We did not expect such a large rebound in the Nikkei as we had the past half year. In fact we expected the index to make a new low somewhere in the neighbourhood of, say, 5000. The Japanese have undergone a renaissance in mercantilism, monetary expansion and deficit financing all on a scale previously unheard of. Will it all work, or will it work at all? A few inconvenient facts makes one wonder where this will all go. At 240% of GDP government borrowings are on a scale not seen anywhere else. Should rates approach 2.5/3% on government bonds the entire intake by the government will be needed for interest expense. The population is starting to shrink at an alarming rate which is only expected to accelerate. Competition is pretty fierce and there is not much love lost between Japan and some neighbours. It all begs the question how far they can take this before it blows up. We will see.