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Reality Will Clobber Japan: Peter Schiff
CNBC ^ | 06/26/2013 | Alex Rosenberg

Posted on 06/26/2013 7:16:47 PM PDT by TexGrill

The incredible rise of Japanese stocks, and the gut-wrenching correction that recently ensued, have only one parallel for Peter Schiff: The dot-com bubble of the late 1990s and 2000.

In both rallies, investors shifted away from accepted means of valuation, and were instead "deluded by fairy tales," Schiff said. As tech stocks skyrocketed, "We were told that valuations, revenue and profits no longer mattered."

And as Japan embarked upon a policy of massive quantitative easing, "monetary policy was seen as a substitute for an actual economy."

(Read More: PM Abe Says G-8 Welcomed Japan's Economic Policies)

Now the Japanese Nikkei index sits nearly 20 percentage points below its late-May peak. But Peter Schiff, the CEO of Euro Pacific Capital, said it could get much worse.

"The Japanese government could quickly become insolvent," Schiff said. This would happen if Japanese bond yields continued to rise, for "if rates on the 10-year debt were to ever match the 2 percent of their inflation target, more than half of total tax revenue would be needed to service debt payments."

(Excerpt) Read more at cnbc.com ...


TOPICS: Business/Economy; Foreign Affairs; Japan; News/Current Events
KEYWORDS: japaneconomy
Global business tip
1 posted on 06/26/2013 7:16:47 PM PDT by TexGrill
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To: TexGrill
And as Japan embarked upon a policy of massive quantitative easing, "monetary policy was seen as a substitute for an actual economy."

This is some serious Quote of the Decade material here.

2 posted on 06/26/2013 7:19:10 PM PDT by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
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To: TexGrill

We’re on the same path.


3 posted on 06/26/2013 7:23:42 PM PDT by piytar (The predator-class is furious that their prey are shooting back.)
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To: piytar

4 posted on 06/26/2013 7:25:18 PM PDT by mylife (Ted Cruz understands the law, and he does not fear the unlawful.)
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Funny that a Japanese economist painted that picture.


5 posted on 06/26/2013 7:27:04 PM PDT by mylife (Ted Cruz understands the law, and he does not fear the unlawful.)
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To: piytar

Beat me to it. I’d say we’re well into the equivalent of Japan’s “lost decade”. And as economic time seems to be getting shorter and shorter, I don’t think we’re 20 years behind them in the ways Shiff lists here.


6 posted on 06/26/2013 7:35:41 PM PDT by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: TexGrill

Japan’s population is collapsing. Why would anyone expect economic growth as a result?


7 posted on 06/26/2013 7:57:58 PM PDT by Jack Hydrazine (I’m not a Republican, I'm a Conservative! Pubbies haven't been conservative since before T.R.)
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To: Jack Hydrazine
Japan’s population is collapsing.

I think we can solve that problem...I'm sure plenty of American men would be willing to do their part.

8 posted on 06/26/2013 8:03:03 PM PDT by dfwgator
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To: dfwgator

Here’s a good article about it.

Japan’s Deflationary Destiny Ordained By Demographics And The BOJ
http://www.forbes.com/sites/investor/2013/06/17/japans-deflationary-destiny-ordained-by-demographics-and-the-boj/


9 posted on 06/26/2013 8:04:40 PM PDT by Jack Hydrazine (I’m not a Republican, I'm a Conservative! Pubbies haven't been conservative since before T.R.)
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To: Alberta's Child

You and I are thinking the same thing, I think.


10 posted on 06/26/2013 8:36:43 PM PDT by D_Idaho ("For we wrestle not against flesh and blood...")
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To: TexGrill

well, I see these economic collapse theories as a win,win.
no kidding.

if they fail to materialize then its all good.

if we do collapse and society breaks down, we’ll have the dual pleasure of watching the welfare crowd whining that their snap cards no longer work, plus the sight of the likes of Pelosi and reid indicted by the grand jury.


11 posted on 06/26/2013 9:04:51 PM PDT by willywill
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