Is The Japanese Party Ending?

Tyler Durden's picture


As we discussed here just two weeks ago, there is a growing concern that Japanese officials will decide to turn the currency war amplifier volume to 11 and devalue the JPY. With carry trades unwinding rapidly, JPY continues to strengthen (much to their chagrin) but now we are seeing very aggressive positioning in 5Y JGB breakevens (or inflation bets) which implicitly belie devaluation expectations. The key being that, breakevens spiking implies a market expectation that the BoJ will finally be forced to stimulate inflation, as Andy Xie recently pointed out, but going the hyper-inflate path and crushing the JPY. This instead of the alternative, for an economy which is now no longer in a trade surplus, which is a collapse in bonds which has its own very nasty endgame (where, as a jarring reminder, if bond yields rise to 2 percent, the interest expense would surpass the total expected tax revenue of 42.3 trillion yen).

Chart: Bloomberg, h/t Clavin

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Thu, 04/05/2012 - 10:57 | 2319419 lolmao500
lolmao500's picture

They just have to do something like QE... but bigger. Keep rates low AND devalues the currency. Win/Win... for a time.

Thu, 04/05/2012 - 11:10 | 2319461 Oh regional Indian
Oh regional Indian's picture

Ending? Ending? They got Fukushima'ed, greatest nuclear disaster in ever.

They were an export oriented econ, cannot have strong currency.

THey need everything from everyone now, cannot have weak currency.

Unless they say to hell with humans...which they seem like they are.

Orgone Generators... They are THE answer.

But fiscally, Japan was an in-efficient mess to begin with ( i ran a Japanese company for 4 years as CEO, I know). I met my Japanese mentor two months ago, big time professor in big name univ.

He said all is well.



Thu, 04/05/2012 - 11:16 | 2319506 tempo
tempo's picture

Fukushima radiation increasing ( Fish caught 200 km south of reactors with radioactive cesium levels 4 times allowed limits on 3/28/12. This is a big problem. Class action lawsuits on the way.

Thu, 04/05/2012 - 11:24 | 2319522 non_anon
non_anon's picture

just read, local sushi restaurant imports Japanese fish for it's sushi instead of using local fish in Cali, yum!

edit: and H. Clinton signed an agreement to allow radioactive foodstuff into the US from Japan.

Thu, 04/05/2012 - 11:31 | 2319547 sushi
sushi's picture

And if you have a thing for norimaki you should know that the nori concentrates the cesium. The best high end nori concentrates it more. Yum and double yum.


Thu, 04/05/2012 - 14:26 | 2320034 markmotive
markmotive's picture

Japan is going bust.

2 reasons:

  1. Debt service payments as a % of gov't revenues
  2. Gov't borrowing as a % of total expenditures

Fri, 04/06/2012 - 02:28 | 2321409 dubbleoj
dubbleoj's picture

Japan rushes to restart reactors....We canna do it Cap'n, we don't have the power!!

Thu, 04/05/2012 - 17:24 | 2320549 Not Too Important
Not Too Important's picture

The rain in the US is above FDA radiation levels in drinking water. So in a matter of days, the FDA will scrap all water radiation limits because they can't stop the rain from falling.

We're off the cliff and gaining speed.

Thu, 04/05/2012 - 19:24 | 2320804 Short Memories
Short Memories's picture

But that's not from Fukushima!

Iodine 131 has a halflife of 8 days, and a month after fukushima Iodine has been hard to detect in Japan. Cessium on the other hand has a half life of 30 years so will be with us here in Japan for the lifetime of my children and them some.

There is a fear of radiation that effects everyone, I live in JP, I've seen it. Do yourself a favour if you are worried, educate yourselves on the facts because the media will just talk about "looming death rain fallout instills panic in Tokyo"

If ZH teaches you nother else, it should be not to trust media sources!!



Thu, 04/05/2012 - 11:43 | 2319582 GMadScientist
GMadScientist's picture

Somehow I don't think radation gives a shit if you sue.

Thu, 04/05/2012 - 17:21 | 2320541 Not Too Important
Not Too Important's picture

No, no it doesn't.

Thu, 04/05/2012 - 11:20 | 2319514 Chief KnocAHoma
Chief KnocAHoma's picture

We don't want no stinking Hunger Games!

