Ingot54 wrote:nanningbob wrote:
Very good article except it left out one major problem the Japanese face. Massive debt. To finance their govt. spending about half comes from tax receipts and half comes from borrowing. Because of deflation Japan's tax receipts are the same as they were in 1985. In other words they have not experienced any real growth for over 20 years. Yet they kept on borrowing hoping things would change. For 2 decades they havent. Since the Japanese were great savers for their retirement there was always a supply of money to borrow in house. The Japanese did not have to borrow money from outside their country. So now that they have borrowed almost all their people's savings, there is no more to borrow. No foreign markets are going to lend to a country that is 240% debt to gdp ratio and at present borrows almost 50% of its govt. budget. The phrase they are backed into a proverbial corner is understating the case. There are no other alternatives waiting for them. They either default on their loans which means almost everyone's savings in Japan is wiped out thereby povertizing the entire country OR depreciate the currency and pay every one back with deflated YEN and bring down its debt to GDP ratio. Those are its choices. All this other stuff that writers are writing are meaningless. Japan cannot have an appreciating YEN. It either depreciates with all the consequences that goes with that or it bankrupts and starts over. If you think that wont upset the markets you are high. Imagine what would happen if all of a sudden the world's 3rd largest economy just disappears into oblivion. My respects to the writer, he has done his homework and everything he says is true. However, he left one little detail out and that is the one that is driving this whole story. Japan is at the end of the debt super cycle and has nowhere to go anymore. Greece came to its end but was given more money to borrow. So they kicked the can down the road one more time. Japan is out of cans.
Agree totally with your assessment of that article, Bob.
But there is more to this story than has been publicly revealed, I think.
When BOJ announced its plans to weaken the YEN, (at the behest of politicians Abe and Kuroda) all was good. I remember the euphoria on this thread about how the YEN was going to trend for three years.
It hasn't, and I have read more than a few posts about that illusion, and the damage done to traders who expected the utopian trend to continue. I was one who bought that illusion, and paid for it.
Since then I listen to nothing ANYONE says about Macroeconomics - here on this thread, with respect, or anywhere else in the world. And my trading has been blessed and flourishing ever since.
The only macroeconomics I want to read, is the 2MA on the monthly chart ie the 240MA on the 4H chart. The rest of it is hot air ... words ... padding for journos who need to justify their ill-informed positions.
Remember how many times did the BOJ reiterate their policy of weakening the YEN?
Yet the net result has only been a strengthening!!!
DON"T TRUST the written word on macroeconomics. They are lies intended to misinform.
Remember also ... the G20 meetings were expected to chastise the Japanese for their weakening policy. Instead - what did we hear - Statements supporting and justifying the policy "because it was only going to benefit Japan
DOMESTICALLY! That was the
overt position for the public chickens!
Bulldust!! "
Domestically" has nothing to do with the international exchange rates we deal in - it was euphemistically assembled for consumption by a public eager to hear that the new and wonderful trends in the xxxJPOY would continue into the sunset.
Oh yes - they tied it to "GDP" ... smoke and mirrors!
But covertly ...
covertly ... you can bet that the G20, the World bank and the IMF delivered such a stinging slap on the wrist ... no ... the face ... to BOJ and their cohorts ... that the YEN has been strengthening
ever since.
So please forgive my taking an ostensibly opposite tack to the written intentions of Central Banks to anything! They can't ... and they won't ... do what they say.
Simply forget about Internet links to articles about it all, and get on with the 10.4/10.5 V. 5.01.
Is there anything wrong with that? If we keep on following news articles, we have too much time on our hands.
