Albos war on landlords

It was like something out of a movie. A horror movie.

It was well past midnight on New Year's Eve in downtown Tokyo. I had checked into a capsule hotel.

I was lying flat on my back, and every breath hit the ceiling of the capsule-coffin and bounced straight back onto my face, creating a claustrophobic loop of ramen-tainted air.

"So this is what my final night will feel like," I thought.

Yet this is Japan, so of course it got weirder.

Just inches from my nose, a camera with a blinking infrared light was pointed directly at my head, recording my every movement and sound.

I slid out of the capsule — careful not to rupture a hernia — and trudged to reception.

"What's the camera for?" I grumbled.

"It's to track your sleep," the attendant said, bowing.

"But I don't want my sleep tracked."

She smiled politely. 

"These are the rules."

I wouldn't normally stay in a capsule hotel, but I was here with my eldest boy, and he's 12 and flexible. He'd just finished primary school, and to celebrate we went on a father-son trip. 

I'm well aware that very soon the hormones will kick in and he'll soon communicate with me through grunts. Yet for this trip, we had the best time. And without his mother as the sensible voice of reason... it was loose.

He found a ramen joint in a back alleyway that served what looked suspiciously like raw chicken.

He looked at me. I looked at him.

"Sure, why not?"

Japan is weird. But here's what's weirder:

The camera wasn’t the real shock. What happened in Japan’s financial markets was.

In the 1980s they had the mother of all wealth booms.

In the 1990s they had the mother of all debt busts.

And since then they've had the mother of all borrowing binges to ease the pain. The government  kept piling debt upon debt for decades, and kept rates ultra-low to keep it manageable. They had the highest debt levels in the developed world. Everyone warned them. For years. Nothing happened.

Until this month.

While I was sleeping in my surveillance capsule, Japan's bond market had a meltdown. Yields that should take months to move exploded in a single day. Bloomberg called it a "once in 1.4 million year move." The US Treasury Secretary had to call Japan's Finance Minister to say: "Your bond crisis just hit our markets."

Here's why that matters to you:

In Australia it’s not the government that has the debts, it’s our households, and it's one of the highest in the world. We've got massive mortgages, cheap rates, and we think we're different.

Japan thought they were different too.

For 30 years, they got away with it. Then one Tuesday, the market said:

 "Not anymore." 

I’m not saying Japan is about to collapse. What I am saying is that things that look safe for decades can break in an afternoon.

My takeout from Tokyo? 

Don't confuse thirty years of calm with safety (oh, that and don't eat raw chicken, or stay in hotels with a camera pointed at your snoring noggin).

Tread Your Own Path!