Perhaps the masters of those with magic powers are located in Japan. With nearly a 229% debt to GDP level and unemployment near record lows, Japanese Prime Minister Shinzo Abe looked his fellow Group of Seven economic leaders in the eyes and said a Lehman-style crisis is approaching, to some degree echoing previous statements by financial analysts. In pointing to falling commodity prices as an indicator of the next crash, however, it might be what Abe didn’t address, debt, that matters to a more significant degree than correlation. Correlation analysis during periods including a Lehman-style crisis and market crash of near…
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- Correlation analysis during periods including a Lehman-style crisis and market crash of near 50% is different than during periods without a major crash
- The causation that matters between the Lehman-style crisis and Japan today is a debt commonality
- Abe ignores government debt and with unemployment at 3.2% -- historic lows -- says a tax hike isn't wise now
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