Abenomics is back in the spotlight tonight.
Global trade with Japan has collapsed. Exports are down and imports are down even more.
The result is an unexpected rise in Japan’s trade surplus, yet another failure of abenomics.
Japanese Output Shrinks at Fastest Pace Since 2012
The Markit Japanese PMI shows Output falls at fastest rate in over two years, underpinned by a sharp
drop in new orders.
- Flash Japan Manufacturing PMI™ at 47.6 (48.2 in April). Flash headline PMI signals sharpest decline in operating conditions since December 2012.
- Flash Japan Manufacturing Output Index at 46.9 (47.8 in April). Production decreases at most marked rate in over two years.
Unexpected Surplus
Bloomberg reports Japan April Trade Surplus 823.5 Billion Yen, Beats Estimates.
Japan’s exports fell for a seventh consecutive month in April as the yen strengthened, underscoring the growing challenges to Prime Minister Shinzo Abe’s efforts to revive economic growth.
Overseas shipments declined 10.1 percent in April from a year earlier, the Ministry of Finance said on Monday. The median estimate of economists surveyed by Bloomberg was for a 9.9 percent drop. Imports fell 23.3 percent, leaving a trade surplus of 823.5 billion yen ($7.5 billion), the highest since March 2010.
Trade With Japan Collapses
Clearly those stats are not worthy of comment. Thus, there was no comment.
Comments or not, those stats are precisely what is behind the Japan-USA feud on the unwelcome, disorderly strength of the Yen from the perspective of Japan.
Orderly and Not Disorderly in Pictures
For further discussion of the meaning of disorderly, please see US and Japan Feud Over Yen, Devaluations, and Meaning of “Orderly”.
Mike “Mish” Shedlock
Send Professor Krugman over there to fix it.
Good Idea
Rumor has it he can fix anything!
That’s no rumor! Just ask Mr. Krugman, he’ll confirm it.
This Bastard ABE sold out Japan. Just like his father. A traitor to the people and country. Only thing to do is Hari Kari.
Japan is an old age colony. The elderly can’t afford to buy anything with negative interest. The economy is spiraling into oblivion.
Abe is a dodgy politician at best….another Tony Blair type. On the USA payroll and taking orders from the USA to keep China in wraps. Nothing but a traitor to his people but that’s what his kind do.
It’s quite possible that war is the only answer for Japan. North Korea could be an ideal foe, too, as it would bring prosperity to the entire region and a much needed baby boom in both Korea(s) and Japan. Sounds horrible, but what else can save Japan besides the very long and hard process of dismantling Tokyo and spreading it’s human capital and industry across the nation? This latter option makes the most sense, but politically it would be almost impossible to pull off fast enough to see any near results.
It is difficult to imagine the yen has much more upside considering how with each jump it damages Japan’s export driven economy. The big question is where the yen will go from here. To many Japan watchers the country is between a rock and a hard spot as a recession looming in the next quarter.
It is getting more difficult to ignore that Japan is facing a mountain of debt that can only be addressed by printing more money and debasing their currency. This means paying off their debt with worthless yen where possible and in many cases defaulting on promise.
Japan is stuck with an aging and shrinking population that with each day becomes more expensive for the government to provide for. Simply put, the fundamentals for Japan are lousy. More about this in the article below.
http://brucewilds.blogspot.com/2016/02/japan-is-falling-into-economic-abyss.html
“It is difficult to imagine the yen has much more upside considering how with each jump it damages Japan’s export driven economy”
I imagine 100 yen to $US …. possibly stronger.
The (years in the making) unwind of the yen carry trade will be a b!tch for those short yen.
I would like peoples view on this….. Economic models are not the problem, nor is government intervention. The root problem is the population is getting older and consuming less while the younger generation is reproducing at lower rates and consuming in lower and different ways. Years of overconsumption is finally beginning to normalize as the greatest consuming generation begin dying.
Don’t u think Abe saw the same thing you saw? He’s a traitor to his people and is another Tony Blair. On the take from USA masters.
I think that blaming Abe is an oversimplification. This is the results of governments banks and businesses trying to maintain the status quo in whichever way they can. Nothing is working and those thinking a change of economic models will fix things are fooling themselves. The world needs a reset….collapse, war then growth.
Economic models are always a problem for somebody. But I agree that aging is a problem. 3 other giant problems: the Japanese maintain too high a standard of living to compete with China, China’s economy is slowing down, and the great age of inventions is over.
Japan must radically reduce the value of the Yen in order to impoverish the population. That is the only way they will be competitive.
I totally agree but every nation is trying to do the same thing which only prolongs the inevitable.
The (relative) strength of the Yen is due to carry trades unwinding, as Japanese investors liquidate overseas investments and bring the money home to live on. They are consuming their capital. Don’t be fooled. Once this phase ends, it is curtains for the Yen. As always, knowing when is very hard to judge.