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Japanese Trade Deficit Streak Hits 40 Months, Biggest Miss Since October

Tyler Durden's picture




 

Any day, week, month, year now... Japan's adjusted trade balance missed expectations by the most since October 2013 (back over a JPY1 trillion deficit) as the QQE-ing, j-curve-any-minute-now nation awaits the arrival of the competitive pickup for the 40th month in a row. Exports beat expectations (which we are sure will be the headline crowed about by all) but imports surged by 2.3% (against expectations of a 1.5% drop). It appears you single-handedly devalue yourself to prosperity in an interconnected world after all - whocouldanode? As we said before, "Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery."

 

 

On the terrible missing J-Curve (via Patrick Barron of the Ludwig von Mises Institute of Canada):

Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

 

Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

 

Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

 

The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.

Of course, with USDJPY so close to 103.00, we are sure Japan's open will run stops and take NKY (and S&P futures to new highs overnight) or did the big block sales into the US close finally end the last week's facade?

 

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Tue, 08/19/2014 - 20:14 | 5117597 surf0766
surf0766's picture

We rebuilt japan.. They helped

Tue, 08/19/2014 - 20:38 | 5117701 max2205
max2205's picture

Japan is a shithole...

How do you say Detroit in Japanese?

It's all Japanese to me.

Tue, 08/19/2014 - 20:19 | 5117617 HileTroy
HileTroy's picture

Kyle Bass .... was right.

Tue, 08/19/2014 - 20:22 | 5117631 WTFUD
WTFUD's picture

'Emperor Abe and the Tomb of Yurei' starring Ben Bernanke as the Emperor and Timothy Geithner as the tomb of apparitions.

Tue, 08/19/2014 - 22:51 | 5118245 stewie
stewie's picture

+1 for the imagery

Tue, 08/19/2014 - 20:27 | 5117647 FieldingMellish
FieldingMellish's picture

.

Tue, 08/19/2014 - 20:29 | 5117663 skbull44
skbull44's picture

Yet, Bloomberg headline: Japan's Exports Rise More Than Expected in Tailwind for Abe. With this insight: “I’m optimistic about the outlook on exports as the global economy is firm,” Masahiko Hashimoto, an economist at Daiwa Institute of Research in Tokyo..." (http://www.bloomberg.com/news/2014-08-19/japan-s-exports-rise-more-than-...)

It's a mad, mad world...

 

http://olduvai.ca

Tue, 08/19/2014 - 20:31 | 5117665 kowalli
kowalli's picture

japans defolt crash cabal market system

Who care about japans

what do you think?

Tue, 08/19/2014 - 21:08 | 5117824 GooseShtepping Moron
GooseShtepping Moron's picture

"Who cares about Japan," you ask? Judging from the level of activity on this thread, I'd say practically nobody. That is unfortunate, however, for there is almost nothing more instructive one could do right now than watch Japan, and watch it very closely.

Tue, 08/19/2014 - 21:48 | 5117967 Wild Theories
Wild Theories's picture

I think we are simply at the stage where there's nothing more that can be said about Japan, all there is left is just watch the slow-mo train...

 

so we are watching, in silence

Tue, 08/19/2014 - 20:46 | 5117746 disabledvet
disabledvet's picture

Good thing they built those huge manufacturing plants in the USA I guess. Those things throw off dollars and help keep the ship upright.

I still the the main problem is Fukushima...and these policies seem to be hurting in that regard.

Tue, 08/19/2014 - 21:16 | 5117821 ThirdCoastSurfer
ThirdCoastSurfer's picture

I don't care if it's wrong if exports and imports are expanding. I'd be a lot more worried if one or the other was in decline, especially in a country like Japan that has no natural resources and has to import almost everything. 

Tue, 08/19/2014 - 22:35 | 5118171 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

Wed, 08/20/2014 - 02:36 | 5118745 nflux
nflux's picture

Im wondering if Japan's goverment will start requiring companies with overseas factories to start cutting production at those plants and start making more at home

Wed, 08/20/2014 - 07:01 | 5118963 Irishcyclist
Irishcyclist's picture

Japan. Economic tumbleweed. Utterly screwed with no economic way out of their mess.

Japanese Ministry For Finance is a joke. 

Alex Kerr's book "Of dogs and demons" is a must read for anyone who wants to learn about the about economics and politics in Japan.

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