Bloomberg (and everyone else) is reporting that The LDP of Japan has suffered a crushing defeat, calling it a "bloodless revolution":

Hatoyama, who quit the LDP in 1993, has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and curtailing the power of bureaucrats. His grandfather founded the LDP in 1955 and became the first of that party’s 22 prime ministers.

“This election has been all about changing the government,” Hatoyama said in a nationally televised press conference. “Everything starts now.”

Indeed it does.

Before the election The Democratic Party of Japan had talked assiduously about the avoidance of US Debt Hegemony (read: Japan may stop buying or even sell US Treasuries) and in addition they made noises unthinkable just a few years ago - their stance towards China, long thought of as an arch-enemy of Japan, is quite friendly and cooperative.

While Bloomberg and others seem to be reporting that the Japanese debt and stock markets will cheer this win, that is not necessarily something that I would be inclined to chase in our markets if indeed it translates over here at all.

There is a tremendous amount of contradiction out in the marketplace in regards to what this means.  I have seen articles over the last two months claiming that this win would mean dramatic increases in bond issuance, and then others claiming that the party is adverse to bond issuance.  Which is the truth? Who knows - but what has come through loud and clear is an unmistakable tenor that the DPJ is well-aware of that the policies of the last twenty years, adopted on the back of the Nikkei's and Japan's property market crash (gee, anyone see parallels?) have not worked and have instead stagnated the Japanese economy for close to two decades.

The DPJ has audacious goals in terms of social spending.  One way to meet them could be to sell some or part of their US Treasury holdings to raise cash (oops!), which would have dramatic and immediate impact in our Treasury market.  It could also do interesting things to the Yen/Dollar balance, but between that and trying to sell huge quantities of additional debt into the Japanese market, I suspect the former, rather than the latter, would be the wiser policy - for them.

More ominously a link-up between the Yen and Yuan, unthinkable with the former government, now looks possible.  Create a basket-of-currency settlement system over in Asia with the Yen and Yuan as the core elements and the US immediately loses control of the game we've been trying to run with the banksters and fraud-laced credit games in the United States.

That which cannot continue forever won't, and I suspect we're about to get a lesson in reality from our friends over in Japan and China - a lesson we may not like at all.

Time is drawing short for The US to clear The Bezzle on a voluntary basis, lest we be forced to as a consequence of US Debt rejection by the Asian nations that have, thus far, enabled us to continue this charade.