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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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Thu, 03/28/2013 - 21:03 | 3387422 Yen Cross
Yen Cross's picture

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

Thu, 03/28/2013 - 21:17 | 3387469 Manthong
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?

 

Thu, 03/28/2013 - 21:24 | 3387485 Yen Cross
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.

 

Thu, 03/28/2013 - 21:34 | 3387487 Manthong
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?

Thu, 03/28/2013 - 22:24 | 3387606 Scarlett
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.

Thu, 03/28/2013 - 21:24 | 3387477 american eyedol
american eyedol's picture

@ yen cross

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

Thu, 03/28/2013 - 21:35 | 3387494 Yen Cross
Yen Cross's picture

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

Thu, 03/28/2013 - 21:37 | 3387510 Manthong
Manthong's picture

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

Thu, 03/28/2013 - 23:57 | 3387746 The Heart
The Heart's picture

.

Fri, 03/29/2013 - 05:53 | 3387978 Freaking Heck
Freaking Heck's picture

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

http://capitalistexploits.at/2012/01/japan-official-media-announcement/

 

Thu, 03/28/2013 - 21:03 | 3387424 Exile on Mainstreet
Exile on Mainstreet's picture

Yelled out fire, then came Suzy

The bitch came out with a sub-machine Uzi,

Thu, 03/28/2013 - 21:04 | 3387425 damage
damage's picture

Oh Abe!

Thu, 03/28/2013 - 21:07 | 3387434 Jim in MN
Jim in MN's picture

You came and you gave without taking

But I sent you away

Oh Abe

Thu, 03/28/2013 - 21:10 | 3387447 kaiserhoff
kaiserhoff's picture

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

Thu, 03/28/2013 - 21:13 | 3387460 Yen Cross
Yen Cross's picture

     Japan in the late 80's  Barry Manilow - Mandy - YouTube

Thu, 03/28/2013 - 21:33 | 3387503 disabledvet
disabledvet's picture

I was thinking Looking Glass myself: http://www.youtube.com/watch?v=_6ybb6myGE4

Thu, 03/28/2013 - 21:40 | 3387515 Yen Cross
Yen Cross's picture

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

Thu, 03/28/2013 - 21:50 | 3387541 hannah
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.

Thu, 03/28/2013 - 21:05 | 3387428 Exile on Mainstreet
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.

Thu, 03/28/2013 - 21:07 | 3387430 Jim in MN
Jim in MN's picture

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

Thu, 03/28/2013 - 21:08 | 3387433 kaiserhoff
kaiserhoff's picture

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

The wailing hobo.  (Dillon)

