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Chinese Business Media Cautions Japanese Bond Bubble Is Ready To Burst, Anticipates 40% Yen Devaluation

Tyler Durden's picture




 

It is a fact that when it comes to the oddly resilient Japanese hyperlevered economic model, the bodies of those screaming for the end of the JGB bubble litter the sides of central planning's tungsten brick road. Yet in the aftermath of last month's stunning surge in the country's trade deficit, this, and much more may soon be finally ending. Because as Caixin's Andy Xie writes "The day of reckoning for the yen is not distant. Japanese companies are struggling with profitability. It only gets worse from here. When a major company goes bankrupt, this may change the prevailing psychology. A weak yen consensus will emerge then." As for the bubble pop, it will be a sudden pop, not the 30 year deflationary whimper Mrs. Watanabe has gotten so used to: "Yen devaluation is likely to unfold quickly. A financial bubble doesn't burst slowly. When it occurs, it just pops. The odds are that yen devaluation will occur over days. Only a large and sudden devaluation can keep the JGB yield low. Otherwise, the devaluation expectation will trigger a sharp rise in the JGB yield. The resulting worries over the government's solvency could lead to a collapse of the JGB market." It gets worse: "Of course, the government will collapse with the JGB market." And once Japan falls, the rest of the world follows, says Xie, which is why he is now actively encouraging China, and all other Japanese trade partners of the world's rapidly declining 3rd largest economy to take precautions for when this day comes... soon. Oh, and this: " If the bond yield rises to 2 percent, the interest expense would surpass the total expected tax revenue of 42.3 trillion yen."

Why has Japan been able to sustain its deflationary collapse for over 3 decades? Simply - an ever rising currency.

A strong yen, deflation and rising government debt form a short-term equilibrium that lasts as long as the market believes it is sustainable. The yen has seen a relentless upward trend since it depegged from the dollar in 1971, up to 83.4 from 360 again to the dollar. When wages and asset prices rise, a strong currency can be justified. When wages and asset prices fall, a strong currency is suicide. Japan's nominal GDP peaked in 1997 and its nominal wages did too. Its property prices have declined every year since. The Nikkei rose in only four out of the last fifteen years and is still close to a three-decade low.

 

Japanese policymakers, businesses, academics, currency traders and the average Mrs. Watanabe all believe in a strong yen. This belief is wrong but self-fulfilling. It has lasted so long because the Japanese government adopts policies to offset the destabilizing effects of deflation due to a strong yen. Hence, Japan's national debt has marched upwards along with the value of yen. It is expected to top yen 1,000 trillion in 2012, 215 percent of GDP, 7.8 million yen (or roughly US$ 94,000) per person, and about half of net household wealth per capita.

 

The sustainability of Japan's deflationary path depends on the market's confidence in Japan's debt market. As Japanese institutions and households hold almost all of the government's debts, their faith in the government's creditworthiness is the mojo for Japan's seemingly harmless deflationary spiral.

There's that. And also that it is nothing but a ponzi. In Xie's words.

The justification for the low JGB yield is deflation. The real interest rate (the nominal rate plus deflation) is comparable to that in other countries. This rationale requires deflation to persist. But, deflation shrinks the nominal GDP or tax base. How could the government pay back its escalating debt by taxing a shrinking economy? It can only sustain its debt by borrowing more. This fits the definition of a particular type of Ponzi scheme.

Deflation is ok, if in addition to collapsing GDP, it is paralleled by declining wages.

The JGB bubble explains the seeming lack of pain in Japanese society. A strong yen and deflation haven't led to an employment crisis because the government deficit is pumping up aggregate demand. As long as wages decline in line with prices, one doesn't feel the pain. Japan's household debt is only half of GDP, about half of the level in the United States. Deflation doesn't cause much balance sheet trouble.

Unfortunately this is unsustainable by definition, as the divergence is a finite series at which point it become self-destructive. And yet the strong Yen is the glue that ties the rickety house of cards together... for now.

Despite the fact Japan has had a bad economy for so long, the yen has remained strong. It reinforces the Japanese psyche on the issue. The strong yen has become a cult.

 

The international financial market believes in a weak yen from time to time. In 1998, the short-selling by foreigners briefly caused the yen to touch 140 against the U.S. dollar. But, as the Japanese hold all of the yen, if they believe in the yen, foreign short-sellers get punished eventually. Over time, yen bears are all weeded out of the market. The remaining yen traders are all believers in a strong yen.

So far so good: any cult can exist in its own bubble if left to its own devices. However, as much as it is trying to avoid it, Japan's secular role in international society is changing, and very soon the habitual self-delusion of its citizens, politicians, and FX traders will do nothing to offset the advent of reality.

While the Japanese can always take care of business within, they cannot control the outside world. The country's Achilles heel is losing trade competitiveness due to the destructive impact of deflation on business confidence and the strong currency itself. When a trade deficit emerges, it signals the beginning of the end.

 

Japan has lost competitiveness in a swath of industries that it used to dominate. Its automobile industry is losing out to Germany, South Korea and the United States. Japan's automobile industry used to be competitive in cost and far superior in quality to its global competitors. But the world has changed. The yen has dropped below 110 from as high as 160 against the euro. The South Korean won was about ten against the yen and is now 13. Cost-cutting cannot offset such a big change in exchange rates. The U.S. auto industry cut its labor costs and debt burden through the government bailout. It is now more competitive than Japan's.

 

The automobile industry is the pillar of Japan's economy. Its decline leaves Japan's economy nowhere to turn. Indeed, if the auto industry leaves Japan, it will become a poor country.

 

Japan's electronics industry, still significant to its economy, is losing out big time to its Asian competitors. Nothing hot in electronics is made in Japan now. U.S. companies like Apple leverage China's manufacturing sector to turn out hot products. South Korea is embracing the vertically integrated model and churning out competitive products like Japan used to.

 

Nothing symbolizes Japan's decline like its electronics industry. It was the envy of the world and had all the ingredients to take the industry into the mobile internet era. Instead, it embraced insulation and made products just for the Japanese market. Now it is almost irrelevant to the outside world.

 

Japan isn't just facing macro troubles. Its micro competitiveness is rotting away. It is just bizarre to see that the whole world believes in a strong yen when Japan is failing on such a grand scale.

This is especially true in the aftermath of the Fukushima disaster, when one of the primary drivers of economic growth - energy creation, has collapsed, and as of Today Tepco has shut down its last reactor. Thus an energy crisis imminent. It will also accelerate the transition of Japan from a trade surplus to deficit econoy. In this case the trend is certainly not Japan's friend.

Japan's trade balance may swing into surplus from time to time, but the negative trend is irreversible. Japan will face rising trade deficits. That makes foreigners' views important because Japan would need foreign money to fund its deficit. When foreigners change their views, which they surely will, the yen will crash.

There is only one controlled way out for Japan: take the pain now, or let a veritable epic econoic collapse sweep everything that Japanese society stands for. Recent overtures by the BOJ show it understands what has to be done. It is, alas, not doing it fast enough.

