A Day When Three “Reiwa Bubble Abnormalities” Erupted at Once

 

A Day When Three “Reiwa Bubble Abnormalities” Erupted at Once

The movements in Japan’s markets and policy landscape yesterday (Thu, Feb 26) symbolized the structural fragility of the Reiwa Bubble.

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1. Prime Minister Takaichi Appoints Two Pro‑Easing, Reflationist Candidates to the BOJ Policy Board

With inflation staying elevated, labor shortages intensifying, and service prices such as rents becoming increasingly sticky, this is a moment when Japan needs personnel capable of supporting monetary normalization.

Instead, the administration selected two reflationist economists who have long advocated continued monetary easing.

This represents a clear policy contradiction:
stepping on the accelerator in the middle of an inflationary phase.

Markets are likely to interpret this as politicization of monetary policy, which could increase upward pressure on long‑term interest rates.

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2. Former BOJ Governor Kuroda Supports “Continued Rate Hikes”

In his Reuters interview the day before yesterday, former Governor Haruhiko Kuroda stated:

“If we push fiscal and monetary stimulus any further, inflation will accelerate.”
“The BOJ should raise rates toward the neutral level over the next one to two years.”

Kuroda—once the very symbol of unprecedented monetary easing—
is now openly speaking of tightening.

This marks a historic turning point:
the very premise of Abenomics (escaping deflation) has collapsed.

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3. Nikkei 225 Futures Tried the 60,000 Line—and Then Deflated

From Thursday evening into Friday morning,
Nikkei 225 futures surged into the upper 59,000s.

But they failed to reach the symbolic 60,000 mark and quickly retreated.

This is a textbook case of “early-stage exhaustion in an overheated market.”
The underlying structure is becoming visible:

• The real economy cannot expand due to supply constraints (labor shortages)
• Valuations (PER) are rising without earnings—a low‑quality rally
• Short‑term foreign money is driving the move
• Policy contradictions (fiscal expansion vs. rate‑hike pressure) are being recognized at the top of the market

Today’s Tokyo market is also likely to show heavy resistance on the upside.

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Summary: The Reiwa Bubble Is Inflating Through “Policy Contradictions × Market Overheating”

These three developments clearly reveal the structural dangers of the Reiwa Bubble:

• Policy is pressing the accelerator (fiscal expansion, pro‑easing appointments)
• The economy is pressing the brake (labor shortages, inflation)
• Markets are speeding out of control (testing 60,000 without fundamentals)
• Former Governor Kuroda is warning of the need for continued rate hikes

This contradiction will reach a critical point between 2025 and 2026.

The core of the idea I have been developing—
“The Structure of the Reiwa Bubble and Its Collapse in 2026”—
was vividly exposed in just one day.

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Postscript: On Beginning The Rise and Fall of the Great Powers

Paul Kennedy is a rare scholar who integrates military power, fiscal capacity, population dynamics, technology, and geopolitics to explain the rise and decline of civilizations.

Reading Kennedy alongside Niall Ferguson’s Empire each night,
I am beginning to see more clearly how:

“the lifespan of a nation” and “the lifespan of a bubble” follow the same structural logic.”

It is intellectually fascinating—and deeply enjoyable.