Is This The End Of Japan?

Prime Minister Shinzo Abe

This week we got further news that despite the hype of successes of the Japanese newly embarked policy of inflation infinity plus, things are getting worse. The Japanese have decided to out do every other central bank in the world in the race to create inflation to eliminate government debt. Headlines read that Japanese exports have risen once again, which is expected as they continue to devalue the currency. This is not a difficult task, there is no secret or special knowledge needed to devalue your currency and achieve competitive advantage in the world market because of a lower relative price. So to claim this as being some sort of success, is rather foolish. The key is to at the same time produce wealth, that is where the difficult part lies. If you read any of the articles stashed toward the end is the admission that imports also rose, and rose faster than exports. They actually rose 50% faster than exports, which is further exacerbating their trade deficit. What is even worse in that the amount of goods didn't really change at all, which is an admission that inflation is taking hold and hurting the average Japanese citizen. What is happening is that Japanese citizens are having to pay way more for the same goods as they did previously because the Yen can't buy what it did before. This is continued bad news for the Japanese people and government.  

I have been saying that Japan will be the canary in the coal mine for another worldwide recession. They are insolvent by any measure, and cannot pay for their current debt burden. Interest on the debt is the second largest government expenditure, with only social security being larger. They are paying debt with more debt, but even worse since they are still spending more, they are ensuring that interest payments with consume even more of the budget in the future. Add in that the interest rates there are even lower than the US, and one can quickly see that rising interest rates there will end up destroying the government finaces and take the country back to a depression. Other countries around the world are not in as bad a shape but also heading down the same path. As the US has accumulated almost a third of our total debt in just the last 5 years. What will be the result to the world economy when the Japanese collapse worsens? As the 3rd largest economy becomes more poor the buying of goods from other countries will drop and drop significantly. I am sad to say that Japans decades long problem is far from over because they continue the same ridiculous policies without ever addressing the real problem which is their indebtedness. The is not and never really was an easy way out, and just as the US is doing, they are simply making the inevitable pain even worse than it should be. The Japanese citizens are being kept in the dark about the inevitable end to all of this, since the dealer never wants to tell you the longer you stay at the table the more you'll end up losing.