So great, in fact, that I'm in the market for a few slaves to help around my baronial estate. Can you please get Congress to legalize slavery? Why wouldn't they want to add another incremental measurement to their GDP calculations? If drugs and prosties can count, why not slavery?
I saw a picture of that "Chariot" sculpture on Drudge. If that was on the curb, even the trash truck would be reluctant to pick it up. What an ugly, scrawny, weak looking POS, that sculpture is. I'll bet that there are Art majors, who spend hours dissecting what it's supposed to mean, the symbology behind it, etc, etc, blah-blah-blah. Stupid is, as stupid does. I wouldn't even put that thing on my front lawn.
America has a reserve currency and japan doesnt
Correction: people with money to invest have done well. Not the millions of other hardworking folks who have been pilfed of their resouses and productive wealth. It's kind of akin to stealing from your grandmother, the disabled guy down the street, and all your working class neighbors. No something to be proud of.
Its raining YEN halilooya, its raining Yen.
( Apologies to songstress. )
The rape of Nanking has finally concluded with the rape of Japan herself.
Karma is a bitch.
There can be only one.
The American are next.
chinese would not forget it for generations. anyone traveles to china will find it out quickly.
Time to say sayonara.
https://www.youtube.com/watch?v=fUDqcnSuKWc
Monetary Planning and Central Banking initiators failure mode in progress.
Monster
http://m.youtube.com/watch?v=S_ahvqzZVNE
A quadrillion here, a quadrillion there, and pretty soon you're talking real money...
I keep hearing that the Japaneese will never abandon their bonds. This is where Kyle Bass and the Japaneese (Japaneese hegemonic narrative) split apart. Thoughts?
the japanese yen carry trades should be considered to unwind asap prior to the collapase, since japan is currently in a desperate situation to devalue yen.
Spiritualist Alice Bailey wrote in; "The Destiny of Nations" that her ascended master "Djwal Khul" {a spirit she channeled} told her that the beginning of the New Age would begin with the collapse of the global economy. It would first start as a financial panic in Japan, and spread across the globe. What is interesting about this, is that this was written in the late 1940s. At that time, there was no global economy, and Japan was not even a functioning nation.
What else did Alice bailey say?
Demons, fallen angels, etc are hip to stuff like that, considering them and their master run the whole show to begin with and you pick up experince having been around millions or billions of years.
party like it's 1989
Honorably, Japanese senior citizens will kill themselves to settle their debt.
Dead-beating American senior citizens, not so much. American seniors will cry and sue for breathing machines – even though American senior citizens have Jesus and a seat in heaven waiting.
Just as Zero Hedge has descried the destructive effects of our Central Bank's policies upon the nation and the common man, it is also right to point out the same regarding Japan's. But, acknowledge this: the FED policies have been great for stockmarket investors. And I believe that is the Bank of Japan's goal as well.
Look, everyone -including myself- who followed the principal train of thought of Zero Hedge over this span of QE, probably sat out waiting for this market mayhem to turn into a classic bear market. It hasn't happened; and I have come to the conclusion that it won't happen until the FED+Treasury+TBTF banks want it to. Why would they ever?
My brother's net worth doubled because he believed in the FED. My net worth has stayed the same, because I have stayed in cash, waiting for the doomsday event to occur. Who was right?
All Japan is doing under Abe and Kuroda is following the FED. Why should the outcome be different for them? As the yen gets weaker and the dollar gets stronger, "Japan Inc." itself may make a comeback. That is what Abe and Kuroda are thinking. And, frankly, there is no other way for Japan to get out of its 20-year decline.
As I recall the Tylers and ZH said to BTFD a long time ago, so they have been correct on that call.
You are absolutely correct on that point. But I always read those BTFD comments as being riddled with sarcasm, implying that it was a foolhardy act to do so. "My Bad!"
And you are entirely correct that many of us missed the boat on stocks and bonds. But I don't think the Tylers did. I would imagine they have made lots of money even though they know the long term fundamentals suck.
If you bought Herbalife on the dip you would have had your ass handed to you. I'm tired of you fucking guys arguing "thanks to ZH I've missed out on the biggest bull run in history."
FUCK OFF!!
Investing and trading are two different things. And both require you to pull the trigger - EITHER WAY. Don't blame ZH for your trading desk insecurities - fuck sakes - the short sellers - the price discoverers are loathing your kind - you've got no balls.
If you invest in this market, you are investing in a rigged centrally planned casino where nothing is "durable". ZH spends a lot of time pointing this out.
The last thing I want to EVER see here is somebody simply telling me how i missed out by not buying the fucking dip, such as you - because I glean absolutely fuck all from that linear sheep minded fucking observation.
Well, you could have expressed your contempt for my inertia a little more politely!
Your focus on my personal example has unfortunately distracted you -among others I presume- from the point I wanted to emphasize: Namely that, since the actions of the FED worked out very well for investors and traders in the US, there seems to be no justificatiion to declare that the BOJ will fail to get the same outcome for Japanese investors.
Then all your brother is doing is timing the market and hoping that it will continue down that road. The stock market is going up only because there is no where else for money to go. It isn't a long term fix. Can you put faith in that? Dollar, Inc is powerful, but not that powerful. You raise the pressure over here, the piece burts over there.
