• Asian stocks gain as US economic concerns ease.
• Australia increases commodity export sales forecast to record $203B.
• ECB steps up its bond buys amid worries of default by Greece, Portugal, Ireland.
• Escaping double dip to growth recession means no unemployment relief seen.
• Greece sells 13-week T-bills, yield drops to 3.98%
• Gulf states in $123B US arms spree; Arab nations seek to counter power of Iran.
• Oil falls after US Homebuilder Confidence reading prompts demand concern.
• Treasuries hold gain as Fed may say it is open to boosting debt purchases.
• US recession ended in June 2009, NBER says amid threat of renewed slump.

Opinions on the future are pretty binary: either uberdefl*tion or hyperinfl*tion. These views premised on an overreaction to some policy or belief that no policy matters at all. Do policies really mean nothing—or everything? Please. On the one hand, the Fed isn’t omnipotent, and on the other hand society will not tolerate leaders standing around slack-jawed as people starve to death. Seriously, whatever happened to old-fashioned flat prices or high inflation? Nature is too crazy in the head to predict with certainty, sure. But that does not imply a hell on earth scenario. Outcomes are a question of exit times on a non-Markovian process subject to drift and random jumps. Nature takes her time and the path of least resistance. She’s awful at chess, but plays with three queens. Make no mistake: Mother Nature is going to do her thing and she’ll just move on after she burns the club to the ground.

Now that the United States has had its own real-estate bubble pricked, a lot of smart people have been selling the idea that the U.S. will experience what Japan has experienced. But as a look at the balance of payments shows, Americans and their government have gone into massive debt with the rest of the world, in order to finance all their spending over the last 35 years. Japan, meanwhile, has been carrying a current account surplus. Therefore, the Japanese government has been borrowing money not from overseas, but from its own citizen’s savings. All of the Japanese government’s stimulus spending has been paid for by the Japanese people. This is the main difference between the United States and Japan. It should be obvious—and ominous—what this difference means. —Gonzalo Lira

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The compare and contrast between Japan and the rest of the developed world is a topic that will only get more and more attention as increasingly more pundits debate America's plunge into a deflationary spiral (sorry, with $2.1 trillion in shadow debt evaporating YTD, it is inevitable. It is the economy's reaction to the Fed's response, i.e., the nuclear option, at that point that is the topic of most contention - whether it will rekindle hyperinflation or have no impact on the deflationary collapse into a Keynesian black hole). The latest to chime in, interestingly, is the all important Bank of International Settlements, recently best known for promoting the regulatory farce that is Basel III. A just released paper by Shinobu Nakagawa and Yosuke Yasui looks at the nuances of Japanese household debt, and how its build up, concentration and composition is uniquely Japanese, and why Japan, unlike the US, has traditionally had the capacity of falling back on its domestic population to bid up its sovereign bonds (which is all in flux currently, as the Japanese savings rate is plunging, as the demographic shift so well covered in the past by Dylan Grice is currently taking place). Here are the findings of the BIS economists, which may provide some insight on how America's upcoming fight with deflation could proceed. Of particular note is just how skewed US society (based on GINI scores and the distribution of net worth) is compared to Japan. It also explains why America is now a democracy only on paper, while in fact it merely caters to the interests of the top 1% of the population.

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