Harry Houdini-san

An article I wrote in the October issue of FinanceAsia, The JGB Conundrum, dealt with how foreign bond fund managers have taken a bath because they wrongly assumed Japan’s markets operate on an Anglo-Saxon model of supply and demand. In fact Japanese bureaucrats are adept at twisting the arms of domestic insurance companies, trust banks and other institutions into buying government bonds to lap up the government’s oversupply. This out-of-control supply problem is tilting global bond indices out of whack and creating big problems for overseas investors.