Japan's Debt Off the Charts

Thanks to Zerohedge!  

Japanese debt too large to fit on graphs anymore....

By now every single chart laying out every possible permutation of a hopelessly insolvent and overlevered world has been compiled, created, colored and in some cases, animated and socially networked. The following chart showing global debt dynamics over time from the WSJ is no different: it is animated (check) it has lots of pretty colors (check), and it is quite informative because it remembers that in addition to public sector debt, there is a thing called the private sector (sadly it avoids shadow debt: perhaps someone good at making 3D animated charts should take a stab?) and succeeds in incorporating everything in one cool animation.  

Yet why it may be most memorable, or not as the case may be, is that it is merely the latest chart in a seemingly infinite series which are just not big enough to fit Japan.  Perhaps it is time to make a chart of all the charts that need to be bigger to show the true Japanese state of affairs. 

That, or in reverence to the sadist joke, pardon "experiment" (as Jens Weidmann would say) that is Abenomics, we can finally start making bigger charts.  

Go here to play with the interactive chart. It's, er, "fun"! http://graphics.wsj.com/national-debts/#i[]=999

Japan's Debt Explosion Coming Up

UPDATE BELOW

"Japan is spending 25% of its total government tax revenue on interest on debt. It spends 50% on servicing that debt…" - Kyle Bass

Some guy wrote and said that he thinks the Japanese economy is going to be going great within a year. And he thinks I am insane to think otherwise. Well, it's impossible to pick an exact date, but I think it is pretty sure that I am going to be the last one standing here.

I predict that the debt to GDP level in Japan is going to surpass over 250% this year and with it, a crash of the economy coming soon (not to mention overwhelming inflation)... I have been warning that this debt problem cannot continue. In 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.

Yep. And they GOT REELECTED and are running the government now.

Er, the definition of insanity is doing the same thing over and over and yet expecting a different result...

Who is the insane one here? The people who elect these folks in government, the government or people like me who warn people to buy precious metals and get out of debt?

I also warned one year ago that the government was going to intentionally devalue the currency. Please refer to: Yen Devaluation Now Imminent? Being Called by Major Financials! Get out of debt - Get your financial house in order now!

No one seemed to believe it at the time, excepting a select few..

Kyle Bass seems to agree with me. This from Zero Hedge "Detonating the Japanese Debt Time Bomb":

The hyper-correlation of Japanese stocks (Bass - The people that buying Japanese stocks, are picking up a dime in front of a bulldozer) and the JPY have led many to believe that Abe's miracle promise will be just the ticket to bring the nation's two-decade slump to an end - a 2% inflation target is all you need.
However, in a brief CNBC interview, Kyle Bass explains that not only are 99.9% of people wrong about the crisis (explaining the critical aspect of the abrupt turn of twenty years of the 'procylicality of thought' - that deflation is the norm), but Abe's actions have actually brought forward the date of the "detonation of Japan's Debt Time Bomb. 

Bass goes on to discuss the US Housing stabilization, European stress, and China's economic opacity (and tensions with Japan), but leaves us with the clear and present danger in Japan that the clock has started on the qualitative shift in participants' minds that the situation is untenable (signs are already among the elite with recent JPY-extricating M&A deals) and "All of the components for this [bomb] to go off 'all of a sudden' are in place." Must watch.

Read more at ZeroHedge

UPDATE: Read: Japan's Chain Of Events: Stagnation -> Monetization -> Devaluation -> Stabilization -> Retaliation -> Hyperinflation

As the world's equity markets prepare to rally on the back of yet more central bank printing as Japan's Shinzo Abe takes the helm with a 2% inflation target and a central bank entirely in his pocket, The Telegraph's Ambrose Evans-Pritchard suggests arather concerning analog for the last time a Japanese prime-minister attempted to salvage his deflation/depression strewn nation.

The 1930s 'brilliant rescue' by Korekiyo Takahashi, who removed Japan from the Gold Standard, ran huge 'Keynesian' budget deficits intentionally, and compelled the Bank of Japan to monetize his debt until the economy was back on its feet managed to devalue the JPY by 60% (40% on a trade-weighted basis). Initially this led to exports rising dramatically and brief optical stability, but the repercussion is the unintended consequence (retaliation) that the world missed then and is missing now. Though the economy appeared to stabilize, the responses of other major exporting nations, implicitly losing in the game of world trade, caused Japan's policies to backfire, slowed growth and left a nation needing to chase its currency still lower - eventually leading to hyperinflation in Japan (and Takahashi's assassination). 

With no Martians to export to, why should we expect any difference this time? and how much easier (and quicker) are trade flows altered in the current world?

More: Japan's Chain Of Events: Stagnation -> Monetization -> Devaluation -> Stabilization -> Retaliation -> Hyperinflation

Cut Spending? Could the Japanese Government Finally Be Waking Up?

