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Game Over Japan: Real Wages Crash Most In 21st Century, Savings Rate Turns Negative
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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Yep, likewise when compared to Italy, Spain, France, the U.S., etc.
LOL!
Russia has also defaulted on their debt as recently as 1998. Please note, when is the last time Japan defaulted?
I'm glad you're not working as a loan officer. You appear to ask the wrong questions.
Did Russia default because they could not pay their debts or because they were not allowed to monetize their debts? Who decides? Seems like a lot of monetization going on and no one is saying shit about it.
I think it is more politics than economics. The economics are simply a weapon of choice.
Who needs wages when you can simply print for nothing (ZIRP) and provide all the corporate and public welfare you need to "grow"...
/s
Greetings from Deer Valley, I hope all of my ZH bretheren are doing well.
Merry Christmas (yep, I said it).
Merry Christmas LoP
Merry Christmas LoP.
This good news should send the NIKKIE well past 30,000!
fucking BULLISH
Japan,
Implode already so we can get a preview of what happens to the US.
Can someone with knowledge explain how the Dollar/Yen trade is used to ramp the stock market? I've been hearing Japan has imploded for the past 10 years, but nothing appears to have changed in that country for the worse financially. Looks like business as usual. Would this be a good time for an older man to put in an order for a hot Asian Bride?
Maybe , but more like after so many fill ups you get a free honda
Fukushima Hot Baby! Love you long time!
The Keynesians will claim that stimulus and monetiztion could still work if only more countries would participate in the global infinity debt farce. Nobady can fix their economy in a vacuum -- all must go full retard together.
Time for a new Subaru.
The theory of collectivized economies always has been that they can only survive if everyone is forced to participate. A mandatory Ponzi scheme. Free markets don't demand any specific participation other than if you wish to participate, you can. If you demand to an entitlement or more "equitable" distribution, you starve. Freedom is the ability to destroy yourself through choice or stupidity. Collectivism says your life is not your own, that your choices reflect on others, and as such, the collective owns you and only the collective can make those decisions. If you follow this logic far enough you realize that there is no part of your life that can be claimed your own, not the breath you take or the fart you let, and ALL societal failures fall back on YOU.
Looks like Kyle Bass's wet dream is about to get real .
You mean that nickles are taken out of circulation? Just kidding.
Many fail to understand that the Japanese QE has allowed Wall Street to suck a trillion dollars out of the Japanese peasantry every fucking year since 1990 via the Carry trade. Now you realize how the modern day slavery functions for the American Empire.
"Japan still suffers from a lack of demand."
-krugs
Mr K should be careful - the demand for the heads of those resposnible could be about to increase rapidly.
Russia can handle a 20% interest rate.
The US would implode with a 20% interest rate.
"Russia can handle a 20% interest rate."
lol. Not for long, they can't.
longer than US could.
There's gonna be hell to pay when JGB's crash.
Y'all still keep your money in a bank?
http://www.washingtontimes.com/news/2014/dec/25/christine-odonnell-tea-party-figure-says-irs-mista/
I also wounder if US /EU want yen to crash to prevent the Japanese from buying up too much foreign assets. The Japanese Govt cannot afford to pay the interest on the old bonds issued, let alone new issuance.
tax 500 bill / spending 750 bill / interest 270 bill and rising. So they need to
switch their assets to stocks or foreign bonds/ stocks so someone else pays ( mainly US/ EU stocks / bonds. So they have an interest in weakening the yen as much as possible to limit the amount of Assets Japanese owns ( which means the old Japanese savings were blown by bad Govt investment .
for many many months now it jas been clear that anyone who is holding Jap bonds is a total moron.
I love that term " Diebolded", hope it catches on.
Among conspirologists, it already has.
We "Diebolded" some folks. HTH.
Four Horsemen - Feature Documentary - Official Version
There have been a lot of comments regarding the Japanese problem becoming the same in America soon.
We have much different demographics. We have a huge influx of immigrants. And can get more anytime.
We have much more natural resources.
And if our policies and culture don't crush it, we have innovators who can create what ever we need.
