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Abenomics Crucified With Lowest GDP Since Abe, Worst Current Account Deficit On Record

Tyler Durden's picture




 

"It's the weather" That's all Abe has left to pretend that 'recovery' is right around the corner. Japan just printed its worst current account deficit on record and its worst GDP growth since Abenomics was unveiled - both missing by the proverbial garden mile and both confirming that all is not well in Asia. As for the perpetual hope of a J-curve (or miracle hockey-stick reversal)? There won't be one! As Patrick Barron noted, "monetary debasement does not result in an economic recovery, because no nation can force another to pay for its recovery." 

 

Worst current account deficit ever - and a chart that shows absolutely no hope of a turn anytime soon...

 

and the worst GDP growth since Abenomics was unveiled and 2nd quarter missed in a row...

 

 

On the terrible missing J-Curve (via Patrick Barron of the Ludwig von Mises Institute of Canada):

Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

 

Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

 

Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

 

The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.

And the latest joke from Asian trading floors: "when asked what he thought of the recovery, Shinzo Abe responded "Depends!""

 

The result of all this total and utter disaster for the Japanese economy - a melt-up in JPY crosses (i.e. JPY weakness with USDJPY back over 103) supporting US equity futures into the green... because what do you do when Chinese credit markets are collapsing, the Japanese economy is imploding, and the fate of Germany (and therefore Europe's) economy lies with Russia... you BTFATH...

 

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Sun, 03/09/2014 - 20:25 | 4528954 ApollyonDestroy
ApollyonDestroy's picture

Crash and burn bitch! Fuck you Yellen!

Sun, 03/09/2014 - 21:32 | 4529150 Serfs Up
Serfs Up's picture

Let me be among the first to say....

 

HA, HAAA!!!!!

Sun, 03/09/2014 - 22:05 | 4529233 Clint Liquor
Clint Liquor's picture

With the current (43 year old) experiment in fiat only currencies, account deficits are functionally meaningless. Without a method of international settlement all deficits are simply resolved with ctrl p.

Cheney was right; "deficits don't matter".

Sun, 03/09/2014 - 23:56 | 4529498 The Dunce
The Dunce's picture

Abe is a crazy nationalistic bastard.  But the problem with Japan's economy isn't his fault.  There's just no escaping the deflation.  Bitches.

Sun, 03/09/2014 - 23:32 | 4529447 Greenskeeper_Carl
Greenskeeper_Carl's picture

I assume that you, like myself, are an American. We are just a decade or two behind them, and will be doing the same shit and expecting different results, cuz this time will be different. Or we as a society are ruled by fucking morons, or sociopaths. Or moronic sociopaths. I can here paul krugman now. He will write a long blog post, the gist of which will be " printing money didn't work, so now we need to print more money" and chuckie schumer will tell them all to 'get to work'

Sun, 03/09/2014 - 20:27 | 4528957 DoChenRollingBearing
DoChenRollingBearing's picture

Nothing in Asia looks good tonight.  Maybe it´s just as well because I am sick as a dog, too much food and too crappy.  I violated my own rule: take it easy in Peru!

Gluttony is for suckers, you´re reading one...

Sun, 03/09/2014 - 20:42 | 4529006 DoChenRollingBearing
DoChenRollingBearing's picture

Comi demasiada comida grasosa y fea...

Live and learn.  Ha ha link!

Sun, 03/09/2014 - 21:00 | 4529054 Grande Tetons
Grande Tetons's picture

No hay otra typo de comida alla! 

After years spent in Laitn America...my gut still can not used to the crap. 

Sun, 03/09/2014 - 20:29 | 4528977 oleander garch
oleander garch's picture

Diaper joke?  Or is Depends a major new product line for Japan Inc.

 

Sun, 03/09/2014 - 20:50 | 4529025 Redneck Hippy
Redneck Hippy's picture

Japan is the only country where adult diapers for the incontinent outsell baby diapers.

Sun, 03/09/2014 - 20:30 | 4528979 Obchelli
Obchelli's picture

Bullish M***er F***ers

Sun, 03/09/2014 - 20:37 | 4528994 Yen Cross
Yen Cross's picture

        Japan is (3) match>sticks away from exploding!  Who's going to buy those JGB's?

  KAMPO has been divesting for 2-3 years from BOJ paper!

Sun, 03/09/2014 - 20:43 | 4529012 kaiserhoff
kaiserhoff's picture

I think you're right Yen, but with China imploding what will be left in Asia to cushion the blow?

Funny, for four years people were focused on the Southern Tier of Europe as the weakest link, but maybe not.

Sun, 03/09/2014 - 21:25 | 4529131 Yen Cross
Yen Cross's picture

kaiserhoff 

 Thanks for the comment.

