This page has been archived and commenting is disabled.
Has Japan Run Out Of Cans To Kick?
Japan's Trade and Current Account imbalances appear to be hitting some kind of terminal velocity and while neither JGBs nor CDS seem to reflect the ensuing chaotic recognition that perhaps the can that has been so faithfully kicked down the "Nishi-no-michi" or the West Road may have plunged over the lip of Mount Fuji (conjuring images of Mordor), FX markets recent and abrupt weakness brought on by yet more printing (a topic we discussed in great detail recently as the chosen heretical method du decade) may well be coming face to face with reality. We assume Azumi is faithfully watching these market moves but we wonder at what point the quasi-intentional weakening of local currencies flares into a full-blown currency war - and instead of merely encouraging simpleton FX-carry strategies chasing momentum and leverage - quickly becomes the hyperinflationary super nova that many have been waiting for over the last decade. Dismal demographics aside, we wonder how long before Koo prescribes yet more of the same medicine for this constant state of deflation and at what point does inverted-Apple-looking charts for Trade and Current Account balances become simply too hot to handle...
The Japan trade balance has tipped into extreme freefall...
As has the Current Account balance...
And the absolute basis (purple line) between CDS and JGBs remains notably above any of its peers reflecting more of the possibility of a hyperinflationary or devaluation 'event' than Greece-like default given its currency-manufacturer status as opposed to its currency-user status (a la Greece)...
The basis (5Y 83bps) above is all the more shocking (almost triple the bond yield) when considered in relative terms - i.e. compared as a ratio to the extreme low yields of JGBs (5Y 29bps!! and 10Y charted below)...
so perhaps the recent 'crash' in USDJPY, catching up to FX vol risk-reversals (a measure of the FX options market's implicit skew to bullish or bearish sentiment) is the start of bigger things...
or is it simply yet another false alert on the road to Mordor for Japanese Central Bankers?
Charts: Bloomberg
»
- 16153 reads
- Printer-friendly version
- Send to friend
- advertisements -
land of the sinking sun
Now this is serious. If Japan goes down, so does US/UK 24hr control of financial markets.
Oh dear...
Now this is serious.
Not really. Not yet.
Won't BSB just set up some FX swaps and buy the Neiki? Buy the JGB? Buy Tepco? Buy everything???
They use Japan to move future markets on Sunday nights. Usually, when the US opens a trend is already in place. You'll remember Hanks Sunday night revelations in 2008, very telling...
The Eastern front is about to get a whole lot more dicey.
Another factor is that if the USD reserve status went down in a heap the US also loses the ability to continuously track and target funds in private accounts everywhere, and to 'freeze them' or confiscate them, it will lose its toadies, and also be less able to fin-fuck whole countries and individuals.
Thus providing another excellent rationale for states to collaborate to delouse themselves of USD and geopolitical (i.e. Washington) exposure. USSA's constant, habitual and ever-amplifying meddling in other countries internal affairs and inciting conflicts is more than fair cause to rid the world of USD.
Sooooo.....basically what you're saying is we've got plenty of cans.....we're just out of road.
No, basically we have one can, cos we can't afford any more, and no more room to kick it.
I think its more like the French "Can-Can". You sort of kick in the air at an imaginary can and try to impress everyone by lifting your skirt.
According to Dylan Grice Japan has no way out:
http://www.planbeconomics.com/2012/03/09/dylan-grice-popular-delusions-march-1-2012-japan-crisis-no-way-out/
No offence but I'd kind of figured that one out already...
Yea. Good news for New Zealand.
So where will the shit hit the fan?
Will it come from Athens or Tehran?
Madrid, Lisbon or Rome?
Or from Ben here at home?
I’m with Kyle, keep an eye on Japan
The tsunami destabilized Japan and looks like their house of cards will tumble. Japan will destabilize the house of cards that is ZIRP. What will happen if/when the Fed cannot dictate interest rates? This is the problem with central planning, even teams of people with 1000 IQs can't plan for everything.
Yes we can...
Yeah, me and Harlequin001 do it all the time. Course his IQ is only 980 but we let him in the club anyway.
Charity work.
it is if you divide it by two...
