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Kyle Bass Vindication Imminent? Largest Japanese Pension Fund Begins To Sell JGBs

Tyler Durden's picture





 

Sayonara internal funding. In what we suspect will become a major issue (and warned in April of last year), Bloomberg reports that Japan’s public pension fund, the world’s largest, said it has been selling domestic government bonds as the number of people eligible for retirement payments increases. "Payouts are getting bigger than insurance revenue, so we need to sell Japanese government bonds to raise cash." It would appear the Ponzi has reached it's Tipping Point. Japan’s population is aging, and baby boomers born in the wake of World War II are beginning to reach 65 and eligible for pensions. That’s putting GPIF under pressure to sell JGBs so it can cover the increase in payouts.

The fund needs to raise about 8.87 trillion yen this fiscal year. GPIF is historically one of the biggest buyers of Japanese debt and held 71.9 trillion yen, or 63 percent of its assets, in domestic bonds as of March.

This leaves the biggest question "to whom will the pension fund sell?" After all it is all marginal and everyone just front-runs the biggest players (Governments and their Central-Bank caring internal funds). Now that the pensions funds are out, there is no more incentive to frontrun them - a la The Fed - which is summed up by the fund's manager "There isn’t much value in short-term notes as the BOJ’s massive asset purchases have made their yields extremely low."

 

From our April 2011 thoughts:

In the world of bonds, few things have perplexed investors as much as the ridiculously low (and going lower) rates of Japanese Government Bonds (JGBs), at last check yielding 1.22%. Granted "deflation" in Japan has long been quoted as the key driver for the ongoing decline in real and nominal rates, but in practical market terms it was always the fact that there was a buyer of first and last resort, usually this being either Japanese citizens directly or their proxy, the Japanese Government Pension Investment Fund (GPIF) that kept yields in check and sliding

 

and from SocGen's Dylan Grice 2010 views (full presentation here):

This is far from just a JGB market problem. As Japan's retirees age and run down their wealth, Japan's policymakers will be forced to sell assets, including US Treasuries currently worth $750bn, or Y70 trillion "eight months" worth of domestic financing. At nearly 10% of the outstanding US Treasury stock, this might well precipitate other government funding crises (bearing in mind that the Japanese model is the argument buttressing confidence in Western government bonds in the face of deteriorating fiscal conditions). At the very least I'd expect it to trigger an international bond market rout scary enough to spook all other asset classes.

 

And As Kyle Bass has questioned numerous times, will 2010 be the beginning of the end of flawed Keynesian economics?

Maybe Japan's will be the crisis that wakes up the rest of the world and triggers some tough decisions on world-wide debt loads. Or maybe not - maybe the Greeks will beat them to it? or the Irish or the UK, or the US? Like banks in 2007, developed market governments today rely on sustained capital markets more than any time in their history. What if they shut?

(h/t Brian)

 


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Wed, 07/25/2012 - 19:42 | Link to Comment Hulk
Hulk's picture

Hmm, reminds me of a snake eating its tail...

Wed, 07/25/2012 - 19:50 | Link to Comment ACP
ACP's picture

I thought Bernanke was American?

Wed, 07/25/2012 - 20:03 | Link to Comment Hugh_Jorgan
Hugh_Jorgan's picture

"Reality is not optional" ~Thomas Sowell

Wed, 07/25/2012 - 20:13 | Link to Comment Precious
Precious's picture

I doubt that Tyler.  For one thing, what do you think these Japanese people will do with the pension payments they receive.  Buy iPhones?  No.  They will put the money in the bank, because they really don't need it.  Japan isn't the USA.  The USA has about 50 million people living below the poverty level.  Japan has around 1 million people living below the poverty level.  As a percentage, the poverty level in Japan is 1/4 the poverty level in USA.

Like I said, these pensioners probably don't need the money and will likely just bank it again.

Wed, 07/25/2012 - 20:22 | Link to Comment Subliminal messenger
Subliminal messenger's picture

What about the declining population? Their population numbers are dropping fast.

Wed, 07/25/2012 - 20:27 | Link to Comment Jason T
Wed, 07/25/2012 - 21:52 | Link to Comment Thomas
Thomas's picture

Passed along Kyle's hour-long video to a colleague in which he described his views on everything including Japan. My friend ordered his first shipment of gold that day.Bass is not alone in his view about Japan, but he is one of the more compelling spokesmen on the subject.

Thu, 07/26/2012 - 00:25 | Link to Comment Rick Blaine
Rick Blaine's picture

Yeah...right or wrong, he's a pretty interesting speaker about all this stuff.

I've read a couple of articles in recent weeks/months which basically claim he is/was wrong about Japan...as if the matter is settled...

What's funny about those articles is that they all seem to suggest that Bass has predicted that Japan would come unglued "immediately" (i.e., within a few months or so) after the first sovereign default in Europe...

That, at best, is a "mischaracterization," if not a flat out lie, about what Bass has been predicting...at least from what I have heard him say on the subject...

Rather, his comments on the timing of "it" in Japan have been that the situation(s) in Europe would be an "accelerant" for what would eventually happen in Japan...and he certainly hasn't given a definite timeline...again, at least from I have heard.  In fact, at one of the AmeriCatalysts events (maybe one of the videos you are talking about) he specifically said something to the effect of "the bill is due today in Europe...tommorow in Japan...and here in the U.S. the next day...and of course those days are separated by years..."

Now, MAYBE one could criticize him for not being more specific with his timeline...

That said, based on his record in recent years, when he speaks, I listen.

Thu, 07/26/2012 - 00:52 | Link to Comment Richard Chesler
Richard Chesler's picture

Cue the CNBC bulltards: Japan is different!