I sugest you simplify you life, pay off debts, invest in a mix of things of real value; coins, land, antiques, some stocks, things you like to collect, your marriage, your family, good times fishing, family trips, gardening, etc while your brother HOPES this will continue. Your sleeping better at night will actually be a real thing.
Do what's best for you as an idividual. I DO NOT feel safe putting ALL I HAVE into a rigged game run by psychopaths.
The following is a headline from today’s Yahoo. We already know, ‘inequality’ is code for ‘we must take your shit to make the non-producers whole’. All the while, we never read anything about how the lowest government employee gets a full taxpayer paid pension at the expense of the 401K contributor.
‘How 401(k) Plans Have Fueled Inequality in America’
Change? It is built-in into their culture and brains, they don't change. Japanese culture is very unique. They will do the same thing over and over again, stubborn as anything. Change means you implicitly admit failure and that is NO NO because you show a sign of weakness and coward.
Don't get me wrong, they are nice people and work bloody hard but their views on work ethic seems a bit screw up to me.
So the Seven Samurai were right: "We always lose."
Could Kuroda San's inspiration be Kamikaze pilots of earlier times????? One last go before it's all over.
Kamikaze economics .... maybe the Japaneese can allow its people to starve much longer than americans can allow thier people to starve. Who can go the longest without food? Look at North Korea. They seem to be able to go without everything. Just saying ... anchient cultures are stronger than non-existent american culture.
To avoid being remembered as a madman, Kuroda had better devise an exit strategy from history's most audacious bond trade.
That's like devising an exit strategy to avoid hitting the ground after you jump off a 1000 foot cliff.
I read somewhere that in order to fly, one must first fall and then miss the ground.
Inflation is opposite of what they need. A country in serious debt does not want inflation when they need to roll debt continually and a 1% increase in interest will use up an additional 25% of government revenues. If they succeed with 2% inflation and the interest rate moves to 3%, 75% of government revenue will be absorbed by interest on their debt. The only real hope they have is to maintain price stability and quit borrowing. There is no safe exit from the current path. It is demographics that has sealed their fate and their savings rate is turning negative. This BOJ strategy works until they destroy credibility. Currency first and bonds second. Here are some facts:
1. Japan Post Holdings is the largest financial institution in the world ($3.8 trillion). This is about 40% of total U S bank deposits. Most of their assets are in JGB's.
2. GPIF is the largest retirement fund in the world and they currently own mostly JGB's but are in the process of shifting to foreign bonds, stocks, domestic REITS and ETF's.
3. Japanese banks hold deposits more than double the United States (over $20 trillion) and some 30% of those assets are in JGB's. Insurance companies are large and similar.
4. The deficit in Japan has been running some 50% of total spending and social security is 55% of total spending. They are borrowing all the money to run the government. The Sales Tax increase may get them down to borrowing 45%.
5. Interest uses up 25% of total government revenues. Inflation equals higher interest rates sometime. The only exit on this path is a ruined currency and hyper inflation.
6. The central bank is printing some 960 trillion ($870 B) yen per year at the new rate. Do you want to hold onto these new yen.
The fact is that Japan has wasted the wealth and savings of an industrious and frugal population trying to stimulate their economy and it did not work. Abenomics was a hail mary pass trying the ultimate Keynesian experiment that has greatly increased their risks.
Jap bond market cannot crash if the BofJ buys ALL the bonds! Maybe that is why they bumped up their QE. What will more likely happen is that the yen will collapse into hyperinflation. The same scenario is likely in the US in the future, as the Fed will not let interest rates go up either.
Bond markets collapse before the domestic curency becomes worthless, never the other way around. Does this mean Toyotas and pearls and Canon L lenses are gonna be free?
In normal times, yes; but right now the BOJ is buying all the bonds being redeemed/issued. Will the commercial banks dump their JGB's? The GPIF will dump some. Individuals might. Foreign holders are getting killed because of the yen falling. I am short JGB's and yen so I guess I don't care which goes first. Where are the credit rating agencies??
I have not seen much on the effects of imported fuel etc to Japan. the prices for imported items are going to cost more causing a drag on profits to Japans exporters. they can sell exports for less and pay more for imports. how does this make them better off. export volume can rise but since europe and the U S are not robust at the present it does not follow that economic activity should greatly expanddd in Japan, I guess that doesn't matter then. It is a game to continue the status not a plan for change.
Be careful what you wish for. If Japan ever does succeed in stoking the inflation fires, investors are going to abandon the near zero yielding JGBs in droves. The BOJ would be forced to buy them, creating even more inflation and causing the value of the yen to crash.
The incredible thing is that no one (except ZH and Kyle Bass) seem to be worried about this.
Canada is gearing up for demand for gold by selling one gram coins, 25 per holder. The premium on these is a horse choking $4.99 per gram over spot. the $4.99 premium represents a 12.89% fee per gram with gold at $1200 per troy ounce, each ounce being equal to app. 31 grams.
"Manipulation" ?
"Control" ?
NIKKEI 1989: 38957
2008 6994
2014 c.17000