Japan

President Barack Obama has indirectly attacked Republican presidential front-runner Donald Trump, saying he knows very little about foreign policy  and not much when it comes to “the world generally.” Obama was referring to Trump’s latest proposal to arm Japan and South Korea with their own nuclear weapons to fight it out with North Korea and China themselves. Trump believes America is not a great nation any longer and needs to sit it out and count the pennies while the rest of the world sort out their own problems, including nuclear proliferation and such other important worldly matters.

At the end of the day, it was all about the dollar.

Thousands protested outside the parliament building in Tokyo against Japan’s controversial ‘war legislation’ that allows the military to take part in armed conflicts oversees. The governments new security law marks a historic departure from Japan’s decades-long pacifism that endured since the end of ww2. Common Dreams reports: The controversial “war legislation,” a package of bills that passed parliament in September and took effect on Tuesday, reinterprets Article 9 of the country’s Constitution, which renounced war as a means to settle international disputes following World War II.

Last week, when looking back at consensus economist forecasts for Japanese growth as of 1995, we compared what the pundits thought would happen, and what actually did happen: the result was what may have been the worst forecast of all time, leading to a 25% error rate in just five years later. It also unleashed the start of Japan's three lost decades.

But while laughably wrong economist forecasts are nothing new, a more troubling observation emerges when comparing the evolution of Japan's 10Y yields start in the 1990s...

Much like BoJ governor Haruhiko Kuroda, Paul Krugman thinks that the key for Japan when it comes to overcoming decades of deflation is a positive outlook.

“Japan needs to reach a point where everyone believes that it has pulled out of deflation. And then if that can be believed, then it may be able to stay out of trouble thereafter,” he told an audience in Tokyo last September.