Japanese Consumer Confidence WAY Down & New Leak at Fukushima! It's All Good News!

Well, as I have been saying for a long time, in spite of my foreign-born detractors, who live in Japan but seem to be out of touch with what the average Japanese on the street is thinking, average Joe Tanaka is not happy at all about Abenomics. And there's now data to back me up on that point; not just anecdotal evidence. 

Happy as hell! See?

There's no way to paint this is a positive note: Consumer Confidence in Japan is downright miserable. Before I get to the proof, here's some background: 

In The Facts: Data Doesn't Lie and "Positive" Writing, I wrote:

Look, there's responsible fiscal policy and then there's what the Japanese government (and US government, EU, etc.) are doing: irresponsible deficit spending. Japan has been doing what Abe is doing for over 20 years. The only difference is that Abe has put the deficit spending into hyper-drive.

Over twenty year of deficit spending and infrastructure projects? Look where it has gotten Japan today.

Folks, you couldn't deficit spend like this on your own home and personal finances; you'd go bankrupt. This isn't rocket science. No matter what the government says or how they try to spin things, this is simple math. Mathematics are a bitch and they are consistent as hell. Two plus two will always equal four. It doesn't change.

Japan's low interest rates and easy money policies on steroids will not yield any different results than they already have.....

A few days later, I added in Cheerleaders for Abenomics Extremely Quiet: Inflation on Energy, Gas and Food Up - Wages Down 

....The average consumer confidence drops for three months in a row, amongst all the Abenomics recent good news? (polite laughter and applause here, please!) And amongst merchants, it drops for 5 months in a row, and people say I'm negative? Yes, OK. Fair enough. I may be negative on Abenomics, but I work amongst the Japanese and hear what they say and talk about. I'm no more negative than they are. 

I just report the facts. Just the facts, ma'am!

Like I said, I work closely with the average Japanese person; at both my jobs: one is with business people and the other at the radio station brings me closely in contact with the average Japanese who commutes to work (how much more "average" can you get than commuters going to work in trains and cars to white and blue collar jobs who listen to regular old FM radio?)

Well, well, well, lookie what we have today! The Bank of Japan has just released a poll: BOJ Poll: Japan Consumer Confidence Slips on Lower Income.

In that poll the consumer confidence index actually crashed from a year before - when people were fooled into voting for Shinzo Abe - and the index actually stands today at a -8.3 (I'm not too sure about how badly a minus confidence point is calculated, but it was only -4.8 last year).

Here's a few tidbits from that report by BOJ:

The government data showed that Japan's core consumer price index (excluding perishables but including energy) rose 0.8% on year in August, the third straight y/y rise after +0.7% in July and +0.4% in June, which was the first rise in 14 months. It remains the largest gain since +1.0% in November 2008.  

The average household spending fell a real 1.6% on year in August, marking the first y/y drop in two months after a 0.1% gain in July. The average real income of salaried workers' households fell a real 0.9% on year in August, the first fall in six months while their disposable income also posted the first drop in six months, down 1.4%.

Wolf Richter over at the Testoserone Pit slices and dices this data into much easier form than I ever could. He writes in: Japanese Consumers, Hammered By Abenomics, Get Gloomier:

In the prior survey, undertaken in June, the index had jumped 17.8 points to a still low -4.8. Consumers at the time were less disillusioned about the promise of Abenomics that something good would trickle down to them, from the trillions of yen that the Bank of Japan was handing to megabanks on a monthly basis. But now consumers have opened their eyes, looked at price tags and glanced at their paychecks, and the index fell to -8.3. 

One of the stated policies of Abenomics and the Bank of Japan is to stir up inflation. It has worked wonderfully, with year over year inflation rising. Goods inflation has hit 1.8%. Alas, consumers reported that rising costs of essentials, such as utilities and food, were cutting into what they could spend on other things. At the same time, more people reported that their incomes actually dropped from a year ago. 

Great! And, uh, this money printing by the Bank of Japan was supposed to be hand in hand with an increase in wages... Didn't happen; nor will it. 

Wolf Richter continues:

This isn’t just an idle impression of benighted consumers who don’t get Abenomics: Average household spending adjusted for inflation fell 1.6% year over year in August, more than wiping out the minuscule rise of 0.1% in July. Not a surprise: the average inflation-adjusted income of households of salaried workers, after six months of small improvements, dropped 0.9% year over year in August, and their disposable income dropped 1.4%. 