Japan has only one way out – a massive devaluation. If the stable national debt is 120 percent of GDP, the yen needs to be devalued by 40 percent because devaluation is ultimately equal to the nominal GDP increase. The devaluation is likely to sustain 2 percent to 3 percent of nominal GDP growth for Japan beyond the repricing induced increase, which is necessary to restore Japan's tax revenue. Deflation has caused Japan's tax revenue to decline as a share of GDP. It can be only reversed through restoring nominal GDP. A devaluation of 40 percent can restore Japan's competitiveness against Germany and South Korea, which will lay the foundation for Japan's industrial recovery.

 

The Bank of Japan is trying to weaken the yen through expanding its balance sheet. It has an asset purchase program of 65 trillion yen and a lending program of 5.5 trillion yen. The two are equivalent to 15 percent of GDP, comparable to what the Fed or European Central Bank have done. The effectiveness is limited so far. Because Japanese businesses, households and investors believe in a strong yen, the printed yen largely stays in the country and just slows down money velocity. The U.S. dollar has risen 10 percent against the yen from last year's bottom. This is probably due to the financial market upgrading its view of the U.S. economy rather than the BoJ's action.

To Andy Xie, the day of reckoning has never been nearer. And to those who have grown disenchanted with the Kyle Bass view of an epic JGB bubble pop, it may be time to refresh your lost cost hedge. Because a devaluation, to be truly effective, will not be visible from a mile away: it will be sudden, and very, very shocking, unless the government opts for the worse of to evils - a bond market collapse.

Yen devaluation is likely to unfold quickly. A financial bubble doesn't burst slowly. When it occurs, it just pops. The odds are that yen devaluation will occur over days. Only a large and sudden devaluation can keep the JGB yield low. Otherwise, the devaluation expectation will trigger a sharp rise in the JGB yield. The resulting worries over the government's solvency could lead to a collapse of the JGB market. Of course, the government will collapse with the JGB market.

 

The day of reckoning for the yen is not distant. Japanese companies are struggling with profitability. It only gets worse from here. When a major company goes bankrupt, this may change the prevailing psychology. A weak yen consensus will emerge then.

Finally, no matter how it's spun, the outcome, whether a 40% JPY deval, or a JGB bubble pop, will have devastating consequences on both the regional, and global economy.

A yen collapse will impact China and South Korea most, just like in 1998. It will trigger substantial weakness in their industries. If a banking system succumbs, the shock can bring down an entire economy, as South Korea's experience in 1998 demonstrates.

 

Both China and South Korea have weak banking systems. South Korea's banking system is one of the most leveraged in the world due to high level of household loans. In 1998, a similar shock sank its banking system that was overleveraged with industrial loans. Now it is overleveraged with household loans. A shock could sink it again.

 

Overinvestment and a property bubble make China's banking system very vulnerable to such a shock. Unless China substantially increases the capital in its banking system, a big yen devaluation could cause China's banking system to sink. China suffers from overinvestment and a property bubble, as Southeast Asia and South Korea did in 1997. In terms of the magnitude of leverage, China's situation is much worse. Hence, a yen devaluation could wreak havoc to China's economy.

Perhaps there is a reason why the global market (not US stock futures of course - those only care what comes out of the Chairman's mouth) is so very concerned with what is happening in China right now: perhaps the Chinese hard landing (which will come, no doubt about it) is not so much an underlying cause of the Chinese malady but a symptom of the Japanese deflationary unwind, which like a tsunami will drag first the Koreas, then China, then Southeast Asia, and finally the world underwater. And this time no amount of trivial Greece-like headline posturing ad headlines will have any impact whatsoever. 

Yet following all that, we fully expect nothing to change, because the entire world is now hypnotically rushing toward the cliff, very likely bringing Dow 36,000 with it, if only for one instant, because with nothing getting fixed, the moment of global euphoria will be truly transitory. It will be then followed by an all out deflationary collapse... or much more likely since in this day and age printing a trillion, quadrillion or quintillion, is only a CTRL+P keystroke away, hyperinflationary.

And just to show the sensitivity of the world's most indebted nation to interest rates, here again is Andy:

Even though the yield on 10-year Japanese Government Bonds (JGB) is only 1 percent, the interest expense is expected to top 22.3 trillion yen in the fiscal year that begins next month. This is one-quarter of the general account budget. If the bond yield rises to 2 percent, the interest expense would surpass the total expected tax revenue of 42.3 trillion yen.

Yup: a mere "surge" in interest rates to a whopping 2.00% will destroy the Japanese economy.

Good luck.

 

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Mon, 03/26/2012 - 14:53 | 2291948 qussl3
qussl3's picture

Sony, o sony where art thou?

Mon, 03/26/2012 - 14:56 | 2291960 Sudden Debt
Sudden Debt's picture

Wii Wii Wiiiiiiiiiii!

Mon, 03/26/2012 - 14:58 | 2291969 SilverTree
SilverTree's picture

History.

Mon, 03/26/2012 - 15:13 | 2292029 Ahmeexnal
Ahmeexnal's picture

But...but....a square mile of real estate in Tokyo is worth more than all of California.

So surely they can sell a few square miles (in and around Fukushima) and pay up all their debt....can't they? can't they?

Mon, 03/26/2012 - 15:47 | 2292130 Sudden Debt
Sudden Debt's picture

Yeah, but that warm feeling you get in that piece of real estate in Tokyo is actually.... Radiation boiling your guts.

Mon, 03/26/2012 - 15:55 | 2292154 markmotive
markmotive's picture

When Japan implodes and the central banks print like crazy PM investors will be showered by their gold.

I will call this phenomenon a "golden shower".

 

Mon, 03/26/2012 - 16:04 | 2292192 The Big Ching-aso
The Big Ching-aso's picture

 

 

The Japanese yen to debase their yen urges other to yen for the same yen.

 

Mon, 03/26/2012 - 17:26 | 2292474 Popo
Popo's picture

So... The Japanese, who have been desperately trying to debase their currency for years now, in order to stimulate exports -- are on the verge of succeeding and at last representing a massive threat to Chinese, European and US manufacturing.

Why pray tell, are the world's central banks going to allow one of the world's industrial power houses to succeed with a 40% debasement?

Does anyone believe that the Powers that Be wont step in and "save" the Yen as they have in the past?

Mon, 03/26/2012 - 19:08 | 2292806 3MonthsZHober
3MonthsZHober's picture

That's crazy talk monkeyboy.

Tue, 03/27/2012 - 03:39 | 2292858 Popo
Popo's picture

The only crazy talk is the notion that a weak Yen would hurt the Japanese economy. Or that it would somehow run counter to a wet-dream scenario for Japan's manufacturers.

As for this quote from the article,  I am speechless regarding it's deep inaccuracies and misunderstanding of FX:

"Japanese policymakers, businesses, academics, currency traders and the average Mrs. Watanabe all believe in a strong yen. This belief is wrong but self-fulfilling. It has lasted so long because the Japanese government adopts policies to offset the destabilizing effects of deflation due to a strong yen." 

