I was reading an article today about how the return of former Prime Minister Shinzo Abe, now head of the LDP, as the new Prime Minister, could be absolutely devastating in terms of the value of Japanese bonds. Yes, I was actually reading a finance article. Not that I claim to fully understand it but then again, it’s not completely over my head either.
Here’s the first two paragraphs:
Bond Risk at Month High on Specter of Abe Spending: Japan Credit
Japan’s bond market is signaling concern that a government run by Shinzo Abe will ramp up spending to revive growth, adding to a debt burden already twice the size of the nation’s economy.
The cost to protect Japanese government bonds against nonpayment for five years rose every day last week, reaching 76 basis points, the highest level since Oct. 30, according to CMA prices compiled by Bloomberg. Contracts on U.S. Treasuries were at 37.5 basis points. Theextra yield that investors demand to hold 20-year JGBs instead of 10-year notes is hovering near a 13-year high, showing they are pricing in more long-term risk. for the rest of the article click here
So I was thinking, what would be the best way to explain my own sort of aversion to having Shinzo Abe return as PM other than the fiscal meltdown he might create. He is death for Japan Bonds. He is Bond. And then it occurred to me, that with his pro-nuclear policies, he might add another atomic meltdown to the fiscal meltdown or do both. So to fully explain my views on the guy, without taking the trouble to get to serious about it, because after all, Prime Ministers in Japan make fireflies look like turtles, I pondered what would happen if Shinzo Abe played Bond. It might have seemed like a crazy notion a year ago, but the movie starts on December 16th. I can hardly wait.