Project 'End-Up-Like-Japan' Continues

Tyler Durden's picture


As we noted (here and here) earlier this week, the world increasingly looks like 'Japan' with little aggregate way out. The following chart perhaps confirms the repressive wave of ongoing intervention across the developed world. Extrapolating trends into the future implies that since the world's central banks will need to have a short-term rate of negative 2% by 2020, there is a lot of QE-equivalent easing still to come. As Simon Black noted, "The ironic triumph of the Keynesians means that, in trying to save the economy, our central banks may end up destroying it completely by means of the printing press; as a consequence, we now get to experience some of the full-on horror of the Japanese malaise."

(h/t John Lohman)

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Thu, 04/26/2012 - 13:15 | 2377180 cossack55
cossack55's picture

Negative trickle-down?

Thu, 04/26/2012 - 13:20 | 2377182 SilverTree
Thu, 04/26/2012 - 16:42 | 2377990 midtowng
midtowng's picture

It hasn't hit zero yet, so we have room to spare before we have to worry about stuff.

Thu, 04/26/2012 - 18:10 | 2378334 trebuchet
trebuchet's picture

keynes did not advocate use of a printing press, on the contrary his whole point was that to use a printing press wont solve the problem. 

That gets lost on most.

Thu, 04/26/2012 - 20:20 | 2378723 fourchan
fourchan's picture

zero is extra bullish

Thu, 04/26/2012 - 13:18 | 2377191 BandGap
BandGap's picture

I think I might end up Japanese, end up Japanese, end up Japanese - I really think so.

So, what should I do to prepare for having nothing saved at retirement?

Thu, 04/26/2012 - 13:21 | 2377202 cossack55
cossack55's picture

Research "highwayman".

Thu, 04/26/2012 - 13:37 | 2377270 SilverTree
SilverTree's picture

The Highwaymen

Thu, 04/26/2012 - 14:09 | 2377395 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I already think we are like Japan. What do you mean become like Japan?

Thu, 04/26/2012 - 15:52 | 2377806 MBOB
MBOB's picture

study recipes for squirrel, rabbit, gopher (Aztecs loved 'em in Tamales), dandelion, frog, snake, etc. You know, homo sap's traditional scavenger diet.

Thu, 04/26/2012 - 16:17 | 2377904 Bicycle Repairman
Bicycle Repairman's picture

We're going to end up like Argentina, because we are not Japanese.

Thu, 04/26/2012 - 18:49 | 2378476 trebuchet
trebuchet's picture

@ Band gap


you could do what many japanese old folk do in that situation - end it quickly, they don like to be a burden on their offspring. suicide rates amongst elderly highest in the world or way up there in top 3 

I personally wouldn't want my old folks to do that...

Thu, 04/26/2012 - 13:20 | 2377198 Cursive
Cursive's picture

Can't eat cash?  They'll be stuffing in Taco Bell burritos by next month....

Thu, 04/26/2012 - 13:23 | 2377213 cossack55
cossack55's picture

Mad Cash Disease (MCD) is better than Mad Cow Desease (MCD).  Look, the acronyms are the same. Quick, call Ben.

Thu, 04/26/2012 - 13:22 | 2377211 disabledvet
disabledvet's picture

Ben Bernanke is a MONETARIST. He is NOT a Keynesian. Besides the price of gold is surging today. What's the problem?

Thu, 04/26/2012 - 14:03 | 2377371 Lord Blankcheck
Lord Blankcheck's picture

Governments are the hyper-Keynesians.Borrow/spend too much in good times and borrow/spend way too much during lean times.(witn no intention to pay for a thing)



Thu, 04/26/2012 - 14:13 | 2377404 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I always argue that the term "Keynesian" is misleading at best to describe the current mess. Maynard Keynes suggested public spending during bad times and paying the debt off/saving during good times. What we have is just plain IRRESPONSIBILITY by our gubimint. Spend more during good and bad times. "Amoralism" is more appropriate or just plan fraud.

Thu, 04/26/2012 - 16:04 | 2377847 Winston Smith 2009
Winston Smith 2009's picture

Thank you for saving me from having to point that out for the nth time.  They're not "Keynesians."

And what they are doing is outright fraud of and theft from the typically ignorant world citizens, trying to keep a monstrous debt super-cycle bubble going until the very last unit of value can be squeezed from the productive classes.  It is an unsustainable attempt (deficits of 10% of GDP for four years thus far in the US and into the foreseeable future because there is no "recovery") and that which cannot continue indefinitely won't.  However, when it all eventually blows up in our faces as it will, the culprits will hide behind the new and improved police state governments they own just as they are doing right now.

Thu, 04/26/2012 - 13:22 | 2377212 buzzsaw99
buzzsaw99's picture

japan is optimistic. they are insourcing and outsourcing labor too much for that.

Thu, 04/26/2012 - 13:44 | 2377237 Mercury
Mercury's picture

...the world increasingly looks like 'Japan' with little aggregate way out.

We should be so lucky.

Show  me a culturally cohesive sovereign state and people with a demonstrated ability to make sacrifices today for a better outcome tomorrow and I’ll show you where to place your bets when a worldwide crisis becomes critical.

Japan has issues but let's not forget that lopsided demographics will eventually corret all by itself. One day we shall see how our open admissions policy has performed against that benchmark.

Thu, 04/26/2012 - 13:50 | 2377313 narnia
narnia's picture

They'll reboot faster & undoubtedly more peaceful than the US, but they're still going down.

Thu, 04/26/2012 - 16:18 | 2377871 Winston Smith 2009
Winston Smith 2009's picture

Kyle Bass on Debt Sustainability: Which Countries Are Beyond the Point of Return and Why?

Japan is toast.  As in all such cases, exactly when is anyone's guess but as Kyle points out, it can happen literally overnight.

