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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.