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Japanese GDP Plunges 6.8% As Consumer Spending Collapses By Most On Record
Compared to the 3.6% drop in GDP when Japan last hiked its consumption tax in 1997, today's Q2 GDP collapse of 6.8% annualized is an utter disaster (even if it is slightly better than the expected -7.0% expectations thanks to a surge in the deflator). Inventory additions added 1.0% growth. Consumer Spending collapsed 5.2% QoQ - the most on record. Of course, in the traditional of Keynesian hockey-sticks, this XX% collapse in Q2 is expected to surge back to a 2.5% growth figure in Q3 and lead Japan to the holy grail once more.. only it didn't quite work out that way last time for Japan. Simply put this is the worst posible outcome for bulls, small beat not enopugh to rejuice QQE. As a gentle reminder of just what happened in 1997 - the last time Japan hiked taxes - we provide the eerily analog chart below...
Japanese GDP growth was almost twice as bad as the last time Jap[an hiked its taxes...
As Consumer Spending collapsed...
Here come the hockey-sticks...
* * *
Let's hope the last 10 months was just coincidentally 90% correlated to 1997!!
And remember - they were quantitatively easing then too!
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"even if it is slightly better than the expected -7.0% expectations"
- perspective
Yep, beating expectations ALL the way down.
Definitely going to be a global collapse. Wasn't Japan always the second largest economy?? How many US Ts??
Bullish.
Now back to the Kareoke Bar!
That's a huge collapse. But a lot this shit comes down to demographics. Too many oldsters. Perhaps they need a Logan's Run solution. Bitchez.
BFTHAT!
Indeed bullish, Nikkei closed up 52 points!
Kyle Bass called it first. It's playing out pretty much as he thought just not as quickly. Then again, the can kicking has gone on longer than most observers ever thought it would.
Japan is world's 3rd largest economy now at 8% of world GDP, behind China's 12%.
This graph shows US debt distribution including Japan & China as of 11/13.
Not really that much of an amazing call from Bass. I have been telling the macroeconomists since May 2013 than Abenomics looked like the last desperate dice roll of a failing government. Nobody listened, hell they even overruled me and the official line was that Abenomics was a "prudent macro policy." The last talk we had was right before the tax hikes went in (and consumer spending was primed to avoid govt. tax grabs).
So, part of me is highly amused by these charts (because it's good to be right), but then I remember all the families and lives that are getting turned upside down on the back of this stupid political scene, and I just feel bad for the Japanese people. Long nailguns when the Japanese bond market collapses and the Japanese investors (majority of debt held internally) get a donkey-punch from reality.
PS see next: The Japanese Crisis- coming to a Eurozone near you. No doubt that this will be the deflationary event of the century, followed by the hyperinflationary event of.. well the century I guess?
BOOYAH!
This, people is exactly where the US is headed. Higher taxes (massive under Obamacare alone) more government spending, unlimited QE'ing, more regulatory interference. Plus, we got a whole buncha brand new human welfare enrollees flooding the country illegally, let alone spending bazillions killing people in far reaching lands who represent no existential threat whatsoever to our well being, whatsoever.
Every single trend is intact.
Equities will get monkey hammered (possibly just over a long dismal grinding time) bond yields are going to drop and the Reign of Empire is Past.
De-dolarization it self will prohibit the largesse of the Federalies, demanding that total expenditures be decreased by some 50%.
That's the math.
Period.
The problems are structural driven my non-monetary affairs which the central banks of the world remain incapable of addressing.
The 4 Horsemen Are In The House!
with elvis, of course
The prophesy of the 4 horsemen sure was, um , prophetic in so far as galloping in on horses. If they were supposed to be arriving in GM cars this could go on a long, long time.
Except for Krugman's. I think he was hoping for moar.
Krugman is an economic sophist to be dismissed and ignored.
coulda said asshole, but that would be the same as his ad homenim attacks, so I won't call him the asshole he deserves to be called
"Sophist" is much more accurate and classier than ,"asshole"
Good call.
Yup. Fucking love all those mutual fund managers talking about the "significant value" seen in Japanese bonds & stocks.
Expect the August numbers to be "seasonally" revised upwards on lower import's, which of course is bullish for Sammie bonds and Tokyo tax revenues.
All they gotta do is start adding in hookers and blow to their calculations. That will fix everything, just ask the Italians.
If only they had Mexico on their southern border. Oh the possibilities.... Refried bean sashimi and a whole new generation of Spanish speaking freeloaders.
worse than that. Lots of those kids speak Mayan or some other dialect and not Spanish. Of course the schools have to provide bilingual education so they are scrambling to find Mayan speakeers before the lawsuits fly.
I knew a waiter in Cozumel that spoke Mayan. Maybe he could get a visa.
