There’s an article at Bloomberg today that verifies what I’ve been saying since December of 2012: Abenomics is failing and is having the exact opposite effect of what was intended.
From Bloomberg: Japan Inflation Accelerates to Fastest Since 2008 on Energy
Japan’s inflation accelerated to the fastest pace since 2008 in August on higher energy costs, underscoring pressure on Prime Minister Shinzo Abe to drive wage increases as he seeks to end 15 years of deflation.
Consumer prices excluding fresh food increased 0.8 percent from a year earlier, the statistics bureau said today in Tokyo. The median forecast of 30 economists surveyed by Bloomberg News was for a gain of 0.7 percent. Stripping out energy and perishables, prices fell 0.1 percent.
While, on the surface, and looking at just the core CPI, people are happy about Abenomics, but the cheerleaders are conspicuously silent; a quick peak under the surface shows why as there are massive problems building up.
Abenomics is supposed to devalue to currency to increase exports all the while wages increase are supposed to help the Japanese public spend more thereby turbo-charging the domestic market.
But it isn’t working out that way at all.
First off all, Japan’s Trade Deficit was massively in the red for the 14th straight month in a row and hit a historical deficit record at the same time.
For the eight month period, the trade deficit hit a record of ¥6.8 trillion, up 66% from the same period in 2012, and up 332% from 2011. During that period in 2010, Japan had a surplus of ¥4.2 trillion! Japan’s trade fiasco is on a steep downward slope. August was the worst August ever, July the worst July ever, June the worst June ever…. There’s no discernible turning point on the horizon.
And secondly, wages for workers (the people who were supposed to benefit from all this and start buying stuff) have gone down for the 14th consecutive period in a row (I guess 14 is the magic number for the failure of Abenomics!) Bloomberg again:
Salaries in July extended the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 percent from a year earlier, a 14th straight drop.
Not only are wages declining, while energy (and food) costs are rising, there’s a double whammy of a 40% Sales Tax just around the corner!
Gasoline prices rose this month to the highest since 2008, according to the industry ministry. The nation’s last operating nuclear reactor was halted for maintenance on Sept. 15, leaving Japan without atomic power for the first time since July 2012, and more dependent on imported fuel…
The yen’s 20 percent slide against the dollar in the year through August pushed up fuel costs. While the data point to early success for Abe, a sales-tax increase scheduled for April will add to the burden on households and risk dragging on the nation’s economic rebound. Abe is set to announce a decision on the levy on Oct. 1.
“Without pay increases, households’ purchasing power will weaken gradually,” said Taro Saito, director of economic research at NLI Research Institute in Tokyo. “Abe will have to keep up his campaign on companies for wage growth.”
In this insane Keynesian experiment that Abe is trying, wages are supposed to rise along with inflation. In Japan, the opposite is happening.
This, again, is simple mathematics, folks…. We are witnessing a slow-motion train wreck in Japan.
The good news is consumer confidence is also way down in Japan (for the third month in a row)… Which is usually a precursor to a change in government….
…Rising prices in the absence of higher incomes have dented consumer sentiment, which could undermine consumption…
…Consumer confidence fell in August for a third consecutive month, and sentiment among merchants declined for a fifth month.
The average consumer confidence drops for three months in a row, amongst all the Abenomics recent good news? (polite laughter and applause here, please!) And amongst merchants, it drops for 5 months in a row, and people say I’m negative? Yes, OK. Fair enough. I may be negative on Abenomics, but I work amongst the Japanese and hear what they say and talk about. I’m no more negative than they are.
I just report the facts. Just the facts, ma’am!
Like I said, the best thing here in the news is the drop in confidence part. Why? A drop in confidence amongst the Japanese has always lead to a change in government… But, alas, in Japan’s case, and judging from recent history, a change in government won’t help… It’s too late to fix the debt to GDP problem, energy costs are skyrocketing, the nuclear power plants aren’t coming online anytime soon (and even if they did, that’s not exactly good news, is it?) and the system is broken.
Any new government of Japan will be more of the same: Meet the new boss, same as the old boss… Japan’s problem isn’t this political party or that… Japan’s problem is the government.