Thu, 07/26/2012 - 04:28 | Link to Comment Dr Benway
Dr Benway's picture

LOL. If a trade is painful enough to be known as 'Widowmaker', then in the end its bound to make major coin cause only the true believers will be holding on. The Japanese ponzi seemed everlasting though.

 

An Australian Ponzi:

 

http://s1144.photobucket.com/albums/o489/_DrBenway/

Thu, 07/26/2012 - 01:17 | Link to Comment indygo55
indygo55's picture

He's always been "wrong" until in the end it is discovered he was right, very right. And I think he's right this time too.

Thu, 07/26/2012 - 04:08 | Link to Comment conork
conork's picture

Can you link me to his vid please?

Fri, 07/27/2012 - 02:44 | Link to Comment Rick Blaine
Rick Blaine's picture

I'm not sure if you were addressing me...but here are the 2010 and 2011 AmeriCatalyst videos with Kyle Bass...

Each is about an hour long...but WELL worth it, IMHO.

http://www.youtube.com/watch?v=WWgtzwqWh60

http://www.youtube.com/watch?v=5V3kpKzd-Yw

 

 

 

 

Wed, 07/25/2012 - 23:17 | Link to Comment old naughty
old naughty's picture

and soon the health bill from fuku will pile up.

Wed, 07/25/2012 - 21:42 | Link to Comment Fedophile
Fedophile's picture

That's good news; fewer people, fewer expenditures.

Wed, 07/25/2012 - 20:26 | Link to Comment ACP
ACP's picture

Actually, there are about 20 million people living in poverty in Japan. Unemployment is low, but the wages have kept up by going even lower. It's worse than most people know in the US. Single recent college grads live either with their parents or in sub-500sf apartments, and in many cases, sub-250sf apartments. It's simply that people have too much trust in the government and take whatever bullshit the government dishes out.

Google some news stories on this. It's pretty bad.

Wed, 07/25/2012 - 20:26 | Link to Comment fonzannoon
fonzannoon's picture

At the end of the day it does not matter what the reason is. If they are that resolute about it then it goes on and on. I imagine thats why the Germans wake up every day and just work, right up till the end. They may be pissed about it but they don't know any other way. Thats just my guess.

Wed, 07/25/2012 - 22:11 | Link to Comment Precious
Precious's picture

Actually, you've probably never been to Japan.  Your impressions are laughable.  But Google away genius.

Wed, 07/25/2012 - 22:14 | Link to Comment ACP
ACP's picture

Geez, I didn't mean to provoke a personal attack.

But yes, I was there, late last year, genius.

Wed, 07/25/2012 - 22:37 | Link to Comment Mentaliusanything
Mentaliusanything's picture

I love the place but 35% of the workers are now part time/ low paid. Taiwan and Sth Korea have slowly overtaken them. Japanese Government admits its isolatonist policy to Foreign workers has force fed the decline of the aging population. The young Japanese don't want children and to marry. It is a fact it is a candle burning from both ends. They have tried to use labour and capital outside the country but that is not helping the Japanese people, just the Large Corporations. Japans future has not many positives. Is this what Governement intervention/ QE does? if so it is predictive.

The lost 20 years 

Wed, 07/25/2012 - 23:11 | Link to Comment ACP
ACP's picture

At the risk of beating this subject completely to death, yes, it is wonderful there. In what other place can a bajillion people be walking about from place to place in a complete frenzy (at least in the city), but you still feel comfortable and unstressed?

The one main factor that will be bad for Japan in the short and intermediate future is it cultural cohesiveness. This, however, will be an incredible boon long term. I don't think any other country has this going for them. As long as this stays intact, the future will not be as bleak as in other countries (US) where politicians are actively destroying the country for political gain.

 

 

Wed, 07/25/2012 - 23:51 | Link to Comment Zgangsta
Zgangsta's picture

Comfortable?  Yes.

Unstressed? Absolutely not.  But they do have a stronger level of gaman that keeps them from blowing apart too often, and when they do, it usually manifests in the form of throwing themselves in front of a rush-hour train rather than causing physical harm to others.

They may be the first to crack, and the last to totally disintegrate.

Thu, 07/26/2012 - 04:24 | Link to Comment Rogue Trooper
Rogue Trooper's picture

Thanks ACP.  A thoughtful comment.... Japan does have this feature that other 'Nation States' do not have.

No one gets out of this 'mess' without harm.  When I see or observe America I see a country of States, Philosophies, Beliefs, Cultures, Political (Red vs Blue Team) and races that just plain do not get along.

Completely polarised and wating for the trigger to explode.  Many other Countries have similar issues but they are also not so large and have such a large, diverse, population.

This will not end well.

Thu, 07/26/2012 - 08:59 | Link to Comment N. B. Forrest
N. B. Forrest's picture

The United States is too big and too diversified.  It will either split apart peacefully, or it will be a long drawn out ugly nightmare. 

 

Let's follow the post-Soviet model and not the post-Yugoslavia model.

Wed, 07/25/2012 - 23:31 | Link to Comment Calmyourself
Calmyourself's picture

They had better throw together some nukes, they can probably do it in a day or two any way but if their are young women there the Chinese will come sniffing soon..  About 20 million strong I'd say..

Wed, 07/25/2012 - 23:46 | Link to Comment Whiner
Whiner's picture

Easter Island Extinction Award. 2036. And the winner is (drum roll, pause) The Land of the Setting Sun! (golf clap, crickets).

Wed, 07/25/2012 - 23:35 | Link to Comment Precious
Precious's picture

Then you should likely know better than to say there are 20 million people living in poverty.  That's just moronic.  Look at the facts.

Thu, 07/26/2012 - 00:18 | Link to Comment Attitude_Check
Attitude_Check's picture

Your math is wrong.  The website you reference has the % of Japanese population below poverty as 15.7% and according to Google the latest estimate of the Japanese population is 127.65M, so the total is ~ 20M people below poverty level in Japan.

