Proof Again Japan IS (Has?) Collapsing - Bank of Japan Posts ¥233 Billion Loss - Red Ink on Balance Sheet Hits ¥156 Trillion!

Update below

Hate to say I'm right... Well, actually, no. I am happy to say that I was right when I wrote, "Japan is Collapsing."

Today over at Zerohedge they posted an article that is just jaw dropping. Please refer to: Bank of Japan Posts Whopping ¥233 Billion Loss As Its Soaring Balance Sheet Hits Record ¥156 Trillion

But... but... a central bank can never lose money. Bzzzz, wrong. As it just so happens, the world's most tragicomic farce of a central bank, and one which is about to officially lost its (faux) "independence" and become a branch of the Japanese government if the up and coming PM Abe has his way, the Bank of Japan, just reported that in the quarter ended September 30, the Japanese central bank reported an operating loss of ¥183.4 billion, and a net loss of ¥232.9 billion. As a comparison, the loss in the same period in 2011 was "only" 91 billion. This is a harbinger of the total collapse that is the utterly meaningless capital tranche of all central banks will go through before the terminal phase of the global Keynesian experiment is finally completed.  But in the meantime, enjoy this chart of the Bank of Japan's balance sheet returning back to a record ¥156... trillion.

Read the rest at Zerohedge 

But, but (again as some illiterates think) the 0.0007874% of the foreign public living in Japan whose corporations pay for their children's schooling are part of the problem, right? Laughable.

Update: Incredibly, there will still be some who think that private industry or foreigners are "partially" to blame for Japan's woes (polite snickering, here please) instead of government meddling in the economy. To them, may I present this also from Zerohedge: The Cost Of Kidding Yourself

"...As horrific as these results are (USA), they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.”  Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak.  But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively.  The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010)…

The more they “fixed” it, the more it broke.  17 years later, the only thing Japan has proved is that smart Japanese economists are about as real as Godzilla.  Time and time again, the country has chosen collapse over admitting failure. On November 19, 2012, Bloomberg reported, “The Japanese government will spend 1 trillion yen ($12.3B) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession.”  It would be funny if it wasn’t so tragic.

……

To say that Japan is still growing (at least in terms of Yen), but everyone else is growing much, much faster in terms of Yen distorts the reality that  Japan is undeniably shrinking relative to the world (no matter what currency is used). 

Yen Devaluation Called for By Financial Houses Now Becoming Japanese Government Plan? 18% Yen Devaluation on the Horizon?

In March of this year, I posted,

Yen Devaluation Now Imminent? Being Called by Major Financials! Get out of debt - Get your financial house in order now!  Whereby I cited and quoted major financials predicting a yen devaluation of up to 40%.

Some readers scoffed.

I doubt they are scoffing now, the predicted soon-to-be new government of Japan not only wants a 18% yen devaluation, they also want interest rates and inflation to go up about 2%.

Please refer to Zerohedge, Is An 18% JPY Devaluation The 'Best-Case' Scenario For Abe's 'New' Japan? In that article it is discussed how the coming government of Shintaro Abe thinks that Japan can return to the "Golden Days" if only they can (artificially) force the yen back down to ¥100 yen to $1 US dollar! Madness! How could destroying the value of the currency return the nation to economic health?

After twenty-plus years of folling around with the economy and propping up failed banks and businesses, haven't these clowns figured out that the more they do the worse it gets? It really astounds me that, in some surveys, it is reported that some of the Japanese public support tax increases! Are these people crazy?

The other day I was at Shibuya station and a minor political party was holding a rally and their main pillar of their policy was "No Tax Increases!"... Yet, there were few people listening and you just know they'll get stomped in the election by the big money parties.

I wrote all about the Zeitgeist of the situation in "Japan is Collapsing" and two subsequent blog posts.

Besides the insanity of thinking that artificially destroying the value of the currency, Abe and his co-horts think that a 2% inflation target would be a good thing.

The Zerohedge article goes on to point out:

Even though the yield on 10-year Japanese Government Bonds (JGB) is only 1 percent, the interest expense is expected to top 22.3 trillion yen in the fiscal year that begins next month. This is one-quarter of the general account budget. If the bond yield rises to 2 percent, the interest expense would surpass the total expected tax revenue of 42.3 trillion yen.

