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humanERROR - by "Frying Dutchman"
Powerful, lyrical appeal to the Japanese. Slams nuke industry, MSM, bureaucrats, and politicians.

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What the Japanese Trade Deficit Says About the Fraying Fabric In China And Europe

European talking heads have been reassuring us on an hourly basis, lest we forget, that the worst of the debt crisis is over. But the Japanese trade deficit, a measure of reality, not words, tells a different story about the crisis in Europe. And about troubles coming to a boil in China. But neither issue can be resolved by Prime Minister Shinzo Abe’s plan to decapitate the yen.

Trade deficits aren’t the end of the world for Japan. But they’re the end of an era. Since the mid-1980s, Japan has booked large annual trade surpluses, to the total and ineffectual aggravation of US presidents and lawmakers. The surpluses helped fund Japan’s budget deficits without having to rely on foreign investors. Now, these deficits have become a mountain of debt over twice the size of GDP, unequalled in the developed world.

But in 2011, that seemingly endless string of surpluses, on which the Japanese economy had become dependent, broke. Instead there was a deficit of ¥2.56 trillion, small by US standards. It was ascribed to the earthquake and tsunami, fuel imports, etc. A temporary blip. In 2012, the monthly trade deficits got worse, and over the last six months, they occurred in an uninterrupted sequence to reach ¥6.93 trillion ($78 billion), almost tripling from 2011. An all-time record.

Yet, even during the campaign late last year, Shinzo Abe, now prime minister, vowed to toss all fiscal restraints overboard and pile even more deficit spending on that mountain of debt that had been funded by the now evaporated trade surpluses. So the cabinet just approved another round of stimulus spending, $117 billion, the largest since the financial crisis. It will be up to the Bank of Japan to print enough yen and mop up the red ink.

It’s Abe’s effort to goose the economy, or at least remain prime minister for longer than 15 months, which was the limit for his hapless six predecessors, including himself, ever since Junichiro Koizumi vacated the post in 2006 (graph). And it’s causing a ruckus around the world. Politicians and lobbyists are accusing Japan of yen manipulation and of starting the next round in the currency wars, forgetting conveniently that it was the Fed that has been trying with all its might and for years to demolish the dollar, and is still doing so by printing $85 billion a month [The Currency Wars: Now US Automakers Are Squealing].

But Abe’s gyrations had no impact on the trade deficit in December. At ¥641.5 billion, it was once again worse “than expected.” Exports deteriorated 5.8% from December 2011, imports rose 1.9%. Of Japan’s three largest export markets—China, the US, and Europe—two had turned into a veritable trade catastrophe.

China had overtaken the US as Japan’s largest export market. And Japanese companies were brimming with optimism. Then the Senkaku Islands “dispute” erupted—in quotes because Japan insists that there is no “dispute,” the islands being Japanese. It didn’t take the Chinese government long to rile up its people against everything Japanese. And the images floating around the world were ugly.

At first, it appeared to be a spat that, like others, would be, after sufficient commotion, put back in the dirty-underwear drawer, unresolved, but out of sight. Instead, jets were scrambled by the Japanese to counter jets approaching the islands from China, and ships were involved, and perhaps shots might be fired. Rather than a spat, it has become an element of China’s growing territorial assertiveness.

Japan, which spends only about 1% of GDP on its military, can’t rattle its saber loud enough for China to notice. Instead, it has to rely on the resolve of its ally, the US, to keep the Chinese at bay. A resolve that China is testing. While a shooting war is somewhere between unlikely and unthinkable, given the economic ties between the three countries, tensions are rising, and tempers aren’t settling down, and Japanese exports to China are crashing.

In November they were down 14.5%; in December, 15.8% to ¥906 billion. Worst hit were cars, trucks, and parts (-47.5%), machinery (-22.2%), and electrical machinery, which includes tech products like semiconductors (-16.8%). Imports from China edged down by 2.1% to ¥1.24 trillion. And the trade deficit jumped by 76.8%.

This debacle is unrelated to the strength of the yen. It’s caused by the deteriorating relationship between two of the world’s largest trading partners. Knocking the yen off its lofty perch—it’s down 11% against the dollar and 15% against the euro since November—won’t have much impact. In that respect, Abe’s cure won’t work.

Then there’s Europe. In December, exports skidded by 12.3% to ¥561 billion, after having plunged 20% in November. To Germany, which now may be in a recession, they declined by 9.2%, to the UK by 10.2%, to France by 16.8%, to Spain by 26.2%, and to Italy by 28.2%.

These are crisis numbers, a function not of a strong yen but of the European economies that, despite ceaseless declarations to the contrary, have stepped up from a debt crisis to a full-blown economic crisis. And in this environment, Abe’s cure—demolishing the yen—will largely be ineffective.

And here is an awesome, amazing, and powerful appeal (video with lyrical English text) to the people of Japan to open their eyes. It slams the nuclear industry, the mainstream media, government bureaucrats, and politicians of all stripes.... humanERROR by “Frying Dutchman” (video).

