Prime-Ministerial Unpopularity Contest at the Edge of the Japanese Abyss

Wolf Richter's picture

Wolf Richter

While all eyes are on Europe and the ever expanding Greek farce, a much bigger fiasco on the other side of the globe is advancing at an inexorable pace—with another setback for Japanese Prime Minister Yoshihiko Noda, who was stuffed into that slot last September. All Japanese prime ministers since Junichiro Koizumi (2001-2006) slither down a bumpy and steep slope that lasts between 8 and 15 months. When their approval ratings drop into the low twenties, they're thrown out, and a new sacrificial lamb is stuffed into that slot. And Noda is on a straight line down to replacement hell. 

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:


Approval rating vs. months in office

It seems the top item in Noda's job description is to get the unpopular consumption tax through a recalcitrant parliament along with some half-hearted reforms of the social welfare system that is bankrupting the country—if that were still possible.

The Japanese fiscal quagmire has no peers among developed nations—by March 2013, national debt will surpass one quadrillion yen, or $14 trillion, a mindboggling 240% of GDP. The budget deficit for fiscal 2012, with all its accounting shenanigans, will exceed ¥54 trillion yen, of which an astounding 56% will have to be borrowed. For more on that vertigo-inducing debacle, read.... The Endgame: Japan Makes a Move.

So, comes along the idea of an increase in the consumption tax. It’s currently 5%. The first phase would take it to 8% in April 2014; the second phase to 10% in October 2015. While the deficits are eating up Japan’s future right now, the proposed fixes, insufficient as they may be, won’t even kick in until 2014 and 2015. Sure, a consumption tax will further demolish consumption, and given that Japan’s fourth quarter GDP has shriveled by 2.3%, it’s not a good time to try to implement something like that. But in Japan’s economy, which is completely dependent on a flood of deficit spending, it’s never a good idea to implement any kind of tax increase or spending cuts. Meanwhile, as the problems get worse and more intractable, ineffectual and powerless prime ministers are shuffled in and out.

And the problems are getting worse, fast. Japan’s all-important trade surplus has generated $1 trillion in foreign exchange reserves and has been one of the pillars supporting the government’s deficit-addicted ways. Alas, the joyride is over. The trade balance for January, reported today, was a record deficit of ¥1.475 trillion ($18.6 billion), the fourth consecutive month of trade deficits. Already, 2011 had seen the first annual trade deficit in 31 years, but it was mild compared to what 2012 will look like.



Imports jumped 9.8%, liquefied natural gas being the most salient item. That won’t be getting better anytime soon: another nuclear power plant was shut down today for scheduled maintenance, and will stay off line. Due to opposition and controversy—Fukushima is haunting the country in a myriad ways—none of the reactors that have been shut down since March 11 have been brought back up. By now, only two of Japan’s 54 reactors are still generating electricity. On March 26, both are scheduled to be taken off line as well.

A mad scramble has ensued to replace their capacity. Old and inefficient fossil-fuel plants have been de-mothballed, and new ones are being planned. Companies are building their own power plants as a matter of survival. They need LNG. Hence the jump in LNG imports. Other generating capacity is being brought on line, but it will be impossible to replace the massive capacity of 54 nuclear power plants over such a short period. With harsh consequences for power-hungry manufacturers.

Exports plummeted 9.3% from January 2011, as manufacturers reacted to the power shortage, the strong yen, and high production costs. Caterpillar was the latest when it announced that it would shift production of small track-type tractors and mini hydraulic excavators from Japan to the US. And Japanese companies spent $70 billion on acquisitions overseas in 2011—a record. They’re going overseas to escape the pressures at home. But they’re doing it just when Japan can least afford it. For that whole fiasco, read.... Japan Inc. Seeks Salvation Overseas.

However, life goes on in its unpredictable manner. A convoy of 20 supercars was speeding down the Chugoku Expressway, entered a left-hand bend at 90–100 mph, though the posted speed limit was 50 mph. The highway was wet. And the rest was very expensive.... Superlative Supercar Pileup (incl. video).

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BiggerInJapan's picture

Regarding the nuclear reactors.

I disagree, the nuclear reactors have been easily replaced.

The sooner they are dismantled and the waste fuel sold to french and americans the better.

