As Japanese Prime Minister Warns of "Lehman-Style Crisis," Is He Looking At Correlation or Causation?

Mark Melin

Published onMay 26, 2016

Updated on May 13, 2021

Perhaps the masters of those with magic powers are located in Japan. With nearly a 229% debt to GDP level and unemployment near record lows, Japanese Prime Minister Shinzo Abe looked his fellow Group of Seven economic leaders in the eyes and said a Lehman-style crisis is approaching, to some degree echoing previous statements by financial analysts. In pointing to falling commodity prices as an indicator of the next crash, however, it might be what Abe didn’t address, debt, that matters to a more significant degree than correlation.

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Correlation analysis during periods including a Lehman-style crisis and market crash of near 50% is different than during periods without a...

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Mark Melin

Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.

As Japanese Prime Minister Warns of "Lehman-Style Crisis," Is He Looking At Correlation or Causation?

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