Tuesday, October 22, 2013

R.I.P. Abenomics: Record Trade Deficit Now 15 Months in Row

The situation is laughable... Well, it would be if it weren't true: Abenomics is a dismal failure. Now, a record trade deficit of Japan for another record 15 months in a row!

From Zerohedge - Abenomics Humiliated Again As Japan Posts 15th Consecutive (And Record) Trade Deficit

Overnight Japan posted its latest, September, trade numbers which were absolutely abysmal, as the trade deficit rose to a fresh record high of 932 billion yen ($9.5 billion), the 15th consecutive monthly shortfall. The deficit for April-September rose to nearly 5 trillion yen ($51 billion), also a record for the first half of the fiscal year.

Why is this? Well, like I wrote in December of 2012 (I just love to brag that I was right and also see major news sites falling in line): Here's Why A Weak Yen Will Destroy Japan

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

From Forbes Magazines, please refer to: Japan's Energy Dependence 

Data from the Energy Data and Modeling Center (EDMC), Institute of Energy Economics, Japan, for 2008 published in the APEC Energy Overview (2010), paint a stark picture of Japan’s energy vulnerability: 

– Of total primary energy supply (508,327 kiloton of oil equivalent (ktoe)), 85 percent (433,725 ktoe) was imported.  The breakdown of primary energy was coal 23 percent, oil 44 percent, gas 17 percent, and other 17 percent.  

–For final energy consumption in ktoe, the industrial sector took 45 percent; the transport sector 24 percent; and other sectors 31 percent.  By type of energy:  coal 11 percent, oil 53 percent, gas 9 percent, and electricity and other 28 percent.  

Don't forget that these are 2008 figures - three years before the Fukushima Dai-ichi nuclear disaster. Things have gotten much worse since then. Now take all that imported oil and natural gas (and coal) and jack up the price 10%... What do you get?

Couple that sum with the 2% inflation rate targeted by the new government of Shinzo Abe and you get a collapse of the Japanese economy.

Hell, while I (sadly) chuckle over this news (as I've said a hundred times: "Math is a bitch" and "Data doesn't lie") I'll let my friends at Zerohedge kick the Abenomics fans a bit more... (Haven't I done that enough?!?!)

The worst news: Abenomics is now impacting the country so adversely, the boost in GDP as a result of consumption is now over thanks to a detraction from the net trade deficit: "As a result, the net export contribution to growth is likely to be weaker than we had expected, and it may be around zero in Q3, after 0.5ppt in Q1 and 0.3ppt in Q2." Make that negative...

...In short: with every passing month Abenomics does merely more of what it was meant to do - cripple the economy, destroy the workers and hurt end consumers, while the soaring stock market helps just the ultra wealthiest. Good job Goldman Sachs advisors to the BOJ. 

Goldman adds more data:

Another significant trade deficit in September on higher imports: The trade balance continued to show significant deficit at ¥932.1 bn, following the deficit of ¥962.8 bn in August. Export values came in at +11.5% yoy, slowing down from +14.6% yoy in August...

...Exports to Asia and Europe slow down, imports from China surge: Looking at exports by region, exports to the US remained buoyant in September in value terms, rising 18.8% yoy (+20.6% yoy in August) while there was a slowdown in exports to Europe (September: +14.3%, August: +18.1%) and Asia (+8.2%; +13.4%), exports to China also declined (+11.4%; +15.8%). Meanwhile, imports from China grew 30.9% yoy (+17.6% yoy in August), contributing to the growth of Japan’s overall import value by 6.7% points. Imports of electric machinery from China, telecom equipment in particular, are growing rapidly, with the September figure coming in at +55.8% yoy (+23.2% in August).

This is basically what was predicted... This should come to no surprise to anyone who:

1) Understands 3rd grade mathematics
2) Has a lick of common sense
3) Understands Japan's economic problems since the late 80s and how Japan has tried to deal with them.

We are watching a slow-motion train wreck...

... Can't wait to see how a Sales Tax increase magically makes things all better or how adding over $60 billion dollars to the deficit will help for the 2020 Olympics.

Go Abenomics!


Anonymous said...

I wondered what your take on this was?:

[RE: Fukushima] "In Japan the government just passed a law that could be used to imprison Japanese journalists who report truthfully on the dire situation."...


There was no additional information at that website.

Oh, and I got a new nic, a more telling one:

- RothbardianamercianHelot

Anonymous said...

Instead he is busy starting issues with his Asian neighbors, Korea and China. He should focus on reviving his nation's economy....

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