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Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes

Tyler Durden's picture




 

UPDATE: USDJPY has tumbled to 5 week lows and NKY has retraced all post-Fed gains

 

Japan is in trouble. Normally the news that a piece of macro data had utterly and completely collapsed would be greeted by thge BFTD mentality as bad news reinforces the printing-press of central planners' put guarenteeing future wealth for all... but not this time. Household spending collapsed 8.0% in May (echoing the plunge following the last tax hike in 1997) - more than double expectations and almost as bad as the month of the tsunami. Great news? That's the problem... the great limiter of central bank largesse is looming as Japanese CPI spiked to 3.7% - its highest in 24 years! (and Core CPI at 3.4% - its highest since 1982) This implicitly hobbles the BoJ from further exuberance and already JPY strength (and NKY weakness) are showing.

 

Household spending collapses...

 

And inflation spikes... (with core CPI at 3.4% - its highest since 1982)

 

Now what Abe? More depends?

 

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Thu, 06/26/2014 - 20:29 | 4900404 ShrNfr
ShrNfr's picture

Mr. Abe? May I suggest the pufferfish liver prepared by our new cook? It is the first time he will have done this.

Thu, 06/26/2014 - 20:33 | 4900426 InjectTheVenom
InjectTheVenom's picture

this is EXACTLY where good 'ole USSA is headed ! (real soon).

Thu, 06/26/2014 - 20:36 | 4900447 localsavage
localsavage's picture

People are getting scared to spend on both sides of thePacfic. It is going to be a shit show.

Thu, 06/26/2014 - 20:38 | 4900454 Chris Jusset
Chris Jusset's picture

Let it be known: Abenomics has FAILED.

Thu, 06/26/2014 - 20:45 | 4900470 ZerOhead
ZerOhead's picture

And to think they said "it couldn't be done"... no wait... or was it "it shouldn't be done"?

Oh crap... at this inflection point it simply doesn't matter any more.

How do you say "totally fucked" in Japanese?

Thu, 06/26/2014 - 20:52 | 4900505 max2205
max2205's picture

It's all Japanese to me

Thu, 06/26/2014 - 21:08 | 4900561 zyby
zyby's picture

Actually, I think this is exactly what ABEnomics was designed to do - create higher inflation. As folks get used to a high inflation rate, they will start spending on goods to get them before the price increases. This is all in the plan and good.

 

The problem is where the money came from to get this process started.

Thu, 06/26/2014 - 23:07 | 4900949 Not My Real Name
Not My Real Name's picture

Prease ... do not worry.

Thu, 06/26/2014 - 21:26 | 4900628 GS-DickinDaMuppets
GS-DickinDaMuppets's picture

Looks to me like KYLE BASS had the Japan collapse predition - right - on - the - money!

Thu, 06/26/2014 - 21:02 | 4900539 Not Too Important
Not Too Important's picture

People who are dead and dying of radiation don't spend money. They certainly don't go to work, and are not too concerned with taxes.

Everyone left knows they're next.

Hard to overcome the non-spending habits of the soon-to-be-extinct.

Thu, 06/26/2014 - 20:38 | 4900450 Top Gear
Top Gear's picture

Like Jesus' Second Coming, the financial apolocypse is much desired, but never materializes.

Ya'll sound like Harold Camping. Or the Y2K'ers.

Desire for apocalypse is an emotional escape.

 

Thu, 06/26/2014 - 20:43 | 4900465 Grande Tetons
Grande Tetons's picture

Desire for apocalypse is an emotional escape.

Inciting negativity on a message board is a cry for help. 

Thu, 06/26/2014 - 20:48 | 4900491 Top Gear
Top Gear's picture

I agree, all the negativity ZeroHedge and doom porn commenters incite here is a cry for help.

"A fake fortune teller can be tolerated. But an authentic soothsayer should be shot on sight. Cassandra did not get half the kicking around she deserved." ~Robert Heinlein

Thu, 06/26/2014 - 20:53 | 4900510 max2205
max2205's picture

TRANSITORY

Thu, 06/26/2014 - 20:55 | 4900518 Grande Tetons
Grande Tetons's picture

I disagree to your first comment. For the most part, ZH is a community of smart asses that are trying to understand the nature of the world's predicament.  This is so for financial issues as well as non-financial issues.  

