nothing has changed, big picture wise. The same guys who take a stab at shorting Japan still get whipped their asses each and every single time. Your points mostly do not make sense. The aging problem in Japan is irrelevant to my point of Japanese households being able to bail out their own governments. When someone dies, part of the estate goes as taxes to the government, the remainder is passed on to the descendant who is Japanese as well. Japanese household savings are still enormous enough to delay any sort of Japanese governmental bankruptcy by a decade or more. Its utter nonsense to say that they are finished in 2-3 years. I respect Kyle Bass but on one issue he is dead wrong, which is that Japan cannot sustain itself if current accounts dip into the negative: While its true that you gotta pay for what you eat, Japanese politicians are masters at bullying their own central bank into whatever they desire. Any deficit can at worst be paid through printing money. Keep in mind the bulk can always be shouldered by its own domestic population while only the current account deficit has to be paid for. Kyle as well as many others who are so negative on Japan forget or do not even begin to understand what the average Japanese is willing to do for his/her group, and I bet my life with you that the Japanese government will make sure to have their citizens on their side when times get tough. I have lived and still live in Japan for over 13 years now (on and off) and I do not think Kyle Bass fully appreciates and understands that when Japanese see a pleading by their own government in form of an ad in taxi cabs asking their fellow citizens to buy government debt that it is a moral obligation if not even a code to oblige. Forget 2-3 years, there is NO WAY Japan will spiral towards a restructuring in such short period of time. Dont get me wrong, I find many things in Japan and Japanese politics hilarious, illogical, inefficient. But I try to be rational myself and I do not even know where to begin with to see who from the outside of Japan may ever trouble the JGB issuance and secondary market near-term.
Likewise your points mostly do not make sense. Things have changed big picture wise - as per the 3 points I listed in my previous post. However we can agree to disagree whether or not these things count as "big picture". While it may be beneficial for a dying Japanese person's estate (and death tax?) to support the bond market, they will no longer pay income tax, which is negative for the government's fiscal position. If the population is at or near a peak, and the working age population is also at or near a peak, then it follows there are going to be fewer workers supporting unproductive Japanese citizens. Your statement "The same guys who take a stab at shorting Japan still get whipped their asses each and every single time." is vague because you didn't define what "shorting Japan" means. I assume you will concede that people like me who bought USD/JPY and/or the Nikkei (in USD) futures contract months ago have not only not had their "asses whipped", but have made significant gains. This is despite JGBs not showing any signs of stress. I don't recall ever saying that Japan will spiral towards a restructuring in 2-3 years; my timeframe is longer than that. I think this is our main disagreement. I agree that Japan can continue with a very high debt/GBP ratio for another 3 years.
you do not seem to understand a thing about Japan: * Japan does not have a CURRENT aging problem, they will have an aging problem if the trend continues!!! * Japan has no income tax revenue problem because of less income tax payers but because the actual taxable income is MUCH MUCH lower than ever before. Half the workforce in Japan has been replaced by temp or contract workers who earn a fraction of a full-time employed staff. Also the benefits and hence contributions to pension and health care funds are suffering from that. This is a CURRENT PROBLEM, not that you have more retirees and less employed in the workforce right now. * Japan suffers from a lack of structural reforms, and NOTHING ABE SAYS, NO MATTER where USDJPY will go will CHANGE ANY OF THAT. NOTHING. The real problem is that policy makers do not even begin to understand what really has to be done, simply because their term in power is so limited, the average life span of a prime minister is less than one year, judging by the past 10 years. Additionally, most of those guys are so detached from the average citizen's life style (nor have they ever worked in their life, which makes outliers such as the mayor of Osaka so popular with the masses) that they completely fail to see what this country really needs to cause a turn-around. * Shorting Japan means selling Japanese fixed income instruments. Its a generally used term in professional finance. * "I agree that Japan can continue with a very high debt/GBP ratio for another 3 years." -> thats the same what people said 10 years ago. * When I say *they got their ass whipped* then that referred to those who sold JGBs and got burned time and again. * Congratulations to your pick of USDJPY in the 80 levels, what does that make you now? The expert on Japan? Have you lived here? Have you studied and do you speak Japanese? Do you actually understand why Japanese corporations are losing the competitive war, companies that were all "category killers" just a few years ago? Do you understand why the Japanese government wants to end deflation? Why it is bad? And whether they have the slightest inkling of how to inflate but at the same time not affect swap curve? And do you understand why it would spell the end to the government ever being able to service its debt if the curve steepened? Anything else, Dr. Japan?
Thank you for that honorary title, hftvol, very much appreciated. Given that title, I assume it means that you think that I do indeed understand a lot about Japan, contrary to the first line above in your quoted post. Thank you also for congratulating me on my long USD/JPY trade. As you will see from my earlier posts, I did not claim that this now makes me an expert on Japan. However, it appears that you have conferred that title of expert, by giving me the title of Dr Japan.
people like you copy what they hear in the media, then they occasionally watch a youtube of Kyle Bass, and suddenly they are the experts of current accounts and Japanese demographics. I am just getting tired of hearing from those who came across Sony, Manga, Sushi, and Geishas that Japan's biggest problem is the "aging problem" and Japan will be bust in about 2-3 years. Yawn. Carry on.
I don't recall ever saying that Japan will be bust in about 2-3 years. Furthermore, I am only calling myself an expert on Japan after you gave me the title of "Dr Japan". I did not refer to myself as an expert on current accounts and Japanese demographics before you gave me that title. Thank you once again for that honor.
You should have noticed that I was only repeating myself to correct the repeated strawman arguments that you put forward.
sure we all understand. You have not even picked up on a single of my arguments but resort them to nonsense. I backed up my points (most of them nonetheless). What gets me is people like you, who copy without really thinking for themselves, when their points are being challenged they go all soft, and wait, I give it a day or two, then they come back out of the shell and post the same garbage without thinking that they have posted before. Hilarious. I am out of here. From time to time I come across a Japan related thread, each time it turns out 99% of the participants have never even been in Japan but claim to be the experts. (and yes, you come across as a self-proclaimed expert with all your dandy charts and links and video references, sadly none are yours). If you know what you are talking about then why not making your point?
"You have not even picked up on a single of my arguments" This is inaccurate. One does not need to have visited Japan (or any country for that matter) in order to comment on its economic situation. Your assertion that I am a self-proclaimed expert (again) is inaccurate. I have put forward my views on the Japanese economic situation, but sadly, you seem to have ignored this and instead have retorted with aggression and strawman arguments.