Bank Of Japan Said To Start Preparing For Losses On Its “Huge” Debt Holdings Once QE Ends

Remember when Japan was going to rule the world? And no I’m not talking about WWII, I’m talking about the late 80s. The Japanese were buying up everything. The world was turning Japanese. Ahem.

That was a long time ago now. Indeed many of our readers don’t remember the 80s Japanese surge because they weren’t even born. Since those heady days Japan has stagnated. It may be looking at significantly worse than stagnation soon. The Land of the Rising Sun,

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“The largest macro imbalance the world has ever seen.”: China banks may lose 5 times US banks’ subprime losses in credit crisis

Consider that according to Bass (one of the few investors to win big during the last recession) the exposure of Chinese banks (and others) to their domestic property bubble is 5 times that of US banks during our recent bubble. China’s economy is still 2nd to the American in terms of size. Consider the impact of a property bubble 5 times the size of ours in an economy which is smaller than ours. Consider also that China is run by a Communist Party which is very keen on staying in power and has a history of using extraordinary force in times of crisis.

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Kyle Bass at Hayman Capital – How does the global debt ponzi scheme end? — War.

Bass makes a whole series of insightful observations regarding the global economy in the attached video, observations of the type one is unlikely to hear expressed on CNBC . But he makes one particularly chilling point. We have never seen peace time debt levels like this. In the past when debt levels spiked, during and just before war, the losers of the war got saddled with the debt. What happens now with much higher levels of debt to GDP ratios than we’ve ever seen,

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