Of coures there are always going to be shit disturbers...but...hey...one can not have a community without an outhouse.  

Thu, 06/26/2014 - 21:31 | 4900646 Magooo
Magooo's picture

This unfortunately --- is the truth of the matter:

 

High energy prices = less consumption because everything including the fuel in your tank costs more = layoffs = less tax revenue = government cutbacks, layoffs and debt increases = less consumption = more layoffs = less taxes =====  economic death spiral.

 

Compounding the problem is the fact that a weak labour market means real wages drop - as they are across the world right now - that means everything is more expensive and your buying power is dropping at the same time.

 

Governments recognize this and are trying to offset with debt, easy lending (they are purposely inflating bubbles), lower interest rates and money printing.

 

This all started in 2002 when oil went from $12 a barrel to nearly $40 (and of course has never looked back)

 

Of course they will fail - because the disease is expensive oil.  And there is no substitute

 

The economic death spiral will accelerate when the QE and ZIRP no longer have any effect and the confidence game collapses.

 

This moment will be known as the end of the industrial revolution by the few who survive.

 

This is not a Hollywood movie where the hero saves the day.  This is the reality we are facing.

 

HIGH PRICED OIL DESTROYS GROWTH

According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices.  http://www.iea.org/textbase/npsum/high_oil04sum.pdf

Thu, 06/26/2014 - 23:29 | 4901028 Pinworm
Pinworm's picture

What a pain in the ass

Fri, 06/27/2014 - 01:50 | 4901230 kareninca
kareninca's picture

Top Gear, it looks like neither you nor Heinlein have actually read Agamemnon.  Cassandra's fate was to accurately see the future, but to never be believed.  That is why she was not shot (with an arrow, presumably) on sight.

BTW, you are an ignorant bore.

Thu, 06/26/2014 - 20:49 | 4900488 CrashisOptimistic
CrashisOptimistic's picture

I don't think you quite understand the point.

Why is such a thought sufficiently credible to be taken as seriously as it clearly is, even on CNBC, 6 years after overwhelming monetary and fiscal stimulus globally?

Why?  Here's why:

"the great limiter of central bank largesse is looming as Japanese CPI spiked to 3.7% - its highest in 24 years! (and Core CPI at 3.4% - its highest since 1982)"

You'd think maybe a country that imports every drop of liquid in their 5 million barrel per day burn paid $5 more in May than April.  

Behold, the power of oil.

Thu, 06/26/2014 - 20:52 | 4900490 hobopants
hobopants's picture

"Desire for apocalypse is an emotional escape."

Wow retard, who said shit about the apocalypse? This is an article about the Japanese current economic situation.

Thu, 06/26/2014 - 20:52 | 4900508 Top Gear
Top Gear's picture

Pray to Tyler about it, halfwit.

20 Stunning Facts On The US Retail Apocalypse | Zero Hedge
zerohedge.com/news/2014-03-10/20-mind-blowing-facts-us-retail-apocalypse

Bill Buckler Presents The Four Horsemen Of The (Financial) Apocalypse
zerohedge.com/news/bill-buckler-presents-four-horsemen-financial-apocalypse

Thu, 06/26/2014 - 21:12 | 4900516 hobopants
hobopants's picture

Again, what the fuck does that have to do with this article? You seem to be the only one obsessing over the Apocalypse, no one else has said shit about it...

Thu, 06/26/2014 - 20:50 | 4900502 caShOnlY
caShOnlY's picture

the financial apolocypse is much desired, but never materializes

it's already here, my little chim chim.  See Russia and China? just tossed the ol' buck right out the window in their gas trade.  10 years ago the only way they would have trusted each other would be to demand the buck in trade.  Sayanora, skippy!  

 

Thu, 06/26/2014 - 20:55 | 4900523 Top Gear
Top Gear's picture

It's already here? OMG! So when do I have to stop partying?

