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.
At least the dude got over his crippling colitis. I guess… (Though, Japan *really* needs to do something about deflation; Korea is underpricing the hell out of Japanese companies.)
Its funny how you were making snarky comments about Romney and Bain, when this is what the current US administration has been doing for the past four years(QE1,2 and 3). The US has also been artificially keeping yields low.in order to prop up the economy as well as service national debt. This will the next bubble according to some economist. Without going into a very complicated US Japan relationship, Japan is at an advantage over the US because most of the bonds issued in Japan are bought by the Japanese people. The US has most of its treasuries owned by the US government.or foreign governments like Japan and China. Japan alone has nearly one trillion dollars of US debt. The other advantage is that Japan can call in the debt. The US doesn’t have that option. Even if they were to sell their stake, there is so much debt that there is no one who would be able to buy it. This is important because it will affect the yen.
As far as the nuclear issue is concerned, Japan is better off continuing to use nuclear energy until its economy is better able to handle the estimate 30% increase in costs purchasing alternative resources.
brilliant
Thanks Chris! BTW, in the yuletide spirit, a certain past posting of mine is now off-line. Good luck!
I will hear no rubbish about Japan being better off by some muddle mouthed “anon” commenter about it keeping nuclear power. This is just uninformed rubbish not to mention grotesque stupidity.
Great article Jake, and you got it right, Abe = further decline in our living standards, in every imaginable way.
Thanks Richard. Well, considering a consistent history of failure and disaster–nuclear power in Japan seems like an awful bet and Abe is not a very bright gambler.
25 Nuclear Power Plants Could Be Replaced By Geothermal In Japan – CleanTechnica
http://cleantechnica.com/2012/12/22/25-nuclear-power-plants-could-be-replaced-by-geothermal-in-japan/%23L6DV3zZyfpWjKlJG.99
A few years ago I went to a lecture in Tokyo at a Japanese university given by Lester Brown of the Worldwatch Institute. Credit due to Worldwatch for many years of hard science research into energy consumption issues, and especially for their efforts to popularize the issues. The professor who was in charge of the lecture, a Japanese chap, droned on for 45 minutes hemming and hawing and promoting HIMSELF all the while Lester sat there. Finally they got Lester up there to speak for 20 minutes and his mic did not work! We did make out, somehow, that Lester recommended just what the author of this article says, that geothermal could be a huge energy producer for Japan. He even chastized the audience as if to get them riled up and do something about it.
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