I only found out two months ago that an IQ score is not like a golf handicap at all. I used to think I was totaly and utterly stupid, but now I realise I'm actually a certifiable fucking genius.
Howzat for pure blind luck..
Read James Stone's Fukushima hypothesis on how the Magna BSP's security cameras were the culprit. Stuxnet did participate there as well, took out not only the plutonium enrichment facility but down with it the Japan's already ailing economy!
All of them. At once.
Yeah. This feels like I'm bowling and the pinsetter is getting it ready.
.
You might wanna leave the limericks to the King. Haiku maybe?
When Japan's Financial system blows it's gonna make hiroshima look like a firecraker
The PC crowd.....is not going to be pleased with that statement
Oh well.........fukem.
They make good bearings though.
Let me guess, you make bearings in Japan?..
Kyle Bass...nailed it, again. It will happen, and many will be thrown under the bus.
Red Drain?
The implosion will be epic. So much has hung on the carry trade.
"Sterilized QE" coming to Japan?
The area around Fukushima has been sterilized already.
Is Japan going to keep playing the print money while someone buys your bonds or are they going old school Zimbabwe style, crank up the presses carelessly? Japan is running out of investors for their crappy bonds.
Man!!! What part of this friggin world ISN"T on the edge of a cliff. Or already over the edge?
I know, I know. Antartica. And maybe ... I just looked at Google Earth...nope! Every other friggin part of this world is screwed.
Maybe Venezuela? Chavez repatriated their gold.
So, oil and gold. Nice combination as long as they have food, water, and the means to protect their assets,
The poles are melting down
get the boats out
Fukushima is the big deal-----no much how much noise these markets make
poles melting-----radiation will not be denied----synergetic?
we'll see in time, but keep stacking those metals down in the hole
at least it helps pass the time
oh, shit-------what happens if we have nuclear war?
Man, this is fun---never thought I'd live to see a show like this
never imagined I'd be in the show----so lucky to be here with all of you thanks om
A country very rich in natural resources and with as-of-yet unspoiled populace is still chugging along quite nicely: Indonesia.
Japan's more screwed than America! At least they know how to cove it up!!!
No, because in a financial collapse the Japanese population won't tear itself apart violently. The U.S. population will.
I watched two shows last night. One on 9/11 and one on the Tsunami last year. In NY people on the ground were stampeding to get out of the path of destruction. Very logical IMO.
In Japan they were barely jogging while this massive wall of water and debris was bearing down on them. I was thinking, what the hell is wrong with these people. Some of them are 100 feet from a safe hill and 300 feet from certain death and thy still won't fuckig run as if it is improper or something. It was very strange to see.
Japan is desperate. They are invoking VAT taxes, and trying speed up the transistion schedule. Their working class is aging from 2 decades of deflation. They are being torn apart from Asian counterparts : Korea , China, India. Japan has very limited natural resources.
Japan is an albatross, for the Americas. They went apeshit in the 80-90's and destroyed the ( commercial), real estate market in the United States. If any one should have Nukes, it should be Japan! Let Japan deal with China.
2 Milleniums of torture, should suffice!
Yep, Japan's been pretty good at starting wars in the past...
Both of my Grandfathers fought in it!
Did they win?
And as we know VAT is a regressive tax.
Demand is hardly going to go up, nor deficits down.
Yep, just ask any good German about VAT...
Did either one of them fought in Nanjing (1937) too?
What is often ignored in Western education curriculum, and unknown to Western society in general, is the fact that War in Asia had already erupted by 1937 with the Japanese invasion of China and the subsequent takeover of the then capital city of Nanjing, 4 entire years before the attack on Pearl Harbor in 1941. Japanese expansionism had already begun by the early 1930s with the occupation of the northeastern part of China and the establishment of the puppet state of Manchukuo. Full scare war between the Empire of Japan and the Republic of China officially began by July 1937 following the Marco Polo Bridge Incident. By August of 1937, the Japanese launched a full scale assault on the city of Shanghai. They were met with heavy resistance from the Chinese Nationalist army but eventually captured the city after weeks of brutal fighting. By then, the then-leader of China, Chiang Kai Shek, knew that the Japanese’s eventual target would be Nanjing. Knowing that the city would be lost, Chiang Kai Shek pulled out and relocated his government to Wuhan and later Chongqing. He left with most of the Nationalist army in preparation for future battles, leaving only a small, disorganized and greatly undersupplied battalion of soldiers left to defend Nanking. The Japanese slowly made their way to Nanjing after the fall of Shanghai.
