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Japan's Economy Is Shattering

Abenomics is fast proving to be a costly failure
Monday, April 28, 2014, 10:09 AM

When you are a fully-industrialized island nation that makes its living in the world by importing raw materials, fashioning them into useful exports, and collecting the difference as your profits, then you simply have to run a trade surplus for the model to work.

Which means Japan is in big trouble: » Read more



FerFAL: Here's What It Looks Like When Your Country's Economy Collapses

Argentina is showing us the playbook in real-time
Saturday, February 8, 2014, 2:36 PM

Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years, and looks poised to do so again soon.

Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina's budget deficit is exploding and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years.

Want to know what it's like living through a currency collapse? Argentina is providing us with a real-time window.

So, we've invited Fernando "FerFAL" Aquirre back onto the program to provide commentary on the events on the ground there. What is life like right now for the average Argentinian? » Read more


We're All Turning Japanese

Japan is the proxy for our future
Tuesday, September 10, 2013, 12:40 PM

Executive Summary

  • As goes Japan's efforts to rescue it's economy, so will go the U.S. and E.U.
  • Japan's options:
    • Outsource its manufacturing base
    • Replace as much human labor with automation as it can
    • Rush to trade its depreciating currency for hard assets around the world
  • What Japan is telling us about the Keynesian endpoint

If you have not yet read Part I: Abenomics' Dismal Anniversary, available free to all readers, please click here to read it first.

Japan Is Reflecting the Future of Western Economies

While many observers continue to follow Europe as the proxy for post-growth dynamics in the OECD, it's actually Japan that merits the closest analysis.

Much farther along in its post-growth phase, bloated with government debt and having tried a number of big-bang initiatives over the decades, Japan not the U.S. or Europe is leading the way. The country has never really recovered from the gigantic property and stock bubble over twenty years ago.

As proof, just consider the biggest trading story of the past 12 months. Was it the Federal Reserve's intention to taper? How about the chaos in emerging market currencies in countries like India and Indonesia? Or perhaps the continued economic depression in peripheral Europe, as countries like Spain, Portugal, and Greece re-run the 1930s, with mass unemployment and people burning wood from forests to say warm? No, not even such dramatic suffering in Europe was enough to move markets or the EUR currency much this past year.

Instead, it was Abenomics and the front-running (and then chasing) of wildly huge moves in both the Nikkei and JPY that helped drive liquidity and speculative juices across all markets. It is not a coincidence that the peak of this frenzy in May heralded the peak in many markets.

But Japan has more than a financial problem. Despite the hand-wringing about Japan's debt, the world has ignored for some time now Japan's debt-to-GDP, GDP on an absolute basis, and Japan's low cost of capital. Japan borrows. Japan prints. Japan devalues. But the world doesn't care.

An issue the world may finally begin to care about, however, is that Japan has failed to launch itself out of deflation and is making very little progress in its struggle now. Indeed, Japan has a demographics problem and a resources problem that far outweigh its financial problems. To this point, instead of launching into recovery, Japan is running with the resources Red Queen, as every step of its currency devaluation is met with rising costs to import the raw materials Japan uses to make its goods... » Read more


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Why We All Lose If the Fed Wins

Fighting the wrong battles
Monday, August 19, 2013, 6:20 PM

If we hold the view that humans are behaving unsustainably in terms of any of the 'three Es'  the economy, energy, or the environment  then any rapid resumption of a paradigm of exponential growth in our consumption of natural resources or in our growth of debt over income simply takes us more quickly to the bitter end of this story. » Read more

Daily Digest

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Daily Digest 7/31 - India At Watershed, Detroit Has Bigger Problems Than Bankruptcy

Wednesday, July 31, 2013, 11:01 AM
  • Shipbuilders' losses seen widening
  • Bank of Cyprus deposits raid boosts finances
  • Greece sells state lotteries, clears way for OPAP sale
  • UK Losing Fight Against E-Crime Amid Budget Cuts, Parliamentary Committee Warn
  • Amid bankruptcy, Detroit has a bigger problem
  • Growing copper theft 'like an epidemic' sweeping US
  • India at a watershed as it confronts the spectre of stagflation
  • India central bank pat on rates, cuts growth view
  • African Barrick Writes Down Mines, Cuts Costs After Gold Tumbles
  • Court ruling allows Flint to start collecting on retiree cuts
  • Miami Springs counting on red-light camera revenue in face of deficit

Ron Paul: Rejecting Authoritarian Government Is Our Greatest Priority

Self-reliance is the key to our future
Sunday, June 9, 2013, 11:00 AM

Dr Ron Paul has long been a leading voice for limited constitutional government, low taxes, free markets, sound money, civil liberty, and non-interventionist foreign policies.

