Tag Archives: Yen

  • Insider

    We’re All Turning Japanese

    Japan is the proxy for our future
    by Gregor Macdonald

    Tuesday, September 10, 2013, 5:40 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…

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  • Blog
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    Abenomics’ Dismal Anniversary

    Why we need to care about Japan's continued decline
    by Gregor Macdonald

    Tuesday, September 10, 2013, 5:39 PM


    Abenomics, the radical set of reflationary policies designed to (air)lift Japan out of its multi-decade slump, is approaching its first anniversary. Don't expect a joyful celebration.

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  • Blog
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    The Dead Weight of Sluggish Global Growth

    Weighing heavier each year
    by Gregor Macdonald

    Tuesday, July 9, 2013, 5:04 PM


    Global Slowdown

    The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility?

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  • Daily Digest
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    Daily Digest 5/10 – Living On A Budget, No “Peak Natural Gas” Anytime Soon

    by DailyDigest

    Friday, May 10, 2013, 3:09 PM

    • Stocks Are Officially in a Blow Off Top
    • Kevyn Orr: Detroit Is In Worse Shape Than I Thought 
    • Living on a budget: Readers' stories
    • Mobiles 'to outnumber people next year', says UN agency
    • The man who makes his living whittling wooden spoons
    • Yen breaches 100 threshold mark against US dollar
    • Renting your home can be lucrative, but are you ready for tenants from hell?
    • No "Peak Natural Gas" Anytime Soon
    • Union joins environmentalists in call for stricter controls on raw log exports

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  • Blog
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    Japan vs. Newton (and Certain to Lose)

    Running head first into hard limits
    by Chris Martenson

    Tuesday, April 9, 2013, 1:17 AM


    Conventional thinking and reporting has it that Japan is conducting a larger version of the same monetary experiment they’ve been running for about 15 years.  The implication here is that we can safely analyze what Japan is up to through the same monetary lens as always, but with a slightly wider aperture.

    By now, we are all familiar with the details.  Japan has initiated a program of monetary expansion that goes by the shorthand of 2-2-2.  In 2 years, the Bank of Japan (BoJ) will fully double the monetary base as they seek a minimum of 2% inflation.

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  • Daily Digest
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    Daily Digest 3/27 – Cyprus Banks Stay Shut Until Thursday, Spain Bank Offers Grim Forecast

    by saxplayer00o1

    Wednesday, March 27, 2013, 2:55 PM

    • Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief
    • Spain's central bank offers grim economic forecast
    • Mr Yen cautions on Japan's 'unsafe' debt trajectory
    • House To Propose College Tuition Increase
    • California State Treasurer emphasizes shrinking retirement savings
    • Portugal to contract 2.3% in 2013: central bank
    • Bernanke rejects competitive devaluation worries
    • Cyprus bailout: Banks to stay shut until Thursday
    • Recession keeps Italy's banks at risk: IMF

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  • Insider
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    The 10 Next Predictable Steps to Japan’s Unfolding Disaster

    As Japan goes, so will the rest of the world soon after
    by Gregor Macdonald

    Monday, February 18, 2013, 10:05 PM


    Executive Summary

    • Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
    • Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
    • Rising bond rates are all but guaranteed.
    • Gold vs. the yen is surging and will pick up momentum from here
    • The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds

    If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.

    In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.

    Further “abundance” harvesting from this point forward will be difficult if not impossible.

    Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.

    Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.

    Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility.

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  • Blog

    The Arrival of Japan’s Sunset

    The repercussions will be tremendous
    by Gregor Macdonald

    Monday, February 18, 2013, 10:05 PM


    For a successful technology, reality must take precedence over public relations, for nature cannot be fooled. ~ Richard Feynman

    Waiting for Japan's economy to make a strong recovery has been an ongoing game since 1990. Shall we play that game one more time?

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  • Insider
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    Off the Cuff: When the Wheels Will Come Off

    The argument for a major correction by Spring
    by Adam Taggart

    Thursday, February 14, 2013, 3:47 PM


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

    • The (Dire) State of the Union
      • The money for the Administration's grand vision just doesn't exist
    • The Housing Market
      • Bubble pricing returning to several markets
    • Currency wars
      • Why the dollar will likely strengthen further from here
    • The Next Correction
      • Here by summer?
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  • Insider
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    Off the Cuff: Irrational Exuberance

    Partying like it's 1999 in 2013
    by Adam Taggart

    Thursday, January 3, 2013, 12:16 AM


    In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

    • Market Euphoria
      • ​Stocks explode higher for irrational reasons
    • The Fiscal Cliff Fake-out
      • ​No spending cuts, no curbs on the rich
    • ​Japan: The Ticking Time Bomb
      • ​The leading candidate for currency collapse

    Well, it's now 2013, and the stock market is partying like it's 1999.

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