How do you say, "Visa? I don't need a fucking Visa!" In Mayan?
You tattoo some shit on your face and say nothing.
Ok
Working in politics and in public offices.
Not contribute to GDP.
So, still have doubt's on my economic forecasts?
Your forecasts are fantastic. It's the market reaction to the forecasts that are concerning.
http://www.marketwatch.com/investing/bond/TMBMKJP-10Y?countrycode=BX
:-)
That is not a market
That is a video game
If I'm so smart, how come I'm not rich?
Taking risks and lots of luck makes you money, not smartness
That is pretty sad. That sounds like blind gambling rather than capitalism.
Las Vegas is actually better as there are some games where you have the advantage, and, if you use your mind, then you can use your mathematical talents to make money.
I suppose that some of those advantage games still exist in the Wall Street Casino. But that used to be the rule rather than the exception.
Though the question wasn't directed at me, I'm familiar with them and I think you're a bit of an optimist.
Have you considered long-dated USTs? Might want to lock in those 3% yields now or you might suffer from regret later.
100 day TD bank gsc. Thats it until triple Lehman
Ah, you're just afraid to reach for a little yield!
Think Argentina CDS will be contained?
You are referring to your GDP forecasts, correct? If so I dont doubt they will be pretty close to dead on. What I do doubt is that all of those countries you predicted will admit to numbers as bad as those, especially the US.
Wow. This article destroys the "beat". Well done.
Buy GOLD !!!!
Bitcoin users are not affected. :)
Neither is my gold.
Well of course not, because you lost your gold, remember,in a horrible boating accident.
I had a summer gold and i was miserable
Abe go > Blub...Blub...Blub. The Japanese pension funds have been reary patient with Abe.
I'm curious to see what the next U.S. long term auctions yield. This is a slow motion train wreck.
Mr Miyagi for Prime Minister!
Tax on, tax off...
Goose, next week the BoJ and BoE start their policy meetings for 2015.
I'm still trading the range,(101-102.50) I think Kyle Bass is spot on, but missed it by a few quarters. I'have my reversals set if anything happens. ;-)
There's still some more news later/
JPY Core Machinery Orders (YoY) 3.3% -14.3%
JPY Core Machinery Orders (MoM) 15.3% -19.5% Tomorrow.
Thanks, very interesting. I'll never cease to be fascinated by Japan, even in decline.
I always give this guy a plug even though he is no longer active, simply because (barring an old deceased friend of mine) I've never seen a blogger write with more integrity, depth, and beauty.
http://spikejapan.wordpress.com/
Yeah but the Pacific Ocean glows in the dark now. It's not all bad news.
you're not kidding. water off the coast of california has never been (in my lifetime) as turquoise as it has been this year. pacific wildlife dying off has done wonders for the clarity of water along the west coast.
It'll all save on electric costs in the end, so ecologically sound irradiation policies
One lump or two, my dear?
90% correlation to '97; ooops!
This demonstrates that printing money, not paying decent rates to savers, and off-shoring production and career employment benefits two groups - bankers and politicians.
The citizens get screwed over a barrel; but that is the purpose of Central Banks to begin with so...
Expect this to be revised down over the next few months and bottom out around (10%).
only way to go from there is up! right?
I'm a great believer in starting at the bottom, and working my way down.
I just had a brilliant idea to keep this whole facade going. Now rather than being overly optimistic all economic forecasters have to do is switch to becoming ridiculously over pessimistic. Next quarter the estimate for Japans GDP contraction just has to be -20% and when it comes in at -18%, perfect, Japan beat expectations, Nikkei soars. Ring, ring, ring, ring . . . . . . . excuse me a sec . . . . . . just have to take this call, "Hello" . . . . . . "Janet who" . . . . . . "oh, Yellen, head of the Fed reserve" . . . . . . . . . . "you've read about my econimic models on ZH and there's an opening on the Fed board which you'd like to nominate me for" . . . . . . . "sorry Janet, but I'm really not interested in working with Jew, you, you I meant you".
be nice, mr. asteriod. they don't intend to hurt you (ms. yellen and bernake, and greenspan (just saying but,,,,,,) their group of friends). they just want get ahead. besides - if you look at the statistics, corporate earnings, p/e bets, employment, gdp bets, 70% of the analysts get it all wrong, everybody gets to 'beat'. i know if i came home from grade school with a 70% report card, i would get a beating also....
I appreciate the courtesy and civility Mr Fun but you can call me Bring
better than expected! buy! buy! buy!
Beat the lowered numbers! Keep lowering the numbers and beating, best game around, never lose.
So I'll expect to see more "Date Japanese Women!" ads in the sidebar here in the future?