This combination of inflation without wage increases – or worse, with wage declines – amounted to inflation without compensation. And consumers don’t expect it to end anytime soon: 83% of the respondents expected prices to continue to rise over the next twelve months, up from 80.2% in June. 

So only a minuscule 16.2% saw the economy improving over the next twelve months, down in a big way from the already low 24.3% in June. Even more people expected their income to fall over that period. 

Throw in the increase in Sales Tax and what do you have? A disaster in the making.

Folks, I love Abenomics as much as the next Japanese guy (Someone go out and find that next Japanese guy, I can't find him anywhere!) but this is simple mathematics... 

People's spending is already down, along with consumer confidence before the Sales Tax increase is implemented...

It's not rocket science what's going to happen here in Japan...

This isn't being negative; the data backs up what I'm writing here... Like I said, not negative, just realistic.

No amount of happy talk is going to fix this problem.... 

....Or what's going on at Fukushima!

Kyodo News, October 3, 2013: 

New leak of stored toxic water found at Fukushima plant: TEPCO [...] Tokyo Electric Power Co. said Wednesday it has found that highly toxic water has leaked from another storage tank at the crippled Fukushima Daiichi nuclear power complex. [...] TEPCO, which operates the Fukushima plant, said it detected high levels of radioactive materials in water accumulated within barriers around a group of storage tanks including the leaky one.

Abe assured the Olympic committee all leaks we secured... But, as usual, he didn't know what the hell he was talking about... I wonder if my friends will complain that I don't report this in a positive light?

NOTE: This is the BIG NEWS in Japan today. Watch a NHK (English) news report here:

http://www3.nhk.or.jp/nhkworld/english/news/20131003_04.html

Now, I'm not talking about how dangerous these leaks are or are not. My point is credibility of the government. Now, think about this: If people can't believe what the government leaders say, then how can they have any confidence?

BNP Paribas Gives Abenomics Only 10% Chance of Success? - I Think They Are Way Too Optimistic

There's a very interesting article over at Zero Hedge from BNP Paribas parsing out the chances of success for Abenomics. 

Everything is under control!

The article is entitled: BNP Warns Only 10% Chance That Abenomics "Ends Well." Here's a few snippets:

Japan’s core CPI (which excludes perishables) surged 0.7% y/y in July, but the upturn is largely due to higher prices for energy that reflect rising import prices due the yen’s weakness. Despite global exuberance at Abe's "progress", BNP notes that there are still no signs of price growth for rent and service prices, factors behind Japan’s protracted deflation. Crucially, BNP believes that Abenomics could lead to four possible medium-term outcomes: (1) Continued deflation (35% probability), (2) Financial repression (40%), (3) High inflation (15%), and (4) Happy end to deflation via revived trend growth (10%).

On the continued deflation 35% possibility...

Under this scenario, the economic euphoria, yen depreciation and stock market rally triggered by the BOJ’s new dimension in monetary easing (QQE) will be found to be just momentary things based essentially on placebo-like effects. On this score, ever since stock market corrections began from late May, various sentiment indicators have peaked out and started trending lower....

The BOJ’s Kuroda has declared that open-ended easing will remain in effect until 2% inflation is achieved. Because of this, many might feel that this scenario should not have a very high probability. But, as pointed out above, because the long-term interest rate is already very low, no matter how much the BOJ inflates its balance sheet with aggressive purchases of long-term JGBs, the effects will be meager. 

On the 10% chance of success...

Now If Abenomics’ growth strategies were to show dramatic success, allowing the trend growth to significantly revive, the resulting improved growth expectations could encourage households and businesses to increase spending, thereby fostering improvements in the output gap that bring an end to deflation. While ending deflation via revived trend growth would be a happy ending, the probability of this optimal scenario is just 10%.  

