The answer: They're only loaning the Japanese government money (via buying JGBs) as a side effect of the transaction that they *really* want to do, which is selling dollars [0] to Japanese financial institutions, which is lucrative. [0] Technically, dollar-denominated exposure.
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Read on for more interesting tidbits, including how the risk appetite of Japanese fisherman facing retirement dominates the Caribbean domiciled but really US-based issuance CLOs which determine the market for US-based corporate junk bonds.
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Agree. Following the money is surprisingly fun.
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How did you find this post out of curiosity? Interested in building up my personal reading list
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Or there is more trust in Japan than banks.
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An idea from disaster relief engineering: to understand large complex connected systems, try to grok just one part of the system fully (like sanitation) and you will end up understanding the whole system. sanitation ~ water ~ electricity ~ sewage ~ finance.
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