The Abenomics Farce Continues

Tyler Durden's picture

It's not been a great evening so far for the leadership in Japan. We are now six months into the greatest monetary policy bluff of all time and thanks to the sound and fury from Abe (and now his henchmen) the JPY has devalued by an impressive 25%. The goal, of course, to target inflation and combat the dreaded deflation - that Abe himself today said "can take a long time." So how are we doing? Not so great it seems. Just as the US went 4-for-4 today in dismal data so Japan is 3.5-for-4 as the much-watched 'inflation' missed expectations once again with a -1% print (that would be deflation) - the worst level since August 2010; Japanese Industrial Production slumped 11% year-over-year, far in excess of the consensus 5.8% drop (biggest miss since Feb 2009) and the biggest collapse (ex-Fukushima) since October 2009; and to top it all off, Japanese unemployment ticked up higher than expectations to 4.3% - equal worst in 7 months. The one saving grace was a PMI above 50 (but driven by an 18-month high print in input costs and accompanied by a drop in backlogs and slump in employment sub-indices - so not exactly bursting with euphoria). Need moar Abenomics...


The Bold Strategy...


The Results...


Of course, living by the Keynesian easy money credo of "If at first you don't succeed, devalue moarer..." we can look forward to more bold easing down the road.

Perhaps this?


Charts: Bloomberg

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Yen Cross's picture

    The annual repatriation is almost finished. usd/jpy goes parabolic next week. I have been averaging in.

Manthong's picture

With all the other important stuff like the massive impact of a few billion in liquidity in Cyprus , why would anyone be concerned  with the paltry trillions dislocation in Japan?


Yen Cross's picture

   So 'manthong' you are implying that the yen weakens on "risk off next week"?  The yen has been directly correlated to usd strength over the last 2 weeks.

   Any sane person would agree with you 'manthong'. Unfortunately the U.S.$, is in fact strengthening against the yen during risk aversion events.


Manthong's picture

yep..  that's how evil works.

I agree with you, but “sane” means “sound” which has no correlation to “logical” in the kabuki
so.. are we playing any good games, lately?

Scarlett's picture

they should introduce the billion yen note and show it in a great festival; nothing creeps out people more than looking at those high-denominations hyperinflationary paper notes.

american eyedol's picture

@ yen cross

so your picking up the dime in front of the bulldozer?

Yen Cross's picture

  I'm driving the 'bull dozer'.  Anything I can short the yen against is my friend.

Manthong's picture

good, logical  move.. but as always, time is an adversary 

Capitalist Exploits's picture

Looks like the BOJ may have a solution to the last something that would actually work.


Exile on Mainstreet's picture

Yelled out fire, then came Suzy

The bitch came out with a sub-machine Uzi,

Jim in MN's picture

You came and you gave without taking

But I sent you away

Oh Abe

kaiserhoff's picture

Mandy -but we'd have to be older than dirt to know that.

Yen Cross's picture

 I love that tune  disabledvet.   Brandy was a fine girl!

hannah's picture

There once was a girl named Brandy
Who, when it came to sex was quite handy
Then one night on the beach
She gave up her peach
And noticed her buttcrack got sandy.

Exile on Mainstreet's picture

Took out the security guard with the slap of my hand

Yeah he's wearin' a badge but he's an old-ass man.

Jim in MN's picture

"She's breaking up!  She's breaking up!!!"

kaiserhoff's picture

You cain't always get, what you wah-ant.

The wailing hobo.  (Dillon)

francis_sawyer's picture

If you hold the 'FRANCHISE' on PRINTING JOOBUX... That automatically makes you a 'gazillionaire'...


N'est pas?

Ropingdown's picture

Warren Buffett converted?  Wasn't in the papers.....

Tinky's picture

Question posed to Kyle Bass at a recent event:

What would you do if you were named Japanese Finance Minister?

