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We Are All (Almost) Japanese Now
Submitted by Jeffrey Snider via Alhambra Investment Partners,
It may be unexpected to economists, but the sudden and uniform economic downside that is either appearing or strengthening almost everywhere in the world is closely tracking the wholesale “dollar.” In many cases, that flows through China and so is given that gloss, but there can be little doubt now about either cause or effect. In Japan, machine orders (a highly-used proxy for capex) tumbled “unexpectedly” in August after a mixed view from July (to put it kindly).
Machine orders – a proxy for private capital expenditures – fell 3.5 per cent in August from a year earlier, with the drop catching economists off guard.
They had predicted a 3.5 per cent increase for the month, building upon a 2.8 per cent year-on-year gain in July.
Worse than that, the measure of private “non-volatile” (read: core) machine orders fell 5.7% year-over-year in August after declining 3.6% in July and 7.9% in June. The fact that there is apparent downside gathering two and a half years into QQE without any actual upside to date is perfectly ruinous. As noted discussing Japan’s lack of progress for industrial production, there has been no such upside to QE in any of the channels and pathways that economists were absolutely sure would result. Instead, without any gains, there has only been engineered a massive economic hole that is “unexpectedly” widening and deepening again.
The Bank of Japan mercifully held off from expanding QQE again this week, which only allows some minor reprieve for Japan’s beleaguered households. Real wages were up just 0.2% Y/Y in August only because “inflation” was calculated as close to zero. Total hours worked was once more flat, suggesting that the best that the Japanese can hope is “scraping along the bottom” before any renewed contraction.
The Japanese economy has only “grown” smaller without any apparent catalyst for the recovery (QQE no longer counts, having been proved decisively ineffective and harmful) and “defeat of deflation” that pushed at least asset markets to multi-year extremes. So where Japan risks continuing a downward slope of depression, despite pressing against quadrillion and the true debasement via orders of magnitude, there is purportedly no connection to the “unexpected” trade developments in Germany:
German exports fell sharply in August, in the latest sign that the slowdown in emerging markets is beginning to affect Europe’s biggest exporter.
Exports in August were 5.2 per cent lower than July, their sharpest monthly fall since the financial crisis, according to Germany’s national statistics office. Imports also fell 3.1 per cent.
Of course, we are re-assured that all that is left “overseas” and unrelated to the monetary-driven boom in the QE feudal districts of the US and Europe (it must be that Japan’s extra “Q” in QQE is the difference):
“The figures are consistent with the industrial data we’ve already had this week and round off quite a bad August for German data,” said Richard Grieveson, an economist at the Economist Intelligence Unit.
“Clearly, what’s happening in emerging markets — particularly China and Russia — is having an effect and the outlook is not as positive as it was, given the fall in factory orders and the possible impact of the Volkswagen scandal on the ‘Made in Germany’ brand.
“However, it would be dangerous to read too much into one month’s numbers, given the impact of summer holidays, as well as the fact that the year-on-year data and sentiment indicators are not showing a big change in trend.”
“Transitory” again? The credentialed economist assures us that there isn’t yet any slowdown in trade activity with especially the US and non-Eurozone EU, despite the Census Bureau reporting this week an August continuation of the 2015 slowdown in US imports from Europe (to nearly 0%).
Perhaps the US is importing more from Germany than the rest of the EU, but even if that were the case such a situation where the US is buying from Germany at the expense of other European nations doesn’t bode well for any European trade business in the future. Denials aside, there isn’t any evidence to support the idea of US economic strength which is why the September payroll report was only shocking to those that testify to the Yellen economy; US and global. Thus, Japan wages and machine orders and German exports all figure in with US consumers further slipping down in economic function, to and through China or not. And each is met with the growing chorus of “more stimulus” as if the word itself accomplished the directive (since semantics is undoubtedly all that is left of it).
Apparently the “slippery slope” of economic denial is likewise as universal as the aligned direction of economic progression across the world:
- Dollar doesn’t matter, indicates strong economy relative to the world
- Dollar matters for oil, but lower oil prices mean stronger consumer
- Manufacturing slump doesn’t matter, only temporary
- Manufacturing declines are consumer spending, but only a small part
- Manufacturing declines are becoming serious, but only from overseas
- ...