If you are going to flame someone for being moronic, you should probably not post links to data that prove you wrong and them right.

Thu, 07/26/2012 - 01:24 | Link to Comment Nage42
Nage42's picture

Well, I only lived there for 15 years, from 23 -> 38, so across the whole young->middle-age demographic.

I for one, think his assesment is pretty much right on.

 

I share his optimism for Japan's ultimate future outlook bacause of their willingness to work together (westerners, other than maybe Oz/Kiwis, won't have a clue about the extent of this), but holy crap there's gonna be a rough patch when the people have had their last straw with their failed politicians and paper-pushers... it will be ugly.

Thu, 07/26/2012 - 04:44 | Link to Comment 1000pips
1000pips's picture

It is personal, idiot comments like yours that insure your time on this site is limited-do it one more time and we will remove you- trolls like you have tripled since the ponzi has started falling apart...troll somewhere else-"precious".

Fri, 07/27/2012 - 16:37 | Link to Comment Precious
Precious's picture

suck my dick, idiot

Wed, 07/25/2012 - 23:04 | Link to Comment daedon
daedon's picture

Spot on, which is why you have 11 ups and Zero downs,  the real Japan was never what we were led to believe, even in 1987 when Jogn Pilger made his documentary titled "Japan Behind the Mask"

Wed, 07/25/2012 - 23:47 | Link to Comment Zgangsta
Zgangsta's picture

It doesn't seem like there are that many because they are so well-behaved.

Take a walk in a park in Shinjuku or Ueno, and compare with what you might see in NYC...

Thu, 07/26/2012 - 06:32 | Link to Comment Doubleguns
Doubleguns's picture

ACP, This is a bit dated so the statistics are actually a lot worse but it demonstrates exactly what your talking about. Before anyone asks I lived there 10 yrs and return there every year. I do know.

 

http://factsanddetails.com/japan.php?itemid=640&catid=19&subcatid=120

Wed, 07/25/2012 - 20:46 | Link to Comment 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 the BOJ will buy JGB’s while the Japanese government repatriates 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.

Wed, 07/25/2012 - 21:00 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Good analysis IcQb. We are looking into the crystal ball as the US unless we change our ways. We may be importing labor in the form of low level labor. What we are lacking is high skilled labor. This will become rare when the US baby boomers start to retire and US business remains picky to their own detriment.

Wed, 07/25/2012 - 21:09 | Link to Comment Bobbyrib
Bobbyrib's picture

We import our fair shares of skilled workers as well. It's called the visa program. What US corporations won't do is train Americans to do the same jobs. The compensation for skilled labor is going into the toilet, because we import too much labor.

Wed, 07/25/2012 - 21:25 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Bobby, you are right in the fact that we import skilled labor. They are brought in on visas, worked to death and kicked to the curb. People in industry are tired of the smelly Asians. They are good hard working citizens, but do not bring much to the table for company culture or community.

Wed, 07/25/2012 - 21:10 | Link to Comment Frozen IcQb
Frozen IcQb's picture

The most important question no one dares to ask is:

What can we make that Asia will buy?

Wed, 07/25/2012 - 21:13 | Link to Comment fonzannoon
fonzannoon's picture

dollars?

Wed, 07/25/2012 - 21:22 | Link to Comment Frozen IcQb
Frozen IcQb's picture

Thanks, I needed the laugh.

Wed, 07/25/2012 - 21:17 | Link to Comment EvlTheCat
EvlTheCat's picture

White women

Thu, 07/26/2012 - 00:29 | Link to Comment reader2010
reader2010's picture

We can't complete with Russia and other Eastern European lands. 

Wed, 07/25/2012 - 23:05 | Link to Comment daedon
daedon's picture

T-bills.

Wed, 07/25/2012 - 23:13 | Link to Comment rayduh4life
rayduh4life's picture

Big tits.

Wed, 07/25/2012 - 23:52 | Link to Comment dwdollar
dwdollar's picture

GMO foodstuffs.

Thu, 07/26/2012 - 02:09 | Link to Comment e-recep
e-recep's picture

protection (mafia-style)

Thu, 07/26/2012 - 04:33 | Link to Comment Rogue Trooper
Rogue Trooper's picture

They really wanted the F22?  Thinking about it even the Aussies would have bought 50 or so.

 

Thu, 07/26/2012 - 08:11 | Link to Comment mccoyspace
mccoyspace's picture

Chicken feet. At least the Chinese think so. They love American chicken feet.

Thu, 07/26/2012 - 16:14 | Link to Comment Zeilschip
Zeilschip's picture

Soft commodities (grain, corn, soy, rice)... In theory, the US should switch to producing only soft commodities and weapons. That will solve everything.

Thu, 07/26/2012 - 21:09 | Link to Comment Frozen IcQb
Frozen IcQb's picture

I like your suggestion. Extreme...Yes ...but in the right direction.

Either go back to basics or go all out high tech. Better math and sciences are needed for K~12 for the later.

Too bad no one will read this post any more.

 

 

Mon, 07/30/2012 - 09:53 | Link to Comment juliawong
juliawong's picture

Not true. :)

Wed, 07/25/2012 - 21:52 | Link to Comment Son of Loki
Son of Loki's picture
Stanford: O.C. retirement system $10 billion in the hole

 

The Orange County Employees Retirement System – which has assets valued at some $10 billion — also happens to be about $10 billion shy of what it needs to fulfill its pension promises to workers, according to a study of California’s largest independent pension systems by researchers at Stanford University.

Put another way, OCERS is only 53.5 percent funded, they said. Stanford suggests that a healthy system must be at least 80 percent funded (but others say that even 80 percent is way too low).

