Japan Foreshadows Next Global Crisis

by James Gruber on June 1, 2013

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{ 3 comments… read them below or add one }

LWH June 4, 2013 at 2:28 pm

To quote a recent Asahi Shimbun editorial: “Abenomics is designed to exert psychological pressure on citizens to increase their spending on expectations of an economic recovery… If the best scenario drawn up by the BOJ and the government crumbles, the Japanese economy could be in worse shape than before Abe took over …”

David Barth, CFA June 2, 2013 at 4:32 am

It is David Barth, Cfa

David Bart, CFA June 2, 2013 at 4:31 am

The centeal bankers,who are social scientist not experienced business people, have financed the expansion of governments with excess bank reserves that are liabilities creating leverage of over 50 to 1 on the central bank’s balance sheet. Should economies improve, conceivably lending will increase and, the “excess” reserves will disappear, interest rates will go up and central banks would have to sell assets at a loss on a declining market thereby wiping out the central bank’s equity. If I were a central banker I would retire quickly.

No matter how you look at it interest rates wii increases: When is the key Variable. If you know your house is gong to burn down soon would you wait for the fire to start before insuring it? The central bankers have lost control so don’t wait to liquidate bonds. This is just the tip of the over-leveraged central banker forthcoming disaster.

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