There’s a storm coming, folks.
I don’t get it.
Everyone knows that the attention spans of people are getting shorter yet rock musicians (people who are appealing to those with the shortest attention spans), keep making songs that are getting longer.
According to the website: Attention Span Statistics data:
“The average attention span in 2012, 8 seconds. The average attention span in 2000, 12 seconds.”
Yet, people keep making pop and rock songs longer and longer! Ever since Queen’s Bohemian Rhapsody, which was six minutes long, pop and rock musicians keep making songs over four, even five minutes! Is this counter-intuitive? Or just plain dumb?
I think it’s dumb. Let me tell you why…
I program and select all the music for a very popular morning drive-time program in Tokyo. Our service area covers 35 million homes, so it’s huge. I know that many people like me (I’ve asked) have agreed that the “perfect pop/rock song” is 2.5 minutes long.
Yet musicians keep sending us their new singles and the songs are all over four minutes. I hate it!
It’s just plain, well, dumb. Why?
OK. It’s simple. Did you know that there are ten times more listeners at 7 am than there are at 7 pm (due to people driving in the morning)? Did you also know (at least in Japan’s case) that the average listener listens to FM radio for only twenty minutes at a time? That’s right.
Now, morning shows (the ones with, by far, the highest ratings) need a quick tempo and a fast pace. We don’t have time to screw around. We have to get lots of information, news, weather, sports, traffic, commercials and music shoved into the shortest time span possible. That means we play lots of short songs in the mornings (when, as I mentioned, the ratings are highest)… That means we (well, I won’t) play any songs at all that push the 3:15 mark. I greatly prefer short songs. (See my show webpage and song list here: http://www.interfm.co.jp/wtf/index.php?mode=fri&id=32 … Scroll down. You can see that nearly all songs before 8:30 am – peak drive time – are under 2:45!)
If you send me a 2:30 song, then I will greatly consider that for airplay during the peak times… But, if you send me a 5 minute song? Yeah, later on in the show… Or never. Long songs are difficult to use.
Of course, I’m talking about the fun shows that are on in the mornings (did I say the ratings = more listeners – were higher at that time? I did? Thanks.)
That means, in my case, I will play short, up-tempo songs like early Beatles, Stones, Ramones at peak times to get the listeners pumped-up and ready to go in the mornings. We don’t do easy listening…
It used to be that, long ago, songs were always under 3 minutes. What happened? I don’t know. But this “long song” business is foolish.
It’s simple; if you want your songs played when there are the most listeners, then make them short. If you can’t say it in 2.5 minutes, then you need to work on it.
Of course, there is a time and place for longer songs…. But generally not on the highly rated morning shows… I’m trying to wake people up in the morning and cram in as much as I can in the shortest space I can…
Knowing this, you wanna make long songs?
“Brevity is the soul of wit.” – Lord Polonius from Shakespeare’s Hamlet 1602
NOTE: Oh, and PS: If you are a new musician, then make sure you “Like” the FB pages of the radio programs you are (or want to) promote to. Our FB page is here: https://www.facebook.com/WhattheFriday
“The price of anything is the amount of life you exchange for it.” ~ Henry David Thoreau
Before I go on, let’s do some chemistry (oh, I wish!) First off, the elements. I’d like to point out to you, the newest discovery in the elements and that is Governmentium. It is the heaviest of all elements, yet it does absolutely nothing good. It just expands.
Term: Governmentium: Fefinition: Inert, worthless.
The heaviest chemical element yet known to science. Governmentium (Gv) has 1 neutron, 12 assistant neutrons, 75 deputy neutrons, and 224 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert. However, it can be detected as it impedes every reaction with which it comes into contact.
….Governmentium mass will actually increase over time, since each reorganization will cause some morons to become neutrons, forming isodopes. When catalyzed with money, Governmentium becomes Administratium–an element which radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.
In my last few postings, I complained about the 2020 Olympics coming to Tokyo. Actually, not exactly that; I complained about how the government will use that as an excuse for out-of-control spending and the subsequent taxation.
