Printing money and forcing interest rates to near zero, that’s how the Fed and other central banks papered over the Financial Crisis, duct-taped the bursting credit bubble back together, inflated new asset bubbles, and propped up TBTF banks. It accomplished a huge feat: a worldwide tsunami of hot money. Which is now receding.
You don’t seem to “think Abenomics is working,” a reader wrote, followed by tough questions and a comparison to Kyle Bass, who has been betting on a “full-blown Japan crisis.” It got me thinking. I’m attached to Japan. What started in 1996 has turned into a complex relationship. But now that Abenomics is the religion of salvation, I’m even more worried.
Japan’s Prime Minister Shinzo Abe skillfully used his miraculous economic salvation plan, a religion lovingly dubbed Abenomics, as a platform to catapult his party, the LDP, into power. With the LDP controlling both houses of parliament, real changes, after years of dickering, might now finally be possible.
“We welcome the ruling party’s victory,” announced Hiromasa Yonekura, chairman of Sumitomo Chemical, and chairman of the Japan Business Federation, the country’s largest business lobby. He is one of the faces of Japan Inc. He’d been handed a gift: the ruling coalition controls both houses of parliament and will push Abenomics deep into the system.
CEOs have, in these crazy days of ours, one primary job, it seems: manipulating up the stock of their company. Few master this delicate art like Tesla Motors CEO Elon Musk, who took his highflyer into the stratosphere on a wing and a prayer. But why are executives worldwide wallowing behind the scenes in 2009-like gloom about the economy’s future?
Things move quickly at the G-20 when markets go south. The turmoil following Chairman Bernanke’s mere suggestion of a vague and slow taper of the Fed’s multi-year money-printing and bond-buying binge has already incited our illustrious finance gurus and central bankers at the G-20 to buckle – under the weight of the financial lobby.
Contributed by Lee Adler, of The Wall Street Examiner. The Fed, ECB, BoJ, and BoE all deal with the same banks. Of the Fed’s 21 Primary Dealers, its sole counterparties, only seven are US domiciled. Three are Canadian, eight are European, including three British banks, and three are Japanese. All of them are major players in Europe and Japan.
Japan’s make-or-break economic policies have been named lovingly after Prime Minister Shinzo Abe – lovingly, because if they fail, he gets to carry an albatross called Abenomics around his neck for the rest of his life. And one of the “three arrows” of Abenomics is already headed that way: goosing the economy through a frontal attack in the Currency War.
The Japanese stock market has become a case study of central-bank manipulations, and of what happens eventually as reality cannot be eliminated forever. What you hear is a giant hissing sound. What you get is capital destruction and wealth transfer.
During the hearings before the German Constitutional Court, Finance Minister Schäuble, perhaps unwittingly, put his finger on yet another fatal flaw of the Eurozone: a central bank that could bail out speculators and pile the resulting losses on taxpayers of other countries, no questions asked, whenever it felt like it, without controls – “to save the euro,” as it were.