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The GPIF Has A Warning For Japan's Citizens: Abenomics Better Work, Or Your Pensions Are Toast
Once upon a time, the world's biggest government pension fund, Japan's $1.1 trillion Government Pension Investment Fund, or GPIF, was apolitical, and merely focused on preserving the people's wealth.
Then everything changed, and with the reckless abandon of a junkie on a crack cocaine binge, aka Abenomics, the GPIF management was kicked out, and its entire mandate was flipped from preserving wealth, to gambling on #Ref! P/E stocks, in hopes of recreating the wealth effect of the super-rich (the only problem: Japan has reached its breaking point and the higher the USDJPY, and thus the Nikkei rises, the more the BOJ directly destroys its economy with an already record number of bankruptcies due to the plunging Yen getting recorder).
Worst of all, the GPIF became nothing short of the latest political pawn in what is now the the first failed Keynesian state, Japan.
Here is why this is bad. As the WSJ reports, "Japan’s $1.1 trillion government pension fund is betting that a long-term recovery and rising corporate profits will push Tokyo stock prices higher, helping the fund increase returns for the nation’s retirees."
Mr. Abe has pushed for the fund to become a more aggressive and sophisticated investor. The fund decided in October to shift its portfolio to seek higher returns, slashing its target allocation to domestic bonds almost in half while nearly doubling that of domestic and foreign equities.
Mr. Mitani said the fund is still in the process of carrying out the changes and has a long way to go. Just under 50% of its total portfolio was in domestic bonds at the end of September, compared with its new target of 35%.
...
Expectations that Mr. Abe’s policies will succeed have already helped double Japan’s benchmark stock index since late 2012. Further gains would no doubt benefit GPIF’s ¥23.9 trillion ($202 billion) domestic stock portfolio.
Actually, no.
What has doubled Japan's stock index is the collapse in the Yen. In Dollar terms the Nikkei is down for the year. Which means the only beneficiaries are those uber-rich ten or so percent who were long the Nikkei and hedged for a collapse in the Yen. For everyone else, such as the 90% of Japanese (including record number of retirement-age population) who do not participate in the market, Abenomics has so far been an absoutely epic and undisputed debacle, as confirmed not only by the soaring inflation of most products and services coupled with collapsing real wages now down for a record 16 consecutive months, but also by a misery index that is at generational highs.
Sadly, it has gotten so bad that with the BOJ at least on paper limited as to what it can buy sizewise (because the recent expansion to its QE has already been factored in by the market), means that the GPIF is now being used as a patsy that may or may not be buying more stocks in the market, just to keep the algo frontrunners at bay:
Mr. Mitani said the fund is still in the process of carrying out the changes and has a long way to go. Just under 50% of its total portfolio was in domestic bonds at the end of September, compared with its new target of 35%.
He declined to say whether it had already bought more stocks and foreign bonds. “I leave it up to you to imagine that,” he said.
Of course he will: after all the GPIF has more than filled its legal quotes of stock purchases by now. However, what he won't leave to your imagination is what happens when this latest experiment in central planning fails:
“I have no doubt that the economy is in a recovery trend if you look at the long run,” GPIF President Takahiro Mitani said in an interview Friday.
Actually, no, it isn't, unless you call a quadruple-dip recession a "recovery".
Unfortunately, for Japan, and its tens of millions of pensioners, the only news here is simple: the entire country is now held hostage by Japan's last-gasp attempt to prove Monetarist and Keynesian policies work. Because, said otherwise, "Abenomics better work, or else all your pensions are toast."
What happens when Abenomics inevitably fails, we leave to the civil war historians of the latter part of the 21st century.
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the gpif was thrown unda da bus bitchez.
fuk mi, no, fuk yu. [/fuk yu]
The real losers are all those American businessmen who learned Japanese in the 80s
https://www.youtube.com/watch?v=VI6tBwVjyOY
BOJ: We Abenomicsed some forks.
I just got back from meeting a few suppliers in Japan. They are not happy. Every raw material they have to buy is up in price due to the yen, and their selling prices in yen cannot make up for it. And everyone outside the banking system has taken a cut in real wages, killing demand.
They are only a year or two ahead of the US.
"Abenomics Better Work, Or Your Pensions Are Toast."
Well, I guess that means no pensions then...
That's what baffles me. Lets follow in Japan's footsteps because it's working out so well. Fuking retards over at the fed.
Learn from others mistakes, Bernanke is gone, so get your head out of his ass already. Take the hit. We should have flushed this toilet 6 years ago, but no we still have those bad investor turds floating around.
Retards=parasites. Kiss your SS bennies goodbye.
How about "We Abe-atomized some folks"
I guess you could say: we Abe-shimad some forks.
Naw the real real losers are the ones who pimp vegan cookbook links in every thread.
It's up to the otaku to save the day.
