Japanese Accelerated Perf Fund Share Discussion Threads

[tpaulbeaumont] 15/9/2012 09:16

Fair write up on something ive suggested for a long time, that (not just the yanx but) western gov'mints seem to be copying Japans (clearly flawed) fiscal policies, its bizarro, like imbeciles on forums that copy the investing/trading policies of other (clearly flawed) imbeciles.

However, as ZIRP is extended further, i agree junk bonds and income shares will be en vogue still (OEX broke out an age ago), and that going forward housing numbers may move the market more along with the always popular employment figs.

its interesting to note he highlights:
it won't always be in MBS - the Fed came right out and said that it will also "undertake additional asset purchases and employ other tools as appropriate until such improvement is achieved in the context of price stability".






I don't think this latest Fed action does anything more for the economy than the previous rounds did. It's just an added reminder of how screwed up the economy really is and that the U.S. is much closer to resembling Japan of the past two decades than is generally recognized. Maybe in the central bank world of the "counterfactual" these QEs prevent a worse outcome but the most radical easing in monetary policy ever recorded has not stopped this post-bubble-bust American economy from posting its weakest recovery ever whether measured in real, nominal or per capita terms.

The economy is saddled with too much debt, a shortage of skills, bloated government, an uncertain tax rate outlook, the costs associated with Obamacare, banking sector re-regulation and a spreading European recession. Home prices may have revived of late, but there are still an amazing 22% of debt-ridden homeowners who are upside-down on their mortgage. Monetary policy is best equipped to deal with the vagaries of the business cycle but is a blunt way to deal with deep structural, fiscal and regulatory hurdles. QE has done squat for the economy and I don't expect that to change. Even the Fed cut its 2012 real GDP growth projection for this year to 1.85% from 2.15% - for a year when typically growth is closer to 4% - and so the bump-up in 2013 to 2.75% from 2.5% has to be viewed in that context (in fact, it would seem as though for all the bluster, the level of real GDP is actually lower now at the end of next year compared to the pre-QE3 forecast... maybe this is what the Treasury market has latched on to).

It would seem as though the Fed's macro models have a massive coefficient for the 'wealth effect' factor. The wealth effect may well stimulate economic activity at the bottom of an inventory or a normal business cycle. But this factor is really irrelevant at the trough of a balance sheet/delivering recession. The economy is suffering from a shortage of aggregate demand. Full stop. Perhaps most importantly, in order for the Fed's action to have a lasting impact on the direction of the equity market, it must foster at least some significant belief that the action will lead to self-sustaining economic expansion. The scars of real family median income declining for two years in a row - the Fed's action in a perverse way perpetuates this by forcing essential basic material prices higher - and an unprecedented five-year decline in household net worth are lingering, and exerting far more powerful dampening effect on spending and confidence than the Fed's repeated attempts to generate risk-taking behaviour.

To the extent that the Fed is at least temporarily successful in nurturing a risk-on trade for portfolio managers, the reality is that changing the relative prices of assets does not create demand.

It just perpetuates the inequality that is building up in the country, and while this is not a headline maker, it is a real long term risk for the health of the country, from a social stability perspective as well.

[tpaulbeaumont] 23/8/2012 14:53

Japanese exports:

[tpaulbeaumont] 15/8/2012 09:42

Defying gravity
Aug 14th 2012, 18:45 by R.A. | WASHINGTON

"ONE of this week's new NBER working papers is a fascinating look at Japanese government debt, by Takeo Hoshi and Takatoshi Ito.
[...]

As the authors of the paper note, however, this model is doomed (seemingly) to end. Japanese saving rates are rapidly falling as the population ages. The share of the working-age population in Japan is plummeting, and total saving rates are falling as a result and may eventually turn negative. Correspondingly, Japan's current account surplus is shrinking fast. But Japanese government liabilities are only growing. At some point, the stock of government liabilities will grow larger than the stock of total domestic saving, so that even if everything the Japanese saved was used to buy government bonds, the government would have to rely on foreign lenders to cover some of its borrowing. Foreign investors, it is assumed, will demand better rates of return, particularly given the possible risk of eventual default. Rates will rise, and the jig will be up. The authors estimate when this point might be reached under several different scenarios. Even under optimistic assumptions, the end is only a decade away."

[tpaulbeaumont] 06/8/2012 08:24

Japanese lessons
After five years of crisis, the euro area risks Japanese-style economic stagnation
Aug 4th 2012 | from the print edition

[tpaulbeaumont] 17/6/2012 19:52

courtesy of the inimitable Blackstone

[tpaulbeaumont] 17/6/2012 11:22

As euro, american and other CB'ers decide to nationalise and prop up failing institutions by flooding them with more lousy credit, theyre doing the exact same 'zombifying' that the very same western CB'ers bemoaned the Japs for, from their academic ivory towers, over the last couple of decades.


Woefully ignorant, dangerously inept.... our 'leaders'

[tpaulbeaumont] 17/6/2012 11:04

For some inexplicable reason, western Central Banks seem to be following in the footsteps as the BoJ during Japans infamous post-1990 malaise.

Governments have never learned anything from history, or acted on principles deducted from it. - Hegel

Albert Einstein: 'Insanity is doing the same thing , over and over again, but expecting different results.'



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[briarberry] 29/3/2012 14:20

Nation-wide vehicle sales, excluding mini cars, surged 32% in February...


TOKYO-Japan's three biggest auto makers on Thursday reported a jump in domestic production in February, as they looked to keep up with surging demand sparked by government buying incentives for fuel-efficient cars.

The subsidy program-worth ¥300 billion, or around $3.6 billion-is designed to boost domestic demand to help the Japanese auto industry compensate for a drop in exports amid the strong yen.

The government will start accepting applications for subsidies of either ¥70,000 or ¥100,000 per vehicle in April. Those who buy fuel-efficient cars from Dec. 20 last year to the end of January next year will be eligible to apply.

Nation-wide vehicle sales, excluding mini cars, surged 32% in February on the back of the program, according to an industry body.

Executives in the industry expect the subsidies to continue to buoy demand for fuel-efficient vehicles, but firms are also bracing for the program's effect to wear off much earlier than they hope as they say that current brisk demand may use up the budget ahead of schedule.

The ¥300 billion package will end as soon as the allocated budget runs out.

[the avoint] 20/7/2011 13:29

Japan's crippled nuclear plant reaches stability