Japan

benjamen · Jul 9, 2012

What if Japan runs into trouble? They are to large to be bailed out:
http://www.reuters.com/article/2012/07/06/us-japan-economy-azumi-idUSBRE86501O20120706

Similar to U.S. debt ceiling fights:
"Japan's government could run out of money by the end of October, halting all state spending including salaries, pensions and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit."

"Japan already has the world's largest debt burden at nearly twice the size of its $5 trillion economy, and a breakdown in fiscal spending could increase skepticism that politicians are losing their grip on public finances."

pmbug · Jul 9, 2012

Their central bank has been employing CTRL+P for a while now. I expect it to continue.

swissaustrian · Jul 9, 2012

I'm long Japanese 10yr CDS's since late 2010. Good trade so far:
http://www.bloomberg.com/quote/CJGB1U5:IND/chart

ancona · Jul 9, 2012

Japan is somewhat different in that the lions share of their debt is held by the people of Japan. When they default, it will be on their own.

swissaustrian · Jul 9, 2012

ancona said:
Japan is somewhat different in that the lions share of their debt is held by the people of Japan. When they default, it will be on their own.

This benefit is about to change, they've recently posted their first trade deficit since 1980. So they won't be able to fund themselves forever: http://www.ronpaulforums.com/showth...ng-Japan-posts-first-trade-deficit-since-1980
This trend should continue as their population ages even more.

benjamen · Oct 3, 2012

Long, but good article looking at the problems in Japan:
http://www.theatlantic.com/magazine/archive/2012/10/the-next-panic/309081/

The author thinks it will not be the U.S. or Europe that has the next big crash, but instead Japan.

DCFusor · Oct 3, 2012

Well, I understand Kyle Bass is betting big on a Japan crash, and he has convincing numbers, but...it's not happening yet.

I expect the real troubles as more and more of their population retires and starts selling those bonds. When they have to face the "real" market, their rates are going to be sky high, and that's when the real crash comes. Or just after if they just monetize their debt by pure printing.

Demographics is highly predictive that something will happen +/- some years, but it doesn't indicate very well just when the tipping point happens - makes it hard to know when to place your bets.

DoChenRollingBearing · Oct 3, 2012

My impression ("anecdotal data point" if you will) when I was in Osaka a few days last May was that the Japanese are kind-of giving up. I had some nice long chats with our supplier there. He told me that the kids no longer bust their butts studying... Fukushima also still glows... Maybe it was just me, but there seemed to be an air of resignation.

He was able to keep his bearing plant running though this summer, apparently did not suffer big brownouts.

I feel for the guy though (the president of our bearing supplier there). His is a family company, and his only kid is just 9 years old and so is a LONG way from being able to manage a manufacturing and export company.

rblong2us · Oct 3, 2012

DoChenRollingBearing said:
apparently did not suffer big brownouts.

Do Chen,

:doodoo: came to mind when i read those words :rotflmbo:

sorry

DoChenRollingBearing · Oct 3, 2012

WOW, rblong2us! I thought I had the filthy & crappy mind around here!

pmbug · Nov 12, 2012

The global economy took another turn for the worse as Japan plunged into recession following two consecutive quarters of growth.

Please consider Japan’s economy shrinks annualized 3.5%.

Japan’s economy shrank an annualised 3.5 per cent between July and September, the steepest decline since the earthquake-hit first quarter of 2011, as exporters suffered big falls in shipments to key markets such as China and Europe.

Prime Minister Yoshihiko Noda described the gross domestic product figures as “severe”, while Seiji Maehara, economy minister, said Japan had possibly entered a “recessionary phase”.

In a speech on Monday, Masaaki Shirakawa, Bank of Japan governor, said there was “no question that the [central bank] should exert every effort to enhance its easing effects as much as possible”. He said domestic demand was “unlikely to increase at a pace that will outperform the weakness in exports”.
...

Click to expand...

...
As my friend John Mauldin suggests, Japan is a bug in search of a windshield. I highly doubt Japan can make it 2022 or even 2017 before it runs into serious issues.

Actually, Japan has extremely serious issues already, it's just that the market is ignoring them for now. If interest rates rise by a mere 2% or so, interest on the national debt will consume 100% of Japanese tax revenue.

Global imbalances are mounting. I suspect within the next couple of years (if not 2013) Japan will resort to the printing press to finance interest on its national debt and the Japanese central bank will start a major currency way with all its trading partners to force down the value of the yen.

More: http://globaleconomicanalysis.blogspot.com/2012/11/japan-plunges-into-deep-recession-gdp.html

benjamen · Nov 15, 2012

http://finance.yahoo.com/news/prepare-seismic-shift-japans-politics-104347347.html

"Abe said Thursday that he wants the Bank of Japan (BoJ) to bring interest rates down to zero, or even below zero, to stimulate lending."

"...called for the BoJ to embark on "unlimited" monetary easing to return to inflation after years of deflation. The current target for inflation is just 1 percent, but Abe wants to raise it to 3 percent."

pmbug · Nov 15, 2012

Sounds like they are about to turn their central banking knob to eleven.

swissaustrian · Nov 15, 2012

Breaking: Secret photos of Abe playing with Japans money supply

pmbug · Nov 15, 2012

Haha... Anticipation...

DoChenRollingBearing · Nov 16, 2012

Go ahead Bank of Japan! QE all you want, BEAT that Yen down!

It looks like it will be a real race vs. the US$ and euro as time goes by.

It the Yen goes down it makes our MBS bearings cheaper though... MBS is now our 3rd best selling brand. We just sold over $1,000,000 (2012 total) at Ameru this month. At the risk of antagonizing some of my friends here, I will write something up discussing details of our landmark.

pmbug · Nov 16, 2012

DoChenRollingBearing said:
... At the risk of antagonizing some of my friends here, ...

Pretty sure that most everyone here is happy for another bug's success. Jealousy is not part of the equation.

:beer:

Jay · Nov 17, 2012

DoChenRollingBearing said:
My impression ("anecdotal data point" if you will) when I was in Osaka a few days last May was that the Japanese are kind-of giving up. I had some nice long chats with our supplier there. He told me that the kids no longer bust their butts studying... Fukushima also still glows... Maybe it was just me, but there seemed to be an air of resignation.

He was able to keep his bearing plant running though this summer, apparently did not suffer big brownouts.

I feel for the guy though (the president of our bearing supplier there). His is a family company, and his only kid is just 9 years old and so is a LONG way from being able to manage a manufacturing and export company.

JAPANESE TEENAGERS, YOUTH AND YOUNG ADULTS: ATTITUDES, APATHY AND NEW LIFESTYLES
http://factsanddetails.com/japan.php?itemid=622&catid=18

pmbug · Nov 25, 2012

Japan's Population Now So Old That Sales Of Adult Diapers Exceed Those For Babies
...

http://www.zerohedge.com/contribute...old-sales-adult-diapers-exceed-those-babies-1

dontdeBasemebro · Nov 25, 2012

I'd laugh if it wasn't such a problem for them.

Although, it was nice to see a chart where the US wasn't in the worst shape for once.

Japan

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