Japan is a "Bug looking for a windshield?" I think we just found it.

I've been writing for months that Japan's situation is past desperate (well, me and many others who follow the markets)... I've written several times over the last year that we are heading for the cliff. I've actually stuck my foot in my mouth (gambling man and all, you know?) and called for another major crisis to hit Japan this summer because I believe that Europe will be the trigger for the next massive crisis and I believe it is coming this summer. Please refer to: Here's Comes Europe's and Japan's Debt Crisis - Just in Time for Summer: 

This debt crisis has terrible repercussions for the world economy and Japan. Reuters has a good article on it entitled: Europe Poses Global Recession Threat: IMF. The article is a good rundown of the debt problem but the solutions they offer of throwing money at the problem are completely wrong (Been there, done that. Didn't work)... For proof of that, just look at how well throwing good money after bad has done for Greece.

Looks bad. These things have a way of getting out of control. But Japan is OK, right? Because these European countries can't print their way out. Japan can. Let's look at a few charts there. Here's a chart that shows the world ratio of debt to GDP:

Here's one to show Japan's debt mountain in yen:

As an important note, as of 2009, the Japanese national public debt, according to my handy-dandy calculations equaled over ¥6 million yen per man, woman and child in the country (about $72,000 USD). That means that if every single one of us coughed up ¥6 million yen and paid off our total debt today, we'd still be back in massive debt tomorrow as the costs of running the Japanese government, social security and health care, etc., etc. are completely out of control.

...

But wait! Things are getting better, right? Wrong! Here's an article you might want to read from a the New York Times that asks the laughable question: "Could Japan's Debt Lead to a Crisis?" (Let me ask you: "Could the next Pope be Catholic?") But, like I said, that article is a year old. I add it because it is a typical example of the confused reporting emanating out of the MSM... "Everything will be alright as long as government's keep printing money! We have to save the system!"

Well, no. We don't have to save the system. We can't save the system. The system is a wreck.

.......

I think, as I've said many times before.... The summer of 2012 is going to be a very hot one for Japan - as well as all around the world.

Of course, making predictions on when exactly the sh*t hits the fan is difficult. But, as famous American baseball player Yogi Berra said, "Making predictions is difficult. Especially about the future." 


Well folks, it looks, unfortunately, like these predictions might come true. The chances of the fan getting blasted by the crap and the reverberations slamming the Japanese economy just jumped up a hundred-fold.


Socialists won the presidency in France... I predict that will seriously damage the power of the bailout and pro-austerity crowd in the EU and I believe this is the beginning of the end for the Euro. And, as Mish Shedlock has successfully predicted when he said that someday, a right-wing nationalist is going to go before the electorate in his European country with a copy of the EU charter and while tearing it up, he tell people to, "Vote for me and I will exit the EU!" 

Now it has happened! Neo-nazi groups won enough power in Greece to be recognized in parliament and now the rumbling is for an exit of the Euro and no deal to any bailout of the bankers.


These events are going to affect Europe and the USA and Japan in so many ways..The unforeseen consequences of so many years of massive debt and money printing are coming to a head. 


What cannot go on... Stops. Japan is going the have to hottest summer in decades this year and, no, I don't mean Global Warming either.

The US Dollar is Dropping Like Dead Flies All Over the Place

This from Zerohedge is about how many nations, including staunch ally Japan, are quietly concluding business deals and trade that do not involve the US dollar - the world's supposed reserve currency. This needs no comment from me excepting that I'm wondering when gold and silver are going to go ballistic.

Zerohedge reports: 


For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper... Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these:

"World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade",

"India and Japan sign new $15bn currency swap agreement",  

"China, Russia Drop Dollar In Bilateral Trade", 


"China And Iran To Bypass Dollar, Plan Oil Barter System", 


and now this: "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says." And ironically, the proposal to dump the greenback did not come from Iran. Per Bloomberg: "Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow. The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said." Is Iran gradually becoming the poster child of an energy rich country that just says no to the dollar: "Iran has replaced the dollar in its oil trade with India, China and Japan, Fars reported."... Read more




It won't be too long until Japan, China and Russia will complete bilateral trade agreements with the Eurozone nations in exchange for purchasing European Bonds or European Financial Stability Facilities (FSF).  Oh, but don't worry, Only China, Japan, Russia, India, Brazil and the EU will make these transactions in other currencies besides dollars... Everyone else will still use good old US made paper! Who will that be, you ask? Well, there's the USA, and er... Ummmm...

