He disagreed with the views of noted investment analyst Byron Wien, vice president of Blackstone Advisory Services, who told CNBC in January that Japan could surprise in 2010 by being the best-performing major industrialized market.
“Byron Wien and some others have said that this could be the year for Japan to have a renaissance in the equity markets, but it won't be real, and I think it could be a last gasp,” Daley warned.
Japan cannot sustain itself on domestic demand, its citizens don’t have the propensity to consume, Daley explained. “Demand can never pick up in Japan as long as the fiscal situation is so bad.”
“The government is going the wrong way -- They're exacerbating the fiscal issues, they're holding back the domestic consumer in Japan,” Daley added.
“(The) consumer does not have the firepower anymore largely because they've lost a lot of it in the carry-trade, in the reversal of the carry-trade, and also they've been buying JGBs for years at the urging of the government to keep the whole system afloat.”