{"id":5776,"date":"2012-09-18T21:20:16","date_gmt":"2012-09-19T02:20:16","guid":{"rendered":"http:\/\/streamingradioguide.com\/startingover\/?p=5776"},"modified":"2012-09-19T12:00:58","modified_gmt":"2012-09-19T17:00:58","slug":"bonds-away","status":"publish","type":"post","link":"https:\/\/streamingradioguide.com\/startingover\/?p=5776","title":{"rendered":"Bonds Away!"},"content":{"rendered":"

http:\/\/www.telegraph.co.uk\/finance\/china-business\/9551727\/Beijing-hints-at-bond-attack-on-Japan.html<\/a><\/p>\n

World War III will likely be fought by computers and financial markets, not tanks and aircraft carriers. \u00a0 Pay attention to this story as it suggests what might happen to us in the future.<\/p>\n

First the combatants – Japan and China are not friends, although the countries have manufacturing ties. Both countries have big economies that need a lot of energy, and neither has an adequate supply.<\/p>\n

The current fight over a few unoccupied islands is not about the islands, but that there may be large deposits of natural gas under the China Sea. Who “owns” those islands established who owns the mineral rights.<\/p>\n

Japan isn’t backing down even under the threats that China will not prevent attacks on Japanese companies and people working in China. \u00a0World War II in Asia had been going on long before the attack on Pearl Harbor (since 1937). \u00a0Japan had invaded the mainland and ruthlessly murdered \u00a0civilians and overran an ill equipped military that had placed its hopes on the League of Nations preventing all future wars.<\/p>\n

So China is now threatening to use its large holdings in Japanese government bonds as a weapon. \u00a0Japan is such a good credit risk their 10 year bonds sell at less than 1% interest.<\/p>\n

Trying to dump bonds may be an idle threat. \u00a0Flooding the world on the secondary market will not affect the interest Japan has to pay on its existing bonds – at worst it would make it more expensive to borrow new money or roll over existing debt. \u00a0But Japan is not a weak economy that can be bowled over. \u00a0 Other central banks would pounce on the opportunity to buy Japan’s bonds. \u00a0 Japan might sell its US Dollar holdings to meet its internal needs.<\/p>\n

Even if China was able to create a stampede and destroy confidence in Japan, they would destroy the value of the remaining bonds they hold – Kind of like the character in blazing saddles who holds himself hostage.<\/p>\n

This is poker for huge stakes. \u00a0Does Japan think China has a pair of twos?<\/p>\n","protected":false},"excerpt":{"rendered":"

http:\/\/www.telegraph.co.uk\/finance\/china-business\/9551727\/Beijing-hints-at-bond-attack-on-Japan.html World War III will likely be fought by computers and financial markets, not tanks and aircraft carriers. \u00a0 Pay attention to this story as it suggests what might happen to us in the future. First the combatants – Japan … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104,1],"tags":[],"class_list":["post-5776","post","type-post","status-publish","format-standard","hentry","category-global-finances","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/5776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5776"}],"version-history":[{"count":7,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/5776\/revisions"}],"predecessor-version":[{"id":5785,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/5776\/revisions\/5785"}],"wp:attachment":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}