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Goldman Warns Of 6.5% Japanese GDP Collapse, Worst Since Lehman

Tyler Durden's picture


Back in early 2013 we warned in article after article, that as a result of Abenomics, Japan is facing an economic disaster of epic proportions.

We recapitulated this topic most recently in June, when our forecasts were proven correct, and we summarized the legacy of Abenomics as follows: Japan's Greatest "Misery" In 33 Years. Of course, starting in 2012, throughout 2013 and into 2014, the mainstream media, like a dutiful little cheerleader has been encouraging the devastation with the argumentum ad populum (and ad baculum, and ad ignorantiam) "what other option does Japan have."

Well, one option was simply not to engage in economic suicide. But then again it was never about the economy: it was all about the BOJ's monetary stimulus that would allow the US stock market several more months of fungible bliss as Japanese reserves found their way into the US stock market at a time when the epic illiquidity in the US Treasury bond market (as we grew tired of explaining in 2013) forced the Fed to begin tapering in December (and conclude in October, or a few months before it is forced to launch yet another QE episode).

This likely explains why just like the media, Goldman, which would do anything to revel in yet another year of soaring bonuses, was a fervent supported of Abenomics, knowing well what the impact of $75 billion in Japanese liquidity would have on the S&P500, and thus Goldman's bonus pool, all the while explaining away the ongoing catastrophe of the economy with the magical "J-Curve": you see, Japan's miraculous export-boom driven recovery was always just around the corner... after all the J-curve is never wrong.

Except this time.

And now that Japan has served its purpose, with the Nikkei225 well below its January 1 level and unlikely to repeat last year's performance (in fact it will be lucky not to plunge by 10-20% by year end as the momentum chasers have long gone, just as the cartoonish government dumps the people's pensions into 30x P/E stocks and destroys what little peace of mind Japan's future retirees may have), Goldman has finally turned the corner and is now saying what we warned would happen in Japan well over a year ago.

From Goldman's Naohiko Baba:

Japan Focus of the Week: June wages disappoint; watch for BOJ’s economic assessment 


Slowdown in June wages, special wages disappoint


June total cash wages rose 0.4% yoy, decelerating slightly from May (+0.6%). Basic wages turned to a small growth, but overtime wages decelerated.  Special wage, reflecting summer bonuses disappointed with only a small +0.3% increase.


Real disposable income drops sharply again in June / large negative GDP growth unavoidable for Q2


Based on the Household Survey, Q1 real spending rose 4.6% qoq on rush demand before the tax hike, but the Q2 pullback was higher at -9.4% qoq. One explanation was decline in real disposable income, which declined -8.0% yoy in June and -6% yoy on average for Q2. The difficult income environment is reflecting in consumer behavior.


June production declines far steeper than expected


Production decreased 3.3% mom in June (May: +0.7%), a far steeper decline than the market consensus (-1.2%) and the production outlook (-0.7%). Producer shipments were also down 1.9% mom in June, and this resulted in a sharp rise in inventories (of +1.9%).

Just as Abenomics is preparing to hit its 2-year anniversary, Japan's economy is on the verge of recession. And here is Goldman's punchline, one whose arrival we warned was only a matter of time.

The greater-than-expected weakness in the consumption snapback signals significant downside risk to our forecast of 4.6% decline for Q2 real GDP (sequential annualized). While we expect lower imports, higher inventories, and other factors to support GDP to some extent, we see negative real GDP growth of around -6.5% as likely, based on the data currently available.

Considering in Q1, Japan's GDP grew by a front-loaded 6.7%, the nearly 13% plunge to a -6.5% annualized contraction would be the biggest sequential GDP drop in Japan's history. As we showed two weeks ago:


In short: Japan's Keynesian lunacy is about to result in the worst economic collapse since the Lehman bankruptcy. Congratulations tenured ivory tower economists: your "theories" have just crushed another country.

As for Abe, he still has time to develop another mysterious case of diarrhea and to take his second and final leave from politics, leaving some other unlucky soul to pick up the pieces from his disastrous policies.


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Sat, 08/02/2014 - 21:38 | 5039210 ekm1
ekm1's picture

I am quite surprised that Goldman is converging with my forecast, pleasantly surprised.


Again my estimations of GDP (ALL NEGATIVE):


USA, -4%


EU, -6%


JAPAN, -5%

CHINA, -8%


WORLD, -5%


Sat, 08/02/2014 - 21:47 | 5039217 strannick
strannick's picture

Could always exchange some of that feverishly minted yen, for freshly mined gold.