Bzzz. Wrong.  I trudged through the article further, but frankly there's no point reading past the above.    This Xie idiot apparently doesn't understand the underpinnings of Japan's GDP.   Japan has been fighting a strong yen since the early 90's and the strength of the yen has allowed Korea and China to steal Japan's pole-position in electronics, and the strong yen continues to decimate Japan's automotive-industrial business (still the heart of Japan's economy).  

To put it another way:  If the yen were to drop 40%,  I would put every penny I had in the Nikkei as the Japanese economy would explode upwards into the greatest bull market in 30 years.   Except... it ain't going to happen because the value of the yen isn't controlled by the BoJ.   The yen is high *despite* the BoJ.   

Tue, 04/17/2012 - 02:57 | 2350694 sixers333333
sixers333333's picture

why dont BOJ just print more money like the fed?

Wed, 07/25/2012 - 03:39 | 2648222 mediaprizm
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This blog is really very interesting and easy to understand the information provided in it. It is very nice to view this blog and it's nice to see the best information cited here. Fulfilment Service

Mon, 03/26/2012 - 16:18 | 2292252 The Big Ching-aso
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Golden showers are usually a precursor to violent brown storms.

Mon, 03/26/2012 - 16:24 | 2292277 Gully Foyle
Gully Foyle's picture

The Big Ching-aso

You are mistaken, What you are envisioning is the one where someone pisses in your ass during anal sex.



Mon, 03/26/2012 - 16:34 | 2292314 markmotive
markmotive's picture

That doesn't sound healthy.

Mon, 03/26/2012 - 19:05 | 2292796 KnightsofNee
KnightsofNee's picture

Urine is actually sterile when it leaves your body. It is also used as a secondary ingrediant in the production of Santorum.

Mon, 03/26/2012 - 19:14 | 2292822 markmotive
markmotive's picture

Oh, well that changes everything.

Mon, 03/26/2012 - 21:16 | 2293057 dubbleoj
dubbleoj's picture

golden bukake

Tue, 06/26/2012 - 16:05 | 2562696 SteinRobyn17
SteinRobyn17's picture

China has long term strategy. business telephone systems

Tue, 03/27/2012 - 00:50 | 2293446 jonjon831983
jonjon831983's picture

I'd like a golden shower, plz.

thx.

 

Wait... what are you doing? What? OH GOD? NO! STOP! NOT THAT!

Mon, 03/26/2012 - 15:55 | 2292160 Antifaschistische
Antifaschistische's picture

When the price of oil quadruples in YEN, Japan will realize it's only option is to expand it's utilization of nuclear power.  I can't wait.

Mon, 03/26/2012 - 17:05 | 2292406 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Japan, you could have reduced your pain by defaulting about a decade ago. Cleaned house and gone the way of Iceland. Noooooo! Denial of reality will now force your society into and unending depression. Pitchforks time!

Mon, 03/26/2012 - 19:09 | 2292811 Quaderratic Probing
Quaderratic Probing's picture

Ben is doing the same to us right now...

Mon, 03/26/2012 - 20:19 | 2292965 DeadFred
DeadFred's picture

But their bankers had ten more years of the good life. Get your priorities straight!

Tue, 03/27/2012 - 01:13 | 2293488 Bananamerican
Bananamerican's picture

"Pitchforks time!"

and who will be weilding those pitchforks?

Elderly Japanese.

Maybe that's the true kick the can game...wait till demographic changes have rendered your populace too frail and senile to swing a 'fork...

Mon, 03/26/2012 - 17:41 | 2292502 JohnKozac
JohnKozac's picture

40% devaluation means prices will more then double. Remember when Russkies devalued, food prices there more then tripled.

It's not a 1:1 correlation. Funny thing is the japanese savings have been decimated already by 20 years of the Emperor's printing presses from 1990 to present.....it's all printing from here on out.

As far as the Fuki radiation goes, didn't the J. Gub'mint tell its people, "it's only a tiny leak?"

Mon, 03/26/2012 - 18:19 | 2292605 i-dog
i-dog's picture

 

"While it is not yet over, and radioactivity continues to come out of the devastated plant, the good news is that there are still precisely zero deaths attributable to the release of radiation at the plant, and on the basis of doses received, zero are expected."
http://asiancorrespondent.com/53036/the-fukushima-death-toll/  (Asian Correspondent.com, April 24, 2011)

Now, 12 months later, Greenpeace puts out a scare story on nuclear energy ... which contains precisely zero references to the number of people killed or critically ill from radiation at Fukushima:

http://www.greenpeace.org/international/en/news/Blogs/nuclear-reaction/the-next-fukushima-nuclear-disaster-is-waitin/blog/39367/

What are the current facts about radiation deaths and illnesses at/from Fukushima? Are there any credible ZHedgers in Japan who can enlighten me/us? Enquiring minds want to know....

George?

Mon, 03/26/2012 - 19:17 | 2292827 3MonthsZHober
3MonthsZHober's picture

What you fail to understand is the Vatican has a cloak of secrecy wrapped around Japan. They are the real profiteers in this saga and they have even managed to silence GW.

Mon, 03/26/2012 - 20:50 | 2292985 i-dog
i-dog's picture

Oh, I fully understand the Vatican's involvement in the Meiji Restoration and the Jesuits' long history of meddling in Japan ... including being on the ground at Hiroshima and Nagasaki in 1945. The first Jesuit on the scene even ended up becoming the Black Pope 20 years later (rather than dying from radiation poisoning, as one might have expected).

As for GW being "silenced", his last article referencing Fukushima was posted here, and on Alex Jones' Voice of the Vatican, just 5 days ago!

I ask the question again: Since even Greenpeace omitted any reference to the number of [claimed] radiation deaths in their fear piece on nuclear energy a few days ago -- yet they are/were on the ground in Fukushima province and would surely have mentioned a figure if it would help their case -- what are the facts?

I have this sneaking suspicion that Anne Coulter may have indeed been close to the mark last year ... which would explain quite a lot about the fear-mongering around nuclear energy and nuclear arms proliferation!

Something smells fishy....

Mon, 03/26/2012 - 20:59 | 2293030 3MonthsZHober
3MonthsZHober's picture

The real problem is: The Vatican has successfully imported heroin into Japan bringing the common man to his knees. Much like the lizards did here in the US. The lizards had their bio-engineers in tel aviv create strains of Cannabis so potent that it minics heroin. Night-night you weak minded 'mericans.

Mon, 03/26/2012 - 21:50 | 2293142 i-dog
i-dog's picture

Errrm ... concentrate!! The question was:

"Since even Greenpeace omitted any reference to the number of [claimed] radiation deaths in their fear piece on nuclear energy a few days ago -- yet they are/were on the ground in Fukushima province and would surely have mentioned a figure if it would help their case -- what are the facts?"

Please leave lizards, heroin, cannabis, Tel Aviv and Rome out of it, for now. You'll have a chance to discuss them later....

Mon, 03/26/2012 - 23:37 | 2293345 Nassim
Nassim's picture
Former Fukushima Governor vs. Tepco: My friends committed suicide — One still in coma

http://enenews.com/former-fukushima-governor-vs-tepco-my-friends-committ...

