As predicted, events are quickly spinning out of control in the Eurozone and this is going to have many unforeseen consequences to Japan and the rest of the world's economy. The recent news and chain of events have even begun the clarion call that the countdown to the breakup of the European Union has begun.
When a politician holds up a copy of EU Constitution and says, "Elect me and I will make a country for our people, not the EU" He will be elected... Greece recently elected Neo-Nazis to parliament. Will it happen in other EU countries? I think the answer is "Of course!"
I think it is a safe bet that the Euro is a dead currency and I don't think it will last another two years. In fact, I believe that things will completely spin out of control this year (but have been wrong with timing before).
It turns out that austerity is extremely unpopular. But if newly elected politicians all over Europe begin rejecting austerity, this puts Germany in a very difficult position. Should Germany be expected to indefinitely bail out all of the members of the eurozone that choose to live way beyond their means? If Germany pulled out of the euro tomorrow, the euro would absolutely collapse, bond yields for the rest of the eurozone would skyrocket to unprecedented heights, and without German bailout money troubled nations such as Greece would be headed directly for default. The rest of the eurozone is absolutely and completely dependent on Germany at this point. But as we have seen, much of the rest of the eurozone is sick and tired of taking orders from Germany and is rejecting austerity. A lot of politicians in Europe apparently believe that they should be able to run up gigantic amounts of debt indefinitely and that the Germans should be expected to always be there to bail them out whenever they need it. Will the Germans be willing to tolerate such a situation, or will they simply pick up their ball and go home at some point?
"It turns out that austerity is extremely unpopular." Duh!
This looks to me like a lose-lose proposition.
If the EU countries stick to austerity, the people revolt and their governments fall. If they reject austerity (which I believe they will) then the Euro collapses. Germany is not going to keep bailing out these countries.
I expect that Greece will leave the Euro - soon! And then Germany won't be far behind...
Couple that with US economic problems and the Japanese financial disaster we are faced with and, as I said, I expect the bug to hit the windshield this year... Possibly summer.
The article talks about public debt then continues...
When one adds private financial and household debt, things get truly hilarious, as seen on the following chartalso from Morgan Stanley(which unfortunately excludes such critical components of public debt as contingent and NPV of pension and healthcare) which shows why the UK, with its 950% global consolidated debt/GDP, is quite fond of infinite rehypothecation, or the iterational “fractional reserve” creation of credit money from one asset (most likely robo-signed away to someone, unclear quite who: just ask Jon Corzine how fiat money can evaporate when one tries to match it with the “asset” that spawned it), as many times as necessary to pay those record banker bonuses.
It's as I mentioned so many times in the past, folks... In Japan's case, like the rest of the world, our problems of public debt stem from uncontrolled government spending... They can raise taxes to the moon and it won't matter if they do not cut spending.
If you have a can with ten marbles in it, you cannot take out eleven marbles. We need to cut government spending immediately...
They say that imitation is the greatest form of flattery so I hope the folks at Zerohedge will forgive me for, er, umm, flattering them so! Yeah. That's it! Flattering them! Over there they have a hilarious graphic showing the entire country of Greece on auction at E-Bay.
In Japan, the online auction market is totally and completely dominated by Yahoo Auctions.
Over at E-Bay, the starting bid for Greece was $1500.00 (USD) but Japan is far and away a bigger, better and more prosperous country than Greece so the price is a bit heftier but well worth the starting bid of about $35,000 (USD).
Check out the Yahoo Japan Auction page for the Wonderful Asian Paradise Auction! Japan!:
click on image for larger view:
Three days left and no bids?! Weird, eh?
There is, though, one tiny-weeny catch though... Beware the fine print! The lucky purchaser also receives the wonderful responsibility of taking over Japan's public debt of ¥1 quadrillion yen.
I'm sure the auctioneer might be guilty of mis-stating the debt on the graphic so let me explain for you:
¥1 quadrillion is a one followed by 15 zeros: ¥1,000,000,000,000,000
In US dollars that would be about ¥12,000,000,000,000. In mere mortal terms that's 12 trillion dollars.
Will you be paying by cash, credit card or Paypal?