Thu, 04/26/2012 - 13:36 | 2377264 Joe Davola
Joe Davola's picture

Woo-hoo, Cosplay for all!

Thu, 04/26/2012 - 13:37 | 2377268 Jason T
Jason T's picture

Was part of the deal with the Devil.  The central bankers of the world asked him to create money, so he did.  

Thu, 04/26/2012 - 13:37 | 2377271 q99x2
q99x2's picture

Bernanke is a financial terrorist. NDAA that f'r already.

Thu, 04/26/2012 - 13:38 | 2377277 rumblefish
rumblefish's picture

? can someone help me with my history. Japan Nikkei hit 40k and sits now at sub 10k. We're they easing all the way down? or was there a crash and they've been easing since.

Thu, 04/26/2012 - 13:48 | 2377303 Dr. Engali
Dr. Engali's picture

Japan had a big crash but they didn't print enough money in the beginning (not that they should have) to support the market. But they started easing immediately and have been easing ever since. They never let the institutions die off that needed to go away,and we are doing the same thing. 

Thu, 04/26/2012 - 13:55 | 2377332 CvlDobd
CvlDobd's picture

And they started with a housing bubble. We have the advantage of a tech and a housing bubble to "ease away"

Thu, 04/26/2012 - 16:31 | 2377953 obejoyful
obejoyful's picture

American economist were so proud in the 90's that we let our companies go bankrupt.  See Japan should do what we do they say, now that the situation in the US is like Japan's what are they saying.  We cannot let them fail it will cause to much damage.  I can not believe all of this is happening, we are doing exactly what Argintina and Japan did 20 to 30 yrs ago.

Thu, 04/26/2012 - 13:40 | 2377285 scatterbrains
scatterbrains's picture

If you look at UGA vs. SPY it always snaps back violently to the SPY trend (upwards)The spread right now is pretty wide but this time I don't think UGA is going to snap back up, rather SPY is going snap back down. Gold's move would suggest the central bankers are loading long for their own accounts ahead of another print fest but would they print and send gasoline to $5?


Thu, 04/26/2012 - 13:42 | 2377291 Pairadimes
Pairadimes's picture

I'm turning Japanese, I think I'm turning Japanese, I really think so.

Thu, 04/26/2012 - 13:51 | 2377316 dugorama
dugorama's picture

i just got back from japan.  if that's maliase, I'll take it.  I saw nothing anywhere that looked like poverty or want.  Perhaps their economy isn't growing robustly by some measure or another, i don't know.  But, the streets have no potholes, are clean and crowded, people are out in the shops and restaurants, the trains run mostly on time, the houses and apartment buildings look tidy, if a little dense packed for an American.  There must be more to the story about japan than that they have debt, therefore it sucks.  Because, it doesn't suck

Thu, 04/26/2012 - 15:33 | 2377705 xela2200
xela2200's picture

Clean cities with no pot holes maintained with borrowed money. How can that go wrong?

Thu, 04/26/2012 - 15:38 | 2377731 Belarusian Bull
Belarusian Bull's picture

Japanese are very different from western people.

Thu, 04/26/2012 - 13:54 | 2377330 yogibear
yogibear's picture

Japan's market dropped. The US, thanks to infinite Federal Reserve money and buying up everything, is going up.

The US market may go to new highs as all the slosh liquidity is used to buy commodities and stocks.

The US stock market could see new highs as Bernanke and the Federal Reserve keep throwing money at banks and investment houses. Inflation will also be increasing as well.


Thu, 04/26/2012 - 13:55 | 2377333 pods
pods's picture

That zero number is like a black hole.  The closer we get to it, the more .gov bonds will be swallowed up by it.
The FED will end up as the ONLY funding source for new issue treasuries.

I am sure that will work out well!


Thu, 04/26/2012 - 14:06 | 2377381 BandGap
BandGap's picture

I will be a sage old man when I retire.  Young people will seek me out for my wisdom, and in return for this guidance, will offer me food, shalter and drink. 

And I will have a shitload of silver.


Thu, 04/26/2012 - 15:54 | 2377810 MBOB
MBOB's picture

Whatever you're cultivating and smokin' start saving seeds. You be a rich man come hard times. 

Thu, 04/26/2012 - 14:22 | 2377429 yogibear
yogibear's picture

The Bernanke and the Fed knows it has an infinite amount of make believe money. The trick is to keep everyone using it conviced it's worth something. 

When the Fed's money is as good as that play money at the dollar store is when prices shoot to the moon and it becomes bad for most of the people within the US. Argentina here we come.


Thu, 04/26/2012 - 14:28 | 2377445 dwdollar
dwdollar's picture

The chart highlights a truth which some may find disturbing. The tech bubble itself was fueled by cheap credit from the easing of the early 90's.

Thu, 04/26/2012 - 14:37 | 2377478 earleflorida
earleflorida's picture

the japanese own most of their debt, whereas the FRB [and china, eu, me, etc., etc.,] hold[s] a nice proportion [?] of american debt - good times ahead? 

Goooo,oh.... USSA!

Thu, 04/26/2012 - 15:50 | 2377802 machinegear
machinegear's picture

Martin Solveig - Big In Japan

Thu, 04/26/2012 - 16:46 | 2378000 TheMuppet
TheMuppet's picture

"we now get to experience some of the full-on horror of the Japanese malaise."

Ever live in Japan over the last 25 years?  "Oh, the horror, the horror!"  Not.

Vast majority of the world would kill to live that "horror".

Thu, 04/26/2012 - 22:22 | 2379018 Sandmann
Sandmann's picture

Well they built their own Hiroshima device using GE plans at Fukushima and they did nationalise TEPCO. How much was TEPCO's market cap at peak ?

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