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
5 comments:
Yeah, great, Naoto Kan will be gone. As if the LDP can fix things. They've been driving the Japanese economy in first gear towards a cliff for twenty years now.
Your argument reminds me of what George W. Bush said after 9/11. He told we Americans that the patriotic thing we could do is shop. Shop? Such a sad and pathetic economic system we have chosen. There must be some kind of sane, humanistic alternative to capitalism.
Let's think about where the money not spent on retail sales actually went. Perhaps it was donated to victims of the earthquake or maybe it was set aside for new investments required as part of the rebuilding effort. Some of it may be used for increased retail consumption in the coming months.
I have to say I'm not so sure that less spending on retail goods was such a bad thing for the economy, though no one needs some politician to tell them what to do in this regard.
In terms of a humanistic and sane alternative to free market capitalism, it is necessary to concede that our current system is horrible. The only way to keep powerful interests from taking advantage of people is to abolish government.
@Anonynous's comments upstairs are pretty typical of some arguments that I see that make no sense at all. Are you saying that, "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" is in some way a "bad argument"? How could that be a bad argument? And where was anything written about the LDP? Or are you reading a different article than the one above?
Andy's comments make sense... Sort of... No government would be great! Free Market economy! Yes! @Anonymous talks about some sort of utopia that doesn't exist and props that up as a straw man to say that our current system is bad? OK, well, what do you want to try? Socialism has already shown itself to be a miserable failure.
Your argument didn't remind me of what George W. Bush said after 9/11, his was kind of, "forget about everything except for periodic directed outrage" while yours is a, "don't stop living" kind of expression.
Has Japanese society changed as a result of the tsunami like the unitedstate did after 9/11? It doesn't seem like it.
What did strike me as similar was the Japanese goberment reacting the same way as the unitedstate goberment did after 9/11 in creating a funeral-type atmosphere.
When my boss at the time of 9/11 forced everyone to go outside and bow their heads at his command a co-worker rebelled by quietly muttering, "What about the thousands who are killed on the hyways? How come we don't do this for them?" I understood then that there would be a funeral atmosphere for a long time at the expense of... something(s).
Perhaps they overdid things a little and thus the need for the "go shop" comment by Bush? Extreme social conditioning?
I don't know, some People get confused and think things like, "There must be some kind of sane, humanistic alternative to capitalism." Only, what we have right now, at least in the unitedstate, is definitely Not capitalism, imho.
Maybe corporatism, or Sociapitalism?
http://financialsense.com/contributors/jason-kaspar/sociapitalism-how-the-government-became-the-next-bubble
But surly it's utopian, free lunches for everyone! As if.
Also, while I found what Mish wrote to be reflective of what a lot of others are saying and likely spot on, and I am interested in money and the economy, I don't make the Mish's blog a daily must-read, he's a deflationist, isn't he?
Someday maybe we'll read about him in a Gary North article capitulating ?
BTW, that is a fantastic photo you have, did you take it? It certainly isn't your western stereotypical kimono image. Wow. Do they wear this when the Japanese go to park and eat and drink with friends under the cherry blossoms? And they canceled this? Are they crazy? Or is that what happens when People become Keynesian for too long?
"...the Japanese people, businesses and the economy are paying the price." All around, it seems, compounded even.
Just a note to the caustic comments from Mr. Anonymous #2...
I'm not saying it's bad that people getting their lives together is a bad thing. It's a stopgap solution to an economy that is disastrously precarious, a point made several times in this here blog. Spending creates debt and debt has a sell-by date. It's coming.
And socialism is a "miserable failure?" Don't know about you but the economies of Northern Europe are about the most stable in the world and their societies are educated and egalitarian. I think you're confusing socialism with communism, a common mistake by the right, who like to villainize any -ism beyond the sanctimony of capital.
Get your -isms in order, Amigo...
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