The Japanese arrived outside the city walls on December 8, 1937. After 5 days of fighting with the remaining Nationalist army, the wall was breached. The Chinese army remaining in Nanjing were vastly outnumbered and outmatched by the superior Japanese forces and weaponry. After the city fell on December 13, 1937, the Chinese army surrendered their weapons and hoped to be treated with mercy by the occupying Japanese forces. They couldn’t have been more wrong. The events that followed later became known in history as the Nanjing Massacre.
Full story is here: The Tears of Nanjing
Kyle Bass called it again
And while you're fearmongering, the Nikkei is about to break 10,000. Game over. Ponzi FTW, bitchez!
OOOHHHHH 10K Nikkei! Me so impressed. Did you see the DAX yesterday Ass hole ?
Y I know your Father! Z
Nikkei is still about 75% under what it was on December 29.1989.
(38,915 vs. 10,000)
And, with a quadrillion yen debt, to boot now.
http://e.nikkei.com/e/app/fr/market/nikkeiindex.aspx
Again, if the stock market actually reflected the true economy, everyone in Zimbabwe would be driving Bentley's and Bugatti's.
https://mises.org/daily/2532
Too bad for the US. One less US (junk)bond buyer now.
The problem with Japan is I have been hearing the same shit since 1990-something. Their printing makes Ben look like a piker. I'm still waiting.....
You missed the part about frugal Japanese saving money and handing it over to the postal system [of all places].
Their government debt was financed internally. No one could pull the rug out from under them.
Now the frugal Japanese can't save anymore. They're retiring. They need to consume their savings.
Japan trade imbalance is nothing more than Japan importing a mess of fuel to replace the energy from all the nuclear plants that have shut down. It'll go up further throughout the summer, but the trend won't go any deeper than that.
Riiiiiight...
Which of the 1,433 ETFs is the JGB one?
Nikei.com shop the index window. You are buying Inflation. Enter at your own risk!
The problem with Japan is althogh they are in huge debt, Japan has been one of the biggest buyer of the US bond/ treasury. How can they keep buying huge amount of US treasury while the coutry has been running debt and printing money for over 15 years.
That was in 2011. Japan is net short U.S. Treasuries in 2012. When the BoJ /MoF failed with the last intervention, they devised an overseas reinvestment program. You are currently seeing devaluation without earnings. Ponzi spending
on the back of purchasing power! If you buy Japan, I would hedge it at a 3-5 RATIO! Japan is buying into a recession.
Not reflation! Europe
They can't. The US is on the exact same path as Japan - the exception being our population is still growing. The Fed is now the number one owner of T-bills - this will only increase as China and Japan unwind.
EDIT - Here's a list of the largest US debt holders:
http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Deb...
HD
Not growing---don't believe everything you read om
Not growing?! Trust Obama to pony up more Cash for Bastards.
?
!
We have sorution. We build more robots. Robots do our work. Robots become sentient, earn income and consume. Robots buy our bonds. No need immigration.
Sorbet/ Orange Flavour?
rehypothicating robots ..?
The problem with Japan is that 30 minutes after eating some JPY, you are hungry again! Err wait ..
Not to worry. Japan slowly being absorbed back into Asia after a long affair with the Anglosphere
actually while this will sound odd "i think the exact opposite is going on." in my view the capital structure of Japan has in effect "abandoned Japan for New York" until Japan is safe for re-habitation. Under this scenario trillions is being financed by the Japanese Government through its primary dealer "Mitsubishi Financial" such that all the technology by which Japan "the country" can be run and as well cleaned up is effected. The way i see it "this is truly a blank check." GE turbines to run the nat gas electrical grid "flat out"..."robotics to begin nuclear clean up"..."expansion of mfg'ering facilities in Kentucky, Ohio and Mississippi" to run production flat out, etc...etc....And "standing in the way is South Korea" which will fight tooth and nail to be the next Honda, Toyota and Sony.
re. "expansion of mfg'ering facilities in Kentucky, Ohio and Mississippi"
Japan is expanding facilities many places in Asia.