The loss of another province because of an accident/earthquake will be much more expensive than ending those bloody fucking moronic mistakes that was constructing those 54 doomsday reactors.

If it's not too late already....

I already have the pitchfork ready for the day japanese decide to do the right thing to TEPCO.

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BiggerInJapan's picture

Regarding the nuclear reactors.

I disagree, the nuclear reactors have been easily replaced.

The sooner they are dismantled and the waste fuel sold to french and americans the better.

The loss of another province because of an accident/earthquake will be much more expensive than ending those bloody fucking moronic mistakes that was constructing those 54 doomsday reactors.

If it's not too late already....

I already have the pitchfork ready for the day japanese decide to do the right thing to TEPCO.

rsnoble's picture

So what is the latest with the radiation in Japan?  They sure aren't talking about that anymore.

I do feel sorry for those people but on the other hand you've built an entire civilization on a small on island made by volcanos in the ring of fire and built nuke plants on the shoreline. Isn't that one of those "not if but when" things?

My step grandad was Japenese, he was a pretty cool dude.  When I was a kid I always considered all of them that had funny eyes and darker skin to be the same.  Apparently not so, he sure hated Chinese people.  To him they were the equivalent of white trash.

rsnoble's picture

BTW I live in Kansas. People think it's totally safe here. Let's see, I have one nuke plant 100 miles to the north and another 100 miles to my south and im not that far from the New Madrid fault to boot.  I'm one of the few poeple around here that carry earthquake insurance.  Ins agent that I was joking. It's only like $30 a year so hell yeah I want it. 

Our big thing is tornados.  I'm just waiting for tornado coverage to be like flood coverage. Either can't get it or cost out the ass. Insurance companies are pure evil, they think all those premiums are theres and never want to disburse any of the funds. They are the best friends in the world till you actually need them.  People think they're there to protect. No, there business is making $ and they'll spend a dime to save a penny.

BiggerInJapan's picture

get a monolithic reinforced concrete dome and you are safe from everything except meteorites and floodings.

JohnKozac's picture

"In Japan, where rates have been near 0 for 16 years, the notoriously frugal Japanese population is ageing. With vast amounts of their savings invested in Japanese government bonds, Japanese retirees have been getting negligible returns for a long time.


Without income off their savings for so many years, things have turned rather desperate for the Japanese elderly.

Bloomberg reported in 2008 that...

'more senior citizens are picking pockets and shoplifting in Japan to cope with cuts in government welfare spending and rising health-care costs in a fast-ageing society. Criminal offences by people 65 or older doubled to 48,605 in the five years to 2008, the most since police began compiling national statistics in 1978, a Ministry of Justice report said. Theft is the most common crime of senior citizens, many of whom face declining health, low incomes and a sense of isolation, the report said.'"

From The Daily Reckoning article by Nick Hubble.

Matt's picture

It never ceases to amaze me how people who saved a big chunk of their income, and consider themselves risk-averse and "conservative", have no problem piling all of their savings into one or two assets; namely, government bonds and real estate. Did they grow up without ever hearing the adage "don't put all your eggs in one basket"?

kaiserhoff's picture

They don't know how to grow pot?  Send in the Peace Corp.  They'll be experts soon enough;)

Ayn Rand's picture

Maybe the elderly WANT to get arrested.   Let the government take care of them for the rest of their lives with free food, board and medical.   

kaiserhoff's picture

I don't think old farts like jail, but I have noticed a trend down at Sleaze Beach.

The latest income supplement is to recycle your unlimited supply of pain killers, amphetamines, Viagra, whatever in trade with the local youngins, who provide unlimited demand.  They are oblivious to drug laws, and can't believe such things apply to the grey haired set.  We'll see.  The law of the land is mostly a memory.  Gawdhelpus.

AnAnonymous's picture

What a sad, desperate situation.

You mean that the Japanese Ponzi is more and more exposed, no longer being covered by the scam of their exports but they keep being able to import what they need?

Dont stare into that abyss. Really. You might want to jump in.

In the meantime, of course, in US citizen drama world, those who have it good are those who cant consume their resources right now because those resources are required to feed japanese consumption.

