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It’s argued that Japan didn’t get a return of all its deficit spending in the decades after its epic financial bubbles burst. This could not be further from the truth. Despite the epic size of these bubbles and the world’s worst demographics, Japan’s economy kept on growing on par with other rich economies. It never […]

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Japan proposes an interesting challenge to hard money economics, having embarked on seemingly massively irresponsible fiscal and monetary policies. One has to keep in mind that these lessons, as extraordinary as they are, only apply under a very specific economic situation. That is, they should certainly not be generalized, but they are interesting and very […]

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Growth has returned to Japan’s economy, unemployment is low, and prices are peeping up again. Japanese shares are considerably cheaper compared to those of other developed markets, corporate profits are high, and Japanese corporations are sitting on insane amounts of cash. So there are good reasons for buying Japan. The most immediate risk is the […]

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So far, the Japanese economy has escaped the bursting of asset bubbles 3x the size of those in the US without suffering a depression or double digit unemployment. The price they paid for that is the ratcheting up of the public debt/GDP ratio, which at 250% looms as a serious threat over Japan and the […]

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Japan hasn’t been able to break the debt-deflationary cycle that has plagued its economy for over two decades. Monetary policy isn’t likely to achieve it either. It’s time for bolder experiments, a fiscal package directly financed by the central bank. While not without risk, the risk of doing nothing shouldn’t be underestimated either. Time To […]

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It’s popular in certain circles to depict Japan as a sort of Keynesian failed state, plagued by by near insurmountable economic problems such as an insurmountable debt burden. But Japan’s problems can be traced back to the burst of epic asset bubbles, which hobbled the country for decades. While far from perfect, the policy reaction […]

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Some argue Abeconomics has already failed. Others argue it will end in hyperinflation, or in a massive capital flight, or a bond market crash, or all of the above. Others argue that Japan won’t reach the escape velocity needed to bring its debt situation under control. While we can’t discard these risks entirely, we think […]

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Some argue that Abeconomics alredy failed (after less than two years) and make it a showcase of failed Keynesianism. It’s too early to draw conclusions though. It’s funny, because what (temparary?) derailed Abeconomics was a tax hike, under the Japanese economic circumstances the very antithesis of Keynesian policy. We should also remind people that Abeconomics […]

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The Bank of Japan provided another shot of monetary stimulus, surprising markets all around. We think that under the conditions, they didn’t have much choice, there isn’t any clear alternative. We could learn from history, in the 1930s both the US and Japan beat the depression, only to shoot themselves in the foot. The April […]

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We think that Japanese shares are still attractive, for a number of reasons. They are not expensive, haven’t done much this year, profits are good, big institutions are buying and the government is hell bent of getting Japan out of its deflationary funk. The main risk to us is that the recent tax hike might […]

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