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Well, judging by the absolutely ridiculous moves in the USDJPY as of this moment, with the pair soaring 70 pips in a matter of seconds, we are about to have precisely the kind of insanely volatile session that the Japanese Finance Ministry itself warned may lead to a wholesale selloff in JGBs, offsetting even the New Normal Mrs Watanabe kneejerk which is to merely frontrun the BOJ in buying JGBs. Why? Because with implied vol exploding, VaR-driven models will tell banks to just dump bonds as they have become too volatile to hold on their books. The problem is that with trillions and trillions of JGBs held by banks, insurance companies and pension firms, there just not may be anyone out there to buy them.
Which is exactly where Max Keiser and Jim Rickards said it would all start. Don't know who those two are? Look em up.
Japanese Finance Ministry Warns Surge In JGB Volatility May Lead To A Sharp Bond Selloff | Zero Hedge
Well, judging by the absolutely ridiculous moves in the USDJPY as of this moment, with the pair soaring 70 pips in a matter of seconds, we are about to have precisely the kind of insanely volatile session that the Japanese Finance Ministry itself warned may lead to a wholesale selloff in JGBs, offsetting even the New Normal Mrs Watanabe kneejerk which is to merely frontrun the BOJ in buying JGBs. Why? Because with implied vol exploding, VaR-driven models will tell banks to just dump bonds as they have become too volatile to hold on their books. The problem is that with trillions and trillions of JGBs held by banks, insurance companies and pension firms, there just not may be anyone out there to buy them.
the situation in China is really quite dangerous even without Japan going for a Buzz Lightyear on steroids monetary policy.
32 to 65 basis points within minutes in the JGB market as the chart at the link shows is mindblowing. 106.25% moves in yield this soon after Cyprus means we are moving to an endgame of some sort. Sending the People's Army across the Yalu as a distraction for the Chinese public is a distant but real possibility as a response. With a probable 20 GDPs of bad debts in construction, State Owned Enterprises and infrastructure, the situation in China is really quite dangerous even without Japan going for a Buzz Lightyear on steroids monetary policy. As to EB's point Brian Arthur's works on Increasing Returns industries may not make the point explicitly but the number of industries with double digit deflationary productive gains is growing rapidly. Intel, Microsoft and Dell have become the new rustbelt according to their own earnings reports.
As an example I went to Barnes & Noble today and I did not see a single paperback for sale at a price that matches much less was lower than the same work used and in hardback from Amazon. Nor did I find a single nutrient or vitamin that I could not get cheaper online. Rethink Robotics is trying to eliminate all production and many service jobs with their open platform programming. This is going to get ever stranger and John Law's scheme no matter how it is gussied up as post-Keynesian economics won't work any better in the 21st century than it did in the 18th.
How will the economy operate in a world where many--if not most--people are no longer needed in the workforce because of technological advances? .
As to the first paragraph China went into double digits on ghost cities a while back. "60 Minutes" did a special report on that recently but just Google "Chinese Ghost Cities". Excluding roads to nowhere and the building of empty buildings China has been growing at most 4-6% in terms of economically useful products for a minimum of 20 years. Japan has been stagnant for 30 years and Jim Jubak at MSN every so often goes into why that assessment is wildly optimistic. Command economies do not work only certain cretins miss that. When 60% of GDP is make work projects actual GDP is at best 40% of the published number.32 to 65 basis points within minutes in the JGB market as the chart at the link shows is mindblowing. 106.25% moves in yield this soon after Cyprus means we are moving to an endgame of some sort. Sending the People's Army across the Yalu as a distraction for the Chinese public is a distant but real possibility as a response. With a probable 20 GDPs of bad debts in construction, State Owned Enterprises and infrastructure, the situation in China is really quite dangerous even without Japan going for a Buzz Lightyear on steroids monetary policy. As to EB's point Brian Arthur's works on Increasing Returns industries may not make the point explicitly but the number of industries with double digit deflationary productive gains is growing rapidly. Intel, Microsoft and Dell have become the new rustbelt according to their own earnings reports.
As an example I went to Barnes & Noble today and I did not see a single paperback for sale at a price that matches much less was lower than the same work used and in hardback from Amazon. Nor did I find a single nutrient or vitamin that I could not get cheaper online. Rethink Robotics is trying to eliminate all production and many service jobs with their open platform programming. This is going to get ever stranger and John Law's scheme no matter how it is gussied up as post-Keynesian economics won't work any better in the 21st century than it did in the 18th.
Well, W the W, those were an interesting couple of paragraphs. I have no doubt that there is a lot of truth in the first one--but I don't think that accurately assesses any outcomes relating to Japan's approach to stimulus. In fact, there are some signs that it is already helping Japan's economy. We shall see, and this will play out over months--not hours.
I absolutely agree with your second paragraph, if I follow your thoughts correctly. How will the economy operate in a world where many--if not most--people are no longer needed in the workforce because of technological advances? If people do not receive pay--what will they spend? And how will businesses stay in business without a market?
Interesting days are coming, indeed.
It may be that the unthinkable may actually happen; all citizens may be "given" a living wage as an allowance, with work as an optional enhancement. There is actually no reason why that can't be done when technology replaces human labor. In fact, it is probably an absolute necessity if we are to maintain a currency-based economy.
. "60 Minutes" did a special report on that recently
4-6% in terms of economically useful products for a minimum of 20 years.
gdp has been but new products got us from stone age to here and Japan has had many many in last 30 yearsJapan has been stagnant for 30 years
Command economies do not work only certain cretins miss that.
When 60% of GDP is make work projects actual GDP is at best 40% of the published number.
