Game Over Japan: Real Wages Crash Most In 21st Century, Savings Rate Turns Negative

Tyler Durden's picture

When about a month ago it was revealed that Japan's shadow economic advisor is none other than Paul Krugman, we said it was only a matter of time before the Japanese economy implodes. Terminally. We didn't have long to wait and last night the barrage of Japanese economic data pretty much assured Japan's transition into failed Keynesian state status.

In fact, after last night's abysmal Japanese eco data, we doubt even the most lobotomized Keynesian voodoo priests have anything favorable left to say about Abenomics: not only did core inflation miss expectations and is now clearly in slowdown mode despite Japan openly monetizing all gross Treasury issuance, not only did industrial production decline 0.6% missing expectations of an increase and record its first decline in 3 months with durable goods shipments crashing, not only did consumer spending plunge for the 8th straight month dropping 2.5% in November (with real spending on housing in 20% freefall), but - the punchline - both nominal and real wages imploded, when total cash wages and overtime pay declined for the first time in 9 months and 20 months, respectively.

And the reason why any poll that shows a recently "re-elected" Abe has even a 1% approval rating has clearly been Diebolded beyond recognition, is that real wages cratered 4.3% compared to a year ago. This was the largest decline since the 4.8% recorded in December 1998. In other words, Abenomics has now resulted in the worst economy, if only for consumers, in the 21st century.

But that's not all: as Bloomberg reported, for the first time ever since records were collected in 1955, Japan's savings rate turned negative. To wit:

Japanese drew down savings for the first time on record while wages adjusted for inflation dropped the most in almost five years, highlighting challenges for Prime Minister Shinzo Abe as he tries to revive the world’s third-largest economy.


The savings rate in the year through March was minus 1.3 percent, the first negative reading in data back to 1955, the Cabinet Office said.


A higher sales tax combined with the central bank’s record easing are driving up living costs, squeezing household budgets and damping consumption. Abe’s task is to convince companies to agree to higher wages in next spring’s labor talks to sustain a recovery. 


“Households are suffering from a decline in real income,” said Hiromichi Shirakawa, an economist at Credit Suisse Group AG who used to work at the Bank of Japan.

Actually, if you ask Krugman, they are suffering from not enough inflation, and a lack of willingness to spend their savings. Oh wait... Never mind.

The savings rate, which the Cabinet Office calculates by dividing savings by the sum of disposable income and pension payments, peaked at 23.1 percent in fiscal 1975.


As Japan’s population ages, its growing ranks of elderly are tapping their savings, according to the Cabinet Office. Consumers also ran down savings to make purchases ahead of a sales tax-increase in April, the first since 1997.


The report offers perspective on a debate of decades ago over Japan’s trade surplus with the U.S., which caused periodic bouts of tension between the military allies. While respective savings rates have moved in opposite directions, the U.S. still had a $56 billion deficit with Japan in the first 10 months of 2014, U.S. government data show.

As for that imminent surge in wages: Today’s data showed there were 1.12 jobs available for every person seeking a position, the most since 1992. Said otherwise, Japan now has the most labor slack in over two decades!

The preliminary wage data released today lack a large enough sample and include some biases, so the final figures may be revised upward, according to Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management Co. “Looking ahead, wages will probably rise but not accelerate,” said Muto.

Actually, it is far more likely that they will keep falling as Japanese corporations build up cash for what is now shaping up as the inevitable collapse of Abenomics which will send the economy, and the Nikkei, into a tailspin, one from which, however, there will be no recovery this time.

Or, as Keynesians around the world would like to call it, "a job well done."

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BaBaBouy's picture

AND Free Hair Coloring Provided For All MALE Politician

PartysOver's picture

No worries.  The "K-Hen" has got your back this morning.

Jeff the Terrible's picture
Jeff the Terrible (not verified) PartysOver Dec 26, 2014 10:14 AM

Abe wasn't doubling down he went all in

Manthong's picture

We Seppuku’d some folks.

Gaius Frakkin' Baltar's picture

Between the ongoing nuclear fallout and the population decline, it's as if 2 to 3 Hiroshima events happen every year in Japan. Bullish right? I'm sure it brings tears of joy to Krugman's eyes.

