This page has been archived and commenting is disabled.

Consumer Confidence Collapses In Japan

Tyler Durden's picture




 

Submitted by Pater Tenebrarum of Acting-Man blog,

As a little addendum to our recent ritual lambasting of Abenomics, here are the  latest news on Japan's consumer confidence – the reading, mind, is from March – before the introduction of the higher sales tax:

“Japan’s consumer confidence fell in March to the lowest level since August 2011, a reading that may tumble further this month after a sales-tax increase on April 1 sapped the public’s spending power.

 

 

The reading of 37.5, down from 38.5 in February, was released by the Cabinet Office in Tokyo today. About 90 percent of respondents to the survey expect prices to rise over the next 12 months, the highest in comparable data back to 2004.

 

Prime Minister Shinzo Abe risks the public souring on his campaign to sustain growth in the world’s third-biggest economy as prices start to rise while wages stay stagnant. Weaker sentiment could make it harder to drive a rebound from a contraction forecast this quarter, and raise the odds that the Bank of Japan adds to its already unprecedented easing.

 

“Consumer sentiment has been undermined to a large extent by rising prices,” Goldman Sachs Group Inc. economists Naohiko Baba and Yuriko Tanaka wrote in an e-mailed note before the release. “We expect a major retreat in sentiment from April as the tax hike drives inflation.”

 

The confidence reading was 39.9 when Abe took office in December 2012, and rose to 45.7 in May last year — the highest point during his current term as prime minister. The Topix index of stocks is down more than 10 percent this year after soaring 51 percent in 2013.

 

Confidence dropped in all five components in the survey, with willingness to buy durable goods dropping the most, down by 2 to 30.8.”

(emphasis added)

In light of yet more damning evidence of failure coming to light, we are moved to make a prediction about the near term future of Abenomics.

It isn't going to be abandoned just because it is failing. Instead, we are hereby confidently predicting a 'flight forward'. Instead of relieving the increasingly sapped and demoralized Japanese consumer from the scourge of rising prices, the pump priming effort will be increased even further. Fresh inflationary measures may well be announced at the next BoJ meeting already.

Anyone want to bet?

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 04/18/2014 - 10:20 | 4672881 Badabing
Badabing's picture

On this day in history thirty pieces of silver paid for a contract on an important political person.

The same thirty pieces of silver bought a large parcel of land in a world center city.

The pieces of silver probably used, where the shekel because it came from the temple.

http://www.antiques.com/classified/1094298/Antique-Year-One-Silver-Shekel---LC-138

This coins weight is around 22 grams. 22 x 30 = 660 divided by 32 = 20.625 oz or around $405 in today’s money. Does this sound like the correct price to you? Cursed is the man that uses faulty weights and measures!

Happy Easter ZH

Fri, 04/18/2014 - 10:29 | 4672911 remain calm
remain calm's picture

I will bet you a Quadrillion Yen in 2020

Fri, 04/18/2014 - 10:58 | 4673004 Manthong
Manthong's picture

Um.. I do not understand..

Outside of the earthquakes, the volcano’s, the tsunamis, the radiation and the JGB nuclear explosions what is there not to be confident about over there?

(..except maybe China or North Korea)

Fri, 04/18/2014 - 11:01 | 4673012 813kml
813kml's picture

The Japanese still make topnotch anime and tentacle porn.

Fri, 04/18/2014 - 11:06 | 4673028 Manthong
Manthong's picture

I have a vague understanding about the anime thing..

but I not, under any circumstances want to know about oriental things regarding tentacles.

Fri, 04/18/2014 - 12:25 | 4673222 max2205
max2205's picture

It dropped because they wish their houses went up 7% a year or a month like China s

Sat, 04/19/2014 - 02:46 | 4675043 ilion
ilion's picture

Can anybody recommend the easiest way to short JGBs? Are there ETFs?

Fri, 04/18/2014 - 13:33 | 4673373 Not Too Important
Not Too Important's picture

Tentacle porn is what .gov is doing to us daily. At least the Japanese seem to use a lot of KY. Not so in the West.

Fri, 04/18/2014 - 21:45 | 4674703 franzpick
franzpick's picture

Voyeurism isn't what it appears to be.

Fri, 04/18/2014 - 12:23 | 4673219 NoDebt
NoDebt's picture

I gotta tell ya, I thought I had been around enough that I had heard of just about everything.  Until you posted "tentacle porn".  I just stared at the screen for about 30 seconds, blinked a few times and said out loud "no shit?"