A good friend of mine, John Shippen, who works in the investment banking industry in Japan, says he totally agrees with my take on the disaster heading toward Japan that I wrote about two days ago. Please refer to: Japan's Collapse Will Be Absolute and it Cannot be Stopped - Here's Some BIG Reasons Why. The only thing about that article that John seems to take umbrage with is my description that the "disaster is heading Japan's way." John says it's the opposite. He says that the disaster isn't coming, Japan is intentionally driving into it... He describes it as, "Japan is a bug that's looking for a windshield."
Hope you got a laugh from that. It's the only one you'll get from this post.
On that note, an easy article this morning for you referring to the huge financial calamity that is quickly heading our way (or, if you prefer, we are heading full speed ahead towards!) If you live in Japan, better put down that coffee before reading this. Hate to spill!
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.
As of the writing of this post, Japan's national debt according to the Japanese National Debt Clock is: ¥972, 133,157,539,777 (about $11.8 trillion USD) at debt of over ¥7.5 million per person (about $91,000 USD).
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.
In addition to the current Euro crisis which we discussed here and here, Japan, the world's third largest economy, could have its own debt crisis as early as 2012 bigger than the Euro Zone.
CLICK ON CHART FOR FULL SIZE VIEW
So as long as Japan could keep financing a majority of its debt internally without going through the real test of the brutal bond market, the country most likely would not experience a debt crisis like the one currently festering in Europe.
But the chips seem to have stacked against Japan now. On top of the new and re-financing needs, the Japanese government estimated that the economy will shrink 0.1% this fiscal year citing supply-chain disruptions from the earthquake and tsunami disaster in March, the strengthening of the yen and the European debt crisis. Moreover, S&P said in November that Japan might be close to a downgrade. After a sovereign debt downgrade to Aa3 by Moody's in August, 2011, it'd be hard pressed to think Japanese bond buyers would shrug off yet another credit downgrade.
Burgeoning debt, coupled with the global and domestic economic slowdown, and continuing political turmoil (Japan has had three Prime Ministers in the last two years, and the current PM Noda’s popularity has fallen since he took office in September), would suggest it is unlikely that Japan could continue to self-contain its debt.
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.
They say a picture speaks a thousand words. Here's a comic that does. It shows why we should be against all nationalization of industry and bailouts of industry and banks as well as tax increase and adding debt to our already un-payable debt.
Of course the free market system (which, by the way, we haven't ever really tried - there's always government control and cronyism) has its warts... But the way we do things now (bailouts, credit rate control, printing money, government take over of industry, government controlled education, medical care and retirement) just doesn't work. The fact that we're heading for bankruptcy (Greece is showing us what's going to happen to us soon enough) shows that we must stop this big government mentality.
If an industry like banks or big companies like General Motors or TEPCO in Japan go bankrupt, let them! Why do private companies get to keep profits but when they lose money the government wants to socialize their loses and stick it to the taxpayer?
And some taxpayers actually agree with this twisted logic?
Say in the case of a company like GM. If we bail them out, the same incompetent management get to keep their jobs. If they go bankrupt, a new group comes in and buys them up. The new group gets rid of the bad parts. The factories are still there, the buildings are still there, the new company needs someone to run those factories; they get rid of bad management and bad workers and start again. That's why they buy a bankrupt company in the first place; they think they can make it profitable!
But, when the government bails them out? The incompetents keep their jobs (and donate to the next election of those government people) and confused people in the public sector think that those industries should be nationalized. Yes. Nationalized and run ostensibly for a profit. Like the profitable venture that our, say, Japanese government has us at public debt of 229% of GDP.
What's wrong with this logic and this picture?
Anyway, the same old same old way of doing business that we've been doing for the last 40 years, since 1971, has got to stop.
Haven't we screwed up the world for our kids and their kid's kids enough as it is?
But first, watch this video of a sinking ship and you'll get the idea of what I'm talking about here:
You back? OK. Well, the video is relative because, first; the passengers are oblivious to dangers coming (the passengers represent us "the people"). Second; when the ship started sinking, the captain and crew were splitting. The captain & the crew represent our politicians and bankers.