Some 40,000 people depend on OCERS for retirement security. OCERS, and just about every other public pension system, expects to earn 7.75 percent on investments.

http://taxdollars.ocregister.com/2012/03/09/stanford-o-c-retirement-syst...

 

Underfunded pension plans are all the rage.....

 

 

 

Wed, 07/25/2012 - 22:43 | Link to Comment Mentaliusanything
Mentaliusanything's picture

In a nut shell that was a great post - well done IcQB

Thu, 07/26/2012 - 01:43 | Link to Comment Arnold Ziffel
Arnold Ziffel's picture

The Fuki radiation coating the northern half of the country has encouraged Japan's Elites to move out to safer, lower radiation level places from what I read. Anyone with money or a skill looks outward for many of IcQb's reasons and now they have the Fuki mess to add to their list of reasons to emigrate.

Wed, 07/25/2012 - 20:58 | Link to Comment Bob Sacamano
Bob Sacamano's picture

Japan's standard of living at "poverty level" is lower than the US (as measured by average living quarters, car ownership, etc)

Wed, 07/25/2012 - 23:36 | Link to Comment Precious
Precious's picture

That's just patently stupid.  Again from another googler whose never even been to Japan.  There are dozens of reasons that illustrate how the average living standard in Japan much ahead of the USA.  The size of your living room is not an indicator of poverty. Look at the facts.

Thu, 07/26/2012 - 00:31 | Link to Comment Attitude_Check
Attitude_Check's picture

Those facts (the same ones you posted before that actually proved you wrong about the numbers of Japanese below the poverty line)  are non-sequitor to the argument that the relative standards of living are different.  The small apartments are large walk-in closets (250 sqft is ~16X16 ft room).  This should not be surprising considering the population density of Japan compared to the US.  The cost of food is also very high (again not surprising considering the small amount of farmland compared per capita).  The cost of energy is huge considering it all has to be imported (which is why nuclear was so big, and with nuclear plants shut down (mostly) they have a serious electricity shortage.

http://in.reuters.com/article/2012/07/21/japan-nuclear-reactor-idINL4E8I...

http://www.eia.gov/cabs/japan/Full.html

http://www.bloomberg.com/news/2012-05-13/japan-to-experience-power-short...

http://www.japantimes.co.jp/text/nn20120726b8.html

I just spent all of 5 minutes checking the facts -- maybe you should try it also before calling someone stupid.

Thu, 07/26/2012 - 01:26 | Link to Comment 11th_hour
11th_hour's picture

Don't feed the trolls, attitude.  It is part of their M.O. They won't let facts get in their way!

Thu, 07/26/2012 - 01:32 | Link to Comment bigwhiffa
bigwhiffa's picture

Having lived in Japan for over 2 years I would have to agree with Attitude_Check on this one.

Many poor people in Japan feel too ashamed to ask for help so "the stats" are not going to reflect reality in this case anyways. 

In my experience, food in Japan was expensive depending on where you lived and what you bought. I lived in a small mountain town that was agriculturally based so rice, tea and vegetables were cheap at the local co-op compared to stores in the big cities. Driving a vehicle was prohibitive with high car taxes, insurance, fuel and toll roads but necessary after a huge typhoon washed out the only train line in the area.

The high school I taught at had three - four story buildings of which only one floor per building was being used due to steady depopulation in the area. The only thing that the kids want to do after graduation is move away to a big city. The school board even set up a farm program so local kids could learn how to raise cattle, plant rice, tea etc and go work on their family farms. The locals are trying everything they can to stop the area from dying (except immigration... unless of course they are young women of eastern European decent).

In my opinion, Kyle Bass is right about Japan.

Thu, 07/26/2012 - 03:39 | Link to Comment John_Coltrane
John_Coltrane's picture

Let's consider this argument in some limiting circumstances.  Large Scale:  Rather live in Versaille or a cardboard box?  How about if your living room is the size of a cardboard box?  What if it is a cardboard box?  Then you would be homeless wouldn't you?  How do you like them facts?  See what you can do with multiple neutons and a few synapses?  Always take limits if you want to understand an argument.  Standard of living does scale with energy consumption, size of residence, vehicle ownership, horsepower of vehicle etc. because the more you reduce entropy the higher degree of order in your life and the more options and freedom of choice, the greater the likihood of satisfaction.

Wed, 07/25/2012 - 22:36 | Link to Comment JamesBond
JamesBond's picture

WTF?

Houses and apartments are very small compared to the US.  Also, most Japanese dont need a car to get to work or run errands!

-007

Wed, 07/25/2012 - 22:05 | Link to Comment squexx
squexx's picture

Japan doesn't have a border where lots of wetbacks are sneaking over, either!

Wed, 07/25/2012 - 20:23 | Link to Comment TwoShortPlanks
TwoShortPlanks's picture

Ouroboros is the name i believe you're looking for.

Wed, 07/25/2012 - 20:36 | Link to Comment butchee
butchee's picture

Is that snake taking a shit whilst eating its own tail?

Thu, 07/26/2012 - 01:07 | Link to Comment Peter Pan
Peter Pan's picture

"A snake eating its tail"........I prefer to say a dog eating its own vomit.

Thu, 07/26/2012 - 01:15 | Link to Comment Peter Pan
Peter Pan's picture

I was going to say this situation is more like a dog eating its own vomit.

Thu, 07/26/2012 - 01:23 | Link to Comment El Oregonian
El Oregonian's picture

Where the hell do I send my dollar to you so you can REMOVE those insidious smiley ObumASS and Ms. Predator banner ads off this frigg'in page!!!

The idiots freak me out, like some prick staring at me like "Big Bro" is watching!!!

Thu, 07/26/2012 - 07:38 | Link to Comment StychoKiller
StychoKiller's picture

Go here: http://www.mvps.org/winhelp2002/hosts2.htm

follow the directions, ads gone.

