There was an article in the China-based news service, Caixin (I caught this on Zerohedge) the other day, written by one "independent economist" named Andy Xie.
Turns out Mr. Xie was the former "star" chief Asia-Pacific economist for Morgan Stanley. (Doesn't take much to be a "star" over at Morgan Stanley, apparently. A general lack of knowledge on economics will suffice.)
Anyway, in the article Xie opines on the outlook for Japan, where he gives us these pearls of wisdom:
| It is a fact that when it comes to the oddly resilient Japanese hyperlevered economic model, the bodies of those screaming for the end of the JGB bubble litter the sides of central planning's tungsten brick road. Yet in the aftermath of last month's stunning surge in the country's trade deficit, this, and much more may soon be finally ending. Because as Caixin's Andy Xie writes "The day of reckoning for the yen is not distant. Japanese companies are struggling with profitability. It only gets worse from here. When a major company goes bankrupt, this may change the prevailing psychology. A weak yen consensus will emerge then." As for the bubble pop, it will be a sudden pop, not the 30 year deflationary whimper Mrs. Watanabe has gotten so used to: "Yen devaluation is likely to unfold quickly. A financial bubble doesn't burst slowly. When it occurs, it just pops. The odds are that yen devaluation will occur over days. Only a large and sudden devaluation can keep the JGB yield low. Otherwise, the devaluation expectation will trigger a sharp rise in the JGB yield. The resulting worries over the government's solvency could lead to a collapse of the JGB market." It gets worse: "Of course, the government will collapse with the JGB market." And once Japan falls, the rest of the world follows, says Xie, which is why he is now actively encouraging China, and all other Japanese trade partners of the world's rapidly declining 3rd largest economy to take precautions for when this day comes... soon. |
A FACT THAT JAPAN IS HYPER-LEVERAGED??
FACING INSOLVENCY??
COLLAPSE OF THE JGB MARKET???
This crap is beyond ignorant. It is mind-numbingly dumb ass stupid.
The really, really, sad part, though, is that as dumb as this (to use Matt Franko's term) moron is, policy makers in Japan will read this and believe it to be true. That's right. Mark my words. Political leaders in Japan will start talking about cutting the debt to avoid insolvency. And don't be surprised if you even hear officials from the Bank of Japan worry outloud about interest rates and their own ability to keep them down. After all, we've seen such idiocy from our own Fed, so don't think it can't happen elsewhere. It can and it will.
Mike,
ReplyDeleteIf there was one thing I could get these people to see, one falsehood I could get overturned that they are led to believe that would act as a lynch pin that would start to turn this around for them; I'm thinking it is what you coined some years back as the false "taxpayer on the hook".
If we could get them to see how this "taxpayer on the hook" nonsense is untrue, then it logically follows that "our grandchildren are not on the hook", "the Chinese are not on the hook", "quantity of money is not on the hook", etc...
I think if we could get back to attacking "taxpayer on the hook" it could be removing a foundational false belief for them, and they may start to snap out of it...
Resp,
Your blog is the most worthless piece of shit I have ever read. Andy Xie is right on many of those issues.
ReplyDeleteJapan has huge fiscal problems; yields have remained low because of a captive domestic audience forced to buy JGBs... as their current account surplus shrinks, the impact of their aging population becomes greater -- leading to household savings approaching zero, they'll have to look for external sources of capital, who will demand higher rates, making their debt servicing impossible. BOJ will have to up their asset purchase program and/or intervene in FX markets to devalue the yen... the only way out.
Instead of being the huge pussy that you no doubt are and deleting my comment like you've deleted several of them because they prove you wrong, how about you actually offer a rebuttal that isn't based off the fantasy world you live in you piece of shit? Fuck you and everything you stand for.
@ Anonymous
ReplyDeleteTake it you are shorting the yen or Japanese bonds?