 

Fri, 04/18/2014 - 13:57 | 4673239 Manthong
Manthong's picture

the evil I have tried to distance myself from came back today..

damn you all..

http://www.youtube.com/watch?v=OXAQpKmc4zc

I have to go to church on sunday to beg foregiveness.

Fri, 04/18/2014 - 14:40 | 4673574 Snoopy the Economist
Snoopy the Economist's picture

You saved me from googling it. There's 30 seconds I'll never recover. That' just stupid.

Fri, 04/18/2014 - 14:51 | 4673603 813kml
813kml's picture

It falls under Rule 34 of the Intertubes Handbook.

Fri, 04/18/2014 - 12:28 | 4673231 Mr Giggles
Mr Giggles's picture

I just found a suit case in China, full off Yen, Raise ya 2 Quadrillion.

Fri, 04/18/2014 - 15:26 | 4673691 Ham-bone
Ham-bone's picture

Sept 1990 - US and Japanese 10yr Bond yields were within 80bps (8.82 vs 8.02%). 

Japan peaked in '90 @ 8% and moved to sub 1% yields in 9yrs time...a 90% reduction in financing costs

US peaked in '81 @ 17%+ and has moved to sub 1.5% yields in 31yrs time...an 89% reduction in financing costs

Japan now .6%, US 2.7%

now - who hits sub zero first

Fri, 04/18/2014 - 10:31 | 4672915 moonman
moonman's picture

28 grams in an ounce

Fri, 04/18/2014 - 10:34 | 4672926 pods
pods's picture

31.1 in a troy oz. (metals weighed in troy oz)

pods

Fri, 04/18/2014 - 10:36 | 4672932 hungrydweller
hungrydweller's picture

31.1 grams per troy ounce

Fri, 04/18/2014 - 11:01 | 4673015 Unknown Poster
Unknown Poster's picture

true, 22 grams < 1 oz. Less than $20.

Fri, 04/18/2014 - 11:03 | 4673021 Manthong
Manthong's picture

.. just to be a tad more accurate  31.1034768..

but you guys have the right idea...

 

Sat, 04/19/2014 - 09:33 | 4675261 Cthonic
Cthonic's picture

Would you like to buy some silver?

Fri, 04/18/2014 - 10:44 | 4672952 zerozulu
zerozulu's picture

I wonder when Japaneses had confidence, ever?

Fri, 04/18/2014 - 10:58 | 4673000 Oh regional Indian
Oh regional Indian's picture

Anyway nothing ever collapses in Japan, it can only coRRapse!

Baad paafomaance!

Otsukaresama desu!

ori

Fri, 04/18/2014 - 11:46 | 4673082 Manthong
Manthong's picture

OK.. let’s get this right..  

Before the Federal Reserve Bank Act, and when the Constitution of the United States of America was the set of guiding principles in law, the dollar was defined as an ounce of silver and twenty of them equated to one ounce of gold (twenty dollar gold piece)…

Then the Fed happened in 1913, along with the destruction of the rights of the states (17th Amendment) and the income tax (16th Amendment).. that established what you kids will come to know as the end.

Now your dollar is worth about 3 cents of what it was back then.

It’s just amazing that it took a little over 100 years for the bankers to destroy the United States of America.

..and oh geez.. let us not forget about the cousin of Theodore who used the depression that the democrats inflicted on the nation to steal the little gold in possession of the citizens.

Actually, FDR just wanted to get the large amount of gold that was in the possession of the (small, local) banks who still felt it necessary to have some real fractional collateral for their loans..

He then, by executive order (you should be very afraid of that ability) revalued the gold he stole by +40%.

Consider voting for obama in 2016..  he might use an executive order to inflict himself back on you.

 

 

Fri, 04/18/2014 - 13:50 | 4673422 seek
seek's picture

In the 1980s everyone thought they'd take over the world, and there were plenty of Japanese wives dropping 1000s per bet at the tables in Vegas, I was there to see it.

They were just ahead of their time with printing and enjoying the early adoption of free trade. Now, no so much.

It's trippy watching late 80's/early 90's films where Japan's strength is a key plot point. I think "Rising Sun" was probably one of the last examples. Remember "Die Hard" took place in the Nakatomi Plaza in LA.

How far they have fallen. Imagine when the US does the same.

Fri, 04/18/2014 - 14:15 | 4673497 zerozulu
zerozulu's picture

Two things I heard there a lot at that time. Yen is going to be the world reserve currency and Japanese cars have left German cars behind.

Fri, 04/18/2014 - 15:08 | 4673652 Manthong
Manthong's picture

last time I played Pebble, they owned it.

Fri, 04/18/2014 - 10:24 | 4672893 oklaboy
oklaboy's picture

is that a glow I see coming from Japan? 

