Yo Yo Hashi - Yo Yo's Pad
In his most recent posting: Japan Retail Sales Plunge Most in 13 Years; S&P Cuts Japan Debt Outlook to "Negatibe"; 30,000 Dead or Missing, How You Can Help, Mish writes up, and links to, articles and data that point to a very bad future for Japan.
Immediately after the March 11, 2011 earthquake and tsunami, foolish Japanese politicians told the Japanese public that we should not be trying to live our lives normally. Shintaro Ishihara, the mayor of Tokyo, even told people that the traditional "Hanami" celebrations should be cancelled this year.
Hanami is an old tradition whereby the Japanese go to park and eat and drink with friends under the cherry blossoms.
Due to these sorts of short-sighted pronouncements, many famous Japanese festivals were cancelled and the country went into a sort of mourning like that of a funeral. Things still haven't gotten 100% back to normal. Now, because of these ill considered pronouncements, the Japanese people, businesses and the economy are paying the price.
The best thing the people could do is try to get their lives back in order as soon as possible as get back to work and get the economy back on track. In that way, with a strong economy, can we help those poor people who suffered in Tohoku in this terrible tragedy. But, no! The government wonks made their dumb announcements and now we are paying the price.
Japan prime minister Naoto Kan has announced his idea for reconstruction but he's not said how he will pay for it. The idea to raise taxes was floated but that died a quick death - especially after Kan's party got trashed in local elections this last Sunday. Now, ratings agencies suspect what I fear; more Japanese government debt.
That's the last thing we need. Mish writes:
Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load.
The outlook on Japan’s local-currency debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002. Moody’s Investors Service said last month the disaster may bring forward the “tipping point” for the country’s bond market.
Today’s decision adds to pressure on Prime Minister Naoto Kan, who has yet to detail how the rebuilding will be paid for and how he plans to rein in longer-term fiscal deficits. As public spending increases, revenue will likely decline because of the economic hit from the disaster, with a report today showing retail sales tumbled the most in 13 years last month.
Moody’s today reported no change to its negative outlook for Japan's Aa2 grade rating, the third highest, after a reduction from “stable” in February because of political gridlock. Japan’s public debt will probably increase 5.8 percent to 997.7 trillion yen ($12.2 trillion) in the year started April 1, from a projected 943.1 trillion yen last year, the Finance Ministry said in January.
As I predicted in December of 2010, Naoto Kan will be gone by summer. That's the good news. The bad news? That will do nothing for Japan's political stability and our credit rating and economic outlook.
The only thing we can say for certain is that it looks to be a long hot summer in 2011.
Read the rest of Mish's post here: http://bit.ly/kOqL8i