Wednesday, May 20, 2009

Asia will author its own destruction if it triggers a crisis over US bonds

TOKYO, JAPAN - FEBRUARY 17:  US Secretary of S...

Image by Getty Images via Daylife

By Ambrose Evans-Pritchard
Last Updated: 7:49AM BST 18 May 2009

Et tu Tokyo? If Washington is counting on Japan to act as last-resort buyer of US dollar bonds, it may have to think again. Masaharu Nakagawa, finance chief of the Democratic Party of Japan (DPJ), told the BBC that his country should not purchase any more US debt unless issued in yen as "Samurai" bonds, akin to "Carter bonds" in 1978.

This is the sort of petulance that tends to emerge in the late phase of slumps (1840s, early 1930s) when mass lay-offs provoke a populist backlash and hotheads run away with the agenda. Mr Nakagawa later played down the comments, calling them private thoughts, but the genie is out of the bottle.

Asia will author its own destruction if it triggers a crisis over US bonds - Telegraph

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