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Stupid Stuff
I’m amazed that Japan has not yet hit an economic reef. At over 230+%, the country’s debt to GDP is so far out of whack that I keep thinking that something has to give. I’ve been wrong for years.
The trend lines for Japan are awful. A decline in total population coupled with a rapidly aging society is a recipe for slow or no growth. Japan is the world leader in these critical statistics. I don’t think there is anything that Japan can do to reverse its social/economic future. Projections on the critical variables for at least the next ten-years continue to head south.
It's not as if the Japanese are unaware that they are headed for a debt train wreck. They have just passed new tax legislation that could make a meaningful contribution towards stabilizing Japan’s debt to GDP problem. But the new law is a sham. The new taxes will never get paid.
Japan has a consumption tax today of 5%. The new laws will raise the tax to 8% in 2014 and 10% in 2015. Moody’s thought this was a great idea, and said this about the tax hikes: (Link)
"it is an essential component of Japan's fiscal consolidation goal, achievement of which we consider necessary to maintain market confidence in Japanese government bonds."
But here's the joke; in order to get the votes to pass this very controversial legislation, there is a critical stipulation that the new taxes will not come into effect unless the country is increasing GDP at a minimum rate of 2% a year (or nominal growth of 3%).
There is no chance in hell that Japan will achieve the triggers. The folks who passed the laws know that. I think Japan deserves the annual award for the most heinous “kick the can down” tactic. The following chart shows how Japan has limped along for the past 20 years. Note the GDP performance over the past decade. What are the odds that it breaks 2% anytime soon based on the prior track record?
How’s Japan doing today? Is it on it way to achieving the all important 2% GDP target for 2013 (the trigger for the 2014 tax increase)? Not a chance. From the FT this morning:
Moody’s warned about the possibility that the taxes would never be levied:
the gross domestic product growth targets contained in the new law remain an area of uncertainty
How hard do you have to stretch a rubber band before it breaks?
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On the Good Efforts by the SEC
The SEC made an important announcement this morning:
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The SEC is just now getting around to hiring some people who might have a clue what is going on in the capital markets. Mr. Berman, the head of the office Analytics and Research acknowledged that the SEC had no idea what was actually happening. From the interview with Tradersmagazine (Link):
the SEC learned it was unprepared to sift through the mountains of market data in the current high-speed, rapid-trading marketplace of today. That was evident when it had difficulty understanding what happened in the market on May 6, 2010-the day of the "flash crash."
So two plus years later they get to thinking that they need some “smarts” on board? The SEC gets the award for Rank Incompetence.
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No Inflation
Both the Fed and the Treasury have made comments on the tame inflation outlook as the basis for monetary/fiscal policies that potentially have inflationary implications. They have relied on a Cleveland Fed report that measures expectations for the future rate on inflation.
Not surprisingly, the folks in Cleveland are using a measuring stick that says the all-important “expectations” are very low, about 1.25%.
I look at the multi-trillion US Government bond market for a better measure of what those expectations are. The Tips/Coupons spread tells a different story than the nice folks in Cleveland. From Bloomberg – (Link)
The hockey stick higher starts on July 26. That was Draghi saying that he would print to the moon. The second leg higher was Bernanke saying that he was going to act in September.
Like I said, Bernanke ignores the market’s measure on expectations. But I’m absolutely certain that the Chairman, and all of the other Fed Governors, have the market measure of expectations somewhere on their screens. So they are well aware of the fact that the market is now forecasting inflation above the Fed’s target of 2%.
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check out the latest from "Lil' Mouse" on YouTube and you will see why we are doomed to failure
One better?
Bankstown 75th Ave Niggas - YouTube - http://bit.ly/RJHZlg
"No description available."
Indeed.
you didn't produce that sample....
http://audio.tutsplus.com/articles/web-roundups/8-most-overused-samples-in-hip-hop-history/
i like the westvillage sarcasm - but at some point - they won't all have i-toys, their own pc's and flat panels and remotes and everything else, unpaid for and then the boogie down wonder starts. i don't like it, it's a shame, but that's the way it is.
President showed we have choom ... and they don't. Teleprompter on please.
'SEC Data Analysis Group'=more people who surf porn! (In the theme of Horshack) Oooh, ohh, ooh, hire me! Finally, something I'm trained to do. Hand trained that is...
It's perfectly reasonable to speculate that the SEC has NO ONE that understands HFT or how to technically analyze the firehose, either in real-time or post-mortem. It's easy to speculate that ~90%+ of men at the SEC do porn surfing. Men are hardwired to look.
Porn surfing aside, Remember that 95% of the staff of the SEC are lawyers. A profession once described to me as so popular because it is one of the few ways the quantitatively challenged can earn a good living. So they are not going to be able to analyze market data.
Say, i know some people that could, or i could myself. What are they going to pay? GS-13 salary? Is anyone who is clever enough to learn how to interpret a real-time firehose of HFT data going to work for GS-13 salary? They might get a few, who like the hours, but the smarter girls are going to be on the other side of the table. Interesting.
if i understood HFT - why would i work at the sec for peanuts when i could be at the TBTFF?
if i knew how to run a business and earn a living, why would i work in government?
If you had durable skills, you wouldn't work for the government.
Bruce, are you READY FOR THE ULTIMATE MIND F**K?
A federal reserve note (what some refer to as the USD; I do not) now only buys 79 yen, versus the 130 or so it did a decade ago.
