zerohedge.com / By Tyler Durden / February 7, 2013, 21:36
Yesterday we presented a simplistic analysis of why for Japan “This Time Won’t Be Different“, a preliminary observation so far validated by the just announced Japanese December current account deficit which was not only nearly double the expected 144.2 billion yen, printing at some 264.1 billion yen, but was only the first back-to-back monthly current account deficit since 1985.
In short – at least in the first month of Abe’s great reflation attempt, not only did trade post another whopper of a deficit, but so did the broader current account implying that much more Yen weakness will be needed to generate the structural reforms sought by the new Prime Minister.
But perhaps we are wrong and this time Abe will succeed where he, and so many others, have failed before. And, as is now widely understood, perhaps Japan will succeed in finally launching the necessary and sufficient currency war that would be part and parcel of Japans great reflation, as even various G-8 members have recently acknowledged.
The question is will it, and when?
One attempt at an answer comes from the fine folks at Bienville Capital who have compiled the definitive pros and cons presentation on what Japan must do, and how it will play out, at least if all goes according to plan.
What not even this presentation addresses is what happens if Japan is, in the end, successful in reflating, in the process beggaring all its neighbors, radically shifting the economic lay of the globe, and launching full blown currency war – far worse than anything seen to date, including the dark days of the 1930s.
