• Sprott Money
    04/29/2016 - 05:58
    There is unfortunately no basis for renewed optimism that this current litigation will have any meaningful impact on precious metals manipulation – with respect to either silver or gold.

Japan Balance Of Payments Current Account Collapses To Record Deficit

Tyler Durden's picture


Any day, week, month, quarter, year now... that J-Curve 'recovery' will come bounding over the horizon and save the Japanese economy from its inevitable death spiral... for now, presented with little comment aside for historical confirmation (as even Goldman Sachs has now given up on hope of a bounce), Japan's largest (seasonally-adjusted) Balance of Payment Trade Deficit ever...



Must be the weather...

As Bloomberg notes, this seems related to the tax hike...

Consumers splurged on items such as refrigerators and computers in March before the 3 percentage point tax rise, boosting imports already climbing due to a weaker yen and nuclear plant closures pushing up energy costs. A slide into a sustained deficit could make Japan more reliant on overseas funding to service the world’s biggest debt burden.

But... don't worry...

“It’d be a problem if the government fails to demonstrate a clear path for budget consolidation should Japan fall into a structural current account deficit,” Tsutomu Saito, an economist at Daiwa Institute of Research in Tokyo

Oh yeah - they have a plan.


Goldman provides a little more color (and it's just as uninspiring)...

For FY2013 as a whole, the current account recorded a surplus of +¥789.9bn but was far lower than the +¥4.2tn in FY2012 and the lowest since comparable records became available in FY1985.


The breakdown of the March balance of payments (non-adjusted) shows the trade deficit widening to -¥1.13tn (February: -¥533.4bn), as export growth slowed to +6.2% yoy (February: +15.7%) and import growth accelerated +23.2% (February: +14.1%). The services deficit narrowed to -¥58.4bn (February: -¥193.4bn).

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Sun, 05/11/2014 - 20:15 | 4749335 i_call_you_my_base
i_call_you_my_base's picture

Just set another tax rise to take effect next year. 15%. Problem solved.

Sun, 05/11/2014 - 20:19 | 4749342 Oldwood
Oldwood's picture

Yes, stimulative.

Working as planned. You can't fake a graph like that.

Sun, 05/11/2014 - 20:28 | 4749370 maskone909
maskone909's picture

After how many quadrillion does this become an obvious problem? They cant hide behinde Keynesian ivey leaguers much longer.

Sun, 05/11/2014 - 21:33 | 4749547 ApollyonDestroy
ApollyonDestroy's picture

Some Japanese men are going to be pooping their pants tonight

Sun, 05/11/2014 - 21:33 | 4749549 LetThemEatRand
LetThemEatRand's picture

That would be stimulative of the Japanese economy.

Mon, 05/12/2014 - 01:15 | 4749915 spine001
spine001's picture

That is why the Nikkei is up. Only Keynessian solution is to print 3 times more than they already did. What do you think they will do, print more or let the house of cards fall?

Mon, 05/12/2014 - 01:36 | 4749942 Mistress Raindrop
Mistress Raindrop's picture

Japan is so tired and dead.  All my money is invested in pumpkin pie.

Sun, 05/11/2014 - 21:42 | 4749569 GoldenTool
GoldenTool's picture

I'd keep playing.  I don't think the heavy stuff is going to come down for quite a while.

Sun, 05/11/2014 - 21:54 | 4749605 Aussiekiwi
Aussiekiwi's picture

Keep dancing...for gods sake just keep dancing!!

Mon, 05/12/2014 - 02:15 | 4750000 RafterManFMJ
RafterManFMJ's picture

The progression seems to be:


Next comes Sextillions, and the denouement will be the Seppukutillion.

Mon, 05/12/2014 - 05:36 | 4750111 Squid-puppets a...
Squid-puppets a-go-go's picture


I think we just found Abe's motivation

Sun, 05/11/2014 - 20:18 | 4749344 Aknownymouse
Aknownymouse's picture

Yet another reason for VIX To get in single digits, other than the wildely bullish WWIII

Sun, 05/11/2014 - 20:20 | 4749349 FieldingMellish
FieldingMellish's picture

Hockey stick save any day now... any day...

Sun, 05/11/2014 - 20:26 | 4749365 Jack Burton
Jack Burton's picture

What does this all mean?  Can Japan survive as a trade deficit nation, after all, it made it's living since World War Two as a great world exporter. Or in other words, can any nation be an exporter in the new Chinese century. I was watching a program about Afghanistan's economy after the NATO troop pullout and money that the occupation forces brought to that economy. Mentioning the Islamic Female Dress that most Afghan women wear, it was mentioned that these had for many centuries been made in Afghanistan by Afghans for Afghans. According to the report, none of these are made in Afghanistan anymore and that all the factories making them are closed, and all workers are gone. It seems, that they are all made in China and shipped in, it was said that Afghanistan is too expensive a place to manufacture these traditional clothes. China has captured 100% of the market, all Afghans do now is retail the Chinese goods, no jobs left in Afghanistan. China has changed the world, not even the poverty stricken slave labor of the Afghans can compete with the slaves of China.