Well, lo and behold, not 5 days have passed and the hammer has come down. Japanese Prime Minister Shinzo Abe has pronounced that he is going ahead with the increase in sales tax. From the Japan Times “Abe to raise sales tax to 8% as scheduled – More stimulus in works but critics fear hike will hobble recovery”:
“Prime Minister Shinzo Abe has decided to raise the consumption tax rate to 8 percent next April as planned, emphasizing the need to demonstrate fiscal discipline by making good on a pledge to the international community, a source close to him said Thursday.”
Oh? So finally this guy wants to show some “fiscal discipline” concerning the Japanese debt to GDP problem? Great. He also admits that a sales tax increase will most probably slow down the economy… He wants to show the critics that the tax increase will not slow down the economy, so what does he do? In true Keynesian fashion he is going to spend more money! The Japan Times article goes on with a laugher and total contradiction of the “fiscal discipline” comment Abe made (polite laughter here).
“Abe, who has been trying to shake the economy out of nearly two decades of deflation, is also considering implementing a stimulus package worth ¥5 trillion to prevent the tax hike from slowing down the economy, the source said.”
See? We have to show fiscal discipline (translation: controlling government spending) by increasing government spending. Let me rephrase that: We have to show some fiscal responsibility by spending more money!
What did I tell you? Throw that ¥5 trillion (¥5 trillion yen? Is that $50 billion USD?) on top of the ¥10 trillion (is that $10 billion?) – it will be much more, you’ll see – they plan on spending on the Olympics and you have the government spending $15 billion dollars on crap. FIFTEEN BILLION US DOLLARS!!!!
Ah, but it’s just a drop in the bucket, right? The Japanese government is already at least $10.46 trillion dollars in debt - that’s about 240% of GDP? Another $15 billion is a drop in the bucket, right?
I’ll bet lots of people who were cheering the Olympics slapped themselves on the forehead when they heard the news about the tax rise. I didn’t. I just thought, “See? I told you so.” You just knew that the 2020 Olympics coming to Tokyo would serve, for now, merely as a green light for MORE out of control government spending.
They already said they were going to spend about $10 billion USD… Like I said, I bet you a half a bento it will be waaaaaaaay more than that!
“…The cost of Tokyo’s bid fell between $5 billion and $6 billion. That includes the construction of 11 new sporting venues and 10 temporary ones, at a cost of $3 billion. The Olympic village will cost another $1 billion, according to the IOC.”
See? It works already! Like I said, the Olympics are an excuse for more out of control government spending and, with that, a cover to increase the sales tax… It’s funny that when the former government who made this tax increase passed the law, Abe and his cronies were against it… Now they are for it.
Who said that these political parties weren’t simply two sides of the same coin?
Abe and his cronies claim that the Olympics will charge Japan’s infrastructure investment and help the economy. That’s bullsh*t folks. Don’t forget, that Japan ran up this 245% debt to GDP all through the 80s, 90s, 2000s with wasteful infrastructure investment. How is having an event going to change the equation?
These words are already cropping up when discussing real estate developments in the Harumi area, reclaimed land by the Tokyo Bay where the Olympic village will be sandwiched between the two main competition sites. Two dozen high-rises are to be built (though high-rises on reclaimed land did badly during the earthquake in 2011 as the ground “liquefied”) with nearly 11,000 luxury apartments. There will be dining halls, seaside restaurants, and parks. And views of the Rainbow Bridge to Odaiba, a manmade island with hotels and apartment buildings, but not much else.
All this activity, including new transportation, will jack up apartment prices by 20%, Sanyu Appraisal Corp. announced giddily. This bubble excitement comes on top of the bubble the BOJ’s free trillions are already creating in the Tokyo property market. It would “particularly benefit land owners” in Tokyo Waterfront City, predicted a report published by Macquarie Securities to further stir up bubble enthusiasm. Nomura Securities jumped into the fray with its own prediction that it would “attract a new wave of investors to housing in the bay area” that would “push up property prices.” Alas, if wages remain stuck where they are, and if inflation cuts real wages further, who is going to buy these beauties? The few beneficiaries of Abenomics and foreign investors?
