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Japanese Credit Dries Up

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Guest wrongmove

?...! That's such an interesting graph I want to start a new thread with it.

Can you see the big spike with all that free money in it, and when it happened housing bulls? And can you see the spike down, beginning now?

That is a truly impressive graph !

Note that the figures are YoY change, so this downturn will have to be sustained for several years to suck all the liquidity of 02-04 out of the markets. Damn good start though !! :)

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That is a truly impressive graph !

Note that the figures are YoY change, so this downturn will have to be sustained for several years to suck all the liquidity of 02-04 out of the markets. Damn good start though !! :)

The 15% plunge below zero was evident in the global commodity sell off in mid-May.

By October all of the free interest JGSs will have matured and Japans relentless stoking of the global economy (in order to allow capacity for their own recovery) will be over.

Japan will be very wary of inflation following a ten year recession, the Japanese are savers (no matter what) and they hold huge amounts of our debt, Western consumers will now pay towards Japanese growth over the lifetimes of Western mortgages.

Mortgage repayments will generally flow towards Japan where Japanese banks will lend to the only people with very good credit history and large savings, the Japanese.

They now also have the worlds biggest factory in China next door, transport and shipping cost will be relatively low in the face of sky high oil prices, whereas here in the west by far the largest overhead on any goods is likely to be shipping costs.

We will have to pay much more than Japan for identical goods, thus they can afford to have lower IR than us as we fight inflation.

Or so the theory goes...

Edited by ?...!

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?...!,

Japan could also end up back where it started from - low rates weren't so much of a problem as their land bubble popped. Now though low rates + increasing land/property prices + a voracious appetite from foreign property investors looking for the next market could start it all off again.

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The 15% plunge below zero was evident in the global commodity sell off in mid-May.

By October all of the free interest JGSs will have matured and Japans relentless stoking of the global economy (in order to allow capacity for their own recovery) will be over.

Japan will be very wary of inflation following a ten year recession, the Japanese are savers (no matter what) and they hold huge amounts of our debt, Western consumers will now pay towards Japanese growth over the lifetimes of Western mortgages.

Mortgage repayments will generally flow towards Japan where Japanese banks will lend to the only people with very good credit history and large savings, the Japanese.

They now also have the worlds biggest factory in China next door, transport and shipping cost will be relatively low in the face of sky high oil prices, whereas here in the west by far the largest overhead on any goods is likely to be shipping costs.

We will have to pay much more than Japan for identical goods, thus they can afford to have lower IR than us as we fight inflation.

Or so the theory goes...

Should we therefore expect the Yen to rise in value against the dollar et al.?

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?...!,

Japan could also end up back where it started from - low rates weren't so much of a problem as their land bubble popped. Now though low rates + increasing land/property prices + a voracious appetite from foreign property investors looking for the next market could start it all off again.

I think (off the top of my head) land prices in Japan have fallen around 60% since the early 90's. When they were very high

i.e. the Imperial Palace valued higher than the state of California.

Still high now though.

Back to the original graph.

When the liquidity goes everything is just a bit harder to come by.

The retraction of liquidity by the BOJ in May is a clear sign that they feel the Japanese economy is back on its feet, after a decade on its knees. They have taken full advantage of american consumerism, the BOJ must have thought at some point "If the Japanese won't spend Japan out of a recession maybe the Americans will".

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Should we therefore expect the Yen to rise in value against the dollar et al.?

I expect everything to rise against the dollar over the next few years, but mainly because they stopped publishing M3 and are clearly trying to erode their deficits, which are dollar denominated.

They will maintain economic capacity lose some purchasing power parity suffer inflation and higher rates.

But it will hurt everyone in some way due to the way oil is traded.

Everything is on a sliding scale and it's very hard to know where anything is without hindsight.

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20th March 2006

When the crash comes and it unleashes its terrible consequences upon the largest house price bubble in history of mankind they will look back at the above date and say it shall ever remain a day of infamy.

What happened on 20th March 2006? It was the day when the Japanese Banks began removing liquidity from the world markets. It happened very quietly without much fanfare. Just the odd news story one of which was posted on HPC when that dreadful day dawned.

Gordon "Miracle Economy" Brown's entire HPI-MEW diaster in waiting was made possible by one significant underlying factor: cheap credit from Asia. Had Gordon just printed money we would have had correspondingly higher inflation. Rather than inflate Gordon decided to follow his mentor and buy his way out of recession through borrowing on a massive scale. Surplus Yen by the 100's of billions flooded the markets allowing people to borrow at super low rates of interest. It seemed like it would go on for ever. But then the tap began to tighten on that day in March.

We have been warned.

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I expect everything to rise against the dollar over the next few years, but mainly because they stopped publishing M3 and are clearly trying to erode their deficits, which are dollar denominated.

They will maintain economic capacity lose some purchasing power parity suffer inflation and higher rates.

But it will hurt everyone in some way due to the way oil is traded.

Everything is on a sliding scale and it's very hard to know where anything is without hindsight.

So would it be a good idea to borrow money from the yanks? :unsure:

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So would it be a good idea to borrow money from the yanks? :unsure:

Foolish to borrow from anyone to be honest. Whatever you buy will be worth less than the loan.

Equity is the pruduct of liquidity. Retract liquidity and equity too retracts.

Equity is based on potential to release capital, well you cannot sell something for £1,000,000 if nobody has £1,000,000 to buy it, so that equity cannot be released and therefore does not exist, the equity is reassessed to whatever capital can be released in a sale.

All this happened in mid-May, it's a done deal.

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Wow, this is huge. I vaguely remember this being flagged up, but I guess I am bit insensitive now to "final straw" news.

But that graph. Amazing.

If we're watching this crash in slow-mo, we've just passed the point where the driver realises the brakes don't work.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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