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Japan Welcomes Abenomics With Record Unadjusted Trade Deficit In January

Tyler Durden's picture




 

We may have this centrally-planned, currency-debasement driven economic stimulus thing backwards, but unless we are very wrong, in January, Japan was not supposed to post a record unadjusted trade deficit, amounting to some ¥1,628.4 billion, or nearly ¥300 billion more than the expected ¥1,379 billion deficit. And while exports did rise more than the 5.6 expected, at 6.4%, it was imports which printed at 7.3%, that destroyed expectations of a modest 2.1% rise, and which were likely all energy related.  Which means that Japan is happily importing the rest of the world's inflation and getting precisely nothing to show for it. Then again, the central planners are smart folks. They have PhD's. They are certainly on top of this.

And as Bloomberg's Michael McDonough notes, the chart below showing Japan power generated by nukes, is certainly not helping the trade balance.

 

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Tue, 02/19/2013 - 20:11 | 3257859 Seasmoke
Seasmoke's picture

that island is DOOMED !

Tue, 02/19/2013 - 20:29 | 3257888 DJ Happy Ending
DJ Happy Ending's picture

They were saying that 10 and 20 years ago. Never underestimate the power of the printing press.

Tue, 02/19/2013 - 20:31 | 3257890 Hedgetard55
Hedgetard55's picture

Bullshit.

Fuck those little yellow monkeys. This is payback for what they did in WW2.

Fuck you, Sons of the Rising Sun.

Tue, 02/19/2013 - 23:24 | 3258356 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

 

 

They are fucked and they're going down NOW.  These curves have shifted; the world doesn't grow anymore neither will exports; their citizens are literally shitting in their pants due to old age; this is the most massive debtload ever; game's over, checkmate.  

But don't worry, our time will come too.

Tue, 02/19/2013 - 23:14 | 3258333 jballz
jballz's picture

 

actually this is a beautiful demo of printing press failure. This the most important post on ZH for tru econ geek losers.

Why?

This is fiscal entropy. The printing devalued the yen as desired (Soros thanks you, I slept right through it). The result as one would predict, and desire, a surge in exports. 6.4% is great! And it will only get better as yen tanks further.

What is key here is the import drag is ENERGY. That's it, that is peak entropy rearing its evil motherfucking head.

You spend $100 on electricity to pump a barrel of oil from the ground, you lose 5 bucks. Not worth pumping.

You import 300 billion yen worth of oil to export 280 billion yen worth of sony toyota shit (like the both but it's shit).

Fail.

Currency war fail. Trade war fail. You lose because the energy entropy kills the printing press game.

Magical. Keep watching this is the future of the fucking world, a microcosm of your fate.

No more cheap shit, bitchez.

 

Tue, 02/19/2013 - 20:33 | 3257894 kaiserhoff
kaiserhoff's picture

and this will keep happening, because you need more of a weak currency to pay for oil, food, LNG, metals, and everything Japan imports, while its exports are not all that price sensitive.  The whole thing is a fool's errand.

Tue, 02/19/2013 - 20:12 | 3257861 NoDebt
NoDebt's picture

I have my fork ready.  I'm getting a good idea where to stick it because Japan looks about done.

Tue, 02/19/2013 - 20:18 | 3257872 negative rates
negative rates's picture

How can they be? They are a creditor nation, their debts are internal. We are debter nation, with some 25% as external debt, we owe other country's. Those same country's can not at the same time owe us so much that a fork is necessary, a silver spoon perhaps, now our goose is cooked on a single skewer. 

Tue, 02/19/2013 - 20:33 | 3257896 Hedgetard55
Hedgetard55's picture

We don't owe anyone shit if they don't have the firepower to collect, motherfucker!

Tue, 02/19/2013 - 21:44 | 3258073 orez65
orez65's picture

But that would also holds true of intra-governmental Treasury debt like Social Security.

About $5 Trillion.

Tue, 02/19/2013 - 23:28 | 3258371 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

and they too have nukes.  And we have unfunded liabilities.  Bienvenidos a Argentina, matharfackars

Tue, 02/19/2013 - 21:44 | 3258074 orez65
orez65's picture

But that would also holds true of intra-governmental Treasury debt like Social Security.

