Seeking Alpha

Japan's trade deficit widened to ¥520.3B ($6.5B) in April from a shortfall of ¥84.5B in...

Japan's trade deficit widened to ¥520.3B ($6.5B) in April from a shortfall of ¥84.5B in March, as exports rose a less-than-expected 7.9%. Finmin Jun Azumi calls for the Bank of Japan to "take appropriate steps in a timely manner;" analysts believe BOJ may boost asset purchases in the coming months.
Comments (3)
  • User 353732
    , contributor
    Comments (5124) | Send Message
    Japan is gradually losing its global competitive advantages as it ages and as its workforce shrinks.


    It is increasingly ossified in its institutions and practices and less innovative by the year.


    Japan is now in the second generation of descent and on a trajectory of decline that it cannot reverse.
    23 May 2012, 05:41 AM Reply Like
  • mickmars
    , contributor
    Comments (1322) | Send Message
    Stick a chopstick in Japan. They're done.
    23 May 2012, 07:06 AM Reply Like
  • Mcwillifloor
    , contributor
    Comments (81) | Send Message
    Before you put on the Kyle Bass short, remember that Japan still has a few tricks up its sleeve to delay the big crash...perhaps by another decade.


    I have identified dozens of examples, but here are a few...Japan:
    * is issuing 40 year JGB's now at 2%, pushing out average maturities to 8 years and beyond;
    * is buying in all floating rate paper and refusing to issue more;
    * can push retirement ages up 4 years without excessive trouble;
    * will increase national health co-pays (again)
    * will probably issue long term work visas to SE Asians requiring payments into, but no withdrawals from, social security.
    * can raise consumption tax to 18%, like many other countries
    * can privatize Japan Post, Japan Tobacco, others
    * is authorizing municipal revenue bonds FINALLY, which alleviates central government debt and improves project quality
    * Can push the yen down to 110/dollar without spooking markets merely on the excuse that such a rate is the recent historical norm
    * can endlessly rig the JGB auctions by promising buyers (mostly Japanese institutions) special perks, tax breaks, regulatory favors, in exchange for buying allotments of JGB's at specified low rates.


    This last reason, folks, is the benefit of having most of your debt held by your own countrymen. Its not that Japanese banks and insurers love to hold JGB's, rather they can be forced to do so via regulatory gerrymandering, tightened RBC ratios, etc. or they can be bribed to do so by being granted favors elsewhere by the government. An example would be asking Japan tobacco to buy a huge allotment of overpriced JGB's in exchange for being tipped off in advance of a new required chemical in all Japanese cigarettes. The new requirement will destroy foreign competition by late announcement to the public, and be justified under safety principles, etc. Worst case is they create a WTO case which stretches out for years.


    Also, think about synthetic hedges. Is there really ANY chance that the Ministry of Finance's controlled companies are not chock-full already of CDS, currency shorts, rate swaptions, etc? Does anybody honestly think the Japanese government is un-hedged? In all probability, they are hedged to the gills.


    These all can push back the timing of the big Japan beware folks, and if you go short, make sure its a long-dated short, like 5 to 7 years, to be safe. Luckily, these maturities are not so expensive, so you should be able to put on such shorts for cheap, say 1% per year. Good hunting!
    23 May 2012, 10:58 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs