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Monday, April 28, 2014

Rigging the price of Gold interview with Lars and Bill

A fascinating interview with Lars and Bill discuss gold price suppression and the flawed policies of the world’s central banks.
Bill’s understanding of the gold market is second to none, so if you have an interest in the yellow metal, you’ll want to watch this...

What If China Has a Fukushima?

What If China Has a Fukushima?

China has never suffered a Three Mile Island-like nuclear power plant accident, much less a Chernobyl meltdown or a Fukushima disaster.
But now that the government under Premier Li Keqiang has put the country on a fast-track for nuclear power development, with dozens of new reactors scheduled to launch by 2020, the insurance industry is focusing attention on the difficult question “what if?”
China’s insurers have been taking a cue from the National People’s Congress, the nation’s top legislature. A special panel under the NPC’s Environmental and Resources Protection Committee was recently ordered to draft a nuclear safety law, the nation’s first, with a built-in framework for power plant accident compensation.
NPC Standing Committee Vice Chairman Shen Yueyue said in February the law has reached the legislative agenda.
Zuo Huiqiang, general manager of the Chinese Nuclear Insurance Pool, expects the law to be enacted within two years. The 15-year-old CNIP is a collaborative effort of 25 Chinese insurance companies including China Reinsurance Group, Peoples Insurance Company of China and Ping An Insurance Co.
“During the early period for nuclear power development,” Zuo said, “coming up with plans for what to do if something goes wrong is the responsible thing to do.”
Certainly, there’s plenty of work to be done in the insurance arena to make sure China’s has a compensation response plan in place before an accident occurs. For example, liability caps for China’s nuclear accident insurance policies are now the lowest in the world.
Under a 2007 State Council directive spelling out nuclear accident compensation plans, any of China’s 19 nuclear power plant operators such as China Guangdong Nuclear Power Holding Co.(CGN), operator of the Daya Bay Nuclear complex in the southern province of Guangdong, and China National Nuclear Corp. (CNNC), which runs the Qinshan nuclear power plant in the eastern province of Zhejiang, must have insurance that covers financial losses and injuries up to 300 million yuan. If a legitimate compensation claim exceeds that maximum liability, the central government will provide up to 800 million yuan extra to cover the costs.
“Liabilities of 300 million yuan or less are to be assumed by nuclear operators, and the government is responsible for the next 800 million,” Zuo said. “Even though there’s no clear wording for anything over 1.1 billion yuan, the public nature of nuclear accidents almost definitely means that the government will bear the burden.”
Thus, the 2007 directive in effect is a form of government policy support for the nation’s nuclear plant operators. But because of the nation’s liability caps, the level of support is relatively modest compared to what’s in place in other countries that use the atom to generate electricity.
China’s limited liability insurance system stands in sharp contrast to the unlimited liability coverage that protects the public in Germany, Switzerland, Japan, Belgium, Russia and the United States.
All other countries with nuclear power around the world, including Britain and Spain, have a limited liability system like China’s.
The Chinese insurance pool’s direct underwriting capacity is a respectable US$ 898 million, behind only Japan, Britain and Switzerland. In terms of compensation caps, Belgium has the highest at US$ 1.5 billion, followed by Japan and Switzerland at US$ 1.2 billion each.
In China, a lot more money would be needed to cover damage in the event of a major catastrophe.
“If there’s ever a problem, this liability limit will certainly be too low,” said Liu Yubo, CNIP’s deputy general manager....
*** caixin / link

Thomas Piketty is a rock-star economist — can he re-write the American dream?

Thomas Piketty is a rock-star economist — can he re-write the American dream?

When the movie is made about the fall of Western capitalism, Thomas Piketty will be played by Colin Firth. Piketty, whom the Financial Times called a “rock-star economist”, isn’t a household name — but he should be, and he has a better shot than any other economist. He is the author and researcher behind a 700-page economic manifesto, titled Capital in the 21st Century, that details the path of income inequality over several hundred years.
This sublime nerdishness is, somehow, a huge hit. It is now No 1 on Amazon’s bestseller list and sold out in many bookstores. When Piketty spoke on a panel this month at New York’s CUNY with three other economists — two of them Nobel-prize winners, Joseph Stiglitz and Paul Krugman — the Frenchman was the headliner. The event was so packed that the organizers had to create three overflow rooms. Weeks after the release of Capital, intellectuals are still salivating, even calling Piketty the new de Tocqueville.
This is quite a burst of stardom for a man who, despite his understated Gallic charm, is very much the bearer of bad news. Piketty’s sublimely nerdy book, packed with graphs, statistics and history, is all evidence for an immensely depressing theory: that the meritocracy of capitalism is a big, fat lie.
Piketty’s research, which is immaculate, reaches back hundreds of years to establish a simple thesis: the American dream — and more broadly, the egalitarian promise of Western-style capitalism — does not, and maybe cannot, deliver on its promises. That, he writes, is because economic growth will always be smaller than the profits from any money that is invested. Economic growth is what we all benefit from, but profits from invested money accrue only to the rich.
The consequences of this are clear: those who have family fortunes are the winners, and everyone else doesn’t have much of a shot of being wealthy unless they marry into or inherit money. It’s Jane Austen all over again, and we’ve just fooled ourselves that the complicated financial system has changed a thing.
This is a deep point. Many American households, if they are lucky, will grow their wealth at the same rate as the economy. But, because the wealthy are growing their fortunes at a much faster rate, no one else can ever catch up.
Let’s repeat that: no one else can ever catch up.
This is where Piketty adds more nuance: it’s not just inequality of wealth and income that we’re struggling with, but inequality of opportunity. That’s of far more concern. In essence, he is saying, we’re lying to ourselves if we believe that hard work will lead to wealth. Mainly, wealth reliably leads to wealth. Everything else is chancy. The middle class is playing the economic lottery to improve their lot in life, while the wealthy have a sure thing.
This is clearly fraught — and to some, like the New York Times columnist David Brooks, it sounds like class war (he calls it “angry progressivism”). Piketty’s purpose is not to point out that inequality exists, or that it’s growing — both of which have been established ad nauseum by everyone from President Obama to Pope Francis. Piketty’s point is that we are actually doomed to inequality.
It’s hard to argue with this, really — Piketty’s research is too good, too sprawling, too complete. It’s as good as fact. It codifies what many suspected. Piketty’s point is accepted wisdom in most of Europe, where, in France and Germany, the morality of capitalism is regularly questioned.
But there remains a lot of controversy anyway. Why? Because Piketty wants to change the lever on income inequality by putting a tax on wealth — not on income, which is the stuff of the middle class, but on fortunes themselves, on the money that is invested and reinvested and compounded and grown....
*** The Guardian / link

Tier 1 Chinese cities begin property discounting

Tier 1 Chinese cities begin property discounting

“Two weeks ago the price fell 200,000 yuan,” “6 hours ago the price fell 100,000 yuan,” …… Yesterday, the sites of real estate companies show homes in the east, south and west Third Ring large area, about thirty percent of listings are marked with The green arrow indicates the listings with price cuts have almost quadrupled since the period before Spring Festival. Such a situation from two weeks since the beginning of April, the city is currently at this largest second-hand housing sales real estate agent are starting to tell homeowners who ask for high listing prices, “no.” Every home exceeding the average price for the area is being persuaded one by one to cut their asking price, otherwise they will be removed from the website, “off the shelf.”
Reporter survey found that many hot spots in the district, real estate agencies have taken as much as 40% of the properties off the market, resulting in an eyeful of lower prices online. Meanwhile, statistics from “Love My Home” (and other agencies show that in April, Beijing region through its stores traded second-hand housing transactions , the average transaction price of 31,265 yuan / square meter, with a full month of March compared to the average trading price fall about 4%.
“My agent told me to drop the price by 100,000 yuan because no one has looked at it over a week.” Put yourself in public last week, Ms. Liu lowered her second-ring road second-hand asking price, still no one came to see it. From the beginning of the month, she has cut her 80 square meters two-bedroom apartment by nearly 20,000 yuan.
Liu is not only one, the reporter in the chain of home listings online Yuanjianmingyuan district saw, more than 90 sets listed online listings, nearly 30 percent of listings are marked with green price sign — ranging from a few (a few 10,000s), to as many as 200 to 300,000 yuan. Statistics show that all of these homeowners lowered the price in the last two weeks.
“Through our efforts, the district where many homeowners have recently lowered the listing price, and are basically starting with cuts of 50,000 yuan. Doing so mainly to prevent the new sellers from comparing to the online listings high offer, thereby pushing overall pricess. Realtor Wu said for new listings, the owners will make reference to similar sized residential listings with price quotes given. For example, Yuanxianmingyuan less than 52,000 yuan average residential price, but individual owners if quoted 55,000 yuan, the new majority owners will refer to this listing higher offer, and then increase the average housing price.
A South Third Ring Road, East Third Ring Road real estate broker, said that after consultation with the homeowner, they reduced second-hand housing significantly more in April, accounting for almost 30% of the total valid listings. In contrast, those who insist on asking high prices have become invalid listings.
Reporter survey found that, after half a month of busy introducing broker, the city used some hot area of online listings leaving only 50-60% of the peak listings. In other words, the remaining approximately 40% for whatever reason haven’t adjusted their price are temporarily off the market. Yesterday agents at several real estate brokers said persuading the old and new homeowners to lower their price has become their main job, in the task of “discouraging” listings, stands at about 50% of the online total listings.
“For example Xishanfenglin 1-4 there was about 90 listings, after removing the high prices homes, there are about 40 to 50 listings now.” Xishanfenglin district real estate agent Chen said. Similar Xishanfenglin phenomenon of mass removed expensive listings in the rings are very common. However, although online shows decreased listings, but in fact, the proportion of listings ready to deal has greatly improved. “Late last year, if a customer came to look at homes, we have the key for several, if a customer comes now, if he wants to see 10 homes a day, no problem.” He said.
After some adjustments, the agency’s online listings actually increased rather than decrease, but also with brokers “hard to stay” exclusive listings are not unrelated.
“Call me last weekend intermediary brokers have seven or eight people, half of which advised me to check with the stores ‘exclusive quick sales’ contract.” Pang said the public, in accordance with the broker’s recommendation, if the homeowner with the agency signed an “exclusive quick sale” contract, which is equivalent to bind listings from this agency does not allow homeowners and then selling through other intermediaries, and intermediaries mouth so-called “quick sale” is its commitment within three months the house is sold, the seller will otherwise receive compensation of 1,000 yuan. According to sellers’ reports, signed with the agency if the “exclusive quick sale” contract, which would not have strict restrictions on listing price, the equivalent of all the parties agreed to make some concessions....
*** macrobusiness / link

GPIF Shakes Up Committee With Three Abe Panel Members

GPIF Shakes Up Committee With Three Abe Panel Members

Japan’s government pension fund overhauled its investment committee, adding three members of a state panel that urged it to cut bonds, as the balance of power shifts at the world’s biggest manager of retirement savings.
Yasuhiro Yonezawa, who sat on the group handpicked by Prime Minister Shinzo Abe that recommended a strategy and governance revamp at Japan’s 128.6 trillion yen ($1.25 trillion) Government Pension Investment Fund, will join the committee, the health ministry said. Yonezawa, 63, is expected to be named head, according to media reports. Sadayuki Horie and Isao Sugaya were also appointed, with only two of 10 previous members remaining and the committee’s size reduced to eight.
“Several stages are needed to change GPIF’s governance structure, and the first is to change its investment committee members,” Takatoshi Ito, who headed the advisory group, said in an interview on April 17. “Our panel advised that the investment committee should hold more power, as the fund currently has no board of directors.”
The appointments suggest the ministry is heeding the directives of Ito’s group amid mounting pressure on GPIF to cut reliance on domestic bonds as pension payouts swell and Abe and the Bank of Japan seeks to spur price gains. GPIF has already implemented several of the panel’s recommendations, including readying to diversify into areas such as infrastructure, adopting benchmarks like the JPX-Nikkei Index 400 for domestic stocks and preparing to hire in-house investment experts at market rates.
The health ministry appoints the members of the committee, which monitors the implementation of GPIF’s policies and advises the president.
Yonezawa, a professor at Waseda University’s Graduate School of Finance, is also on a 21-member advisory group helping the ministry of health conduct a five-yearly review of public pensions due this year, which may lead to a change in asset allocations. He sits on a 10-member ministry committee that set GPIF’s new return target of 1.7 percent plus the rate of wage growth last month and said the fund no longer needs a domestic-bond focus.
“I’m convinced that he will work in line with our panel’s report to enhance GPIF’s investment and strengthen its risk management and governance,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co., who was also a member of Ito’s group.
Yonezawa is expected be named chairman of the investment committee, according to reports by the Nikkei newspaper and Kyodo News on April 19.
Horie is a senior researcher at Nomura Research Institute Ltd. and previously worked for Nomura Asset Management Co. Sugaya, 61, is managing director at the Japan Trade Union Confederation, known as Rengo.
Two women have been appointed: Junko Shimizu, a professor of international finance at Gakushuin University in Tokyo, and Yoko Takeda, chief economist at Mitsubishi Research Institute Inc. Also joining the group is Setsuya Sato, a professor in the English communications department at Toyo University who also served as a financial adviser to the World Bank and public policy director at UBS AG.
The remaining two are Hiromichi Oono, a board member at Ajinomoto Co. and Kimikazu Noumi, president and chief executive officer at Innovation Network Corporation of Japan.
Ito’s panel recommended in November that legislation be enacted to give GPIF independence from the health ministry, which has ultimate responsibility for the fund. As a transitional measure until the law is passed, multiple members of the investment committee should be hired full-time, according to the panel. The health ministry’s statement made no mention of full-time officials.
A system where GPIF’s head has sole decision-making power and responsibility “may fail to function adequately,” Ito’s panel said in its report in November. Takahiro Mitani, the fund’s president, currently has sole authority.
GPIF and the health ministry should “quickly and steadily” enact necessary policies following the recommendations by Ito’s panel, according to a cabinet decision on Dec. 24.
“The cabinet is the driver of change” for GPIF, Ito told Bloomberg News. “The cabinet is going to keep pushing.”...
*** bloomberg / link

The Downfall of Rome: Can a New Mayor Stop the City’s Decline?

The Leonardo Express rumbles from Rome’s airport right to the city center. After 32 minutes, it arrives at its final destination, Termini, the city’s central station. An ad in a pedestrian tunnel at the station reads, “Roma Termini — a Place to Live.” Some have taken the message quite literally.
It’s 11:10 p.m. Stranded people from around the world are wrapped up in their sleeping bags as they lay in front of the exit on the north side of the station. On some nights, up to a hundred homeless huddle together like freezing people in front of a fire. Many of those who sleep here are African refugees.
During the daytime, Roma from Romania represent the majority in and around the station. Left largely unchecked by the local authorities, they aggresively try to squeeze money out of foreign tourists.
A comment by one British tourist recently got posted on the Facebook page of Ignazio Marino, who became the city’s mayor in June. The tourist said she had never before experienced “a more wretched hive of scum and villainy” than when she arrived in Rome by train. For safety reasons, she wrote, it is advisable to “spend as little time as possible” at Termini.
Marino takes criticism seriously, but also in a sporting manner. As he sits at his desk in Rome’s Palace of the Senate on Capitoline Hill, a building once remodeled by Michelangelo, he exudes the aura of a man at peace with himself. Two months ago, he was still cursing his opponents who, he says, wanted to let the Eternal City go up in flames just as Emperor Nero did. At the time, Marino made clear that he wasn’t prepared to play the role of the “capital city’s liquidator-in-chief.”
What had happened? Rome was on the verge of bankruptcy and the mayor said the only way to possibly rescue the city would be for the national government to jump in with emergency aid to the tune of €600 million ($829 million) within 24 hours. Marino got his wish and the city didn’t go up in flames. Standing beneath a photo that shows him in an intimate embrace with Pope Francis, the mayor now says he wants to move forward. After all, he adds, “spotlights from around the world will be shining on Rome” on April 27, and 2 billion people will be watching on their televisions.
On Sunday, the two most popular popes of the 20th century — John XXIII and John Paul II — are to be canonized on St. Peter’s Square by Pope Francis. Catholic pilgrims from around the world plan to attend, and hotels in the capital city are almost entirely booked out.
For at a short time at least, Romans will be “able to dream of living in a truly European city,” because the metro, for once, will finally operate at night to help accommodate the expected 3 million visitors, the local citizen’s advocacy group Residents of the Historical Center notes caustically.
The old Roman establishment feel they are being ignored by politicians and that they have been forced to look on powerlessly as one fast food restaurant or bed and breakfast after the other has replaced the last remaining artisan shops in the heart of the city.
More than 12 million tourists visited Rome last year, and this despite the fact that the city once known as Caput mundi, or the capital of the ancient world, has since lost much of its splendor. That, at least, is what many residents say.
Novelist Mauro Evangelisti warns visitors, like the pilgrims who are about to descend upon his city, that they must brace themselves for “an old airport, crooked cab drivers, swindlers, pickpockets” and streets full of potholes like in Havana. In an open letter published prior to the last municipal election, 21 Roman intellectuals lamented what they saw as signs of the city’s downfall and “cultural gloom”.
Meanwhile, Carlo Verdone, one of the leading actors in the movie that took this year’s honor for Best Foreign Picture at the Oscars, “The Great Beauty,” even goes so far as to describe his city as a true to scale likeness of a “totally failed country.”
Matteo Renzi, Italy’s new prime minister, is now calling for radical reforms. Since it narrowly averted insolvency at the end of February, the capital city has, to a certain extent, been under the yoke of the national government and the mayor has been ordered to undertake draconian austerity measures. This is the last remaining opportunity for turning the city around, Renzi’s state secretary for the economy recently said. Rome, he said, should become a shining example for the rest of Italy to follow.
But where to begin? Upon their arrival, the first thing some pilgrims to Rome will see is a five-and-a-half-meter (18 foot) tall bronze statue of Pope John Paul II. In what appears to have been wise foresight, the former leader of the Catholic Church has his back turned to the station forecourt, which is littered with drug addicts’ syringes and grocery store shopping carts that homeless people have filled to the brim.
A wiry, bald-headed man walks right through the turmoil on a recent morning and says, “The first thing that needs to be done is for the city to reconquer its public spaces. There is not a single street left in the entire city where you have the feeling you’re in Europe — I mean, where everything works as it should.”...
*** der spiegel / link

BRICS countries to set up their own IMF

BRICS countries to set up their own IMF

The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the International Monetary Fund and the World Bank, which are dominated by the U.S. and the EU. A currency reserve pool, as a replacement for the IMF, and a BRICS development bank, as a replacement for the World Bank, will begin operating as soon as in 2015, Russian Ambassador at Large Vadim Lukov has said.
Brazil has already drafted a charter for the BRICS Development Bank, while Russia is drawing up intergovernmental agreements on setting the bank up, he added.
In addition, the BRICS countries have already agreed on the amount of authorized capital for the new institutions: $100 billion each. “Talks are under way on the distribution of the initial capital of $50 billion between the partners and on the location for the headquarters of the bank. Each of the BRICS countries has expressed a considerable interest in having the headquarters on its territory,” Lukov said.
It is expected that contributions to the currency reserve pool will be as follows: China, $41 billion; Brazil, India, and Russia, $18 billion each; and South Africa, $5 billion. The amount of the contributions reflects the size of the countries’ economies.
Russia to launch domestic alternative to Visa and Mastercard Russia to launch domestic alternative to Visa and Mastercard
By way of comparison, the IMF reserves, which are set by the Special Drawing Rights (SDR), currently stand at 238.4 billion euros, or $369.52 billion dollars. In terms of amounts, the BRICS currency reserve pool is, of course, inferior to the IMF. However, $100 billion should be quite sufficient for five countries, whereas the IMF comprises 188 countries — which may require financial assistance at any time.
The BRICS countries are setting up a Development Bank as an alternative to the World Bank in order to grant loans for projects that are beneficial not for the U.S. or the EU, but for developing countries.
The purpose of the bank is to primarily finance external rather than internal projects. The founding countries believe that they are quite capable of developing their own projects themselves. For instance, Russia has a National Wealth Fund for this purpose.
“Loans from the Development Bank will be aimed not so much at the BRICS countries as for investment in infrastructure projects in other countries, say, in Africa,” says Ilya Prilepsky, a member of the Economic Expert Group. “For example, it would be in BRICS’ interest to give a loan to an African country for a hydropower development program, where BRICS countries could supply their equipment or act as the main contractor.”
If the loan is provided by the IMF, the equipment will be supplied by western countries that control its operations.
The creation of the BRICS Development Bank has a political significance too, since it allows its member states to promote their interests abroad. “It is a political move that can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues. The stronger this union and its positions on the world arena are, the easier it will be for its members to protect their own interests,” points out Natalya Samoilova, head of research at the investment company Golden Hills-Kapital AM.
Having said that, the creation of alternative associations by no means indicates that the BRICS countries will necessarily quit the World Bank or the IMF, at least not initially, says Ilya Prilepsky.
In addition, the BRICS currency reserve pool is a form of insurance, a cushion of sorts, in the event a BRICS country faces financial problems or a budget deficit. In Soviet times it would have been called “a mutual benefit society”, says Nikita Kulikov, deputy director of the consulting company HEADS. Some countries in the pool will act as a safety net for the other countries in the pool....
*** RBTH / link

Suspicion grows that China is exporting deflation worldwide by driving down yuan

Suspicion grows that China is exporting deflation worldwide by driving down yuan

The Chinese Yuan weakened yet again this morning, punching through the key line of 6.25 against the dollar. It is almost back to where it was two years ago. This is the biggest story in the global currency markets.
Yuan devaluation has reached 3.1pc this year. The longer this goes on, the harder it is to accept Beijing’s story that it is one-off measure to teach speculators a lesson and curb hot money inflows.
The US Treasury clearly suspects that the Chinese authorities have reverted to their mercantilist tricks, driving down the exchange rate to keep struggling exporters afloat. Officials briefed journalists in Washington two weeks ago in very belligerent language.
The Treasury’s currency report this month accused China of trying to “impede” the market by boosting foreign reserves by $510bn last year to $3.8 trillion — “excessive by any measure”.
It gave a strong hint that China is disguising its reserve accumulation. You don’t have to dig hard. Simon Derrick from BNY Mellon said a recent buying spree of US Treasuries and agency debt by Belgium of all places looks like a Chinese front.
Holdings by entities in Belgium have jumped to $341bn from $169bn last August. This would appear to explain how China’s FX reserves have kept rising to $3.95 trillion even as its custody holdings in the US itself have been falling. If so, China is playing dirty pool.
Hans Redeker from Morgan Stanley says China seems to have adopted a “beggar thy neighbour policy” to counter the slowdown at home and soak up excess manufacturing capacity.
AEP%20Article%20Yuan.psd 
Albert Edwards from Societe Generale said in a note today that China is “sliding inexorably towards deflation”. Factory gate prices have been falling for 25 months in a row.
The GDP deflator — which proved a much better gauge of trouble at the onset of Japan’s Lost Decade than consumer prices — has plummeted from 1.4pc to 0.4 over the last year.
This means that China’s nominal GDP growth has dropped to just 7.4pc and is nearing the levels of the post-Lehman trough. This is the indicator that matters for the solvency of China’s heavily-indebted companies.
Mr Edwards said the next shoe to drop in world the economy (leaving aside the Donbass) is a systematic attempt by China to export its deflation to any other sucker willing to accept it by driving down the yuan.
Those countries that have failed to build adequate defences by keeping inflation safely above 1pc could face a nasty shock when this happens. The eurozone looks like the sucker of last resort. A Chinese deflationary tide would push Southern Europe over the edge.
Perhaps that is why the ECB’s Mario Draghi sounded ever more alarmed today in his efforts to talk down the euro today.
I take no view on how far China intends to go with this. It may reverse course any time. I merely pass on SocGen’s view for readers to think about.
Nor have I made up my mind whether the yuan is correctly valued. Diana Choyleva from Lombard Street Research says it is 15pc to 25pc overvalued as a result of surging wages and poor productivity growth....
*** Ambrose Evans-Pritchard / link

Things That Make You Go Hmmm...

“When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
Sir Arthur Conan Doyle, The Sign of Four




“We all want to believe in impossible things, I suppose, to persuade ourselves that miracles can happen.”
Paul Auster, The Book of Illusions




“He possessed the logic of all good intentions and a knowledge of all the tricks of his trade, and yet he never succeeded at anything, because he believed too much in the impossible. Surprising? Why so? He was forever in the act of conceiving it!”
Charles Baudelaire

“She shook her head and whispered, “No. No! That can’t be true. Impossible!”
“You think things have to be possible? Things have to be true!”
Philip Pullman, The Subtle Knife