Thu, 06/26/2014 - 21:04 | 4900547 This just in
This just in's picture

You will be stopped automatically when your fiat dollars won't buy what you need.  Coming soon!  Until then, party on, dog.

Thu, 06/26/2014 - 21:11 | 4900573 Top Gear
Top Gear's picture

Is that going to happen right after the Rapture?

"For then there will be a great tribulation, such as has not occurred since the beginning of the world until now, nor ever will."

Yeah, yeah....zzzz.

Thu, 06/26/2014 - 21:15 | 4900588 El Vaquero
El Vaquero's picture

 

The “average life expectancy for a fiat currency is twenty-seven years; so, by that measure, the greenback has had a good run.”  Bye-bye, fiat dollar.  Hello, gold?

http://www.forbes.com/sites/ralphbenko/2011/08/29/u-s-elites-begin-to-co...

The USD has been fiat since 1971.  Can you name a fiat currency that has withstood the test of time?  No, you can't.  All fiat goes to its inherent value, which is 0.  You are going to be in for a rude awakening.  

Thu, 06/26/2014 - 21:31 | 4900649 ZerOhead
ZerOhead's picture

Sounds more like he's waitng for the "Second Coming"

Member for 1 week 4 days
Fri, 06/27/2014 - 06:33 | 4901407 The Navigator
The Navigator's picture

In my "travel wallet", with my passport, are paper currencies I keep (so if I arrive at midnight, I can catch a taxi without worrying about a currency trader being open at midnight at the airport). Most of the South American currencies are worthless after 5 years.

Yen have been good. NT hold value. HKD have held, although I've seen "new" paper there in 30 years. So Far East has been good, S. Ameriaca, not so good. Rest of the world, I don't go so I do't know.

Still, if you study paper money, you'll find it all goes to ZERO in the long run, not a single one is worth a silver WA quarter or Mercury dime.

The guys that wrote the Constitution, requiring currency to be gold and silver, what the hell were they thinking?

It worked for a while, but not very long. By Lincolns time, it was all over.

Less than 70 years - 1 generation.

Thu, 06/26/2014 - 21:21 | 4900593 hobopants
hobopants's picture

You must have gotten lost on your way to bible study dude, all your comments thus far have mentioned praying, the apocalypse, and bible verses... There is nothing wrong with that, but you should seek out a forum that deals with theology or something

Here is the headline to help you understand what the article is all about:

"Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes"

Please do your best to try and stay on topic

Thu, 06/26/2014 - 22:29 | 4900843 bwh1214
bwh1214's picture

I've been looking at your posts and had to comment. No it's not the end of the world, but this is exactly what kyle bass said would happen. If you would have said in1927 that the economic boom was unsustainable and the gov would confiscate all of the citizens gold you would have been called crazy. In 61 if you would have said in 10 years the dollar would not be backed by gold, again crazy. A crash in stocks in '97, crazy. If you said in 03 a housing crash would nearly break the system, nuts. All these things happened, and the people that warned about them were kooks at the time, only to end up being correct. I'm paying more attention to the people with a good track record, and doing my own research and its not looking good. End of the world, no of course not, but I have a pretty good idea things will get ugly. So if you want to come on here and bash people, fine, but your really making yourself look stupid by not saying anything with substance about the artical. Here let me help 250% govt debt to GDP + rising inflation + slowing economy = really really bad news no matter how you cut it.

Thu, 06/26/2014 - 23:38 | 4901047 zorba THE GREEK
zorba THE GREEK's picture

Top Gear...You have been here on ZH for 11 days. Are you just here to see how many people

you can rile or are you Million Dollar Bonus's cousin? 

Thu, 06/26/2014 - 21:09 | 4900567 caShOnlY
caShOnlY's picture

STOP??????!!!!!!   the band on the Titanic played with water over their ankles for god's sakes!   This is merika!!! party till u puke, baby!! (or nuke, baby)

Fri, 06/27/2014 - 00:53 | 4900519 CrashisOptimistic
CrashisOptimistic's picture

"Ya'll sound like Harold Camping. Or the Y2K'ers."