We cannot assign a higher probability because growth strategies, even if successful, do not bring dramatic changes. Currently, the government hopes to achieve trend growth of 2% over the coming decade, but that means the per capita trend growth rate will have to climb to 2.7%. Over the past 30 years, the only time per capita trend growth ever approached 3% was during the bubble in the latter half of the 1980s. If we assume that the workforce will continue shrinking almost 0.7% annually (and this figure prices in higher employment rates for women), increasing the per capita trend growth rate from the current 1% to 1.5% will still put overall trend growth at just 0.8%. Seeing how the per capita trend growth rate in America is slightly over 1% and that of the EU about 0.5%, hoping for 1.5% would be very optimistic. The government, however, aims for an even higher target (2.7%) and there is no magic wand to achieve it.  

Now even if this happy ending scenario were to unfold, that does not mean that structural problems, like the swelling public debt and insolvent social welfare, will be headed for resolution. 

Yep. The last line is the killer. The structural problems are not being addressed at all: the debt, bankrupt social welfare... It's better for the government to kick the can down the road...

Ten percent? Really? That's way optimistic, guys. The two biggest reasons why this growth won't happen are:

1) Demographics and aging Japan along with a severe decline in the workforce. Please refer to: Japan’s deflation is a product of shrinking work force, not policy:

In his first testimony before the Diet last week, Bank of Japan Governor Haruhiko Kuroda noted, “Japan’s economy has suffered from deflation for nearly 15 years. This is an extraordinary situation even on a global scale.” 

We would supplement Kuroda-san’s statement with the observation that the working-age population and employment have also been declining for 15 years. This is no coincidence... deflation is a natural consequence of a declining labour supply, as long as technological innovation persists at a faster pace than employment is shrinking. We therefore predict that no amount of monetary stimulus can reverse the trend decline in prices: The roots of Japan’s deflation are not monetary. 

Calculations by High Frequency Economics show quarterly employment in Japan has declined 5 per cent since 1998. As Japan’s huge demographic cohort of baby boomers ages, they are leaving the work force.

2) The devaluation of the yen hasn't shown any good results overall yet. Last month, Japan hit it's 14th straight month of trade deficits and the largest trade deficit in history! From Yahoo: Japan trade deficit swells 25 percent in August: 

Japan's trade deficit swelled to a larger-than-forecast 960.3 billion yen ($9.8 billion) in August, the 14th straight month of red ink, as imports outpaced growth in exports, customs data showed Thursday.  Boosted by higher fuel costs, imports rose 16 percent from a year earlier to 6.74 trillion yen ($68.7 billion) while exports climbed 14.7 percent to 5.78 trillion yen ($58.9 billion). The deficit was a quarter bigger than the 768.4 billion yen gap seen in August 2012.  In surplus for years, Japan's trade account fell into deficit after the March 2011 earthquake and tsunami on Japan's northeastern coast caused meltdowns at the Fukushima Dai-ichi nuclear power plant. With all nuclear plants offline for safety checks or maintenance, imports of crude oil and natural gas have soared.  Costs of imported fuel, which comprise more than a third of all imports, rose nearly 18 percent in August, despite a slight decline in volume.

So, uh, how's that yen devaluation working out for Japan so far? Not good. And with all of Japan's nuclear power plants offline (and Fukushima in the headlines - everyday) there's no foreseeable chance they are going back online anytime soon.

Testosterone Pit slams more nails into the coffin. Please refer to: Trade Is Supposed To Save Japan, According To The Gospel Of Abenomics, But In Reality... 

Trade is one of the aspects that Abenomics has designated as critical. So the Bank of Japan has embarked on a radical money-printing program to devalue the yen and make exports more competitive. The principle of a currency war. It would also render imports so expensive that buyers would seek domestic alternatives. The resulting trade surplus would save Japan. In theory. 

In reality, the opposite is happening.  Exports did jump 14.7% in August year over year, the Ministry of Finance reported. But the rest was ugly. Exports were valued in yen, and the yen had lost 20% of its value over the year. So in most categories, export volume actually declined. 

But Imports jumped 16%, from a higher base, and the trade deficit soared 25% to ¥960.3 billion ($9.6 billion). Analysts were shocked.  It was the worst August trade deficit ever. It was the 14th month in a row of trade deficits, matching the longest such spell of 1979-1980. It was 27% higher than the trade deficit of August 2012. By comparison, in August 2010, Japan had a surplus of ¥63.8 billion; in August 2009, a surplus of ¥165 billion; in August 2007, a surplus of ¥784.6 billion! 

