Japan Wrecks The Yen Via Buying Government Debt

Japan’s export wealth depended greatly on US and EU markets.  These, in turn, depended greatly on a global housing credit super bubble to increase ‘productivity’ which is bank-speak for ‘dropping wages, rising hours for labor’.  The purchasing power of the masses hinged nearly entirely on putting all assets into hock and then adding personal unsecured loans at high interest rates on top of this.

 

The mechanism for funding spending in a wage-declining era was simple: people ran up huge unsecured credit debts while waiting for the nominal value of their property to rise and the get a new mortgage or secondary mortgage on the property and then repeat this process to basically, infinity.  But we know intellectually, infinity never comes, it can’t come.  But neither does it go onwards forever except theologically.  That is, nothing in the entire universe is infinite or runs forever.

 

So, eventually, a hidden breakpoint was reached whereby people could no longer buy houses for the value set.  That is, houses were too expensive to trade off to someone else and collect a profit.  The limitation of income for paying higher and higher mortgage costs reached a point where it could rise no further.  For a long, long while, the housing bubble was kept inflated via dropping interest rates.  But this merely meant it would be impossible to revive with lower rates due to the high property value overhead costs!

 

Japan had a housing bubble from hell.  At one point, all the property in Japan was worth the value of the entire planet’s property.  Then it spectacularly popped and has never recovered.  Prices today are far below where they were briefly 20 years ago.  Japan’s attempt at exporting its way out of a crash is also dead in the water.  Japan now runs a trade deficit…for the first time in nearly 50 years.

 

Desperate to weaken the yen, yet again, Japan surprises market with extra £82bn stimulus –

 

The increase, equivalent to about 2.1pc of Japan’s gross domestic product, brought the total programme to more than $830bn, and is to be spent entirely on long-dated Japanese Government bonds.  The news saw the dollar rise 0.6pc to 78.19 yen, while the euro strengthened 0.7pc to 103.10 yen.

 

Japan, not Greece, is in the most trouble due to high government deficit spending.  Japan outruns all other countries on earth by far and away in this matter: over 200% over its GDP.  As Greece’s GDP falls, the ratio of government debt to GDP gets worse and even then, it is only a little above 100% GDP negative which is twice as good as Japan.  The fiction that elderly Japanese are buying government bonds is just that: a fantasy.

 

Once upon a time, this may have been true but not the last 3 years.  Every time China refused to strengthen the yuan, Japan would happily join in bashing China.  The US would bellow and fume…at China…while neglecting to chide Japan.  Now, it is naked aggression: the Japanese are deadly determined to depress their currency as much as possible ’till it is 120 yen to the dollar.  Last week, it was around 75 yen to the dollar, a gigantic differential.

 

They are doing this so they can export to the EU and US while nothing moves in the opposite direction into Japan!  This is open hostilities aimed at ruining the economies of allies.  Instead of treating this latest salvo in currency depreciation as a trade war tactic, the US and EU says nothing…but will have to continue doing the same thing, too.

 

This see-saw of fiat currencies is making trade harder and harder even as ‘free trade pacts’ proliferate.  They cannot see how their own actions, all the governments doing this game, are making things deteriorate faster and faster.  From Japan:

 

Masafumi Yamamoto, currency strategist at Barclays Capital, said the move was less powerful compared with the latest actions by other central banks.
“However, it is important that the Bank of Japan is trying to catch up to its counterparts, and this adds to the downward pressure on the yen already prevailing from Japan’s ongoing external balance deterioration and the risk of a sovereign downgrade toward fiscal year-end.”

 

The Japanese offer no returns on holding government securities.  This is total ZIRP financing at its most naked.  They also claim everyone is doing this so why not Japan?  Except, Japan pioneered doing this!  Note, too, that even though the Japanese work hard to prevent anyone from holding their own debts, they still fear a sovereign downgrade in the future…one they know is overdue.

 

Here is some of the latest news about the Debt crisis: as it happened February 14, 2012 – Telegraph

 

Tomorrow’s meeting to discuss the second Greek bail-out has been called off amid accusations that a top politician in the debt-stricken country has failed to sign off agreed austerity measures.

 

The media keeps reporting that the Greek mess is fixed. It isn’t any more easily fixable than Fukushima.  Passively waiting for people to die and things to blow up or deteriorate further seems to be the true trend here.

 

20.20 Further to our Bundesbank entry at 19.06, its President Jens Weidmann has said profits fell by half last year to €2.2bn because the eurozone debt crisis forced it to make exceptional provisions, AFP reported. The provisions, totalling some €1.6bn, “have an impact on the Bundesbank’s profits,” Weidmann reportedly told the daily Handelsblatt.
The result is bad news for the German government, since the Bundesbank hands over its net profits each year to the state, within a limit of €3.5bn.