Thu, 03/28/2013 - 21:08 | 3387436 francis_sawyer
francis_sawyer's picture

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

~~~

N'est pas?

Fri, 03/29/2013 - 02:03 | 3387869 Ropingdown
Ropingdown's picture

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

Thu, 03/28/2013 - 21:09 | 3387437 Tinky
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.

Thu, 03/28/2013 - 21:08 | 3387439 e m m
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.

Thu, 03/28/2013 - 21:34 | 3387508 disabledvet
disabledvet's picture

must....short....something....and....win.....ahhhhhhhhhhhhhhhhhhhh

Thu, 03/28/2013 - 21:09 | 3387440 Jim in MN
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.

Thu, 03/28/2013 - 21:10 | 3387442 max2205
max2205's picture

Bullish!

Thu, 03/28/2013 - 21:10 | 3387445 Evil Bugeyes
Evil Bugeyes's picture

Dishonest Abe?

Thu, 03/28/2013 - 21:18 | 3387471 nmewn
nmewn's picture

Use the Farce, Abe.

Thu, 03/28/2013 - 21:33 | 3387501 Freedumb
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.

Thu, 03/28/2013 - 21:43 | 3387523 Evil Bugeyes
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.

Thu, 03/28/2013 - 22:13 | 3387587 ultimate warrior
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.  

Thu, 03/28/2013 - 21:45 | 3387533 kaiserhoff
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.

Thu, 03/28/2013 - 21:57 | 3387557 Freedumb
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.

 

Fri, 03/29/2013 - 02:01 | 3387867 Ropingdown
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. 

Thu, 03/28/2013 - 21:33 | 3387504 lolmao500
lolmao500's picture

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

Thu, 03/28/2013 - 22:05 | 3387563 nmewn
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.

Thu, 03/28/2013 - 22:17 | 3387570 JustObserving
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.

http://www.larouchepub.com/other/2000/ref_quality_adj_2742.html

 

Thu, 03/28/2013 - 22:42 | 3387638 NoDebt
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.

 

Fri, 03/29/2013 - 07:54 | 3388062 css1971
css1971's picture

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

Thu, 03/28/2013 - 22:42 | 3387639 DaveA
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, ..."

Thu, 03/28/2013 - 23:37 | 3387729 optimator
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. 

Thu, 03/28/2013 - 22:12 | 3387582 Yen Cross
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.

Thu, 03/28/2013 - 22:28 | 3387616 Captain Nukem
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.

Fri, 03/29/2013 - 00:46 | 3387814 AynRandFan
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.

Fri, 03/29/2013 - 07:50 | 3388053 css1971
css1971's picture

The Germans have Greece. Japan has South Korea.

Thu, 03/28/2013 - 22:28 | 3387615 fuu
fuu's picture

1565.15 = 23

1569.19 = 31

1569.19 - 1565.15 = 4.04 Market Not Found?

Thu, 03/28/2013 - 23:39 | 3387727 Schmuck Raker
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]

Fri, 03/29/2013 - 00:57 | 3387826 fuu
fuu's picture

The oddity of numbers.

Fri, 03/29/2013 - 01:10 | 3387837 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

What's 10 divided by 3?

 

3.33333etc

 

What's 3.33333etc times 3?

 

9.9999999etc

 

Proof: 10 = 9.9999999

Thu, 03/28/2013 - 22:46 | 3387648 eddiebe
eddiebe's picture

Helicopter Abe

Thu, 03/28/2013 - 23:14 | 3387705 Yen Cross
Yen Cross's picture

   O/T  gpb/usd q-1 [squaring up/rebalancing] looks ripe to short next week. That turd is way over bought on every chart under weekly. All the OPEC douche bags rinsing their profits.

Thu, 03/28/2013 - 23:33 | 3387723 Schmuck Raker
Schmuck Raker's picture

OK, I admit I don't really understand a lot of this Japanese ECON mumbo-jumbo statistical.......stuff.

Are you saying that, from here on out, the porn will be a little more, shall we say, mainstream?

Thu, 03/28/2013 - 23:41 | 3387724 The Heart
The Heart's picture

Mr. Jim Roberts has got lots to say here.

"Run to the hills, I am doing it."

"If you're gonna listen to govt, you are going to go bankrupt very quickly."

Here is this interview that may have been censored.

http://www.youtube.com/watch?v=UX8mfeB32j4

This repost comes from Shrerri's blogpage:

http://sherriequestioningall.blogspot.com/2013/03/jim-rogers-on-cnbc-328...

Thu, 03/28/2013 - 23:50 | 3387745 Zgangsta
Zgangsta's picture

Not to mention that this is an illegitimate government, as dozens of courts have found the elections to have been unconstitutional.

http://www.washingtonpost.com/world/asia_pacific/japanese-courts-press-f...

Thu, 03/28/2013 - 23:56 | 3387760 tok1
tok1's picture

