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Japan Unveils Its Worst Current Account Deficit Ever

Tyler Durden's picture





 

Any day, month, quarter, year, decade now; Goldman Sachs' mythical J-Curve will arise from the cinder-strewn ashes of Japan's current account. Japanese bond markets are rallying and JPY is weakening modestly after Abe's increasingly disapproved-of government announced the worst balance of payments current account deficit on record. At JPY -592bn vs expectations of JPY -36bbn and its 5th miss in the last 7 months as economists and analysts and pretend portfolio managers just keep getting it wrong. The trade deficit plunged once again, missed expectations once again and printed at the 3rd worst deficit ever with the 16th monthly trade deficit in a row. But apart from that, the Nikkei is -1000 points from the 2013 close highs and apart from rumors of a big bank selling JPY to defend 103, the trend ain't Abe's friend for now...

 

 

Charts: Bloomberg

 


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Mon, 01/13/2014 - 20:44 | Link to Comment eddiebe
eddiebe's picture

Surely you meant 360 billion and not 36. But it doesnt seem to matter which anyway..

Mon, 01/13/2014 - 20:51 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

369 billion

Mon, 01/13/2014 - 20:55 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I'll put my ass on the line & call the beginning of Japan's economic meltdown (that will be seen by the public writ large, regardless of the propaganda uttered by the government or media).

Nothing and no amount of fiat printing will stop the avalanche that is currently underway (it will only add to the casualties).

Now, about that Chinese economy...

Mon, 01/13/2014 - 21:04 | Link to Comment Scarlett
Scarlett's picture

Krugman must be salivating in that disgusting beard

Mon, 01/13/2014 - 21:06 | Link to Comment wallstreetapost...
wallstreetaposteriori's picture

Who has the best capital account surplus then...

Mon, 01/13/2014 - 21:15 | Link to Comment disabledvet
disabledvet's picture

that would be the United States believe it or not. you have to factor in "terms of trade" not just goods sold. If I'm selling you something of enormous value and you're giving me something that can simply be automated...the pressure is on you not me to provide the value added. Needless to say Korea and China have done a SPECTACULAR job of this (and of course TMSC...Taiwan Semiconductor.) This Bucky Ball once she starts flying around is going to really start smashing into things.

Tue, 01/14/2014 - 06:53 | Link to Comment caShOnlY
caShOnlY's picture

that would be the United States believe it or not. If I'm selling you something of enormous value and you're giving me something that can simply be automated...the pressure is on you not me to provide the value added.

what will we do with the 250 million NON-WORKING americans? EBT?

Mon, 01/13/2014 - 21:20 | Link to Comment Frozen IcQb
Frozen IcQb's picture

The dragon

Mon, 01/13/2014 - 23:09 | Link to Comment Bindar Dundat
Bindar Dundat's picture

Cue global banking crisis -- 3. 2, 1, collapse....

Mon, 01/13/2014 - 21:18 | Link to Comment This just in
This just in's picture

There is no chin behind Krugman's beard...only a clod of incorrect economic assumptions.

Mon, 01/13/2014 - 21:15 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

What Ponzi Blows Up First?

A. China

B. Japan

C. Europe

D. USA

E. All of the above

 ________________________________________________________

As far as "rumors of a big bank selling JPY to defend 103"

Federal Reserve Said to Probe Banks Over Forex Fixing

http://www.bloomberg.com/news/2014-01-13/federal-reserve-said-to-probe-banks-over-forex-fixing.html

U.S. Said to Open Criminal Probe of FX Market Rigging

http://www.bloomberg.com/news/2013-10-11/u-s-said-to-open-criminal-probe-of-fx-market-rigging.html

 

Mon, 01/13/2014 - 21:20 | Link to Comment disabledvet
disabledvet's picture

If Japan blows this will slam into Great Britain which is I believe one of the THE primary debt holders. China would probably be number two since the Japanese were complaining about all the "Chinese money" flooding in a couple of years a go. If I were Senator McCain "this is absolutely pedal to the metal time" for the US Navy. Finish off your flight decks...sure...but i'm talking destroyers and a massive littoral combat fleet and a "we're hiring" sign.

Mon, 01/13/2014 - 21:27 | Link to Comment aVileRat
aVileRat's picture

Nah China holds very little JPY holdings. The main players who will be wacked are the MENA banks (Saudi), US and EU. Out of all of those, EU is most exposed due to their significant trade with UJF and the major trading houses. What is most certain is the 3rd arrow will never be released and the rearming of Japan will be used as a distraction for the 4th arrow being never launched.

Should Japan call in their poker chips with the USA and demand a treaty equal to the Taiwan pact, then the Chinese will be permantly screwed since they will have  two allies with gen-4 air superiority/AA spheres. Japan suddenly deciding to spend US$1.2T on military arming would not only give the millions of neo-con Otaku's dreaming of Samurai Champloo hentai a meal ticket, The contract order would also give US Arms a huge fiscal stimulus boost. This would bump up the 2014E trade account and fix that messy Retail number tomorrow.

