While the US is bogged down in endless wars against angry Muslims, as we fall apart internally due to using assassins to fight our wars, as we go bankrupt while trying to patrol the planet, the US and Japan as well as NATO economies are falling into one slump after another. Meanwhile, China unleashes North Korea into the teeth of US/Japan territorial demands and what I call ‘Baby Dragon’ coughs burning hellfire threats at South Korea and Japan. So much for our naked attempt at circling China with Japanese territories!
The head of the Bank of Japan is resigning early to let in Abe’s choice who is a ‘explode the yen money bomb’ person who will print yen like crazy and this, he imagines, will stop the Chinese…HAHAHA. Fat chance. One of Japan’s top trade partners is still China although the Chinese are beginning to strangle this trade. It always pays to look at the FOREX reserves of various nations to see who is holding what currencies and why:
China is not only the #1 currency holder, it has nearly triple what Japan has. This means, China can easily sop up a lot of yen if they force the Japanese to do business using yen. Japan is terrified of this. They have decided this year that the Bank of Japan will now sop up ALL government red ink rather than sell it abroad because China can buy every yen easily if they think in Beijing, this will cripple Japan’s independence.
The danger of printing trillions of yen is simple: inflation. The Japanese pretend there is no inflation but what there really is: wage destruction. The Japanese worker is falling from first world status to third world status in just one generation. Desperate university graduates are not finding jobs in nearly the numbers the school produces with over one third finding no work in their fields.
The common workers are being systematically reduced to part time wage slaves with no benefits, no healthcare and no hope for future pay raises. So the Bank of Japan can flood Japan with trillions of yen but this won’t circulate inside Japan’s economy. The US does the same: half of all the money created by our bankers and the Fed flowed overseas and we have depression in wages while inflation slays our finances when it comes to food, fuel and other things we need to survive.
A few facts about the Japan Foreign Exchange Reserves
Foreign Exchange Reserves in Japan decreased to 1258809 USD Million in February of 2013 from 1267299 USD Million in January of 2013. Foreign Exchange Reserves in Japan is reported by the Ministry of Finance, Japan. Historically, from 1957 until 2013, Japan Foreign Exchange Reserves averaged 231803.10 USD Million reaching an all time high of 1306668 USD Million in January of 2012 and a record low of 455 USD Million in September of 1957
And before the Great Tohoku Quake and Fukushima disaster, it was less than $110 trillion. During the last two years, Japan has run bigger and bigger government and trade deficits, no longer a surplus trade country. Yet they could pad their FOREX reserves with mainly US and EU currency stashes. This was to weaken the yen so they could export heavily again.
Slowly they are drawing down their funds as Japan’s forex reserves down 4th straight month. Japan unlikely to suffer hyperinflation, says Abe ‹ Japan Today: Japan News and Discussion which is called ‘whistling past the graveyard of central bank disasters in the past’.
“Some people talk about hyper inflation, but I think it is safe to say it is unlikely. If the two percent price target is exceeded, the Bank of Japan would naturally take steps to keep (inflation) within two percent,” Abe told a news conference.
So far, inflation doesn’t happen due to virtually no money flowing to the bulk of the population. The elderly don’t buy cars or other things and young Japanese can’t buy much of anything or even have children. The Bank of Japan issued the minutes of their most recent meeting and it is a bland potpourri of assurances and wishful thinking and like our own Fed, they muse about the declining state of the workers while suggesting nothing to stop this madness:
1. Economic developments Exports continued to decrease, but the pace of decrease had been moderating.
Real exports continued to decline in the October-December quarter of 2012 on a quarter-on-quarter basis, after having registered a large decrease in the July-September quarter. On a monthly basis, however, they rose — albeit very slightly — in November for the first time in seven months, and posted only a tiny decline in December. Exports were expected to stop decreasing and start picking up as overseas economies gradually emerged from the deceleration phase.
Japan decided long ago to forget about domestic markets and put everything into the ‘export to the US’ basket. When the US becomes a basket case country, this flounders. The Japanese make our condition worse but like any leech operation, they need to continue sucking blood. Oneway trade has killed the US golden goose. Before the great quake, Japan was counting on China to sop up more exports. But now this has been thrown away by the imperialist gang in the LDP.
Business fixed investment had shown some weakness on the whole, as that in manufacturing had declined due to the drop in exports and industrial production, although resilience had been observed in that in nonmanufacturing. Machinery orders remained relatively weak due to the drop in manufacturing, but had recently shown signs that they had stopped decreasing.
The rest of the meeting, the Japanese nervously talk about China and they assume China will give up and let the LDP grab territory claimed by China. This is an insane hope. The Chinese daily challenge the Japanese military and are sizing up how weak or distracted the US and Japan are and naturally, unleashed Baby Dragon in North Korea to test the waters of war. North Korea threatens to attack South island and North Korea no longer answering South Korea’s phone calls and now declares 1953 armistice invalid. Basically, they are at war with the US again.
In Japan, corruption at the top continues: Yakuza’s Debtors Forced to Work at Fukushima Daiichi? This story was covered by daring reporters in the Japanese media. Back to the meeting of the board of the Bank of Japan:
The employment and income situation remained severe and the improvement in supply and demand conditions in the labor market continued to peak out.
Private consumption remained resilient and the effects of the decline in car sales due to the ending of some measures to stimulate demand for automobiles had fallen off. The number of new passenger-car registrations, including those for small cars with engine sizes of 660cc or less, fell back significantly through October
Car sales have slumped for years. The domestic market in Japan is in severe decline. Young people can’t buy cars and the elderly can’t drive. When I travel around Japan in Google Map mode, I see very few cars in the streets and even fewer sitting at home but I see more and more bikes mainly with women peddling them. It looks more and more like China 25 years ago.
5. Regarding risks, there remains a high degree of uncertainty concerning Japan’s economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, the possibility of emerging and commodity-exporting economies making a smooth transition to the sustainable growth path, and the effects of the recent bilateral relationship between Japan and China.
The board has no solution to the crisis between Japan and China. They are passive watchers who are now printing a heroic number of yen to fuel higher military spending and more aggression. This always ends badly.
News about the yen from Australia which exports lots of commodity metals to Japan: Japan’s Spring Offensive Against the Yen – International Business Times
In other words, you get a rally in Australian stocks driven almost exclusively by capital flows from overseas. Sure, some of the move will be driven by money coming out of ‘safe’ fixed income assets. And some will come from cash. But a lot will come from investors playing the ‘carry trade’.
These are always the most dangerous type of rallies. They’re dangerous because they’re hard to resist.
Like the derivative contract games Wall Street loves, the Japanese carry trade game created by the Bank of Japan is very popular and it floods the earth with currencies that fuel inflation in particular, inflating stock markets and property markets. And as I pointed out years and years ago, THIS is the problem. We can’t stop Japan from flooding the earth with cheap ZIRP money because we are doing it too! And as China sops up a lot of this money, it makes China more and more powerful because all it has to do is vomit up $3+trillion in foreign money and boom: we have instant hyperinflation hammering the euro, yen and dollar.
And a war over territory will cause this to happen. One last item about our corrupt Congress: Samsung increases spending on U.S. lobbyists to $900K. Yes, our other happy ally, South Korea will, like Japan and Israel, bribe our Congress to pass laws, enable trade and so on so that South Korea can suck us dry. And the Chinese love this, they were very excited to learn that Reagan was bribed by Japan back in 1988. So it is with all our politicians. We didn’t put Reagan in prison and so they all ran with hands out for foreign bribes.
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