Not a pretty picture. People going along, as usual, in their ignorant bliss. The "leaders" knowing full well what's going on but trying to get out with what they can, while they can! The only difference between the sinking ship and the economy is there won't be any rescue coming for us.
While the entire world watches Greece and Italy, it seems, from looking at this chart, the real action is the UK, Japan, Spain and France.
Business, government and household debt in Japan show a 492% of GDP problem for Japan. The tax and spend days are coming to an end soon in Europe, the USA and, of course, in Japan.
This entire house of cards is going to collapse around our heads. When the collapse does come, it will come suddenly. Hope you have cash readily available and at least a few weeks of food and water ready. Because when the crash does come, stores will be empty in a matter if a few hours - if it takes that long.
A reader sends in this video. Kyle Bass on the BBC saying that Japan is "next":
Every morning, like clockwork, I turn on my computer to do work and to write this blog. Every morning I see something on the top page of Yahoo that just makes me roll my eyes. (Yes, I know everyone uses Google, but I use Yahoo to get the financial and stock market news).
Everyday, at the top of the page, Yahoo has their 5 "hot" stories. These are always incredibly stupid and useless. Usually it is about an unusual football play (when, upon clicking, you see that it is not so unusual at all)... Or it it about some idiocy involving some Hollywood person getting a divorce or the dress s/he is wearing or something else.
Here's what was at the top of Yahoo this morning: $2.5 million dollar bra, Wal-Mart's sales, Golfer gets angry, 10 strange sports venues, Billy Crystal hosts Oscars? Hoo hum...
In a few words, God! American society is stupid!
You know this stuff is there because Yahoo is "giving people what they want"... There is never any news about anything that actually matters.
The article is just Hollywood fabulous. Let me quote:
Each season of "Dancing With the Stars" features a revolving line-up of contestants and professional dancers, but one thing remains the same: spray tans are a big part of the show. And that's where Julie Nostrand, the owner of South Seas Skin Care, comes in. All season long, she's spent every Sunday flying from Loveland, Colorado, to Los Angeles, to ensure celebs look luminous in the ballroom and in front of the camera. omg! caught up with Nostrand to find out more about what the stars do to get glam.
Isn't that just ZZZZZZzzzzzzzzz......... Oh, where was I?
According to the A.C. Nielsen Co., the average American watches more than 4 hours of TV each day (or 28 hours/week, or 2 months of nonstop TV-watching per year). In a 65-year life, that person will have spent 9 years glued to the tube.
The average child will watch 8,000 murders on TV before finishing elementary school. By age eighteen, the average American has seen 200,000 acts of violence on TV, including 40,000 murders. At a meeting in Nashville, TN last July, Dr. John Nelson of the American Medical Association (an endorser of National TV-Turnoff Week) said that if 2,888 out of 3,000 studies show that TV violence is a casual factor in real-life mayhem, "it's a public health problem." The American Psychiatric Association addressed this problem in its endorsement of National TV-Turnoff Week, stating, "We have had a long-standing concern with the impact of television on behavior, especially among children."
Millions of Americans are so hooked on television that they fit the criteria for substance abuse as defined in the official psychiatric manual, according to Rutgers University psychologist and TV-Free America board member Robert Kubey. Heavy TV viewers exhibit five dependency symptoms--two more than necessary to arrive at a clinical diagnosis of substance abuse. These include: 1) using TV as a sedative; 2) indiscriminate viewing; 3) feeling loss of control while viewing; 4) feeling angry with oneself for watching too much; 5) inability to stop watching; and 6) feeling miserable when kept from watching.
OK, 4 hours a day or 6.7 hours a day of watching TV!? Are you kidding me? Don't these people work? How can anyone, in this day and age, have the time to watch that much TV? Why would anyone want to watch that much TV? These people are truly sick, especially when they feel miserable when they cannot watch enough TV!
What's to watch on TV? Nothing good.
I heard from my friend who works at NHK that recent surveys in Japan show that the average Japanese under 30-year-old watches an average 20 minutes of TV per day.
If these statistics are true then the USA is definitely done for. People in the USA no longer read books, they don't know their basic geography. They don't know the difference between John and Yoko staying in bed to protest the war or Lenin doing the same. They think Falafel is a political party in Pakistan and the people in Eye-rack had nooklar weapons.