Thu, 07/26/2012 - 01:29 | Link to Comment Anne Ominous
Anne Ominous's picture

Bass is a big fish.

Wed, 07/25/2012 - 19:45 | Link to Comment Al Huxley
Al Huxley's picture

You know, you read about this, it's obvious that it has to happen at some point, and then month after month the government seems to avoid the inevitable and you forget about it, and then all of a sudden, reality finally makes an appearance.  Will be interesting to see what full-scale monetization of Japanese govt debt does to the yen, and what the knock on effects are.

Wed, 07/25/2012 - 19:47 | Link to Comment fonzannoon
fonzannoon's picture

I am sure the people who the pensions are paying out to are using their pension money to buy more japanese government debt....Call it a ponzi reinvestment program

Wed, 07/25/2012 - 20:03 | Link to Comment fonzannoon
fonzannoon's picture

What is truly amazing is the metaphoric gun that must be to their heads if Japan holds their treasuries and sells their own debt causing an avalanche on their own heads.

Wed, 07/25/2012 - 21:23 | Link to Comment ChacoFunFact
ChacoFunFact's picture

reverse carry trade?  borrow from ben and lend to Japan at 9%?

Wed, 07/25/2012 - 19:45 | Link to Comment Goldtoothchimp09
Goldtoothchimp09's picture

Ruh Roh!

Wed, 07/25/2012 - 20:00 | Link to Comment hamster wheel
hamster wheel's picture

There aren't enough Scooby Snacks in all of Osaka for Mrs. Watanabe to bury her sorrows under when her pension cheque comes in at a fraction of what she's expecting.

Of course, the recent decline in cat food sales in Japan may experience a sudden, and (publicly) unexplained reversal...

Wed, 07/25/2012 - 19:49 | Link to Comment cherry picker
cherry picker's picture

I feel bad for all those who depended on the pension funds being there as they contributed during their working lives.

For all the Americans and others in the world who are reitred or are retiring and depend on this, it will be a real wake up call as families are not always in a position to help out.

Wed, 07/25/2012 - 19:52 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Fuck 'em.  The .01% each needed another island.  Retirement is for the wealthy.

Wed, 07/25/2012 - 19:55 | Link to Comment fonzannoon
fonzannoon's picture

How about everyone else who has to foot the bill for those pensions? Knowing full well they will pay into the system as much if not more with no promises at the end for them?

Wed, 07/25/2012 - 21:12 | Link to Comment Bobbyrib
Bobbyrib's picture

Social Security?

Thu, 07/26/2012 - 05:53 | Link to Comment WillyGroper
WillyGroper's picture

How about everyone that looted them?

Thu, 07/26/2012 - 00:17 | Link to Comment Dingleberry
Dingleberry's picture

Don't feel bad for them....these Cali fuckers voted themselves massive pay raises along with gold-plated bennies.  The taxpayers went along for the ride....until they didn't.  Prop 13 screwed them up.  Now Cali has a choice: cut the libtard shit out or disintegrate.

Wed, 07/25/2012 - 19:50 | Link to Comment DougM
DougM's picture

Young ZH punks don't remember how awsome Japan was in the 80s

Wed, 07/25/2012 - 19:53 | Link to Comment john39
john39's picture

almost anyone can live outside their means for awhile...  some longer than others.

Wed, 07/25/2012 - 19:59 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Nobody remembers how awesome the US was in the 1800's...before the Federal Reserve and the income tax.

Wed, 07/25/2012 - 21:14 | Link to Comment Bobbyrib
Bobbyrib's picture

Don't forgot before labor unions too. Life in the middle class was great then.

Thu, 07/26/2012 - 00:00 | Link to Comment dwdollar
dwdollar's picture

Most people in the middle class were small business owners.

Thu, 07/26/2012 - 01:42 | Link to Comment THX 1178
THX 1178's picture

Poor farmers...

Wed, 07/25/2012 - 19:55 | Link to Comment rbg81
rbg81's picture

I remember reading "Rising Sun" in the early 90s and being convinced that we'd all be debt slaves working for Japanese masters by now.   I still think its going to be a while before the System implodes.  Unlike Spain or Greece, the Fed and the BOJ can print their own $$.  The US especially has hundreds of trillions $$ in assets; these assets both underpin and dwarf the debt.

Wed, 07/25/2012 - 20:04 | Link to Comment johny2
johny2's picture

You were wrong in early 90s and you are wrong again now about those trillions $$ in assets

Wed, 07/25/2012 - 20:29 | Link to Comment rbg81
rbg81's picture

Really?  Research how much land the Government owns and the resources that are on that land.  Not to mention buildings, equipment, etc. 

Wed, 07/25/2012 - 20:46 | Link to Comment johny2
johny2's picture

Are those valued by the same people who worked at Bear Stearns? Excuse me, but I think if they were so valuable, the USA would not be producing deficit year after year, and it added about 1 million $ of debt in the time it took to write this.

Wed, 07/25/2012 - 21:33 | Link to Comment rbg81
rbg81's picture

The land is underutilized.  In many cases, it is either:

1.  Fallow, perhaps for environmental reasons

2.  Leased to Industry at well below true market value

Bottom line -- the Government is not an efficient manager of its resources.  Is this a surprise?

Wed, 07/25/2012 - 22:16 | Link to Comment johny2
johny2's picture

Finally a thing we can agree on, the government is not an efficient manager of its resources. One of its resources is land, and one other is its people. And than there is its currency and the current account. Well, the USA government has been mismanaging all of them, and its debt is supported only by the FED buying lots of it.

But in fact you have a point, once the dolar is devalued, the $15 trillion of debt is going to be a tiny sum.

