Thursday, March 21, 2013

Japan: The End of an Era

I hate to say "I told you so!"... Well, no, that's not true. I LOVE saying, "I told you so!" Nearly four months ago, on December 29th, I predicted exactly what was going to happen with a weak yen. Now, this prediction has come to pass. Things are deteriorating quickly. I wrote in:

Here's Why A Weak Yen Will Destroy Japan  

The clowns in the LDP think a weak yen will rescue Japan's faltering economy by making exports cheaper... Sounds good... That is, if there anyone to buy Japanese goods.  I fear that the weaker yen will be the last straw in breaking the Japanese Economy. Here's my reasoning why... 

China and Japan are in a row over islands. Boom! Down goes exports to Japan's biggest trading partner. Please refer to the NY Times article, "Japan Trade Suffers as China Ties Deteriorate":

"Shipments to China, which is Japan's biggest trading partner, tumbled 14.1 per cent as demand dropped for Japan-branded products..."

Also refer to Japanese Car Sales Plunge Amid China Rage.

Europe is in no condition to be big spenders on anything as Euro states are already in deep recession.

The USA isn't in good shape either as it is in recession too and Japanese cars aren't selling well due to Fukushima and other issues.

Gee? So what will a weak yen certainly buy for Japan? Answer: How about a 10% increase across the board on energy imports?

Read more at: Here's Why A Weak Yen Will Destroy Japan 

Now, the numbers are coming in and they confirm what was (easily) predicted.

From: Testosterone Pit

Japan's trade deficit in February jumped to ¥777.5 billion. Exports dropped "unexpectedly" by 2.9% from prior year, despite Abenomics. Imports surged 11.9%. Eighth monthly deficit in a row, worst since 1979. Good news: exports to the US up 5.7%. But to China, they plunged 15.8%, to Hong Kong 14.3% (still iffy commercial relations due to island tiff). To the EU, they skidded 9.6% (tough economy). Not getting better: February 2012 had a surplus of ¥32.9 billion, after what was a record trade deficit in January of ¥1.4 trillion. This year in January, the trade deficit hit a new record of ¥1.63 trillion, and now ¥777 billion.    

Trade deficits aren’t the end of the world for Japan. But they’re the end of an era. Since the mid-1980s, Japan booked large annual trade surpluses, which helped fund budget deficits without having to rely on foreigners. But in 2011, there was a deficit of ¥2.56 trillion. A temporary blip, it was called. In 2012, ¥6.93 trillion ($78 billion). An all-time record. And so far this year, the trend is even worse. (Read more at Testosterone Pit)

And, Zerohedge adds:

Japanese Exports Drop More Than Expected Smashing Adj. Trade Balance To New Record Low 

It appears Abe and his henchmen had better stop doing things and say something as the huge devaluation of the JPY so far is NOT having the effect he had hoped for. Exports dropped 2.9% - more than expected - and while imports rose less than expected, the currency drop still meant an 11.9% surge in imports. All this means is that on a seasonally-adjusted basis, the Japanese Trade Balance just hit a new all-time record low (negative). USDJPY is strengthening on the news... it seems that well-placed non-news headline at 2am Japan time is well worth it now to cover this debacle... We assume the lesson is - just wait, "if we devalue, they will come."


Anonymous said...

The end of an era, no doubt.

Does this mean I will Never own a Honda Enduro motorcycle? It's always been beyond my grasp. Dang it!
And a GPZ motorcycle, too?
I sooo wanted one of those, when I was young. My friend from Japan wanted one too. He had a poster on the wall of one.
Crap, I've forgotten his name.

"Getting old's such a drag"

Your friends have been going through some rough times. And you too?

I feel bad saying it, but that makes me feel slightly better because I'm in that boat too.

I didn't want to post that on your blog entry above because it seemed so up-lifting. My comment is counter to that. I absolutely HATE being a downer. It's so-un-me.

The truth is the truth, though.

Also, I can't get your thinking out of my head. I read this story:

Salad is more dangerous than beefburgers, leading food expert warns

Oh yeah, Mike mentioned that.

And this story:

The sheepshead fish has human teeth, but it’s okay because it won’t give you a psychedelic crisis

Oh yeah, Mike mentioned that.

Well, not really. You were talking about how the teeth of people proved they were vegetarians and here's this non-vegetarian tooth story. But still, I thought of your words.

We ate some fish tacos once and had Very Very vivid and surreal dreams at The Very Same Time. I think I now know why that was.
Forget about taking LSD, eat this fish for the trippiest dreams ever.

I better stop. I do not need a tear in my beer, er wine glass.

OH NO! I've broken rule #1.
Do not touch the keyboard after you've been drinking.

Back to the drawing board for me!

... now let's see if I can prove I'n Not a Robot. Heh.

- IndividualAudienceMember

Anonymous said...

I remember now!, his name was, Kyoshi.

I probably didn't spell that right.

He was one cool guy. He would have made a perfect linebacker.
Or mafia leader.

I wonder what happened to him, and what Will happen to him. Assuming he lived through the earthquakes awhile back.

His older brother was cool too.

So were most of their friends. They didn't seem like fair-weather friends like most of mine turned out to be. The turn-coats.

While driving though Las Vegas once, I stopped at a stoplight and next to me was a guy I knew from little league baseball. We had a brief exchange and drove off. That was weird.

I was at a car wash and I had a conversation with a guy about those convex mirrors you stick onto your outside rearview mirrors to avoid blind spots. I told him to get them, they make all the difference in the world.

After I left the place I wondered, was that Kyoshi's older brother?

Well, I thought: the world IS only 8000 miles wide.

Life is strange.

Pardon my ramblings.
It's been a great distraction from my wife being mad at me, and I at her.

Fixing broken.
I'm good at fixing broken.
But, sometimes broken should stay broken. The key is knowing when? And are you better off?

Macro Mirco


- IndividualAudienceMember

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