Realname's picture

That jouchebag needs to be shedding tears after being repeatedly pummeled in the face.

cnmcdee's picture

Debt for the people is like engine coolant for your pet.  It tastes sweet but the more of it we have the sicker we get.

What Japan *should* of done is made interest rates a minimum 10% it would of rewarded saving instead of borrowing.  It would of kicked the teeth out of the Bullshit housing market bubble. 

SoberOne's picture

Less is more, right?  Moar!

Yes We Can. But Lets Not.'s picture

"Abe’s task is to convince companies to agree to higher wages in next spring’s labor talks to sustain a recovery."

Since when is it gubmint's role to be involved in setting wage rates?

Anusocracy's picture

I hope the Japanese government has the wherewithal to subsidize the inflatable doll factories.

Son of Loki's picture

I hope more Japanese migrate to the USA to escape Fuki radiation and Japan's economic mess; the ones I have met have been hard working, friendly, non-violent, and take care of their house.


I'm getting tired of the two 'love dolls' I have from Tokyo; they're a little too quiet and passive in the sac.

El Vaquero's picture

Since the sheeple started crying "It's not fair that they make all of this money and I get shit!  Do something!"  Or since oligarchs realized that there is a minimum amount of shit that the middle classes need to be "happy" and threw them a tolken gesture that actually didn't do what the sheep thought it would do.  Or since you had governments that felt that they just knew better than everybody else what wages should be and wanted control over everything.  

BigJim's picture

I'm going for: d) all of the above.

old naughty's picture

PTB (porn, thermo-nuclear, baseballs) have kept the land of the rising sun enter-tainted for decades;

the 3.11 event horizon was crossed...and now they dive head first into the abyss, dragging us with them by the tail, even though our heads face the opposite.

The plans contain no fixes...

Flow kept...changes perpectuated, just as I-Ching predicted.

we, the slaughtered.

Incubus's picture



I like it.  I will put you on my counter-propaganda committee.

old naughty's picture

will that be life-long membership?   Uh, scratch that, life isn't long...permanent then?

daveO's picture

10%? And have indirectly freed the debt slaves? Not likely, on the Fiat Plantation.

J J Pettigrew's picture

Over the cliff they go.....followed by Janet Yellen leading us into the abyss

None are so blind and those who will not see...get Janet Yellen an eye transplant

Future Jim's picture

"Between the ongoing nuclear fallout and the population decline, it's as if 2 to 3 Hiroshima events happen every year in Japan. Bullish right? I'm sure it brings tears of joy to Krugman's eyes."

That is a lot of broken windows.

A self proclaimed American progressive, once he ran out of logical fallacies, told me "the broken window fallacy does not exist". It is "not a fallacy". He also said "the free-market is not a real thing", not because we don't have one, but because it is too vague and is theorectically impossible. Oh, and the problem is that the government is not spending enough becasue the Republicans are holding back Obama, who "knows what to do".


sun tzu's picture

Denial is the favorite tactic of the useful idiots tools of the statists.


Communism hasn't failed because it's never been tried. LOL

Future Jim's picture

Yes, I hear that one a lot, but fortunately, I know that America already tried communism.

mkkby's picture

Young japs have given up on themselves.  Not working, not getting married or even having an intest in sex, not starting businesses.  Just tuning out the world with video games and other wastes of time.  Sort of sounds like the US millenials, doesn't it?

Something's gone wrong with the Y chromosome.  We have xx butch females, and xy vagina boys.  Many causes - mainly media and cultural bias;  plastics in food/enviroment.  If this goes on much longer, mankind will need to find some frozen sperm from 100 years ago, and breed some masculine males.

Tall Tom's picture

We are well beyond the Point of No Return. The Rubicon has been crossed.




Do not count on any miracle to save it. God does not act against His Word and will not act in order to save the corrupt and dishonest system


And that is TRUTH worth CELEBRATING..

Incubus's picture

From a gen Y'er I'll give you a take on what I'm experiencing here.