Since mining takes a lot longer than minting, seems pretty obvious choice, but as former Fed Chair Arthur Burns told us, "the last duty of a Central Banker is to tell the truth". J.C. Junker seconded this central bank truism (falseism?) when he said, "when it gets serious you lie".


Sat, 08/02/2014 - 21:48 | 5039236 ekm1
ekm1's picture

no objection to anything said

Sat, 08/02/2014 - 22:05 | 5039272 ZerOhead
ZerOhead's picture

Did Goldman just throw Japan under the bus?

Watched it climb up that chair...  stick a noose around it's neck... and now it is going to kick that chair away and almost certainly cash in big time. They probably have a 100 man team figuring out how to ride that forthcoming wave of falling dominoes for the love of fun and profit...

Sat, 08/02/2014 - 22:05 | 5039277 ekm1
ekm1's picture

GS is untouchable.

Now think. If Japan is negative, then all world is negative. And it's all due to world trade collapse and all due to USA Quantitative Easing


Bullets coming soon if margin on the system is not called by Yellen

Sat, 08/02/2014 - 22:13 | 5039296 ZerOhead
ZerOhead's picture

She is going to have to net out that quadrillion dollar derivatives market fiasco before it explodes in her face and we have Fall 2008X10 all over again...

Sat, 08/02/2014 - 22:15 | 5039305 ekm1
ekm1's picture

The government will sacrifice many other sacrificial lambs on GS's altar.

Sat, 08/02/2014 - 22:42 | 5039388 robertocarlos
robertocarlos's picture

Well called ekm. I knew all the banks were insolvent in 08 and still are insolvent but I didn't think the deflationary depression was getting started so soon. Anyways I backed Maki on here years ago with the deflation call. What do I win?

Sat, 08/02/2014 - 22:47 | 5039398 ekm1
ekm1's picture

canadian maple syrup

Sat, 08/02/2014 - 22:56 | 5039418 robertocarlos
robertocarlos's picture


Sat, 08/02/2014 - 23:09 | 5039461 kliguy38
kliguy38's picture

a butterfly across the world........just took a GIANT SHIT

Sun, 08/03/2014 - 01:14 | 5039637 Tall Tom
Tall Tom's picture

It has not yet crystalized. They are between a rock and a hard placee.


If the US decides to save the Dollar then it cannot even pay the Service on the Debt, much more the Debt.. Deflation saves the Dollar but destroys the Government's Credit, thus credibility. That is not Politically palatable.


If the USA decides to pay its bills it must inflate. Of course the Currency, the US Dollar, will have to be sacrificed.


It will be Politically expedient for them to inflate, to hyperinflate.


Deflation first precedes a hyperinflation and Deflation then follows a hyperinflation.


How many retirees will be screaming for blood when they lose their pensions and retirement?  They are the voters and the politicians will act to appease them.


They will hyperinflate. That is the politically expedient action to take.


Janet Yellen has not yet to begin to print. (WB7...Cast her as John Paul Jones on the sinking Bonhomme Richard...)

Sun, 08/03/2014 - 02:25 | 5039699 GernB
GernB's picture

Your assuming the Fed has enough control to inflate. Recent history suggests the only thing they have the power to do is create asset bibles.

Sun, 08/03/2014 - 11:42 | 5040302 saveandsound
saveandsound's picture

Watch Japan closely.

Heck, no need to watch closely, just take a glimpse every once in a while. The Yen is the first currency to become worthless. I'm thrilled to see how the BOJ is going to stop the process once it started.

Sun, 08/03/2014 - 11:42 | 5039871 oudinot
oudinot's picture

I don't believe the US will hyperinflate.  They will start a major war, write off debts owed to their enemies.



Sun, 08/03/2014 - 12:48 | 5040524 lunaticfringe
lunaticfringe's picture

There is no alternative. Perhaps they will call for war and we will tell them to go fuck themselves like Obama's Syria war.

Sun, 08/03/2014 - 12:46 | 5040515 lunaticfringe
lunaticfringe's picture

Tall Tom you are absolutely correct. The easiest path through this swamp that they have created- which I might add has plenty of historic precedence- is a hyper inflationary episode. That is the only possible outcome. Calling "when" is a game for fools.

Sun, 08/03/2014 - 01:36 | 5039658 401K of Dooom
401K of Dooom's picture

Hmmmm, sounds and smells like Mothra to me.