Yup: a mere "surge" in interest rates to a whopping 2.00% will destroy the Japanese economy.

Once again, I warned people to have at least 2 or 3 months of food and water stored (Duh! Japan is an earth-quake prone country anyway). And protect your wealth by accumulating physical assets like precious metals.

Reflections on Hating the Rich and Evidence of More of it to Come

I recently posted a few articles about that examine, from a more practical viewpoint (meaning mine) how government deficit spending and high taxes are destroying the economy (add that to a rapidly aging society which is a problem in the United States but especially in Japan)... It seems obvious to me that anyone with a basic understanding of economics could follow the train of thought.

Me and my wallet

Nevertheless, it seems that far too many people do not. The first post of the topic was entitled Japan is Collapsing. I was writing about how the economy has fallen over these last few years and put the blame squarely on the shoulders of the Japanese government spending us into debt at 237% of GDP. I also pointed out that Japan now has over 15.7% of the population under the poverty line. I even backed up my article with commentary by Mish Shedlock.

Even with those facts, some claim that the fault lies with rich people or private industry. The last letter on that post I received, said this:

Anonymous has left a new comment on your post "Japan is Collapsing":

So say you are not able to send your kid to the most expensive school in Tokyo and you claim every other option is crap. Turns out, you are not entitled to that school. If they made a better school, 10x more expensive, you wouldn't be entitled to that either.

(No. I said my kid goes to that school and the company pays.... Just like everyone else - it's a corporate tax break! - Mike)

If now, in a moment of economic downturn, those schools don't lower prices it must mean they have enough rich people to pay for it. Too bad you can no longer afford it. Too bad that woman won't sell a couple of BMW and perhaps start working to be able to afford the education she wants for her kids. But guess what, if you can't make enough money you can't get in.

If you want to live in a world where all services are private so taxes are low, where only money can get you into the really good stuff, you need to be prepared to not being able to afford the best. It's what you signed up for.

  
This commentator doesn't come out and say it directly but he also blames the rich. Let's examine his last paragraph once again:

"If you want to live in a world where all services are private so taxes are low, where only money can get you into the really good stuff, you need to be prepared to not being able to afford the best. It's what you signed up for."

I wonder what world this person is speaking about? I'd like to live in a world where taxes are low so I could pay for services. That certainly isn't Japan, I'll tell you that! In Japan corporate taxes are 46%. After that, when I pay my employees, there's another 20% taken off the top of that. I'd consider that outrageously high.

I'll trade back that more than 68% of the money taken from me in taxes and pay for my child's school ten times over.

It's obvious this person thinks government provided services are "good" (kind of reminds me of the British guy who told me NHS (National Health Services) in the UK were great because they were "free!" I asked him how they could be "free" if they are paid for through taxes?)

As I said, his hidden meaning is that government spending is good. This person needs to read the classic "Economics in One Lesson" by Henry Hazlitt to see just how far off base he really is. Yes, my friend, I want to live in a world where taxes are low... Give a guy a break and tell me where that place exists!

Laughingly, he writes, "It's what you signed up for." No. It's not what anyone signed up for. I'll drop the government spending to zero and see my disposable income increase ten-fold and spend it on the real economy; not paying off government debt or having the government hire their crony friends for building bridges to nowhere.

Sorry. Your defense of socialism and government out-of control spending is illogical and ignorant of the situation here in Japan. See? This guy defends the government and socialism... Another under-handed attack on the so-called "rich."

I examined the hatred of the rich in more detail in yesterday's blog post as it has been a subject that I've thought about for a long time and it really has come to the fore over these last 2 years or so (it seems to me). Class warfare is alive and well in the USA.

From yesterday's post, I received two letters that I'd like to repost here:

Michael C commented oo: "The United States and the West Are in Big Trouble....":

I think most of the rich hate in the U.S. stems from the fact they don't pay the same tax rate the rest of us do. It's BS that Romney only pays a 12% tax rate. You can argue it's due to his 'charitable contributions' but he can donate to a non-profit Super Pac to get tax deductions, that spends the donated money supporting Romney, it's a pretty screwed up system.

