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The Painful Side Of Japan's "Growth Strategy"
Following last night's 'surprising' upward GDP revisions, Japan's trade balance plunged to near-record deficit levels (but that didn't matter) and while China's trade data is questionable at best (and now proven 'false'), Japan is facing a much more considerable worry at home. Abenomics' goal to reduce the value of the JPY to improve competitiveness and spur a renaissance has had a rather nasty side-effect for all the Japanese people who eat, drive, or in any way use energy. The cost of Japan's crude basket has risen 35% in the last six months and is now at its highest for the domestic energy user since 2008 (which sparked the last collapse into deflation). As Bloomberg notes in this brief clip, this surge is not related to demand or the price of oil, but to the devaluation of the Japanese currency and leaves both the refiner crushed on margins and the consumer more cash-strapped.
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I'm sure Abe's plan includes making energy imports painfully expensive so he can ensure support for a restart of the nuclear reactors.
"money" is an illusion. This is, and has always been about maintaining power and control folks. Energy has the ultimate say, without it, you don't actually do anything, much less "grow".
Japan jumped (or was rather forced) into WWII because of this very issue.
chreck mrate
It looks like the BoJ has gotten the inflation it wanted:
http://dareconomics.wordpress.com/2013/06/10/around-the-globe-06-10-2013/
Can
Reality
Unwind
Dystopian
Endeavors?
Inflation increases GDP is there confusion over that? McD's 16% increase, goes to the bottom line, as does our $4 gallong gas..... now track their GDP in Gold Pressed Latinum, or euros, it would be another story, but that isnt the accounting method employed....
Inflation in the goods you need daily -food and fuel;
Deflation is things you don't need to buy right now - cars, houses, etc.
Exceptions: PM - for transactions; luxery goods - as a store of wealth
House prices are actually "recovering" very quickly. In April 2012, the median home price was 174K. In April 2013, the median home price is 193K. That's an 11% increase in one year. House price inflation led by big institutional buyers with cheap cash. Regular guy crushed on all fucking fronts.
Pasta in 12 oz boxes now instead of 16, with the same price. Lavazza coffee down to fucking 8 oz per can from 16 oz., price per can has tripled. Lamb and veal priced for millionaires. Shitty Pinot Grigio for $10 a bottle.
Often on ZeroHedge Americans talk about expensive-sounding food, it sounds absurd
Here in Europe, good essential food, wine, beer is all quite cheap at the grocery store
And the taxes are all included in the shelf-price, there is no additional 'sales tax' at the cashier
Excellent 3 / 4 litre bottle of red wine from the south of France - € 3
Excellent 1 / 4 kilogramme family dinner baguette loaf of fresh bread - € 0,75
As the great Persian poet Omar Khayyam said
A jug of wine, a loaf of bread ...
"A jug of wine, a loaf of bread ..."
Yes, yes, but if this is your only and every meal, than a rather short (but admittedly happy) life as an alcoholic lard ass awaits you.
Can you by wine with your EBT card in France (like in the U.S.), perhaps we are not so different after all? I mean, the Fed is essential buying all of the western world's debt already - "winning"
How many obese french people do you see?
I see many skinny alcoholics when in France. Yes, it's called malnutrition (that was the point dipshit, eating only bread and wine would render you not long for this earth). I see more healthy people when in Orange County. I guess it's all location dependent, < duh >.
I doubt Japan will give the Chinese the islands any time soon...they need the energy..at home...go figure..and those nukes..they will restart...all of them...
Rising costs of food and energy is not inflation! It is too volatile and therefore should not be counted. I know this because the Bernank told me so! get it straight...damn barbarians anyway.
Wasn't the 2-2-2-2 plan supposed to work differently? First, kill JPY thus increasing economic activity with a little gubmint stimulus and thus increasing gubmint revenue, then have some mild inflation. No other side effects allowed and please don't sell your JGBs.
Going forward I wish them good luck in their experiment.
@bank guy in Brussels:
I live in California and can (and regularly do) get a excellent 3/4L bottle of red wine from the CA wine country for $2.25 at Whole Foods - not exactly known for its discounty-nees. (Case price of their 3 Wishes brand, if anyone wants to check - if you get the red make sure to get the Cab, the Merlot is mediocre.) Note that price is actually up from last year, when it was just $2.
I can get excellent fresh-baked sourdough rolls at Costco for similar to your baguette. Costco also has an excellent house beer brand - brewed by the same folks who brew the premium Gordon Biersch microbrew brand - for around $0.75 per bottle.
We both will need plenty of our respective quality bargain booze when we look at the price for a house, though.
You think the folks running the global debt Ponzi don't know full well that well-fed-ness of the populace is the surest way to stave off bloody revolution? So: keep inflation on staples "manageable", hide the real inflation and loss of purchasing power due to the relentless hollowing-out of the middle-class wage base in the big-ticket stuff like housing, education and medical care (where people are in fact forced to participate in the Ponzi and the price-rigging games), while offering "cut rate" interest rates on that to suck people into debt servitude.
"Old Japanese had better hurry up and die..." Well, jack up the cost of food and fuel is a good start.