Or the US Govt, reporting -2.9% Q1 GDP after trillions of stimulus.  What crazy people they are.

Thu, 06/26/2014 - 20:39 | 4900455 mjcOH1
mjcOH1's picture

"this is EXACTLY where good 'ole USSA is headed ! (real soon). "

 

Not to worry....the EBT can be adjusted upward with the click of a mouse as inflation spikes.

On the other hand....if you're one of the quickly disappearing tax donkeys paying for Lafonda's Escalade, you'd best be signing up for the 'crazy money' now.   Because the last guy left working is going to have a hell of a time keeping 300million mooches in the level of government handouts to which they've become accustomed.  

Thu, 06/26/2014 - 20:53 | 4900513 Buck Johnson
Buck Johnson's picture

It's most definitely coming to america.

Thu, 06/26/2014 - 20:33 | 4900427 knukles
knukles's picture

Ecronomy rike stink flish

Thu, 06/26/2014 - 20:36 | 4900444 The Limerick King
The Limerick King's picture

 

 

Abe has emptied his quiver

Good fortune he tried to deliver

His arrows have missed

His nation is pissed

And people are starting to shiver

Thu, 06/26/2014 - 21:15 | 4900584 This just in
This just in's picture

Japan has tried Abenomics,

A stunt that defied economics,

despite trillions of Yen,

the effort caved in,

 

a result only fit for the comics. 

Thu, 06/26/2014 - 21:06 | 4900556 SunRise
SunRise's picture

ShrNfr you sir are a professional!

Thu, 06/26/2014 - 20:28 | 4900405 cynicalskeptic
cynicalskeptic's picture

Didn't Japan finally make child porn illegal?  

I suspect that may have had something to do with a drop in spending...

Fri, 06/27/2014 - 00:05 | 4901113 Wild Theories
Wild Theories's picture

The ban excludes comics/manga, so the hentai industry can still contribute to the economy.

Also the ban seems to only cover overt sex, meaning underaged 12yr old models shooting leg-splitting bikini photo albums are still legal and selling like hotcakes.

Thu, 06/26/2014 - 20:29 | 4900406 SandiaMan
SandiaMan's picture

Sounds like here

Thu, 06/26/2014 - 20:29 | 4900407 zorba THE GREEK
zorba THE GREEK's picture

At least Japan's Abe did not declare war on his own people like our Abe in the U.S. did.

Thu, 06/26/2014 - 20:55 | 4900520 suteibu
suteibu's picture

You are wrong.  In fact Abe (along with the corporate, bureaucratic, and political elite) has declared war on all Japanese.

Thu, 06/26/2014 - 20:29 | 4900408 Took Red Pill
Took Red Pill's picture

Coming soon to the U.S.A.

Thu, 06/26/2014 - 20:35 | 4900436 kowalli
kowalli's picture

in 2016

Thu, 06/26/2014 - 21:06 | 4900543 Top Gear
Top Gear's picture

Said Harold Camping.

Coming again, Coming again,
May be morning, may be noon,
May be evening and may be soon!
Coming again, Coming again;
O what a wonderful day it will be -
Collapse is coming again!

hymnary.org/tune/coming_again_peterson

Sing along now, boys and girls.

Thu, 06/26/2014 - 21:54 | 4900744 This just in
This just in's picture

You really need a new hobby.

Thu, 06/26/2014 - 20:29 | 4900409 dutchTender
dutchTender's picture

this is like me fasting for month ... then find out i gained 100 lbs .... bawhaahahaahha  fuck japan, all these fools better start learning chinese ..

Thu, 06/26/2014 - 20:47 | 4900487 homiegot
homiegot's picture

And what's really bad is they JUST banned chiild pornography. But they said cartoon child pornography is OK so they have something to live for there.