Japan, sadly, out of necessity, is moving out of Japan.
In related news.
There is supposed to be an enormous raft of radioactive debri (sp?) making N.American landfall in a couple of months.
Thank you.
Regards,
GL
Japan's debt is internally funded. The US is financed from outside countries.
Japan blows up first, then the US? The US is playing catch-up and fast.
not anymore. "Germany up next...
And we dun need no steenkin bond buyers!
We'll put 'em in cereal boxes, make them redeemable at McDonald's for a happy meal or super-size fries, put faces of past Fed Chairman on them and make them into trading cards.
C'mon, America! Where's your ole creativity?
New credo at the Fed : "Non Debitum Quoque Ingens" ( "No debt Too Huge" )
Engraved over main building entrance
You'd be surprised how true this can become. Spending would have to be prioritized away from consumption of course for it to remain sustainable...
Coming soon biggest blockbuster movie - The Revenge of the Widows!
Can I say it? Can I say it now? I can? Ok, here goes:
"Do I smell gas in here?"
ah, me so horny
edit for you ho's
http://www.youtube.com/watch?v=u6VTj7LhCtE
Based on flows. I think the yen will ( struggle to), strengthen in the medium term as foreign investment flows off set diversification!
Just a wild guess, but sometime in late March, 2011 there was a high level meeting in Japan to talk about the broader Fuku issue. They soon came to realize that if they were honest about the nature of the problems, they would need to evacuate Tokyo and this would be the end of their country. In addition, they cannot afford importing the oil necessary to keep their large industrial base running, so the idea that their nuke plants will be mothballed is just politics. This also put in place the policy that TEPCO is still viable and managing the Fuku issues and a compliant media was told to forget about investigating the ongoing mess.
So their economy is the only thing in cold shutdown, they have traded a million people getting cancer for survival of the country and have some serious financial issues (government debt is 235% of GDP!). Japan is done, debt, demographics, tsunami, Fuku, now trade/CA imbalances. They will hang on for a while, but their future is very bleak.
sschu
I run a non-profit. Maybe now is a good time to contact Hugh Hendry. He says no one ever calls him.
Sorry, can explain please? I thought Japan has been trying to devalue the JPY for a long time. Last example was post-March quake, but also before then.
Is it that they are finally successful in devaluing their currency?
Repost : http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...
sushi flavored
crack..
Japan goes it will take a chunk of China with it, a total repatriation of funds out of Asia back to Japan. They nearly did that in 2011, but instead printed.
Scary part China/Japan both net importers of oil on a major scale. Cue military tensions i.e Japans navy getting frisky.
They world is moving closer to major conflicts.
The global economy may not make it to the end of 2012. The great bond market crash once hyper-inflation hits everywhere. Starting with Europe. China could blow out anytime, gauged on Aust terms of trade that is sinking (exports, AUD is heavy). But oil going upward stagflation could rip into China.
So any oil spikes gift from Iran will tip the world into horror show stagflation or Israel drops some...
Rangy rallies till the Greek con job, 48hrs this market hits the March volatility.
Going to be brutal starting now.
have a nice weekend.
There is NO WAY you are leaving the party Chump!
haha don't worry i am here to the end.
but back on Monday. good luck with your trades.
have a rice weekend
AUD getting hammered. yeah thats a good sign...
something is up.
Yes I'm short. I want to discuss the trade , but everyone is ponzi JPY! Aud is SPX, OIL < GOLD< COPPER, ect...
funny thing. is that hedge funds will short aust to get at China cause they are commie and no one can trust their fudgy data. Their CPI was BS, and exports from aust are getting crunched. so something is very wrong with china. I am not that worried about Japan pe se, more China.
japan central bank has difficulties in buying short term bonds.
http://www.jinrongbaike.com/
http://www.cnhedge.com/
You think that looks bad?
Just wait until it's finally revealed just how bad Fukushima really was/is. Once that happens the nuclear power industry is dead, worldwide.
Just wait until it's finally revealed just how bad Fukushima really was/is. Once that happens the nuclear power industry is dead, worldwide.
