Japan's Demographic Time Bomb Officially Goes Off

[Thug4Life]

And so it begins...

World's Largest Pension Fund Needs to Sell Japanese Bonds; Japan's Demographic Time Bomb Officially Goes Off

Friday, February 25, 2011

"There is not going to be a huge exodus of Japanese bonds anytime soon. However, the world's largest fund has gone from being a buyer of bonds to a seller of bonds. The amount is not trivial.

82.4 trillion yen in domestic bonds is about 1 trillion in US dollars. That is a lot of pent-up supply, especially when the government is running an annual deficit of of about $240 billion with no external buyers at all.

Those factors put huge long-term upward pressures on interest rates."


"Japan is counting on increased sales to China when China is clearly overheating and will have to cut back. How do you think that fantasy is going to work out?

So, it's back to tax hikes. To do it all with tax hikes, Japan would need to hike the VAT by 200%, from 5% to 15%. Is that going to fly with the voters?

Nonetheless, let's assume Japan does hike taxes. Those tax hikes would strengthen the yen, which in turn would hurt Japan's export growth and corporate profits.

Also, there is this very alarming section:

Will growth be sufficient to make a long-term dent in Japan's debt? I scoff at the notion. Moreover, rising energy prices will take a big bite of of Japan's trade surplus.

By the way, in case you missed it, Japan's trade surplus went negative last month. Supposedly it's a one-time thing.

And as Edward Hugh recently wrote:

What happens if Japan runs a trade deficit

Tuesday, January 11, 2011

Once Japan has a trade deficit it will all be over pretty quickly, since then of course they will have to attract funds to finance the deficit, and this is where things will start to get pretty tricky.

[tone]

yen getting even stronger against dollar?

[Ketou]

The end of the ponzi scheme financial system draws closer...
The very fact that a pension system buys bonds should ring alarm bells, but no everyone just goes about things as if it's normal for a government to buy it's own debt.
Nenkin will collapse along with the yen, us$ and euro. 99% of the sheeple will never realise the real cause of the collapse, as the mainstream media will give another version, they will then happily enter into a new global ponzi scheme and continue to live unknowingly as chattel.

[matsuki]

The end of the ponzi scheme financial system draws closer...
The very fact that a pension system buys bonds should ring alarm bells, but no everyone just goes about things as if it's normal for a government to buy it's own debt.
Nenkin will collapse along with the yen, us$ and euro. 99% of the sheeple will never realise the real cause of the collapse, as the mainstream media will give another version, they will then happily enter into a new global ponzi scheme and continue to live unknowingly as chattel.

While I don't disagree, what is the best alternative in Japan?

[Ketou]

While I don't disagree, what is the best alternative in Japan?

The only real alternative, whether in Japan or the States, is to remove to power to print money from the private banking cabal that does it now and to return that power to the people. Money needs to be issued debt free to the economy and fractional reserve banking must be replaced with full reserve.

[Coligny]

The only real alternative, whether in Japan or the States, is to remove to power to print money from the private banking cabal that does it now and to return that power to the people. Money needs to be issued debt free to the economy and fractional reserve banking must be replaced with full reserve.

Going back to gold parity would clean up the game.

But that's all strategerical and stuff... won't solve anything related to health care and pension system. For this states need to make money. Not out of thin air but out of state owned companies. We need to stop a system where profit goes into shareholders pockets and deficit are paid by the states. It should be the opposite. How can you justify that powerplant operators, railway companies, highways or telco are part of the private sector ? The usual lie is to say that open market with several companies are better for the consumer while it always end up in higher price lower quality of service and total lack of investissement toward maintainance or improvement of infrastructure.

