Playing Mr. Kuroda’s Wild Ride: DDR Corp (DDR), iShares MSCI Japan Index (ETF) (EWJ)

And guess where American policy is taking its cues? From Europe. Combine the payroll tax hike, reduced government spending, and sequestration, and we’re going to be hitting a headwind of 2.5% against our GDP growth starting next month. That means that unless the private economy grows at a rate over 2.5%, we’re going to be in recession again.

This is the “stupid recession” I warned about. It is completely man-made. Lower energy prices mean that the U.S. economy is actually poised for growth, but policymakers are deliberately preventing this from happening, for political reasons.

How to Play

The lesson here is simple: there is no austerity fairy. Anyone who believes that taxing more and spending less is going to stimulate growth is wrong – you can take their money. Anyone who thinks that deflation is going to lead to growth, that keeping the money supply down like the gold bugs do is a sane policy, is insane and you can take their money.

How? The easy way is to sell instruments like the SPY, which bet on the U.S. economy, and buy ETFs like iShares MSCI Japan Index (ETF) (NYSEARCA:EWJ), which bet on Japan. Trades like placing a negative bet on the Euro, through instruments like CurrencyShares Euro Trust (NYSEARCA:FXE), the Currency Shares Euro Trust, or (if you’re braver) DDR Corp (NYSE:DDR), the Market Vectors double short Euro, also look good, especially if you’re buying some Japanese assets alongside.

I don’t usually play currencies and economies this way, so please feel free to offer other good trades to take advantage of this in the comments. Or just make fun of my thesis–it’s your call.

The article Playing Mr. Kuroda’s Wild Ride originally appeared on Fool.com.

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