   

Mon, 03/10/2014 - 00:25 | 4529537 angel_of_joy
angel_of_joy's picture

Paging Kyle Bass...

Sun, 03/09/2014 - 21:03 | 4529067 Grande Tetons
Grande Tetons's picture

Hey YC, what are you thinking short to medium term Yen? I am fucking lost.  Cranking  the printing presses has done shit. But does that matter?  

Sun, 03/09/2014 - 21:21 | 4529119 Yen Cross
Yen Cross's picture

  As long as  ¥ is respected as an "safe haven" trade?  The yen is an joke! Kyle Bass is correct.

 My yen trades always have "trailing stops"

  We're going to wake up one morning, and it will be usd/jpy 120.00 or 140.00.

     It will be UGLY!

Sun, 03/09/2014 - 21:27 | 4529135 Grande Tetons
Grande Tetons's picture

Thanks, YC.  April should be an interseting month.  

Sun, 03/09/2014 - 21:36 | 4529167 Yen Cross
Yen Cross's picture

  My Friend, Always. Thank you for confiding

Sun, 03/09/2014 - 23:02 | 4529377 orez65
orez65's picture

"Thanks, YC. April should be an interseting month. "

Beware of the Ides of March!!!!!

Sun, 03/09/2014 - 23:39 | 4529459 Greenskeeper_Carl
Greenskeeper_Carl's picture

I still wonder about what effect the ongoing shitshow at Fukushima could have on all this. If these cleanup efforts collapse, it would probably render the city of Tokyo uninhabitable, as this would ruin tokyos water supply. This would simultaneously destroy a major global financial center, one of the biggest economies in the world, as well as one of the most traded currencies in the world. And it could literally happen over night. And it will be dangling over them for the next few years even if things go how they are supposed to. Kinda surprised anyone would make any kind of major investment there with this kind of economic uncertainty, then you add that mess hanging over their heads.

Mon, 03/10/2014 - 01:05 | 4529567 newbie vampire
newbie vampire's picture

Relax. Abe knows what he's doing. In a few years time, Japan would have acquired energy independence.

The people living around Fukushima would be able to connect to the national power grid and provide a neverending power supply to the rest of Japan. Think about it, people glowing in the night , won't need to switch on the lights, power their TVs etc. The problem of importing expensive oil would be a problem of the past.

And unsurprisingly, the same may come true for residents on the west coast of the US too.

Sun, 03/09/2014 - 20:37 | 4528995 Newmoney24
Newmoney24's picture

dogecoin for the win

Mon, 03/10/2014 - 03:45 | 4529666 Scarlett
Scarlett's picture

Sorry, Obamacare killed your meme.  Find another.

 

http://www.maxkeiser.com/2014/02/government-uses-doge-meme-to-pump-obama...

Sun, 03/09/2014 - 20:44 | 4529013 Conman
Conman's picture

Need Moar Everything.

Sun, 03/09/2014 - 21:54 | 4529207 spanish inquisition
spanish inquisition's picture

Have not printed enough to satisfy the neo keyensian economists. Should be OK if they double down.

Sun, 03/09/2014 - 20:47 | 4529018 venturen
venturen's picture

Hey lets do what they are doing....massive government debt, high house prices, corrupt government and banking system. Seems to be working for them

Sun, 03/09/2014 - 20:52 | 4529029 skwid vacuous
skwid vacuous's picture

Dr. Copper looks like death...  on an unrelated note, US equity futures will be green by 8am

Sun, 03/09/2014 - 20:56 | 4529040 medium giraffe
medium giraffe's picture

60 pips? Pfft.

Sun, 03/09/2014 - 20:58 | 4529047 Seize Mars
Seize Mars's picture

What a disaster. Remember, in banking terms, there really is no such thing as Japan. It's just a sub-account of the USA.

It was decided to stuff Japan full of American money-printing (exported inflation) and they are seeing the results now. The promise was that the keynseian stimulus of such magnitude would help - but as pointed out, it can't. And it won't. It's just another outrage foisted onto a people who have been literally, but then metaphorically fire-bombed by the US since the 1940's.

Thanks, Lord Rothschild and Mr. Rockefeller. Thanks. Seriously, can you just go sit in a corner and just leave us all alone now?

Sun, 03/09/2014 - 20:59 | 4529049 Iam Yue2
Iam Yue2's picture

BTFD.

Sun, 03/09/2014 - 21:03 | 4529062 new game
new game's picture

so when is this world wide mess gonna slide off the table?

