Friday, March 21, 2014

This Can't Be Good

Uh oh.
Foreign investors are selling Japanese stocks at the fastest pace in almost a decade, government data show, as worries grow that the country's government won't be able to follow through on its promises to spur the economy. Moves by hedge funds and other speculative investors lifted the ratio of bets against Tokyo shares this week to the highest in five years, according to the Tokyo Stock Exchange.
The Japanese have been borrowing and printing like mad, even worse than the US, thinking that a weaker yen and monstrous government "stimulus" spending would drive their economy. Instead, the resulting political misallocation of resources and import price inflation has offset what little good might have been derived from the deficit spending. Every day brings no significant economic growth and a lot more debt.

The article linked above doesn't mention what every investor knows - Japan is a house of cards. While some of the selling is certainly prompted by profit taking after a big run-up in the Nikkei last year, I'd be willing to bet that it's more than normal selling high, it's selling high and getting out until the explosions have stopped and the ruins are no longer smoking.

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