This week’s TTMYGH revolves around “Macs.” The first is a man-turned-verb who was capable of extricating himself from seemingly hopeless situations, armed with an array of tools seemingly singularly unsuited to the purpose; and the second is an ingenious, though ultimately futile, plot device which has been used by everyone from Welles to Hitchcock to Tarantino.
I%20Heart%20Japan.psd
Though at first blush it’s hard to see a link between the two, in today’s world there are Angus MacGyvers everywhere, beetling away with duct tape and Swiss army knives, trying to extricate themselves from completely hopeless situations; and if they are to succeed before the credits roll, they must rely upon one very important thing: the suspension of disbelief by their audience.
That’s where the other “Mac” comes in.
Man first.
Angus MacGyver was a troubleshooter. He worked for the fictional Phoenix Foundation as a secret agent and also for the US government in the (also fictional) Department of External Services.
Macguyver.psd 
Educated as a scientist and possessing an encyclopedic knowledge of the physical sciences, MacGyver had been a bomb disposal technician during the Vietnam War and possessed a distinctly pacifist outlook on life — he hated guns.
Also, his luck could scarcely be described as merely “good.”
Somehow, over the course of seven seasons, MacGyver managed to get himself into some 139 impossible-to-get-out-of situations — each of which he managed to navigate successfully by using conventional items in a distinctly unconventional way.
By way of illustration, in the pilot episode alone, MacGyver managed to do the following:
    Rig a machine gun with a cord, string, stick, and matches so that when the string burned through, the machine gun fell and was triggered by the stick and began firing (while still being held by the cord).
    Plug a sulfuric acid leak with chocolate. MacGyver stated that chocolate contains sucrose and glucose. The acid reacted with the sugars to form elemental carbon and a thick gummy residue. (NB this was subsequently proven to work, as demonstrated on the show Mythbusters.)
    Make a “rocket thruster” by hitting a flare gun with a rock, launching MacGyver and a man he rescued off of a mountain, whereupon he opened a parachute and made a clean getaway.
    Create a bomb to open a door using a gelatin cold capsule containing sodium metal, which he placed in a glass jar filled with water. When the gelatin dissolved, the sodium reacted violently with the water and caused an explosion which blew a hole in the wall.
Impressive stuff. It’s no wonder he ended up becoming a verb. But to witness perhaps his greatest-ever escape, afford yourself two minutes to watch THIS little stunt to see how MacGyver escaped from his own coffin.
Coffin.psd
I couldn’t help but think of MacGyver this past week as I sat chatting with a colleague about the situation Japan now finds itself in.
I won’t recap the details of the straitjacket into which the Japanese have been strapped for the past two decades — enough ink has been spilled on that subject already, including in a recent Things That Make You Go Hmmm... entitled Avenomics — but my conversation this week stemmed from the following statement, made by me to myself, as I leaned back in my chair after reading an article about proposed changes to the GPIF (Government Pension Investment Fund), Japan’s public pension fund:
“Japan really is totally f*****.”
What led me to that well-thought-out and eruditely expressed conclusion? Read on.
In case you are not familiar with the GPIF, it is the largest pool of government-controlled investment capital on the planet — outstripping even the infamous Arab sovereign wealth funds.
The GPIF controls ¥128.6 trillion, or $1.25 trillion, and to say the organization is somewhat risk-averse is akin to calling the Kardashian family somewhat shameless.
The GPIF holds almost 70% of its assets in bonds — and the vast majority of them are of the local variety. The reason for this? Well that would be because the GPIF is (and has always been) run by bureaucrats from the Ministry of Health, Labour & Welfare, as opposed to, say, investment professionals.
But that’s probably no bad thing, because no investment professional worth his salt would have bought so many JGBs; so if GPIF didn’t buy them, THAT would be a big problem for the Japanese government AND the BoJ.
2269.png 
Source: GPIF
How did that allocation to domestic bonds do last year? Well, as it turns out, not so great:

Q1 2013
Q2 2013
Q3 2013
Q4 2013
Total 2013
Domestic Bonds
-1.48
1.18
0.18
-
-0.14
Domestic Stocks
9.70
6.07
9.19
-
27.05
Int’l Bonds
4.01
1.64
8.16
-
14.34
Int’l Stocks
6.14
7.13
16.23
-
32.17
Source: GPIF
Fortunately, over the last twelve years the GPIF has managed to meet its targets — by growing at an annualized rate of 1.54%.
Thankfully for the GPIF, despite their largest allocation throwing off negative returns, the BoJ’s actions in weakening the yen boosted the Nikkei, and the central-bank-inspired strength in equities and bonds elsewhere in the world helped GPIF’s performance to pass the smell test for 2013.
Now, when it comes to bureaucracy, Japan is in a league all of its own. My first up-close experience of this came in 1989 when I went to get a driver’s license after moving to Tokyo. Anybody who has attempted to complete that fairly straightforward objective in Japan knows that it requires the best part of a day traipsing upstairs and down between several counters, getting the same piece of paper stamped by numerous people in a very specific order. Several visits are required to the same person — but only in the correct order.
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Maybe this process has changed 25 years on, maybe it hasn’t. I’m willing to bet on the latter.
Anyway, amongst themselves, foreigners in Japan have a saying which strikes at the very heart of this little bureaucratic problem:
“Everything makes sense once you realize Japan is a communist country.”
Aki Wakabayashi’s book Komuin no Ijona Sekai (The Bizarre World Of The Public Servant) sprang from her 10 years working at a Labour Ministry research institute and lifted the lid on some of the peccadilloes of Japan’s civil service.