About $5 Trillion.

Tue, 02/19/2013 - 20:40 | 3257911 CrazyCooter
CrazyCooter's picture

I think you meant to link to this chart:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/11-2/Agri$%204.jpg

Yup, they got us by the balls!

Regards,

Cooter

Tue, 02/19/2013 - 21:08 | 3257975 disabledvet
disabledvet's picture

try this number on for size: http://en.wikipedia.org/wiki/Greater_Tokyo_Area
logistics must be a bitch. they might start looking at these guys and think "yummy"
http://www.youtube.com/watch?v=UxhKb-zZoWE "stay long US logistics." we'll keep the Sumo train running. maybe we can even get a truck driver to try it out "after a hard days drive across the Pacific Ocean."

Tue, 02/19/2013 - 21:32 | 3258042 kaiserhoff
kaiserhoff's picture

Ben can evacuate that place in 15 minutes.

Tue, 02/19/2013 - 20:21 | 3257862 Yen Cross
Yen Cross's picture

 That weak  ( ¥ ) trade had a 1/2 life, that was shorter than POMO! You whimps don't know how to have fun! I'm short the ¥ and playing with you.

  Hey, I bought the dip in gbp/jpy and am up 60pips.  Catching falling "oversold knives" , has it's rewards.

Tue, 02/19/2013 - 20:15 | 3257866 SilverMaples
SilverMaples's picture

Wut? Devaluing currency creates inflation? Certainly not after a good review of the official representative basket of goods ...

Tue, 02/19/2013 - 20:16 | 3257869 caimen garou
caimen garou's picture

that chart looks like the highway to hell!

Tue, 02/19/2013 - 20:20 | 3257875 HobbyFarmer
HobbyFarmer's picture

Paved with the best of (bankers) intentions, no doubt.

Tue, 02/19/2013 - 20:43 | 3257902 Yen Cross
Yen Cross's picture

 I like Highway to Hell. I'm trading the M-5 chart. "Weighted Moving Averages" 10/20/50/100/200, and Zerolag MACD! A little Fisher_Yur4ik as well. BTFD bitchez. 

Tue, 02/19/2013 - 20:22 | 3257877 q99x2
q99x2's picture

When it is so bad for so long you go in to pick up a paycheck and nothing more.

Tue, 02/19/2013 - 20:28 | 3257886 davidsmith
davidsmith's picture

Japan today, U.S. tomorrow.  This is a very bad report.

Tue, 02/19/2013 - 20:32 | 3257892 VyseLegendaire
VyseLegendaire's picture

Ah, its time like these that national crises, civil unrest, and ultimately national war are made of. 

Makes me feel all warm and fuzzy inside with nostaligia for the 2/26 crisis of 1936 :)

http://en.wikipedia.org/wiki/February_26_Incident

Tue, 02/19/2013 - 20:37 | 3257903 Rustysilver
Rustysilver's picture

The problem is that Japan and other countries don't have such men anymore.  They're playing Nintendo instead.

Tue, 02/19/2013 - 23:42 | 3258401 espirit
espirit's picture

...and they knowingly serve horsemeat there, raw!

Tue, 02/19/2013 - 20:35 | 3257899 stocktivity
stocktivity's picture

Nikkei way up again tonight...It's all Bullshit!!!

Tue, 02/19/2013 - 20:57 | 3257946 ziggy59
ziggy59's picture

Maybe part of the hush hush currency war is for countries to buy the others' indexes...

Tue, 02/19/2013 - 20:40 | 3257905 Spectre
Spectre's picture

Japan is looking like the Carnival cruise ship "Triumph".  In a matter of months we will see real decay. 

Tue, 02/19/2013 - 20:45 | 3257919 thismarketisrigged
thismarketisrigged's picture

u gotta love the cnbc headlines each night for asia.

 

when the nikkei is down, the reason they post as the headline is ''down on profit taking''

 

when the nikkei is up, the reason they post as the headline is some bullshit headline that is clearly misleading and false.