Awesome. Victimhood is high among US citizens.

jwoop66's picture

The welfare state strikes again!    When will we learn?

smb12321's picture

We won't learn.  Despite massive evidence that welfare states inevitable go broke, decline and fall, we choose a short-term gain. What's so bad about Japan is that the very thing that supports a welfare state - growing numbers of workers willing to sacrifice for those not working - is declining at an unprecedented rate in Japan.   So, expenses soar but revenues tank.

Hugo Chavez's picture

Once the united states is cinfirmed to be on a trajectory toward increasing energy independence it will mark the start of another american century.

Japan was supposed to take over the world in the eighties....epic fail.

China will go nowhere.

Just like the twentieth century, the twentyfirst century will belong to the americans.


IAmNotMark's picture

I look at all that we have and I envision the US continuing to thrive.

Then I look at our politicians, red and blue.  We're doomed.

LawsofPhysics's picture

Don't bogart the hopium pipe dude.  In layman's terms, I am sure you are aware of the energy in/energy out model when it comes to discovering, developing and delivering various energy sources.  Energy is going to be the least of our problems moving forward.  For example, I can't wait to see how that Federal injunction on the water rights claimed by the city of Atlanta is going to pan out.  I believe the Feds have placed a deadline sometime in July for a water-sharing plan between Alabama, Florida, and Georgia. No deal in place as far as I can tell, let's if what happens when(if) the Feds shut off the water to the city of Atlanta.

In absence of any rule of law, possession is the law.  

falak pema's picture

Well Japan is now down to near zero production of electricity from Nuclear as aftermath of Fuku, and that will NOT change in near future; whence the degradation of balance of trade in an increasing Oil price scenario.

Japan is truly getting its nuts crushed by lady fate, or lets say its hubristic construct of finance, RE and Nuclear Oligarchies; on structural and natural fault lines. it what you like, can be relentless. Brave Nippon nation, sold down the river of hubristic blindness.

LawsofPhysics's picture

All according to plan FP.  There is no rule of law anymore, possession is the law now.

celticgold's picture

The unapparant connection is more powerful than the apparant one.......

Heraclitus ;500 BC

disabledvet's picture

This is a big deal...I agree. Kyle Bass looks lime he'll be very right on this one...with momentous implications as well. Stick with US equities, stick with the Upper Midwest. The growth numbers being registered in that region are easily the highest in the world...and they are sustainable and growing.

Jim in MN's picture

The fastest growing area up there before the new oil boom was Sioux Falls, SD.  A great story of old-fashioned boosterism, basically jawboning and shoe leather. 

Your credit card bills are quite likely processed there (if you're only pretending to be prepared here at ZH).  Thanks for playing, ka-ching! 

Wind power and natural gas have blown the energy supply picture wide open.  I never would have believed that wind turbines could clock over 25% annual capacity factors.  They are hitting 40% in the Texas panhandle.  Colorado already has some low demand hours that are almost half wind (electric supply, of course).  Still need oil, but in the mid-continent they have almost too much of it.

Question mark: Whither biofuels in this extremely volatile market and political environment....look out for Brazilian cane biofuel.  Legal now and EPA-preferred over USA corn. 

Fun fact:  Who makes money when cheaply produced mid-continent oil is priced on a global market?  KOCH.

LOL makes my side ache.  Or maybe that's my irony bone.

Uchtdorf's picture

Please give us some more details about the upper midwest growth. And is that trend sustainable?

disabledvet's picture

Home Depot earnings. That's not "housing" as CNBC would have you believe...but mom and pop contractor work. Take a look at North Dakota oil production...also said price of product (record lows), the way in which the product is moved (not via pipeline but via rail. the only refinery i know of is in Minneapolis.) Land prices have soared over the past decade. This includes North Dakota where when i first started going their 15 years ago had entire abandoned towns. "Now the strippers are moving in from Vegas." That last one pretty much sums it all up to me...

Vlad Tepid's picture

Look up the remaining projected lifespan of the Oglala Aquifer and get back to me on the growth of the Upper Midwest.

disabledvet's picture

Perhaps you've heard of Lake Superior then? Or how about "the land of 10,000 lakes" known as Minnesota? (on the low side by probably 90,000) No? Take a trip to Duluth of the biggest inland ports in the world. Those are thousand foot long ore ships dumb ass. And "no, they're not just parked there for the view." In Upper Minnesetoa is one of the largest Iron ore deposits on the face of the earth. I don't even know why i bother actually...