His last term in the U.S. House of Representatives ended earlier this year, so we caught up with the former Congressman to get his latest perspective on how successfully our national leadership is dealing with America’s economic challenges. » Read more

Daily Digest

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Daily Digest 6/5 - Portugal 'Should Leave Euro', Beef Prices At Record High

Wednesday, June 5, 2013, 8:39 AM
  • EPA: The United States needs $384 billion in drinking-water infrastructure improvements
  • Argentina May Tax Revenue Rises 27.4% on Year to ARS77.8 Billion
  • Portugal 'should leave euro': best-selling economist
  • Portugal's biggest unions band together for general strike
  • Italian businessmen drop trousers to protest hounding by taxman
  • Many Probationers Go Unsupervised Because of Budget Cuts
  • Cost cutting: Spain's national police buy own bullet-proof vests
  • Chicago Public Schools new pension headache
  • Illinois Losing Rally as State Fails to Fix Pension: Muni Credit
  • China gold imports to keep growing after hitting record high
  • Disney hikes some park prices to over $90
  • Beef Prices Hitting Record High for Summer
  • Gold Imports by India Seen Falling as Central Bank Widens Curbs
  • State of Florida to increase yellow light minimums following 10 News Investigation into red-light camera intersections
Daily Digest

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Daily Digest 5/7 - France's Budget Gap Widens, Australia Faces Decade Of Debt

Wednesday, May 8, 2013, 9:03 AM
  • Unemployment haunts Social Security recipients
  • Spanish Banks Refinanced, Restructured $272.4 Billion in Loans
  • Australia faces decade of debt, economists warn
  • France's budget gap widens in March
  • L.A. city employees urge leaders to go after uncollected fees, taxes to balance $7.7B budget
  • Copper theft epidemic has lawmakers looking for answers
  • Wall Street sees Fed buying $1.25 trillion of assets in stimulus: Reuters poll
  • India's cheap food plans to prove costly for government
  • French Industrial Output Drops as Hollande Aims to Revive Growth
  • Wichita school district counts record number of homeless children
  • Greenspan-Era Faith in Fed Seen With Bernanke: Chart of the Day
  • Many Americans say they can't retire until their 70s or 80s
  • Bankers Warn Fed of Farm, Student Loan Bubbles Echoing Subprime
  • Australian Central Bank Cuts Key Rate to Historic Low
  • New red light camera law could raise cost of appeals
  • Moody’s Says Cities View ‘Strategic Default’ as Less Taboo

Off the Cuff: Malinvestment & Slowing Money Velocity

The 'benefits' of trillions in newly printed money
Thursday, March 14, 2013, 11:36 AM

In this week's Off the Cuff podcast, Chris and Charles discuss:

  • Do Debts & Deficits Really Matter?
    • That's the ideological war being waged right now by our policymakers
  • Medical Mal-investment
    • The US wastes more money per capita on healthcare spending than nearly any other country
  • The Need for New Solutions
    • New models are beginning to emerge at the grassroots level
Daily Digest

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Daily Digest 3/13 - U.K. Faces Growing Vulnerability, German Bank Doubles Reserves

Wednesday, March 13, 2013, 8:18 AM
  • Spain unveils $4.6-billion plan to get young back to work
  • Portugal in worst recession in 37 years
  • Duty hike on gold expected to reduce imports: Minister
  • France's Francois Hollande admits to miss deficit target
  • Students Rally Against Proposed Tuition Hike
  • Military tuition assistance another casualty of the sequester
  • Abe’s Weak Yen Policy Erodes Japanese Tourist Spending in Korea
  • Local Lawmakers Lead Fight To Ban Traffic Cameras in Ohio
  • German Central Bank Doubles Reserves
  • U.K. Faces Growing Vulnerability