Women in my age range aren't worth being in relationships with.  They're tied to their phones and brought up in a culture of self-affirmation that the moment you try discussing anything with them that isn't remotely based on social/pop media or gossip, they turn doe-eyed and shy away.  They're all about fun.  Nothing I'd ever want to have being the mother of my kids. 


fuck and a toss.  that's all they've become, and I find it ironic that they're becoming utterly disposable like everything else in this culture. 

cnmcdee's picture

The best part? As I have heard from Jim Jones who interviewed a *very* old GE Engineer they closed the nuclear loop back in the 1950's.  It would of eliminated spent fuel rods and allowed for total energy extraction.  Truman as I understand it blocked the development because it would of completely obliterated the oil, coal, and gas industries and allowed virtually unlimited free power.  We could of heated homes with electric and made all power free.  We could of heated winter greenhouses with electric heat.

And even if *none* of that was verifiable or true - crowdsourcing Thorium Reactor presentations will prove that nuclear energy is so obsolete.  Power should be free.

Future Jim's picture

It sounds promising, but free energy? I know they have fre energy on Star Trek ... but ...

El Vaquero's picture

The biggest draw of thorium in my mind is the lack of a need for enrichment.  Yes, you need some fissile material to get the things fired up, but we have a shitload of reactor waste that could be reprocessed for this purpose.  We built a working thorium reactor back in the '60s, so to all of the naysayers, yes, they can work, and there is hard evidence of this.  OTOH, the Russians have developed (are developing?) a new uranium reactor that supposedly has many of the advantages of the Th232 MSRs.  I haven't dug too deeply on this one yet, so I'll leave it to you if you want to know more.  


It is sad really.  We could develop fuel cycles that are safe and produce much less waste, but we won't, at least not before a few billion people die off because we went with the status quo instead of looking to the future.  Sunk costs on current reactor technology plus people bitching about nuclear proliferation when we already can destroy the world are going to fuck us.   

Anusocracy's picture

"Power should be free."

The power our rulers wield over us is free for them because the subjects are the ones that pay for it.

Kill or be Killed's picture

It's always policy. Never production.

daveO's picture

It was under the Truman adm. when the patent office started refusing those kind of applications. The Rockefeller's controlled the gov. and we didn't have to import oil. When the Petro Dollar dies, we will have another chance. For all of you naysayers, I'll give you a simple example. A DC electric motor(which tends to be off grid) uses a permanent magnet for half it's fields, while an AC motor uses 100% grid power for both fields.   

SAT 800's picture

You're an engineering illiterate; you have no idea what you're babbling about.

Kill or be Killed's picture

Is that perpetual motion machine still around?

sun tzu's picture

Were they going to put nuclear reactors on airplanes, boats, and cars? There's a difference between electricity and combusitible engines. I doubt there were batteries back then that could have powered ships, plannes, and cars. That's still the main problem today. There's no such thing as free power. Someone has to pay for the reactors and power lines to be built and maintained. 

El Vaquero's picture

We would have to develop the technology for reverse combustion.  It could be done.  Maybe or maybe not for 7.2 billion people, but it could be done.  Ferrous cobalt ceramics have a tendency to snatch O atoms from CO2 when hot enough, and the resulting CO can be used by a better chemist than I in conjunction with hydrogen and electricity to manufacture liquid fuels.  While the technology itself is not here, the basis for it is.  We aren't going to develop it (if we ever do) until after a very lethal crisis forces us to, however.  Our fossil fuel economy will have to totally crash before we start working towards that kind of solution, and by then, it may be too late.  We'll see.

Kill or be Killed's picture

Or just add water and burn the hydrogen. Totally doable.

Oh regional Indian's picture

Japan's game was over a long time ago (like 1945 actually). 

It's been the Fed's carry trade, inflation exporting conduit for the better part of 60 years now.

Plus, it had the curse of all that free nukular energy, now paying it's radioactive dividends...perhaps soon to come to America, if the lied condition of San Onofre, Three  Mile Island , Hanford and all the nukes sitting on Seismic zones  are any indication...

