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Japan Balance Of Payments Current Account Collapses To Record Deficit
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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Just set another tax rise to take effect next year. 15%. Problem solved.
Yes, stimulative.
Working as planned. You can't fake a graph like that.
After how many quadrillion does this become an obvious problem? They cant hide behinde Keynesian ivey leaguers much longer.
Some Japanese men are going to be pooping their pants tonight
That would be stimulative of the Japanese economy.
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?
Japan is so tired and dead. All my money is invested in pumpkin pie.
I'd keep playing. I don't think the heavy stuff is going to come down for quite a while.
Keep dancing...for gods sake just keep dancing!!
The progression seems to be:
Millions
Billions
Trillions
Quadrillions
Next comes Sextillions, and the denouement will be the Seppukutillion.
Sextillions?
I think we just found Abe's motivation
Yet another reason for VIX To get in single digits, other than the wildely bullish WWIII
Hockey stick save any day now... any day...
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.
I thought China was "yesterday", and all mfg was now headed to Vietnam and Cambodia? Even cheaper slaves.
So a 1/5 of the world's population is "yesterday". I'm sure that'll sort out well.
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.
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."
http://www.asianews.it/news-en/Burqa-sales-down-in-Kabul-27668.html
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.
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
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
solid.
I think democracy and cooperation
are dynamics that apply
locally, regionally, nationally
and internationally.
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..."
Dun.
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.
"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.
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?
free broken brick included
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.
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.
pretty obvious the plan is to print more money...
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?
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,
http://brucewilds.blogspot.com/2013/08/japans-economy-going-forward.html
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.
Time to turn the Nukes back on, or game over.
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.
Too bad Japan can't count its Fukushima radiation as an export.
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!
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.
If JPN is F'd so is the USA
What would Krugman do?!
/sarc
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.
Kyle Bass...your payday is coming...soonish I think.
Peak Credit now breached!
RE