$BABYDOGE A curious opinion on the current state of Japan's economy and its prospects:

Japan will crash the market this week, with a debt of $10 trillion. Yields on all Japanese government bonds have just reached record highs.

This week, Japan will start selling $500 billion worth of American stocks to stabilize the economy.

Its economy is collapsing, and this is much worse than most people think:

If Japan collapses, it won't do so alone.
It will drag the global financial system down with it. Japan only survived because interest rates were close to zero. That support has now disappeared.

Now that yields are rising, the situation is rapidly worsening. Debt payments are exploding. Interest costs are eating into government revenues.

No modern economy can survive this purely:
→ Default
→ Restructuring
→ Or inflation

But this is exactly where it will hit everyone else.
Japan owns trillions in foreign assets, over $1 trillion in U.S. Treasury bonds, hundreds of billions in global stocks and bonds.

They bought all of this because Japanese yields were yielding nothing. Now, Japanese bonds are finally providing real returns.
After hedging, U.S. Treasury bonds are effectively yielding losses for Japanese investors.

This is not fear. It’s simple math. Money is coming home.

The hundreds of billions of dollars being withdrawn from global markets will not be gradual. It’s a liquidity vacuum.

And then there’s the Japanese carry trade — over $1 trillion borrowed cheaply in yen and invested in stocks, cryptocurrencies, emerging markets... all with yields.

As Japanese interest rates rise and the yen strengthens, these trades are breaking down. Forced sales begin.
Margin calls spread. Everything moves together.

Meanwhile:
→ The yield gap between the US and Japan is narrowing
→ Japan has fewer reasons to keep money abroad
→ Borrowing costs in the US are rising, whether the Fed likes it or not

And the Bank of Japan is not finished yet. Rate hikes again in January? The yen will spike. Carry trades will unwind even more. Risk assets will feel it immediately.

Japan cannot just print its way out of this problem this time. Inflation is already high.

Print more → yen falls → imports become more expensive → internal crisis.

They are caught between debt and currency — and the door is closing.

For 30 years, Japanese bonds were an invisible anchor holding global rates down. Every portfolio since the 1990s relied on this, whether people liked it or not.

That anchor has just broken.

Bonds are falling. Stocks are falling even harder. Cryptocurrencies are falling the most. This is how “everything is fine” turns into everything breaking at once.

The world is entering a rate environment that no one alive has ever traded in before.