**********
Actually i think the opposite will happen-
I've been buying U-miners for awhile now-
When everyone hates something-it's usually a bottoming signal-
As a gaijin living in Japan I can tell you that things ain't getting no better round these parts. Recently I have been proofing and editing end of fiscal year reports that have lots of bad news in them.
I think its just another confirming indicator but who can say what tomorrow holds ?
http://battleshipyamato.wordpress.com/
So, almighty ZHers, how do we make money off of this?
Give me good Japan short treasury ETF index to trade...
I'm in no respect a mighty ZHdger, but I also want to make money out of this. I don't like ETF:s like proshares ultrashort ETF, as they settle daily and i want to keep longer positions. I would recommend a FX option. Thinking about a USD/JPY ATM Call with 180 days left, what do you guys think?
..You mean there was actually a can to kick?
Has Japan run out of cans to kick?
No, worries, we can supply them with few extra cans, we´ve got quite enough of them ;p
I'm tearing the F/X yen charts apart. The BoJ must be spending insane amounts of money to weaken the yen. All the crosses are elevated and outside interest will offset any JGB sales. I think risk is seriously challenged in the short-medium term. Japans debt to GDP ratio is pathetic, but the savings rate is high. I think the yen ( potentially), is in for a big disappointment.
Japan can and will buy its own debt, as long as there is a working computer available in Japan this process will continue.
Current account is something countries have little easy control over. Japan's customers in Europe are doing poorly, ditto its US customers. Pushing down the worth of the yen is hard to do when the world is looking for a safe haven. Even the Chinese are looking to escape the imbalances in China. Trade is shrinking even w/o any tariffs or currency-related premia. All of this adversely effects current accounts.
Problems in NZ and Australia also adversely effect yen carry trade that has been keeping Japan's finance sector afloat. This is zero-sum as loss of the carry means more funds are available in Japan to throw down the reactor rathole.
Japan's economy is likely to decline ... as it has declined for the past 20 years. Hated 'money printing' will keep deflation at bay, hopefully long enough for Japan to empty out its reactors and solve its real problem.
Hopefully, Japan will come to its senses and realize industrialization costs more than it can ever return.
The governments of the world who have their own fiat currencies will keep their lending-to-government rate near zero, and will create fiat in limitless quantities until their entire system collapses (hyperinflation or nobody will accept their fiat for real, physical goods).
The governments of the world who do not have their own fiat currencies will either become overt, in-your-face slave states, or will have widespread chaos and revolt until they escape or they're thrown out of whatever fake "union" they are part of.
The entire planet is currently run by their predators-that-be and predator-class. There are ZERO honest people today who have any "official" status or power... or even influence.
The world today is 0.1% predators, 99.8% two-legged sheep, and 0.1% honest, alert, observant --- and wondering how human beings could possibly be so utterly and completely insane, stupid and corrupt.
Result: Either the predators go, or the human race is finished. So far, option #2 seems favored by about 99%. Morons.
honestann:
"The governments of the world who do not have their own fiat currencies will either become overt, in-your-face slave states, or will have widespread chaos and revolt until they escape or they're thrown out of whatever fake "union" they are part of."
ICELAND is solemnly contemplating to become SLAVE voluntarily !!!
if seems that their politicians will be succeeding in selling out the Icelandic at last... a sweet revenge for the past vote-downs.
according to bl**mberg:
Iceland will adopt Euro or other crrency, PM says (2012.03.11)
Iceland will either adopt the euro after joining the European Union or drop the krona and unilaterally adopt another currency as “the situation can’t remain unchanged,” said Prime Minister Johanna Sigurdardottir.
“The choice is between SURRENDERING THE SOVEREIGNTY of Iceland in monetary policy by unilaterally adopting the currency of another country or become a member of the EU,” Sigurdardottir said in a speech delivered at a Social Democrat Alliance party convention today in Reykjavik, the capital. EU membership will allow Iceland to “cooperate with EU countries as a sovereign nation, which has a say in the decision and policy making in all fields of cooperation.”
Iceland could fix the krona’s exchange to the euro and be sheltered by the European Central Bank “as early as by the middle of next election term” in 2015, said Sigurdardottir.
Dylan Grice - Popular Delusions - Japan crisis, no way out (2012-03-01)
==> pdf copy :)