Japan: A New Currency War Front

By: Gordon Long | Sun, Apr 7, 2013
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With Special Expert: John Rubino

30 Minutes, 30 Slides

At 512% Total Debt to GDP and 226% Sovereign Debt to GDP Japan's Debt levels are alarming even compared to the EU 'GIIPS'. The IMF recently warned that Japanese debt was now "unstable". This is IMF code for unpayable and inextinguishable. So what is the solution? According to the new "ABE-nomics" policy it is to double-up.

Japanese Government Debt

Japan has replaced the Bank of Japan Governor and mandated a 2% inflation rate within 2 years. This defies logic at the current levels of debt since if they are successful, a mere 1% rise in borrowing costs (usually rises with inflation) would cost them 25% of their tax revenue. Japanese debt is presently24X central government revenue and Japan is already spending 25% of tax revenue on interest payments.

As incredulous as this seems it becomes particularly frightening when you consider that Japan has been able to finance its debt because:

Both of these advantages are now ending.

Japan's Demographic Decline

Japanese Household Savers

What You Need To Know

ABE-nomics has all the ingredients of igniting a global crisis but with the already 25% YTD devalued YEN, Japan has established a new front in the raging global Currency Wars.

Expect China To React

China is not going to tolerate the aggressive debasement of the Yen. With 20% of Japanese exports going to China they have the abilities to retaliate. Chine and Japan have a history of conflict as the recent escalation over two insignificant islands (rocks) clearly demonstrated.


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Gordon Long

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

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