About 6 months ago I estimated -5% for Japan.
Also, my all negative estimations for 2014 are as follows:
USA -4%
Eu -6%
Germany -2%
Canada -2%
China -8%
World -5%
These are best case scenarios for 2014
I think your outlook would improve if you drank more.
see:
http://www.zerohedge.com/news/2014-08-12/forget-piketty-real-problem-us-...
:-)
You had cataclysmic forecasts in 2013 or was it 2012 and they all crapped out.
We all had them, but we learned our lesson and don't attempt to make forecasts any more.
it was may 2013
All of them slowly being proven correct. It's a process
So you do not make any forecasts or pay attention to them?
If the weatherman says that there is a chance for showers do you not listen and take an umbrella?
It is the same with making Economic Forecasts. The forecast may turn out to be wrong...or delayed. But if you are prepared then you are able to weather the storm.
It reminds me of a story.
Back in December, 1985, while living in Phoenix, Arizona, the weather forecast declared that it would be SNOWING...IN PHOENIX.
I read that forecast and laughed my ass off. I trained my telescope on Halley's Comet, that evening, as the skies were crystal clear. The next day happened and it was Clear and Sunny. (I remember this event well.)
Then the same forecast was repeated. Once again I peered at Halley's Comet on that night...under crystal clear skies.
The next morning I awoke to 2 Inches of SNOW on the ground and overcast skies. Needless to say I was shocked. It generally does not snow in Phoenix, Arizona. Traffic was a little bit snarled as I slip slided through the slush on the streets on my way to work.
I had NOT ONCE...BEFORE OR SINCE...ever had seen Snow on the Ground in Phoenix, Arizona. But that morning it was there.
So sometimes the forecasts have to have TIME to pan out...especially if it is a once in a lifetime event....like the oncoming Financial Collapse.
Even if you're right, you'd be wrong...
Keep lowering the bar and beating. Sure seems bullish. Wall Street says keep buying stocks. A sliding GDP is bullish. Bullish all the way down.
Obama has already been briefed on the situation. When Obama was getting a suntan on the beach at his vacation paradise on Martha's Vineyard he petted a seal. The Navy has been training seals as Obama's intelligence homies that deliver all of his intelligence briefings.
CNBC can flip the chart and it looks like a gap up..... Ha, their going to do it?
Always a bull market somewhere.
china gdp grows 10.1% every other day so ha ha to japanese losers
Wyle E is going to look down any day now.
-
I try to be an optimist, despite the evidence against me.
Just what the futures needed to stay GREEN *shakes head*
Same lunacy since 1989 and surprisingly the latest reprise did not change the course of economy.
The scarrier number - Japanese household consumption down 19.2% from last quarter. That's from last quarter!!!
... and they're expecting a full turnaround in Q3, as in, going into positive territory. Are they serious?!
And we should worry, because? FREE MONEY! FREE! Yellen rules!
I slay my self again https://www.youtube.com/watch?v=rSjK2Oqrgic
What were they lieing about to have 6.8% to lose in the first place lol.
To many of us this was not unexpected. 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
The almighty printing press, tough to figure out when the game stops.
First Japan,then a while later the US.
Guys, what do you think will eventually seal the deal for Japan? Will its people always continue to buy its crap bonds? When do you see it really falling apart?
The only things selling well in Japan right now are: Adult diapers and iodine.
GDP numbers? Bunch of shitake.
How about the collapse in labor-force participation?
Collapse in worker wages?
Collapse in median house-hold income?
Or, if you prefer a glass-half-full approach...
SOARING poverty levels among all demographics?
RECORD NUMBERS of people dependent upon welfare and government assistance?
HUGE INCREASE in public school children living on the streets in America, first time ever!!
And of course - taxes, debt, and regulation through the roof.
Right, because all that matters consists of the aggregate supply/demand dynamics of corporations, the most holy people on the planet.
edit: didn't mean to imply that ZH doesn't cover these things. I'm just pissed that it takes these numbers for people to acknowledge that the collapse has already begun.
Abe needs a diaper change.
Thought they were all out of straws five years ago....
It just keeps going, and fucking going...just ask K. Bass.
They are winning. Long live FRauD!
Soooo sick of this shit. Dare to short!
25 years ago..."Japan is screwed"
.....apparently, they've (all of them and us) got it covered. Just enjoy your lives :)
the first domino to fall.
Nikkei up *25 on the news.
moar socialist utopia
zero interest rates removes the consumtive power of the saving consumer.
Japan is a few years ahead of the US...and we follow in their foot steps.
Tax it up, take away a fair return on money, and soon everyone (middle class) is bust.
Quite a model..huh?
Just proves with the NIK that "markets" love and adore a Sh!tty economy.