Sun, 03/09/2014 - 23:12 | 4529406 TheReplacement
TheReplacement's picture

Think coyote-vs-roadrunner when the coyote misses turn and goes off cliff.  He keeps going for a while until he realizes his mistake.  He looks.  He sees it.  He holds up a sign saying something like "Uh Oh" and then plummets.  The fall takes a long time as the report from impact longer. 

We may already be off the table.

Sun, 03/09/2014 - 21:04 | 4529070 NDXTrader
NDXTrader's picture

I wondered what was going to save futures tonight. This just means more printing. You just have to shake your head at this point

Sun, 03/09/2014 - 21:04 | 4529072 Soul Glow
Soul Glow's picture

I am not surprised that war with Russia is on everyone's minds now that the financial system is about to implode. 

Sun, 03/09/2014 - 21:13 | 4529092 new game
new game's picture

max overload shit going on. new norm. just a coincidence? but this how thing happen in my day to day life - all at once with lulls...

Sun, 03/09/2014 - 21:06 | 4529075 surf0766
surf0766's picture

REEEEEEEEEEEEEEEEEEEEEEESET !

Sun, 03/09/2014 - 21:09 | 4529080 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

is this what caused gold to drop from 1337 to 1327?

Sun, 03/09/2014 - 21:12 | 4529087 Ban KKiller
Ban KKiller's picture

Doomsday cults...some pick dates of the end and some don't. I think China goes first on August 12, 2014. Cult of dead pigs floating. 

How about that cult that cut off their balls? Comet cults are popular. 

Faith, a wonderful thing....

Sun, 03/09/2014 - 21:15 | 4529098 new game
new game's picture

cult of hope fading...one more rabbit right outta the ass!

Sun, 03/09/2014 - 21:16 | 4529101 TheInfoman
TheInfoman's picture

Is that Kyle Bass I hear celebrating in the other room?

Sun, 03/09/2014 - 21:18 | 4529107 new game
new game's picture

you are hearing some serious staking-ching ching as the bars are staked...

Sun, 03/09/2014 - 21:30 | 4529142 El Hosel
El Hosel's picture

I bet the 1% did just fine.... so far.

Sun, 03/09/2014 - 21:33 | 4529156 shinobi-7
shinobi-7's picture

Within the Yamanote, Abenomics is working great. Towers built in the 1990s are being pulled down to make room for higher buildings. Mitsui and Mitsubishi are making a lot of money out of "free" space since Tokyo upped the floor ratio from 400 to 800. It most certainly pays to be close to power!

Outside, the further you go, the worse it is. Small towns are dying both economically and literally as the population ages. Far away provinces survive thanks to public works as useless as they are necessary to preserve a minimum of activity. As a result, roads that go nowhere are superb, tunnels and bridges dot the country, enbankments line the smallest rivers and no coast is without it's 10 meter high tsunami wall. Small islands have international airports and olympic pools that nobody uses and everybody wonders how running costs will be covered, forget about the investment.

We are so far down the tube that the only solution to Abenomics will be Super Abenomics!

Mon, 03/10/2014 - 00:34 | 4529545 Kobe Beef
Kobe Beef's picture

Same story in Kansai. You literally can't go three blocks without finding a building being torn down, and a newer one going up. Just adding to the glut of unleased office space and unoccupied residential, according to my real estate guy. But this is how the LDP does policy, and the construction Mafia luvs them some Abenomics.

Sun, 03/09/2014 - 21:36 | 4529164 khakuda
khakuda's picture

Central bankers and politicians of the day suffer from the grand illusion that debt and spending create wealth. Sorry fools but work, saving and investment create wealth.

I'd love to get in shape eating candy bars, but it doesn't work that way.

Sun, 03/09/2014 - 21:37 | 4529168 AdvancingTime
AdvancingTime's picture

The road ahead looks hard for Japan. If investors in Japan's government bonds begin to believe that Abenomics will be successful in dropping the value of the yen and in bringing back inflation it would be logical for owners of JGBs to move out of the securities and buy foreign bonds or equities. This will place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt.

Domestic investors have already started venturing overseas for higher yielding assets. If the value of the yen falls more than the stock values in Japan rise getting money out of Japan will be the only way to protect your wealth. As this turns in to a tsunami of money fleeing Japan and becomes a feed back loop that fuels itself it will constitute the end of the line for those holding both JGBs and the yen. Details below,

http://brucewilds.blogspot.com/2013/08/japans-economy-going-forward.html

Sun, 03/09/2014 - 21:38 | 4529172 The Most Intere...
The Most Interesting Frog in the World's picture

This is worse than Karate Kid III when Danielson was getting his ass beat in Japan...but Mr. Miyagi took care of business in the end!!!!

...oh yeah and Danielson got nice piece of Japanese ass!!!