- Global Recession
- MORE GLOBAL STIMULUS!!
Fittingly, we are all almost Japanese now.
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joyflation
We argued this point on Mish's site back in 2008. As far as I am concerned, there is no "Japan Scenario" for the US. The reasons are many, including: Japan has no global military empire to maintain (or collapse); Japan does not host the global reserve currency. There are more reaosns, but those two are enough. When the US collapses, it will not "go Japanese". more like "animal farm", or "walking dead".
"there is no "Japan Scenario" for the US."
I have been in Japan forabout amonth and a half (I ive in SF) - it's a completly different world here - almost like a different planet. It's different (better) compared to the US in pretty much every aspect. Everything seems better here - from food quality, water, quality of buildings, the way Tokyo is run, how clean it is, their public transport, what you can buy for your money (rent prices in Tokyo vs say SF), the kind of land overlooking the ocean for about 45k $ not too far from a town with lots of industry and employment etc. I have never seen anything like that in the US. Plus people seem very socially engaged and connected. There is lots of innovation and production, building etc all over the place. Plus little children running around looking very happy and safe. For the US to turn into Japan many things woudl have to change (most of them not at all related to money but to do with how we interact vs manic obsession with money and over competitive back-stubbing America is famous for). I am from Serbia (and look at things differently) , but many Americans I have met here agree with my assessment
My American friends also told me that in Iwakuni where I spent a few weeks the only people that steal bicycles are Americans. Even in Tokyo I see many unlocked ones
Homogeneous society.
...which has been outlawed by the multi-cultis. Divide and conquer.
Time for super QE!
Hyperdepressivestagflation.
Turning Japanese is a line from an old song, and refers to squinting while wanking.
Joystick Economics.
The Fixx - Saved By Zero - YouTube
Don't forget this classic
My first thought is this...
https://www.youtube.com/watch?v=mgekmOqCFTU
Back when they were kicking our ass on production.
wait are we turning japanese or did the japanese turn american and do it better and faster.
Given that Japan is one of China's largest trade partners, it is conceivable that the US is waiting to crash Japan in order to take out China, should push come to shove. It'll hurt them more than it'll hurt US.
I've been saying this for seven years now. It's about time Wall Street catches up.
The Vapors - Turning Japanese (1980)
https://www.youtube.com/watch?v=mgekmOqCFTU
Ah soooooo, now I know why I have a desire to sleep in a dresser drawer. I seeeee.
Absolute Unbridled Insanity. ABI =BoJ2
The really scary part of this haphazard experiment is the MoF/BoJ is investing those worthless yen in global equity and bond markets.
Japanese financial scorched Earth policy. Who needs toy airplanesZeros, when you can just print destruction on your keyboard?
It's all Japanese to me.
I hate to break this to Your Highness, but Japan, desite their woes, is much better off than you may like to/want to think. They do not need to cover up their debt into "fundable" and "nonfundable" liabilities. In reality, USA debt is larger than Japan and Europe combined.
USA is the eye of the storm. We realized that when we lived there and got the hell out. I suggest that you do the same, IF you are able to.
http://www.bloomberg.com/news/articles/2010-08-11/u-s-is-bankrupt-and-we...
http://viableopposition.blogspot.jp/2011/04/hidden-american-100-trillion...
I think the most fundamental difference is how Japanese care about others, even strangers. They share everything and everyone seems to try to help the group/sociaety all the time. I see no sins of cultural psychopathy here at all.
I'venoticed in Tokyo when you are about to bump into someone they do the same thing I do if I notice a child is about to bump into me ( i have my palms open towards them ready to grab them in case they are about to hit me - to prevent them from falling down etc). Japanese do that with strangers by default.
Everyone is super respectful and caring and also proud of their work as they should be. In the US work has been dehumnized and turned into a toold to screw people with (or blackmail them ).
Lots fo Japanese even grow their food, they know how to cook and they love to share - whatver hits them they are bound to survive much better than we are in the US where there seems to be no commnity spirit left and everyone is depressed and mentally isolated and often angry
Japan is following the Federal Reserve's plan. Same result except when the US loses it's reserve currency status.
The US borrowed externally as well. Soon enough the deficit will be well over $20 trillion. Unfunded is huge.