Courtesy of the war on credit contraction and personal deleveraging by many governments around the world as they grapple with decaying economies, many currencies around the world are going up in a blaze of glory as the unintended consequence.
Government’s full frontal assaults on currency destruction would make an interesting visual….with loose money more fake and phantom than the Torpedo Breasts of Pamela Anderson and more destructive than any precision point warhead. If we’re going to lose, it’s not going to be the will of powerful armies and dangerous enemies…it’s going to be the greenback collapsing into proverbial oblivion. Yes sir. War is on us—and most are completely unaware of it.
The worst credit culprit at the moment, however, is Japan. Japan is at the Keynesian endpoint; their debt service is officially higher than their tax revenues and what can’t go on forever won’t. Interestingly, this phenomenon is eerily similar to the U.S. housing bubble in 2007. Time magazine 2009 Man of the Year, Ben Bernanke, is on record just before the housing crash vehemently suggesting that since there’s never been a national housing price decline, a total melt-down in housing was “extremely” unlikely. Well, the story of that one didn’t end well….as Ponzi schemes never do.
The greatest Ponzi scam right now is Japan’s bond market. Their stock market and housing market has been nothing short of disastrous over the last 20 years—the Nikkei is down 75% over the last 20 years and housing prices are down almost as much. The one thing citizens have never lost money on in the country is buying JGB’s (Japan Governmental Bonds) and they just can’t get enough of them—forming a massive Government debt bubble. It will end badly for them. Ho ho.
Japan’s debt situation is so precarious and dangerous that it is no wonder their former Minister of Finance, Shiochi Nakagawa, appeared wildly intoxicated at the G7 meeting last February and then suddenly froze up and died for no apparent reason in the summer of 2009. Following on his heals was a finance minister that after being elected in September was so emotionally stressed that he checked himself into a psyche ward just after quitting after a few short months. When the stability of your country is on the verge of a meltdown and human misery is just about to follow it’s really no wonder…
I would get ripped, too, if I had to oversee Japan or a number of many other countries for that matter. Fortunately, I’m not and I can still just enjoy my vice of fine cigars for now as I watch the U.S. follow suite in a completely unsettling and toxic way: leveraging our currency into Oblivion.
At any rate, I wonder who else ponders what happens to Japan if they go to roll their debt and get scant bids. Or worse, what happens when the finite amount of money can no longer fund their financing gap? Is Kyle Bass and I the only ones that are worried about these types of ripple effects?
At any rate, those are the larger questions at hand today and they’ll be thrown around on much larger platforms than this. The stories of massive piles of debt stacking up around the world are only getting started. First we will see Japan unravel, then Greece and others. Preparation for these things is now a necessity. “May you live in interesting times” might be a proverb that will have to be re-written. That’s it for today folks.
