Japan's Collapse Will Be Absolute and it Cannot be Stopped - Here's Some BIG Reasons Why

Truly this country is in a position whereby there will be no way out. The government has dragged us into a cesspool of debt and there will be no fix. The nuclear disaster has put the nation is a position whereby political populism has taken the driver's seat over cool-headed reasoning. 


Japan can't last like this for much longer. I hope I'm wrong about this but I think it looks like our situation is impossible to fix. And I do not exaggerate when I say "impossible to fix." Some will scoff at this but I ask you to read on and see what conclusions you come to. Let me know if you disagree. 


Please keep in mind these three important points as you read on. I think these three make a poisonous cocktail:


*Japan's debt to GDP is too high
*The energy crisis will much further ruin the employment and the economic situation here
*The energy crisis will also cause a hollowing out of Japanese industry


The only good news is that there will be no sales tax increase as prime minister Noda will be, as I've already predicted, out by September 1st at the latest. I seriously doubt that he can last that long. The other good news is that more Japanese fathers will be spending time with their kids as they will be out of jobs.


But first up, about that sales tax problem and our soon-to-be ex-prime minister. From an article that ran at Testosterone Pit in Feb: Unpopularity Contest at the Edge of the Japanese Abyss:  

In a Kyodo News telephone poll over the weekend, Noda’s approval rating dropped to 29%, down 6.8 points from January, and down a dizzying 50 points in less than six months. The disapproval rating jumped to 55.2%. Only Taro Aso fell faster. But at the current trajectory in the prime-ministerial unpopularity contest, Noda might beat his records soon:

Looking at the graph above, you'd see how Noda's popularity was just crashing in his first 5 months in office. Interestingly though, he got a minimal reprieve last month in March 2012. His popularity actually went up 2.5%!:

While not in the least bit scientific, I have projected Noda's popularity with the black arrow. I think this is being quite generous considering the fact that his cabinet actually publicly presented their plan to increase the public tax burden. Please refer to: Japan's Noda Government Passes 200% Tax Increase - Look For Noda to Be Out by July, September at the Latest. Either way, if my guess is correct, Noda will hit the 20% area in late June or early July. Then it's curtains for his administration. If he can survive until September it will be a miracle.

But that's not the whole story here folks. We're not talking about getting rid of another prime minister.... Actually, it won't matter who prime minister is. Japan's political situation is much like the United States: There is no one who even has the hope of repairing the situation. At least the USA has Ron Paul. In Japan, we have no one.  

We're talking about several factors combined to make a political situation that cannot be fixed. The whole story involves the bleak future this country is heading for. Raising taxes will not remedy our debt burden. I've mentioned before that we need massive cuts in government spending - cuts which we will never receive.. Throw on top of this the energy situation in Japan and how that will lead to absolute disaster on our horizon.

Folks, this summer could be the beginning of the end for Japan as a modern day economic powerhouse. I do not make this statement lightly. Like I said, read on and see what conclusions you come to...

Japan has no natural resources and energy. We are on a course to shutdown all of our nuclear power plants this summer. Great! You say? Really? How great will it be when industry finds that it is no longer economical to do business and run their factories and plants in Japan? What's going to happen to your rosy life and happy existence when the Japanese economy hollows out and industry leaves for greener pastures in other countries?

People are going to criticize me for writing this and saying that I am hysterical but all I can say is that I have seen this happen with my own eyes in another country before. It happened in my country. The causes of the hollowing out of the economy were different, but the end result was the same: In the United States, industry left for better shores in the 1980s (they all went to China and India) and we are seeing the results of that today... 

All one needs to do to see what that hollowing out has done to the middle class in America is to get on an airplane and fly to, say, Detroit to see what is left of industry there. It's not rocket science, but where's there's no industry, there are no jobs.

That is the future we are heading for in this country and I see no way out. 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. Power shortages will spread across most of Japan this summer as the last of 54 nuclear power plants will be taken off line in a few weeks. While pressure is building to restart some of them, public distrust and resistance run high, particularly after revelations seeped out about the nuclear industry’s controlling relationship with its regulators. Japan Inc. at work. The conspiracy had squashed stiffer regulations for nuclear emergencies. Five years later, the people of Fukushima paid the price. For that fiasco, the emails that documented it, its deadly and ongoing impact, and the anger it caused, read... A Revolt, the Quiet Japanese Way.