 

Germany is a creditor nation which is why everyone is leaning on the Deutsche to cough up the loot and fix other people’s problems.  The same is being done to China which is not part of the EU but of course, the EU can ask them to join!  HAHAHA…

 

During Chinese Vice-President XI’s visit to the US, President Barack Obama has said:
We have tried to emphasize that because of China’s extraordinary development over the last two decades, that with expanding power and prosperity also comes increased responsibilities. And so we want to work with China to make sure that everybody is working by the same rules of the road when it comes to the world economic system, and that includes ensuring that there is a balanced trade flow between not only the United States and China, but around the world.
Chinese Vice-President XI says it’s important that US and China solve economic issues through dialogue and “not protectionism”.

 

HAHAHA…handing our own ideology on a silver platter like John the Baptist’s head!  How coy!  Of course, the US howls about ‘protectionism’ especially here at home.  The elites who own Congress hate protectionism that protects US jobs.  They love no protections for us at all so we can stand in the howling winds of a global economic hurricane unaided and with no hope of rescue.

 

While they protect their own wealth by parking it offshore, of course!  The problem here isn’t the Chinese cheating, everyone is cheating!  The problem is, the Chinese communists analyzed the weaknesses  and flaws of the floating fiat currency free trade situation and chose to ape the Japanese in key areas and thus, control the value of trade, the direction of trade and the use of labor and resources.

 

The EU and US are abusing their military power by terrorizing Iran.  The recent demand Iran be economically ruined is still brewing and this is no surprise but Iran cuts oil to six EU countries – Telegraph

 

Iran argues that the EU oil embargo will not cripple its economy, claiming that the country already has identified new customers. European sales account for about 18 percent of Iran’s total crude exports.

 

This stupid boycott has caused oil prices to go upwards by at least 20% in the last two years.  This, in turn, is hammering the EU, US and Japanese economic systems in a very negative way.   This is the worst possible time to play soldiers in the Persian Gulf.  Of course, the rulers of the nameless and virtually captive of the elite 1% think this is no big deal even if it means beggaring their own peasants in Europe and the US:  Video: William Hague: Iran sanctions are ‘peaceful and legitimate’ – Telegraph

 

Amid reports that EU diplomats had finalised the terms of the sanctions deal just before formal talks began, Mr Hague told reporters that the UK were looking for an “unprecedented” package of measures including an oil embargo and financial sanctions.
“Iran continues to defy UN security council resolutions and enriches uranium to 20 per cent at con, for which there is no plausible civilian explanation,” Mr Hague warned.
“So I think it is very important for us to agree these measures today to increase the peaceful, legitimate pressure on the Iranian government.”

 

How many more noses do we cut off of our own faces until we stop doing this?  Well, the oil speculators at the big banks love all of this.  They get rich, playing the ‘oil will go up’ card.  Report: Iran says has started using new advanced centrifuges at Natanz uranium enrichment site which Iran knows will irritate the elites even more and the US knows that Iran has every right to create nuclear bombs since not one nuclear armed nation has made the slightest move towards disarmament in the last 10 years.
Canada has had a housing credit bubble which, like Australia, was kept inflated thanks to huge sales of commodities to mainly China.  But since China cut back on credit two years ago, business is slowing down there so B.C. lumber sales to China falling rapidly as Canada, like the mines in Australia, has severe reductions in sales.

 

And finally, here is where we end up with this race to the bottom requiring labor to be cheaper and cheaper and work longer and longer hours:  Mystery disease kills thousands in Central America – The Denver Post

 

Working with scientists from Costa Rica, El Salvador and Nicaragua, Wesseling tested groups on the coast and compared them with groups who had similar work habits and exposure to pesticide but lived and worked more than 500 meters (1,500 feet) above sea level.

 

Some 30 percent of coastal dwellers had elevated levels of creatinine, strongly suggesting environment rather than agrochemicals was to blame, Brooks, the epidemiologist, said. The study is expected to be published in a peer-reviewed journal in coming weeks.

 

Brooks and Johnson, the kidney specialist, said they have seen echoes of the Central American phenomenon in reports from hot farming areas in Sri Lanka, Egypt and the Indian east coast.

 

“We don’t really know how widespread this is,” Brooks said. “This may be an under-recognized epidemic.”

 

And what this study means is, these sugar workers who are toiling long, harsh hours, are doing this to fuel people’s cars!  They no longer are allowed a simple siesta in the middle of the day to relax, drink and be in the shade!  They are literally being worked to death.  Which the Japanese industrialists did a lot, too, working people until they collapse is an old tactic used on slaves.  The terrible fact that this is happening in supposed ‘democracies’ is terrible.

 

We know the Chinese labor is worked to death.  But refuse to notice it happening here in the US, for example.  Treating labor as slaves leads to a rich elite versus starving peasant sort of culture.  The owners of these sugar plantations are extremely rich.  And the workers die young.  This is no ‘mystery’ at all!  It is ABUSE.  When slaves were kidnapped from Africa and transferred to the New World, they had a tremendously high death rate which caused more slaves to be transported by the millions in small, primitive ships.

 

This crime against humanity has never been adequately resolved.  To this day, millions of people imagine the days of open slavery were good times, and unfortunately, our Founding Fathers are responsible for that criminal mess.

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