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Abenomics Is Foundering, and No Sooner Has the Lehman Moment of Japan Arrived! [Copy link] 中文

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Post time 2013-5-27 15:30:56 |Display all floors
This post was edited by abramicus at 2013-5-27 15:37

Japan's trade deficit more than doubled from March 2013, at US$3.6 billion, to April 2013, at US$8.6 billion, with exports aided by a Yen that devalued by some 35%, increasing by 3.6% in the same interval, while import costs jumped by 9.4% instead.

Abenomics enriched the already rich who had extra money to invest in stocks after housing costs are paid off, which is uncommon in Japan for its middle class, at the expense of impoverishing those who are barely making it, and those who are already poor.  Having caused a stock market bubble to arise, it made Japanese equity highly vulnerable to every shock that comes from abroad and within, such as the sudden plunge of 7% in Japanese stock market value last week, due to a perception that the brokerages can no longer count on the Fed propping up the US stock market bubble much longer.

Not only that, given that energy imports account for the lion's share of Japanese imports, which must be paid in US dollars, Japan's foreign currency reserve stands to be drained drastically over the next several months, making the mistakes of Abenomics practically irreversible.

Japan's irrational dream of empire is not only costing it its de facto peace with China, South Korea and even detente with North Korea, now it is costing the Japanese people in more direct ways that hit their pocketbooks instantly, in terms of higher costs of living, less jobs, lower pay, and higher prices of food and other necessities.

Abenomics, like Abe, sounded too good to be true, and reality is proving they are.



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Post time 2013-5-27 15:49:31 |Display all floors
one thunder and you already think it is Noah's flood......................................
I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2013-5-27 22:18:08 |Display all floors
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Writer's real name is Lau Guan Kim.  lau_guan_kim is for commentary and analysis. He writes also under another alter ego jinseng. I will respond to good reasoned debate. Mudslingers shall be ignored. What I do not like are ignorance, stupidity, chauvinism and bigotry. The other party has as much right as I have until it resorts to insults and nuisance.

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Post time 2013-5-27 22:36:51 |Display all floors
lau_guan_kim Post time: 2013-5-27 22:18
Is that you piddle in your puddle?

one bird, and you think it is summer?
I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2013-5-27 22:51:27 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked
Writer's real name is Lau Guan Kim.  lau_guan_kim is for commentary and analysis. He writes also under another alter ego jinseng. I will respond to good reasoned debate. Mudslingers shall be ignored. What I do not like are ignorance, stupidity, chauvinism and bigotry. The other party has as much right as I have until it resorts to insults and nuisance.

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Post time 2013-5-27 23:20:45 |Display all floors
I question Abe's judgement in foreign affairs; but I think his reflationary project is a good idea. As the yen gets cheaper, Jap exports will increase. Of course the US and China will be angry. Even us little Canadians. But Japan just MUST resume some economic growth.
What's on your mind...

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Post time 2013-5-28 02:11:10 |Display all floors
This post was edited by abramicus at 2013-5-28 02:19

Abe wants to resurrect the Japanese empire, shouted "Banzai!" to his emperor which subverts civilian authority to imperial dictates, worshipped war criminals enshrined in the Shinto Shrine amongst which are 14 Class A War Criminals, but found his country's economy too sluggish to achieve his dreams with.  Therefore, Abenomics.  This is nothing more than the same technique of Nazi Germany, to not pay reparations, to re-arm using up the savings of its populace through printing fiat monies, and use those arms to re-invade its neighbors.  The side effects, like inflation and what now has proven to be the real resutl, negative trade balance, will be fought with more fiat money (Japan has just begun with its first tranch of 90 billion USD of fiat money).  People who are rushing to buy Japanese stocks because of the expected rise in exports are quite short-sighted in that the rising costs of imports would negate this advantage, as it has, and more.  They also fail to realize that when they sell their highly inflated Japanese stocks in Yen, they will have to suffer a worser deflation when converting back to US dollars or Euros (by some 35%) which will not just wipe them out in their own currencies, but sink them into a deep hole as well.

Thus, the Nikkei rose 40% on the heels of a 35% devaluation, i.e. 1.4 x 0.65 = 0.91, which means that it would have been better to just pull out of the Japanese stock market before the Japanese devalued their Yen, than to invest or remain invested in the Japanese stock market, let the Yen devalue, ride the Nikkei to its peak, and then transfer the money out in US dollars, at only 91 cents on the dollar.  The foreign investors were effectively giving up 9% of their investments in the short span of 6 months, when the USDJPY exchange rate went from 78.97 in Oct 2012 to 87.74 in April 2013, which is an annualized rate of return of -18%.  Who is celebrating?  The guys in Wall Street who want to dump their Japanese shares on the retail crowd by hyping up the "profits" of investing in Japanese equities.  But, when they all do the same thing at the same time, thinking they do not have enough time to find the suckers, the Nikkei dropped up to 10% in one day, and recovered by some 3% later in the day, to end up with a net loss of 7% for the day.  Today, it dropped another 3%, when Japan tried to correct its mistake by selling dollars in order to drop the exchange rate, making the Yen more dear, likely to reduce its export spike by a significant factor.  This selling of dollars in exchange for more Yens is going to fuel their domestic inflation even more, transforming a trade imbalance into domestic inflation.  The investors in the Japanese stock market may look like they are having a paper profit bonanza, but when used to purchase goods and services, they find they could buy less than with their original investment due to inflation, and when they try to convert their paper profits back into dollars, they find they have less dollars than they invested.   The paper profits of the Nikkei are just a mirage that the Abenomics architects bought for with even greater losses of the savings of its people and of the Japan's foreign currency reserve.  In short, Japan is poorer now after six months of Abenomics, by some 10%.

So, yes, Abenomics is a great idea. Could not think of anything better.

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