Yeah, let’s build lots of building and sky rises… Just like the late 80s when these things were built in Makuhari in the late 80s… These beautiful office buildings and high rises still stand… At 50% (or less) occupancy. Huge money losers…
And most Japanese people cheer the 2020 Tokyo Olympics? Incredible. If they are happy now, then I guess they’ll all be having orgasms when their sales tax goes to 10%…. Any bets for 15% (or more) by 2025?
“Panem et circenses” (bread and circuses) – Juvenal
No problem about the debt, though… Our kids can pay for it.
Thanks to my friend Mark Davis for the Thoreau quote.
(This post will be either loved or hated by many people. This is just my opinion… One not spoken loudly in public… Don’t get mad at me about it. My opinion isn’t going to change a thing. If it makes you mad, then perhaps it’s because my points can’t be denied?)
It was just announced this morning that Tokyo was awarded the 2020 Olympics… Egads! The worst result possible (for the people of Japan!) Congratulations to the “losers.”
But don’t get me wrong, I think the Olympics are OK… As long as the taxpayers don’t get stuck with the bill…. But, for the life of me, with our current economic problems, I can’t see how this is going to help. No. I only see it making things MUCH worse… Excepting for the “Bread and Circuses” part.
No, I’m not happy about it. One would have thought that because of stuff like Fukushima that Tokyo getting awarded the Olympics would have never happened in a million years… But it did. I guess Abenomics and throwing money around works! Of course, or as Homer Simpson would say, “Doh!”
The announcement was made this morning. Yahoo reports: Tokyo will host the 2020 Olympic games, beating out Istanbul and Madrid:
“…Both Istanbul and Tokyo offered notable steps forward for the Olympic experience. Istanbul would be the first time that a primarily Muslim country would host the Olympics, while Tokyo would be the first Asian city to host it twice. Tokyo last hosted the Games in 1964.
Madrid had attempted three straight times to win the Games, but failed yet again despite a pitch for a “sensible, reliable and trustworthy” Olympics. Madrid officials noted that 80 percent of facilities which would have been used for the Games were already built and in use.”
That last line is the telling one. “80 percent of all facilities… were already built and in use.” Yeah. That kills Madrid. Why? Well, if shit doesn’t need to be built then who is going to throw around all those juicy construction contracts (built on taxpayers money) to their buddies in big construction companies? Who will pocket the kick-backs?
Yeah, in spite of all her problems, Japan still has a better economy than Istanbul and Abenomics guarantees a lot of (freshly printed money) will be thrown around… The Japanese taxpayer? Bend over and scream for more.
By the way, it’s all just anecdotal evidence, but I asked dozens of Japanese people (you know, lowly workers and tax payers) if they wanted the Olympics. Not a single one of them said, “Yes.”
“Oh, but the Olmpics will be good for the economy!” Oh really? Tell another country that is deeply into corruption and kickbacks, Greece, about that one. This from the Daily Beast:
“Indeed, the $12 billion cost of hosting the Games contributed to the Greek economic collapse and left an abandoned Olympic Park, which has been overrun by weeds and graffiti artists.”
Yeah, but that’s Greece. Japan is different, right?
Nope. Japan should have learned her lesson a short 16 years ago. Please refer to Yahoo: Olympic Cities Booms and Busts?
Nagano, Japan (Winter 1998) Boom or Bust? Bust
The full cost of the Nagano Winter Olympics will never be known as the documents accounting for money spent on the Olympic bid were burnt on the orders of the Olympic Committee vice-secretary general, Sumikazu Yamaguchi. (Emphasis mine) Yet it is clear that it went vastly over budget, with new infrastructure to make the Games work in this small Japanese city costing up to A$9.4 billion. As a result, Nagano fell into recession, with the debt on Olympic projects roughly A$28,000 per family and growing. It is estimated that these debts will take until 2015 to pay off.