Wakabayashi told of being scolded for saving her department ¥200 million, as her effort put that amount in jeopardy for the following year’s budget allocation; of senior managers taking female subordinates on first-class, round-the-world trips to “study labour conditions in other countries”; and of the mad dash by all departments to spend unused budget before year-end — the collective result of which saw monthly total expenditures by government agencies jump from ¥3 trillion in February to ¥18 trillion in March.
The facts unearthed by Wakabayashi are remarkable:
(Japan Times): The national average annual income of a local government employee was ¥7 million in 2006, compared to the ¥4.35 million national average for all company employees and the ¥6.16 million averaged by workers at large companies. Their generosity to even their lowest-level employees may explain why so many local governments are effectively insolvent: Drivers for the Kobe municipal bus system are paid an average of almost ¥9 million (taxi drivers, by comparison, earn about ¥3.9 million).
School crossing guards in Tokyo’s Nerima Ward earned ¥8 million in 2006. (Such generosity to comparatively low-skilled workers may explain why in the summer of 2007 it was discovered that almost 1,000 Osaka city government employees had lied about having college, i.e., they had, but did not put it on their resumes because it might have disqualified them from such jobs!) Furthermore, unlike private sector companies, public employees get their bonuses whether the economy is good or bad or, in the case of the Social Insurance Agency, even after they lose the pension records of 50 million people (2008 year-end bonuses for most public employees were about the same as 2007, global economic crisis notwithstanding).
In addition to their generous salary and bonuses, public servants get a wealth of extra allowances and benefits. Mothers working for the government can take up to three years’ maternity leave (compared to up to one year in the private sector, if you are lucky). Some government workers may also get bonuses when their children reach the age of majority, extra pay for staying single or not getting promoted, or “travel” allowances just for going across town. Perhaps the most shocking example Wakabayashi offers is the extra pay given to the workers at Hello Work (Japan’s unemployment agency) to compensate them for the stress of dealing with the unemployed.
Japan’s bureaucracy is extreme but hardly unique, so I won’t dwell on its absurdities; but these examples at least give us some background for understanding the GPIF.
The decision-making chart of the organization is a masterclass in Japanese process. Where else would you have specific departments responsible for “demands for improvements” and “deliberations”?
GPIF%20Process.psd 
Source: GPIF
Back in November 2013, a seven-member panel led by a Tokyo University professor Takatoshi Ito and convened by PM Shinzo Abe published its final recommendations for the future of the GPIF, and those findings set the behemoth on a course into far more turbulent waters:
(Pensions & Investments): The panel’s Nov. 20 final report said the GPIF’s 60% allocation to ultra-low-yielding Japanese government bonds — defensible in the deflationary environment of the past decade — should not be maintained in the inflationary one Mr. Abe has promised as a centerpiece of his quest to revive Japan’s economy.
The seven-member panel ... urged the GPIF and other big public funds in Japan to diversify into real estate investment trusts, real estate, infrastructure, venture capital, private equity and commodities, while shifting more assets to active strategies from passive and adopting a more dynamic approach to asset allocation.
Governance of those public funds, with combined assets of roughly $2 trillion, should be strengthened by making them more independent of the ministries that oversee them.
Now, it’s extremely hard to fault the logic underpinning the recommendations made by Ito’s panel — though naturally, with this being Japan...
Some observers — noting that previous calls for reform had come to naught — urged caution.
The recommendations make sense, but the challenges of revamping investments at a fund controlling such a large chunk of Japanese retirement savings will be considerable, warned Alex Sato, president and CEO of Tokyo-based Invesco (IVZ) Asset Management (Japan) Ltd.
To put the size of the GPIF into perspective, should the decision be made to allocate a mere 5% of its assets to a particular asset class, that would require the deployment of $60 billion.
The redeployment of those holdings of JGBs is likely to cause future problems, but that didn’t concern one of the GPIF panel members, Masaaki Kanno, an economist at JP Morgan in Tokyo, who, after the findings were published, made a couple of predictions:
(P&I): In a Nov. 20 research note, Mr. Kanno predicted the GPIF would be permitted enough flexibility to allow allocations to yen bonds to drop to 50% by the summer of 2014.
The Bank of Japan’s recent policy initiative to flood the market with liquidity, meanwhile, could set the stage for a seamless transfer of that huge amount of Japanese government bonds, Mr. Kanno said.
Eventually, Japanese government bonds should drop to between 30% and 40% of the GPIF’s portfolio — higher than the 20% to 30% range typical of leading public pension funds abroad to account for Japan’s rapidly aging demographic profile, Mr. Kanno said. Meanwhile, another ¥30 trillion ($300 billion), or a quarter of the fund’s assets, should eventually shift into “risk assets,” according to the J.P. Morgan report.
The BoJ certainly does have a policy initiative to “flood the market with liquidity,” but that policy initiative is the continuation and expansion of a policy that has been in operation for 20+ years — namely, the purchasing of the government’s own debt with freshly printed yen.
In 2001 the Japanese termed it ryōteki kin’yū kanwa, but today everybody knows it as quantitative easing.
In a paper which analyzed Japan’s initial experimentation with QE, published in February 2001, Hiroshi Fujiki, Kunio Okina, and Shigenori Shiratsuka (all three senior BoJ economists) suggested that once a zero interest rate had been reached, if the situation still appeared dire, MacGyvering an alternate solution might not be the greatest idea in the world:
(Monetary Policy under Zero Interest Rate: Viewpoints of Central Bank Economists): [F]urther monetary easing beyond the zero interest rate policy, most typified by the outright purchase of long-term government bonds, should be viewed as a bet which we would only be forced to explore in the event the Japanese economy stands on the brink of serious deflation. Considering the uncertainty and risks surrounding these unconventional measures, it is quite inappropriate to introduce them merely on an experimental basis. Of course, this does not mean that further monetary easing may not be warranted in any circumstances, nor that other easing measures not covered in this paper are infeasible...
2329.png 
What the hell did those guys know, anyway?
Indeed. As if looking into some sort of crystal ball, Messrs. Fujiki, Okina, and Shiratsuka continued:
With regard to monetary policy in Japan, there seems to be some oversimplified idea that the adoption of inflation targeting would be a panacea for current economic difficulties. This should remind central bankers, who must make policy decisions on a real-time basis amid drastic structural transformation, of the unfruitful traditional “rule versus discretion” debate in terms of monetary policy implementation.
Perhaps Abe and Kuroda prefer watching reruns of Friends to perusing BoJ policy recommendations?
The subsequent expansion of the BoJ’s QE policy can be seen clearly in the chart on the previous page. It highlights beautifully the problem with heading down the treacherous QE trail: ever-increasing amounts of money must be printed to keep the wheels turning.