Sun, 03/09/2014 - 21:58 | 4529213 hooligan2009
hooligan2009's picture

in a repeat of the lesson....you cant change the level of production or employment simply because you print money.

the only valid way to print money is to increase net cash flow within the private sector...sell more than you buy, earn more than you spend etc etc...naive but true

just because some politician or central bank prints more money does not mean it has been earned..if any money printing ever worked, we would all be wealthy and would never have to work..i.e. there would be a collapse in economic activity.

running fiscal deficits is fine, short term, provided you run fiscal surpluses to pay them back. running fiscal deficits year in year out for decades until even the nominal interest cost at 0.5% exceeds how much you take in in all taxes ...is not fine

is japan bankrupt? well if it ever achieves any kind of economic growth it is, as interest rated will rise from 0.5% to 5.0% and the interest bill will approach 15-20% of GDP ...this year, next year, the year after etc.

is the us or europe or the uk bankrupt? not as bankrupt as japan perhaps, but proceeding inexorably down the same route with money not promised in benefits and upcoming rising debt servicing costs (if there is any economic recovers, once the Fed stops turning the nation into communists run by a Fed politburo).

the solution coming to a country near you? qe holdings of government debt are cancelled, government debt in qe is wiped out. result...instead of financing a government deficit, we see an ability of a country to print the money it is overspending, increasing money supply and debasing the currency.

does this make yen dollar jump from 103 to 203 and 303 ..probably..after all when you have a disease that is wiping out your city and the city walls and gates are shut..you start behaving like the greeks in alcibiades time...you really dont care what you do, since your time has expired...

the rate of decline in europe and the US and the UK may be slower than japan; china may have built out a whole bunch of capacity that nobody can use..place your bets and watch the (russian?) roulette wheel spin and hope you get some luck and that your food, air and water isn't polluted, irradiated or coveted by a neighbor with a bigger gun than you have

just saying

Sun, 03/09/2014 - 22:51 | 4529354 Spungo
Spungo's picture

Abe's plan to destroy Japan is working as intended. Maybe he's a Chinese spy.

Sun, 03/09/2014 - 23:48 | 4529479 yogibear
yogibear's picture

Abe and the US Federal Reserve banksters are doing a great job of destroying Japan.

Next the US. QEen Yellen will attempt to print out of deteriorating situation. More debt to get out debt.

Sun, 03/09/2014 - 23:53 | 4529484 XRAYD
XRAYD's picture

In Japan at least they say they are sorry when they finally realize they were wrong or that they made a mistake that harmed others. Sometimes they even kill themselves.

 

In America, they write books blaming others, and have congressional hearings where they all pat each other on the back, and congratulate those who claim things could have been worse, if they had not screwed up in the first place.

Mon, 03/10/2014 - 00:17 | 4529525 Joebloinvestor
Joebloinvestor's picture

Yeah they make a big show by bowing and apologizing and fucking them again.

Just look at TEPCO and OLYMPUS for starters, then there is the BOJ making the YAKUSA whole on their losing investments.

Mon, 03/10/2014 - 03:05 | 4529638 shinobi-7
shinobi-7's picture

Sure, ask the Chinese and Koreans, they are still waiting for their "sorry". As for corporate "sorry", if you consider that sorry is enough for companies like Tepco, yes, indeed, sorry!

Mon, 03/10/2014 - 03:22 | 4529648 ebworthen
ebworthen's picture

What?  Using the credit card doesn't increase your income?

ROFLMAO!  This just gets better and better.

Japan the bellwether for the U.S.A.

Mon, 03/10/2014 - 03:28 | 4529652 Haager
Haager's picture

There's an easy solution: Print moar, it will surely help this time...

Mon, 03/10/2014 - 03:48 | 4529669 Atomizer
Atomizer's picture

Radiation will be the new climate control market theme. In the meantime...

 

The United Nations. Framework Convention on Nuclear Japan Climate Change is sailing Western to LibTards. Help, we need to enact the Copenhagen treaty of 2009. The next carbon trade exchange is evolving with ObamaCare insurance. Hahahahahahaa

http://unfccc.int/kyoto_protocol/mechanisms/emissions_trading/items/2731.php

Mon, 03/10/2014 - 06:31 | 4529746 GoldIsMoney
GoldIsMoney's picture

Well let me ask me this way: "Doesn't debts make us all rich?" What a devastating "news"....

I was thinking at least the central banks, and good politicians know what they are doing. Now I learn they don't - how depressing...

Mon, 03/10/2014 - 14:16 | 4531108 Itchy and Scratchy
Itchy and Scratchy's picture

Domo Arigato Mr Roboto!

Do NOT follow this link or you will be banned from the site!