2020 Tokyo Olympics - Bubble, Boom, Bust (Out of Control Gov't Spending & Tax Increases...) Oh, and Don't Mention Fukushima!
“The price of anything is the amount of life you exchange for it.” ~ Henry David Thoreau
Before I go on, let's do some chemistry (oh, I wish!) First off, the elements. I'd like to point out to you, the newest discovery in the elements and that is Governmentium. It is the heaviest of all elements, yet it does absolutely nothing good. It just expands. See the red box at the lower left:
Governmentium: Inert, worthless.
The Urban Dictionary says:
The heaviest chemical element yet known to science. Governmentium (Gv) has 1 neutron, 12 assistant neutrons, 75 deputy neutrons, and 224 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert. However, it can be detected as it impedes every reaction with which it comes into contact.
....Governmentium mass will actually increase over time, since each reorganization will cause some morons to become neutrons, forming isodopes. When catalyzed with money, Governmentium becomes Administratium--an element which radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.
Keep that information about Governmentium in mind while you read today's post.
In my last few postings, I complained about the 2020 Olympics coming to Tokyo. Actually, not exactly that; I complained about how the government will use that as an excuse for out-of-control spending and the subsequent taxation.
Well, lo and behold, not 5 days have passed and the hammer has come down. Japanese Prime Minister Shinzo Abe has pronounced that he is going ahead with the increase in sales tax. From the Japan Times "Abe to raise sales tax to 8% as scheduled - More stimulus in works but critics fear hike will hobble recovery":
"Prime Minister Shinzo Abe has decided to raise the consumption tax rate to 8 percent next April as planned, emphasizing the need to demonstrate fiscal discipline by making good on a pledge to the international community, a source close to him said Thursday."
Oh? So finally this guy wants to show some "fiscal discipline" concerning the Japanese debt to GDP problem? Great. He also admits that a sales tax increase will most probably slow down the economy... He wants to show the critics that the tax increase will not slow down the economy, so what does he do? In true Keynesian fashion he is going to spend more money! The Japan Times article goes on with a laugher and total contradiction of the "fiscal discipline" comment Abe made (polite laughter here).
"Abe, who has been trying to shake the economy out of nearly two decades of deflation, is also considering implementing a stimulus package worth ¥5 trillion to prevent the tax hike from slowing down the economy, the source said."
See? We have to show fiscal discipline (translation: controlling government spending) by increasing government spending. Let me rephrase that: We have to show some fiscal responsibility by spending more money!
What did I tell you? Throw that ¥5 trillion (¥5 trillion yen? Is that $50 billion USD?) on top of the ¥10 trillion (is that $100 billion?) - it will be much more, you'll see - they plan on spending on the Olympics and you have the government spending $150 billion dollars on crap. ONE HUNDRED AND FIFTY BILLION US DOLLARS!!!!
Ah, but it's just a drop in the bucket, right? The Japanese government is already at least $10.46 trillion dollars in debt - that's nearly 250% of GDP? Another $150 billion is a drop in the bucket, right?
I'll bet lots of people who were cheering the Olympics slapped themselves on the forehead when they heard the news about the tax rise. I didn't. I just thought, "See? I told you so." You just knew that the 2020 Olympics coming to Tokyo would serve, for now, merely as a green light for MORE out of control government spending.
They already said they were going to spend about $10 billion USD... Like I said, I bet you a half a bento it will be waaaaaaaay more than that!
"...The cost of Tokyo’s bid fell between $5 billion and $6 billion. That includes the construction of 11 new sporting venues and 10 temporary ones, at a cost of $3 billion. The Olympic village will cost another $1 billion, according to the IOC.
See? It works already! Like I said, the Olympics are an excuse for more out of control government spending and, with that, a cover to increase the sales tax... It's funny that when the former government who made this tax increase passed the law, Abe and his cronies were against it... Now they are for it.
Who said that these political parties weren't simply two sides of the same coin?
Abe and his cronies claim that the Olympics will charge Japan's infrastructure investment and help the economy. That's bullsh*t folks. Don't forget, that Japan ran up this 245% debt to GDP all through the 80s, 90s, 2000s with wasteful infrastructure investment. How is having an event going to change the equation?
Testosterone Pit writes in Tokyo Olympics "Boom" and "Bubble":
These words are already cropping up when discussing real estate developments in the Harumi area, reclaimed land by the Tokyo Bay where the Olympic village will be sandwiched between the two main competition sites. Two dozen high-rises are to be built (though high-rises on reclaimed land did badly during the earthquake in 2011 as the ground “liquefied”) with nearly 11,000 luxury apartments. There will be dining halls, seaside restaurants, and parks. And views of the Rainbow Bridge to Odaiba, a manmade island with hotels and apartment buildings, but not much else.
All this activity, including new transportation, will jack up apartment prices by 20%, Sanyu Appraisal Corp. announced giddily. This bubble excitement comes on top of the bubble the BOJ’s free trillions are already creating in the Tokyo property market. It would “particularly benefit land owners” in Tokyo Waterfront City, predicted a report published by Macquarie Securities to further stir up bubble enthusiasm. Nomura Securities jumped into the fray with its own prediction that it would “attract a new wave of investors to housing in the bay area” that would “push up property prices.” Alas, if wages remain stuck where they are, and if inflation cuts real wages further, who is going to buy these beauties? The few beneficiaries of Abenomics and foreign investors?
Yeah, let's build lots of building and sky rises... Just like the late 80s when these things were built in Makuhari. Been there recently? I went there, just last month... These beautiful office buildings and high rises still stand empty... At 50% (or less) occupancy. Huge money losers...
And most Japanese people cheer the 2020 Tokyo Olympics? Incredible. If they are happy now, then I guess they'll all be having orgasms when their sales tax goes to 10%.... Any bets for 15% (or more) by 2025?
The Abe government gets their wish: A smoke screen to cover for more spending. The people cheer on...
"Panem et circenses" (bread and circuses) - 大衆の不満をまぎらわすために提供される)食事と娯楽. − Juvenal
No problem about the debt, though... Our kids can pay for it.
NOTES ON FUKUSHIMA: Never mind yesterday's news (Sept 13, 2013) that completely contradicts what Shinzo Abe said to the Olympic committee. From Japan Times:
A senior official of Tokyo Electric Power Co. admitted during a meeting with opposition lawmakers on Friday that the massive radioactive water buildup at the crippled Fukushima Daiichi nuclear power plant is "not under control." ... that view directly contradicts Prime Minister Shinzo Abe's statement last week to the International Olympic Committee in pushing Tokyo's bid to host the 2020 Summer Olympics.
I said not to mention Fukushima... Well, I lied.... Just like Shinzo Abe. And I don't really think that the radiation from the leaks are all that much of a problem, as opposed to what the media is reporting. But that's the kicker here, isn't it? The media reports one thing and the Japanese government and TEPCO say another.... Will world governments and athlete's believe their media or what the Japanese government says?
I don't think what Abe or TEPCO says have much credibility left.
Here's what Der Spiegal thinks in Germany: http://www.spiegel.de/international/world/inspector-says-japan-needs-international-help-for-nuclear-plant-a-921302.html
Thanks to my friend Mark Davis for the Thoreau quote.