COMMITTING HARI KARI

11 comments

Posted on 15th September 2012 by Administrator in Economy |Politics |Social Issues

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11 Comments

  1. AWD says:

    From the largest Japanese pension fund unwinding its JGB holdings to Kyle Bass’ infamous ‘debt-saturation Japan Trade’ and Dylan Grice’s original Japan funding crisis discussion, the nation – now facing Chinese dis-satisfaction over the recent island-purchase – continues to stagger with its Keynesian-endgame heading to a Koo-nesian disaster. The following info-graphic, via Informed Trades, provides everything the savvy investor needs to know about Debt/GDP, balance of payments, energy imports, demographics, and currency debasement.

    Above is Heading for the above infographic.

    The biggest item being the pension fund. It’s the biggest public pension fund in the world, and they are unwinding/selling their Japanese treasuries. They used to be the biggest buyer of Japanese treasuries. Once there are no buyers, there is no more debt issued, then it’s game over for Japan. The U.S. is in the same situation. I have no doubt they will follow the example of Bernake and QUenfinity. It’s a race to the bottom, and now facing war with China? Holy Shit.

    831709204_0e29a9e752_o.jpg

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    15th September 2012 at 8:36 pm

  2. AWD says:

    Rosenberg: “If The US Is Truly Japan, The Fed Will End Up Owning The Entire Market”

    What the Fed did was actually much more than QE3. Call it QE3-plus… a gift that will now keep on giving. The new normal of bad news being good news is now going to be more fully entrenched for the market and ‘housing data’ (the most trustworthy of data) – clearly the Fed’s preferred transmission mechanism – is now front-and-center in driving volatility.

    I don’t think this latest Fed action does anything more for the economy than the previous rounds did. It’s just an added reminder of how screwed up the economy really is and that the U.S. is much closer to resembling Japan of the past two decades than is generally recognized. It would seem as though the Fed’s macro models have a massive coefficient for the ‘wealth effect’ factor.

    The wealth effect may well stimulate economic activity at the bottom of an inventory or a normal business cycle. But this factor is really irrelevant at the trough of a balance sheet/delivering recession. The economy is suffering from a shortage of aggregate demand. Full stop. It just perpetuates the inequality that is building up in the country, and while this is not a headline maker, it is a real long term risk for the health of the country, from a social stability perspective as well.

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    15th September 2012 at 8:46 pm

  3. DaveL says:

    John Mauldin agrees with your chart, and we are not far behind. Who gets all the “chittlins”?

    Like or Dislike: Thumb up 3 Thumb down 0

    15th September 2012 at 10:21 pm

  4. card802 says:

    From John Maudlin:

    “Japan, as I am wont to say, is a bug in search of a windshield. They have transmuted the savings of two generations into the largest debt ever for a country that I am aware of (in terms of GDP). It is now approaching 220% and rising at a prodigious pace, about 10% in 2011. They have gone from a savings rate of 16% to around 1%, largely due to an aging population that is now living off its savings.

    When that savings rates goes negative, and it is a demographic certainty that it will, Japan will either be forced to pay higher interest rates or print massive amounts of yen or cut government spending by equally massive amounts. All of those options are ugly in the short term. If interest rates rose by a mere 2% for Japan, they would be spending more than 70% of their budget on just interest expense within a few years. That is not a workable business model.”

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    15th September 2012 at 10:23 pm

  5. Yaponese says:

    Ellen Brown posits that Japan is not broke.

    https://webofdebt.wordpress.com/2012/09/05/the-myth-that-japan-is-broke-the-worlds-largest-debtor-is-now-the-worlds-largest-creditor/

    Hot Debate Like or Dislike

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    15th September 2012 at 10:47 pm

  6. SSS says:

    Well, Japan at least has Japan Steel Works. Here.

    Japan Steel Works’ services are in great demand owing to its role as one of only four manufacturers worldwide of large single-piece pressure vessels for nuclear reactors at the company’s factory, which is located on the island of Hokkaidō. The other manufacturers as of 2010 are two companies in China, and one in Russia. However, Japan Steel Works is the only one that can make cores in a single piece without welds, which reduces risk from radiation leakage. The company has boosted production to 6 units per year from 4 previously of the steel pressure vessel forgings, which contain the nuclear reactor core. It is scheduled to take capacity to 11 by 2013.

    Anything stand out about that? We don’t even have the capacity to manufacture a nuclear reactor shield in this country anymore. Yet Japan does, even while it just announced that it will decommission all of its nuclear power plants by the 2030s, and we’re planning on building at least 7 more nuke plants this decade. WTF?

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    15th September 2012 at 11:37 pm

  7. Llpoh says:

    Farming, mining, manufacturing. Lose any one of those and you are at the mercy of hose that have not. He US has lmot lost mfg,and is doing its damnednest to lose mining.

    Seriously, no manufacturing = fucked. The US is down the f, u, and c already. Bend over, here comes the k.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 1

    15th September 2012 at 11:46 pm

  8. Yappy Knees says:

    Yet Japan does, even while it just announced that it will decommission all of its nuclear power plants by the 2030s, and we’re planning on building at least 7 more nuke plants this decade. WTF? -SSS

    Trying to decipher the crazy makes me crazy. Its like trying to get into the mind of Batman movie shooter. I cant want to know the mindset.

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    15th September 2012 at 11:51 pm

  9. Ron says:

    Lately i feel like just saying were screwed to every post.

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    15th September 2012 at 12:56 am

  10. TeresaE says:

    Have to guess that between these charts, and the nuke situation, the whole island skirmish with China starts to make sense.

    Seems to be straight out of the rulers’ playbooks. Fuck things up, then send peasants’ children to die.

    East meet West, what old is new again.

    Ponzi on.

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    15th September 2012 at 12:39 am

  11. Bob says:

    For the past 20 years or so, Japan was the mistaken example for the deflation scenario. Because Japan owes its debt in its own currency, and they have had export surpluses up to now, and the rest of the world was growing, the Japanese were able to experience instead a long period of disinflation, punctuated by brief periods of outright mild deflation. That is now over.

    Rising interest rates will be the first sign that Japan is entering a full blown deflation. Because Japanese debt is overwhelmingly owned by the Japanese themselves, Japan is doomed to a different type of experience than the rest of the world. The Japanese will default on themselves and each other, imploding financially while standing in place. Sort of like a 70% off sale.

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    15th September 2012 at 5:05 pm

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