So it's not so dire when you consider its policy--not production.
What if each immigrant is a net drag on the economy?
What if the EPA continues to choke off the use of the US natural resource base?
Why innovate in the US when far more tax-friendly areas (Singapore) exist?
All those points you make are policy.
Even the net drag of immigration slugs is a policy choice. They are only a drag if we subsidize them.
It's always policy not production.
The problems we face can be fixed with a large unwind of bad policy.
Bad policy (well, bad for most, great for a few in power) is what landed the world in its current predictament. There is no unwind without regime change. Not just in Japan or the US, or the EU, but all of them. The reasonable betting man would not think all that regime change/policy unwind was probable. Of course, regime change comes with a lot of bloodshed.
Their population is aging too fast. This is because they refuse to modernize on immigration.
You can't have a thriving economy when your biggest demographic group is blue-hairs.
Btw, this has nothing to do with "Keynesian economics." NO economic model works when your demography implodes due to long-term racism and xenophobia. China is soon to follow suit, later this century.
Yeah, 10 million Africans is just what the doctor ordered for Japan. Bwahahahah!
...or Europeans, or Chinese, or Maylasians, or Koreans, or Australians...
The Japanese don't let anybody in. They have some of the most restrictive immigration in the world, and it is directly tied to xenophobia. This is why their economy is dying. Old people do not take risks, and do not consume. They are economic poison.
They can always fill in For Yucca mountain.
Your trying to argue a completely valid point and a bunch of nitwits will down vote you anyways. Age curve of general consumption is well known and the biggest issue today globally (including in the US) is how to financially deal with their aging populatons. The elderly (65 and older) went from being the poorest age demographic prior to '65 to the wealthiest today because of the massive revenue transfer programs includign Medicaid who single biggest expense is assisted living facilities/care for the elderly.
Solving the problem of age-based dependency is not achieved by importing low-IQ worthless parasites from backward countries.
What? Sweden is doing just fine.
The eldery got rich off of Medicaid. That is rich.
Bullshit on your argument that the Japan economy is dying because it doesn't embrace 'diversity'. The Japanese economy is dying because they didnt clean up the bad debt mess left over from the 80s, and they are no longer the low-cost manufacturing zone. Their competitive advantage of high reliability, efficient production techniques are now the global standard. In an effort to inflate away their 80s leftover bad debts, their tax and cost-of-living situation has gotten FUBAR, so of course young adults dont want to have kids. The same issue confronts the US now. We've just got more violent minorities that mug and shoot each other over the $200 Jordans or the $600 winter coat. We've also got a booming prison population and a can-never-be-paid-for welfare state. If you asked me which problem I'd want, give me the Japanese situation. They don't have any 5th generation welfare families who feel their country owes them a living. Who cares how fast immigrants breed, if that growth means more taxes for their welfare, more taxes for prisons and related personnel, and more violent crime???
If the Japanese had a lot more kids - Japanese kids - they'd work and save their way out of their current problems like they did before.
Probably the biggest catch 22 for generation Y is to have money to have kids to have money.
US Prison population on decline sir. As was stated recently on ZH I believe.
http://en.wikipedia.org/wiki/File:US_incarceration_timeline-clean.svg
Some state governments are starting to loosen the purse strings for jail construction after a 20 plus year hiatus. It is still a huge industry. Irvine is building a 512 bed jail expandable to over 5,500 beds. Ohio is under court order to build a new jail pronto.
You're right. If they'd only import millions and millions of Somalis, Nigerians, Haitians, Afghans...why they'd transform Japan in no time.
You know they would.
Don't know why the downvotes.
All of the Chinese or Confucian nations are the same. China, Korea, Thailand, Japan - xenophobic, hate non-them, black letter law that discriminates, social and linguistic codes that use racist terms on a minute by minute basis every day as a matter of course.
Japan would rather cease to exist than to ever let any other race of anyone move in. Just not possible.
Thing is when their pop drops -20% in the next 15 years, it will be all over then. China will have its revenge, and since Japan has no value other than as a massive military base off shore of China, China will nuke it or conquer it by any means necessary. This century or next - Japan is going away.