A traveler wandering on an island inhabited entirely by cannibals comes upon a butcher shop. This shop specialized in human brains differentiated according to source. The sign in the shop read:
Artists’ Brains $9/lb
Philosophers’ Brains $12/lb
Scientists’ Brains $15/lb
Economists’ Brains $19/lb
Upon reading the sign, the traveler noted, “My, those economists’ brains must be popular!” To which the butcher replied, “Are you kidding! Do you have any idea how many economists you have to kill to get a pound of brains?!”
Shit for brains $0/lb. - cuz they're EVERYWHERE
Why do I have a feeling that after Abenomics fails that the economic wreckage will be similar to the conditions that existed just prior to Japan starting WWI and II?
Because the Liquidation Phase of any Human Farming Operation is always the same.
The Creditors of the Farm are preparing the geopolitical groundwork as we speak, while their Selected Politicans go about the Skinning of whatever worthwhile livestock remains.
chikusho !
Civil war? Going to need a new term for the clusterfuck that is coming.
Of course Abenomics will work. What could possibly go wrong?
these r some seriously stupid mother fuckers...
the Jap government and bankers that is...
Either way their toast.
Deflate and the market turns to crap.
Hyperinflate and your pension is worthless.
Pick your poison
That's what I thought. How could it possibly work?
Yep that's Japans dilemma. I think longer term, the deflate option would be healthier for the system. Deflate, you take a hit now but establish a base to build on. Hyperinflate and you spread the pain out for years and ultimately the thing blows up, uprising, civil war, bad leaders like Abe are replaced by even worse leaders, etc,...Then the base is established, if ever.
But then again, people don't usually plan long term, they plan their TV schedule for the night. That's as far as their planning goes.
Like Mises said, deflation comes sooner or later. With CB's in charge, it's guaranteed to be latter, after the 'crack up boom'. For a nice analogy, look at the US Park Service's attempt to suppress forest fires.
Hmmmmmmmmm...........
“I have no doubt that the economy is in a recovery trend if you look at the long run,”
=
"On a long enough time line the survival rate for everyone is zero"
And they're just sitting there taking it. Must be all that radioactive fish.
unlike
the USA, Germany, France, Scotland, ... ??
Home of the Kamikaze. It's in their genes.
The Kamikaze did not reproduce. The Samurai genes died en masse across the Pacific Theater. The peasant farming stock and the insidious merchant class is all that remains.
That's my Population Genetics Assessment in a nutshell. Would that the Japanese prove me wrong, but if the drones on phones generation has it in them, I'm not seeing it.
So...you are saying the Japanese should buy dollars then? /s
Pensions were gone Loooooooooong ago.
Kuroda can just print money to cover the gap, no worries, no consequences, the world has plenty for everybody and it's all free now, not like back in the old days. God bless our central bankers, saviors of the fucking universe. And god bless or financial institutions for helping to invent the whole scheme.
Yeah, these schemes have been tried before and they all end up in failure.
History provides many examples.
"Whatever you are thinking of, it has been tried, and doesn't work. Good luck."
[The advice whispered in my ear at age 22 when I began my teaching career, uttered by a 25-year veteran of teaching who had been reduced to muttering and fumbling.]
Perhaps we could toss "In God We Trust" for the above? Would it fit on a FRN?
It would look good printed on the back of say, a ¥1,000,000,000 yen note, or a €50,000,000 Euro note (in six languages).
konichiwadating.com
So I guess they just felt like trolling the Japanese people a bit with a random comment that all is well, but if its not youre all fucked?
.
Coming to a public takers pension, near you.
Apparently there are people in Japan who believe that an entire World War and two Atomic Bombs delivered onto the doorsteps of the Japanese citizenry did not cause them enough misery and perhaps they long for just a bit more.
"Oh please sir, I want some more...."
US is raiding the dame thing, nothing will save the Japs except themselves. They need to remove the moronic Abe and get someone that is not a Zionist puppet.
We already know the outcome of this so I don't see the point of discussing it. QE does not work and will not work becoz it drives out good capital and destroys the fundamentals of capitalism. If it worked, Japan would be booming along now considering they have had the longest QE program bar non. When they were still running a budget surplus they could drag this on, but now they are in deficit and the implosion will accelerate.
And then there's this:
http://www.japantoday.com/category/politics/view/abes-base-aims-to-restore-past-religious-patriotic-values
As Prime Minister Shinzo Abe promises voters a bright future for Japan’s economy, key parts of his conservative base want him to steer the nation back toward a traditional ethos mixing Shinto myth, patriotism and pride in an ancient imperial line.
...
“We really have trust in him,” said Yutaka Yuzawa, director of the Shinto Association of Spiritual Leadership (SAS), the political arm of the Association of Shinto Shrines. The group, which counts Abe as a member, is one of a network of overlapping organisations sharing a similar agenda.
“The prime minister’s views are extremely close to our way of thinking,” Yuzawa told Reuters in an interview.
Among the key elements of the SAS agenda are calls to rewrite Japan’s U.S.-drafted, post-war constitution, not only to alter its pacifist Article 9 but to blur the separation of religion and state. Education reform to better nurture “love of country” among youth is another top priority.