Fri, 04/18/2014 - 10:28 | 4672906 Toolshed
Toolshed's picture

Why yes.....yes it is.

Fri, 04/18/2014 - 10:30 | 4672909 Smegley Wanxalot
Smegley Wanxalot's picture

What Japan needs to boost the economy is a PR campaign focused around bunch of new J-Pop videos with cute girls singing "be confident and buy."

After all, that worked great for them a year ago.

Fri, 04/18/2014 - 10:36 | 4672930 Kirk2NCC1701
Kirk2NCC1701's picture

This is not yet a problem for TPTB:  They will simply "PRINT CONFIDENCE".

Print Yen, print positive and upbeat news, until the CONfidence is bouyed again.  Nice people, but they do whatever the US tells them.  But then, you would too, if you were so under its thumb and dependant on it for trade.

Fri, 04/18/2014 - 10:59 | 4673007 813kml
813kml's picture

The US is still taking advantage of Japanese guilt over WWII.

Fri, 04/18/2014 - 11:15 | 4673048 ParkAveFlasher
ParkAveFlasher's picture

I read that as "gilt".  Agree, both ways!

Fri, 04/18/2014 - 11:25 | 4673078 813kml
813kml's picture

Ha, just looked up the definition of "gilt".  Learn something new every day.

Fri, 04/18/2014 - 13:29 | 4673365 Leaping Lizard
Leaping Lizard's picture

Yamashita's gilt

Fri, 04/18/2014 - 10:37 | 4672927 Jack Burton
Jack Burton's picture

Breaking News. The head of the Fukushima reactor has openly admitted that the TEPCO  does NOT have control of the reactors as they have been claiming. He admits TEPCO does not have control of the radioactive water either. Obvioulsy something bad is still going on, they NEVER admit failure at a nuclear reactor site. As I posted a half dozen time, 3 melted cores have broken containment, all TEPCO can do is flush water over them. This is not control this is a desperate measure to keep them cool and prevent them going hot again and continuing to melt down. So much ground water leaks into the melted core area, plus the TEPCO water cannon, noway on earth all that radioactive water can be contained, it flows to the sea, into the water table and into the basements of the reactors. A nuclear expert who cleaned up 3 mile island said 40 years was a fast timeline to clean up the meltdowns. WHy so long he was asked. Because any human getting near the cores would get a lethal dose. SO, they must dream up robots to walk into damaged containment areas and the robot must dig down and access cores that nobody even knows where they are sitting. That will need a quantum leap in robotics! So, 40-50-60 years to clean the site. Decades of highly radiactove water, and god only knows what is going inot the air. When the liar in cheif at Fukushima Admits "Not having control", it might be time to admit to a serious problem going forward.

Not to mention the US Navy sailors the Pentagon sent into the zone to get radiated and then lied too.

Fri, 04/18/2014 - 10:38 | 4672938 hungrydweller
hungrydweller's picture

reference source please

Fri, 04/18/2014 - 11:12 | 4673042 JustObserving
JustObserving's picture

Here is one:

Out of control: Fukushima manager admits to ‘embarrassing failure’


Published time: April 18, 2014 08:18 
Edited time: April 18, 2014 08:52

 

The manager of the stricken Fukushima nuclear power plant has admitted not having full control of the facility. Contrary to the statements of the Japanese PM, TEPCO’s Akira Ono said attempts to plug the leaks of radioactive water had failed.

 

"It's embarrassing to admit, but there are certain parts of the site where we don't have full control,"Ono told reporters touring the plant this week, reported Reuters. Last year, the Japanese PM attempted to assure the world that the situation at the stricken nuclear power plant was under control.

http://rt.com/news/fukushima-embarrassing-radioactive-leak-332/

 



Fri, 04/18/2014 - 12:08 | 4673189 Bunga Bunga
Bunga Bunga's picture

Human failure? They still have humans? WTF?

Fri, 04/18/2014 - 13:44 | 4673408 Not Too Important
Not Too Important's picture

All the nuke qualified workers have hit their lifetime rad limits. TEPCO is now, through their Yakuza subs, sweeping up homeless people to work there. Or 'slave' there - their room and board is deducted from their 'pay', and when they get sick they're dumped somewhere far by bus, never to be heard from again.

Soon no one will be able to work there, and then, when Fukushima Daiichi becomes a massive radiation radiator, it will be too hot to work at Fukushima Daini, just south, and then those reactors will go up, too. NPP's can't survive without 24/7 staff and outside power. Remove either one and BOOM!

