John Mauldin: The Euro, Japanese Bond Market, U.S. Dollar and a Global Perspective — 4/9/14
This week we continue our La Estancia radio series with New York Times Best Selling Author, John Mauldin. John discusses the Eurozone, the Japanese monetization of debt, his outlook for the U.S. Dollar and global finance…
Moving forward, John believes that developed countries are no longer going to be able to finance their sovereign debts, at reasonable rates, without monetization. He uses the example of Japan, where Abenomics has taken full effect. Japan is monetizing debt at record rates and the outcome is likely to end very poorly. John believes that money printing will move to Europe, where some very tough decisions have to be made in the near future.
John points out one crucial point about bond markets — everything is fine until it isn’t, and interest rates can skyrocket overnight. He uses the example of Greece, which saw very steady interest rates right up until things fell apart. John believes that Japan could be the next place to witness a major bond crisis. It is his contention that the time for Japan to make good choices was 10 or 15 years ago. Today it is a decision between Disaster A and Disaster B.
Over in the United States, John believes that the Dollar could fare much better than the currencies of other developing nations. Massive amounts of energy in the form of shale gas and oil will allow the United States to be energy sufficient and help the trade balance moving forward. This is why John sees a possibility that the world’s reserve currency could suddenly see a high demand, which in turn could cause a dollar rise.
Of late, John has been working on a book called The Age of Transformation, which explores what the world will look like in 20 years. It includes both positive aspects and some negative aspects. John points out that despite all the bad things happening, we are in a golden age — there is less poverty, less hunger, people are living longer than ever before and there is more global trade. Tune in to listen to the full interview with John Mauldin.
Each week, well over a million readers turn to John Mauldin to better understand Wall Street, global markets, and the drivers of the world economy. And for good reason. John is a noted financial expert, a New York Times best-selling author, a pioneering online commentator, and the publisher of one of the first publications to provide investors with free, unbiased information and guidance — Thoughts from the Frontline—one of the most widely read investment newsletters in the world.