Most economists predicted the Japanese miracle would come to an end back in the early 80’s. Habits are difficult to change in the land of the disposable chopsticks and one main problem economically speaking is the nation is one of spendthrifts. Most nations wished they had the same problem as foreign national debts are crippling many other nations fiscal and monetary policies as debt continues to accumulate and Moody’s lowers debt ratings around the world. However, Japans’ problems are somewhat different. The average Japanese isn’t spending enough, putting national companies near bankruptcies while their banks now face enormous internal risky debts that until recent outside pressure, never showed up on their books. In my humble opinion, much of the loans are so secretive (many based on family ties – like the Mitsui’s and the Mitsubishi’s etc…) that it is still difficult to comprehend how severe the total unforgiven risk has accumulated. Still unsure if we are talking billions, or trillions of yen, which I believe is another reason why it is still anyone’s guess on the final outcome of the bleakest picture of all, that of Japanese hauling out of foreign investments to pay off the debts, and reestablish the yen.
Nicholas Leasons of Barings strategy of selling Nikkie straddles would have continued to prosper had it not been for the last earthquake on Honshu (and his own greed). However, the clock is now past the cyclical 66 year period for the next big earthquake to hit Tokyo, which certainly could trigger a much graver scenario then anyone could imagine, and that ain't sushi... |
