Following yesterday's collapse in the Nikkei, when a 4% drop pushed it red for the year below 17,000, down 20% from a high of 21,000 hit just over a month ago, we had just one question for Japan's pension fund "fudiciaries" who have been "greatly rotating" out of bonds for the past few years as the primary sources for BOJ debt monetization, dumping trillions in fixed income yen, and promptly buying up equities: equities which have gone nowhere in 2015, and which have posted massive losses in the third quarter. The question was:
What are Japan's pension fund losses after the Nikkei wipeout from 21k to 17K?— zerohedge (@zerohedge) September 29, 2015
Less than 24 hours we got the answer, when moments ago Nikkei reported thatQ3 losses at (at least one) pension funds were just under JPY 10 trillion in the third quarter.
- JAPAN PENSION FUND JULY-SEPT. LOSS LIKELY 9.4T YEN: NIKKEI
With Japan's economy already sliding into its 5th recession of the past decade, once pensioners open their retirement statements in a few weeks and find a 15% plunge in their purchasing power, Japan can skip recession and proceed straight to a consumer-driven recession.
But wait, there's more: because if pensioners are angry now, wait until they learn that they have lost everything, after buying all those junk bonds that Carl Icahn is now actively selling with both hands and feet, because...
- JAPAN PENSION FUND TO INVEST IN JUNK BONDS, NIKKEI SAYS
And just like that, with or without Krugman's active economic advice, Japan's fate is sealed because much to Japan's dismay, "junk" bonds are called that for a reason.
The good news for US shale companies: they just got a 6-9 month reprieve thanks to millions of Japanese pensioners who will starve to death in a few years. This is probably bad news for oil as the scramble to issue junk bonds in the coming weeks to take advantage of Japanese idiocy means taht the oil spigots will be turned on full blast.