[tone]

i do think that inflation is a huge possibility and wouldnt rule out it being intentional to who knows, have a world currency

my issue is i have saved a few $, and am trying to figure out a way to put these into something that will do better than a bank account.

i have a friend who gave me a distribution for some stock market buys. what do the oracles here do with their hard earned extra cash (i'm not wealthy at all, just have saved a bit by being frugal while working grown up paying jobs)

seems like with all the QE stuff - the stock market will rise for a while longer

i know the game is rigged, im just trying to figure out how to get through this. i dont have enough or enough balls to be getting into property or land or anything like that which is what the smart carpetbagger oligarchs are probably doing

[ChargerCarl]

I'm sorry but fixing currency to gold makes absolutely zero sense. Gold generates no economic activity. To quote Warren Buffet: "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head..." It's no different then fixing it to some other currency.

And at least with with a free floating currency we can expand and subtract the money supply. You guys complain about inflation but don't seem to understand the dangers of deflation.

[Fullback]

I understand economics, inflation and deflation very well. When has deflation ever caused a depression or made a politician/tyrant start a war?

Your signature is apropos. You know not of which you speak, if you throw out the banker's bogeyman of scary deflation.

I would agree with Ketou, but add that we're all fucked because governments and the bankers who own the politicians will do anything to string out the scheme as long as they can. But, they will eventually fail.

I truly believe that we'll see the greatest economic calamity the world has ever seen within 20 years. It's going to profoundly change your life.

[ChargerCarl]

When has deflation ever caused a depression

the great depression...

[Fullback]

You believe deflation caused the Great Depression?

[FG Lurker]

The only real alternative, whether in Japan or the States, is to remove to power to print money from the private banking cabal that does it now and to return that power to the people. Money needs to be issued debt free to the economy and fractional reserve banking must be replaced with full reserve.

Fractional reserve banking has been in use for ~200 years. It's not a perfect system to be sure but it is the system that has enabled much of the economic (and therefore all other types) of growth that we have seen over the past two centuries. I don't think we should be trying to put the brakes on growth by severely limiting the amount of money available.

By money being issued "debt free to the economy" I guess you mean that you feel money should be issued directly by government treasuries, not by central banks. I understand the attractiveness of this (no interest due) but feel it would rapidly lead to hyperinflation as most (if not all) democratically elected governments would cut taxes and print money rather than need to keep some sort of debt/tax balance. In the end it comes down to one's opinion on the lesser of the two evils as both systems have potentially severe problems.

[hairygateau]

oh dear. seems like some guys have been spending too much time reading zerohedge

pension funds buy (long dated) bonds because they matches their liabilities with a suitable duration asset. pension funds, like any asset manager look to maximise their returns so will frequently sell assets (bonds) if they have a view that interest rates will go up in the shorter term.

it seems to be quite common for this time of year for the pundits to come out with another 'japan apocalypse' call, usually based on demographics, e.g. greenlight capital last year, dennis gartman consistently but more vocal in the past few weeks.

the thing about demographics is that historically it's a terrible indicator of world events in the long term, and things move so slowly that you can't profit from it in the short term. would demographics have predicted the rise of the British Empire? World War I or II?

Also, as was pointed out on here a while ago, the pundits always miss out the Japan's inheritance tax and the cultural lack of interest in avoiding it - second nature to any free-thinking western Randist. The J-Govt is soon to collect on 40% of the post-war generation's wealth & property. How do those domestic borrowing numbers stack up against that?

[Ketou]

Fractional reserve banking has been in use for ~200 years. It's not a perfect system to be sure but it is the system that has enabled much of the economic (and therefore all other types) of growth that we have seen over the past two centuries. I don't think we should be trying to put the brakes on growth by severely limiting the amount of money available.

By money being issued "debt free to the economy" I guess you mean that you feel money should be issued directly by government treasuries, not by central banks. I understand the attractiveness of this (no interest due) but feel it would rapidly lead to hyperinflation as most (if not all) democratically elected governments would cut taxes and print money rather than need to keep some sort of debt/tax balance. In the end it comes down to one's opinion on the lesser of the two evils as both systems have potentially severe problems.