Sat, 08/02/2014 - 23:11 | 5039464 DoChenRollingBearing
DoChenRollingBearing's picture

Cut your prices for some of your bearings Japan, and we'll take a lot of them off your hands.  Cash-in-advance even...

Sun, 08/03/2014 - 01:11 | 5039633 disabledvet
disabledvet's picture

Careful what you wish for.

Commodity prices have completely collapsed in the USA and the yen has been quite weak for some time. If that bearing production gets "in sourced" the final product ("the widget with bearings") could be of truly stupendous value.

This economic distress is not news in Japan either. What is amazing actually is how well they have persevered through the biggest man made catastrophe (Fukushima) since...and I am quoting the Emperor here..."World War II."

Not an expert at all on the nation or the citizenry...hard to tell how they will respond here. So far there has been a lot of war noise though.

Sat, 08/02/2014 - 23:33 | 5039429 ZerOhead
ZerOhead's picture

Neither deflation nor credit contraction can work over the long term in a Ponzi.

Sat, 08/02/2014 - 23:49 | 5039536 max2205
max2205's picture

It's all Japanese to me....

Japan will be the 51st state

Sun, 08/03/2014 - 11:15 | 5040209 moneybots
moneybots's picture

"Neither deflation nor credit contraction can work over the long term in a Ponzi."


In the long term, all Ponzi's fail.

Sat, 08/02/2014 - 22:07 | 5039282 Yen Cross
Yen Cross's picture

 ZeroOhead , The global bond market is throwing the Squid under the buss.

    The paper changers are getting scared!

Sat, 08/02/2014 - 22:22 | 5039312 ZerOhead
ZerOhead's picture

So your smelling calamari?

Sat, 08/02/2014 - 22:30 | 5039334 Yen Cross
Yen Cross's picture

I'm smellin "puffer fish" calamari.

 The 100.70/50 area is well telegraphed. I'm looking under "parity" before the Kyle Bass destruction plan.

   I like Kyle, and I'll OWN Argentina!

Sat, 08/02/2014 - 22:42 | 5039389 HardlyZero
HardlyZero's picture


Sat, 08/02/2014 - 23:46 | 5039529 remain calm
remain calm's picture

Kyle gets this one right bigtime!!!

Sun, 08/03/2014 - 01:22 | 5039644 disabledvet
disabledvet's picture

Again...I would be very wary. There is almost nothing that cannot be made in if that yen starts to weaken considerably there is a lot of US raw material ready to "rev up the Japanese growth engine."

Also I might add they already have massive production facilities here in the they don't have a problem raising dollars (unlike say friggin Veneuela which in the name of economic lunacy sold off Sunoco just in time for the USA to become the world's largest seller of refined product.)

Interestingly the Chinese are following Japan's lead and paying top dollar for US based assets (pigs in Virginia.) these are top of the line manufacturing and food processing businesses.

Some of these businesses are based in Texas ironically enough.

About the only industry that remains safe in my view remains Boeing. Be interesting to see once General Electric finally is broken up if Boeing buys the aircraft division. Those turbine engines can power a lot more than an airplane.

Sat, 08/09/2014 - 15:32 | 5070533 fonzannoon
fonzannoon's picture

this is a nothing burger as long as that 10yr jgb keeps rallyin. show me their 10yr bustin through 2% on it's way to 3% and i get interested.

Sat, 08/02/2014 - 22:33 | 5039351 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

GS is from the tribe. Zionists get the best service at GS, the rest of us are just muppets.

Sun, 08/03/2014 - 10:54 | 5040159 starman
starman's picture

Should I be worried about my rather large accout at Union Bank what is actually Bank of Mitsubishi?


Sun, 08/03/2014 - 11:18 | 5040215 Greenskeeper_Carl
Greenskeeper_Carl's picture

you should be worried about having a large ammount of money in any insolvent bank in any of the massively indebted western nations. there are bail-in plans in place everywhere, not a question of if, but when

Sun, 08/03/2014 - 11:45 | 5040311 oudinot
oudinot's picture

You should be worried to have large amounts of cash in any bank whatsoever.

That includes equity stock in the broker's name, bonds in the broker's name, paper gold, deposit boxes, mutual funds and ETF's

Sun, 08/03/2014 - 20:27 | 5042095 starman
starman's picture

thanks chaps don't quite know where to put my $$$$$$?! maybe I just go buy a exotic car? Savings on wheels? When the bail ins begin everything will drop in value anyway. 