But it’s a two-edged sword. Shortages of up to 20% this summer are expected to strangle the highly industrialized Osaka area, and companies are shifting production overseas. Now a panel of the Osaka municipal and prefectural governments floated a plan for the city of Osaka to demand that Kansai Electric Power shut down its nuclear power plants permanently. Mayor Toru Hashimoto has come out in support.

Catch that part about a 17% rate increase for commercial customers? Are these people nuts? 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 nearly what one Korea competitor will spend 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 costs; two things. One, they will make you pay for those costs and; two, they will move factories overseas where it is cheaper to operate.

I am a bit surprised at Osaka mayor Hashimoto supporting an idea that's going to wind up putting a large part of his constituency in the unemployment line. I thought he wasn't too interested in populism.... Guess I was wrong.

I think he'll be singing a different tune around autumn of this year. In fact, I predict that he'll be changing his mind real quick and getting off his populist duff when people are out of work. Funny that. Politicians seem to want to talk about jobs and getting people back to work is usually a very populist issue when everyone is broke... Testosterone Pit reports in A Revolt, the Quiet Japanese Way:

...people are opposing the almighty nuclear industry at a local level. Every time a nuclear power plant shuts down for scheduled maintenance, people in the area come out against restarting it. Thus, of Japan’s 54 reactors, only two are still generating electricity. And both are scheduled to be off line by April. With harsh consequences for industry and manufacturers.

And another setback for Prime Minister Yoshihiko Noda, the sixth ineffectual prime minister in six years. Like his predecessors, he is stumbling down a steep slope in approval ratings. When they drop into the low twenties, he will be axed, and a new sacrificial lamb will be stuffed into that slot. For the fiasco that is sending Noda to replacement hell while the economic and fiscal fundamentals are falling apart, read.... Unpopularity Contest at the Edge of the Abyss.

Under pressure from Japan Inc., Noda suggested that some of the reactors should be restarted. And the arm-twisting with the resisting public got a little tougher on Friday, when METI Minister Yukio Edano predicted that Japan would face a power shortage this summer of 9.3%. Last summer, power shortages were largely limited to the Tokyo area and northwestern Japan. This summer, they would hit Kansai, the huge and highly industrialized Osaka area, where shortfalls could peak at 20%.

Industry and households would have to cut back drastically—a Third-World problem that will send more manufacturers overseas. 

It seems to me that there are no good options at this point for Japan. The people are so against nuclear power that they might be able to close the nuke plants for a while, maybe even permanently. I figure that's going to be one of those good examples of "Be careful for what you wish for, you just might get it."

Japan's financial and energy situation is a wreck... It's not even a slow motion train-wreck anymore... If Japan can make it to the New Year (2013) without some sort of devastating financial chaos, it would be a total and complete miracle.... I don't think that can happen.

Even if Clark Kent were the next Japanese prime minister, he couldn't fix this mess.

Nuclear Power? Japan Stuck Between a Rock and a Hard Place - Both, by the way, on Faultlines

I am not a negative person but I am astounded at the news everyday. It seems like, with every passing day, something comes up in the news to add to an already full plate of bad news for Japan. Here's a couple of news stories that have slipped through the cracks that, if you pause to consider, could have serious ramifications.

SAM COOKE - TROUBLE BLUES

Japan's troubles seem like they keep growing. Our debt to GDP is 225%; the government keeps spending; cheap foreign labor have left the country; more holes keep being found at Fukushima along with proof that the cores of the plants melted down ("melted down" sounds really bad, but what exactly that means for you and me is unclear) and, in general, problems with the Fukushima nuclear reactors continues to mount. Throw on top of that an incompetent and bungling political system and we are most definitely headed for the hottest summer in Japan in years!


As I noted in a previous post, Nuclear Crisis in Japan? When the Cure is Worse Than the Disease:


The actual disaster is bad enough. But it is the after effects that are going to kill us. You've heard the expression that the "Cure is worse than the disease?" Well here is a case example happening in slow motion right in front of our faces.  It is the "ping-pong" effect. And the repercussions of this ping pong effect are spreading wider and wider and everyday brings a new facet to this problem as it continually evolves.  

That ping-pong effect could have very serious and long term effects and cause huge damage to the Japanese economy and, in turn, seriously hurt the world economy.