What we call 'Fukushima' is just the first domino of many, many Japanese NPP's going tits up. All into the jetstream west at 3,600 mph.

Enjoy your Easter. There aren't many left.

Fri, 04/18/2014 - 13:36 | 4673384 Not Too Important
Not Too Important's picture

Here's a start:

'Manager of Fukushima Plant: “We have to pay for what we have done” — “Repeated efforts have failed” to bring site under control — “It’s embarrassing to admit”'

"The manager of the Fukushima nuclear power plant admits to embarrassment that repeated efforts have failed to bring under control the problem of radioactive water, eight months after Japan’s prime minister told the world the matter was resolved. [Tepco] has been fighting a daily battle against contaminated water since Fukushima was wrecked by a March 2011 earthquake and tsunami."

http://enenews.com/manager-of-fukushima-plant-we-have-to-pay-for-what-we...

Fri, 04/18/2014 - 15:55 | 4673759 Not Too Important
Not Too Important's picture

Here's another leaking water story:

'NHK Special: Extremely toxic water 4,000,000 times gov’t limit in trenches between Fukushima reactors and ocean — Experts: “Source of contamination for Pacific” — “Levels too high for them to get more precise look at situation”'

"A network of trenches runs between the reactor buildings and the shore. They are flooded with extremely radioactive water that’s been trapped** there since the triple meltdown. Tepco data shows concentrations of cesium up to 4 million times above the government safety limit. Engineers estimate that the trenches hold about 15,000 tons of toxic water but radiation levels are too high for them to get a more precise look at the situation. Some experts point out these trenches are a source of contamination for the Pacific Ocean."

http://enenews.com/nhk-special-extremely-toxic-water-4000000-times-govt-...

Sat, 04/19/2014 - 10:42 | 4675383 thestarl
thestarl's picture

How about common fucking sense

Fri, 04/18/2014 - 10:47 | 4672959 nightshiftsucks
nightshiftsucks's picture

Yeah I dont get the aircraft carrier thing,you would think that the radiation sensors would always be on.

Fri, 04/18/2014 - 13:50 | 4673425 Not Too Important
Not Too Important's picture

They are. In that part of the world, every little bit of radiation is monitored from dozens of monitoring stations, surface and space. The US government sent them in anyway. Along with a skeleton task force, and a number of US merchant marine vessels. Thousands of sailors, from boiler guys to Captains, all going to die one of the most horrible of deaths - from radiation poisoning.

'No doctor can explain what’s happening to Navy officer’s body — “I’m basically kind of deteriorating” after Fukushima radiation exposure — My leg is 17 centimeters smaller, same with my right arm — Radiation levels missing from medical records'

http://enenews.com/tv-doctor-explain-whats-happening-navy-officers-body-...

And, in the end, all for nothing. Nothing was accomplished, other than (possibly) helping to protect the reputation of the nuclear industry.

Fri, 04/18/2014 - 14:00 | 4673456 Not Too Important
Not Too Important's picture

And if you live in New Mexico, or anywhere east of there, from Maine to Florida:

'Crews retreat after nuclear material found at WIPP — Officials: Correct to turn back, contamination was increasing — Robots brought to site for radiation levels too high for humans — ‘Significant amount of information’ will be revealed to public in next few days'

http://enenews.com/ap-crews-retreat-after-nuclear-material-found-at-wipp...

In the US' only deep hazardous nuclear waste dump, hundreds of thousands of waste containers are starting to blow, and there doesn't seem to be a permanent, safe way from keeping it from coming up the air shafts to atmosphere.

'‘Container fire’ at WIPP may have resulted from ‘spontaneous combustion’ — Expert: “Could’ve crapped up a whole lot of real estate down there” — U.S. radioactive waste disposal system crippled?'

http://enenews.com/container-fire-at-wipp-may-have-caused-leak-after-spo...

A lot of plutonium . . .

Fri, 04/18/2014 - 15:32 | 4673706 TradingTroll
TradingTroll's picture

"No doctor can explain what’s happening to Navy officer’s body"

 

BS. Lots of similar cases among Chernobyl liquidators

Fri, 04/18/2014 - 10:49 | 4672963 Frank N. Beans
Frank N. Beans's picture

so he admitted what everybody already knew.  All they are doing is putting contaminated water into tanks, and they have to keep building more tanks, ad infinitum, if that is even possible. 

 

Fri, 04/18/2014 - 11:01 | 4673013 Oh regional Indian
Oh regional Indian's picture

Supply sidism run wild...their only solution is make MOAR SHART!

ori

Fri, 04/18/2014 - 11:51 | 4673142 I Write Code
I Write Code's picture

Well you'd think they could filter out 90% or better of the principle isotopes, not cheap but better than building tanks to hold the entire Pacific Ocean.

