Japan has been a big topic in this newsletter because it illustrates the no-win situation in which wildly overindebted countries eventually find themselves. Here are two articles that illustrate the point:

How a Country Goes Bankrupt, In 10 Steps

Japan Is In That Box

Now For The Death Spiral

Confronted with both a plunging yen and rising interest rates, Japan was recently forced to address one of those potential crises. It chose to protect the yen by raising short-term interest rates and using the dollars in its foreign exchange reserve to buy yen. This arrested the yen's decline:

But remember, Japan is in a box where fixing one crisis exacerbates one or more others. In this case, a resurgent yen makes Japanese exports more expensive, threatening to tip the economy into recession. Japanese stocks, in response, are now plunging