The ramifications to the Japanese economy of the March 11 earthquake, tsunami and Fukushima nuclear power plant accident, government bungling of the entire affair along with  throwing away $63 billion dollars in taxpayer monies to bailout TEPCO, a private firm (when Japan is already at debt of 225% of GDP) - along with all the new problems that are popping up everyday are what's really going to mess this country up.


When the world's number three economy gets a case of cancer this bad, the rest of the world is going to suffer too.


I think it is completely impossible, at this time, to predict how all these various events will affect the Japanese economy and, in turn, the world economy.


Since I make these claims that no one can predict what's going to happen, here's two articles that I have found that are of interest. 


In Japanese superquake moved ocean floor 79 feet sideways and 10 feet up - and new data shows region is under more strain the articles states: 

The ocean floor shifted sideways by 79 feet in the Japanese earthquake in March - much further than scientists originally predicted.

And researchers are warning that immense amounts of seismic stress remain stored in the area, putting it at risk of further devastating earthquakes.

The journal Science has published three new papers about the effects and causes of Japan's March 11 mega-quake, which paints a picture of an earthquake hot spot much more complex and potentially dangerous than scientists had ever anticipated.

(snip)

Under the seabed, the movement may have been even greater - perhaps 160 to 200 feet, by some estimates.

In another study sure to raise alarm in Japan, scientists from the California Institute of Technology have reconstructed how the Tohuku-Oki earthquake unfolded using GPS data recorded at more than 1,200 sites.

Tsunami about to hit Fukushima nuclear power plant on March 11, 2011

Their data showed that - contrary to previous opinion - the area had built up massive amounts of strain prior to the earthquake.

Earlier, there had been general agreement among researchers that the 'Miyagi segment' of the fault line was not under the stress of other segments along the Japan plate boundary, where large earthquakes occur at a regular basis. But Professor Mark Simons' team showed that this assumption was deeply flawed.

This raises questions about other sections of the fault line that had previously been considered low risk - including areas further south, closer to Tokyo. 

This 'Ibaraki segment' of the plate boundary has been thought to behave in similar fashion to that of the Miyagi segment, and Professor Simons says it may likewise hold large amounts of seismic stress.

I do think that, most times, the Daily Mail is a dodgy newspaper, but at least in this article they didn't make any silly statements like "There's is going to be another massive earthquake and we're all going to die." But this article is well written without the writer adding in their two-cents. To read this article has to cause one, who is living in Japan, or anywhere on the Pacific rim, to pause for a moment and consider.

Throw that one article with this blog post by Mish Shedlock about our energy problems not being just Japan's energy problems but a world-wide phenomenon, and you have another factor to consider deeply. Mish writes in Energy Shortages Spreading quoting the ASPO May 23 Energy Review:

Pakistan and China continue to top the list of countries with the most serious power shortages. Last week brought in reports of energy shortages developing or worsening in Egypt, Guyana, the Dominican Republic, India, Japan, El Salvador, Bangladesh, Libya, Mozambique, Nepal, Venezuela, Argentina, Zimbabwe, Kenya, and Tanzania. Most of the reported shortages are of electric power caused by inadequate water levels at hydro dams or insufficient coal, but some of these shortages stem from unaffordable oil prices or the inability to import sufficient quantities of liquid fuels.

In most countries, electricity shortages quickly translate into increased demand for gasoline and diesel as organizations strive to keep important activities such as computers, elevators, hospitals, refrigeration and even factory production functioning with back-up generators.

More stress on fault lines? Sounds plausible. Especially considering this year's earlier massive earthquake in Christchurch New Zealand followed by the March 11 disaster in Japan (and frequent after shocks - just had one ten minutes ago). Throw on top of that the public growing disdain and distrust of nuclear power and the system of political power in Japan - along with the coming of a very hot summer and rising oil prices - and you have a situation that could turn into another energy crisis very quickly.

I've written it before and I will say it again; the very worse thing that could happen to Japan is the loss of cheap, clean energy. 

At outside festivals, hot summer is fine... Not in a hot office, though!

Sure, nuclear power has its warts...And I believe that we need to get rid of these 40-year-old power plants and build new safer units.... 

What are the practical alternatives? Wind power or solar power? No. Those are fine for running a refrigerator or heating your bathtub, but they could never power a steel factory or a subway line... There's no way they could power the grid for a city of over 35 homes like Tokyo.

Certainly, this is going to be a hot summer for Japan and the rest of the western world. 


Japan is most definitely in between a rock and a hard place. The fault line makes it even more precarious. 

Thanks to Lew Rockwell