But having three runaway cores boiling away there for the next 50 years is pretty horror-show, and just let them dry out for an hour and see what happens next.

Fri, 04/18/2014 - 13:35 | 4673381 TheReplacement
TheReplacement's picture

Admittedly I'm not a nuke expert but why would they need to keep using fresh water?  Why would they not recycle contaminated water once it has cooled down again?

Fri, 04/18/2014 - 13:53 | 4673434 Not Too Important
Not Too Important's picture

It's flooding in from underground, uphill streams. There's no way to stop the flow. Some goes into tanks, the rest into the Pacific Ocean.

For billions of years, or until the underground water runs dry.

Fri, 04/18/2014 - 14:06 | 4673474 Not Too Important
Not Too Important's picture

The filtering system, built by Areeva of France, has consistently failed. It's been a complete failure.

Those cores will get hotter for thousands of years before they get cooler. The water helps, but they are still fissioning. The water is to keep the emitted radiation flowing into the ocean and not into the atmosphere.

The tanks will all fail soon. All that stored water, the small percentage they skim to help with nuke industry PR, will all go into the Pacific Ocean. The IAEA has already said that's what they want to happen. Out of sight, out of mind.

Fri, 04/18/2014 - 12:35 | 4673240 Mr Giggles
Mr Giggles's picture

If true, Americans driven East, how ironic. Thank you for your post.

Fri, 04/18/2014 - 10:37 | 4672933 Racer
Racer's picture

Consumer sentiment has been undermined to a large extent by rising prices

That's what you get with inflation that the central bwanksters are so happy with

Fri, 04/18/2014 - 10:41 | 4672948 Jack Burton
Jack Burton's picture

Food infaltion is about to break to the high side. This year's weather for major growing areas could, I said could, be a disaster. A SUper El Nino is still forming, it may receed, but for now it still is moving toward a mid year arrival.  Australian models show a Super El Nino event, the kelvin wave in the Pacific carrying the heat is the largest ever witnessed. It could ump epic heat into the atmosphere, this will set of crop disasters in some major growing areas. We already have food inflation, this would compund it. Fed printing will allow bankers to speculate and drive prices to the moon. Profits for the 1%, hunger for the bottom 25%

Fri, 04/18/2014 - 10:56 | 4672991 geno-econ
geno-econ's picture

But as the land ice melts in Antarctic we can plant Monsanto genetically modified corn, wheat and vegetables near South Pole----problem solved through innovation, technology and the American way of thinking !

Fri, 04/18/2014 - 14:11 | 4673490 Not Too Important
Not Too Important's picture

And we can feed people with the GMO FrankenSalmon!

'FDA expected to approve Genetically Modified Salmon'

http://www.examiner.com/article/fda-expected-to-approve-genetically-modi...

What no one has tested is how GMO food mutates in our stomachs over a period of years. The pig 'virus' that's decimating the pig population in the US? All fed GMO feed for some time now, several generations. It mutates everything, from cells to gut bacteria.

Nothing tested in humans beyond three months.

Fri, 04/18/2014 - 10:38 | 4672937 Fuh Querada
Fuh Querada's picture

"...Consumer sentiment has been undermined to a large extent by rising prices...."

 I thought inflation was supposed to stimulate demand according to central banks- why postpone a purchase when it's cheaper now ? Unleash your animal spririts and apply for your 12th credit card. Use half of the credit limit to pay off the  debt from credit card #10 and the rest for a new TV.

 "....as the tax hike drives inflation"

 since when did a tax increase constitute a definition of inflation ?

 Friggin' idiots. It seems to me that "Economics" is a total abortion masquerading as an academic "discipline". You can make 1 + 1 equal anything between plus and minus infinity just by putting on a Krudman beard.

Fri, 04/18/2014 - 11:57 | 4673159 Son of Loki
Son of Loki's picture

<< Unleash your animal spririts and apply for your 12th... Student Loan >>

 


Fri, 04/18/2014 - 10:52 | 4672978 starman
starman's picture

I thought everything today is weighed in Yellen ounce? 

Fri, 04/18/2014 - 10:57 | 4672996 813kml
813kml's picture

Yellen ounce will soon be pound of flesh.

Fri, 04/18/2014 - 12:07 | 4673182 Dudeskis
Dudeskis's picture

This morning I took a Yellen before work and is weighed probably 5 Yellens.

Fri, 04/18/2014 - 13:38 | 4673391 TheReplacement
TheReplacement's picture

Did you remember to wipe your Obama?