 

i hope the nikkei crashes so badly

Tue, 02/19/2013 - 20:48 | 3257924 Yen Cross
Yen Cross's picture

 I find it comical that people run from reality! These markets are back asswards and we know it! Yet most people fight the trend!

 The trend is your friend! (with tight S/L) This ponzi charade/pantomime will come to an end soon enough!

Tue, 02/19/2013 - 21:17 | 3257999 disabledvet
disabledvet's picture

at it was with ZIRP ("this thing had better work and get those interest rates to zero") so it is with the Yen ("that thing better make the Yen the strongest currency in history." --loosely translated of course.) the fact of the matter is while i can agree "given the trade deficit reality the Yen had better not collapse" i think those trading for said effect are going up against a big chunk of US industry insodoing. "Japan employs MANY Americans." In good jobs i might add. So while the Democrats might have enjoyed shutting down Saturn "to show that non-union state what the deal is"...that State still has Toyota and the Camry...the best selling car 20 years running i believe. "and those profits get re-patriated" as well. BIG profits. with FAT margins. don't get me wrong i'm rootin' for the blue oval here...but they were the only US based car company that a: tried to go toe to toe with Japan and b: didn't need 100 billion from the taxpayer in order to keep doing that. I do agree trying to bring back Japan Inc is going to be an enormous challenge...we've spent trillions over here in the USA...how is our restoration coming?

Tue, 02/19/2013 - 20:48 | 3257930 ziggy59
ziggy59's picture

PhD = Phuckin Doofuses

Tue, 02/19/2013 - 21:40 | 3258061 chump666
chump666's picture

Water down that Sake.

Great Japanese bond collapse lined up.  The question is will war save Japan?  The Keynsian nightmare experiment moves closer to the sound of inevitability.

Tue, 02/19/2013 - 21:47 | 3258082 NoWayJose
NoWayJose's picture

The only good thing about Abenomics is that it will take Japan to the same place that Ben is taking the United States - only now Japan will certainly get there first - and just maybe Ben will see it and take his foot off the gas.

Tue, 02/19/2013 - 23:15 | 3258334 W74
W74's picture

"WHAT'S THAT??  SLAM ON THE B....Oh THE GAS, ROGER, GOT IT"

Tue, 02/19/2013 - 21:51 | 3258090 tube steak tommy
tube steak tommy's picture

what platform did they use to get the FEPCNU chart?

Tue, 02/19/2013 - 22:11 | 3258148 Son of Loki
Son of Loki's picture

Run, Forest, run!

Tue, 02/19/2013 - 22:28 | 3258207 TraderTimm
TraderTimm's picture

I hope the Nikkei goes down like the last time it gave Nick Leeson a good rogering.

"He's a turbo arbitrageur!"

Tue, 02/19/2013 - 22:44 | 3258248 besnook
besnook's picture

japan has a trillion worthless dollars and infinite paper to produce new yen to regulate domestic inflation. they have essentially proven the new fiat theory that domestically held debt can be increased almost to infinity so far without any inflationary consequence as long as interest rates are set at zero. there is no outside influence that could cause a change in yen zirp just as in the usa, where, as long as the fed can buy all the new debt zirp can go to infinity and beyond. if the eurozone can learn the lesson everyone will be zirping in the free world.

Tue, 02/19/2013 - 23:18 | 3258328 ISEEIT
ISEEIT's picture

Oh Tyler..Whichever one of you wrote this post is brilliant and beautiful.

I don't often kiss a strangers ass like this but you deserve it.

Devastatingly honest.

Delightfully alive and aware:)

Wed, 02/20/2013 - 01:41 | 3258354 Mediocritas
Mediocritas's picture

#1: An excessive amount of domestic debt (exceeding demand from domestic economic expansion) flows directly into the current account deficit. The logic is simple: those closer to the money better understand the value of said money than those further away. International prices are slower to adjust than domestic prices, due to information latency, regardless of whether or not the official exchange rate rapidly adjusts in partial compensation. This means that consumers prefer to import rather than buy local, an effect that erodes domestic industry and employment as business is lost overseas. Erosion of domestic income further exacerbates the problem (spread between domestic income and spending), and the downward spiral continues.

