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Your first assertion is incorrect. It's nothing to do with real estate. Being in debt (obv as long as it's nominal/fixed rate) is an excellent investment in inflationary times. Nothing for the moment... IMHO, they need the US more than the US needs them and I think they realize that.

On the margin, as I have mentioned, I agree with your fundamental view, although I think it's a very very crowded trade, which is why I ain't in it... However, I really have begun finding Rosenberg really annoying of late. I think he's very biased and can't admit when he's wrong. I find his...

I would love to understand how FX reserves held by the Bank of Japan matter to the level of indebtedness of the Japanese govt... In truth, due to the various quirks in Japanese accounting methods, the net debt/GDP figure for Japan is more like 170% or so (although opinions vary). However...

I don't necessarily think the front end was moving due to PPI... Moreover, be careful what you wish for. If we had efficient mkts, you and I would have nothing to do. Finally, I'd be careful about listening to Rosenberg. He's been saying the same thing forever, which suggests to me that...

I'm with byteme, but then again, I am one of those evil Wilmott peeps :)...

Here's my view (in response to Misthos, primarily), which I expect y'all to disagree with... You are confounding two independent concepts: debt and GDP. Short-term correlation between the two doesn't imply causation. Accumulation/destruction of debt, in my view, is a cyclical phenomenon that...

So what? Isn't this type of scenario relatively common in business? Why is that such a horrible thing, especially when you consider that your govt is a monopoly, where provision of public goods is concerned... Moreover, Japan and other countries have been doing this for the past couple of...

How is this a theory? Isn't this pretty much what all of human economic history is about? Colonization, industrialization, computerization, you name it... The problem is that somehow Americans got it into their heads that they have some sort of a 'divine' right to win at these games (all...

I disagree with you... IMHO, you're not seeing the forest for the trees. In fact, the process you describe is exactly how economies grow. It's never a smooth process, but seems to work, in the end. Firstly, losing specific types of jobs is not, in the long run, necessarily detrimental to...

Well, if you think about the value of the govt backstop option and the nature of the LIBOR basket, 30y, rather than 10y, makes a lot of sense.

While I'd agree, in general, I don't think that MBS are a particularly heinous example of financial engineering. I actually think it's a pretty good idea and the Danes, who have the oldest and, arguably, best-functioning mtge system in the world, have done wonders with MBS. CDOs and the other...

Well, I am not sure which financial community you might be referring to here... As to financial innovation/engineering, at which point do you start defining products as innovative? Are futures, being derivatives, financial engineering?

Yes, the PRDC story is one of the contributors to increased demand for swaps. However, to be fair, effects such as this should be relatively short-lived. The more I think about it, the more it fundamentally makes sense, though. Most of the members of the LIBOR basket are supranational...

Apart from being somewhat outdated, this amply demonstrates why just looking at govt debt/GDP is such a perilous exercise...

The idea behind A and B are linked, to a certain extent. However, as you have realized, A should, all else equal, cause bonds to outperform swaps, rather than the other way round. In my view, it's the interplay between fundamental (public vs private deficits) and technical (increased swap...

Definitely not A... Certainly a bit of B. Surely not C, unless your fingers are of no use to you. Also quite a bit of "D. none of the above". My opinion...

It is unfair to make such an indiscriminate, broad-brush statement... There's all sorts of financial innovation, some good, some bad.

This is silliness... Even if you assume constant trend growth starting from the 80s, you'll arrive at the real (as opposed to nominal) GDP of somewhere arnd $10trn. That's a rather conservative estimate, as it assumes no TFP increases.

I would say most of the applications are in 'brute force' methods, such as Monte Carlo/neural nets, rather than DSP techniques. Moreover, it's not all FPGAs out there, with GPUs like Nvidia offering stiff competition. You might want to look here...

Japan is really in a lot of debt... However, it's important to realize that the Japanese govt borrows almost exclusively from its own citizens and corps.