So, the yen has appreciated as against the federal reserve note DRAMATICALLY, from the time that Japan essentially had no or little debt (1989 to 1994ish) to the time it became the biggest spender and printer of fiat currency in the world, and during a period that Japan engaged in the largest fiscal stimulus programs, such as road paving and bridge building, of any nation in the world.
How 'bout them apples?
Anyone want to take a stab at that?
T in S, Its strength is a complete puzzle. Even when the BOJ try to sell the damn thing heavily as an intervention in only lasts a few days and then bam it strong again. If it did go back to 130/ USD now , Japan would be in Ben's shoes. Painted into a corner without an exit.
A strong currency with no debt is ok but a weak currency with what they have owed would cripple the place.
Who tells the Empire they have no clothes.
People, from lost tourists to panicky central banks, just seem to implicity trust Japanese hard work and integrity (not I didn't say honesty as fiat is involved). Especially when it is juxtaposed to the tinderbox of America's economic and social maelstrom and the in-family wrist flapping and hand slapping of the Europeans. One will notice that although they are much maligned for their fiscal stimulus projects involving captial projects, one cannot doubt that, however diminishing the return, these have some sort of postive effect on the economy through more efficient infrastructure. The North Americans and Europeans are busy throwing borrowed cash and stimulus down the twin throats of their oligarchy and welfare queens to no discernable improvement to the economy except it's continued functioning. This while the infrastructure litterally falls apart around them. +1 for Japan.
Vlad, you hit the nail on the head. It goes deeper then finance or economics. It's the culture that determines outcome.
A good read on this:
Niall Ferguson: why the West is now in decline For 500 years Western civilisation was full of self-belief, but now, historian Niall Ferguson argues in his new Channel 4 series, its dominance is coming to an end.http://www.telegraph.co.uk/culture/tvandradio/8362325/Niall-Ferguson-why...
http://www.amazon.com/Civilization-West-Rest-Niall-Ferguson/dp/1846142733
Ya but --didn't Mitt just get his "-----" handed to him because he alluded to "culture" -- what gives??
So you're experienced at watching porn and engaging in self love. It takes a man of courage to admit that and I applaud you for it. So tell us then, how long have you been married??????
Happily Single, which means I don't have to explain all the stuff on my PC to anyone ...and I know from your posts you are hitched, probably in a stall in a barn or the dog house most of the time considering your antics here.. ;)
+1
I have this friend who's wife encourages him to look at all the porn he wants and gives him the time - all in a ploy to keep his hands off her!
2% Japanese GDP growth? Easy. Have the government hand out loans so people can build things, like apartments. It worked for China, right?
Japan doesn't have much room left for building living quarters, but they've still got lots of room on their their shelves for Hello Kitty and trips to Tokyo Disneyland. Bullish for domestic consumption.
The Keynsian Model counts government spending in GDP. Just spend a whole shitload of Yen and, "boom", you have that 2% GDP growth. What is the problem? Deficits don't matter. Debts don't matter. Inflating prices don't matter.
Come on, Japan. Just spend like raped apes and your GDP will skyrocket. That will fix your problems. You love to copy American ideas. This one is perfect for you.
I looked this morning for headlines about the Japan's GDP... had to look really hard. If I hadn't read it last night I might have missed it. Wasn't even a blip with any of the usual suspects.
What will I do when my IP address isn't on the 'approved' list and I get muppet news?
you were not listening to bloomberg
they spun it as a "beat"
eff bloomberg and their lead shill Thom Keene the egonomist (read pseudo economist)
Gregg Berman looks like Mokey Fraggle.
Bruce
did you photoshop his head to look like a babies bum?
I did PS this image. I cleaned it up a bit and made the pic of Berman bigger. I didn't do anything to his head.
Picture in your mind what an SEC bean-counter looks like. Think of a guy who is a "lifer" at the SEC. He lives for the once a year chance to attend an accounting convention in Vegas. He is dedicated to the Agency and believes in its goals and firmly supports Mary Schapiro. He knows baseball statistics inside and out, but has never played the game.
So do you have that mental image? Now go back to the Pic of Berman. This guy is the image you should have come up with. He's from central casting.
high wasted dockers with the belt too tight above the navel, black runners meant to look like dress shoes, donut sauce on both ties he owns, got it
cheers
Chinese believe 9 out of 10 balds are rich.
So he only has 10% chance of not making it.
All of these great , Bruce. Scary how Japan somehow keeps its wheels on ,..but then they do produce stuff. I shudder to think USA oligarchs are completely ignorant of the fact we're travelling a similar path.
Thats exactly right my friend, they make stuff that don't break, we make stuff designed to break. Who makes out in the end here? Who's dollar or yen goes further?? And why don't the economic statstics/consequences match here??? The answer is that the #'s get lost in the efficiency and the calculations are mystified by the numbers.
It is not ignorance if you don't care.
It is amazing how long a debt junkie can keep racking up debt. Just look at the people around you. They pull out a credit card and you think, "who the fuck gave that to you?" But there it is, another card after another card. It is all good until it ends and then their only thought is about how to get it started again.
Boom goes the dynamite
Japanese probably have plenty to buy Japanese bonds. Enough left to buy American bonds? Probably not. Maybe Americans should be the one's worrying.
Any day here the JCB will figure out that if they just put out bonds with puppies and large-eyed cartoon girls their sales will triple. The Japanese have not yet begun to fight.
"annual award for the most heinous “kick the can down” tactic" - doesn't Japan already have about 10 or 12 of these already?
That last picture reminds me that people who have their heads buried in the sand eventually cop it in the arse.