Japan was reported its first ever current account deficit, or certainly, its first for many decades. They have a very overvalued exchange rate, a collapsing export sector, an unreformed domestic economy, a debt challenge that makes Greece’s seem easy to solve, a central bank that doesn’t try too hard – currently – to reach its inflation target and, once again, a very weak economy.
And that is without even getting into the complex issues of its relationship with China and other Asian countries, that in principle should be as good for them as those countries are for the rest of us.
Anyhow, we may soon see a general election and a return of the LPD, whose probable
Prime Minister has told us now 3 times in the last fortnight that he would force the BOJ, if necessary, to pursue a 3% inflation target.
This is the sort of thing that many were advising Japan from overseas in the mid to late 90’s when so many people mistakenly lost of lot of money betting against the Yen. Go get all those guys out of retirement as the time has probably come.
The outlook for the Yen is highly asymmetric. It could either waffle around, or could decline sharply in coming months. It is, in my opinion, the most interesting macro thing out there. I have been getting more and more negative about the Yen for the past couple of years, and I have, so far, been wrong, but it seems more and more obvious to me, that the moment is here.
Read more: http://www.businessinsider.com/shinzo-abe-the-boj-and-the-yen-2012-11#ixzz2Db0aN0Bg
The history of QE and how it came about:
Time to replace the QE name with a new one. As QE in reality has nothing to do with trying to improve the overall real economy but in fact is all about tryung to save already insolvent banks it should be named something along these lines - "make taxpayers pay in order to try to delay the imminent and very necessary downzising of the fianancial sector to an acceptable level program".
Then when the Yen is down the drain next to the slaughter is the dollar as the US in a very predictable pattern has followed the Japanese example and QE approach. Only differencve is that the US as it started to enroll on this scheme approximately half a decade later than the Japanese, still has some time to catch up.