Thu, 07/26/2012 - 06:19 | Link to Comment Sathington Willougby
Sathington Willougby's picture

"One of its [government] resources is land, and one other is its people."

Please direct me to this centrist utopia yall speak of at once so that I may too be livestock.

Thu, 07/26/2012 - 08:50 | Link to Comment johny2
johny2's picture

You are already there.

The biggest asset USA had was the people living there, but its goverment succeded on transforming them into the sheeple.

Thu, 07/26/2012 - 00:18 | Link to Comment Dingleberry
Dingleberry's picture

Now you hear the same shit about China. Ain't gonna happen.

Thu, 07/26/2012 - 00:37 | Link to Comment reader2010
reader2010's picture

Last weekend, I took my kids to DC visiting some great museums. What took me by surprise is that nearly half of visitors in all the museums we visited were Chinese-speaking teens, which quicky reminds me the days of late 80s when armies of Japanese students visiting DC museums. 

Wed, 07/25/2012 - 19:56 | Link to Comment Al Huxley
Al Huxley's picture

I remember clearly how awesome Japan was in the 80's.  I still like their cars.  But I'm not sure what that has to do with their imminent discovery of what happens to a society that borrows from its population of savers for 30 odd years and then has to tell them, when they retire, that the it can't pay them back.

Wed, 07/25/2012 - 19:59 | Link to Comment Kreditanstalt
Kreditanstalt's picture

Yes.  Curious.  I was just re-reading Shintaro Ishihara's <The Japan That Can Say "No"> yesterday... 

Wed, 07/25/2012 - 20:11 | Link to Comment RacerX
RacerX's picture

Yep remember that too. Japan was taking over the world!!

It's unfortunate because they're great people. It's just the Gov't that stinks.

Chalk another one up to good 'ol Socialism

Wed, 07/25/2012 - 20:35 | Link to Comment FieldingMellish
FieldingMellish's picture

LOL! Yes. I still have one of their cars. 1989 Accord S. Bought at the peak of Japanese prowess and arrogance. Might go nicely with a 2012 Cadillac.

Wed, 07/25/2012 - 20:56 | Link to Comment FranSix
FranSix's picture

China was awesome, too.  So was Taiwan before the LTCM collapse.

Wed, 07/25/2012 - 21:18 | Link to Comment Kreditanstalt
Kreditanstalt's picture

LTCM? What's that got to do with Taiwan?  I'm there NOW...the big difference between this island and North America is that here they actually still have thousands of small enterprises (and big ones) that actually MAKE STUFF.

And just about everyone has a job.  And things cost less.  And there are more product choices.  And less regulation. And my wife's taxes are 6-10%.  

Wed, 07/25/2012 - 22:30 | Link to Comment Cosimo de Medici
Cosimo de Medici's picture

Making "stuff" is greatly overrated.  Why is making some throw-away carnival prize, or even a soon-to-be-obsolete LCD TV, superior to cutting somebody's hair?  Sounds old paradigm, as if sweat and heavy lifting are somehow more noble.  I don't understand why production of some arbitrage-able good is superior to non-arbitrage-able services.  I guess that's because personally I'd prefer to be a chatty gossip than a worker drone.  Also, "services" tend to be less polluting than the manufacture of "stuff".  After trying to breathe in China, or searching for a clean glass of water, you still think China is winning?  On a planet of finite resources, future manufacturing is going to be like an old Rolls Royce factory:  the production of a very few, made-to-last, high quality goods.  Whither China's excess productive capacity?  Perhaps the US will wake up one morning and be happy that it has a fully-depreciated production base.  If most work is merely make-work to give existing souls a reason to be, which it is, then doing something that is sustainable, non-polluting, and cannot be exported might prove to be the ticket.

It's too late to prepare for yesterday.  Better to prepare for tomorrow.

Wed, 07/25/2012 - 23:49 | Link to Comment Kreditanstalt
Kreditanstalt's picture

Why can I find poodle grooming, massages, shiatsu, cooking classes and art appreciation classes in North America but not buy an American-made coathanger anywhere...?

Standards of living are too high vis-a-vis dismal US productivity levels.

MAKING THINGS increases wealth. And can be exported, earning even more.  Cutting hair...not.

 

Thu, 07/26/2012 - 00:24 | Link to Comment dwdollar
dwdollar's picture

"I don't understand why production of some arbitrage-able good is superior to non-arbitrage-able services."

When push comes to shove, I'll trust my $500 Glock over a $500 hairstyle thank you very much.

Instead of spending $250k on every GI Jane enlistee for battle training, we should spend an equivalent amount on plastic surgery and turn every one into a super model? Then we can seduce the enemy into sex slavery?

Thu, 07/26/2012 - 00:45 | Link to Comment reader2010
reader2010's picture

"China was awesome, too.  So was Taiwan before the LTCM collapse."

Fuck that. China was never "awesome" until four largest Chinese banks went IPO using Wall Street banksters a few years back. You need to check your facts. Taiwan's peak stock market performance was 1989.

Wed, 07/25/2012 - 19:51 | Link to Comment Ineverslice
Ineverslice's picture

It's like when your a kid in a pool holding a basketball underneath the water...not so hard until you finally lose grip, with no time to react.  They will do everything in their power to avoid a dislocation.

Imo, they will continue to backstop TEPCO b/c if they do not, the floodgates will open and the rates will rise.  Radiation is secondary.

Wed, 07/25/2012 - 19:52 | Link to Comment Debtonation
Debtonation's picture

A public pension fund isn't buying public debt?  Now that's just unpatriotic.  How dare they not buy their own government's debt.

Wed, 07/25/2012 - 19:52 | Link to Comment Manipuflation
Manipuflation's picture

Simple fix= CTRL-P ad nauseum.