Sun, 08/03/2014 - 14:31 | 5040905 doctor10
doctor10's picture

Disposable income worldwide is being swallowed up by the derivatives monster-as planned.

Sat, 08/02/2014 - 21:39 | 5039216 MalteseFalcon
MalteseFalcon's picture


Japan GDP to drop to medieval levels soon due to Fukushima.



Sun, 08/03/2014 - 01:36 | 5039662 401K of Dooom
401K of Dooom's picture

The Tokugawa Shogunate due to return by popular demand!

Sat, 08/02/2014 - 21:44 | 5039225 foodstampbarry
foodstampbarry's picture

Stop being rayciss Goldman and get some hopium.

Sat, 08/02/2014 - 21:49 | 5039241 Yen Cross
Yen Cross's picture

 My strategy is to buy usd/jpy just under "parity"  aka " spatial inversion"... 

  Yeahh.. you wonder why I'm sharing?  

Sun, 08/03/2014 - 04:41 | 5039776 Terminus C
Terminus C's picture

Japan to the mother fuckin' moon. Goldman calls collapse... Goin to the moon.


Sat, 08/02/2014 - 21:52 | 5039253 i_call_you_my_base
i_call_you_my_base's picture

Economists will say that the fact that it didn't work is evidence that it wasn't big enough. More stimulus is required.

Sat, 08/02/2014 - 22:33 | 5039345 erg
erg's picture

Memories of Krugman. That has a nice ring to it as in past tense.

What would his epitaph be?

Sat, 08/02/2014 - 22:55 | 5039415 HardlyZero
HardlyZero's picture


The Krugman pontificated during the Bernanke regime many months ago.

During the final fiat era.



Sun, 08/03/2014 - 13:06 | 5040593 I Write Code
I Write Code's picture

"If only they'd listened to me"

Sun, 08/03/2014 - 04:08 | 5039753 nightshiftsucks
nightshiftsucks's picture

Yeah it's a fucking "fecal speed ball " . How you doing  Bro ?

Sat, 08/02/2014 - 21:56 | 5039261 suteibu
suteibu's picture

Goldman is not going deep enough.  The government is already telling the people that they are going to have to raise the consumption tax higher.  Because the IMF.

Sat, 08/02/2014 - 21:57 | 5039265 ekm1
ekm1's picture

Nobody cares about IMF.

The decline is inevitable due to collapse of world trade due to US Quantitative Easing


The decline applies to all the world, not just japan.

Sat, 08/02/2014 - 22:01 | 5039269 suteibu
suteibu's picture

In Japan, all supposed authority matters, especially when the government can use it to sell the public.

Japan must hike sales taxes again to conquer debt: IMF


Japan PM tells Brazil 'Abenomics' working, time to do more business


Sat, 08/02/2014 - 22:04 | 5039275 Yen Cross
Yen Cross's picture

 ekm It's nice to have you back! Those Air -Conditioning Ducts, were getting clogged.

Sat, 08/02/2014 - 22:05 | 5039278 ekm1
ekm1's picture


Sat, 08/02/2014 - 22:32 | 5039287 Yen Cross
Yen Cross's picture

 Silent and respectful my friend.

Sat, 08/02/2014 - 21:59 | 5039268 Atomizer
Atomizer's picture

Fuck the IMF. They are an instrument to the monetary problem. 

Sat, 08/02/2014 - 22:18 | 5039310 suteibu
suteibu's picture

Yes, fuck the IMF.  You hate them, I hate them.  Still, what they say leads to a lot of policies around the world.  Japan is one example, Ukraine is another apparently.  While it's fun to say, "fuck the IMF," it would seem to be unrealistic to ignore it.

Sat, 08/02/2014 - 22:59 | 5039428 HardlyZero
HardlyZero's picture

IMF <--> ECB <--> BIS

we all (now) live under fiat regime.

It got us to here and now.

There will be a tangible economy before the next fiat regime.

Sat, 08/02/2014 - 21:57 | 5039264 Atomizer
Atomizer's picture

It only took Goldman to tell us this now? What will become of JPY/USD carry trade Tuesday? 

10+ years later of deflationary growth was a no brainer. Have to go, Mr Janet Yellen is on the other line. 


Sat, 08/02/2014 - 22:09 | 5039284 jballz
jballz's picture

Negative 6.5 GDP?