Thu, 06/26/2014 - 20:30 | 4900410 buzzsaw99
buzzsaw99's picture

the moar they fudge cpi the madder it gets. eventually it picks up a bus and throws it back down as it makes its way through the center of town. http://www.youtube.com/watch?v=GnXaDKvterM

Thu, 06/26/2014 - 20:37 | 4900448 ZerOhead
ZerOhead's picture

Oh no, they say he's got to go go go Godzilla

Oh no, there goes Tokyo go go Godzilla
Thu, 06/26/2014 - 20:42 | 4900469 knukles
knukles's picture

LOL
Dancing Faires ....

https://search.yahoo.com/search;_ylt=A0SO8xlAvaxTNkoALghXNyoA?ei=UTF-8&f...

Where the Fuck is Raymond Burr when We Need Him?

Thu, 06/26/2014 - 21:04 | 4900545 FredFlintstone
FredFlintstone's picture

All of these great song references ...

Thu, 06/26/2014 - 20:41 | 4900453 homiegot
Thu, 06/26/2014 - 20:29 | 4900411 Renewable Life
Renewable Life's picture

"I think I am (we are) turning Japanese, turning Japanese, I really think so!"

Thu, 06/26/2014 - 20:29 | 4900412 Seasmoke
Seasmoke's picture

Boy oh boy. That island is fucked. If I was Hawaii, I would be on high alert for kamikazes. 

Thu, 06/26/2014 - 20:31 | 4900421 Stoploss
Stoploss's picture

Oh look, gold is bid.

Thu, 06/26/2014 - 20:37 | 4900451 knukles
knukles's picture

I wanna pony.

Thu, 06/26/2014 - 20:35 | 4900437 logicalman
logicalman's picture

I guess that if you could completely switch off any logic in your brain, all this would make sense.

I can't.

Thu, 06/26/2014 - 20:39 | 4900456 knukles
knukles's picture

Pssst.  This bud of mine, Paul Krugman can explain it to ya'..

All's good that ends on somebody else's tab

Thu, 06/26/2014 - 20:40 | 4900452 buzzsaw99
buzzsaw99's picture

actually abe's worst nightmare is that if kuroda hiked rates a mere half a percent it would crash world markets overnight and he would take the blame and have to run himself through with a rusty dagger. there is nothing that can be done but wait for the inevitable.

Thu, 06/26/2014 - 20:41 | 4900464 techstrategy
techstrategy's picture

Just restart the nukes.  Unless and until Japan does that, it will spiral out of control.

Thu, 06/26/2014 - 20:53 | 4900506 CrashisOptimistic
CrashisOptimistic's picture

That's a thought techdood, but you'll have to think again.

They burn 5 million barrels a day.  LESS now than before the nukes were shut down (because GDP is weaker).

It's the 5 million/day import at Brent prices that kill them.  Nukes won't push trucks around.

Thu, 06/26/2014 - 20:41 | 4900468 Evil Bugeyes
Evil Bugeyes's picture

WTF? You mean tax increases and massive money printing are NOT good for the economy? Who would have guessed?

Thu, 06/26/2014 - 21:07 | 4900555 pakled
pakled's picture

Sounds like Japanese consumers are longing to continue that multi-decade deflation thing we're always heairng about.

Thu, 06/26/2014 - 21:23 | 4900609 Wait What
Wait What's picture

"yay! we finally beat the deflation monster!" said no one ever.

Thu, 06/26/2014 - 21:45 | 4900705 moneybots
moneybots's picture

"Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes"

 

Also Yellen's worst nightmare.  Note Bed Bath & Beyond's stock price today.

Thu, 06/26/2014 - 21:46 | 4900713 moneybots
moneybots's picture

"Japanese CPI spiked to 3.7% - its highest in 24 years!"

 

Yellen will tell them it is just noise.

Fri, 06/27/2014 - 00:56 | 4901179 AdvancingTime
AdvancingTime's picture

 Japan continues to slide towards an economic abyss with each passing day. The writing is on the wall. Japan is facing a wall of debt that can only be addressed by printing more money and debasing their currency. This means paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world.

 The moment the Japaneses stock market fails to rise enough to offset inflation this will turn into a tsunami of  money fleeing Japan and constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.

 http://brucewilds.blogspot.com/2014/05/japan-sliding-towards-abyss.html

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