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Song of the Week - Massive Attack - Angel
I’m in a mood for throwbacks right now.
Table of Contents
An Eye on Japan
Economic Calendar
Bank of England Speech
New Zealand Interest Rates
Canadian Interest Rates
US Inflation
Crypto Macro
Price Action
Mechanical Liquidations
Conclusion
1. An Eye on Japan
Shinzo Abe’s assassination has led to a few immediate changes for the current ruling party. One of the main ones is that Japanese citizens and the voting bloc are expressing even higher levels of support for the government than previously. A coincidence, but one that those with a conspiratorial mind would read into as something more, is that just 2 days after Abe’s assassination, Japan had an election for seats in their governments upper house. For American’s, this is kind of like the Senate, and for other westerners, this is kind of like Parliament. The ruling party (the party of the late Shinzo Abe) won a majority of seats in that election so far, and now has enough votes to amend their constitution if they wish to do so.
While Abe was in Power, one large move he made was to re-interpret a section of the Japanese constitution. After WW2, one of the conditions of Japan’s surrender to the US was for them to “never again maintain land, sea, or air forces, or another war potential.” The Allies occupied Japan at that time (and you could say that we still do, since we never left), and guaranteed peace from external aggression. However, the Korean war in the 50’s drew much of the US occupying forces to depart for combat in the Korean Peninsula. And so Japan (with American blessing) drew up a law called the Self Defense Forces Act. This allowed for Japan to maintain an army to defend it’s own borders. The Japanese constitution still made aggressive war an illegal act, and to their credit they have never initiated war as far as I know. In the 2010’s, Shinzo Abe and the Liberal Democratic Party of Japan (this is the more right wing party of Japan) re-interpreted this clause of the constitution to mean that Japan could use it’s self-defense force to come to the aid of an ally who is under attack.
Which is why my IG post from Summer 2021 was so relevant, because its marking a massive shift in the Japanese governments mood on warfare.
Why is this so relevant today? Well, with the recent election win securing more seats within the Japanese upper house, they have enough of a majority to amend the constitution. It would be a timely move to honor the death of the late Shinzo Abe by further expanding the Japanese governments ability to legally declare war or engage in aggressive action. At this point in the global macro, Japan is hurting significantly, and many recessions can be papered over or covered up with military spending. Japan doesn’t have this down to an art like the US does, but I suspect that if China were to move on Taiwan; Japan would use such as an excuse to expand their territorial holdings in the South China sea, especially among the disputed islands north of Taiwan, and maybe even to get back some of the Northern Islands from Russia.
I don’t know what will happen, but global instability and conflict is increasing, and I see this as a potential outcome from the events that have shaped up after Abe’s assassination.
In other news, the Bank of Japan has doubled down on their insistence on demolishing their own currency.
"We won't hesitate to take additional monetary easing steps as necessary" with an eye on risks, Kuroda said in a speech to a quarterly meeting of the central bank's branch managers.
Kuroda also repeated the BOJ's policy guidance that the bank expects short- and long-term interest rate targets to "move at current or lower levels."
They already are running an infinite printer, and are still failing to control treasury yields. I don’t know how many more additional monetary easing steps there are left that they can take. But the conclusion is to keep fading the Yen. I expect them to enter into very dangerous territory, and we may see a militaristic side of Japan emerge in the chaos this creates. Could we begin to see protests in the streets as prices continue to rise, and the re-emergence of an arms culture to both crack down on domestic disturbances, but also to attempt to expand territorial control to take back Sakhalin island and capture it’s massive oil reserves? It would not be hard to make the case that Japan legally owns that island, as the video below explains why.
And it’s quite possible that if the current climate of conflict persists, the West would likely look the other way, as Russia has just over the weekend seized several western natural gas and oil assets that were on the island that had been constructed by Shell, Mitsubishi, and Matsui. If Japan finds themselves cut off from the Natural gas that was previously passing through those facilities could they not invent a reason to invade? By rights, they could make the legal claim that they own that island and it was illegally taken after WW2 by Russia.
I don’t know what’s going to happen. All I can speak on are possibilities and dominos.
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