I don't think the Chinese would ever invade, make it a province, although one never knows.
I highly admire the Japanese. A noble culture. Demographics and debt based money foretell their destiny.. they will manage far far better than many western nations when their "time" comes.
I can't help but admire that they publish the actual numbers. Here it is - in all it's ugliness - face-up on the table. The US hasn't done that in 40 years - China has never done it to my knowledge.
They need a black guy as president; then they could say "racism" to get a colossal fuck-up passed off as a success.
Modern day kamikazes determined to kill themselves by diving full-speed into oblivion.
Japanese chicks are fucking hot. If marriage weren't such a loser proposition, I'd pick up a hot japanese bride on the cheap, but I suppose laws are such that I'll just use them on the cheap instead. Uncle Sham makes me do it.
Yup. Only hotter chics in Asia are Vietnamese chics especially those with a little French blood in their families.
Food Water & Lots of ammo ....Bunker time SHTF 12/29/2014
The Japanese have depended on their exports for decades now. I'm not really sure that a deflationary Japan is entirely going to be a bad thing for them. Overall, they will probably wind up more competetive internationally.
Time to cash out on the Yen trade today. My best trade of the year by far. It stayed 120 and the stupidiest thing a trader can do is keep chasing a trade (up or down). Set a goal and get out. Seriously do wonder where it goes from here and the crazy '200' number that was floated after the unsurprising Halloween announcement doesn't seem to so crazy now.
Lets see now, how do you insure suicide? Hummmm....
Prolly a good thing they do not have life insurance policies like this.:
http://investmentwatchblog.com/red-alert-new-life-insurance-exclusions-m...
Well, Japanese people are pretty lemmings and won't complaint much even though suffering a lot. So, let them. They are the dream citizens of any Keynesian dictators.
The largest indictment of not just neo-Keynesian thinking but academic economics as a whole is the existence and stature of Paul Krugman, whose thinking distills to "what is best for central and large international banks?"
If you can't afford diapers you are in some real crap.
According to Krugman the Japanese ought to band together and go all out investing in preparations for the impending Godzilla attack and simultaneous alien invasion.
Abe - "Me sho sowry, me likey..." ....wait, which country is this again
Maybe Japan should have hired Kyle Bass as their advisor instead of the ultimate Keynesian Krugman? Seems like Bass hit the nail on the head even after the BOJ tried a 5 trillion yen stick save to prove him wrong... Now sitting at 219% debt to GDP the Japs are ultimately fucked and out of ammo. Fucking idiots and they deserve it for all the lies they have served up since Fukushima melted into earth and contaminated the Pacific beyond repair...
Kyle Bass has no solutions, he is a financial parasite making money out of other people's problems.
Now i know for sure that Draghi will print,print,print.
One Europe, united through debt and poverty !
We are doomed i tell you https://www.youtube.com/watch?v=hkWIn3GE9Ec
Inflation is not an exit strategy for Japan. 2% inflation would require 3% interest rates. Interest is absorbing 43% of government revenues at extremely low interest rates that average below 1%. It is obvious that interest rates are not in line with reality but are being pushed lower and lower by radical central bank bond buying. This can only be a temporary solution as the currency will go into free fall if they continue with money printing. It is a fact that the wealth of Japan is invested in JGB's and their value hinges on reasonable credit ratings and interest rates. They recently were downgraded and have been moved to credit watch negative by other rating agencies. Continuing on the current path will bring a series of credit downgrades until the central bank is forced to stop or Japan moves directly into hyper inflation. Those are the only two exit strategies on the current path.