Tue, 03/27/2012 - 05:29 | 2293673 i-dog
i-dog's picture

WTF does that have to do with actual facts on actual radiation deaths!?!

Tue, 03/27/2012 - 06:17 | 2293687 Global Hunter
Global Hunter's picture

there have a few cases of people in that area dropping dead for unexplained reasons, check in on the website posted by the poster above you daily for 2 weeks and you'll begin to get a grasp of what is going on in Japan.  It has come out the last week or two that Tokyo itself has radiation levels that if in the USA would obligate the authorities to label it a "radiation zone".  Check out www.enenews.com for more information its there.  A lot of evidence that a lot of plutonium has been released as well.

edit from March 15th http://enenews.com/radio-something-new-in-the-history-of-medicine-is-happening-at-fukushima-says-physician-30-of-children-tested-had-thyroid-lumps-now-thats-really-early-thats-within-the-first-year-th

Tue, 03/27/2012 - 09:38 | 2293990 i-dog
i-dog's picture

You, along with the others, are still missing my point about facts relating to number of deaths directly attributable to radiation poisoning!!!!!!!!!!!!!!!!

These statements of yours are not such facts:

"A few people dropping dead for unexplained reasons"

"Tokyo radiation levels....."

"a lot of plutonium has been released"

"30 children with thyroid lumps"

They are simply vague unrelated snippets perpetuating the scare mongering that I'm trying to get to the bottom of.

Mon, 03/26/2012 - 19:03 | 2292787 BigInJapan
BigInJapan's picture

You have otunderstand the mentality of the proletariat over here.

The government will point the finger at foreign "Gaijin" meddling and the people WILL get behind it. No sign of government cuts in sight - the very concept dopesn't even enter peoples' minds over here.

I've said for a long time now that this country will go Commie if SHTF.

Tue, 03/27/2012 - 00:49 | 2293450 tenpanhandle
tenpanhandle's picture

I wonder if at some point radioactive cabbages can become reactor fuel.

Mon, 03/26/2012 - 17:24 | 2292395 TomGa
TomGa's picture

A uncontaminated square mile in Tokyo is probaly worth even more, considering the verified Cobalt-60 deposits across the city.  

 

 

Gundersen’s Latest: Think about ramifications for Tokyo… How would you like kneeling in radioactive waste to pick flowers? Cobalt-60 in majority of samples, up to 1,481 Bq/kg 

 

 

"Couple of weeks ago though, I was in Tokyo and when I was in Tokyo, I took some samples. Now, I did not look for the highest radiation spot. I just went around with five plastic bags and when I found an area, I just scooped up some dirt and put it in a bag. One of those samples was from a crack in the sidewalk. Another one of those samples was from a children’s playground that had been previously decontaminated. Another sample had come from some moss on the side of the road. Another sample came from the roof of an office building that I was at. And the last sample was right across the street from the main judicial center in downtown Tokyo. I brought those samples back, declared them through Customs, and sent them to the lab. And the lab determined that ALL of them would be qualified as radioactive waste here in the United States and would have to be shipped to Texas to be disposed of."

--Arnie Gunderson, Fairewinds Associates

March 25, 2012

 

http://enenews.com/gundersens-tokyo-test-results-radioactive-cobalt-majo...

Mon, 03/26/2012 - 18:00 | 2292562 Michael
Michael's picture

So all you have to do to make a dirty bomb is get some soil from Japan in a ziplock baggy, duck tape it to some fireworks, and light the fuse. Sounds easy.

Mon, 03/26/2012 - 20:27 | 2292948 TomGa
TomGa's picture

And our trusty Department of Homland in-Security allows such highly radioactive waste to waltz right into the old US-of-A with not so much as a license or even a courtesy full-cavity body search.  Just put it in your carry-on and tell 'em it's dirt. What could be easier?

Mon, 03/26/2012 - 17:31 | 2292490 Spitzer
Spitzer's picture

Yahoo.com was worth more then all of New Zealand in the tech bubble. Thats all the stocks and real estate in the whole country.

Mon, 03/26/2012 - 20:25 | 2292972 DeadFred
DeadFred's picture

But are you including all the sheep?

Mon, 03/26/2012 - 16:29 | 2292301 TradingTroll
TradingTroll's picture

I call BS

If $94,000 is half the avg individual wealth, on an economy (unlike the US) that still has a large middle class, this means the bubble will go on. Ms Watanabe is only halfway through using 100% of her wealth on JGBs

So maybe she doesn't get to 100%, but why stop at a mere 50%$ It will continue because it can, and because Japan still has real net wealth.

Mon, 03/26/2012 - 17:39 | 2292503 Poor Grogman
Poor Grogman's picture

"The Bank of Japan is trying to weaken the yen through expanding its balance sheet"

I call BS also, the BOJ is monetizing just enough to prevent rapid debt deflation. If they wanted to, any central bank could crush a currency as fast as you could type "100 quadrillion".

This will continue because this is the planned end game.

Central bank control of the entire society...

This type of article is just more smoke and mirrors, because people don't wish to acknowledge what is sitting right in front of them.

The BOJ controls Japan period. Get over it Sheeple..

I don't like It any more than anyone but there it is, The only thing that can threaten the CBs grip on everything is ..GOLD....

Prepare accordingly.

Mon, 03/26/2012 - 15:05 | 2292000 SilverTree
SilverTree's picture

World War Wii?

Mon, 03/26/2012 - 15:58 | 2292166 gangland
gangland's picture

stratfor, that paragon of intelligence and security, says it would only last 48 hours.....

http://english.al-akhbar.com/content/iran-attack-would-last-48-hours-str...

 

"A former IDF military intelligence agent, codenamed IL701, claimed to Stratfor that

if an attack were to be conducted by Israel, it would be driven by “political and oil reasons and not nuclear”

and the Israelis will only initiate such an attack “as a contractor for other nations or if Iran or its proxies attack first,” emails released by WikiLeaks show....

 

...IL701 is David Virgil Dafinoiu (doc-id 5441681 link to internal emails), currently president of NorAm Intelligence and is commonly relied upon by Fred Burton, Stratfor’s VP of counter-terrorism, for insights on Israeli operations...

another "analyst" said this:

"... the Israelis “already destroyed all the Iranian nuclear infrastructure on the ground weeks ago.”

He added, “The current “let’s bomb Iran” campaign was ordered by the EU leaders to divert the public attention from their at home financial problems.”

“The result,” Dafiniou further claimed, “will be massive attacks on Gaza and strikes on Hezbollah in both Lebanon and Syria.”

Dafiniou was then asked to elaborate further on his extraordinary statements.

He clarified, “Israeli commandos in collaboration with Kurd forces destroyed few underground facilities mainly used for the Iranian defense and nuclear research projects.”

Moreover, Dafiniou alleged that “the promoter of a massive Israeli attack on Syria is the axis India-Russia-Turkey-Saudi Arabia,”

while “the axis US-Germany-France-China” was against such an attack.

“Not many people know that Russia is one of Israel’s largest military partners and India is Israel’s largest client,” he said.