For the eight month period, the trade deficit hit a record of ¥6.8 trillion, up 66% from the same period in 2012, and up 332% from 2011. During that period in 2010, Japan had a surplus of ¥4.2 trillion! Japan’s trade fiasco is on a steep downward slope. August was the worst August ever, July the worst July ever, June the worst June ever.... There’s no discernible turning point on the horizon.

Darn those facts and data! Don't you just hate it when facts and data get into the way? The data looks real bad, but Abenomics has 100% hope... Though "Hope" has never really been a good business plan...

Ten percent chance of success? Like I said, I think that's way too optimistic. Deflation was the best thing to happen to the country in a long time... It, despite government meddling, was a result of free market forces. There's no way a bunch of bureaucrats sitting in some back office could possibly know better than free-market forces what prices should be and there's also no way they can stop forever the power of free-market forces; sooner or later this is going to end badly (probably sooner since Japan's debt is 240+% of GDP). 

Abenomics is nothing more than a continuation of Japanese government policies of huge deficit spending since 1989 (on steroids).

Has a government manipulated economy ever succeeded in history?

Abenomics has a zero to 1% chance of success... 

Am I too optimistic?

-------------

On a related article about out of control government spending, please read: After Thoughts on Tokyo Being Awarded the 2020 Olympics - Will Tokyo 2020 Lose Money?... What Do You Think? 
http://modernmarketingjapan.blogspot.jp/2013/09/after-thoughts-on-tokyo-2020-olympics.html

Post-Election Nikkei Drop? Yep. Called it Right Here.

On Sunday, July 21st, in the wee hours of the election day in Japan, before polls opened, I wrote in: My Serious Commentary on Today's Japan Elections (And Some Hot Babes!):

Today there is a big political election going on in Japan (look for the Nikkei 225 to start dropping after today's election is over!) 

Several local stock brokers and the like blasted me about how great "Abenomics" is, etc... They also took umbrage at the utter idea that the Bank of Japan and the Japanese government would collude to manipulate stock prices...

Heavens! The government and the central bank colluding to manipulate the economy? I'm shocked! Shocked, I tell you!

I just wonder what comic books these people have been reading these last 25 years? Of course, the government in power wouldn't manipulate the economy for their advantage prior to an election, would they?

That would be unfair!

The results a week after the election? Well, like I said, look for the drop and, here it is: I think a 3.78% drop in a week is a pretty poor performance. Don't believe me. You be the judge....

The fact of the matter is that Abenomics is doing all sorts of cosmetic things to make the economy look better, But the main and goal of creating a trade surplus in order to turbo-charge the real economy is a complete and total disaster.

Exports indeed increased 7.4% in June, unfortunately at the same time, imports jumped 11.8%, and the balance of trade took a 180 degree about-face from surplus in June 2012 to a deficit of ¥180 billion ($1.8 billion). The data doesn't lie: http://www.customs.go.jp/toukei/shinbun/trade-st_e/2013/2013064e.pdf

The chickens are coming home to roost.

Abenomics Has Failed

Well folks, Elvis has left the building. Abe had a big announcement today and failed to jawbone the market back into line. As of 3:25 pm on June 5, 2013, the Nikkei Stock Market and the US dollar/yen rate have announced the market's verdict: Abenomics have failed.

The yen has cracked to under ¥100 to the US dollar. Look out below! See the spike? That's when Abe began to speak... Gee, what happened within an hour? Your guess is as good as mine.

Bloomberg reports:

The yen gained against most of its major counterparts after Japanese Prime Minister Shinzo Abe’s growth strategy failed to boost domestic stocks. 

Japan’s currency rallied against the dollar and euro after the Topix index of shares extended losses to more than 3 percent. The dollar erased earlier gains driven by speculation the Federal Reserve will scale back stimulus measures. A volatility measure of Group-of-Seven currencies was near the highest in more than three months...  

“The yen is swayed by the movement in equity prices,” said Akira Moroga, manager of foreign-exchange products at Aozora Bank Ltd. (8304) in Tokyo. “Stocks which rose in anticipation of Abe’s growth strategy were sold off after the announcement lacked any concise measures.”

At the same time, while all this is going on, the JGB market is going berserk.