The Telegraph has an article out today entitled, "At Last, Japan May Be About to Abandon its Disastrous Keynesian Consensus." 

Here is a snippet:

....“The government running out of money is not a story made up. It's a real threat," said Japan’s finance minister Jun Azumi on Friday. Opposition parties in Japan are blocking a deficit financing bill which would allow the government to continue to drive its debt levels above 200pc of GDP. If the opposition holds firm, the government has threatened the unthinkable – it will spend less. Tax rises are also on the table, although the doubling of sales tax to 10pc will not come fully into force until 2015.

This is a turnaround for Japan. The nation’s government has already contorted itself in all the ways now common in the West while attempting to postpone this day..... "

I've been screaming since I can remember that the laws of basic math say that if you have 5, you cannot keep spending 7 and that Japan's debt problems must first be fixed by a cut in spending. Coud it be that people are finally waking up?

....Well, we are talking about the government so don't hold your breath.... 

Japan is a "Bug looking for a windshield?" I think we just found it.

I've been writing for months that Japan's situation is past desperate (well, me and many others who follow the markets)... I've written several times over the last year that we are heading for the cliff. I've actually stuck my foot in my mouth (gambling man and all, you know?) and called for another major crisis to hit Japan this summer because I believe that Europe will be the trigger for the next massive crisis and I believe it is coming this summer. Please refer to: Here's Comes Europe's and Japan's Debt Crisis - Just in Time for Summer: 

This debt crisis has terrible repercussions for the world economy and Japan. Reuters has a good article on it entitled: Europe Poses Global Recession Threat: IMF. The article is a good rundown of the debt problem but the solutions they offer of throwing money at the problem are completely wrong (Been there, done that. Didn't work)... For proof of that, just look at how well throwing good money after bad has done for Greece.

Looks bad. These things have a way of getting out of control. But Japan is OK, right? Because these European countries can't print their way out. Japan can. Let's look at a few charts there. Here's a chart that shows the world ratio of debt to GDP:

Here's one to show Japan's debt mountain in yen:

As an important note, as of 2009, the Japanese national public debt, according to my handy-dandy calculations equaled over ¥6 million yen per man, woman and child in the country (about $72,000 USD). That means that if every single one of us coughed up ¥6 million yen and paid off our total debt today, we'd still be back in massive debt tomorrow as the costs of running the Japanese government, social security and health care, etc., etc. are completely out of control.

...

But wait! Things are getting better, right? Wrong! Here's an article you might want to read from a the New York Times that asks the laughable question: "Could Japan's Debt Lead to a Crisis?" (Let me ask you: "Could the next Pope be Catholic?") But, like I said, that article is a year old. I add it because it is a typical example of the confused reporting emanating out of the MSM... "Everything will be alright as long as government's keep printing money! We have to save the system!"

Well, no. We don't have to save the system. We can't save the system. The system is a wreck.

.......

I think, as I've said many times before.... The summer of 2012 is going to be a very hot one for Japan - as well as all around the world.

Of course, making predictions on when exactly the sh*t hits the fan is difficult. But, as famous American baseball player Yogi Berra said, "Making predictions is difficult. Especially about the future." 


Well folks, it looks, unfortunately, like these predictions might come true. The chances of the fan getting blasted by the crap and the reverberations slamming the Japanese economy just jumped up a hundred-fold.


Socialists won the presidency in France... I predict that will seriously damage the power of the bailout and pro-austerity crowd in the EU and I believe this is the beginning of the end for the Euro. And, as Mish Shedlock has successfully predicted when he said that someday, a right-wing nationalist is going to go before the electorate in his European country with a copy of the EU charter and while tearing it up, he tell people to, "Vote for me and I will exit the EU!" 

Now it has happened! Neo-nazi groups won enough power in Greece to be recognized in parliament and now the rumbling is for an exit of the Euro and no deal to any bailout of the bankers.


These events are going to affect Europe and the USA and Japan in so many ways..The unforeseen consequences of so many years of massive debt and money printing are coming to a head. 


What cannot go on... Stops. Japan is going the have to hottest summer in decades this year and, no, I don't mean Global Warming either.

Morgan Stanley Reports: Japan's Total Debt, Public, Private and Household, is More Than 600% of GDP

At least we're not the UK... And at least Greece isn't the USA.


Zerohedge reports in "We Are Number One!", Or Why At Least Broke Greece Is Not America 


The article talks about public debt then continues...


When one adds private financial and household debt, things get truly hilarious, as seen on the following chart also from Morgan Stanley (which unfortunately excludes such critical components of public debt as contingent and NPV of pension and healthcare) which shows why the UK, with its 950% global consolidated debt/GDP, is quite fond of infinite rehypothecation, or the iterational “fractional reserve” creation of credit money from one asset (most likely robo-signed away to someone, unclear quite who: just ask Jon Corzine how fiat money can evaporate when one tries to match it with the “asset” that spawned it), as many times as necessary to pay those record banker bonuses.