“If a direct conflict between Iran and Israel erupts,” he continued,

“Russia and Saudi Arabia will gain the advantages on oil increasing prices”

while “China and Europe are expected to loose from an oil crisis.”

In regards to any Israeli plans drawn up for such an attack, Dafiniou claimed that an attack on Iran “will last only 48 hours” and “will be so destructive that Iran will be unable to retaliate or recover and the government will fall.”

 

Mon, 03/26/2012 - 15:59 | 2292178 brewing
brewing's picture

you sure are posting a lot of claptrap today...

Mon, 03/26/2012 - 16:19 | 2292255 gangland
gangland's picture

for a douchebag who's been here 10 weeks and change, you sure add a lot of value...

Mon, 03/26/2012 - 16:28 | 2292294 brewing
brewing's picture

i'm just here for the sarcasm, and reading your fascinating posts of course...

Mon, 03/26/2012 - 16:28 | 2292297 brewing
brewing's picture

it was so close to being interesting...

Mon, 03/26/2012 - 17:05 | 2292407 gangland
gangland's picture

try trolling yahoo and BI msg boards you'll fit right in idiot

Mon, 03/26/2012 - 17:07 | 2292416 brewing
brewing's picture

try writing your own post without re-posting an article.  this ain't twitter nimrod...

Mon, 03/26/2012 - 17:31 | 2292485 gangland
gangland's picture

indeed, you mean l should be like you and your erudite and deeply mensa posts...

Mon, 03/26/2012 - 17:43 | 2292511 brewing
brewing's picture

pretty big words for someone i see on peopleofwalmart.com all the time...

Mon, 03/26/2012 - 17:52 | 2292537 gangland
gangland's picture

what'd you score on your SAT verbals 250?

that is your idea of a come back or or or " I'll stick to 'sarcasm' "?  lmao!

apparently 'sarcasm' is too big a word for you HAHAHAHAHAHAHAHAHAHAHAAHAHAHAHAHAHAHAHAHAHAAHHAAHHAHAHAHAHAAHAHHAHAHA to eternity.....

Tue, 03/27/2012 - 01:09 | 2293485 tenpanhandle
tenpanhandle's picture

A nimrod is a "hunter".  No insult there my good fellow, unless you shout it at a PETA conference.

Mon, 03/26/2012 - 17:11 | 2292426 brewing
brewing's picture

and one on subject too.  thought i was reading a post about japanese debt and you're talking about invading iran?  me trolling?

Mon, 03/26/2012 - 17:24 | 2292470 UpShotKnotHoleGrable
UpShotKnotHoleGrable's picture

GTFO! Trolls can read??

Since you're new around here lemme clue you in: ZH posters can respond to other posts, even if said post maybe off the headline topic. 

Now, clearly, this is too complicated a calculus for your troll pea brain to ponder, so as a rule, as the man said: either add something of value or shut the fuck up.

Have a nice fucking day ;)

Mon, 03/26/2012 - 17:32 | 2292482 brewing
brewing's picture

na, i'll stick with the sarcasm and let you add value with your well crafted rant...

Mon, 03/26/2012 - 17:47 | 2292526 gangland
gangland's picture

you have no clue what sarcasm means moron epic fail

Mon, 03/26/2012 - 17:57 | 2292553 Rainman
Rainman's picture

sarcasm is anger's ugly cousin

Mon, 03/26/2012 - 16:13 | 2292229 The Big Ching-aso
The Big Ching-aso's picture

 

 

All's well that yens well.

Mon, 03/26/2012 - 17:35 | 2292494 JustanEmotion
JustanEmotion's picture

all the way home...

Mon, 03/26/2012 - 14:55 | 2291955 Sudden Debt
Sudden Debt's picture

Look at all the attention the japanese are getting!
Now lets focus back on whats really important.... Pizza or McDonals for dinner, what will it be?

Mon, 03/26/2012 - 15:02 | 2291992 Dick Darlington
Dick Darlington's picture

McDonald's Monday!

Mon, 03/26/2012 - 15:10 | 2292021 RafterManFMJ
RafterManFMJ's picture

 

 

Pizza for me. The Pizza Hut dumpster is closer for me, and it's a cold day for walking.

Mon, 03/26/2012 - 15:59 | 2292175 brewing
brewing's picture

the only thing i gotta decide is thin crust or deepdish...

Mon, 03/26/2012 - 15:24 | 2292066 DoChenRollingBearing
DoChenRollingBearing's picture

@ Sudden,

Now let´s focus on what´s REALLY IMPORTANT, what will our Japanese bearings cost in six months (made in Kansai region, not close to Fukushima).

Of course, bearings are made of steel, and the Japanese have to import all that iron ore...

Mon, 03/26/2012 - 15:49 | 2292138 Sudden Debt
Sudden Debt's picture

Tip: our bearing almost all come from Germany and Korea.

Mon, 03/26/2012 - 16:04 | 2292193 DoChenRollingBearing
DoChenRollingBearing's picture

+ KBC!

+ Iljin!

Both are Korean and so far this year represent over 70% of our sales this year so far (Hyundai in 2011 outsold even Toyota in Peru).  Our Japanese supplier is the small (but they make an interesting line of scarce bearings for old cars) MBS of Osaka.  MBS is automotive only.

Mon, 03/26/2012 - 15:50 | 2292139 Dave Thomas
Dave Thomas's picture

Do the Japanese make a lot of bearings? I wasn't aware of that. I always remember how important ball bearings were to prosperity from an old B17 video game where if you took out the Schweinfurt ball bearing factory it literally shut down the Whermacht's production.

Here is some interesting history on those Schweinfurt factories:

http://en.wikipedia.org/wiki/Second_Raid_on_Schweinfurt

Mon, 03/26/2012 - 15:53 | 2292152 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Hooooooggaaaaannnnn!!!

"I know NOTHING, Herr Komandant"

Mon, 03/26/2012 - 16:15 | 2292209 DoChenRollingBearing
DoChenRollingBearing's picture

@ Dave T

Yes, Japan makes LOTS of bearings!  Toyota et al pretty much only buy from their national companies.  I believe the current ranking (sales) of the largest bearing companies is as below:

1) SKF (Sweden, but with factories everywhere)

2) Schaeffler (INA, FAG, KBC; mostly Germany)

3) Timken (inc. their Torrington acquisition, mostly USA)

4) NSK (Japan)

5) NTN (Japan)

6) Koyo (Japan)

 

EDIT:

Interesting link D.T., thanks.  I remember reading in the past that the Schweinfurt plants, each time they were hit, would be back in production very quickly as German tanks and aircraft could not run when their bearings blew out...  One critiqute I read said that they should have leveled them to the point of destroying the precision machinery there (which in most cases IIRC was NOT destroyed).

Mon, 03/26/2012 - 17:54 | 2292543 Dave Thomas
Dave Thomas's picture

Thank you for the rundown!

Mon, 03/26/2012 - 22:24 | 2293201 BigInJapan
BigInJapan's picture

@Dochen

I'd think that the costs would either stay flat or decrease, in terms of your end, assuming you're paying/converting in USD.

I'm looking at the value of all my assets - 'cept me gold - being rung through the combine.