January usually sets the tone for the year, so this could get very messy.

 

Mon, 01/13/2014 - 22:53 | Link to Comment TruthInSunshine
TruthInSunshine's picture

By official accounts, and internationally recognized standards (i.e. not taking into account future entitlements owed to a sovereign citizenry whereby the entitlement programs are underfunded), Japan is already far and away the biggest debtor nation out of any developed (or even emerging) one, with a Debt-To-GDP ratio of some 230%.

That's what 24 years of Krugman-nomics gets a nation; massive, never re-payable debt (absent stiffing bond holders through literal hyperinflation) piled atop a disintegrating economy, due to a complete breakdown in aggregate demand.

Japanese officials could literally scream at the top of their lungs that prices for every product, service and good were about to double overnight, and aggregate demand would fail to pick up.

And I haven't even touched on the demographic issues facing Japan, nor the way that automation is adversely impacting their export-intense economy.

Krugman-nomics leads to learned helplessness.

Now China...baby, there's a 64,000 dollar question there as to how high the pile of spoiling provincial bank loans/debts is truly stacked.

Tue, 01/14/2014 - 00:24 | Link to Comment Mike in GA
Mike in GA's picture

3 years ago or so Kyle Bass said the same thing about 'Japan first, followed by the EU, then the US'.  He guesstimated about 2 years between events, if I recall correctly.  He also predicted war as a likely outcome of exactly what we witness today - currency debasement and competition for resources.

With regard to Japanese remilitarization filling the coffers of US MIC, I have a lot of doubt about that.  The Chinese may be outgunned as far as air power but one well-placed missile (by accident, of course) in the heart of Fukushima would contain a lot of military ambitions.  I just don't think a military altercation would last long enough to move the needle on GDP.  Japanese are too old to start a war with China.  It would be the first war in history with military issue adult diapers.  I would hope any military action would be brought to a halt by world opinion PDQ.  If I'm wrong, and the world gets sucked into another world war, GDP fluctuations will be the least of our worries. 

Tue, 01/14/2014 - 01:18 | Link to Comment 3vaLLeys
3vaLLeys's picture

Bass has lost his shirt in Japan. his fund was down 90% i heard. so much for his wisedom

Tue, 01/14/2014 - 01:32 | Link to Comment TruthInSunshine
TruthInSunshine's picture

One can be correct but too early.

In fact, Michael Burry (of "The Big Short" MBS fame) had investors bailing on his fund left and right before his grand thesis was proven correct to the tune of billions in returns.

Mon, 01/13/2014 - 22:17 | Link to Comment Stoploss
Stoploss's picture

Aw for fuck sakes, This is Japan, they don't deal in BN's, they deal in T's!

The forecast was 380T an it came in at 593T  HEAVILY IRRADIATED YEN PAPER..

 

Yall go home before something else fucks up....

Mon, 01/13/2014 - 21:47 | Link to Comment kaiserhoff
kaiserhoff's picture

and Abe gets up every morning knowing that Fukushima is his special Beeeitch.

Who in the cornbread hell would want that job?

Mon, 01/13/2014 - 22:27 | Link to Comment NoDebt
NoDebt's picture

It's enough to give you career-ending dirarrhea, isn't it?

Tue, 01/14/2014 - 07:42 | Link to Comment newbie vampire
newbie vampire's picture

Thats why he keeps harping on those damn rocks in the east china sea.  Got to distract the Japanese peons from gettin worried about that damn Fukushima radiation thing.  And, oh yeah, if any shootin starts, its gonna be Uncle Sam's baby.  Abe figures the US is Japan's biiatch.

Mon, 01/13/2014 - 20:49 | Link to Comment midtowng
midtowng's picture

Japan's economics simply don't work. The public debt, plus the demographics, combined with the fact that they were built as an export economy.

  It's an accident waiting to happen.

Mon, 01/13/2014 - 20:54 | Link to Comment 666
666's picture

"It's an accident waiting to happen."

No, it already happened.

Mon, 01/13/2014 - 20:55 | Link to Comment remain calm
remain calm's picture

The accident already happened! The market players are just in denial and will be until reality hits. When? Nobody knows, but it will.

Tue, 01/14/2014 - 01:19 | Link to Comment 3vaLLeys
3vaLLeys's picture

the economy that doesnt work is the USA. you should go to Japan and see how things "don't work" ....

truth is they dont work the way you want them to so your answer is to write them off. good luck with that!

 

Mon, 01/13/2014 - 20:53 | Link to Comment Gromit
Gromit's picture

Moose looking for a windshield....

