No, Mr. Bond, I want you to die!....................
Posted on 11/04/2009 6:34:49 AM PST by blam
The Japanese Bond Market May Really Be Ready To Collapse
The Mad Hedge Fund Trader
Nov. 4, 2009, 5:11 AM
Having spent a decade living in Japan sharing shoe box sized apartments, living on fish heads, rice, and instant ramen, I am something of an authority on that enchanting country.
I spent the seventies toiling away learning Japanese, shuffling hundreds of flash cards whenever I rode the train or subways.
My friends said I was crazy when I learned obscure, seemingly useless terms like hitokabu rieki (earnings per share) and genka shokyaku (depreciation).
I even made the ultimate sacrifice to improve my fluency, taking a Japanese girlfriend, who later became a wife and mother.
As with most bilingual families, discussions at the family dinner table were a mash up of Japanese and English, leaving visitors in the dark, as they only caught half the conversation.
Alas, my wife passed away too soon, and when my kids grew they complained how rotten my accent was, unaware that I had first learned it from the only free language school around, the bar girls and yakuza who attached themselves to stray foreigners.
During the eighties, Japanese suddenly became the world’s most valuable language, as the stock market soared from ¥6,000 to ¥39,000, and PE multiples ballooned from 10 to 100, landing me a job at Morgan Stanley.
A friend who delivered sandwiches for a living was even able to land a job at a special bracket firm because he had a reasonable fluency in this impossible to learn, 5,000 year old language.
But languages rise and fall, as do civilizations, and I’m afraid that my language skills are getting downgraded to the relevance of Vulgar Latin.
[snip]
(Excerpt) Read more at businessinsider.com ...
No, Mr. Bond, I want you to die!....................
I once heard of a truly bad analogy for bond markets, comparing them to trying to hang a man when you don’t know how.
Most everyone figures that they don’t want them to drop too far too fast, because that will be icky. So the very first decision they make is to keep them from doing this. Not particularly hard to not have that happen.
But from that point, you want them to drop some distance, for a good clean break instead of them choking. And you don’t want the rope to stretch, so they can stand on their tip toes and not hang at all.
Being a truly bad analogy, however, at that point it breaks down, because in the final analysis, bond markets are not very much at all like hanging someone. I mean, seriously, it’s not too hard to figure out how to hang someone. But bond markets are anybody’s guess.
The two things have little or nothing to do with each other.
Amazingly enough, this is pretty accurate.
The situation right now is that the new party has backtracked on the privatization of the Post Office, plotted for years by Koizumi and the finance industry of Japan.
The reason for this is that the Post Office also happens to be the biggest buyer of JGBs. If they go private, they will stop buying junk bonds.
Bump for later read.
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