Fucking Socialists. 

Sure do make some good steel, though!

Mon, 03/26/2012 - 16:13 | 2292227 LongSoupLine
LongSoupLine's picture

 

 

Pizza Ponzi Pump Party!!!

Mon, 03/26/2012 - 14:56 | 2291962 Buzzworthy
Buzzworthy's picture

Kyle Bass has been warning about this for months now.  Nice call, Mr. Bass.

Mon, 03/26/2012 - 22:25 | 2293204 BigInJapan
BigInJapan's picture

But how to cash in?

Mon, 03/26/2012 - 14:57 | 2291964 libertus
libertus's picture

Interesting. Looks like the Mr. Panos was right. 

http://www.youtube.com/watch?v=Mf5mjP_Kzcw&feature=player_embedded

 

Tue, 03/27/2012 - 02:32 | 2293571 Joseph Aguirre
Joseph Aguirre's picture

There are Chinese people... under the ground...

http://www.youtube.com/watch?v=EMoNXBeFrDI&feature=related

Mon, 03/26/2012 - 15:01 | 2291968 GeneMarchbanks
GeneMarchbanks's picture

Pick your poison out there....

Whatever happened to CDS hinting at bond risk? Ah, how we delude ourselves.

Clearly the Chinese are acutely aware of the shitheap of DMs out there.

 

 

Mon, 03/26/2012 - 16:17 | 2292244 Western
Western's picture

Doom mongers? Deutschemarks?

Mon, 03/26/2012 - 15:05 | 2291971 Theta_Burn
Theta_Burn's picture

 

Yup: a mere "surge" in interest rates to a whopping 2.00% will destroy the Japanese American economy. There fixed that for you (Always wanted to use that strike through feature)

Hey Japanese citizens! Got Gold?

**Won't save..

 

Mon, 03/26/2012 - 14:59 | 2291974 i_fly_me
i_fly_me's picture

tick ... tick ... tick ... tick ...

Mon, 03/26/2012 - 14:59 | 2291977 Cdad
Cdad's picture

Ummm...the JGB bubble burtin' the US stock market?  Are you kidding?  We got "window dressing" coming up...the most potent global ecnomic force known to man.

F'n sarc off/

Mon, 03/26/2012 - 15:00 | 2291978 vote_libertaria...
vote_libertarian_party's picture

but but but that means we can buy more toys

Mon, 03/26/2012 - 15:00 | 2291982 Dick Darlington
Dick Darlington's picture

Thank god the japanese have bought the super-safe EFSF-peashooter ponzi-bonds hand over fist, just in case their own economy blows out. Those will give the japanese a nice buffer. ROFLOL!!!

Mon, 03/26/2012 - 15:04 | 2291996 fonzannoon
fonzannoon's picture

I think we should all stand up and give the Bernak a nice golf clap today. Stocks up huge, treasuries barely moving. Mission accomplished sir! At ease.

Mon, 03/26/2012 - 15:47 | 2292132 Bansters-in-my-...
Bansters-in-my- feces's picture

May I suggest a "slap" for the Bernank over the "clap "?

Mon, 03/26/2012 - 15:05 | 2291999 fonzannoon
fonzannoon's picture

When do the Japanese start dumping our treauries?

Mon, 03/26/2012 - 15:54 | 2292162 Doubleguns
Doubleguns's picture

You must have forgot. They are not allowed to dump them. They will be confiscated instead.

 http://www.asianews.it/index.php?l=en&art=15456&size=A

Mon, 03/26/2012 - 16:01 | 2292182 Carl Spackler
Carl Spackler's picture

They won't be dumping them if the Yen devalues by 40%...unless it is a UST-for-Au or Ag swap.

Mon, 03/26/2012 - 15:05 | 2292004 q99x2
q99x2's picture

Japan attacks the UN as they move from petrodollars.

Mon, 03/26/2012 - 15:06 | 2292006 distopiandreamboy
distopiandreamboy's picture

Not saying that the author is wrong but the Chinese might be alittle biased against Japan...

Mon, 03/26/2012 - 15:51 | 2292144 Christophe2
Christophe2's picture

Dunno about that.  It seems like he was laying out some pretty devastating comments on the Chinese situation as well.

Mon, 03/26/2012 - 22:27 | 2293208 BigInJapan
BigInJapan's picture

Not at the levels of power that count. Up there they're like two retarded brothers sleeping in the same bed.

Mon, 03/26/2012 - 15:07 | 2292010 Jason T
Jason T's picture

Like lightening this shit will strike

Mon, 03/26/2012 - 15:07 | 2292011 BandGap
BandGap's picture

Rook out berow!

Mon, 03/26/2012 - 16:51 | 2292368 francis_sawyer
francis_sawyer's picture

The "Wi-R-e coyote" moment

Mon, 03/26/2012 - 15:08 | 2292016 EmileLargo
EmileLargo's picture

There are some counter arguments against this happening quickly (although I totally agree that it has to happen eventually). For starters, Japan has $1.3 Trillion in Forex reserves. They will spend this and can fund their imports for many years before they have a problem (that spending will counteract any fall in Yen value as it will drive the Yen higher against the Dollar). The Japanese Central Bank can start buying JGBs with printed money like the Fed and the Bank of England are currently doing - without causing a massive debacle in the bond market in the immediate future. To the extent that this causes the Yen to weaken, Japanese exporters will LOVE it and it will make Japanese exports price competitive once again. The rise in exports will act as a buffer against a collapse in the value of the Yen. 

I don't disagree that eventually the system has to go completely bust. But because of its unique export industries, its FX reserves etc., Japan has a little more breathing room than people think it does. 

Kyle Bass is absolutely right and he will make a huge profit from this trade. However, I do not think it will happen as quickly as he seems to think. There is a "qualitative" difference between Japan and, say Ireland, because Japan still makes stuff that the world buys and which the world regards as high quality. Ireland produces nothing, by comparison (although some of the whiskey isn't too bad). 

Mon, 03/26/2012 - 15:16 | 2292036 Spacemoose
Spacemoose's picture

"For starters, Japan has $1.3 Trillion in Forex reserves. They will spend this and can fund their imports for many years before they have a problem (that spending will counteract any fall in Yen value as it will drive the Yen higher against the Dollar). "

so what happens here when Japan begins to export our inflation back to us?  i repeat myself, but anything that can be exported (food, gold, refined petroleum) is going to inflate like crazy and anything that cannot be exported (community organizers, massage parlors, baristas) will deflate. 

 

Mon, 03/26/2012 - 15:23 | 2292063 i_fly_me
i_fly_me's picture

You are leaving out an important component of Mr. Bass's analysis; namely, that the Japanese demographic debacle has hit the tipping point and begun to accelerate.  The transition from majority savers to majority spenders is dead ahead and the operative word here is "dead."  I believe his outside prediction is 3 years for Japan and I see no reason to doubt it.

Mon, 03/26/2012 - 16:26 | 2292287 spanish inquisition
spanish inquisition's picture

$1.3T should cover phase 1 of northern Japan decontamination.

