Exit polls show Japan's LDP gaining the big victory expected of it, garnering maybe 310 seats...

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Macro Investor Comments (5770)
 
Japan rally here we come!
16 Dec 2012, 10:07 AM Reply Like

Macro Investor Comments (5770)
 
And as expected, Nikkei rallies.
16 Dec 2012, 08:52 PM Reply Like

BruceInKY Comments (295)
 
I don't share Macro's optimism, to wit:

"Business confidence among large manufacturers deteriorated in the October to December period, posting the second straight quarterly deterioration on a decline in exports amid strained ties with China over the Senkakus row, the Bank of Japan announced Friday in its latest "tankan" corporate sentiment survey."

http://bit.ly/UK5lqV
16 Dec 2012, 10:19 AM Reply Like

Macro Investor Comments (5770)
 
Bruce, That's backward looking. Easier monetary policy helps. The market has been waiting for a rally in anticipation of LDP landslide.
16 Dec 2012, 10:24 AM Reply Like

BruceInKY Comments (295)
 
Easier BoJ monetary policy is not going to slow China's multi-faceted plays against Japan. My forward-looking opinion is that the long-term strategies the Chinese are pursuing versus Japan assure progressive decline regardless of any near-term bounce this LDP win stimulates.
16 Dec 2012, 10:38 AM Reply Like

Macro Investor Comments (5770)
 
That I agree with. Long term the right bet is China not Japan. I am strictly trying to play a short term bounce.
16 Dec 2012, 10:49 AM Reply Like

winningtrader Comments (2268)
 
Well, the JPY is toast, this is for sure. Japan is not a place to invest. It is just a sinking ship.
16 Dec 2012, 12:31 PM Reply Like

Tres Knippa Comments (35)
 
Is it time to add to short yen positions and add to JGB puts? I still like the option market to get short JGBs. This is Japan doubling down on failure. Policy makers buying votes by promising more stimulus. The real failure is the United States is following Japan's road to ruin and slow growth model. Shame on us.
16 Dec 2012, 01:19 PM Reply Like

Macro Investor Comments (5770)
 
Would you prefer USA follows UK's path to ruin by cutting Govt spending in the middle of a recession, thus ending up increasing the deficit because of job losses?
16 Dec 2012, 01:39 PM Reply Like

Tres Knippa Comments (35)
 
This is a circular argument. In the long run is it a good idea to fund additional government spending by borrowing more? Would you consider the fact that it is the government debt itself that may be a headwind to economic growth. Did all that borrowing and spending grow Japan's economy? Nope. Economy is the same size now as it was in 1996. Debt matters. Want to see a success story? Look at Polland. Bite the bullet. Get your house back in order, then the economy starts growing again. More debt is not the answer
16 Dec 2012, 03:40 PM Reply Like

Macro Investor Comments (5770)
 
At least the Japanese economy is the same size at it was in 1996. One shudders to think what it would have been if there was no monetary expansion. That would the early years of the Great Depression. Why are people so resistant to learn from history?

One very simple thing about borrowing. If the cost of capital is lower than the ROI, one should borrow. If not, one should lend. The cost of capital is abysmally low right now, so the Govt should borrow and invest in projects where ROI is higher. How about a mass effort to upgrade the infrastructure in the country?
16 Dec 2012, 04:01 PM Reply Like

Ray Lopez Comments (1350)
 
"How about a mass effort to upgrade the infrastructure in the country? " - are we talking about Japan? Have you been there? They have some of the best roads I've ever seen. Keynesianism has failed in JP due to structural reasons: the JP ROI is in fact negative, with all their geriatrics,massive debt overhang and inefficient non-exporting industries. Read T. Cowen's book "The Great Stagnation" to see what is coming down the pike for the USA.
16 Dec 2012, 05:37 PM Reply Like

Tres Knippa Comments (35)
 
Paul Krugman makes the same argument and it is just as nonsensical when it comes out of the mouth of Nobel Prize winner. He suggests borrowing money because interest rates are low. He talks about how cheap the debt service is on a trillion dollars of new borrowing. Never, not once does he discuss any plan to pay it back. Gee, big surprise interest rates are so low with QE infinity.

Again we get to hear the argument "it would have been a lot worse had we not expanded government". It is nonsense in Japan and it is nonsense in the US. There is a cost to debt. More debt slows an economy down. It is simple economics.
16 Dec 2012, 06:04 PM Reply Like

Macro Investor Comments (5770)
 
Have you ever taken a loan to invest? Like buy a house on mortgage? Why did you do that?
16 Dec 2012, 08:35 PM Reply Like