About that Deflation!
Despite overwhelming fears of deflation in Japan by economists, by the Bank of Japan, and by prime minister Shinzō Abe, all of the preceding forgot to get the opinion of consumers.
Here’s the real deal on alleged deflation: An increasing number of Japanese elderly are repeat shoplifters, trying to get caught, hoping to be rewarded with a two year prison sentence because they cannot get by on government pensions.
Life of Crime
Please consider Japan’s Elderly Turn to Life of Crime to Ease Cost of Living.
Japan’s prison system is being driven to budgetary crisis by demographics, a welfare shortfall and a new, pernicious breed of villain: the recidivist retiree. And the silver-haired crooks, say academics, are desperate to be behind bars.
Crime figures show that about 35 per cent of shoplifting offences are committed by people over 60. Within that age bracket, 40 per cent of repeat offenders have committed the same crime more than six times.
There is good reason, concludes a report, to suspect that the shoplifting crime wave in particular represents an attempt by those convicted to end up in prison — an institution that offers free food, accommodation and healthcare.
The mathematics of recidivism are gloomily compelling for the would-be convict. Even with a frugal diet and dirt-cheap accommodation, a single Japanese retiree with minimal savings has living costs more than 25 per cent higher than the meagre basic state pension of Y780,000 ($6,900) a year, according to a study on the economics of elderly crime by Michael Newman of Tokyo-based research house Custom Products Research.
Even the theft of a Y200 sandwich can earn a two-year prison sentence, say academics, at an Y8.4m cost to the state.
The geriatric crime wave is accelerating, and analysts note that the Japanese prison system — newly expanded and at about 70 per cent occupancy — is being prepared for decades of increases. Between 1991 and 2013, the latest year for which the Ministry of Justice publishes figures, the number of elderly inmates in jail for repeating the same offence six times has climbed 460 per cent.
Akio Doteuchi, a senior researcher on social development at the NLI Research Institute in Tokyo, expects the ratio of repeat offenders to continue rising.
“The social situation in Japan has forced the elderly into the need to commit crime,” he says. “The ratio of people who receive public assistance is highest since the end of the war. About 40 per cent of the elderly live alone. It’s a vicious circle. They leave prison, they don’t have money or family so they turn immediately to crime.”
Japanese Retail Spending Plunges
Given that fixed-income pensioners cannot afford the rising cost of living on their pensions (some real pronounced deflation would help), it should be no surprise to discover Japanese Retail Sales Fall the Most Since 2014 Tax Hike.
Japanese retail sales posted their biggest monthly contraction in February since April 2014, when the government infamously raised the sales tax for the first time 17 years.
Data this morning showed retail sales fell 2.3 per cent month-on-month in last month, down from a revised -0.4 per cent (previously -1.1 per cent) in January, and more than double economists’ expectations for a 0.9 per cent drop.
It was the biggest month-on-month fall since April 2014, when the government decided to increase the national sales tax 3 percentage points to 8 per cent. That was the first tax increase since 1997 and led to a 13.4 per cent month-on-month slump in retail sales.
Never Admit Failure
ZeroHedge provided this chart and commentary in his post Japanese Retail Sales Plunge Most Since 2010.
ZeroHedge noted this was the “4th monthly decline in a row and absent the tsunami and tax-hike reaction, the worst drop since Dec 2010.”
He then asked, “At what point do you just admit failure?”
That I can answer: Never admit failure, especially when CNBC comes to the rescue with headlines like this: Japan Feb consumer spending bounces back, outlook uncertain.
A quick check of my calendar shows CNBC is a bit early for that report. April Fool’s day is four days from now.
Meanwhile, it seems Japanese consumers would welcome a bit more of that deflation all the Keynesian and Monetarist economists are worried about.
Mike “Mish” Shedlock