“Prime Minister Shinzo Abe’s fiscal and monetary stimulus measures may trigger a collapse of Japan’s economy as early as this year, according to Takeshi Fujimaki, a former adviser to billionaire investor George Soros.
The yen has slumped 6 percent since elections last month returned power to the Liberal Democratic Party run by Abe, who’s demanded that the Bank of Japan (8301) undertake unlimited cash infusions to end deflation. The premier also unveiled 10.3 trillion yen ($116 billion) in extra spending last week, a step that will add to public debt that’s already more than double the size of the nation’s economy.
“Large-scale spending is ridiculous given the amount of debt Japan has accumulated, while I think highly of Abe in regards to his intention to weaken the yen to support growth,” the president of Fujimaki Japan, an investment advising company in Tokyo, said in an interview on Jan. 11. “Abe’s policies would have worked some 10 years ago, but now they will only accelerate an economic collapse.”
Fujimaki said in an interview last June that Japan may default on its debt within five years and the yen could weaken to as much as 400-500 per dollar. He advised Japanese investors then to hold assets in foreign currencies such as the greenback, Swiss franc, U.K. pound and the Australian and Canadian dollars.
Borrowing in yen and investing in those currencies would have returned an annualized 32 percent as of yesterday, Bloomberg data show….”
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