{"id":28512,"date":"2012-03-23T16:39:18","date_gmt":"2012-03-23T20:39:18","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/23\/shilling-japan-train-wreck-accelerating\/"},"modified":"2012-03-23T16:39:18","modified_gmt":"2012-03-23T20:39:18","slug":"shilling-japan-train-wreck-accelerating","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/23\/shilling-japan-train-wreck-accelerating\/","title":{"rendered":"Shilling: Japan Train Wreck Accelerating"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

In an interview with Henry Blodget this week, Gary Shilling expained that the “Japan train wreck was accelerating.”<\/strong><\/p>\n

It is easy to dismiss Shilling as just another Japan doomsayer.\u00a0 They have been plenty of analysts and money managers over the past 20 years who have forecast the country’s impending collapse, and yet Japan continues to muddle along.<\/p>\n

You should listen to what Shilling has to say, however.\u00a0\u00a0I covered many of Shilling’s points in an article earlier this year (see “Japan’s Endgame Nears<\/a>“), and\u00a0I agree with his basic premise: Once Japan has to access the international bond markets, the country is looking at a debt crisis that\u00a0makes Europe’s look mild by comparison.\u00a0<\/strong><\/em>\u00a0\u00a0<\/p>\n

Japan has been able to roll over its gargantuan debts–220% of GDP–because its large pool of domestic savers were willing to accept low yields in a deflationary environment.\u00a0 International bond investors are not likely to be as generous.\u00a0 Just look at the pressure faced by Italy and Spain last year–two countries whose sovereign debt loads are a fraction of Japan’s.<\/p>\n

Take a look at what Shilling has to say:<\/p>\n

<\/object><\/div>\n

If you cannot view the embedded video, please click here: Shilling on Japan<\/a><\/p>\n

As an aside, I reviewed Shilling’s The Age of Deleveraging,<\/em> and I highly recommend that you pick up a copy (see “Book Review: The Age of Deleveraging<\/a>“).<\/p>\n

\u00a0Shilling may prove to be early on Japan.\u00a0 My own timeline on Japan’s demise is in the range of 1-5 years.\u00a0 The fall in the yen’s value that Shiller highlights\u00a0is not a warning signal in my view.\u00a0 If anything, it is a sign of investor risk appetites returning; the yen had risen over the preceeding years due to the unwinding of the carry trade and a deleveraging of the financial sector.<\/p>\n

The key in my view will be the 10-year Japanese bond yield.\u00a0 When Japanese yields enter a prolonged rise, the game is up.\u00a0 Japan will not be able to roll over its debts at an affordable rate, and Japan will be looking at a debt and currency crisis that would make the Greeks blush.<\/p>\n

Keep an eye on the Japanese 10-year bond.<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Sizemore Letter In an interview with Henry Blodget this week, Gary Shilling expained that the “Japan train wreck was accelerating.” It is easy to dismiss Shilling as just another Japan doomsayer.\u00a0 They have been plenty of analysts and money managers over the past 20 years who have forecast the country’s impending collapse, and … <\/p>\n

Continue reading “Shilling: Japan Train Wreck Accelerating”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28512","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28512"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28512\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}