Tue, 03/27/2012 - 17:33 | 2295705 mkkby
mkkby's picture

Good comment.  I'll add this.  Simply put, the strengthening yen means the JCB is not printing as fast as the Fed or ECB in relative terms. 

All they have to do is print faster to keep up in this game of competitive devaluation.  They need to do that pronto or their export markets will die.

I don't think there will be a crash any time soon.  First we need to see the debtor European countries "go Greece".  Then the UK, then maybe Japan.  Last the US.

Mon, 03/26/2012 - 15:09 | 2292019 magpie
magpie's picture

Doesn't matter, since they will be selling their (functioning ?) AEGIS cruisers to South-East Asian nations.

Mon, 03/26/2012 - 15:21 | 2292059 GeneMarchbanks
GeneMarchbanks's picture

Is this before or after being struck by a NK missile?

Mon, 03/26/2012 - 17:55 | 2292546 magpie
magpie's picture

uh sell the ship, then the missiles ?

Mon, 03/26/2012 - 15:11 | 2292026 SillySalesmanQu...
SillySalesmanQuestion's picture

They just gave the Bernank props on CNBS for making it a very green day...LMAO

Mon, 03/26/2012 - 15:17 | 2292040 bankruptcylawyer
bankruptcylawyer's picture

excellent piece. 

Mon, 03/26/2012 - 15:16 | 2292042 tony bonn
tony bonn's picture

"...When a major company goes bankrupt, this may change the prevailing psychology..."

tut tut tut! there shall be no major bankruptcies even if bernankula has to hire every unemployed person in america to print more fake money.....bankruptcy? how 1930s......

Mon, 03/26/2012 - 15:18 | 2292045 Conax
Conax's picture

The Fukushima disaster isn't calculated in, at least not heavily enough. I wouldn't care to buy a car or motorcycle manufactured there anymore. Not without a geiger counter check or something. I have been waiting for the JPY to drop, just because their export industry seems likely to suffer. But what do I know?

This will cause the dollar to rise a bit, and damage my damn silver returns.. Arrrgh.

Everything that happens seems to be against me all the time, but I am not a paranoid. I'm not.

Mon, 03/26/2012 - 16:20 | 2292259 LongSoupLine
LongSoupLine's picture

 

 

That very well could be a "trigger event", when some curious retailer or consumer takes a geiger counter to their "product" (i.e.- car, stereo, gaming system, TV, etc) and gets a mega spike.

Mon, 03/26/2012 - 15:19 | 2292049 Robslob
Robslob's picture

 

 

I give a shit about Japan and China...what happens to the "price" of my gold!?!

Mon, 03/26/2012 - 15:23 | 2292064 SilverTree
SilverTree's picture

Revaluation.

Mon, 03/26/2012 - 15:20 | 2292053 Triple A
Triple A's picture

things seem to be heating up a little bit and it aint just the weather.

Mon, 03/26/2012 - 15:25 | 2292068 Ted Baker
Ted Baker's picture

FOR ONCE CHINA IS INCORRECT - THE YEN WILL NOT WEAKEN BUT STRENGHTEN DURING THE NEXT 2-3 WEEKS...FOR THOSE WHO TRADE CURRENCIES SELL USD AND BUY JPY...DO NOT FORGET THAT QE3 DUE DATE IS 15TH APRIL 2012 IF NOT EARLIER...

Mon, 03/26/2012 - 15:28 | 2292082 Frozen IcQb
Frozen IcQb's picture

Like the US and the UK, Japan’s economy is heading of the cliff. Their population is aging rapidly and both their private pensions and social security benefits are mostly un-funded. Savings are declining. Japan has very little energy and natural resources. Commodities are imported. This was not a problem while Japan was running a massive trade surplus. The GDP was supported by exports and a cheap yen supported an economy of exporters. The BOJ intervened constantly to maintain a cheap currency. As a result, they have accumulated huge FX reserves of which 1,000 billion is denominated in USD and parked in US treasuries.


Here’s the game changer: The global economy is slowing. Japanese manufacturing jobs are moving to other Asian countries. Japan needs energy and commodities to rebuild its infrastructure. 30% of their electricity generating capacity has vanished because all their nuclear power generators are now offline. Energy imports have soared. They are now running a trade deficit with the US and China that will likely continue. This trade deficit will force a change from a weak Yen to a strong currency policy to facilitate their infrastructure reconstruction through cheaper imported material and energy. Their debt to GDP is over 200% and that’s excluding the unfunded liabilities. They need money and printing is no longer to their advantage because it makes imports more expensive. The incentive for a weak currency is no longer there. Consequently, I believe they will repatriate some of their USD FX reserve made possible by selling USD assets. Selling US assets and dollars for yens will exert downward pressure on the USD/JPY pair. A rapid unwinding of the Japanese carry trade will follow. US import prices will escalate as a result to the detriment of over-leveraged and unemployed American consumers.

This could most likely be the single largest threat facing the US economy in 2012-13.

Mon, 03/26/2012 - 15:48 | 2292136 Dr. No
Dr. No's picture

Your two paragraphs gets deeper into the real issues than most of these headline pump and dumpers.  Thanks.  Long FXY.

Mon, 03/26/2012 - 17:11 | 2292429 DosZap
DosZap's picture

Frozen IcQb

US import prices will escalate as a result to the detriment of over-leveraged and unemployed American consumers

BAD news for Japan, and anything made there,sold here & made here.......................

Folks will buy anything BUT Japanese.

I am seeing more and more(and I mean MORE), Kia's, and Hyundais,on the streets..........their everywhere you look.

These are eating more into the Nissan/Toyota  business than American makers IMHO.

Higher import prices to people on PB&J sandwitch budgets, are not in the cards.

Bring on the YUGOS.

Mon, 03/26/2012 - 23:05 | 2293268 FeralSerf
FeralSerf's picture

"They need money and printing is no longer to their advantage because it makes imports more expensive."

Conversely, money printing should tend to make their exports less expensive and more competitive on the world's market. The Japanese still know how and are still able to make good stuff, but they've been at a severe disadvantage by the expensive JPY. If they can sell their exports, they will have money to pay for the imports. Value added is what they're good at.

Mon, 03/26/2012 - 15:34 | 2292085 Normalcy Bias
Normalcy Bias's picture

Another home run for Kyle Bass...

Mon, 03/26/2012 - 15:30 | 2292087 SDRII
SDRII's picture

http://www.bbc.co.uk/news/business-16330574

http://www.thestar.com/news/canada/article/1151660--canada-japan-agree-t...

Bass is  the latest on the long list of those puttiing on the widowmaker trade

With ZIRP who needs the Yen carry or an Isuzu

Mon, 03/26/2012 - 15:31 | 2292089 Stackers
Stackers's picture

Follow the inert gray brick road .... follow the inert gray brick road ... follow, follow, follooow .... follow the inert gray brick road .... we're off....

Mon, 03/26/2012 - 15:33 | 2292099 Paul Atreides
Paul Atreides's picture

Caution we have a biege alert!

Mon, 03/26/2012 - 15:35 | 2292106 Stackers
Stackers's picture

"Japan is a bug in search of a windshield" ------ John Mauldin

Mon, 03/26/2012 - 15:34 | 2292103 fpcallc
fpcallc's picture

"The odds are that yen devaluation will occur over days. Only a large and sudden devaluation can keep the JGB yield low. Otherwise, the devaluation expectation will trigger a sharp rise in the JGB yield. The resulting worries over the government's solvency could lead to a collapse of the JGB market."

A sudden 40% devaluation keeps JGB yield low!?!?!?

OK, help me out here. What am I missing? If the Yen is devalued by 40%, this means that the 10 yr JGB I'm holding is worth less because my stream of payments from my JGB is now worth less in relation to other currencies. How is it that yields don't rise in a comensurate fashion to make up for this sudden devaluation, but a slow devaluation would raise yields? Seems to me ANY substantial devaluation, sudden or gradual, would raise yields?

Mon, 03/26/2012 - 15:34 | 2292104 bidaskspread
bidaskspread's picture

North Korea ballistic missle launch April 15  + Patriot missles deployed to Tokyo + Us President states to N. Korea " have the courage to persue peace" = The Yen's Looming Day of Reckoning by Andy Xie.

Mon, 03/26/2012 - 15:41 | 2292114 Zola
Zola's picture

How can there be a big devaluation without weakness in the bonds ??? That would unleash inflationnary expectations i think.

Mon, 03/26/2012 - 15:46 | 2292129 Dr. No
Dr. No's picture

Long FXY.  I am thinking about adding due to this contrarian indicator.

Mon, 03/26/2012 - 15:50 | 2292141 farmerjohn2112
farmerjohn2112's picture

heh... "tungsten brick road"

+1 for Tyler

Mon, 03/26/2012 - 15:54 | 2292156 Belarusian Bull
Belarusian Bull's picture

Ore wa totemo kanashiku natte kimas... :(

Mon, 03/26/2012 - 16:07 | 2292204 mick_richfield
mick_richfield's picture

And yet, it is said:

Kudasai, inryou sui no funsui ha hainixyoushi masen.

Mon, 03/26/2012 - 15:55 | 2292161 Papasmurf
Papasmurf's picture

How does the yen differ from usd in this devaluation?

Mon, 03/26/2012 - 15:55 | 2292165 Milton William ...
Milton William Cooper's picture

Long JGBD...

Mon, 03/26/2012 - 16:02 | 2292184 mick_richfield
mick_richfield's picture

I don't understand how the lights are still on in Nippon, with all their nukes shut down.

I can't believe that they had that much spare generating capacity sitting around.

How are they keeping the lights on?

Mon, 03/26/2012 - 16:07 | 2292205 Reven
Reven's picture

No!  Paul Krugman said this is impossible, because Japan has the money printing.  Move along people, nothing to see here!

 

/sarcasm

Mon, 03/26/2012 - 16:11 | 2292217 slewie the pi-rat
slewie the pi-rat's picture

chinese propaganda, imo

japan is right there in asian w/ china, buying, selling, organizing, vying for trade, profits, control, and currency acceptance

japan just devalued and china is shitting a brick, hence this rhetiric about collapse~~a threat to intervene themselves, just as heavy-handedly~~

japan's respose will be be to moon them

Mon, 03/26/2012 - 16:11 | 2292220 jrpuffnstuff
jrpuffnstuff's picture

My Avatar belongs here!

Mon, 03/26/2012 - 16:20 | 2292260 Thamesford
Thamesford's picture

The land of the falling Yen?

Mon, 03/26/2012 - 16:28 | 2292298 kekekekekekeke
kekekekekekeke's picture

My 25 year old brother taught ESL in Japan for 2 years, I visited last summer against the advice of some commenters here and it was pretty rad, took a loooot of potassium iodine before/after/during

my brother came back 6 months ago, now his parathyroid is totally shot, he's needing surgery.  could be coincidence...

Mon, 03/26/2012 - 16:53 | 2292364 Curve Watcher
Curve Watcher's picture

And Bass had been so ridiculed for getting his mortgage denominated in yen.

Mon, 03/26/2012 - 16:52 | 2292370 Bubble
Bubble's picture

Unfortunately for the Japanese, there has been a rather successful media campaign for at least a year now telling the citizenry to take advantage of the gold price and sell any holdings. To the point where on some days there are queues out of Ginza Tanaka of people hitting the bid for their jewellery/maple leafs.

Mon, 03/26/2012 - 16:52 | 2292371 Decolat
Decolat's picture

All the Japanese nuke reactors are shut down. Their electricity supply is down 30%. A fine time for the bill collectors to come knocking. A fine time for competitors of Japanese products to annihilate them. 

I can't see how Japan is going to get out of this alive.

Mon, 03/26/2012 - 17:07 | 2292414 lolmao500
lolmao500's picture

When you look at it all, you know that Japan is fucked for the next few decades. If I were Japanese, I would get the fuck out of there.

Mon, 03/26/2012 - 17:39 | 2292500 falak pema
falak pema's picture

So now the three pillars are all cracking; US, Jap, Euro and lil ole UK. Dilma goes to India for a BRIC meeting. They plan to have a joint armaments and defense strategy by pooling resources; as both countries do not have a home defense and armmaments industry...Big changes in the DC pipeline. 

Mon, 03/26/2012 - 18:16 | 2292611 EmileLargo
EmileLargo's picture

India is already in trouble. Check out what is happening to the currency. We have a chaotic and unrepdictable few years ahead, to say the least.

Mon, 03/26/2012 - 17:52 | 2292538 lolmao500
lolmao500's picture

At the dawn of the millennium, the nation collapsed. At 15% unemployment, 10 million were out of work. 800,000 students boycotted the schools. The adults lost confidence and, fearing the youth, eventually passed the Millennium Educational Reform Act, AKA the BR Act...

LET BATTLE ROYALE BEGIN!

Mon, 03/26/2012 - 19:08 | 2292805 pashley1411
pashley1411's picture

I'm not getting how a devaluation, which will hit Japaneese savers, will improve the national wealth of the country.

A devaluation would improve export%/GNP%, if you think of Japan as returning to the 1950's economic model as a lower-wage producer of manufacturered goods.   That would take an ungodly fall in national wages.   And, if I understand Austrian economics, a crash in national wealth would also also cut into national consumption.    

I just don't think any sane Japanese politician would let that happen, but would, instead, play out their American forex reserves for all they are worth, beforehand. 

Mon, 03/26/2012 - 21:03 | 2293038 Dingleberry
Dingleberry's picture

The yen got stronger because of the reversal of the carry trade by Mrs. Wantanabe and the huge amount of cash that had to be repatriated. Japan has been living with ZIRP forever, and the only way to make any money is to do forex. Forget the Nikkei.  Japan has a long history of trying to keep their currency low. But they had to start playing ball in the 80s or else. I remember about 300 yen to the dollar.  Eventually their currency will go down as their debt is massive, albeit self-funded. But eventually the funds run out as their trade balances are going negative.  I know people there, and morale is crap. The writing is on the wall. The bubbles that collapsed (RE and stock), along with ZIRP, really did them in. The tsunami didn't help either. 

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