there is no way inflation is negative in Japan now energy costs are up over 20% in 12 months dure to no nukes and weak yen .. plus petrol / food (which most people eating more imported food0 is up 20-25%.. ever durable goods are up cause of increased input costs.. This is just a  cover for Karoda:s bond buying next week (to support Abe:s fiscal expansion so his friends in construction can get paid).. they will keep priniting negative inflation until it all comes down.  Poor Japanese domestics being forced into buying 0-7ys at below 0.23bp   2y is 0.05%  5 ys 0.09-11..  and the auction sizes keep getting larger (yesterdays 2y was 2.9 trill size prev was 2.7trll)  next Tue 10y 2.4 trill pre was 2.3 trll and this is before the largest extra budget ever is implement next week  a head of the largest total budget to come in May... (but apparently theres shortage of bonds causing JGB to squeese daily).. 

Fri, 03/29/2013 - 07:46 | 3388044 css1971
css1971's picture

If your statistical manipulation systems are sophisticated enough, 20% rises in the cost of everything won't even register a blip.

Fri, 03/29/2013 - 00:08 | 3387775 tok1
tok1's picture

the japanese domestics and BOJ are getting like rogue traders. (the FED too in a way) their position is so large now that they all need to keep buying to hold the market up .. otherwise any adverse movement will casue such large losses.. Thats why the bond central bank scheme cant work because it relies on ever increasing position size (to cover ever expanding Govt issuance) as the positions get bigger.. the smalerl size the retracement required to cause large losses.. and in Japans case as the buying continues at ever lower yileds the worse the price they are buying at further exasperating losses when something comes up.. I think the obvious catalist to blow the JGB bubble is oil..  if it goes through 100 with weaker yen its going to get hot for Korada just when issuance size gets out of control.. 

 

stay tuned

Fri, 03/29/2013 - 07:45 | 3388041 css1971
css1971's picture

If you were a central bank, why would you give a fuck about profit or loss?

Poof printed $1. That's $1 profit. Poof, printed  $1 trillion, that's $1 trillion profit.

Poof retired $1 trillion in debt. $1 trillion loss.

 

The concept of profit or loss is meaningless when applied to a central bank so what you can do is move all the crappy non performing debt to the central bank and let it expire. Guess what, the FED's buying MBS. I bet student loans are next.

Fri, 03/29/2013 - 00:48 | 3387816 q99x2
q99x2's picture

At least it won't effect the stock markets.

Fri, 03/29/2013 - 06:49 | 3388006 Augustus
Augustus's picture

The confounding part of the Japanese monetary equation is that the bonds have held up so well.  IF I was facing a comming inflation, as assured by the government, and the currency was depreciating rapidly, why would I continue to hod those bonds paying 1/2% annual interest for ten years. 

Has the Japanese government been on such a buying binge that they are the only buyers?  It is pretty amazing that rates have not gone up but have recently declined.

Fri, 03/29/2013 - 07:37 | 3388033 css1971
css1971's picture

BOJ is buying what level would you like bonds to be at?

Fri, 03/29/2013 - 09:06 | 3388212 tok1
tok1's picture

thats why oil might blow it up cause if it break back above 100 with weaker yen its going to be difficult for BOJ to buy as agressively asd they want. I think the BOJ action is pushing up commodities already .. Japanese domestics and banks are huge owners of JGB much more than the BOJ.. The banks are the most vulnerable to yield rises.. the futs sold of 50 tics today... after the year end window dressing its about to get messy..I think Kuroda has messed up a bit cause he pressured domestics into super low yields and hes talking about flattening the curve but I wounder whats his experiance with managing a huge bond book.. prob same as Bernanke  none..... when the central bank  and domestic bank losses come if oil breaks the losses will be large the impact will be scary..

 

Fri, 03/29/2013 - 09:22 | 3388242 fresno dan
fresno dan's picture

Abenomics

There are some things only an intellectual (or an economist) could believe, for no common man could be so stupid

Orwell

Fri, 03/29/2013 - 09:57 | 3388320 Iam Yue2
Iam Yue2's picture

Mere papering over the cracks. The long term prognosis for Japan is dire, not lease re the demographic timebomb, as per;

" Elderly people are projected to represent more than 30 percent of the population in all 47 prefectures in 2040."

Fri, 03/29/2013 - 13:28 | 3388824 realtick
realtick's picture

It Was A Very Bad Friday - Take A Tour Of Namie, A Radioactive Zombie Fukushima Ghost Town http://chartistfriendfrompittsburgh.blogspot.com/2013/03/it-was-very-bad...

Fri, 03/29/2013 - 18:44 | 3389780 BigInJapan
BigInJapan's picture

MugABEnomics here we come!
Banzai!
Banzai!
Banzai!

Fri, 03/29/2013 - 18:51 | 3389798 Herdee
Herdee's picture

I'm wondering what stimulas the release of the strategic oil reserves would have right about now if Obama gave the order.Seems like oil is getting up there again and might kill the recovery?Too much of a high price is acting like a bad tax on the economy.

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