The Olympic venues alone cost A$20.6 million per year in upkeep, and their rental income brings only one-tenth of that amount. Although Nagano is working hard to stop the Olympic venues turning into rotting white elephants, the cost of their upkeep is not easy for the city’s finances. Today it still costs A$2.3 million a year alone to maintain the M-Wave, where local school children take skating lessons on a high-speed 400-metre rink in winter. The installation of a high-speed bullet train during the Olympics also posed problems for the local hotel industry as more skiers came on day trips rather than spending the night and locals are more inclined to go on shopping days to larger cities.
The Japanese government currently has the highest by-far debt to GDP ratio in the entire world… Current estimates have it at 245% of GDP and Japan’s Vice Minister of Exchange Rates tell the Telegraph UK:
“A debt ratio of 245pc of GDP is not really safe, and it is not happening because we are investing,” said Takehiko Nakao, Japan’s ‘Mr Yen’ or vice finance minister in charge of the exchange rate.
Mr Nakao said the scope for further fiscal stimulus is running out and the country must restore public finances to a sustainable path by the middle of the decade. “We can’t continue to expect people to lend money to us,” he told The Daily Telegraph.
The comments touch on an acutely sensitive topic. A number of global hedge funds and banks have begun “shorting” Japan’s debt, the world’s biggest at $23 trillion.”
Global Hedge Funds are now “shorting” Japan?… Now the Japanese government wants to print and borrow even more money to pay for an Olympics? (An Olympics that, by the way, will have to be paid back from the taxpayers and through destruction of the buying power of the currency through printing and inflation… Gasoline is already at it’s highest price in years!)
Testoterone Pit sums it up in: Abenomics Wins: Budget And Inflation Both Jump (Over The Cliff)
It would be ridiculous if it weren’t so sad: Facing exploding budget deficits and an uncircumnavigable mountain of debt over twice the size of the economy – Japan’s two largest economic problems – the government in its blind devotion to the religion of Abenomics screams, “Damn the torpedoes, full speed ahead.”
The new budget requests from government ministries for the next fiscal year, which starts April 2014, total over ¥100 trillion. This includes the special account for reconstruction. The ¥99.2 trillion (over $1 trillion) for all other expenses, the mostest ever, is up a breath-taking 7.1% from the current budget of ¥92.6 trillion. And then there is even more that hasn’t been specified yet.
While Abenomics has promised to stimulate the economy, it is certainly stimulating Japan’s most destructive problem, the deficit. So the ministries added ¥3.5 trillion to be handed out to Japan Inc., on top of the money it’s already getting, to promote growth (of the deficit). The Ministry of Finance threw its own goodies into the basket: ¥25.3 trillion ($257 billion!) in costs to service Japan’s national debt of over ¥1 quadrillion. A jump of 13.7% from the pile set aside for the current fiscal year.”
Read more on the government plan to destroy the currency and thereby jumping inflation here:
Yeah, and one last thing, about that “reconstruction issue” that Abe and his cronies pay so much lip service to… Has anyone seen the areas around Fukushima Dai-ichi and the areas that were destroyed by the March 11, 2011 earthquake and tsunami disaster? Nope? I did. Just last week…
Guess what? It still looks basically like what it did two years ago right after the disaster… Thousands of cars and trucks are still sitting out in open fields… Entire towns and small cities are smashed and still shuttered….
There doesn’t seem to be a single person there who is happy with the pace of reconstruction (whether they are pro-nuclear power or anti-nuclear power)…
And now Abe and Japan are going to print up a bunch of money, increase the national debt, throw it all on the taxpayers to build new sports gyms and hotels in….. Tokyo?
Now, mind you, I am not pro-government spending for any construction projects at all, anywhere… But I am not in the government…
I’m wondering where the priorities lie for the supposed “leadership” of this nation? But, of course, why do I wonder? Their priorities lay where they always have been: Buttering the hands of their political friends and allies. Where else?
Never forget that the Olympics are a privately run business, when they profit, they keep the profits… When they lose money, the local governments socialize the losses and put them on the backs of the taxpayers.
This isn’t going to last very much longer…
No modern Olympics games has ever made any money.
Watch the video: http://www.youtube.com/watch?v=cLxYNM1ziFI