A short, visual explanation of Japan's debt crisis by Addogram. Published on Apr 4, 2013 [youtube]http://www.youtube.com/watch?v=Njp8bKpi-vg[/youtube]
http://www.businessinsider.com/japan-is-never-going-to-default-2012-5 http://www.theepochtimes.com/n3/blo...ghs-greece-style-debt-default-still-unlikely/
No where is the interest created. No where is it taught that all money is a debt obligation. No where is it taught who gets to control the issuance of money. Etc. etc. etc. The debt can never be repaid because ALL money IS debt with interest. Most here know this salient point like it was their ABCs. Why do I still feel the compulsion after 12 years to bring it to people's attention when watching this propaganda is beyond me. The video is a grand misdirection for the ignorant masses. Great visuals very distracting and mind numbing.
^^^ S. Ohno, That first link was to an April 2012 article - excerpt quoted below. As the article says - then the dollar would only buy 80 Yen, but since then the tide has turned, in fact not long after that article, and dollar now buys 102 Yen. So Kyle Bass's mortgage taken out in Yen in 2010 has indeed got cheaper. Also rock bottom interest rates to pay via the mortgage. Kyle Bass's Most Famous Trade Is A Disaster, And It Is Never Going To Work Out JOE WEISENTHAL MAY 20 2012 "Back in early 2010, there was a story about how he took out a mortgage in yen, because he was so sure that it was going to implode, thus meaning he'd get his house for free. Well, it hasn't exactly worked out that way he planned (yet). Since the beginning of 2010, the exchange has gone from about 92 yen against the dollar to just 80. Kyle Bass's mortgage has gotten way more expensive." Kyle Bass can be heard here in April 2013, roughly a year after the Weisenthal article, saying that he's seeing signs of "the beginning of the end" for Japan. [youtube]http://www.youtube.com/watch?v=3D0guj3OfOw[/youtube]
Kyle Bass is a smart cookie with deep pockets. He stuck it out when they whipsaw the market and makes a killing. Picking the fall of which domino is key.
That's exactly the analogy he uses, and says its just like Madoff, likely to implode rapidly when it starts, "spring-loaded" he says somewhere, as fresh JGBond buying reaches a tipping point where it isn't supplying enough to pay the swelling interest due on the old bonds.
There's a long term chart here of how many JPY to a dollar. I'd really like to get a better notion of how failure of the Yen and default on JGBonds will affect assets like gold. Kyle Bass reluctantly gave a tip to someone after a talk who asked what the small guy should do, and he said "short Yen, Long Gold". I think he was meaning that we could take out a loan in Yen and use it to buy Gold, but not sure, maybe some 'synthetic' version of that?
Here's the second part of that 2013 Bloomberg interview with Kyle Bass in which he affirms that Gold should be held. The Bloomberg metals analyst is confident - but check out the gold futures number as it crosses the screen - $1573! In Early April 2013 Gold was just beginning to accelerate downwards towards the June $1180 bottom to date [youtube]http://www.youtube.com/watch?v=vZH2QEeuIk8[/youtube]
* Units: Millions of US Dollars Source: IMF (2010) http://www.financialsense.com/contr...of-worlds-largest-creditor-and-debtor-nations Data up to 2013: http://elibrary-data.imf.org/public/FrameReport.aspx?v=3&c=24319293&pars=Country,914
About a year and a half ago, I noticed a poster called It's A Mystery claiming that gold was tracking the Japanese Yen. I ignored what he wrote to my great detriment. It's not a perfect correlation, but close enough. Click compare and add gld. http://finance.yahoo.com/echarts?s=JPYUSD=X
^^^ S. Ohno Well must admit - very uncomfortable seeing Australia just above Spain and USA on the table of Net International Investment Position (NIIP), but having foreigners own half your country (Aus) doesn't prove that you have a lot of debt to service does it? Japanese citizens/corps used to own a lot of the Gold Coast here, but we didn't owe them debt on account of it and I don't know how many of us were tenants to them. I guess it does suggest a high NIIP country like Japan (top of the ladder) does have a lot of assets that can be liquidated to pay the interest bill and the principal when they fall due. But a lot of those Japanese assets are in private hands aren't they? Corporations and householders. What is the government going to do - confiscate private wealth to service growing liabilities? How much of the positive investment balance of Japan can be attributed to it having a relatively small land size and doesn't it restrict foreign property ownership? Also there is a claim made by Bass that Japan is 'xenophobic' - for example only a small part of the population is foreign born - that's not going to encourage foreign ownership. It's a matter of cashflow isn't it? Not a matter really of how much of a net creditor one is, but how to get the cash to pay the bill on the debt part of the ledger According to K Bass interview a 1% rise in the interest rate would see The Japanese government using all its revenue to pay the interest bill. It's said to be consuming 25% now. On the income side, the population is ageing, putting greater demand on social security while the working and tax paying population segment shrinks. Also on the income side, Japan's balance of trade isn't looking too hot lately. Japan does have another saving grace in its own currency which it can inflate by even greater QE or whatever; however this would play into Bass's thesis as it would weaken the Yen and cause foreign selling of JPBs?
Foreign selling is not a big problem. The amount currently owned by foreigners is less than the amount of recent QE. The BOJ could buy ALL of their bonds, and the exchange rate would only go back to where it was a decade ago. Current ownership of JGB: 9% Foreign owners 21% BOJ 5% National pension fund 4% Other Japanese government entities 58% Banks 2% Japanese households 1% other crazy people And most JGB have a fixed yield, so a 1% rise in the interest rate would see what? Mr. Bass paying more interest? 30% of Japanese mortgages are variable rate, since currently that rate is pretty much zero. Banks won't sell, because the managers only speak Japanese - they have nowhere to go if the SHTF :lol: http://www.telegraph.co.uk/finance/...r-English-saved-Japans-banks-from-crisis.html
Kyle Bass has always referenced JGBs not JPBs. He mentioned that the aging population means that old bonds will be redeemed vs. additional (new bonds) bought. See the IMF paper below http://www.imf.org/external/pubs/ft/wp/2011/wp11292.pdf