 

See: http://www.buoyanteconomies.com/CAD_Fo1.jpg

 

Something that the Krugmans of this world simply do not seem to understand is that this is a relative, not absolute relationship. If the real economy is collapsing / contracting and the money supply is kept static (no money printing beyond maintenance), then the result is inflation and a blowout of the current account.

It really is that simple. Easy credit killed America. Banks effectively assassinated the US economy with low interest rates and excessive provision of credit relative to a collapsing real economy with no need for that credit (spending exceeding income). ZH understands this, Keen understands this, Harkness understands this, Krugman and the "orthodox" economics he represents does not. By fighting so hard to keep deflation at bay, the Krugmans are killing the economy while claiming to save it.

The correct treatment is to take a chainsaw to the banks, raise interest rates, face a rapid deflationary shock as money supply returns to a proper level relative to the real economy, and take the pain. De-financialize, shrink credit, wipe out the shadow-banking system and release all those brains sucked into "financial innovation" so that they can be applied to physics, engineering, etc. Going cold turkey is never fun, but it's the only way to truly break the habit. In a few years, a much healthier economy would emerge from the financial ashes.

 

#2: A floating exchange rate actively inhibits net export growth. (China knows this, that's why they peg). The floating exchange rate does nothing to address a current account deficit, yet this is one of the primary justifications for it being introduced. Central bank manipulation of the exchange rate (to weaken the currency in order to supposedly boost exports) simply increases the amount of money relative to true local demand. In other words, national spending is forced to exceed national income which flows into the current account deficit.

The central bank ends up fighting natural market forces and taking a high-risk net position equivalent to the difference between national income and national spending. As explained in point #1, the end result of this is to further harm the economy and ultimately weaken exports relative to imports. Exactly the opposite of what is intended.

With a floating exchange rate, the concept of weakening the currency in order to boost exports IS A FAIRY TALE.

Summary: banks playing with numbers and paper can't fix a broken economy. If you want a boost in exports and a repaired economy then import and support more scientists, engineers, designers and innovators, while deporting lawyers, banksters, politicians, lobbyists and other wasters.

Wed, 02/20/2013 - 00:25 | 3258475 hero HNL
hero HNL's picture

Nuclear reactors will start soon after they upgrade to a higher safety standard.

You gotta read nikkei more, not zerohedge.

 

hero

Wed, 02/20/2013 - 00:42 | 3258500 Lord Of Finance
Lord Of Finance's picture

The Japenese are known for taking other countries ideas/inventions and taking it to the next level. It just makes sense.

 

Japanese take QE idea/invention to next level higher. Make QE bring down Japanese economy faster than America and Europe.

 USA print lot of money? Japanese print more!

 

USA run trade deficit?

 

  Japanese run bigger deficit!

 

USA destroy purchase power of dolla?

 

   Japanese obliterate purchase power of Yen!

 

  USA drop money bomb?

 

    Japanese drop nuqweer weapon!

    

 

Wed, 02/20/2013 - 03:40 | 3258671 GreatUncle
GreatUncle's picture

Add the ups and downs together and you get the cancellation effect.

Japan is structurally in exactly the same position today, as yesterday and all through its lost decade of an ever growing debt.

THE GROWTH OF THEIR DEFICIT IS OUT OF CONTROL where deficit is nothing more than the rate of growth of their debt.

This "collusion of politicians and bankers" allows the borrowing and incurring of debt at levels that are unsustainable.

[edit] A bust should have occured on this years ago where markets corrected the issue of a deficit rate that would not be underwritten.

Wed, 02/20/2013 - 05:26 | 3258730 css1971
css1971's picture

Japan have in a few short months switched from a "strong" nation to a "weak" nation simply by shutting off their nukes. Their currency will from this point forward be "weak".

A bit of reality will start entering their politics. I imagine it'll have to get pretty bad before the cluestick thumps home, but that's just human nature.

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