LawsofPhysics's picture

Right, you do understand exponential equations?  What you speak of will require a huge increase in energy consumption, and then more to sustain, much less grow (there is a BIG differenc between available energy and FLUX and then there are those pesty laws of theromodynamics).  However, I think you are correct and this is precisely why the ONLY big bet I am making this year is on energy stocks and suppliers of the energy industry.  The world wide demand for energy is still very much alive.  In the U.S. it may have dropped a little, but the U.S. and the dollar are becoming less relevant every day.

On another note, if you are suggesting that the future of america will be working in iron mines, you are dreaming as this process is very automated already. 

Jim in MN's picture

I realized that Minnesota was a lifestyle state when I noticed that both my parents, seperately, had a therapist, a masseuse and a chiropractor, and would complain when any of them was on vacation.

This was...the mid-1980s.

Say hello to the Fortune 500 and iconic brands from Minni:



Cray Supercomputing


United Health Care

General Mills

Traveler's Insurance

Mall of America



Tonka Toys

Anderson Windows


Best Buy


Caribou Coffee

Most creative advertising

More theater seats than Chicago

#1 bike-friendly

#1 gay-friendly

Michelle Bachmann, Paul Wellstone (RIP), AND Jesse Ventura

And yes, plenty of fresh water, iron ore, and the only place in the Eastern US with all three major biomes (Northern pine forest, deciduous woodland, and prairie).

Abundant renewable resources, only held in check by the low cost of dirty fuels.  Hardly a curse, although an interesting problem to figure out.

--happy rant off--

Of course, corruption and credit insanity can destroy it all.  That's why Ron Paul polled strong here, in fact he WON in St. Paul, losing the broader county by 36 votes to Santorum.

No Romney up in Minni.  People are sort of half awake, when they're not waterskiiing or snowmobiling or riding their Harleys (but that's Wisconsin).  Or going to the spa.....


kaiserhoff's picture

All true Jim.  I would add that most of the heavy industry that is left in the Western world is centered in the upper Midwest or Germany.  Big bucks in rail and pipelines, Barry be damned.

Still, the whole region goes up and down with grain and fuel prices, and there is that Soviet Socialist Trend Thingy.

rsnoble's picture

Apparently you'll get screwed rather the next president has experience or not. As far as im concerned Romney has too much $ which means he's way too exp as screwing people over.

caerus's picture

per me si va ne la città dolente,
per me si va ne l'etterno dolore,

lasciate ogne speranza, voi ch'entrate

BiggerInJapan's picture

I disagree, the nuclear reactors have been easily replaced.

The sooner they are dismantled and the waste fuel sold to french and americans the better.

The loss of another province because of an accident/earthquake will be much more expensive than ending those bloody fucking mornonic mistakes that was constructing those 54 doomsday reactors.

If it's not too late already....

WmMcK's picture

Abandon all hope - Ye Who Enter Here -- I predict pain.

Indrid Cold's picture

That's an amazing chart. 

williambanzai7's picture

I think you mean farusu.

Miles Kendig's picture

Japan will soon be deep in the throes of industrial and the accompanying capital flight that goes with establishment of operations in different locations.  Nothing can change that now.  What passes for government, essentially bootblacks, are completely incapable of formulating and implementing a coherent national industrial policy that will see Japan through rebuilding and reestablishment of its national industrial base. 

disabledvet's picture

i agree this is catastrophe...again "far worse than this" since when dealing with nukers "there is the possibility that the bulk of the island becomes uninhabitable." In short..."HEY TEXAS AND ILLINOIS...SURE YOU WANNA GO DOWN THAT PATH?" At least the guy heading the NRC understands this..."the one they tried to fire for being to tough" i might add.

toadold's picture

You can see braces deforming, some struts are visibly stretching, cables have threads parting. However when something finally snaps and the cascade starts. "This was so unexpected and impossilbe to predict. It wasn't our fault."

Manthong's picture

My repost from yesterday..


So when will the shit hit the fan?

Will it come from Athens or Tehran?

Madrid, Lisbon or Rome?

Or from Ben here at home?

I’m with Kyle, keep an eye on Japan