Sunday, January 20, 2013

Japan's Debt Explosion Coming Up


"Japan is spending 25% of its total government tax revenue on interest on debt. It spends 50% on servicing that debt…" - Kyle Bass

Some guy wrote and said that he thinks the Japanese economy is going to be going great within a year. And he thinks I am insane to think otherwise. Well, it's impossible to pick an exact date, but I think it is pretty sure that I am going to be the last one standing here.

I predict that the debt to GDP level in Japan is going to surpass over 250% this year and with it, a crash of the economy coming soon (not to mention overwhelming inflation)... I have been warning that this debt problem cannot continue. In Japan is Collapsing, I wrote

I am angry at the stupid Japanese government for taking our tax money and bailing out these zombie banks and keeping the status quo intact at the expense of the people and our children's future. I am furious that the situation has gone on for so long. I am angry that it is not only us who is feeling the pain but everyone else I know... I get angry when I read the news and see that 15.7% of all Japanese are under the poverty level. I get pissed off when I see that our debt to GDP is over 237%....

And I really get angry when I read that these idiots in government want to raise our taxes and keep with the failed policies of these last twenty plus years.

And it really really astounds me that the people who got us into this mess can get reelected again. What a farce.

Yep. And they GOT REELECTED and are running the government now.

Er, the definition of insanity is doing the same thing over and over and yet expecting a different result...

Who is the insane one here? The people who elect these folks in government, the government or people like me who warn people to buy precious metals and get out of debt?

I also warned one year ago that the government was going to intentionally devalue the currency. Please refer to: Yen Devaluation Now Imminent? Being Called by Major Financials! Get out of debt - Get your financial house in order now!

No one seemed to believe it at the time, excepting a select few..

Kyle Bass seems to agree with me. This from Zero Hedge "Detonating the Japanese Debt Time Bomb":

The hyper-correlation of Japanese stocks (Bass - The people that buying Japanese stocks, are picking up a dime in front of a bulldozer) and the JPY have led many to believe that Abe's miracle promise will be just the ticket to bring the nation's two-decade slump to an end - a 2% inflation target is all you need.
However, in a brief CNBC interview, Kyle Bass explains that not only are 99.9% of people wrong about the crisis (explaining the critical aspect of the abrupt turn of twenty years of the 'procylicality of thought' - that deflation is the norm), but Abe's actions have actually brought forward the date of the "detonation of Japan's Debt Time Bomb. 

Bass goes on to discuss the US Housing stabilization, European stress, and China's economic opacity (and tensions with Japan), but leaves us with the clear and present danger in Japan that the clock has started on the qualitative shift in participants' minds that the situation is untenable (signs are already among the elite with recent JPY-extricating M&A deals) and "All of the components for this [bomb] to go off 'all of a sudden' are in place." Must watch.

Read more at ZeroHedge

UPDATE: Read: Japan's Chain Of Events: Stagnation -> Monetization -> Devaluation -> Stabilization -> Retaliation -> Hyperinflation

As the world's equity markets prepare to rally on the back of yet more central bank printing as Japan's Shinzo Abe takes the helm with a 2% inflation target and a central bank entirely in his pocket, The Telegraph's Ambrose Evans-Pritchard suggests arather concerning analog for the last time a Japanese prime-minister attempted to salvage his deflation/depression strewn nation.

The 1930s 'brilliant rescue' by Korekiyo Takahashi, who removed Japan from the Gold Standard, ran huge 'Keynesian' budget deficits intentionally, and compelled the Bank of Japan to monetize his debt until the economy was back on its feet managed to devalue the JPY by 60% (40% on a trade-weighted basis). Initially this led to exports rising dramatically and brief optical stability, but the repercussion is the unintended consequence (retaliation) that the world missed then and is missing now. Though the economy appeared to stabilize, the responses of other major exporting nations, implicitly losing in the game of world trade, caused Japan's policies to backfire, slowed growth and left a nation needing to chase its currency still lower - eventually leading to hyperinflation in Japan (and Takahashi's assassination). 

With no Martians to export to, why should we expect any difference this time? and how much easier (and quicker) are trade flows altered in the current world?

More: Japan's Chain Of Events: Stagnation -> Monetization -> Devaluation -> Stabilization -> Retaliation -> Hyperinflation


Mr. Nobody said...

There is more in this lecture on Youtube:

What do you think of Mr. Bass's claim that major debt results in war?

mike in tokyo rogers said...

Hi Mr. N...

Well, I don't know if that is merely Mr. Bass' claim... Seems I've heard/read that for a long time from lots of people...

Great link. Thanks! I got some interesting WWII stuff for you tomorrow or so!

Lisa H said...

Being in the US, it would seem that there are numerous domino tippers in the landmine filled field of financial collapse triggers. I have worried about Fukushima and considered that another explosion there would have worldwide financial repercussions but it seems the debt implosion if far more imminent.

I fear that a worldwide financial collapse is around the corner and Japan might be the catalyst for it.

Top 3 New Video Countdown for May 6, 2023! Floppy Pinkies, Jett Sett, Tetsuko!

   Top 3 New Video Countdown for May 6, 2023!!  Please Follow me at: Check out my Youtube Channel: ...