The idea that government treasuries would cause hyperinflation by over printing has long been fed to us by the very people who would have us believe that the present system is the only stable alternative. The present system is by far the greater evil. Britain became a great empire on the back of government issued non-usurious pieces of wood. 700 hundred years they lasted. In just 100 years of the US Fed we see the two biggest depressions in the history of the country.

[Ketou]

oh dear. seems like some guys have been spending too much time reading zerohedge

pension funds buy (long dated) bonds because they matches their liabilities with a suitable duration asset. pension funds, like any asset manager look to maximise their returns so will frequently sell assets (bonds) if they have a view that interest rates will go up in the shorter term.

it seems to be quite common for this time of year for the pundits to come out with another 'japan apocalypse' call, usually based on demographics, e.g. greenlight capital last year, dennis gartman consistently but more vocal in the past few weeks.

the thing about demographics is that historically it's a terrible indicator of world events in the long term, and things move so slowly that you can't profit from it in the short term. would demographics have predicted the rise of the British Empire? World War I or II?

Also, as was pointed out on here a while ago, the pundits always miss out the Japan's inheritance tax and the cultural lack of interest in avoiding it - second nature to any free-thinking western Randist. The J-Govt is soon to collect on 40% of the post-war generation's wealth & property. How do those domestic borrowing numbers stack up against that?

Interesting info Hairy but do you realise that those taxes would not be necessary at all if not for the fact that all money is debt. And that all the debt has an interest to be paid that isn't even in circulation. The whole discussion of demographics and culture is pointless in the face of the fact that we are in a system that will always have more debt than money in circulation.
I was just speaking to a Japanese economics professor about this today...he agreed that nenkin was a ponzi scheme and mathematically must collapse. He also said that the debt issued reserve system was the same and the collapse of the yen was eventually inevitable, just as the US dollar and the Euro. I asked him why he continued to pay nenkin even though he knew he would never get the money back and he said he felt duty bound. Which goes to show how easy it is to train the sheeple to accept their own position. They feel it a duty to walk down the steel corridor........

[Thug4Life]

If long rates go up, the financial consequences for Japan would be very dire.

[FG Lurker]

The idea that government treasuries would cause hyperinflation by over printing has long been fed to us by the very people who would have us believe that the present system is the only stable alternative.

Hmm, you mean just like people who fear the current system go on about all the potentially catastrophic problems with it while ignoring the potential problems with the alternative?

Britain became a great empire on the back of government issued non-usurious pieces of wood. 700 hundred years they lasted. In just 100 years of the US Fed we see the two biggest depressions in the history of the country.

I'll take the progress of the past 100 years over the progress made during the 700 years of the British Empire. I'd actually go as far as to say we've made more progress (financial, technological, medical, scientific...anything really) in the past 100 years than in the entire preceding history of man. The availability of credit to finance ventures (ie take on risk) has been a very large part of that. The price we pay is periodic bubbles and contractions. The price we pay by turning off the financial tap is much, much greater.

[ChargerCarl]

[Ketou]

Hmm, you mean just like people who fear the current system go on about all the potentially catastrophic problems with it while ignoring the potential problems with the alternative?

Yes, just like them too.

I'll take the progress of the past 100 years over the progress made during the 700 years of the British Empire. I'd actually go as far as to say we've made more progress (financial, technological, medical, scientific...anything really) in the past 100 years than in the entire preceding history of man. The availability of credit to finance ventures (ie take on risk) has been a very large part of that. The price we pay is periodic bubbles and contractions. The price we pay by turning off the financial tap is much, much greater.

I would think that technology is the engine of progress and not a particular type of monetary system. Granted, money is needed for research and technology and a system that can supply ample money would give a progressive advantage. However the cost to the monetary engine, the worker, is far greater. Not only is inflation a tax that burdens the poorest pockets of society the heaviest, but the present economic system favours monopolisation and the movement of wealth away from the middle/lower classes. The benefits of the progress created by the usury system are not spread proportionality to the burden carried.