“After the war, there was an atmosphere that considered all aspects of the pre-war era bad,” Yuzawa said. “Policies were adopted weakening the relationship between the imperial household and the people ... and the most fundamental elements of Japanese history were not taught in the schools.”
Similar concerns drive other organizations such as Nippon Kaigi (Japan Conference), a broader lobby group for which Abe serves as a “supreme adviser”.
Well I don't see what's bad to return to their cultural roots, Russia do the same with Orthodox Christianity, wish my country (France) could do the same instead of self destroying with the left and progressives since May 1968.
I still prefer a "Shintoised" Japan in it's cultural roots than taking the worst of the American culture.
Yes, get rid of the American influence on their culture. However, Shinto was a control mechanism used by the Meiji emperor and destroyed when Hirohito admitted he was not a deity. The heart of Japan's spirituality rests in Buddhism. Shinto was little more than a made-up political mutation of Buddhism. Shinto belief is that people are the subjects of the Emperor - not sovereign individuals - which goes against Buddhist beliefs (each man must walk his own path). Japan can return to its Asian cultural roots which is centered on family and community without resurrecting Shinto as the official government religion.
Yes I agree, but my point is that with a Western alike godless state, Japan will dilute into oblivion and disappear. It's inevitable, the more Japan will dilute, the more the aging effect/low birthrate, the more Nationalist/Traditionalist will be vocal for the right reason.
That's why I remind skeptical on a strict secular laws and system.
After all, even USA (who was once the greatest nation) was build with
"In God we Trust" (who is still on your Greenback) not "In Progressive, Left, or Godless we Trust".
The downside of Abe and his right wing supporter is the expansionism and imperialism with China and Korea, he should concentrate to rebuild his country and culture, getting rid of American interference (stop being a fucking vassal state) not warmongering their neighbor.
I do not disagree with you, however it is more complex than that. First, the US has enormous influence with the Japanese government. It has been pushing for Japan to renege on Article 9 of the US-written post war constitution since the Korean War. Abe has only been giving the US what it wants in that regard.
Japanese culture lies secularly in Confucianism and spiritually in Buddhism. In that sense, god resides in the individual, not in the state. Shintoism is a bastardization of Buddhism with a splash of Confucianism that makes the Emperor divine and all citizens subject to his rule.
The reality seems more likely to be that the Emperor had little power during the shogunate period and merely symbolic power since the Meiji Restoration, rather controlled by remnants of the those who held power under the Tokugawa Shogunate (even to this day - class lineage still being an unspoken reality in post-war Japan). Emperor Meiji was only 14 years old when he was "restored" to power and easily controlled. Hirohito (Emperor Showa) was only 26 when he took power after the death of Emperor Taishou (himself, a person of weak health since birth) in 1926 and, by many accounts, somewhat of a wimp. Even the current Emperor, Akihito compares the Japanese royal family to that of a robot, there to do the will of those in control.
So, Abe's move to restore power to the Emperor seems more like those who restored the royal family in 1868, a means to subjugate the nation under the false rule of a controlled royalty. Do you think anyone who wields real power in Japan would allow a men - Akihito - who has no college education and feels amity toward commoners more than anyone before him, to make decisions that might be run contrary to their own interests?
What Abe wants is not what Abe or his backers are publicly promoting.
"Patriotism is the last refuge of a scoundrel."
syndicate protocol #22
Give bad advice to governments and everyone else
Sincerely,
Paul Krugman
Correction: The GPIF Has A Warning For Japan's Citizens: Work longer, Your Pensions Are Toast
Make that toast on a stick
Shikata ga nai ! It cannot be helped !
Again... the worst thing for pensioners is massive inflation, since it dimishes the purchasing power of their fixed pension paychecks. Abenomics is massive inflation. So the government is telling pensioners, "our destruction of your pensions by massive inflation better work, or your pensions will be toast." Mean joke.
Sometimes the obvious is invisible.
Perhaps this pension fund selling JGBs is what it appears to be --the pension fund bailing out of a failing asset (and currency).
This way the fund will still own something which isn't worthless after the yen and JGBs are toast. Abe's printing allows the fund to sell the JGBs they own and buy other assets. Without this printing, the fund would crash the illiquid JGB market with any sales.
While much of what Abe's policies seem suicidal, there are two clever points that I can see: first, since the BOJ will be buying those JGBs that the GPIF wants to unload, and paying for those bonds with printed money, the Japanese state essentially will be buying real assets (shares of Royal Dutch, Nestles, Microsoft, foreign bonds of various sorts) with money printed out of thin air. Kind of like counterfeiting, only cheaper.
The second point is that if as a Japanese government minister or pension official you are certain that your are going to pound the hell out of the yen, it would certainly be nice if your pension assets were hedged against a massive decline in the yen by owning non-Japanese assets.
The only thing that would surprise me is that the GPIF reallocation had not already been accomplished prior to the announcement.