Thu, 04/05/2012 - 12:44 | 2319802 Precious
Precious's picture

You're late.  Monday was April Fools day.

Thu, 04/05/2012 - 11:19 | 2319473 SheepDog-One
SheepDog-One's picture

Japan has been doing something like QE for about 20 years already. And remember back then everyone used to just shake their heads and say 'Those fools dont realize they are going to blow themselves up one day'! 

Thu, 04/05/2012 - 11:27 | 2319535 tocointhephrase
tocointhephrase's picture

Yep, and this is how many you need to buy a paltry ounce Y134288.69. 

Thu, 04/05/2012 - 13:47 | 2319957 Kobe Beef
Kobe Beef's picture

Don't forget the 20,000 Yen over spot the dealer will charge for a Maple. Better to buy elsewhere.

Thu, 04/05/2012 - 11:12 | 2319489 Thamesford
Thamesford's picture

"I'm turning Japanese, I think I'm turning Japanese, I really think so!"

Thu, 04/05/2012 - 11:16 | 2319503 Divided States ...
Divided States of America's picture


Thu, 04/05/2012 - 11:57 | 2319626 WonderDawg
WonderDawg's picture

raff out roud

Thu, 04/05/2012 - 17:20 | 2320536 Not Too Important
Not Too Important's picture

In my hot rod rincoln!

Thu, 04/05/2012 - 19:47 | 2320851 BigInJapan
BigInJapan's picture

Yeah... sure... simple... in a country devoid of natural resources and so imports almost everything...

Thu, 04/05/2012 - 10:59 | 2319426 RacerX
RacerX's picture

The "Money Print" button reminds me of the old Defender/Asteroids games "Hyperspace" button. You can press it once in a while, but eventually it will blow up your ship.

Thu, 04/05/2012 - 11:00 | 2319435 magpie
magpie's picture

Defender was great, at least until those smart bombs tracked you down.

Thu, 04/05/2012 - 11:11 | 2319484 SheepDog-One
SheepDog-One's picture

Defender ah yes.....I dont know how many hundreds of dollars I must have spent on that one!

Yep true, the 'QE' button seems to be exactly like hitting the 'hyperspace escape' button when you really got in trouble....problem is with that button it often dropped you right into a worse shitstorm.

Thu, 04/05/2012 - 11:30 | 2319543 HD
HD's picture

Insert coin!

Thu, 04/05/2012 - 12:28 | 2319748 Bicycle Repairman
Bicycle Repairman's picture

"coin detected in pocket."

Thu, 04/05/2012 - 14:28 | 2320040 graymnzrc
graymnzrc's picture

Wasnt there a nuke button to deal with those pesky smart bomb droid thingys?

Thu, 04/05/2012 - 10:58 | 2319427 Cognitive Dissonance
Cognitive Dissonance's picture

America is was 10 to 15 years behind Japan as far as the (baby boomer) collapse is concerned.

But rest assured that we're catching up real fast. In fact, we're on an exponential curve.......bitches.

Thu, 04/05/2012 - 11:09 | 2319475 Sudden Debt
Sudden Debt's picture

As the roadrunner would say: BEEP BEEP!! ZOEF!!

Thu, 04/05/2012 - 11:51 | 2319608 DoChenRollingBearing
DoChenRollingBearing's picture

@ CD and SD

+ 1


I so enjoyed being able to "+ 1" two of my favorites here at ZH like that.

Thu, 04/05/2012 - 11:24 | 2319526 gjp
gjp's picture

When is the American party going to end?  As long as Americans keep partying, it seems nothing else matters ...

Thu, 04/05/2012 - 10:58 | 2319429 vmromk
vmromk's picture

PRINT you MOTHERFUCKERS, PRINT.....Bernanke says the party must go on.

Thu, 04/05/2012 - 11:13 | 2319493 SheepDog-One
SheepDog-One's picture

Or, maybe he doesnt. Could be their little central bankster lunch the other day was the final planning for it all to come down...'Pack your bags and grab the gold bars fellas, we're pulling it in 10 days'....who the hell knows?