Zerohedge has a great article about the next chapter in this farce entitled "The Problems With Japan's "Plan (jg)B": The Government Pension Investment Fund's 'House Of Bonds'", the raiding of the $1.1 trillion dollars that are sitting ducks in the Government Pension Investment Fund (GPIF) which is now in the sights of the Japanese government... But! That is the final gamble and it is a wild one!

Nobuyuki Hirano, chief executive of Bank of Tokyo-Mitsubishi, admitted that the bank’s Y40tn ($485bn) holdings of Japanese government bonds were a major risk but said he was powerless to do much about it....The risk facing Japanese banks from their vast holdings of government bonds has been underlined by the chief executive of the country’s largest bank who said it would struggle to reduce its exposure. 

Well that's not good: if the largest Japanese bank can't handle what may soon be concerted selling by one of the largest single holders of JGBs, who can? And what can be done then? Oh, that's right: this is where Kuroda's plea to please not sell bonds, just to buy stocks comes into play. The problem is only the BOJ can come up with money out of thin air, for everyone else buying something, means selling something else first. So unfortunately unless the BOJ wishes to further increase its QE, which will be needed to absorb all the selling without a surge in yields (something Kyle Bass warned about last week), a move which however would further break the connection between bonds and inflation expectations, and further destabilize the equity, FX and bond markets. 

So in short: Japan's Plan B is not only not a panacea, but it is a House of Bonds Cards that would not survive an even modest gust of wind, and an even more modest contemplation into its true internal dynamics. We would urge Messrs Abe and Kuroda to come up with a fall back plan to the fall back plan before it, once again, becomes too late.

I think it is already too late.

A Picture Speaks a Thousand Words...

Why US policy is a failure in the Middle East... 

Why Central Bank policy is a failure all over the world...

(That's me - or at least how I feel when I'm at work most of the time....)
Actually, though, this photo went along with an article about how Central Bank intervention and currency manipulation won't work....

Also for your reading pleasure (sorry folks, been super busy and haven't had the time to write! Will later today.... Maybe...)... Try reading these on for size... I'm extremely bearish on everything except precious metals... The yen? Get out while you can!

Japan Unveils Extensively Priced In "Open-Yended" Monetization News

In the most anticipated (and likely most strawman/leaked) policy actions, the BoJ and the Japanese government (still independent entities theoretically) have unveiled the new monetary policy to complement the $116bn fiscal stimulus plan to boost growth:

• *BOJ TO ADOPT 2% INFLATION TARGET
• *BOJ WILL INTRODUCE OPEN-ENDED PURCHASING FROM JAN 2014
• *BOJ TO BUY 2T YEN OF JGBS MONTHLY FROM JAN 2014
• *BOJ TO BUY ABOUT 10T YEN OF T-BILLS MONTHLY FROM JAN 2014

With epic amounts of JPY shorts and NKY longs, JPY was notably bid versus the USD (from Friday's close) going in, 30Y JGBs bid relative to 10s, and the NKY and TOPIX were leaking lower. Now is the time to see just how effective this efficient market is at pricing in the stabilization-to-retaliation phase of the current actions. Though of course, there is no intent to cough-'weaken'-cough the JPY:

• *AMARI TO SAY AT DAVOS NO POLITICAL INTENTION TO MANIPULATE YEN

So, as expected, the BoJ joins the Fed and ECB on the unlimited "open-yended"^(TM) printfest bandwagon. So far JPY is not totally impressed.

Germany Vs Japan Currency War Heats Up

Germany and Japan have a long tradition of cooperating, at least when it comes to various iterations of world war, generically in the conventional sense (and where they tend to end up on the less than winning side). Which is why it may come as a surprise to some that earlier today German politician Michael Meister launched what is now the third shot across Japan's bow in what is rapidly escalating as the most dramatic case of global currency warfare between the world's net exporters (at least legacy net exporters: thanks to Japan's recent political snafus, it has now become a net importer as it is rapidly losing the Chinese market which accounts for some 20% of its exports) which started as long ago as 2010 when it was quite clear that currency warfare is what the insolvent world can expect, before it devolves into outright protectionism, and finally regular war as Kyle Bass explained recently. To wit: “What can Japan’s competitors do?” Meister said today in a telephone interview. “Either we’re all smart and do nothing, or we follow suit and create a spiral that hurts us all.”

Got precious metals? Silver Bars Being Secured By HSBC – Buys $876 Million Worth From Poland

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). 