There is no way to develop long term growth that Abe is shooting for in an economy that has a shrinking population. Any and all growth in Japan is coming from debt. This is not an avenue to long term growth as debt destroys growth if you have too much of it. Japan is already the most indebted country in the world. Literally half of Japan's government spending is being borrowed. What do you think would happen to growth if they either raised taxes or cut spending or both to reduce this massive deficit? Abe and Kuroda have taken a massive risk with Krugman's advice in the wrong direction. They probably decided it was game over anyway and they might be able to reignite growth. Wages are declining and basic costs for energy and food are increasing. The standard of living is falling. Japan is headed for a major loss of wealth and it is easy to see that destroying the currency is not a positive. A negative savings rate also tells you that the demographics have caught up with you. Japan is running out of time. The right course would be to tighten budgets and reduce borrowing but Keynesians cannot do this. It would admit defeat.
Peak reality always wins.
North Korea is odd though. I've long thought that the 'world community'......tolerates North Korea kinda like some families 'tolerate' particularly egregious sociopaths?
They can't quite denounce them in absolute terms. Doing so would expose too much of their own decrepit player behavior.
And as we all know ( if you know of course) is that all is not as it seems.
In fact, little of it is as it seems, and most of it is entirely unlike we typically infer.
But despite our observations, it is ultimately as it is, our absence notwithstanding.
Abenomics is failing despite QE to infinity and beyond...
http://www.globaldeflationnews.com/abenomics-from-faith-to-failurethe-la...
The Yen bull lasted 40 years. If you were looking at a 40-year future decline of your currency, would you save it at 0.01% interest?
One has to wonder whether it will be 2015, 2016 or beyond when Japan implodes to the point that the average disinterested man on the street in the US (or elsewhere) is awakened.
Common sense suggests this can't go on much longer.
I've been saying very similar things about economic life here, as well as there, for the past 10 years or so. I'm still shocked at the sky-high levels of absolute ignorance and apathy we ZHers see in public and private life here in the US. Preaching common sense has made me the object of ridicule, and the butt of many jokes among my peers.
I am beginning to believe that it may be a very long time before the average man figures it out.
And he may never...
The average, otherwise disinterested man on the street may never get to the point of trying to dissect the minutiae of what this or that data point means, but when one's currency is eviscerated, even he will realize "something" of import has taken place.
When it will happen is another question. One would think a debt-to-GDP of ~235% would be enough, but apparently that's not the case.
On the plus side, once the currency of the world's third-largest economy is destroyed, the implication will be..."which currency is next?" After all, this isn't Zimbabwean or Argentinean currency, but First World currency. As a result, it's highly unlikely that such a high debt-to-GDP ratio would be necessary for follow-on currency crises to occur.
What I can't understand is how it's gone on so long. How can the printing money wheeze have fooled so many for so long?
Short range thinking, the effectiveness of monetary policy in delaying catastrophe, and the, uh, bankers controlling the government, the media and academia.
What I can't understand is how it's gone on so long. How can the printing money wheeze have fooled so many for so long?
Because they have tried to make sure there is no place to run? For a currency to collapse, it would seem you would need to trade it for something else of perceived great value or at least stability. As all governments live in glass houses today, none are throwing many stones....at least until they started pelting Russia, and now it seems Russia may pitch a few back. This is how it always starts but you have to give them begrudging credit that they have been able to keep the scheme alive this long. It's like living with a drug addiction. It can go along for a long time but then it may be one thing that happens that creates crisis or stress in your life and then boom! No more control, no more hiding and faking it. A full blown crash, homeless and on the street within weeks. And while everyone thought you were the cool fun loving, creative type before, now they hide from you and act like they don't know who you are. The world can change quickly.
I wonder the same thing, as well as how much longer these shenanigans can continue.
I wish I knew, because I could make wiser decisions with the pittance that I have...
Gee I'm glad they didn't include USA in that headline. That would have been worrisome.
Like trying to shove a soft cock into a tight pussy.
Just won't go.
Long splints
Highly ironic that the answer, for both the limpus dickus and for Western economies, is to PUMP, PUMP, PUMP!
Krugmania is a dangerous mental disorder with devastating collateral damages.
This is due to the JPN Policy Wonks who rely too much on the US:
A) The USD and USA_Economy for theirs (a vital market in the past; but not so much now - yet they're QE'ing/Selling Bonds to buy up USD/USTs to keep the Yen Cheap). They've outsourced mfg a bit, so the SMEs are still suffering a bit.