Also, the fastest growing Rich in the U.S. isn't job creators it's the financial industry. A hedge fund doesn't make it's money from creating jobs, it makes it's money from shuffling around investments.

Entrepreneurs are the ones that create jobs, but the likelihood of getting incredibly rich as an entrepreneur is minuscule to the financial markets.

Almost everything here doesn't really bother me but Michael C seems to make a mistake that is common. Michael, my friend, may I ask you why you think that,

"...hate in the U.S. stems from the fact they (the rich) don't pay the same tax rate the rest of us do. It's BS that Romney only pays a 12% tax rate."

Michael, the problem with the US economy and the collapse of the middle class has zero to do with what tax rate the rich pay versus the middle class. If anything the taxes across the board are way too high. The problem with the US economy is many but it's not what you've been lead to believe with this mass media - soundbite nonsense. 

The real problems are many but just let me name a few: 

1) The Federal Reserve devaluing your money 97% in the last 100 years.

2) US military empire and bases in over 160 countries.

3) Financing foreign wars by borrowing trillions and trillions of dollars from the Japanese and Chinese.

4) Extremely loose monetary policy and low interest rates.

5) US Total Unfunded Liabilities at 99 Trillion Dollars

6) Total US debt as of the writing of this blog: $16,160,432,335,905.30

7) Taking tax monies and bailing out insolvent banks and foreign corporations on the back of the American public.

There's a whole litany of problems for the US economy... Whether or not people like Romney pay 14% or 40% ~ 50% (like everyone else) on $250 million dollars ain't gonna make a drops worth of difference in the Pacific Ocean. 

This one argument has been common and, I think it points to, and makes a strong case for me, that the Hate of the Rich is growing. The "Hate the Rich"  trend is useful for the government as it deflects attention away from government mishandling of the economy. It's also good for the mass media (populism builds ratings and sells advertising).

Think about it.

Finally, I do want to share with you a comment that I basically have no qualms with at all. Anonymous commented on "The United States and the West Are in Big Trouble....":

I think these last blog entrys are really on perception and need to be put into perspective. The United States citizen hates the decline of the middle class, loss of spending power, high unemployment, and the ultra-high concentration of wealth in the hands of a few. 

Do politicans exploit this angst and muddy the waters for their own gain, you betcha. Mike Rogers decrys cronyism, and I believe is part of the solution. The United States is not the same country it was when M. Rogers left it. 

I proudly voted for Ron Paul. The press decried Ron Paul's idea that the Federal Emergency Management Agency should not bail out rich people who could easily buy private insurance for their expensive beach front properties. 

The upper echelons of the Democrats are fabulously wealthy. The finanical collapse of 2008 was really eye opening for this generation. The banker bailouts proved it was Socialism for the rich, and free market for the rest. One only has to look at the last four president's cabinet members. Its made up of bankers galore. The same type of bankers that are hurting Japan with allowing so much debt. 

Harvard educated Americans become lawyers (mainly corporate) or bankers. People in the mid to late 2000's really thought if they could get a 2nd house they could be famously wealthy.The free market proved otherwise and the government got the tax payer to bail them out. 

Both Obama and Bush 44 voted for the bail out.

Yep! Exactly! Thanks to everyone for reading and commenting.

The United States and the West Are in Big Trouble. Japan is Collapsing and Why Corporations Pay For Schooling For Ex-Pat Children in Japan

(Update at bottom)

The United States and the West are in a world of trouble. I say this for probably not the reasons that you expect and are so obvious to most concerning debt and a poor economy. I say this because the USA & the West are in serious trouble due to poor schooling and with that, are you ready for it? The current hate of the rich and wealthy.

Send your kids to the best school you can afford

Yes. Far too many people in the west seem to hate the rich these days. It's a very bad situation and if this continues will certainly have seriously bad repercussions for all nations and even poor people. Why? Well, Karl Marx would be happy, but hating the rich translates into people thinking it is OK for the government to increase taxes and get more involved with wealth redistribution.

Folks, more government is not the answer. Government is the problem. If more government were a good solution to our problems then the Soviet Union would have been a very successful country. But they weren't. 

