Kyle Bass Has The Japanese Trade Wrong Says Mike Norman
Always be nervous, on any subject matter when you have only one side of the debate. The markets are made up of buyers and sellers with positive and negative investment thesis. Kyle Bass has a negative thesis for Japan, lets compare it to a positive thesis for Japan.
Read the posts concerning Kyle Bass and Japan in this blog.
Kyle Bass, banks on the otherside of my trade want me to close my position.
Kyle Bass, Japan to do an Argentina 1999
Its Greece, no its Spain, no its Japan that is crashing
Kyle Bass, Europe modern day bank run continues
Kyle Bass, Europe and Japans debt issues will give a bid to the USD
Kyle Bass, on Japan, Gold, and Journalists who know nothing
First a reminder of Kyle Bass negative thesis on Japan.
Mike Norman positive thesis on Japan.
COMMENTS: Norman thinks that anyone who follows Austrian economics is an idiot. Norman believes that any country that can print their own money can overcome a debt crisis. So far the world has seen this in action. Norman also believes the gold trend is false.
Felix Zulauf once said he expects the central bankers balance sheets to expand to the size of the countries GDP. Imagine the US Fed balance sheet at $15 trillion dollars. The current gold trend is not about inflation, it is about the combined size of central bankers balance sheets. Therefore if the Fed balance sheet does get to $15 trillion then you can bet gold will be near $10,000 and once or more.
Is Norman correct about Japan?
Let’s say the YEN falls 50% to 70% due to yen printing. This means Japanese pension funds will lose a lot of value based in USD and EUR. This is a massive loss in purchasing power for the yen. Image what a gallon of gas would cost in yen! Japan imports 80% of all energy and they must pay for it in US dollars. More to the point Japanese pension funds own trillions of JGBs (Japanese bonds) that pay nothing, with the Yen falling and the forecast for inflation to rise those JGB will be worth even less. This of course means pension funds will be reducing exposure to JGB and selling down positions that will most likely see interest rates rise and as Kyle Bass suggest ‘Japan will detonate’ into depression.
Norman suggests that the BOJ (Central Bank of Japan) can print as much as it wants to buy all the JGBs that are put up for sale, thus keeping interest rates down so the Kyle Bass detonation will not happen. WOW that’s a lot of yen to be printed, trillions and trillions in fact.
The end game is economic growth must improve for Japan. If Japan can not export and earn USD and EUR they can not pay for imports (like oil and gas). For Japan to succeed there must be a world economy ready to purchase Japanese exports. Germany is Japan largest competitor and somehow you cannot expect the Germans to give the Japanese a free pass on global trade.
Who ever thought that creating inflation is the way to prosperity. Your friendly central banker does.
Will Kyle Bass be correct? It depends on if the BOJ screws up. If they do, he will win.