B) The US Military for their Defense needs (many were willing to be Vassals; but are now facing the problems of being one now that the USA_MIC has barged in as well).
Luckily JPN/CHN Trade Volume is larger than the USA/JPN Trade.
Japan will fall: ugly demographic, Westernized as fuck, losing your religion and tradition, being USA's bitch since 1947, prefer provoking uselessly a country who are ten times stronger than themselves (China), listening to GS goons, and the heresy: following Keynesian economics !
RIP: you was once a great country with refined culture, now you're done if you don't wake up properly and quickly.
Sh? Ga Nai...
Repost:
What means Christmas, if Congress & Media don't talk about Important Issues at all at Christmas Time.
What are Gay Marriage, Marijuana, LBGT Politics, Big Gulps, Smoking in Restaurants, and stop and frisk THE big issues... I can see how Stop and Frisk is part of a larger issue but....
Christmas in the Capitalist Capital of the Globe is about:
1) Capitalism
2) Marketing
3) Consumerism
4) GDP & Revenues & Retail Success
5) the Past, 2,000 years ago
I'm not actually against Christianity or Islam or Buddhism or Hinduism or whatever... Why can't we have Nativity Scenes in front of Government Buildings if the people pay for them...?
But the Spirit of Christmas is about Sweeping Reforms in Government, in Education, in K-12, in the Free Press, and in Communities & Families...
- Thankfulness
- Charity
- Grace
- Forgiveness
- Absolution
- Repentance
- Making Amends
USA is a Psy-Op. USA is going to crash from ignorance. USA is mostly corrupt, and focused on Envy, Greed, Covetousness, Materialism, Fear, Debt, and the need to work to satisfy Patriarchs...
WTF. Thanks for many 2014 Screw Jobs CON-gress!! Thanks for f*cking me up the Ass US Corporations.
I refuse to be a "Cog" for your business.
Germany may come out on top in 10 years, but USA & EU are going to be Japan... like Greece, Italy, Spain, Portugal, UK.
I'll believe Americans have the right to bear arms when they excercise those right's protecting the very thing that gave them those rights to begin with.
Until then, it's dishonouarable lipservice.
Sorta like a financial BUKKAKE
What matters in Japan, is Sievert, Rem, Roentgen.
The economy is sure only a secondary problem.
they finished themselves off, and not only themselves. Gradually the whole Earth willl get the radioactive blast, analogue to blast, which r u receiving in the US today.
Krugman: Noble Prise in Destruction.
Well earned, too.
It's called economic implosion. Publically hang 2/3 of your politicians and the rest will get the idea and boom serious efforts to reform it will happen, or you can wait until the next mushroom cloud, up to you.
As things get worse I'd expect a military coup. Keep in mind the Japanese military has only been out of power since 1945. It wouldn't take much for them to re-assert.
Look at the pre-WWII history of coups/revolts/etc... It's in their blood.
Shinzo Abe, meet your replacement, Shigeru Iwasaki, Chief Of Staff of the JSDF.
http://en.wikipedia.org/wiki/Shigeru_Iwasaki
Looks like a tough little fooker.
Who would have thought that the Keynes Bomb would have caused more damage to Japan than the Enola Gay?
Not sure where to join the 'lack of immigrants' and 'aging population' discussion but the problem is neither - sort of. Actually the problem is that Japan (like the US), has destroyed their once proud multi-generational family support system and replaced it with an aging population that, rather than 'invest' their retirement money, clung to two false hopes - one that the Yen would always be a strong currency so that their 1% Jap bonds were good investments, and two, that the government programs would take care of them when they got old. Sort of like most of the US???
Game Over Man, GAME OVER! https://www.youtube.com/watch?v=dsx2vdn7gpY
I volunteer to impregnate all those Japanese ladies to rebuild that population.
When do I sart?
Japan will have to start coming into the real world soon.
It can't keep printing money and run high debts while its savings and wages decrease and its industries continue to re-locate overseas.
It needs banking reform, agricultural reform and many others. But it ain't going to happen.