One thing good about Japan, though, is that I don't notice the Japanese hating the rich. The Japanese have their problems too but they have their heads on straight and do not hate the rich. They aspire to become the rich. That's logical and normal behavior. It used to be normal behavior in the west too. But now? Now in the USA and the west, people have probably started hating the rich because they can't find a way out of their debt and their financial troubles so they become jealous of what others have. I know this trend is definitely forwarded by the mass media.

Just think how much derision was scorned on Mitt Romney because he is rich! Sure, Romney is might be a jerk, but being rich is not one of the reasons why.

It hasn't been that long ago that books like "Rich Dad, Poor Dad" by Robert Kiyosaki was a best-seller, was it?

The seeds of this current trend of hating the rich (around for a long time on Liberal Arts university campus) seem to me to have been really accelerated  from the so-called "99%" trend that came out of the "Occupy movement" that says the 1% are evil and somehow got their money through dishonest ways. Certainly there are some who were involved in criminal enterprises but I'd wager they pale in comparison to the crimes our government commits on a daily basis. Certainly it was the government who bailed out the banks and zombie industries. But how that now translates into the current trend of hating the rich is a curious leap indeed.

It's not the rich who are our problems here folks. It's the poor who are the problem; the poor have no money and, in many cases, a bad education. If you think I am wrong then go to some rich neighborhood and check it out then, after that, go to the ghetto in Los Angeles, New York or Detroit look around and then tell me that you think it's the rich that are "part of the problem." 

Recently, I posted an article entitled, "Japan is Collapsing" I wrote:

I am angry at the stupid Japanese government for taking our tax money and bailing out these zombie banks and keeping the status quo intact at the expense of the people and our children's future. I am furious that the situation has gone on for so long. I am angry that it is not only us who is feeling the pain but everyone else I know... I get angry when I read the news and see that 15.7% of all Japanese are under the poverty level. I get pissed off when I see that our debt to GDP is over 237%....

And I really get angry when I read that these idiots in government want to raise our taxes and keep with the failed policies of these last twenty plus years.

And it really really astounds me that the people who got us into this mess can get reelected again. What a farce.

Due to that article, I've been infuriated with socialists making absurd claims. The most ridiculous (and incorrect ones) one from a reader who still insists that "one of the problems with Japan's economy is that everyone assumes a paternalistic company to pay for all these benefits for their employees?"

This is just so wrong on so many levels that I don't know where to begin. First of all, companies do not pay for the local Japanese to send their kids to private schools; this is a practice limited to hiring and recruiting top-class foreign labor.  To think that such a small .00078740157 percent of the population is part of the reason of Japan's economic funk is mind-boggling.

Anyway, it shows what I mention above: a bad education and a trend for hating the rich. There are rich foreigners in Japan, for sure, but most of us do not get paid that well... Sure they might drive nice cars and live in big houses, but those houses and cars are paid for by the corporation. Also, ex-pats are only here for a short number of years. Their children cannot be allowed to fall behind in school compared to their peers back home (otherwise the experienced foreign talent won't come here). The companies pay for these expenses as a tax break (individuals paying for private schooling in Japan is not tax-deductable).

Think about it; a corporation pays for good talent to work for them in order so that the company can make more money. The schools receive these funds and pay for employees and those employees take that money a recycle it back into the economy. And some people think this is a part of Japan's economic problems?

What the heck? Don't people understand basic economics anymore? 

There's 127 million people in Japan and ex-pat westerners don't even number over 100,000... 

So the debt to GDP of 237% and 15.7% of all Japanese living below the poverty line is, in part, fault of the .00078740157% of the population of the country and, people who comprise folks living in the upper-class of wealth. (100K divided by 127 million is .0007874015 or .078740157 percent).

Right. You see, it's the rich people who are the problem?????

Like I said, the real reason (and the real part of the world wide problem of too much government spending and too many people on the dole) someone makes a claim that "one of the problems..." (is because of foreign corporations paying for ex-pat children schooling) is actually a symptom of what's really wrong with American & western society today: People have a poor education and can't think. They watch too much TV and have been indoctrinated (brain washed) into thinking that being rich and having money is a bad thing (Why not hate what you can't have, right?) Whereas decades ago, being rich and having a nice car, a large house, a beautiful wife, were things to aspire to, today they are something that people criticize and hold in suspicion.

