Tag Archives: Japan

Japan on a Larger Scale, by James Rickard

Go deep enough into debt and you can’t climb out, as Japan has found out and as the US and Europe are finding out. From James Rickard at dailyreckoning.com:

In my 2014 book, The Death of Money, I wrote, “The United States is Japan on a larger scale.” That was five years ago.

Last week, prominent economist Mohamed A. El-Erian, formerly CEO of PIMCO and now with Allianz, wrote, “With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan.”

Better late than never! Welcome to the club, Mohamed.

Japan started its “lost decade” in the 1990s. Now their lost decade has dragged into three lost decades. The U.S. began its first lost decade in 2009 and is now entering its second lost decade with no end in sight.

What I referred to in 2014 and what El-Erian refers to today is that central bank policy in both countries has been completely ineffective at restoring long-term trend growth or solving the steady accumulation of unsustainable debt.

In Japan this problem began in the 1990s, and in the U.S. the problem began in 2009, but it’s the same problem with no clear solution.

The irony is that in the early 2000s, former Fed Chair Ben Bernanke routinely criticized the Japanese for their inability to escape from recession, deflation and slow growth.

When the U.S. recession began during the global financial crisis of 2008, Bernanke promised that he would not make the same mistakes the Japanese made in the 1990s. Instead, he made every mistake the Japanese made, and the U.S. is stuck in the same place and will remain there until the Fed wakes up to its problems.

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The Japanification of the World, by Charles Hugh Smith

As it grows faster than the underlying economy, debt becomes quicksand from which the economy cannot extricate itself. From Charles Hugh Smith at oftwominds.com:

Zombification / Japanification is not success; it is only the last desperate defense of a failing, brittle status quo by doing more of what’s failed.

A recent theme in the financial media is the Japanification of Europe.Japanification refers to a set of economic and financial conditions that have come to characterize Japan’s economy over the past 28 years: persistent stagnation and deflation, a low-growth and low-inflation economy, very loose monetary policy, a central bank that is actively monetizing debt, i.e. creating currency out of thin air to buy government debt and a government which funds “bridges to nowhere” and other stimulus spending to keep the economy from crashing into outright contraction.

The parallels with Europe are obvious, but they don’t stop there: the entire world is veering into a zombified financial, economic, social and political status quo that is the core of Japanification.

While most commentators focus on the economic characteristics of Japanification, social and political stagnation are equally consequential. If we only measure economic/financial stagnation, it appears as if Japan and Europe are holding their own, i.e.maintaining the status quo via near-zero growth and near-zero interest rates.

But if we measure social and political decay, the erosion is undeniable. Here’s one example. Few Americans have access to or watch Japanese TV, so they are unaware of the emergence of the homeless as a permanent feature of urban Japan. The central state propaganda media is focused on encouraging tourism, a rare bright spot in Japan’s moribund economy, and so you won’t find much media coverage of homelessness or other systemic signs of social breakdown.

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Lenin would be so proud, by Simon Black

By socializing risk, in other words by making others pay for someone else’s mistakes, we make sure those risks will be taken again and again. From Simon Black at sovereignman.com:

Several years ago back in 2004-2006, if you had a pulse, you could borrow money from a bank to buy a house.

In fact, bank lending standards were so loose back then that there were some infamous cases of people who DIDN’T have a pulse who were still able to borrow money.

That’s right. Some banks were so irresponsible that they actually loaned money to dead people.

Of course, it turned out that lending money to dead people… or people with terrible credit who had a history of default, was a bad idea.

And the entire financial system almost blew up as a result of this reckless stupidity.

But then something even crazier happened: the Federal Reserve came in and bailed out all the banks with trillions of dollars of free money.

That was utterly nuts. Instead of being wiped out by their idiotic mistakes, the banks learned that they would always be bailed out no matter how stupid or greedy they acted.

The key lesson was that there would be zero consequences for bad behavior.

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The Asian Arms Race and the ‘Weaponization of Finance’, by Ritesh Jain

The days of Asian countries living under the US defense umbrella but enjoying the fruits of trade with China may be coming to a close. This has substantial investment implications. From Ritesh Jain at worldoutofwhack.com:

There are those in financial markets who believe that Mike Pence’ s bellicose speech at The Hudson Institute a few weeks ago was merely sabre rattling ahead of the US mid-term elections. Sadly your analyst could not disagree more. That speech, reported in the last Solid Ground newsletter, has now been followed by the United States’ threat to withdraw from the Intermediate-Range Nuclear Forces Treaty (INF) with Russia. For those who still believe this has nothing to do with China, the US President made it clear on October 22nd that the withdrawal from the INF is as much about countering a threat from China as it is about countering a threat from Russia:

“Until people come to their senses, we will build it up…” “It’s a threat to whoever you want and it includes China, and it includes Russia, and it includes anybody else that wants to play that game. You can’t do that. You can’t play that game on me.”