JuliaS's picture

Discovery of oil meant redistribution of power. Germany and Japan realized early on how important access to oil was going to be. Both had highly industrialized nations that dominated through coal era. None, however, had made significant oil discoveries on their territories. Unlike Britain, they had no colonies to take advantage of. That's why Germany went to Africa of all places during WW2. What was the significance of Southern territories? Oil! Why did Japan march West across the continent all the way to India? Oil!

Both countries realized that they'd be doomed to serve oil producers for as long as oil would last if they didn't grab a piece of the pie. Attempts to secure trade routes started as early as 1904, but were denied though economic warfare. An actual all out war followed, but since it resolved none of the underlying issues and only put Germany in the worse position it started in, WW2 became inevitable. Hyperinflationary crash of 1922, rise of union busting fascists in Italy and then in Germany. American investment rush into German military following its own stock market 1929 implosion... etc.

It's all about oil. Has been since the discovery of first mass reserves near Mesopotamia and the conversion of British Royal Navy from coal to oil powered transports and warships.

The wheels were set in motion over 100 years ago. And our own Fed, that incidentally, came into existence just as the WW1 was about to unravel, only helped aggavate matters. Everything's intertwined. The geopolitical objectives have remained unchained though all these years, yet the media portrays every conflict as a stand-alone matter, seemingly unrelated to all the others.

lasvegaspersona's picture


you are a filthy troll and all your food are impure. You are eating the animal even in what you think is purest broccoli. You will not go please to vegan hell.

cnmcdee's picture

Winner winner chicken dinner - what you wrote made sense to R2D2..

Lewshine's picture

Can't wait to hear this story on CNBC...Oh wait...

GoldSilverBitcoinBug's picture

Woman will never have problems: they have valuable asset (pussy).

Comex should financialise it: free QE for everyone, just buy #PSY asset. Wealth effect: economy recovered.

BidnessMan's picture

An underutilized asset to be sure.  The VUR (Vagina Utilization Ratio) at an average of 15 minutes twice a week is .3%.  We definitely need a productivity increase on a currently 99.7% wasted asset.  C'mon ladies - help us out.  

Think about the positive impact on World Peace if we could just get the VUR up to 1%.  

( Yes I know that some ladies are out there saying - 15 minutes I wish!  But let's not get distracted from the main point )

noben's picture

Keeping this Friday Humor going... It's an Interest-bearing account, but one that also charges User Fees a number of different ways:

Some are hidden, some are regular, others discretionary or conditional fees.  So to speak.  But let's not digresss too much.

ZH Snob's picture

time to visit Abe and company with pitchforks and torches.

NihilistZero's picture

Won't happen. What will happen is Japan's legendary homogeneous population is about to he destroyed by necessity. To fight the countries demographic time bomb and deflation of asset prices they are going to have to embrace some NWO style immigration and foreign holdings of Japanese RE. Will the historical racism and culture exclusivity of the Japanese people over ride their tradition of obedience and servitude? I doubt it. Once Abe says letti gaijin buy RE and or citizenship is good for Japan, the people will fall in line.

Antifaschistische's picture

I agree....if all they cared about was GDP numbers then destroying their civilization and culture would be worth it...but the American/European model of diluting all things historical and cultural will fail.   Unfortunately, when enough American's/Europeans/English wake up and realize what a gigantic mistake they've made it will be too late.

The Japanese will be fine as long as they DONT sell out.   Sure, they won't be as wealthy as we all thought.  So what.  They were stockpiling fiat forms of wealth for decades and now they're realizing that doesn't work out too well in the end.   We will all one day realize the same thing....and when we do, we'll fall back to family, tribe, traditions and culture. 

What the Japanese should really be doing (but for the reason's you cite won't) is strengthening their relationship with China and Korea.   I get it, they feel they are superior to us Americans.  No arguement....I don't see that as racist at all.  I see it as prideful and cultures should have pride, but at least they should have good relationships with their Asian cousins.   Because they need the Chinese and Koreans to buy Japanese cars (which are the best) and for the Chinese to lose their interest in inferior Detroit byproducts.