Sun, 05/11/2014 - 20:37 | 4749395 sunnyside
sunnyside's picture

I thought China was "yesterday", and all mfg was now headed to Vietnam and Cambodia?  Even cheaper slaves.

Sun, 05/11/2014 - 20:49 | 4749428 i_call_you_my_base
i_call_you_my_base's picture

So a 1/5 of the world's population is "yesterday". I'm sure that'll sort out well.

Mon, 05/12/2014 - 03:52 | 4750064 Leraconteur
Leraconteur's picture

How will those two nations take over ALL of the mfg of hundreds of millions factory workers? There are not enough people to do so in those nations.

Sun, 05/11/2014 - 20:59 | 4749433 ZerOhead
ZerOhead's picture

I'm reading 60% are Chinese but then again the other 40% are probably just cheap knock-off counterfeits. The younger women are also less likely to wear burqas these days so here's to hoping no-one gives the Taliban fucknuts advanced facial recognition software...

"Costing half or even a third of locally produced garments, imported Chinese burqas also come embroidered, which means Afghan seamstresses only have to sew on the cap and netted veil for the garment to be ready."


Sun, 05/11/2014 - 21:17 | 4749503 Leraconteur
Leraconteur's picture

China has an attitude, and policy, that retains industry for its self and land mass.

No reason why others cannot do this as well.

France won't let some industries go, regardless of what the technocrats in Brussels/Strasbourg dictate.

If you have 20 nations with open policy to trade and competition and one nation that hoards it all for themselves and enacts draconian nationalistic trade barriers, you are going to have 19 poor nations and 1 that makes everything.

The Afghans could make the dress there, and pay the higher price, if they wanted to do so. Same for Mexican pottery and American consumer goods.

The rest of the planet needs to call China and the Chinese on their bullshit, and make them behave like adults. 

They won't, but someone needs to tell them they are playing unfairly, and tell them to go to hell when they play the race / treating China unfairly manipulative card. 

Sun, 05/11/2014 - 23:23 | 4749762 Spitzer
Spitzer's picture

It's not that simple. Germany has trade surpluses with China yet they have higher wages in Germany and a higher currency , then the US

Mon, 05/12/2014 - 00:39 | 4749873 evernewecon
evernewecon's picture



Defining favorable terms of trade

and high valuation of a people's

efforts and worth, the right

goals of an honestly democratically

grounded government.


Except, not meaning to nitpick, you understand,

their currency's still just the euro.


They're probably mostly not

pleased with it.


However, it's probably not that simple.

They DO export more easily with it

than would be the case with the DM.

So continentally, there's a potential

blending of strengths and weaknesses.

They simply lack the cohesion the 

U.S. has, which cohesion still appears



I think democracy and cooperation 

are dynamics that apply

locally, regionally, nationally

and internationally.



Mon, 05/12/2014 - 03:49 | 4750063 Leraconteur
Leraconteur's picture

It *is* that simple. Germany simply refuses to share, or sell, technology with the Chinese when it is requested. Problem solved. Other nations let greed and short term thinking cloud their judgment. Germany insists that they make it IN Germany and sell it TO China, generating jobs and trade surpluses.

All it requires is societal will - it does not require a single law.

"Yeah the Chinese goods are cheap, but we don't buy them here..."


Mon, 05/12/2014 - 08:16 | 4750280 HalinCA
HalinCA's picture

Proving Germany is still a nation run, by in large, by and for Germans. The USA, on the other hand, is merely a market, run by puppets for the benefit of international bankers.

Mon, 05/12/2014 - 08:52 | 4750367 headhunt
headhunt's picture

"The USA, on the other hand, is merely a market, run by puppets for the benefit of international bankers."


The USA, on the other hand, is merely a market, run by muppets for the benefit of politicians and the muppets votes for free shit.

There - fixed it for you.

Sun, 05/11/2014 - 23:13 | 4749745 matrix2012
matrix2012's picture

I think the Bangladesh is the new paradise source for the cheap clothes, even JCP and UK brands are taking the advantages of even lower labor costs there. Still remember the collapsing building there?

Mon, 05/12/2014 - 01:18 | 4749922 patb
patb's picture

free broken brick included

Sun, 05/11/2014 - 20:47 | 4749423 Ignorance is bliss
Ignorance is bliss's picture

If I were Japanese....or living in an economy that has an unsustainable current account deficit and that whose monetary policy was set on debasing the Currency, I would buy the hell out of Silver and Gold bullion. I wonder how PM sales are in Japan? I know silver sales in the U.S. Are fairly robust.