Tue, 01/14/2014 - 05:00 | Link to Comment StandardDeviant
StandardDeviant's picture

Good one.  John Mauldin's been calling Japan "a bug in search of a windshield" for ages now (see "Endgame") - but unfortunately I think your version is more nearly to scale.

Tue, 01/14/2014 - 08:55 | Link to Comment Dismal Scientist
Dismal Scientist's picture

In fact, 'moose looking for a windshield' is also John Mauldin...

The other fact is that Mauldin, Bass and all the other doom and gloom brigade have predicted 10 out of the zero Japanese economic collapses. As long as over 90% of JGBs are held domestically (which they are), then it isn't going to collapse.

Tue, 01/14/2014 - 17:34 | Link to Comment MagicMoney
MagicMoney's picture

Japan is headed towards hyperinflation. There will not be any default. Just debase the money as the government cannibalizes the entire Japanese country with higher inflation, swelling debts, higher taxes, and regulations. If you keep abusing crack cocaine, you will die from it some day. Just a matter of time and it really doesn't matter of JGBs are held domestically, because when the shit smells so bad from inflation, even the Japanese will dump JGBs & demand higher interest payments to keep up with inflation. Even if Bank Of Japan buy all of JGBs, because there will be no investors to buy them, that creates even higher inflation. A perpetual spiral toward doom which is inflationary, not deflationary. You seem to be injecting a lot of hopium into your veins. Japan is a good lesson in what not to do and what is really stupid.

Mon, 01/13/2014 - 20:58 | Link to Comment Unknown Poster
Unknown Poster's picture

Print cash, buy oil.

Mon, 01/13/2014 - 21:00 | Link to Comment indio007
indio007's picture

The funny thing is japan us poised to collapse but the still aren't handing out MRAVS to the local cops.

Mon, 01/13/2014 - 21:38 | Link to Comment gatorengineer
gatorengineer's picture

That point is lost on the local  US populace.  Was at Cabelas last week, it was amazing.  People carrying out Ammo and arms fast.  Had a line probably 20 deep to buy a firearm.  8:30 Am saturaday morning...

Mon, 01/13/2014 - 21:25 | Link to Comment Notarocketscientist
Notarocketscientist's picture

Speaking of krugman - a french friend send me this - where he says all is well in France - hahahahahahahaha!!!!

http://www.smh.com.au/business/world-business/the-plot-against-france-20...

 

In Japan we are setting up for the following:

 

- the headline reading sheeple (they can't read past headlines or think analytically because they are conditioned to read no more than 140 characters - or click Like) believe Japan is powering ahead

- Japan of course has thrown a hail mary pass using a defalated ball from their 1 yard line

- Japan is going to blow sky high - and the headlines will read 'how come nobody saw this coming?'

Mon, 01/13/2014 - 21:53 | Link to Comment NoWayJose
NoWayJose's picture

Could there be any other result when a nation that no longer 'makes' things intentionally devalues their currency? Coming soon to the USA.

Mon, 01/13/2014 - 21:53 | Link to Comment Spungo
Spungo's picture

Why would dramatically raising the cost of imports while lowering the cost of exports cause a trade deficit? Someone get Krugman on the line to explain this. I was always told that getting a pay cut while the cost of living goes up is the shortcut to prosperity.

Tue, 01/14/2014 - 07:50 | Link to Comment newbie vampire
newbie vampire's picture

Thats Japanese economics.  Makes sense to them.

Mon, 01/13/2014 - 22:17 | Link to Comment Rising Sun
Rising Sun's picture

KA-BOOM!!!!

oops, said a bit soon

Mon, 01/13/2014 - 22:23 | Link to Comment bdub2
bdub2's picture

Another nail in the coff...uh,,,wall of worry.

Back when things mattered I'd read that pension fund money-flow was a key metric - when $16T moves, it's like an ocean liner. Takes a while to turn, once it does, it's staying there for a awhile. 

Well, in another useless factoid of "hasn't happened since the crash of '08, 2000, '87 and/or 'in history'. "Pension funds have flooded into bonds. They've gone from 55% allocation in 2012,  to a targeted 80%. They started this in 3Q 2013. This move is at the fastest rate since '08". (bloomberg)

If something bad had happened in 08, maybe it would serve as a warning. 

But as most here know, everything everywhere is bullish forever and ever. and all this talk of a bubble means there's still 50% upside left before anything except BTFATH should be even considered.

Anyway, on to 14% returns in 2014.

 

Tue, 01/14/2014 - 01:15 | Link to Comment 3vaLLeys
3vaLLeys's picture

Wow - lots off inane comments from people who know nothing about the market in japan. Good luck to you all. I hope you're not playing with the college fund.

Tue, 01/14/2014 - 03:01 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Mrs. Watanabe -vs- The Widow Maker.

It's on like Godzirra.

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