Sat, 04/19/2014 - 03:50 | 4675061 damicol
damicol's picture

1 yellen equalls one full wirght camel cunt, or  or the hyperbolic inverse funtion  of a bernamke goat  bollocks or 2861 ot those

Fri, 04/18/2014 - 11:03 | 4673022 Bold Eagle
Bold Eagle's picture

Yeah, let's raise the sales tax to stimulate consumption. Brilliant.

Fri, 04/18/2014 - 11:28 | 4673046 Frank N. Beans
Frank N. Beans's picture

Tyrer right, boost infration, wee tu lo now

 

Fri, 04/18/2014 - 11:29 | 4673085 ebworthen
ebworthen's picture

Abe elected = hope and dreams

5% increase in sales tax = reality

Fri, 04/18/2014 - 15:05 | 4673645 NotApplicable
NotApplicable's picture

I noticed that nice Hopium spike too.

Fri, 04/18/2014 - 11:31 | 4673089 Ham-bone
Ham-bone's picture

hmmmm...me thinks something wicked this way comes.

BOJ owns 20% ($2T) of JGB market...10yr JGB @ .6%...and the private "market" is effectively now dead as rates driven so low w/ even tame Japanese inflation likely 4x's that yield

Fed owns 25% ($2.5T) of Note/Bond market...10yr @ 2.7%...and Domestic private market in Notes/Bonds has effectively died...only Fed/Foreigners buy these.

I don't follow the Italian/Spanish bond markets other than to note they too now yield just over 3% wiping out much of the arbitrage that was offered by ECB in lending @ .5% and buying these @ 7%.

In short, the bond market must remain @ these levels of yields to avoid a worldwide interest payment spike but @ these yields there is only CB's left to buy these as the yields are falling below inflation. 

$17.5 T in US Treasury debt

$5 T intra-gov holdings

$12.6 T Public debt

                        FED ($2.3T)  Foreigner ($5.9T)   Domestic ($4T non-Fed)

 

Bills $1.65 T            $0                $600 B           $1 T

TIPS $1 T               $95 B            $300 B           $600 B

Notes $8 T              $1.4 T           $4.5 T            $2.1 T           

Bonds $1.45 T        $700 B          $400 B           $350 B

(FYI - Bills up to 1yr, Notes 2-10yrs, Bonds >10yrs)

Jan '00 -      '07 -          Feb '14

$1 T  --->  $1.6 T ---> $5.9 T (cumulative "foreign" held US Treasury debt)

25% --->     40% --->    55%  (% of notes / bonds held by "foreigners")

1%  --->      1%  --->     25%  (% Fed held notes / bonds...Fed primarily held Bills until '08)

74% --->     59% --->    20%  (% domestically held notes / bonds)

6.6% --->    5%    --->   2.4% (net interest rate on debt)

$300B ->  $270B ---> $223B (net interest paid on national debt)

$9.2 T --> $13.7 T --> $16.1 T (GDP = 75% increase);

$5.7 T -->  $9 T     --> $17.5 T (National debt = 305% increase )

We are now in year 6 of ZIRP and as the fixed income crowd laddering of investments of 2, 3, 5, and nearly all 7yr debt with actual yields must have rolled off replaced by ZIRP or much "riskier" assets to acheive yield.  This onboarding of ZIRP to Pensions, States, Insurers, intra-gov SS, etc. will leave the already underfunded completely unable to pay out w/out more bail-outs.  And Japan is really in the same scenario as fixed investments yield no income. 

So we now come to a point that CB's effectively are the market debt markets..and the roll off of yielding debt to ZIRP is a corrosive that is destroying all institutional holders of this debt...the laddered tipping point or bankruptcy of 7% planned growth rates of fixed income must be soon.

 

 

Fri, 04/18/2014 - 12:01 | 4673168 Son of Loki
Son of Loki's picture

Thnx Ham.

Fri, 04/18/2014 - 12:12 | 4673193 Seeking Aphids
Seeking Aphids's picture

Great post H. Talk about a rock and a hard place! This sounds like a recipe for forced ZIRP for years to come....resulting in movement to riskier corporate bonds, right? The ma's and pa's are going to have to put their hard earned retirement $$s into such vehicles and then.....bam! Down they go with reductions in profit projections. Ma/Pa lose a lot of their life savings and have to work till they are 90. Mission Accomplished!

Fri, 04/18/2014 - 12:26 | 4673224 Tinky
Tinky's picture

Your analyses of the bond markets are among the most valuable contributions on these threads. Thanks!

