OT, re Japan:
The other thing to watch is the government budget deficit. They have been priming the pump so massively, and for so long, that government bonds are being downgraded, yet all that does is prevent a slide back into recession. There are several interconnected mountains of debt (government, corporate, bank) that will never be repaid. And the interconnections mean that, when one large part fails, the whole edifice collapses. No way out that I can see. I think we are witnessing a passing of the baton, in East Asia. Japan is going to go the way Argentina went early last century, and England went after WW2. This is the "creative destruction" aspect of capitalism. And the Japanese were so rich in 1989, that they have been able to creatively destroy wealth on a massive scale for over a decade now. The end will be ugly. Unless they do something radical, they'll end up being a nation of impoverished pensioners.
So, is the Japanese government going to force their people to keep their money in bonds yielding near-zero interest? The proper term for that is "theft". Or are they going to allow Japanese to buy foreign equities and bonds? That would imply a huge shift out of Yen-denominated assets. |