The Japanese Titanic: Japan's Public Debt Will Surpass ¥1 Quadrillion Yen Any Day Now

How much is a quadrillion? That's a thousand trillion....


Recently, I've been getting my daily money market news fix from the usual suspects: Mish Shedlock, Karl Denninger and Mad Max Keiser but there's another blog that I've found that hits the mark consistently and updates more than several times a day. It's called Zerohedge. I highly recommend it because the guy that runs it seems to get the scoops on what's going on days and even weeks faster than all the rest.

The latest one rings the alarm bells for Japan once again. Japan's Public Debt is about to surpass ¥1 Quadrillion any day now. Jeez! How many zeroes are there in a quadrillion? I didn't even know without having to look it up.


Let's see that's a one with fifteen zeroes after it. Like this: 1,000,000,000,000,000.


Zero hedge reports in Japan Will Raise More Cash From Debt Issuance Than Taxes For Forth Year in a Row


Japan's marketable public debt, already the largest in the world at $11.2 trillion compared to America's $10 trillion (of course this assumes the whole SSN sleight of hand is funded, which it isn't), is due to surpass ¥1 quadrillion any month now (aka the exponential phase). And that's just the beginning. As Bloomberg reports, "Bond sales to the market will climb to a record 149.7 trillion yen ($1.9 trillion), while the national budget’s reliance on debt for funding will rise to an unprecedented 49 percent in the year starting April 1, Japan’s government said Dec. 24.


The article goes on to stomp on these Keynesian "economists" (read: clowns) who claim that the government should increase spending to pick up on falling consumer spending and loosen monetary restraints (read: print like hell) in order to pump up the economy before a recovery starts:


In other news, and to all the neo-Keynesians out there, we post the following thought experiment: according to the head priest economic growth derives from debt issuance. And since apparently every country (yes, yes, that has its own currency) can issue infinite amounts of debt, why doesn't the US and Japan (and the EU post Eurobonds), simply announce it will monetize, aka print, an infinite amount of debt tomorrow? Shouldn't that lead to global GDP promptly rising by infinity %? Or is there an actual problem with this hypothetical scenario which takes current debt trends to their ludicrous extreme.


Want to see what a quadrillion pennies look like? Here ya go!

Here we have buildings (in front) used for scale at a trillion. They're now dwarfed by the large cube of pennies in back (quadrillion). The large cube is a quadrillion, or a thousand times one trillion. This cube is roughly a half-mile wide and would weigh an astonishing three billion tons.

Translation: Japan is doomed. 2012 and beyond are going to be rough ones.


Happy New Year! If you are in Japan, may I suggest drinking as much as you can, while you can. 

Japan and Europe Imminent Default - Kyle Bass Letter to LPs

Kyle Bass has written his latest letter for Hayman Capital Management. It is not good. Read it... This one sentence sets the tone for the poor outlook for the economy of Land of the Rising, er, Setting Sun....Er, Japan.


"... We believe the debts of the following nations, among others, are not sustainable in the current economic environment: Greece, JAPAN, Portugal, France, and, have we mentioned Japan?"


Notice, on page 9, that Japanese government debt is at "229% of GDP."

Click the box circled in red below the letter to view in full screen

Below:

Or click here to go to full screen.
Hayman_Nov2011 Thanks to Zerohedge

People With Jobs Doing the Minimum... Lots of Them!

With unemployment numbers rising all over the world and talk of the Greatest Depression, many in the Banker and Wealthy class and even in the mass media say that the unemployed are lazy. I think the notion that the unemployed are lazy might be a lie. From what I've seen, in my own experience, it's the employed salary workers who are lazy.


I don't know about the unemployed. I do know that, in my experience, there are far too many employed people who are lazy and are skating by on doing the absolute minimum. I know several of them.


A few of them are about to be out of jobs.