That's the most bullish fuckin stat I've seen all year. Shit we got a sweet rally on us GDP at neg 2.9 I can only imagine what a 6+ contraction does. Nikkei to a fuckin million that's what I bet.

Sat, 08/02/2014 - 22:44 | 5039391 mvsjcl
mvsjcl's picture

Even when it's negative they still call it "growth." Loony Tunes.

Sat, 08/02/2014 - 22:08 | 5039288 Seasmoke
Seasmoke's picture

Has Japan finally drawn the short straw ??

Sat, 08/02/2014 - 22:15 | 5039303 nmewn
nmewn's picture

Financial chicanery has never fed a starving child...for long ;-)

Sat, 08/02/2014 - 22:22 | 5039317 suteibu
suteibu's picture

Especially true for Japan where the official rate of child poverty exceeds 16%, one of the higher rates of the 34 OECD countries.  And this after the government revised its methodology for determining the climbing rate.

Sat, 08/02/2014 - 22:40 | 5039379 ekm1
ekm1's picture

well formulated

Sat, 08/02/2014 - 22:39 | 5039370 spanish inquisition
spanish inquisition's picture

That is so weird, they were just very bullish in January.

Sun, 08/03/2014 - 11:00 | 5040179 remain calm
remain calm's picture

Everyone needs to watch this 3 minute video,  It clearly shows how dishonest and self serving GS is and in the end these cocksuckers need to be hung for treason. If I was a big banker I would be worried, the world is a small place and is interconnected. Good luck hiding, the sheeple will be very angry.

Sat, 08/02/2014 - 22:43 | 5039381 perchprism
perchprism's picture


We're seeing now in Japan what is occurring world-wide, because Japan just happens to be a wee bit more transparent than the norm.   There still exists in their culture a sense of pride, responsibility, and shame.  Heh heh heh. 



Sat, 08/02/2014 - 22:48 | 5039399 ekm1
ekm1's picture

fully concur

Sat, 08/02/2014 - 22:52 | 5039410 Carpenter1
Carpenter1's picture

Yes, that or they're the designated sacrifice. 

Sun, 08/03/2014 - 00:46 | 5039598 The Blank Stare
The Blank Stare's picture

No. They're just like the US. Too dumb to vote in real leadership with a vision. I think a Parliamentary government keeps the scumbags in power with little choice for the vision seekers.

Sat, 08/02/2014 - 23:02 | 5039440 Bernanke'sDaddy
Bernanke&#039;sDaddy's picture

Any surviving Japanese WW2 vets should grab some katanas and slice and dice some Squid bastards.

Sat, 08/02/2014 - 23:14 | 5039469 WhyWait
WhyWait's picture

If Japan goes to a social explosion, which way will it go?

Japan and USA together, challenging China and Russia to a war?

Or Japan ordering US troops out and joining BRICS?

Would the US pull its troops out when ordered? Or drift toward war with Japan?  Or start a war with China to change the subject?

Many factors go into this cook pot.  Many actors.  Many clashing stories. Many dreams and deep resolves.

The future is unknown.


Sat, 08/02/2014 - 23:27 | 5039485 suteibu
suteibu's picture

Excellent question.  Businesses would prefer not to lose the Chinese market (including tourism in Japan).  Most of the population probably leans anti-war with anyone.  Most ignore that presence of US troops except in the areas surrounding US bases, especially Okinawa. 

That said, the present government (the nationalistic Abe administration and the decidedly pro-America bureaucracy) will never kick the US out of Japan. 

Sat, 08/02/2014 - 23:39 | 5039516 constantine
constantine's picture

Good, so based on this reassessment, any number better than negative 6.5%, such as negative 6.3% GDP growth, should be seen as an 'upside surprise' and met with substantial Nikkei stock purchases.

Sun, 08/03/2014 - 00:13 | 5039567 Crazed Smoker
Crazed Smoker's picture

Unprecedented times call for unprecedented measures - priiiiiiiiint!  haha.   Whole thing is ridiculous.   Now we all gonna have to see what happens when powers that be refuse to accept that reality has boundaries. 

Sun, 08/03/2014 - 00:26 | 5039579 Da chief
Da chief's picture

Get serious people. Japan is going down hard and there will be absolutely "no Nikkei buying" anytime soonas the highs where put in back in January.

A 25 year downward trendline still not breached, now after this massive money printing experiment goes bust.

I'ts ll down hill for Japan from here.