[Ketou]

It's like people forget why we moved away from the old systems. Economic theory has evolved and progressed a lot over the past 100 years.

http://www.econlib.org/library/Enc/GoldStandard.html

People have forgotten..that's why we are back on the most parasitic and onerous system there is. Usury has been around for eons and the theory around it has only become more convoluted in it's effort to hide the simple fact that it is pure theft. Apparently, even the bible and koran rail against this very system. (have never read either)

The other thing people tend to assume in their forgetfulness is that a gold standard is the only alternative. A gold standard just means that the supply of money can be manipulated by those who have the reserves of gold. And once the present ponzi collapses you can bet your klackers that those who tout a gold standard will be those with the gold.....will be those who are the only private organisations legally allowed to accept gold as payment, the Reserve Banks. Ever wonder why Fort Knox has never been audited? Nor the Fed?
The only things that give money value are the willingness of people to accept it as a means of commerce and the amount in existence/circulation.
A gold standard is not needed to have a debt free fiat currency that doesn't create inflation. The only thing is fiscal responsibility to only have enough in circulation to facilitate commerce and moderate growth.

I honestly don't understand why people think that a ponzi system is better. And if anyone is unsure about the present system being a ponzi or not, they just need to look for data on the money supply versus debt. The debt is always higher and as interest percentages work it always gains speed as the debt increase. Collapses are a mathematical certainty. You either inflate away the currency or rescind it and create a new one. Either way there are winners and losers and the those who run the house never lose.

[Fullback]

^

Once again, well said.

[rooboy]

Until last year I was in the Ketou way of thinking bout the whole issue of money, privately owned banks 'lending' to a nation, taxes supposedly in the US going to not only fund the interest on the debt to the Fed Reserve but also into the coffers of the fucking Royal Family of Britain (probably true in a sense tho not in the simple conspiracy theory way), Glass Steagall being abolished by Bill Cocksucked Clinton and supposedly bringing about today's fucking financial crisis etc etc.

But then during shit boring holidays when I didn't have any spare fucking money to go anywhere I surfed around the net and looked up Forbes and Fortune mag etc and did some big research. I think it aint as simple as all that and what Lurker says has some real merit.

I learnt a lot about the history of banking and I got fucking sick of that 'blame the Rothschilds for their conspiracy' shit. For starters the damn Medici Family of Italy (inc arsehole Popes) have a shitload to do with the start of what can be called 'modern banking'.

I also reckon that all the overhyped shit about Jewish people who started to control the world thru finance needs a more intelligent look. Jewish people did what they were allowed to do as minorities in various European countries and England - they weren't fucking conspiring because the rulers kicked em out when they felt like it.

Jewish people had contacts in the east and middle east etc with traders and thats how they got so involved in the business side in the countries they moved to. The Rothschilds couldn't have done diddly squat without the European ruling classes approval.

[tone]

sounds like China is making a move to make the Yuan be the world reserve currency

http://www.washingtonsblog.com/2011/03/china-takes-giant-step-towards-making.html

also on this blog the guy talks about the average stock is held for something like 27 seconds, which indicates computer automation.

i just wonder is money better left in a bank or in the market for the next period - NYSE could top 15k with all the new money that was released into circulation.

[tone]

sounds like China is making a move to make the Yuan be the world reserve currency

http://www.washingtonsblog.com/2011/03/china-takes-giant-step-towards-making.html

also on this blog the guy talks about the average stock is held for something like 27 seconds, which indicates computer automation.

i just wonder is money better left in a bank or in the market for the next period - NYSE could top 15k with all the new money that was released into circulation.

[Thug4Life]

Yeah, I have heard about the Yuan taking over. But would it ever be traded on the NYSE?

Puts on tin foil hat:

I have also read something about a one world order whereby they will replace the dollar and ALL other currencies within one world reserve currency, one world government, one political system and one world bank.

But I doubt that will ever happen. Instead, they may eventually go to a new system of multiple world reserve currencies. IMHO that would seem to be a more sensible solution to the current system.