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The Japanification of bond markets

IN THE 1920S E.M. Forster, an English novelist, set out the difference between a story and a plot. The king died and then the queen died is a story, he wrote. But a sense of causality is needed to make a plot more than just a sequence of events. The king died and then the queen died of grief is a plot.Investors like stories as much as anyone. They like plots even more. A durable narrative, and one that is on everybodys lips once again, is Japanification. A Forsterian summary might read: The bubble burst, people became cautious and the economy got stuck in too low a gear to stop prices and interest rates from falling. In its strongest form Japanification is a pure tragedy, in which rich, debt-ridden economies are destined to follow the path set by Japan. In another, softer version only countries with rapidly ageing workforces, such as Germany, are thus fated.
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