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Reader Comments (6)

re the islands > Rather than a spat, it has become an element of China’s growing territorial assertiveness.

no .. it's a result of US declaring unilaterally and illegally that Japan has administrative control of disputed area. Japan is acting as if US blather on the subject is the word of God, ie. it belongs to them because the US said so.

So, as usual, the US interference and encouraged belligerence is at the root of the problem.
January 24, 2013 | Unregistered Commentermijj
Too m,

Yeah go ahead and blame the USA for everything. Fact of the matter is that Japan controlled the islands as a result of the 1908 Treaty of Shimonoseki and that Japanese actually lived and worked on the islands around the year 1900.

next we'll be hearing that China "owns" the Hawaiian Islands and the USA becuase some Chinese ships sailed there 500 years ago..............
January 24, 2013 | Unregistered CommenterLee
Japan has borderdisputes of different sorts with ALL its neighbours (Russia, China, Korea, Taiwan).
And so basically has China (only with a lot more neighbours). And looking at Asia nearly all countries are in a similar position.
Caused by the facts that it had no priority before to solve them and loss of face stuff.
On top of that come minority issues. Half the surface of China is in fact minority land and so are a lot of other countries.
This will almost certainly be a huge problem in the future and with a lot of potential to run out of control as the countries involved simply doesnot seem able to solve it and the world gets more and more overcrowded and desperate for resources.

In Europe almost all borders are relatively clear. In the Americas they are largely artificial anyway, in Asia they are simply not. France and Germany are seperated in areas with peoples and resources. So the issue before gave rise to a lot of war situations but it was tackled early.
China and India are seperated (as an Asian example) by previously not inhabited areas. With most of the seas it was similar, nobody really cared who owned it. That has changed. Add the fact that most Asians are highly nationalistic and loss of face stuff and you have a permanent source of conflict.
January 24, 2013 | Unregistered CommenterRik
From an economic pov probably what we see here (as we have seen before in the US) is the uncoupling of especially larger international companies and their country of origin.
If you would look at Japan including Japanese comnpanies there would most likely still be a huge surplus. There isnot because production has been moved to China, Vietnam, Thailand, Indonesia and alike.
The cost of doing business as far as the productionside goes in the West (incl Japan) is simply way too high for companies that have to compete globally.
Has a lot of complications.
-Attacking them on low tax payments will most likley not work, they simply will move activities even faster and the West will be even worse of.
-As a source of employment they will lose part of their importance, SMEs are likley to become more important).
January 24, 2013 | Unregistered CommenterRik
The matter of fact is US did not have the right to arbitrarily assign ownership of these islands (China calls it Diaoyu, Japan calls it Senkaku). If they should belong to China, US made a mistake. If they should belong to Japan, US should come out and state the facts for it. If US didn't know, and still do not know, then the right thing for US to do is to admit that they made a mistake in 1972. That the ownership of these Islands should be up to negotiation between China and Japan. US did not do that.

Instead US confirm that they would help Japan defend these islands, that they would setup missile defense system. It's an act that aimed at causing conflict.
January 25, 2013 | Unregistered CommenterReformedSheep
Japan invaded other countries over half a century ago and the Japanese nationalists want to do it still because they have only an island and need resources and everything else. They did it just like the British did it. Until the Japanese people all realize and accept what the British already accepted and dealt well—give up invaded land and cooperating with the world for resources, there will always be problems in Asia. It is unwise that the US again has acted for convenience and alliance of the moment, instead of acting on principles and fairness.

The US should not forget that encouraging an invader’s mentality can easily turn on against itself, just like supporting the Taliban in the 80s ends up supporting the terrorists against the US. Someday, there could be another Pearl Harbor again. Two countries competing for power can easily find themselves at war, as history repeatedly shown.

The Chinese people should always stand up against invaders, even if their government cannot. This will be good for the whole world. Encouraging the invasionary mentality of a people with brutal acts of invasion is unwise for the whole world. If the US supports Japan merely because they think they can control Japan, they should be very careful. They should think “how many of the world events they are really controlling? Which one? In the middle east, or south Asia?”


"Japan in effect stole the islands from China in 1895 as booty of war ("Treaty of Shimonoseki").

It is certainly a very good question to ask why Japan kept the annexation of the islands (in 1895, Treaty of Shimonoseki) for so long. If it was a lawful annexation, why the secrecy?

There were at least the following reasons:

1. The cabinet decision of 14 January 1895 was not lawful by Japanese domestic law and practices because there was no direct "approval" of the Japanese Emperor by imperial decree. The annexation was therefore illegal by domestic law and not legally binding by international law.

2. The survey carried out by the Okinawa's authority in 1885 was never completed and therefore was inconclusive to show the islands were Terra Nullius, i.e. with no owner. The Okinawan knew very well the islands were Chinese territories.

3. Since Japan already "got" the islands by the Treaty of Shimonoseki, and China was not in any position to object (Japanese gunboats were better then!), there was no real need to make the annexation public."

More at "The Inconvenient Truth Behind the Diaoyu/Senkaku Islands" -
January 25, 2013 | Unregistered Commentermatrix2012

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