Bass' response: Quit.

e m m's picture

At least that JPY trade bailed out some hedge funds and helped the stock market to reach record highs. The Japanese can wear two cardigans if they can't pay for heating.

disabledvet's picture

Jim in MN's picture

He said Yo, watchu doin' in my girl's crib?

I said Yo, ain't what I'm doin', it's what I done did.

nmewn's picture

Use the Farce, Abe.

Freedumb's picture

Honest non-rhetorical question, so say the BOJ steps their flavor of monetary policy up to its theoretical limit and begins buying derivatives and anything else they can get their hands on, in other words just printing money left and right. Assuming some (perhaps global, macro) event triggers a shift from deflation to inflation, will high inflation in their particular circumstance kick in in a matter of a few years, a few months, or overnight? I won't even try to speculate on what will shift things, I'm just curious as to how long people here might think a hypothetical (or, well, likely) transition would take. Personally I'm assuming it'll be some sort of event out of China that would throw Japan's monetary policy totally off kilter but am interested to hear opinions.

Evil Bugeyes's picture

German wholesale price index:


July 1914 1.0

Jan 1919 2.6

July 1919 3.4

Jan 1920 12.6

Jan 1921 14.4

July 1921 14.3

Jan 1922 36.7

July 1922 100.6

Jan 1923 2,785.0

July 1923 194,000.0

Nov 1923 726,000,000,000.0

There was deflation from Jan-July 1921, but prices had more than doubled by Jan 1922. Six months should be enough for inflation to kick in. But it looks like the Japanese are just trying to talk down the yen without actually inflating. And it seems to be working.

ultimate warrior's picture

Peter Schiff uses an awesome analogy. You jump in the shower and the water is cold. Your turn the knob for hot water but its still cold. Your turn the knob even more but still cold. You turn the hot water knob even more and finally the hot water has arrived but it isn't very nice as you now have scalding hot water on you. Abe thinks he can manage inflation but he will soon find out that you can't "shut off the valve" in time and will get burned.  

kaiserhoff's picture

Too late in the evening to think deeply, but it depends,... on how quickly wages adjust, and ratchet up.

Our Oriental correspondents might have a good take on that, but the relative stability of Japan in spite of all their problems is impressive..., and a pain in the ass for social planners.  Some societies just resist change.

The farm boy in me likes that.

Freedumb's picture

Yeah, it makes a lot of sense if that may be a big part of it.... Perhaps (at least from what I've read) higher rates of loyalty in employment and a greater propensity toward keeping business as domestic as possible would put a damper on how quickly things turned bad.


Ropingdown's picture

The employer loyalty and "keeping business as domestic as possible" are dying.  Biz is becoming Chinese and North American.  Loyalty has faded.  The dream is dead but the population is in denial.  The bills will have to be paid.  Living standards will have to fade and meet Chinese/South Asian standards.  The Chinese are stealing Japanese data and tech just as they are stealing US intellectual property. 

lolmao500's picture

CPI is bullshit. In real life, there's inflation, thanks to depreciation of the currency.

nmewn's picture

Thats right.

Inflation (rising prices) is nothing more than currency devaluation. I can prove it with any honest, knowledgeable merchant, just hand him a 1962 quarter for a loaf of bread.

The bread is priced at 2-3 dollars (with all the labor built in to produce it & exist on the shelf) the face value of that quarter I just handed him, is a measly twenty five cents. The merchant would pocket the difference if I were so inclined to offer.

So I would ask Doctor Krugman (if he were here) why the disparity? He would not answer because it is the defacement of currency.

Inflation = devaluation.

JustObserving's picture

No one has played the CPI game better than the US through hedonic adjustments.  Actual inflation is about 6% instead of the official 2%.  So instead of the economy growing at 0.4% in the last quarter of 2012, it was actually shrinking by 3.6%.

All these hedonic adjustments have overstated the size US economy by nearly 50% over just the last 10 years (without hedonic adjustments, US GDP would be about $10 trillion now).  It is one of those open secrets that everyone ignores when talking about the US economy.

