Part 8/15:
The Political & Mathematical Double Bind
Politically, defaulting or drastically cutting entitlements risks unrest, but mathematically, such actions would lead to asset devaluations, social chaos, and possibly a collapse of political order. The complexity of this dynamic makes the crisis unavoidable unless extraordinary reforms are enacted, which have little political feasibility.
The Detectable Signs of Systemic Stress: Market Indicators to Watch
Several market signals act as early warnings for the impending systemic upheaval:
The divergence of 10-year US Treasury yields versus Japanese government bonds indicates waning confidence.
The weakening of the yen against the dollar despite rising Japanese debt yields signals a loss of faith in the Japanese economy.