I have definitely less than half chance of getting this right, may be not even better than 10%
Japan is not America. They should have dropped money from the helicopter if I might borrow the metaphor from Bernanke long ago. Now they want to do it when Debt/GDP is a more than 200% This is frightening. They are doing it when the locals are running out of money to buy JGBs. Instead they will need to cash them for retirement.
My point? America is a price giver to the rest of the world but Japan has become a price taker. Abenomics would come to grief. But as Japan eventually spirals down it might drag America and the rest of us along. Europe can help to make everyone falls faster and harder. Of course I exaggerate. It is never so one dimensional.
Confidence is the bedrock for quantitative easing. Japan could never do a "It's halftime in America, and we are roaring back". They passed up that chance at least ten years ago. Therefore traders are trading your markets short term. Yen short sellers finally got their profits but this is all flash in the pan.
Eventually inflation would not sustain consumption to grow the economy because an ageing population is worried about using up its retirement savings. Japan is going bankrupt. Perhaps she would be selling their IPs for a song first. Its ambitious young would be forced to leave for greener pastures far away from home but language is a huge obstacle. Again, I am probably wrong here because there are smarter routes to the end but I haven't the time to read up and think through. One possible path takes Japan to war, an alarming thought. Abe is a bloody hawk.
I don't doubt the denouement of Japan but the paths that she might take is much harder to fathom and that is where the money is.
Only the two sentences in bold font are useful and true, the rest is imaginative speculative nonsense.
"One possible path takes Japan to war, an alarming thought. Abe is a bloody hawk."
ReplyDeleteThat's a thought.