Sun, 08/03/2014 - 01:01 | 5039619 Karaio
Karaio's picture

My father was a lawyer and served in many Japanese communities in the city of Registro-SP (Brazil). 

Had many friends there, many went to Japan to work in the 70s and 80s, some were rich, others poor again. 

Even children of Japanese born in Brazil, are not considered when Japanese go out there. Some I met or spoke Portuguese law, only Japanese, black tea and banana planted in the region. 

Deep in my soul, I pity the Japanese. 

Will be alone with their radioactivity and culture.

Tue, 08/05/2014 - 04:33 | 5047828 hai
hai's picture

So tell us about brazilian culture where 55 thousand people are killed each year. That is what's really pityful.

Sun, 08/03/2014 - 01:11 | 5039632 2bing
Sun, 08/03/2014 - 03:24 | 5039710 shinobi-7
shinobi-7's picture

Stores and restaurants in Japan have entered the Twilight Zone, more specifically the first episode: "Where is everybody?" Well, Abe, we know: Boasting about Abenomics in South America and secretly learning how to declare bankrupcy in Argentina. Not as stupid as it looks...

This said, Japan won't be the first wheel to fail since a "new" Yen replacing 1,000 old yen can solve everything. One new Yen being worth 1 dollar! Et voila, problem solved. The Japanese will have to work hard again (and they will), forget about foreign holidays and foreign goods, reduce energy consumption which will be easy at 10 times the current cost. Bankrupcy without declaring bankrupcy.

The real problem is the rest of the world which will not be able to afford Japanese goods even at Chinese prices.

Sun, 08/03/2014 - 14:36 | 5040927 constantine
constantine's picture

"they will have to work hard again"

Again?  Have you ever been to Japan?  They may be insolvent but I can guarantee you that it's not because they haven't been putting in the work hours.

Sun, 08/03/2014 - 05:55 | 5039813 Youri Carma
Youri Carma's picture

THE BLACK SWAN I:   Portugal's Largest Bank Bonds Collapse
THE BLACK SWAN II:  Argentina Defaults
THE BLACK SWAN III: 6.5% Japanese GDP Collapse, Worst Since Lehman

Just like Jim Willie said, the time between the events will be shorter and shorter, meaning an higher frequency of events which is a telltale for the coming global collapse.

Sun, 08/03/2014 - 06:33 | 5039829 TeraByte
TeraByte's picture

Surprise, surprise! Methods that constantly failed 1989-2012 did not turn into a success under the new management.

Sun, 08/03/2014 - 08:44 | 5039950 Bossman1967
Bossman1967's picture

Now see if they were honest with our GDP would look like that but I am sure that when they are ready and a false flag is accomplished our GDP looks like like theres.

Sun, 08/03/2014 - 08:46 | 5039952 Ban KKiller
Ban KKiller's picture

Karma is a bitch, no? Monday the market says bullish as this must be the bottom. 

Sarcasm is hard to express in these days of bankster fantasy...

Sun, 08/03/2014 - 10:18 | 5040079 orangegeek
orangegeek's picture

but US GDP is 4% - ever since that rodent Barry has been in the WH, it's been nothing but rotten to the core chaos


tip of the iceberg - this is going to get a lot worse

Sun, 08/03/2014 - 11:25 | 5040231 Smegley Wanxalot
Smegley Wanxalot's picture

Those snowy blizzards in Tokyo this time of year are a real bitch when it comes to GDP.

Sun, 08/03/2014 - 14:17 | 5040851 yogibear
yogibear's picture

The US follows Japan. The flood of illegals is turning the US into a 3rd-word country. Rather than taking in the creame of the crop we are taking thin more liabilities (EBTs, welfare, Medicaid). A relative from eastern Europe warned about the change in US policy and the decline in the US 20 years ago. She held an advanced degree and educated in her country. She said rather than progressing the US these new uneducated people would take the US down. She was right.

Sun, 08/03/2014 - 14:32 | 5040906 Wait What
Wait What's picture

When you tell ppl about impending inconvenient truths they ridicule you.

When those truths finally manifest themselves the sleeper effect takes over and they boldly state they saw it coming all by themselves.

happens to me all the time.

Sun, 08/03/2014 - 15:40 | 5041159 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.

Sun, 08/03/2014 - 20:02 | 5041999 novictim
novictim's picture

"Fuck you, Dolphins!  Fuck you, Whales!"

- Japanese Ambassador to the UN

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