The mass media has done a good job of marketing to the unwashed masses. 

I have written volumes about mass media brainwashing. It shouldn't surprise me at all how easily people are duped... But it still does sometimes.

Interestingly, over at Zerohedge, there is an article today that explains exactly what the problem is with these people who think private industry or the wealthy are the problem... Please refer to "Hating the Rich:

Western culture is presently defined by many things; one of which being an instilled sense of extreme jaundice toward wealth. No doubt Karl Marx would beam with pleasure in seeing how the contemporary bourgeoisie is regarded with hateful suspicion.

... 

Before the twentieth century and the ascendance of the all-intrusive state, sumptuous living was typically seen as something to aspire to. It aroused jealously which fueled a lust for reaching such heights of luxury; not to pick away at success. 

... 

The bourgeoisie values of prudence and temperance are no longer respected in the Western world. They are seen as anachronistic and not in tune with the needs of society. This is a self-defeating attitude that will only lead to further impoverishment. For as long as success is punished and high time preferences are rewarded, the capacity for productive efforts deteriorates.

Coercive egalitarianism based on ill feelings of Schadenfreud is a cancer. 

Absolutely. How anyone could think that people who create private business and create jobs and wealth (and pay huge taxes) are a part of the problem is beyond comprehension. 

It is they who have no money and think the government should do more, along with that government interference in the economy and our lives that is the problem. 

What a pathetic situation indeed. I'm teaching my children that being rich is good and that emulating and aiming for that in life is what each and everyone of us should do.

My kids deserve the best. Don't yours?

Update: I know economically illiterate people, especially leftists and Liberals, won't bother to read Henry Hazlitt, "Economics in One Lesson" so let me direct them to a short explanation in a more macro sense at Market Ticker: http://market-ticker.org/akcs-www?post=214480

Japan is Collapsing

The financial situation just keeps getting worse in Japan...

I send my son to a very exclusive international private school in Tokyo. It is very expensive too. So expensive is it that just about every family who sends their kids there has their company foot the bill for tax reasons. Me too. I could never afford it; the company pays. If the company didn't pay, he'd go to public school and get a crap education.

At that school there are so many children of foreign ambassadors and the bosses of big Asian and Western companies that the list is like a who's who of Fortune 500 company children.

Then there is our family. I drive a used Toyota four-door and most of the other parents drive new Mercedes Benz or BMW's with the occasional Saab running around. Many children have chauffers drive them to school. 

Not my kid. He's stuck with his hung-over and disheveled and unshaven dad behind the wheel every morning.

Our family is like a desert island in an ocean of opulence at that school.

Or, at least I thought so until the other day. 

I was at the grocery store where I met one of the moms from the school. I see her sometimes; she doesn't work. Her husband is an executive at some big company. She drives around in a very nice Benz. They are rich... Or, like I said, so I thought....

We were on the escalator at the grocery store and she asked me how work was going. I answered that work was tough for us, just like it is for everyone else now. We all have to work 3 times as much for 1/2 the money. She sighed and said,

"Us too. I don't know if we can afford to pay for school anymore!"

That blew me away. Here I thought these folks were loaded with money. Heck, they are, or were. I have a hard time with one kid at that school. She has two!

I said to her,

"Yeah. You know, 20 years ago, I sent two girls through international school at the same time and I don't really remember it being too much trouble, money-wise. Now? Now it's all I can do to work and send one!"

She didn't say anything but I could tell from the expression on her face that she was genuinely worried.

I thought about it and got angry. I am angry at the stupid Japanese government for taking our tax money and bailing out these zombie banks and keeping the status quo intact at the expense of the people and our children's future. I am furious that the situation has gone on for so long. I am angry that it is not only us who is feeling the pain but everyone else I know... I get angry when I read the news and see that 15.7% of all Japanese are under the poverty level. I get pissed off when I see that our debt to GDP is over 237%....

And I really get angry when I read that these idiots in government want to raise our taxes and keep with the failed policies of these last twenty plus years.

And it really really astounds me that the people who got us into this mess can get reelected again. What a farce.