Wed, 07/25/2012 - 19:54 | Link to Comment JackT
JackT's picture

What is the Japanese equivalent to "running on fumes"?

Thu, 07/26/2012 - 01:02 | Link to Comment monogratis
monogratis's picture

wunning on fooms

Wed, 07/25/2012 - 19:57 | Link to Comment rockraider3
rockraider3's picture

Why don't they put some cute singing and dancing girls up on stage on a concert tour, and they can promote JGB's during their show?  Oh, they already do that you say?

Wed, 07/25/2012 - 19:58 | Link to Comment SqueekyFromm
SqueekyFromm's picture

I know this is cold, but do they have ice floes in Japan???

Squeeky Fromm, Girl Reporter

Wed, 07/25/2012 - 20:23 | Link to Comment Al Huxley
Al Huxley's picture

You should post more often.

Wed, 07/25/2012 - 20:55 | Link to Comment SqueekyFromm
SqueekyFromm's picture

Thank you!!! I will try to be more visible.

Squeeky Fromm, Girl Reporter

Thu, 07/26/2012 - 00:07 | Link to Comment moroots
moroots's picture

From your pic you're looking a little thin.  Try eating a steak.

Wed, 07/25/2012 - 20:01 | Link to Comment Occams Aftershave
Occams Aftershave's picture

ok, good on you, Kyle.  For us retail investors, what's the trade?

Wed, 07/25/2012 - 20:02 | Link to Comment Chump
Chump's picture

Close out your positions.  Duck and cover.

Wed, 07/25/2012 - 20:04 | Link to Comment Aguadulce
Aguadulce's picture

"Sushi, Kamakaze, Fujiyama, nipponichi....."

Wed, 07/25/2012 - 23:57 | Link to Comment cbxer55
Wed, 07/25/2012 - 20:10 | Link to Comment Ineverslice
Ineverslice's picture

There is no trade.

They are (and were the first) stuck on Zombie. 

Can u boil a Zombie to death?....Bass-san, u will wait a long time.

Thu, 07/26/2012 - 06:38 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

Bass-san, u will wait a long time - LOL

 

I would bet against the USA before I bet against Japan anyday.  GDP to Debt Ratio or not.

Wed, 07/25/2012 - 20:00 | Link to Comment johny2
johny2's picture

Japan is not Greece.

Wed, 07/25/2012 - 20:01 | Link to Comment rufusbird
rufusbird's picture

Isn't it nice to know "It can't happen here"...?

Wed, 07/25/2012 - 20:05 | Link to Comment Centurion9.41
Centurion9.41's picture

Ah, yes.  That pesky demographic priniciple underlying and driving 80% of all economic activity, that prinicple Political Economist parading as scientists have been ignoring in their "models" as they road her wave for the past 50 years....  

Now if only the US could actually structure a real immigration program, one that tosses out all those who snuk across illegally and welcomed those of desired character and intelligence, we too may avoid this wave.

Wed, 07/25/2012 - 20:04 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Eventually, every frog in the process of boiling becomes fully-boiled.

Wed, 07/25/2012 - 20:12 | Link to Comment Seasmoke
Seasmoke's picture

i prefer the ZH....everyone drops to zero"

Wed, 07/25/2012 - 20:05 | Link to Comment same old story
same old story's picture

None of this is funny.  These psychos will fuck us all and take great pleasure in doing it.  Please stop blaming the sheeple what actions have people here taken to put a stop to this?  we have been dumbed down through school, lied to out whole lives, and trying to wake up to that is a process and takes time, and the ability to educate yourself.  While you are waking up you still have bills to pay, mouths to feed, and so on.  

What is happening and what will happen is sad beyond words.  People should not work hard their whole life and then find what they believed in and paid for has been stolen, by a criminal cartel who are never held accountable as they own and control everything - starting with what you are taught in school.  

For those that think PM's will save you, dream on.  If you don't think they have thought that through you are not fully awake.  It is just another piece on their chess board  they control most of it, and while you might see a little upside benefit they have plans for that too. 

Wed, 07/25/2012 - 20:06 | Link to Comment Centurion9.41
Centurion9.41's picture

"we have been dumbed down through school"

Uh, no. 

YOU have dumbed yourself down by squandering school.

Wed, 07/25/2012 - 20:20 | Link to Comment same old story
same old story's picture

why don't you do a little research on the history of education in america and then come back and tell me what you think, oh wise one

Wed, 07/25/2012 - 20:49 | Link to Comment Centurion9.41
Centurion9.41's picture

First of all, the "YOU" was not a personal you.  I wrote it that way as a generic reply to anyone who whines along the "you didn't teach me/warn me/protect me" line.  In short, the standard 99% whine.

As for the more general question of education in America, btw the A is capitalized, then I do not agree but go beyond your assertion.

The American educational system has been deeply perverted.

Do you not see the contradiction in your sentence that says "and then find what they believed in and paid for has been stolen" yet is shortly followed by "starting with what you are taught in school"?

If this were the 1800s, or even before the mid-1900s, I'd agree with the premise the sheeple werent able to know better.  But now, a decade into the information revolution?  No, one has a hard time blaming their ignorance on others.  That was my point.

 

As for blaming the sheeple.  Who are we to blame?  The sheeple can save themselves, by vote or by gun; as a retired military guy, I strongly recommend the former.   The Cartel can be overthrown, by good old fashion Founding Father's conservative principles.

You are right Old-Story.  None of this is funny.  But you are wrong if you think blaming the Cartel or the education system is really the answer.

 

Good luck to you, and I hope your story changes.

 

Wed, 07/25/2012 - 21:10 | Link to Comment same old story
same old story's picture

LOL, the A is capitalized.  Yeh, maybe when it stood for something.  So your point is because we now have a decade of the Internet everyone should know what is going on?  You can not be serious.  