Once you start, to stop is not a decision that is made by you, but rather it eventually gets made for you. In the meantime, your balance sheet just swells and swells. The BoJ’s has increased almost five-fold since 1997 and is up 80% since the beginning of 2012:
2343.png 
... and, if you’re Japan, your monetary base goes vertical:
2358.png 
That’s three very similar charts, but the next one looks nothing like the preceding ones:
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And therein, as The Bard (who celebrated his 450th birthday this week) almost once said, lies the rub.
Japan’s population is actually declining — fast. And under the crush of that breaking statistical wave, everything gets harder for Japan.
Japan’s population “pyramid” looks more like a top-heavy baking dish. There are already more over-65s than under-24s; but it is estimated that by 2060 Japan’s population will have fallen from 128 million to 87 million, and roughly half of those remaining will be over 65.
2387.png 
The ONLY answer for Japan is immigration — lots of it — but that, I am afraid, is a total non-starter for the insular Japanese. The depopulation problem already loomed on the horizon like a distant oil tanker in 1989 when I lived in Tokyo. What has changed since then is that the tanker has now docked.
In 2003, it was estimated by the UN that Japan would need 17 million new immigrants by 2050 to avert a collapse of the very pension system we’re examining this week. Those immigrants would amount to 18% of the population in a country where immigrants currently amount to...wait for it... 1%.
It gets worse.
2414.png
Of that 1%, most are second- or third-generation Koreans and Chinese, descendants of people brought to Japan from former colonies.
As of October 1, 2013, there were all of 1.59 million foreigners in Japan, and that is after net immigration ROSE for the first time in 5 years, with 37,000 new immigrants taking a bit of the sting out of the 253,000 decrease in Japanese citizens in 2013.
So... Japan’s fate is set. In coming years the ageing population will be drawing down its pension funds at an ever-increasing pace, even as the largest pension fund in the world is being forced by the government into allocating more of those funds to riskier assets in order to try to stimulate growth in the moribund economy.
Meanwhile, the Bank of Japan is embarking on an experiment in monetary prestidigitation the likes of which has never before been seen; and in order for it to be successful they will need the GPIF to not only not SELL JGBs but to BUY MORE of them.
In addition, Shinzo Abe is promising the Japanese (and every holder of JGBs, which are yielding a paltry handful of basis points) that he will generate 2% inflation, thus rendering their JGB holdings completely useless.
The whole thing is madness — madness built on the promise of the delivery of a dream.
Already the BoJ is buying up to 85% of some JGB issuances, and an estimated 91% of Japanese bonds are held domestically. What do you think happens when the GPIF turns from buyer to seller?
Uh-huh. The BoJ will have its work cut out to maintain order.
How tenuous is the BoJ’s grip on their bond market?
Well, last month the BoJ announced that it would be buying “just” ¥170 bn of long-term bonds instead of the ¥180 bn the market expected. The result?
(FT): Traders’ explanations for a sudden surge in yields at about 10:15 am in Tokyo ranged from a “fat finger” trade in JGB futures — which saw prices for June delivery drop one whole point from 144.80 to 143.80 — to a simple sell-off exacerbated by algorithmic trading.
But there was no doubt about the trigger: a 10:10 am announcement from the central bank that it was looking to buy Y170bn of long-term bonds, rather than the Y180bn the market had expected.
“I think the BoJ has induced some form of unwarranted volatility, which is not being taken kindly by the market,” said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch in Tokyo. “With rates near zero the only thing the BoJ can do is to contain volatility, and today they’re doing a very poor job.”
Mark my words, this is going to end VERY badly. Very badly indeed.
PAGING MR. KYLE BASS! MR. BASS TO THE FRONT DESK, PLEASE:
(Beacon Reports): KYLE BASS: That plan, one of the three arrows in Abe’s growth strategy (called ‘Abenomics’), has the BOJ buying just over ¥60 trillion of new bonds each year for the next two years. It effectively doubles Japan’s monetary base. Considering the likely fiscal deficit for this year and next is running about ¥50 trillion each year, or close to 11% of GDP, I think the BOJ can only buy another 10 or ¥12 trillion of JGBs. I don’t think that cushion is going to be enough to monetize the entire fiscal deficit if they are going to be the buyer of last resort.
The key question is, will the BOJ be able to hang on to rates? I think they can in the near-term and I think they can’t in the medium to long-term. If investors holding JGBs actually believe that ‘Abenomics’ will work, then it creates a problem — the ‘Rational Investor Paradox’ — where investors rationally sell some of their JGBs because they are being told to expect negative real rates of return if the administration achieves its 2% CPI target.
Whether that means they sell some or all of them is up to the individual sellers. One bank sold more than 20% of its JGB ownership in the first quarter. If 5% of owners sell, that’s another ¥50 trillion. The reason you’re seeing so much bond market volatility, even though the BOJ is actively trying to keep a lid on rates, is that the BOJ is being overwhelmed by selling despite its large purchase program.
Bravo, Kyle.
Kyle brings up the topic of Abenomics and Abe’s fabled “three arrows,” which supposedly, once fired, would magically fix all Japan’s woes.
The first arrow, massive monetary easing, has been launched; and, depending on how you measure these things, it has either been a magnificent success or has put the final nail in Japan’s coffin. Optically, it has done what was intended (weaken the yen, pump up the Nikkei, and pull JGB yields even lower), so the Japanese government is counting that one in the win column. Me? I think, once hindsight can take a look at Japan properly, Abe’s QE will be seen as an arrow shot right through the faintly beating heart of the country, finally killing it. But we’ll have to wait and see.
The second arrow is the targeted ¥10.3 trillion ($116 billion) of fiscal support that includes investment in ageing infrastructure and tax breaks to encourage R&D, the hiring of new employees, the raising of wages, and the buying of capital equipment. That arrow too has been fired, and the jury is once again decidedly out on whether any long-term success will result.
Mori%20san.psd
That leaves Abe’s third arrow.
Before we get to that one, a little story of how the policy got its name.
In 16th-century Japan, according to legend, a daimyo (feudal lord) named Motonari Mōri told each of his three sons to break an arrow in half. Each of them duly did as their father bade them. Mōri then told his sons to tie three arrows together in a bundle and try to break all three at once.
None of them were successful.
Do you see what Abe and his advisors were doing here? Isn’t it brilliant? Such a wonderful allegory. Who wouldn’t buy into that idea? Well, the Japanese certainly did (up to a point); and foreign investors, guaranteed a sinking yen and a rising Nikkei, also came to the party — though one can’t help but think they have a taxi waiting outside and won’t be sticking around for the slow dancing.
But there’s still that damned third arrow.
That is the one that involves real, structural change; and I’m sorry to have to be the one to mention it, but the Japanese don’t do real structural change.
This brings me to our other “Mac” for today.
Abe’s third arrow is little more than an ingenious device designed to keep the watching world focused on something that will ultimately prove irrelevant to the plot.
In movie parlance, it’s a “MacGuffin”:
(Wikipedia): [A] MacGuffin is a plot device in the form of some goal, desired object, or other motivator that the protagonist pursues, often with little or no narrative explanation. The specific nature of a MacGuffin is typically unimportant to the overall plot. The most common type of MacGuffin is an object, place or person; other types include money, victory, glory, survival, power, love, or other things unexplained.
The MacGuffin technique is common in films, especially thrillers. Usually the MacGuffin is the central focus of the film in the first act, and thereafter declines in importance. It may re-appear at the climax of the story, but sometimes is actually forgotten by the end of the story.
Sound familiar?
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Think of Abe’s third arrow as Citizen Kane’s sled or Pulp Fiction’s briefcase a plot point that initially assumes tremendous importance but fades into irrelevance by the end of the movie.
Abe has done a masterful job at getting the world to buy into his reform program, but the world was only too ready to do so after two decades of false dawns in Japan.
The Japanese public were ready for their country to cast off the shackles of deflation (although, to a population ageing as fast as the Japanese are, a little deflation is a wonderful thing), and investors around the world were happy to believe that this was finally going to be the time when buying the Nikkei would lead to outperformance (providing your currency was hedged, of course). FX traders just wanted a central bank-backed trade to put on.
But as with all central bank-inspired moves, the reality here is not all about reform and structural change, but rather about a group of investors simply front-running the BoJ’s largesse.
The investment community will play ball until the moment juuuuuuust before the crashing realization dawns that Abe can’t fire his third arrow — and then they’ll say thank you for the free ride and exit stage left.
Preliminary committee findings which suggested that radical overhaul of Japanese employment law, healthcare, and agricultural policy be part of the third arrow were watered down, and a vague compromise was wafted in front of the world — with the promise of so much more to follow.
In an interview with CNN’s Fareed Zakaria earlier this year, Abe explained the true significance of the third arrow:
“What is important about the third arrow, structural reform, is to convince those who resist the steps I am taking and to make them realize that what I have been doing is correct, and by so doing, to engage in structural reform.”
Read that again.
Yes folks, the important part of structural reform in Japan is to convince people that Abe is correct. If he can convince them he is right, they will have engaged in structural reform.
Confused?
You should be.
This is how Japan works — or doesn’t.
Falling%20Wages.psd
Immigration reform has been widely recognized as the only answer to Japan’s crippling demographic problem for well over three decades. Nothing has been done about it.
How about the “Wage Surprise” — increasing wages on a national basis — hailed by Abe as the key to lifting Japan out of the doldrums, and a key feature of Abenomics?
(Bloomberg, March 4, 2014): Japan’s salaries increased for the first time in almost two years in January as companies boosted pay for part-timers, aiding Prime Minister Shinzo Abe’s effort to end 15 years of deflation.
Base pay excluding bonuses and overtime rose 0.1 percent from a year earlier, the first gain in 22 months, the labor ministry said in Tokyo today.
Yep, a 0.1% increase in base pay. However...
Overall pay fell 0.2 percent, the first drop in three months.
Doh!
Subsequently, Japan’s wages have seen modest increases, with base pay increases hitting 16-year highs. “Good,” I hear you cry. Well yes, only, that 16-year high equates to a 2.39% rise — not QUITE enough to make up for the 3% consumption tax increase which kicked in on April 1.
If Keynesian loon former BoE policymaker Adam Posen is to have his way, those wages had better start spiraling up fast:
(WSJ): The goal of Abenomics, Mr. Posen said, is not to make Japan richer or improve its fiscal position. Rather, it’s to establish a strong base from which Japan can help remake the Asian order in coming years — “a nice way of saying” that the ultimate purpose is to enable “Japan and its neighbors not to be dominated by China.”
There’s a window of about a decade to remake Japan’s economy toward that goal, Mr. Posen said, but over that time it needs to average economic growth of about 1.75% a year and raise its consumption tax to 20%.
Markets will eventually tire of Abe’s continual promises that more is coming, so he desperately needs to somehow break the entrenched deflationary attitude in Japan.
(WSJ): In a survey of 1,000 consumers on March 29-30 by broadcaster Fuji News Network, 69% said they had not made any special purchases ahead of the sales tax rise, and 77.4% said they didn’t feel an economic recovery was under way.
Good luck with that attitude problem, Shinzo.
This week we got a look at how Abe is faring with one of his promises, that of guaranteed 2% inflation.
Core CPI (excluding food and energy) rose 1.3% in March — unchanged from the previous month and lower than analyst forecasts.
Of course, that was taken as a sign that further easing by the BoJ would be forthcoming...
And round and round it goes... until it stops.
The briefcase in Pulp Fiction ONLY works because we DON’T find out what is in it.
Abe’s third arrow can be loaded into the bow, but it can’t be fired once and for all, because if it IS fired, the game is up. There will still be continual promises of more to come, and markets may buy into that for a while; but, like all central bank-induced “boom times,” Abenomics has a shelf life, and that is nearing an end.
Abenomics%20More%20Flat.psd
The changes at the GPIF are potentially disastrous, and Kuroda’s BoJ and Abe’s government are desperately trying to MacGyver their way out of an impossible situation, armed only with hollow promises and faith, when what they really need is duct tape and a Swiss army knife.
When asked by François Truffaut in a 1966 interview how he would describe a MacGuffin, Alfred Hitchcock illustrated it perfectly with this story:
It might be a Scottish name, taken from a story about two men on a train. One man says, “What’s that package up there in the baggage rack?” And the other answers, “Oh, that’s a MacGuffin”. The first one asks, “What’s a MacGuffin?” “Well,” the other man says, “it’s an apparatus for trapping lions in the Scottish Highlands.” The first man says, “But there are no lions in the Scottish Highlands,” and the other one answers, “Well then, that’s no MacGuffin!” So you see that a MacGuffin is actually nothing at all.
Abenomics is a plan by which to change Japanese behaviour; but as anyone who has spent any time in that wonderful, perplexing country will tell you, the Japanese do NOT change their behaviour — even when facing a demographic disaster.
Sorry, but Abenomics is actually nothing at all.
*******
Right then, after that little lot, it’s time to get to the rest of this week’s Things That Make You Go Hmmm..., and we kick things off with suspicions surrounding a Chinese export of a slightly different kind than those we are used to. From there we head to Rome to find a mighty city in decay; to the US, where an astonishing one in ten bridges is in need of repair; and to France to read about the man of the moment, Thomas Piketty.
The BRICS are on the verge of making a big move of their own; and heading back to China, we ask the question “What if China has a Fukushima?” and find a property market swiftly falling to earth.
The article that kicked off this week’s TTMYGH can be found on page 26, and I’ve thrown in an irresistible story from The Onion for good measure. See if you can guess which one it is.
Charts? Well, food inflation, crop and water stress, and Chinese gold consumption take care of those, which leaves only the interviews; and this week we have a couple of crackers, beginning with my friend Bill Kaye from Hong Kong.
After Bill we get to hear from the brilliant Pippa Malmgren, and there’s even room for yours truly to squeeze his ugly mug in at the bottom of the page.
Until Next Time... Grant Williams