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

Bank of Japan Flushes Another $123 Billion Dollars Down the Toilet!

‎"Paper money eventually returns to its intrinsic value — zero.” - Voltaire

They did it again! This is complete and total madness. I rarely am speechless, but this news just dumbfounds me. I really don't know what to say or, even if I want to say anything. This kind of news just makes me want to shrug my shoulders and throw my hands in the air in complete disgust... 


Damn! I need a stiff drink!

At least last weeks F-up, when the idiot prime minister just up and gave away $57 billion dollars of money that Japan doesn't have, that made me mad enough to write  commentary. You see, probably because that doesn't happen too often... (once is one time too often as it is).... But the Bank of Japan debasing the currency - repeatedly - in a hope to stop deflation and arrest the yen's rise, seems to happen every six months...


The Bank of Japan has made another effort to buy assets and debase the currency of this country. That's four times in the last 18 months or so... The last three didn't work, so why not throw away another few hundred billion dollars?


How many times do they have to do this, and have the failure repeated, before they ever figure out that this doesn't work?  Zerohedge reports in BOJ Eases. Einstein Rolls Over in His Grave:

"...the BoJ defends its decision to follow Einstein's definition of insanity  by doing the same thing over and over again expecting a different outcome (Nov 2008 was the last time CPI was above 1% YoY). Admittedly, at some point the ever-increasing BoJ balance-sheet-to-GDP will become too much even for a nation hell-bent on printing its way out of chronic deflation only to be punched-and-kicked by a balance-sheet-recession so deep and full of deleveragers. The facts are that the BoJ will expand its LSAP-equivalent program by JPY10tn (USD123bn) - raising the 'stock' - but maintaining the same pace of JGB-buying at JPY1.8tn per month - leaving the 'flow' stable - hence extending the program by around six months." (read the rest at Zerohedge)

Simply put, LSAP is another word for “money printing”... They keep doing this over and over (for the last 20+ years) and the results are the same. Yet they keep doing it. 


I no longer get mad at this, folks. Why should I? It's like a dumb puppy you bought. At 8 weeks old, the dog keeps sh*tting on the living room rug. You keep getting mad and yelling and screaming about it over and over. But the dog keeps doing it over and over everyday.


Day after day, over and over; the dog sh*ts on the rug. One day, you realize that the dog is too old now to be trained and is just plain stupid and is going to keep sh*tting on the living room rug no matter how much you piss and moan about it. What you going to do about it then? 

Are you going to keep getting mad and screaming about it? Will you get all riled up and let it destroy your health and give you high blood pressure and a heart attack? Or will you accept that it is what it is?


I'd get mad, I suppose, but since I am not Japanese, I cannot become a politician in this country and I cannot vote... So I can scream and scream... Nothing changes... I try to get the people of this country mad about it, but not enough people seem to care... 


I guess I'm either tired now or I've given up on these people in government and the Japanese people who are going to pay the price for this when the party ends. 


When the sh*t hits the fan, don't say that I didn't try to warn you. 


You'd better accumulate all the gold and silver you can while you can because this ain't going to be pretty. 


Read about how we're heading for a cliff in "Japan's Economic Collapse Will be Absolute and it Cannot be Stopped"

Live in Japan? You Owe More Than ¥7 Million Yen - And Your Debt is Skyrocketing

I've been writing a lot recently about the terrible financial situation Japan is in and how I believe that this situation is coming to a head soon, possibly by this summer... I think the best analysis was in Japan's Collapse Will Be Absolute and It Cannot Be Stopped - Here's some Big Reasons Why.

Bugs predicting Japan's economic future

Recently, the Internet chatter about Japan's imminent collapse has been increasing exponentially. Many news sources and many other writers seem to be agreeing with me... Or, perhaps I should say that I agree with them... They are all probably smarter and richer than I am. Why just today, once again, another article was sent to me entitled, The Japanese Party is Ending that warned about a possible hyper-inflation scenario for Japan just around the corner and it could be possible that Bank of Japan is intentionally pursuing a plan to devalue the yen.


Even though I write about these things constantly and think about them a lot. I am just shocked that people I meet are so oblivious to what's going on. You'd think that the average person would care enough to know that their government has put each and every man, woman and child in Japan ¥7,632,897 in debt (as of the writing of this article). If you want to read more on that (please make sure you're sitting down when you do), refer to: Here Comes Europe's and Japan's Debt Crisis - Just in Time for Summer. There you can see a debt clock and other information that should wake you up.