Fri, 04/18/2014 - 13:06 | 4673299 Ham-bone
Ham-bone's picture

Thnks...

ramifications of no yields in fixed investments drove "investors" to buy RE...and they were able to get nice cash on cash return that was no longer available in fixed...but now this arbitrage is gone...

http://www.marketwatch.com/story/rent-or-buy-this-map-has-the-answer-2014-04-18

tipping points abound...so many sharp objects and such a big vulnerable bubble drifting about....

Fri, 04/18/2014 - 13:13 | 4673328 fonzannoon
fonzannoon's picture

Ham-bone do you ascribe any chance to the idea that pensions etc. will be pushed out (or already have been) on the risk curve past bonds? For example I own some MLP's yielding 6% plus. The XLU yields around 4%. Same for telecoms. I wonder if those investments are the next area for massive inflows to push into. Until eventually those yields are 2%. 

Fri, 04/18/2014 - 13:47 | 4673398 Ham-bone
Ham-bone's picture

seems reasonable...I'm no expert but from the little I know seems MLP's are coming out fast and folks need the yieldbut seems there are difficulties for foreigners or institutions or tax exempt (401k, IRA, tax exempt $'s) and it's a relatively small (but rapidly growing) market...generally, seems most of the avenues to get yield have greater restrictions and limited size...so the smart guys will find the opportunities but in general big money institutions and the like need big markets...but fuckifIknow, you probably know 100x's more on this than I

Fri, 04/18/2014 - 14:03 | 4673436 fonzannoon
fonzannoon's picture

Good point about the big instituitions needing big markets. It's funny I was looking at HYG the other day. The yield is below 6%.  It's amazing...I wonder if 2 years from now Junk Bond's will be paying 3% and investment grade debt will be paying nothing. How far can we push zirp? Or I wonder if at some point they separate borrowing costs somehow and you have treasuries pegged at 0% and the rest of the credit markets adjust upward. I have had someone put that thought in my head. It seems plausable.

Fri, 04/18/2014 - 14:10 | 4673472 Ham-bone
Ham-bone's picture

It's a world that only offers infinite appreciation of assets but trending to zero yield on assets...now invest for the long term!?!

Also love the idea that rents, tied to income, are finite while home prices, tied to leverage and ever lower interest rates, are infinite.

Fri, 04/18/2014 - 18:03 | 4674087 GotGalt
GotGalt's picture

fonzannoon, you may be right about search for yield putting even bigger money inflows into MLPs, REITs, and the like.  One area I've been putting more money into are BDCs.  They act kind of like junk bonds also, as they deal in non-investment grade loans and sometimes senior level loans and/or floating interest rate debt.  Many of them yield very high compared to most junk bond ETFs nowadays.  I think there is much greater value in these than popular junk bonds right now (at least until the global economic implosion finally occurs).  Companies like ARCC, MAIN, FSC, and PSEC are worth looking into along with floaters like FSFR, PFLT, and TSLF.  Just my opinion of course.  I also own a number of MLPs and some general partners as well for the distributions.

Fri, 04/18/2014 - 14:33 | 4673561 ThroxxOfVron
ThroxxOfVron's picture

Rates will have to be forced DOWN or the Naitonal debts will outrun the printing presses/'refinancings'.   The National Debts ( and quite a few if not all others ) will HAVE to be restructured/haircut/defaulted.

Oliver E. Williamson is going to be proven horribly prescient.

Since the Government Bureaucracies cannot comprehend the necessity for or bear the internal strife of the anti-thesis of perpetual 'growth'; the fiscal damage and taxation lust will only accelerate into the crisis.

CBs have NO CHOICE but force the curve further and further into Negative Real Interest Rates and drain the system of wealth by those means provided.  The deflation is actually clearly evident in the Bond Markets.   Tertiary Phase: the Snake IS eating it's fucking tail...

NIRP is 'soft' default.  The Fractional Reserve Monetary Systems are running in reverse in real terms although the nominal math continues to pyramid on the spread sheets...

Capital, foremost Human Capital; is being sacrificed to soften the blow of the credit based monetary system imploding as super-saturation is exceeded.

We have no money.  We owe each other more than We ever MADE and We are all pretty much broke and in hock to Our/Each Other's Children.

-& the Kids don't have any fucking money...

IF this was a system collateralized by Gold then the Gold would be confiscated -again;  and then revalued -again.  

Now the Collateral is Debt.  What good will it do to confiscate the Debt and revalue it?  

-Ask Bazooka Ben and Dammit Janet.  Not that those two are going to answer THAT question.  They know they've painted themselves into a corner and are stacking the paint cans to stand on them and painting the cans and up to their shoes 'cause They can't do anything else...

