A terrible corporate hangover from the consumption-tax hike has set in.
Entries in Japan (104)
Even the soothsayers and spin doctors expected a downdraft after Japan’s consumption tax was jacked up to 8% from 5%, effective April 1. But not this.
By David Stockman: In a decade or two, nearly 40% of the Japanese population will be retired; and the single-risk it should never take is to induce a collapse of its currency, and the resulting sharp inflation of its import bill for virtually all its energy and industrial materials.
The miracles performed by Abenomics – an economic religion touted with blinding exuberance around the world – and the endless wonders performed by the Bank of Japandemonium, are now coming home to roost.
China’s moves “discourage” Japanese corporations from doing business there, said the Japanese government on Monday. That’s exactly what has been happening for months. In a most dramatic way, and where it hurts China the most.
By David Stockman: Now it has happened. For nearly two days there was not a single cash bid for the 10-year JGB in what is a $10 trillion market. At least for the moment, liquidity has dried-up completely. This is the canary in the Abenomics shaft.
This year has been lumpy for stocks around the world. Gone are the wild rallies followed by mild rallies interrupted by minor downticks, followed by more rallies. That’s so 2013. It's as if on December 31, someone turned off the spigot. But in Japan, it turned into a rout.
Japanese corporations no longer even try to invest in Japan, but they’re falling all over each other grabbing the Bank of Japan’s freshly printed dough to invest it overseas.
Abenomics, a democratically elected economic religion, was to save Japan. But the plan has already gone to heck. Not in small increments over the years with minor ups and downs, but in relentless month-to-month leaps whose viciousness surprised even the deep cynic in me.
Kudos to the Bank of Japan. Its heroic campaign to water down the yen has borne fruit. The people may not have noticed it because it’s not indicated on their bank and brokerage statements, but 20% of their magnificent wealth has gone up in smoke in 2013.
According to Japan’s state religion of Abenomics, devaluing the yen would boost exports and cut imports. The resulting trade surplus would jumpstart the economy and induce Japan Inc. to invest at home. It would save Japan. But the opposite is happening.
Just before Christmas when no one was supposed to pay attention, Japanese Prime Minister Shinzo Abe and his ministers agreed on a budget for fiscal 2014. It’s a doozy. Instead of slowing down the fiscal fiasco, Abenomics is speeding it up. With an elegant solution.
Japan’s new economic religion of printing yourself out of trouble works. For the elite. This is a lesson learned from the Fed. But how are workers and consumers faring? And by implication the real economy?
The dogfight over Japan’s biggest problem, its gargantuan government deficit, entered its annual ritual of leaks and pressure tactics that usually lead to a pre-Christmas draft budget with an even bigger deficit. But this time, it’s different. Very different.
The beneficiaries of Abenomics are now coming out of the woodwork with soaring profits – but they’re doing the opposite of what Abenomics promised they’d do: they’re diversifying away from Japan.
Today it was Hotel Okura Co., which operates landmark hotels across Japan. It confessed its restaurants had misrepresented 235 menu items. That followed confessions by leading department store chains, other high-end hotel chains, traditional ryokan hotels.... New revelations bubble up daily. And consumer confidence is taking a hit.
“The JGB market is dead,” announced with finality Tetsuya Miura, chief bond strategist at Mizuho Securities, one of Japan’s 23 primary dealers that have to bid on government securities. It had been “sacrificed” by the Bank of Japan, said another industry heavyweight.
TEPCO, the bailed-out owner of the Fukushima nuclear plant, famous for its lackadaisical handling of the fiasco and its parsimonious delivery of information, reported earnings today. It was a doozie! And a glimpse into what's in store for Japanese taxpayers.
Most powerful person in the world? Putin! Sez Forbes. At least, it wasn’t Merkel, who has been throwing her weight around when she found out that her Handy had been bugged by the NSA, just like our cellphones. We have to take it; she gets to make a big stink and gripe to Obama on the (bugged) phone.