Comments on: Is the Yen making a giant top? http://sovereignspeculator.com/2010/03/12/is-the-yen-making-a-giant-top/ Just another WordPress.com site Mon, 30 Jan 2012 00:05:17 +0000 hourly 1 http://wordpress.com/ By: rogerjarema http://sovereignspeculator.com/2010/03/12/is-the-yen-making-a-giant-top/#comment-1917 Fri, 12 Mar 2010 21:57:00 +0000 http://sovereignspeculator.com/?p=4242#comment-1917 If the yen really crashes, it will have a very unpredictable effect on the global mechanics. By observing the demographics, it’s really a plausible scenario although timing is always the issue. Japanese savers are getting old, they are way past their productive ages. Japan has the highest life expectancy among all nations in the world. As those JGBs caught bids from these Japanese savers, it very well could be these very savers who spell JGB’s demise… retirees withdraw their savings for consumption for their retirement. With JGB 10-yr rate @ sub 1.5%, debt servicing costs already eat up 20% of Japanese govt budget. US 10-yr is at 3.7%. Just imagine what JGB 10-yr yield @ 2% will bring to the Japanese economy.

Now… what happens if the yen crashes? Hyperinflation? Will they become the export juggernaut as they once were? Obviously if this happens, China is bound to get seriously hurt, before even mentioning China’s own internal problems. Will the Nikkei finally break its 20-yr downtrend? There are a boatload of interesting questions one can make from the yen’s demise.

The yen behavior since summer has been unusual & a bit puzzling. It doesn’t really play into the “all the same market” scenario, as it was in 2008. The only thing selling off hard at risk rallies is the dollar.

]]>