Intelligent people know what is going on with the economy and how things are going to get really rough very soon. There are many people who are oblivious to what's going on and think they can keep doing things the way they've been doing them all their lives.


Perhaps they can. Perhaps sitting at an office and doing the minimum required can save their job. I don't think it can. 


I think the current malaise in the economy is going to get much worse than it is now and people who think they can, say, work for 40 hours a week (and leave immediately when the clock strikes 6 pm) and keep their job are kidding themselves. Jobs are getting scarce. The Governor of the Bank of England says that we are soon to be into the worst economic crisis in history. That's not all, the BBC says we are two or three weeks away from full blown global financial meltdown...


There are plenty of people who are willing, nay desperate, to do far and above the call of duty, to do more than is required to get quickly disappearing jobs...


This goes for good jobs with good pay and also the so called "slave wages" jobs like flipping hamburgers at Macs. Even at Macs, working the 40 hour shift, who do you think will keep their job? The worker who does the minimum required or the worker who, when business is slow, will mop the floors and clean the windows without first being told to do it?


In the eighties vacations and benefits were perks of jobs. In the year 2012 and beyond, merely having a job will be a perk. I think many people today, who have a poor understanding of the economy, think that the conditions and events of the last twenty years (especially the last 3 years) are normal. What they don't understand is that we have been living on borrowed time created by a government policy of artificially low interest rates and massive money printing. 


These government policies have created an artificial economy but these quick fix solutions to our problems can't work forever and they are unraveling quickly in front of our eyes - regardless if people recognize it for what it is or not. Japan will not escape the problems - and, in fact, is a huge part of the problem. And the piper must be paid someday and that day is soon coming upon us.


A few days ago I met a woman whose father was 56 years old and she told me that he hadn't a job for over two years! At 56, it should be his highest earning potential in his entire life, but here he is, out of work.


People under 30 ~ 35 years old today are fooling themselves if they think that they will be able to get along over the next 10 ~ 20 years doing the minimum amount of effort for the minimum amount of working hours a week: 40.


Like I said, there are many people who will gladly take those forty hour a week jobs and invest 72+ hours a week of their time and sweat to make sure they get and keep those jobs. It's not a question of desire or want, it is a question of survival. 


Survival of the fittest.


For a short view of just how bad things have gotten in the USA over these last 3 years watch this video. (And don't think I am blaming it all on Obama, the Republicans haven't done any better).  

And if you think that the coming collapse of the US economy isn't going to affect you in Japan, or anywhere else in the world, you are out of your mind... 


I meet young people today who tell me that they want to work "only" a full 40 hour week - no more than that. I think they are living in a fantasy world. I even had a guy (who works part time) tell me the other day that he "even worked until 1 am the other night."


I am not impressed in the least.


When I was the GM of a broadcasting station in Tokyo, I worked from 5 am until 9:30 pm every night at least 6 days a week.. Often 7. So I am not impressed a bit by someone working until late.


Big surprise for many: People do that all the time. It used to be considered a strong work ethic. It used to be considered normal if someone wanted to "get ahead". 


I am not rich but I have always been a person who was hired and then soon became a management staff. Even when I got my first job in 1975. I was only 17 but soon was given the right to clear personal checks and credit transactions. A right many employees did not have and those employees were often in their thirties.


When I graduated from college, my former boss called me out of the blue and tried to hire me back. He said, "We will hire you part-time but pay you more than full time wages." Sounds pretty good, eh? 


I refused and said, "No!" 


I told him that I didn't go to college to graduate and earn full-time wages. I told him, "I want to work twice full-time and earn five to ten times full-time pay - at least!"


Now, I meet young people who tell me that they want to work "only 40 hours a week" if that much? Dreamers. Good luck with that.


How in the world will you get any jobs when there's a flood of out of work professionals with tons of experience who will work well over and above the call of duty for their wages?


The days of doing the minimum at work are over...


For most people the days of doing the minimum ended when they go out of high school... For too many, they still think that they can continue to do the same.


Well, I've got news for you folks... Life is full of rude awakenings. You can get with the program now, and get off your asses or you can wait until you are forced off your ass.


Like Keith Richards said, "I'm going to walk before they make me run."


Too many people are sitting there waiting... They won't have to wait long.