Sun, 05/11/2014 - 21:09 | 4749483 D-Fens
D-Fens's picture

When I went to Japan I had a great time.  They are truly a great people.  Everything there is 2 or 3 times the quality of America.

But they have weaknesses.  They are childlike and don't stand up for themselves.  They have no domestic resources. Consequently, behind the gleaming facade they have no real strength left.  They will never stand up to America, and they certainly won't stand up to China.

Ultimately, I think they will end up being a sort of Chinese vassal state like they were in the distant past.

Sun, 05/11/2014 - 21:21 | 4749514 bam
bam's picture

pretty obvious the plan is to print more money... 

Sun, 05/11/2014 - 21:45 | 4749579 Redneck Hippy
Redneck Hippy's picture

How does the Japanese yen continue to enjoy its status as a "safe haven" currency?  Is it just that currency traders are stuck in a well-worn rut and can't shake it, or is there some deeper reason?  

Sun, 05/11/2014 - 22:03 | 4749622 AdvancingTime
AdvancingTime's picture

The effect of a lower yen on exports is beginning to wane. When the yen drops faster than the Japaneses stock market rises it will no longer protect the wealth of those invested within its borders. Japan is the most indebted developed country in the world and its future prospects are dim and getting worse.

It is only a matter of time before the yen becomes worthless and as inflation begins to take root it will place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt.It appears domestic investors have already started venturing overseas for higher yielding assets. When this turns in to a tsunami of  money fleeing Japan it will constitute the end of the line for those holding both JGBs and the yen. More on this subject below,



Mon, 05/12/2014 - 01:24 | 4749930 spine001
spine001's picture

Yep. You got it. That is exactly why they have to triple their qe. The JCB doesn't have any other option than to buy all the JGBs themselves from their pension funds. Since one way or the other they will have to pay for the retired people in the system. Most of Japanese debt is owned internally.

Sun, 05/11/2014 - 22:27 | 4749663 atomp
atomp's picture

Time to turn the Nukes back on, or game over.

Sun, 05/11/2014 - 22:33 | 4749676 toadold
toadold's picture

As has been stated before, even Keynes would not approve of what governments are doing now.  

At one time Japan had "dark" factories. Factories that were so automated that they turned out the lights and would only turn them on about once a month to restock production material and minor maintenance.  Actual production cost were extremely low but government taxation and inflation policies ran the cost of the necessary imported raw stock and the taxes had to be passed along.  Now a lot of those "dark" factories have shut down, their product artificially priced out of the international market. 

Some of the big corporations,are rumored to be just biding their time until the populace and the media gets tired enough to turn on Abe and his party. How bad will it have to get is the question.  It may take missed meals.  Meanwhile they invest overseas, but keep a presence in Japan.   

Sun, 05/11/2014 - 22:54 | 4749717 Peter Pan
Peter Pan's picture

Too bad Japan can't count its Fukushima radiation as an export.


Mon, 05/12/2014 - 03:21 | 4750043 intric8
intric8's picture

It can count towards exports, well kind of. A coupla years ago, radioactive second hand cars were aggressively being exported to countries like? You guessed it- uganda and kenya! its a pretty good assumption that no one has a friggin geiger counter there.

Picture a happy second hand car buyer whistling on the way home thinking he got a steal on a 2011 toyota camry, but all the while his ass is getting massively irradiated.

Upper limit on export products like tea leaves and rice are around 500 bq/kg or thereabouts, so technically, radioactive sources are exiting the country, and paid for!

Sun, 05/11/2014 - 23:26 | 4749773 laomei
laomei's picture

Oh Japan, you are so utterly utterly fucked.  Here's waiting for them to get that idea in their heads again that the only way out is a good old fashioned war... and then China will just nuke them to glass and be done with it.  Either way, problem solved.

Mon, 05/12/2014 - 08:44 | 4750342 headhunt
headhunt's picture

If JPN is F'd so is the USA

Sun, 05/11/2014 - 23:50 | 4749815 kchrisc
kchrisc's picture

What would Krugman do?!



Sun, 05/11/2014 - 23:57 | 4749827 q99x2
q99x2's picture

Steve Keen on the Keiser Report says he expects the next financial bubble to pop in 7.5 years.

I'll have to eat my food supplies before then and buy new.

Mon, 05/12/2014 - 01:42 | 4749958 lasvegaspersona
lasvegaspersona's picture

Kyle Bass...your payday is coming...soonish I think.

Mon, 05/12/2014 - 01:53 | 4749978 Rogue Economist
Rogue Economist's picture

Peak Credit now breached!


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