The Banks are soooooo fucked; -and they aren't even the worst of the problem.  The FED reverse-repoed $252B on March 31st so that the FED could act like the Banks held sufficient Tier 1.  -THAT was the same trick that Lehman was using ( called 'Repo 105' ) to fudge solvency into the gaping maw...  Now the numbers are much higher.  I expect the next quarter to end with an even larger FED Reverese to keep the TBTF floating...

I suspect that this is why the MIC War Machine is locked on full throttle.   There are no grand global initiatives to fix anything.  The Oligarchs either waited to long to get their shit together and cooperate or They have decided to purge populations in the traditional way, aggressive attrition...

Fri, 04/18/2014 - 11:52 | 4673143 I Write Code
I Write Code's picture

Consumer confidence is irrelevant, resistance is futile.

Fri, 04/18/2014 - 12:23 | 4673218 Bunga Bunga
Bunga Bunga's picture

Looks like another big Tsunami is coming.

Fri, 04/18/2014 - 12:31 | 4673236 whidbey-2
whidbey-2's picture

Just a peek at the genius of the developed world. Economic experiments failing right and left. 

 The EU, Russia, USA and China are all in serious, politically created debt problems. 

Change is brewing, hold on for a bottoming attempt, a bounce, then a hard landing globe wide.

Expect disinflation first, before a flip to inflation, and then an attempt at restart.

 

 

Fri, 04/18/2014 - 12:46 | 4673251 Mr Giggles
Mr Giggles's picture

One Baker in Pudding Lane, anywhere.

Fri, 04/18/2014 - 12:55 | 4673275 goldhedge
goldhedge's picture

Maybe they should buy War Bonds?

 

Fri, 04/18/2014 - 13:37 | 4673387 yogibear
yogibear's picture

The US follows Japan with infinite printing.

It will take a while until people figure out they should be dumping dollars as well as yen. 

Fri, 04/18/2014 - 14:11 | 4673477 GreatUncle
GreatUncle's picture

Too late the contagion is complete. When you look at how central bankers owe each other billions everywhere in a continuous circle that if any one central bank goes tits up the rest follow.

So sure they can get an implied deal on something like say the Ukraine the reality is that no central bank can afford not to get a deal neither USA EU RUSSIA etc even little old Japan.

The harshest truth is the economic mechanism they want that is elites grab all they can whilst industrilisation and mass production leave an income shortfall for people who will have no work yet need to be fed, housed, etc. Brutally elites want industrialisation but they would need to stop robbing the pot, leaving the monetary system short then governments could borrow less to pay for the industrialisation issue.

Now can you see the only action central banks have seeing they ain't going to tax their elite buddies is inflate the system through money creation and more of what got us in this process to begin with and with that an ever growing proportion of the population falls foul of no income and can only take what they need. FAILURE TO DO SO IS SUICIDE IS IT NOT?

They are sooooo fucked, if not in my lifetime eventually as the system find it harder and harder to continue and Japan is in fact just more advanced through the industrialisation efficiency it chaseed.

A litle question, name me one thing that has in fact created more jobs than it loses, that is why what often is considered is this increased effciency that is "less man hours per product".

Minimum wage underemployment is not a solution, the numbers need converting to full time average paid jobs to be compared and you wonder why Japanese consumer confidence collapsed.

Governments have played a remarkable game since 2008 all of them or should I say ever fucking central banker but we are in exactly the same shit today as we were then!

THERE IS STILL AN ELEPHANT IN THE ROOM EVEN THOUGH THEY THOUGHT BY TURNING THE LIGHT OUT IT WOULD DISAPPEAR THE LIGHT GOING OUT IS MORE PROOF OF THE EXISTANCE OF AN ELEPHANT IS ALL.

THE REALITY IS THE CENTRAL BANKERS ARE THE ELEPHANTS IN THE ROOM WHO ONLY EXIST TO PURSUE AN ECONOMIC SYSTEM THAT ONLY EVER WORKS FOR THEM AND NEVER THE MAJORITY POPULATION = MINORITY RULE.

 

 

Fri, 04/18/2014 - 14:27 | 4673536 NOTaREALmerican
NOTaREALmerican's picture

We've been waiting for Japan to collapse for how long now?

It's worse than waiting for the US dollar to collapse.  It's worse than waiting for the stock-market to collapse.  

It's worse than waiting for ______________ to collapse !

Fri, 04/18/2014 - 17:00 | 4673939 Ifigenia
Ifigenia's picture

and those same banksters want Mario Draghi to start the printers. Fuck you banksters.

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