Just the hedonic adjustments made to computer spending account for 25% of the alleged growth in US GDP.


NoDebt's picture

You said a mouthfull there.  Agreed completely.  And provable.

As my screen name would imply, I live completely debt free.  No mortgage, no student loans, no car payments.  So my personal/family expenses actually model the average "paycheck-to-paycheck" working-class family quite accurately (it's just that I've got money left over once all running expenses are paid). 

So it's fairly easy for me to calculate my "personal inflation rate."  Skipping to the end.... it's roughly 7% just looking at expenses (no change in family size, no change in the basic necessities I buy for the last few few years).  Just food, gas, liability insurance, health insurance and the various gadgets required for modern life like electicity, cell phone service, etc.  My needs have been fairly "static" for years now, so I think I'm actually a pretty good example you can "drive a stake in the ground and measure from there."

And 7% is being kind because my current health insurance costs have gone up while my co-pays and deductibles have as well (I have not taken those reductions-in-coverage into account in my rudimentary calculations).  Nor have I taken into account that some of the food I buy may, in fact, be horsemeat or dogfood.

If you have a typical fixed-rate mortgage on your house, your "personal inflation rate" would be lower than mine since a significant portion of your monthly expenses would be at a 0% inflation rate (a mortgage payment that doesn't change). 

Is there anywhere I've actually legitimately REDUCED costs?  Well, yes, there are two.  Both are telecom-related.  Home phone service has been effectively zeroed out (thanks, MagicJack!!).  Cell phone service is also just flat-out cheaper than it used to be even with more data usage (although I feel no increased enhjoyment in my life because of this- it's mostly just programs updating themselves automatically and doing shit I never see that uses up the extra data).  Also, term life insurace costs are legitimately cheaper than they used to be apples-to-apples.

Still, I don't know how you can get to the official government inflation number.  It's just not possible from what I've seen.  Not for anybody, ever, in the US.  The only way you can really get to 2% is to lower your standard of living by about 4% a year.


css1971's picture

No problem. You just eat iPads & buy lots of television sets.

DaveA's picture

In other words, every year we spend more money to buy less food, less fuel, and less of everything else.  This is called "growth", and every news story about human suffering begins with "Despite the economic recovery, ..."

optimator's picture

Inflation hits everyone differently.  One example.  Old couple retired 20 years ago to a nice condo complex, paying cash and with a nice retirement felt set for life.  The are now selling the condo and moving to a much smaller ranch house.  Their company retirement paycheck is the same as it was 20 years ago, and their SS hasn't gone up that much.  They are draining their 401's and IRA's to pay for taxes, and especially their property taxes.  They wouldn't say how long they could sustain living where they currently are, or how much they had socked away.  their problem was outliving their money. 

Yen Cross's picture

    Manthong has a valid point. What is the purpose of shorting the yen, if Q-2 falls off the cliff. After all Japan is an export /saving economy.

     My response is, Japan is out of options. It's do or die time for Japan. What ever the outcome, ' Haruhiko Kuroda' will print and aquire every external asset he can. The yen devalues during said aquistions. Japan isn't interested in servicing debt. (Japan want's to own the debt)

    He who owns the gold makes the rules.

Captain Nukem's picture

He who owns the gold makes the rules.

Or is it: He who makes the rules owns the gold?

If I were making the rules, the first one I would make would be that everyone must give me all their gold.

AynRandFan's picture

How come the Japanese are so helpless, when Germany is doing great?  Can't just be a cheap Euro. Maybe the Germans are just smarter.

css1971's picture

The Germans have Greece. Japan has South Korea.

fuu's picture

1565.15 = 23

1569.19 = 31

1569.19 - 1565.15 = 4.04 Market Not Found?

Schmuck Raker's picture

I get 8.

Let me check again.

Yep. 8.

BTW, +1, fuu.

That'd be.......hmmm, 9.

Final answer.

[edited for over-capitalization]