With its deflation, aging population, gargantuan debt load, extreme seismic activity and sub-zero interest rates essentially forever, Japan sure makes for a bizarre "safe haven" in times of trouble. Yet last week, as all hell broke loose in Europe, investors couldn't buy yen fast enough.
They fled the Nikkei in droves on Friday (it plunged nearly 1,300 points) as "Brexit" became reality, but the yen surged and Japanese bond prices soared, never mind the negative yields. The idea that an economy staggering from recession to recession for 25 years, borrowing with increasing abandon and run by change-averse bureaucrats thinking it's still 1986 speaks to the upside-down state of the world. Really, which previously rock-solid financial correlation in bond, equity, commodity or money markets still makes sense in 2016?
But the same is true of Japanese politics. Some Tokyo wags figure the Brexit chaos may give Prime Minster Shinzo Abe a fresh boost ahead of the July 10 elections. This speculation features its own down-the-rabbit-hole dynamic. After all, if Abe had done anything substantial these last 1,280 days to restructure an uncompetitive economy, Japan wouldn't be the main casualty of European contagion. And in a more robust democracy, Abe's Liberal Democratic Party might be sent packing 13 days from now.