Like I said, I'd say that almost everyone I meet either doesn't understand or doesn't care. I've met three people in the last month who knew what was going on... Trust that I meet a lot of people. Besides those three, most often express that they, "Hope that things get better."


Folks, when it comes to your and your families future and safety and security, "hope" isn't a very good business plan.


On that note, today, one simple lesson in why the Japanese government budget and deficit are such problems for you (if you live in Japan). First the relevant news as reported by Finance Nine:

Diet passes Y90.3 tril budget, adding to Japan's debt mountain

TOKYO — Japan passed a 90.3 trillion yen budget on Thursday, with about half the spending expected to be financed by new bonds that will add to Japan’s massive debt mountain.

...

Local media have reported that spending for the 2012-2013 fiscal year may be Japan’s highest ever, reaching more than 96 trillion yen when including extra public spending such as funds for rebuilding the nation’s northeast after last year’s earthquake and tsunami disaster.

About 49% of the budget would be financed by issuing new bonds, a plan fiercely contested by opposition lawmakers who are aiming to push Prime Minister Yoshihiko Noda to call snap elections, according to reports.

For those of you who are versed in this sort of thing and understand what bonds are and how much of a clusterf*ck situation Japan is in, you can stop reading this post right now and go back to doing something useful. This post is an explanation for the total and complete layman who doesn't - or can't - comprehend what this news means to them. Like I said, when I talk to people out and at work, I'm getting the impression that far too many people in Japan see this sort of news and these sorts of numbers and it just goes completely over their heads. 

This article is for people who don't understand why they should be near panic! Let me explain two very important points about this that you need to know. 

The two important points in this article are the amount of money at ¥96 trillion yen and an understanding of what a bond is. That's today's simple lesson in why the Japanese government budget and deficit are such problems for you (if you live in Japan). 

A trillion is a one with fifteen zeroes behind it. ¥96 trillion yen is this: ¥96,000,000,000,000,000. In US dollars that translates to: $1,160,000,000,000,000.00.

A lot of money. Too much too comprehend, isn't it? So let's now go to what a bond is. The simplest and best explanation for bond I could find was at allBusiness.com and the article is: What are Bonds and how do they work?

Most of us have borrowed money in our lives, be it to finance our college education or to ask the bank for a mortgage or auto loan. So just as people need money, so do companies and governments. One option for this money is to issue bonds in which thousands of investors each lend a portion of the capital needed.

What Is a Bond?

In essence, a bond is nothing more than an IOU. The organization that offers the IOU (the bond) is known as the “issuer,” while the purchaser is the “investor.” Because nobody would loan his or her hard-earned money to an unknown party for nothing, the bond issuer is required to pay the investor interest payments, which are made at a predetermined rate and schedule.

Please read that "What Is a Bond? again, "a bond is nothing more than an IOU." 

IOU's? Like in "totally useless and worthless pieces of paper?" This in a country that has a greatly aging society that is not saving, but spending savings and cashing in on bonds bought in the past? Who does the Japanese government think they can sell these bonds to? Working Japanese, the traditional customer for this market is now an elderly retired Japanese. Does the Japanese government think that they can sell these bonds to foreigners? 

Selling these bonds to foreigners is an interesting option. Problem is that foreigners will want competitive rates as Japan's rate are way below other countries. The foreigners will want much higher interest rates on those bonds bond yields. Problem with that is if Japan's interest rates rise to just 2% the interest payments on Japan's debts will surpass the entire expected tax revenue of ¥42.3 trillion yen.

Now, understand that the Japanese government and this country's gas tank is empty and running on fumes. The government wants to keep the party going and is expecting you - yeah, you if you live in Japan and are reading this - to finance an IOU to somebody in order to pay the debt on our debt and keep the good times rolling...

No problem, right? Not only do they want you to buy the IOU, when the money to pay back that IOU comes due, and they don't have it, you'll be forced to pay that back too.

I hope you have an extra ¥8 or ¥9 million yen in your piggy bank for each and every person in your family to pay for your high life and profligate spending!... But no problem, right? 

Let's just hope things get better.