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Anti-Vaccine Japan Has World’s Lowest Child Death Rate & Highest Life Expectancy, by Amanda Mary Jewell

Vaccines administered jointly, like the MMR (Mumps-Measles-Rubella) vaccination, and vaccines containing aluminum adjuvants and mercury have finally been acknowledged to pose significant health risks to the children who receive them. From Amanda Mary Jewell at healingoracle.ch:

Fact: Japan has the lowest infant mortality rate following ban on mandatory vaccinations, they urge other countries to follow this firm stance

The citizens of Japan are statistically proven to be the healthiest and longest-living people in the world. The country also has the lowest infant mortality rate on the planet. It may come as no surprise to many that the Japanese Government banned a number of vaccines that are currently mandatory in the United States and has strict regulations in place for other Big Pharma drugs and vaccines in general. Japan’s anti-vax policies have long been criticised by vaccine pushers in the US who claim that vaccinating the public “promotes health.”

However, Japanese people live longer, healthier lives than Americans, with babies born in the US twice as likely to die in infancy than those born in Japan. It’s clear to see that Western nations have a lot to learn from the Japanese when it comes to their approach to vaccinations and issues facing public health. The Japanese are vaccine sceptics, to put it simply, and due to adverse reactions suffered by Japanese children, have banned many vaccines.

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Why Japan may spark the next crisis, by Simon Black

Japan has the worst debt problem among developing nations…by far. From Simon Black at sovereignman.com:

In a world full of reckless and extreme monetary policy, Japan no doubt takes the cake.

The country has total debt of more than ONE QUADRILLION YEN (around $10 trillion) pushing its debt-to-GDP ratio to a whopping 224% – that puts it ahead of financial basket case Greece, whose debt-to-GDP is around 180%.

Japan spent 24.1% of its total revenue (appx. 23.5 trillion yen) last year servicing its debt – both paying down principal and interest. And that percentage has no doubt moved even higher this year.

And, keep in mind, this isn’t some banana republic. It’s the world’s third-largest economy.

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The country’s economy is so screwed up that the Bank of Japan (BOJ), the central bank, has been conjuring trillions of yen out of thin air to buy government debt.

The BOJ printed yen to buy basically all of the $9.5 trillion of government debt outstanding. When it ran out of bonds to buy, BOJ started buying stocks. Now it’s a top 10 shareholder in 40% of Japanese listed companies.

Most recently, the central bank has started “yield-curve control,” which basically means they’ll do whatever it takes to make sure the government doesn’t have to pay more than 0.1% interest.

But something interesting has happened over the past few weeks…

Despite the BOJ’s promise to hold rates and bond yields down, the other owners of Japanese government bonds (JGBs) have been getting nervous. And they’ve been selling.

The selling pressure pushed bond prices down (and, inversely, yields and rates up)… In just under two weeks, yields on 10-year JGBs soared from 0.03% to 0.11% – an 18-month high.

If you own an asset and you don’t think it will perform well, you sell it. And clearly that’s how people feel about Japanese debt. The bonds pay close to zero, after all.

Japan has been fighting deflation for a long time. And with deflation, when the purchasing power of your money increases every year, you may consider holding a bond that pays close to zero… because you’re still maintaining your purchasing power.

To continue reading: Why Japan may spark the next crisis

Contaminated Fukushima Water Storage Tanks “Close To Capacity”, TEPCO Admits, by Tyler Durden

Japan is nowhere close to “containing” the Fukushima nuclear power plant disaster. From Tyler Durden at zerohedge.com:

The Tokyo Electric Power Company is running out of container space to store water contaminated by tritium outside the Fukushima No. 1 nuclear power plant, and it’s also running out of room for building more tanks, according to Yomiuri Shimbum, a Japanese newspaper, which is creating an intractable problem for the utility, which has been tasked with supervising the cleanup of Fukushima.

The Japanese government has been desperately trying to accelerate the cleanup ahead of the upcoming 2020 Olympic Games in Tokyo – and it’s a miracle it hasn’t run into this issue sooner. TEPCO is still struggling with how to dispose of the tritium-tainted water. Options discussed have included dumping it into the ocean, but that proposal has angered local fishing communities.

At some point, TEPCO and the government will need to make a difficult decision. Until then, ground water will continue to seep into the ruined reactor, where it becomes contaminated. Afterward, TEPCO can treat the contaminated water to purify it, but they can’t remove the tritium, which is why the supply of water contaminated with tritium continues to grow.

As one government official pointed out, Japan can’t simply store the radioactive water forever. As of now, the company should be able to store water until 2020.

Efforts have been made to increase storage capacity by constructing bigger tanks when the time comes for replacing the current ones. But a senior official of the Economy, Trade and Industry Ministry said, “Operation of tanks is close to its capacity.”

TEPCO plans to secure 1.37 million tons of storage capacity by the end of 2020, but it has not yet decided on a plan for after 2021. Akira Ono, chief decommissioning officer of TEPCO, said, “It is impossible to continue to store [treated water] forever.”

To continue reading: Contaminated Fukushima Water Storage Tanks “Close To Capacity”, TEPCO Admits