The Federal Reserve did not raise interest rates last month as many expected. Their reasons were understandable: one in 10 Americans remains unemployed, underemployed or so discouraged that they have fallen out of the labor force; and inflation remains consistently near zero.
It is no wonder that Japan greets Abenomics with caution. At a retail level, people have held deflationary expectations for years and at a professional level, fund managers and corporations have seen unstable governments come and go.
Paul Krugman is right: Japan is attempting a paradigm policy shift with potential systemic implications; and sustainability and success are not certain. The outcome, still too early to tell, will be consequential for Japanese society and the global economy as a whole.
As a contrarian investor, I'm always looking to buy what people are selling and sell what they're buying. It's the only way to ensure you're getting a reasonable price. This often leads me to forsaken corners of the investment world.
Investors are scared of the sovereign debt crisis unfolding in Europe. However, they are ignoring a more likely and significantly larger debt catastrophe that is about to hit the second-largest economy in the world -- Japan.