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