Thu, 04/05/2012 - 11:20 | 2319516 fonzannoon
fonzannoon's picture

I would have had that meeting over skype as to not have people with brains possibly draw these types of conclusions.

Thu, 04/05/2012 - 11:33 | 2319553 SheepDog-One
SheepDog-One's picture

Yea but then Skype is SO easy to hack....I see trolls doing it all over youtube they find such juicy Skype screen captures.

Thu, 04/05/2012 - 17:30 | 2320567 Not Too Important
Not Too Important's picture

They've been planning this for a long time. 2007 just accelerated everything, and now they've lost control of events. They're just surfing the chaos. They'll stripmine this whole radioactive country until there's nothing left.

Pack tungsten, you say?

Thu, 04/05/2012 - 10:59 | 2319430 Bold Eagle
Bold Eagle's picture

Goldman advised muppets to short USD/JPY. Place your bets accordingly.

Thu, 04/05/2012 - 11:00 | 2319436 Milton William ...
Milton William Cooper's picture

I TOTALLY get that ETNs are a joke.....but whats the deal with JGBD? Shouldn't it be moving higher?

Thu, 04/05/2012 - 11:06 | 2319458 CvlDobd
CvlDobd's picture

It appears you don't TOTALLY get ETNs.

Thu, 04/05/2012 - 11:34 | 2319557 Milton William ...
Milton William Cooper's picture

TVIX is a joke too....that doesn't mean it wont shoot to 100 if the S&P tanks again


ETNs are a joke because they have nothing underlying them other than faith, but they should still track the movement of the index intraday....i mean USLV moves with silver, does it not? Why not JGBD?


Thu, 04/05/2012 - 11:44 | 2319586 CvlDobd
CvlDobd's picture

There are opposing views on this but I don't buy into the idea that low trade volumes aren't an issue for ETP investors. I see 200 shares traded so Far today. I see shit trades and poor tracking in these thin ETPs all the time.

Just avoid them. Yeah you may miss some big move but generally you lose. They are as close to a casino as you can get in this industry.

Thu, 04/05/2012 - 12:53 | 2319828 Milton William ...
Milton William Cooper's picture

Even if there is no volume, the bid/ask moves with the market......

Thu, 04/05/2012 - 13:50 | 2319966 Kobe Beef
Kobe Beef's picture

You're still better off trading long-dated Orange Juice options if you really have a need for low volume, highly discontinuous markets. har har har

Thu, 04/05/2012 - 11:01 | 2319437 lolmao500
lolmao500's picture


French nuclear reactor shut down due to fire alert

Thu, 04/05/2012 - 11:04 | 2319451 Sudden Debt
Sudden Debt's picture



Thu, 04/05/2012 - 11:11 | 2319482 old naughty
old naughty's picture

...but why devalue now, after more than a decade

...could it be smokes to cover up impending move out of glowing Tokyo?

Thu, 04/05/2012 - 17:27 | 2320560 Not Too Important
Not Too Important's picture

There's no move out of Tokyo. No countries want radioactive refugees. Governments would have offered by now.

We're going to see some sick shit on YouTube.

Thu, 04/05/2012 - 17:26 | 2320555 Not Too Important
Not Too Important's picture

I see French Glow In The Sarkozy!

Thu, 04/05/2012 - 11:11 | 2319483 spanish inquisition
spanish inquisition's picture

Japans currency reserves will be all used up for phase 1 of the cleanup. Just a quick perusal of ENENEWS will let you know that a massive portion of northern Japan is contaminated with mystery black ash and a variety of new compounds made with seawater used for cooling that have massive half lifes. Should #4, that is full of plutinium crack and lose water in the next 4-6 years (because they can't get at it to empty), the entire northern hemisphere will become mildly radioactive. If that happens, expect politicians to legislate manditory smiling, so you dont get ill from radiation.

Thu, 04/05/2012 - 13:58 | 2319977 Kobe Beef
Kobe Beef's picture

"What radiation?" says the Japanese Government. "That? no, that's good for you. Have some more."

Spending the reserves on nuclear cleanup? Don't make me laugh. Japan is spending money on its construction industry cronies in a "reconstruction effort." After they get their fill, there might be a thin 1-Yen for decontamination.

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