It's as I mentioned so many times in the past, folks... In Japan's case, like the rest of the world, our problems of public debt stem from uncontrolled government spending... They can raise taxes to the moon and it won't matter if they do not cut spending.


If you have a can with ten marbles in it, you cannot take out eleven marbles. We need to cut government spending immediately...

What a Difference a Few Decades Make - More on Japan's Coming Collapse - The Energy Crisis

In yesterday's article Japan's Collapse Will Be Absolute and it Cannot be Stopped - Here's Some BIG Reasons Why I wrote that Japan is now entering the so-called Perfect Storm that is going to ruin this country and there's no way out. 

Our debt situation is past fixable state. The March 11 disaster of Tohoku has put the entire country in a situation whereby we are set to turn off all our nuclear power plants in the summer of 2012 (good timing while oil prices have passed $100 a barrel and the saber rattling gets louder near Iran)... The Japanese public, in their usual confused state, as well as the decrepit Japanese political class are even entertaining the idea of shutting the power plants off permanently. This entire mess has lead to a situation whereby Japanese electrical power companies have stated that they want to raise the power costs to manufacturers. Zerohedge writes in: A New Beginning in Japan: Glimmers of False Hope:

TEPCO, the bailed out owner of the Fukushima nuclear power plant, is trying to shove rate increases of 17% down the throats of its commercial customers—while rationing power at the same time. 

Continuing in another quote from yesterday's article: Japan Inc. is losing money left and right as it it without a massive increase in costs. Please refer to Times of India Sony, Panasonic forecast deeper losses:

Japan's biggest makers of phones, televisions and chips say they'll lose about $17 billion this year, about three-quarters of what Samsung Electronics Co will spend on research to lengthen the lead over its competitors.

Sony Corp more than doubled its annual loss forecast for the year ending March 31 as it announced a new chief executive officer, while Panasonic Corp and Sharp Corp predicted the worst losses in their histories. Their combined losses compare with the $22 billion that Samsung, Asia's largest consumer- electronics company, said it will invest in capital expenditures.

These two Japanese giants are going to lose in one year nearly what one Korean competitor will spend merely on R&D? Folks, it doesn't take a genius to figure out what's going to happen to these entities when they are hit with a 17% increase in operating costs. At least three big things will happen. One, the manufacturers will pass on increased costs to you, the consumer, which will ultimately decrease sales for them and increase the cost of living for you. Two, this increase in cost of living will decrease sales and hurt production and profitability further (thereby actually depressing tax revenues for the government in spite of raising taxes). And three, they will move factories overseas where it is cheaper to operate.


This energy problem and the problems Japan faces lay plainly at the feet of the government... Namely government interference with all areas of the economy and public life... An interference that expands daily. If the government didn't get their hands in ruining the economy, Japan could have shaken out all this bad debt we had in the late 80s at the end of the so-called bubble and started building a solid economy... But we didn't. The Japanese government bailed out the banking industry and gave rise to the word, "Zombie Banks." We still have them.


A the economic problems grow inexorably larger as the population ages and the energy problems peak.


Diego.a a regular reader to this blog sends in some very interesting observations on this situation. They basically boil down to, "How in the world could it be that Japan has fallen so far, so fast in just these thirty years?" Of course, I'd have to answer, "...Just look at government interference. The more the government gets involved, the more messed up things get."

Diego.a writes:

Remember the 1980s/1990s when people were Americans were scared of Japanese companies buying up the world? 

Losing the War with Japan:

(The description on the video of "Losing the War With Japan" reads as follows:

PBS documentary, which first aired in 1991, titled Losing the War with Japan. It examines Japan's economic challenged to the US, which reached its peak in the late 1980s to early 1990s. A key argument in the documentary centers on the manner in which Japan achieved its economic rise, which was through state-led industrial development based on "predatory capitalism" and America's need to respond in kind. )

Diego.a continues: 


Now, thanks to the state, you have blackouts in 21st Century Japan.

Things are so bad, China may end up with the first practical thorium reactor . That is nuts! 


(More on LFTR/thorium power plants.)

Fukushima immune? China bets on 'safer nuclear fuel':

Oh what a difference a few decades make. Seriously, when you consider Diego.a's words, it is appalling that the Japan of the 21st Century has been so ineptly mismanaged that blackouts are going to become a part and parcel of life in this country.


That people still ask, "Why doesn't the government do something?" Just makes me scratch my head. Hasn't the government already done enough to make things worse? We certainly don't want them doing anymore.


If big government were the answer to our problems then the Soviet Union would have been a very successful country. But it wasn't.


We are now witnessing the results of two lost decades, going on three, of government interference in the Japanese economy. It's pretty easy to see how well they've done.