 

As for blaming the sheeple.  Who are we to blame?  The sheeple can save themselves, by vote or by gun; as a retired military guy, I strongly recommend the former. 

 

I rest my case.  It seems your decade on the Internet leaves you still believing in the tooth fairy.  Oh, and the fact you were in the military is further proof that you were steeped in sheeple stew.  I am sure I will get arrows down for saying this, but if you research most wars, and follow the money, etc you will know I am speaking truth.

Wed, 07/25/2012 - 21:45 | Link to Comment Centurion9.41
Centurion9.41's picture

I decided at "LOL, the A is capitalized" you are to ignorant and selfish to waste anymore time on you and your 99% whining.

Good luck with your ignorance, anger, and whiny blaming everyone else kid.

Wed, 07/25/2012 - 22:18 | Link to Comment same old story
same old story's picture

and good luck to you thinking the whiny people only have themselves to blame.  You miss the bigger picture looking through such a narrow lenses.  Alas your type have been with us for ever, flashing your credentials, why? 

Wed, 07/25/2012 - 22:12 | Link to Comment tbone654
tbone654's picture

Here's a little education...  That's been hidden from the sheeple for 70 years...  And remember, History repeats...

http://www.revisionisthistory.org/communist.html

Thu, 07/26/2012 - 06:05 | Link to Comment WillyGroper
WillyGroper's picture

>>>>>>as a retired military guy

So no one in the private sector would hire you?

There's nothing like the military this side of prison.

Wed, 07/25/2012 - 22:25 | Link to Comment Cosimo de Medici
Cosimo de Medici's picture

Your moniker fits.  Yours is a common lament around here.  There's always a "they" and "they" always have some Master Plan, which only the "fully awake" can see.

I suspect this mind set came from the same place that produces god-fearing drones who dismiss tsunamis and childhood cancer as part of some mysterious Master Plan.  Screw everybody's god, shit happens, and most of it is random.

THERE IS NO PLAN.  "They" are as incompetent as anybody's god, except for the Greek gods, who were believed to be both vindictive and fallible.  You give "them" far too much credit.  Please go review the genesis and transcript of the European problem.  Look over the supposed plans to stop the bleeding, whether it was in Greece, Italy of Spanish Banks.  These clowns are competent? 

"They" are dinosaurs and they don't see the asteroid coming at them.  Just as successful nations get fat and lazy and drift into the decline phase of human society, the "they" had it good for a long time and got complacent. 

Accept some personal responsibility.  Save yourself.  "They" will be running around like chickens with their heads cut off, perhaps literally.

Thu, 07/26/2012 - 00:29 | Link to Comment Reese Bobby
Reese Bobby's picture

Oh boo-hoo.  My father taught me debt was servitude.  He taught me that cutting back basically meant buying nothing but cheap necessities.  He was damaged by too much dependent responsibility at a young age, but he was not a whiner.  Suck it up and stop surrendering like a Frenchman.  "They" are just a corrupt political and corporate system.  "We" out-number them.  Finally, "PM's" is a relatively small market that very rich people have stockpiled.  So they are a good CURRENCY to own.  Good luck.

Wed, 07/25/2012 - 20:04 | Link to Comment bankruptcylawyer
bankruptcylawyer's picture

GODZILLAA!!!!!!

Wed, 07/25/2012 - 20:15 | Link to Comment goforgin
goforgin's picture

So how much money did Kyle make on this? Surprise, surprise said an accountant, all expenses are paid from cash on hand.

 

This site is getting stupider and stupider.

Wed, 07/25/2012 - 20:08 | Link to Comment RacerX
RacerX's picture

time for another Fukashima event

Wed, 07/25/2012 - 20:22 | Link to Comment new game
new game's picture

for anybody stupid enough to believe and rely on any one of these fucking ponzi gub run scams; just go fuck yourself and certainly don't tell me you paid in and you deserve blah blah, fucking can't wait for you to come knocking, cause i put up with your shit and i had to be labelel the dooms dayer and laughed at. hey and not to fucking mention i lived within my means and you spent your fucking money on the new chev while i ran um to rust and smoke, fuck off you wastefull cunts; i can't wait to piss on you in the gutter.  a little pent up anger -eh.

Wed, 07/25/2012 - 20:10 | Link to Comment Seasmoke
Seasmoke's picture

Yet Somehow they seem to be able to keep buying up our good racehorses for stud

Wed, 07/25/2012 - 20:12 | Link to Comment boiltherich
boiltherich's picture

71.9 trillion yen = just under one trillion bucks.  SS trust fund 2.6 trillion but stuff always sounds like so much more in yen.

Wed, 07/25/2012 - 20:17 | Link to Comment Crimedog
Crimedog's picture

There is a reason this trade is called the Widowmaker.  Like fonzannoon mentioned earlier, most likely the Japanese pensioners will just reinvest these payouts into JGBs, if needed.  The Japanese are much more patriotic than Americans, and seem willing to sacrifice a ton to make sure their way of life is preserved.  I would not call this the tipping point by any means.  If this was America, sure, because as much as we Americans claim to be patriots, we're nothing but a bunch of selfish pricks.  Most Americans could care less about the system imploding, as long as they "got theirs" beforehand.

Wed, 07/25/2012 - 20:31 | Link to Comment Al Huxley
Al Huxley's picture

If that was going to work, then this article wouldn't have been written.  The whole point is that they HAVE TO SELL, because their payouts are bigger than their income, which makes sense because if you're retired and have no income other than your pension, clearly you have to spend that pension income on things like food, energy, etc, and therefore are not able to reinvest it (at least not all of it) back into JGBs.

 

None of this stuff is rocket science, the fucking bankers and gov'ts just intentionally complexify it, to make it look less ponzi-ish and provide more opportunities for graft, corruption and theft.

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