Mish Shedlock writes about the disaster about to befall us:

Doorsteps of a Currency Crisis; Economic Illiterates Debate Monetary Policy; Monetarist Mush

Japan's grand experiment of decades-long QE coupled with Keynesian foolishness is about to take one last gigantic leap forward before it plunges straight off the cliff into a massive currency crisis.

Please consider the New York Times article A Call for Japan to Take Bolder Monetary Action 

For years, proponents of aggressive monetary policy have offered this unusual piece of advice as a way to end Japan’s deflationary slump and invigorate the economy. Print lots of money, they said. Keep interest rates at zero. Convince the market that Japan will allow inflation for a while. 

Japan’s central bankers long scoffed at such recklessness, which they feared would ignite runaway inflation. But now, the bank’s hand could be forced by an unlikely alliance of economists and lawmakers who have argued for Japan to take more monetary action after more than a decade of weak growth and depressed prices.

Championing their cause is the former prime minister Shinzo Abe, who is favored to return to the top job after nationwide elections next month. Otherwise deeply conservative, Mr. Abe surprised even his own supporters by calling for the Bank of Japan to be much bolder in tackling deflation, the damaging fall in prices, profits and wages that has choked Japan’s economy for 15 years. 

In escalating remarks over the last week, Mr. Abe has said that he will press the Bank of Japan to act on government orders if his Liberal Democratic Party wins the Dec. 16 election and even rewrite Japanese law to reduce the bank’s independence.

In a speech in Tokyo on Thursday, Mr. Abe said he would call for the Bank of Japan to set an inflation target of 2 to 3 percent, far above its current goal of about 1 percent, with an explicit commitment to “unlimited monetary easing” — an open-endedness that has caused jitters among some economists. The bank’s benchmark interest rate should be brought back to zero percent from 0.1 percent, Mr. Abe added.

He went even further over the weekend, saying in the southern city of Kumamoto that he would consider having the bank buy construction bonds directly from the government to finance public works and force money into the economy, according to local news reports. That raises concerns, however, the bank may be called on to bankroll unrestrained spending on more roads and bridges that Japan does not need. 

Economists cite several missteps by the central bank that have entrenched Japan’s deflationary mind-set and made consumers and businesses wary that the bank’s policies will stick. In early 1999, as the country’s economic woes deepened, the bank lowered a benchmark interest rate to virtually zero and said it would keep rates at zero until deflationary concerns disappeared. But an economic uptick in mid-2000 caused the bank to raise that rate to 0.25 percent despite protests from the government that the move was premature.

Monetarist Mush

Anyone who thinks an interest rate hike from 0% to .1% or even .25% has much influence on economic growth has "monetarist mush" for brains. Seriously.

The NYT does not name the economists, but I have no doubt they exist. Highly respected (for no reason) Richard Koo is one of them.

I have written about Koo on numerous occasions. From Japan's decade long experiment resulting in public debt of a 1,000,000,000,000,000 yen (a quadrillion yen), Koo reckons Japan failed to defeat deflation because it did not do enough!

Japan is in a crisis alright, and it was entirely self-made, by politicians listening to clueless economists all begging Japan to do something. 

One Thing Worse 

Central banks are bad enough on their own, but history shows that one thing worse than central banks acting on their own is central banks acting under control of politicians.

Committing to a little inflation will push stock prices higher, while a weaker yen will bolster Japan’s exporters and strengthen corporate balance sheets. Incomes will rise, fueling consumption and raising tax revenue for the government, said Kozo Yamamoto, a lawmaker of Mr. Abe’s Liberal Democratic Party.

“Basically, it’s what the Bank of Japan should have been doing for the past 15 years,” he said. “A few percent of inflation is nothing to be worried about.”

The economy is in the trash can and inflation is nothing to be worried about? Haven't these clowns in the government done enough???? We're doomed! Folks, get canned foods and buy gold and silver while you can.

For more please refer to:

Happy Thanksgiving! Sony and Panasonic are Junk! Japan Has No Leadership! Mish Shedlock Spells it Out!

Also for more absurdity and proof the US education system is in the sh*t can, read this: Japan Was First to Use Nuclear Weapons... On Korea???!!!! Dave in Austin is Confused - You Need to Drink More! http://bit.ly/TjWqO9