They think Mexico is in Central America even though Central America doesn't exist... And, they think Napoleon is an ice-cream sundae at 31 Flavors. They couldn't pick out "Grease" on a map of Europe and don't care about "Cheese eating surrender monkeys" anyway.
The night closes in. Read the surveys of what children know, what students in universities know. Approximately nothing. We have become wanton morons. As the intellectual shadows fall again, as literacy declines and minds grow dim in the new twilight, who will copy the parchments this time?
No longer are we a schooled people. Brash new peasants grin and peck at their iPods. Unknowing, incurious, they gaze at their screens and twiddle, twiddle. They will not preserve the works of five millenia. They cannot. They do not even know why.
Twilight really does come. Sales of books fall. Attention spans shorten. Music gives way to angry urban grunting. The young count on their fingers when they do not have a calculator, know less by the year. We have already seen the frist American generations less educated than their parents. College graduates do not know when World War One happened, or what the Raj was. They have read nothing except the nothing that they read, and little of that. Democracy was an interesting thought.
Ours will be a stranger Dark Age than the old one. Our peasants brush their teeth and wash, imagine themselves of the middle class, but their heads are empty.
We are witnessing the end times for the USA as we've known it for all these years.... It's too bad that, when the drunken giant in the room finally collapses, his fall is going to break everything on everyone else's tables.
It's been written on these pages since the beginning of 2011: Groupon has BIG trouble. Now, with events in Greece completely throwing a wrench into the Eurozone and markets, it looks like Groupon could suffer greatly from events in Athens. It must be confirmed by the latest news today: There must be crisis in the EU and the Groupon boardroom bordering on a full-blown panic.
Nov. 1, 2011. Two days before Groupon pricing Dow Jones
drops nearly 2.5%... Situation in Europe up in the air.
Groupon must IPO. Their situation is getting serious. They have yet to turn a profit and, if the books were closed today, they'd be over $221.7 million dollars in the red. Groupon is running out of cash.
Groupon remains unprofitable. The company had $243.9 million in cash at the end of September and still owed merchants $465.6 million. The 8.4 percent increase in cash from the prior period was outstripped by the rise in marketing costs, which jumped 37 percent to $234.4 million.
The company has used 85 percent of the $1.11 billion it has raised from venture capitalists and other investors to buy equity from early investors eager for a return, instead of funding growth. That is contributing to a potential cash crunch, said Sam Hamadeh, chief executive officer of PrivCo, which provides financial data on more than 20,000 private companies. With two days to go until IPO and the stock market's crashing worldwide, then Groupon must be in a panic... If not, then the stuff they were smoking when they rejected the $6 billion dollar offer from Google must be really killer weed!
Monday morning (Sunday for most people who read this blog). I've got a ton of things to do but here's a few things I've been thinking about... Especially how, even a few days after press release, you can see proof of how messed up a company Linkedin Japan is. Linkedin Japan is a FAIL!
First up, though, before the bashing begins, for your enjoyment, a very cool video Mash-up by Hexstatic of Nancy Sinatra's sixties smash hit "These Boots Were Made For Walking"
The picture in Greece, whose troubles kicked off the crisis almost two years ago, is bleaker than ever. A new report from Athens' international debt inspectors -- the European Commission, the European Central Bank and the International Monetary Fund -- proved that a preliminary deal for a second package of rescue loans reached in July is already obsolete.
The report showed that in the past three months Greece's economic situation has deteriorated so dramatically that for the bank deal to remain in place, the official sector would have to provide some euro252 billion ($347 billion) in loans. Alternatively, to keep official loans at euro109 billion ($150 billion), banks would have to accept cuts of about 60 percent to the value of their Greek bonds.
….
100 Million Euros is insufficient. The IMF pegged the amount between 100 million and 200 million. There is absolutely no reason to suspect the minimum is needed. Indeed, there is every reason to expect 400 million euros is insufficient.
….
I believe 400 million Euros will prove way insufficient once Portugal, then Spain, then Italy get into trouble.
Like I said, I think we could see the bankruptcy of Greece any day now. If that happens, all bets are off and it's every man (family) for itself. I think people would be wise to draw out a good sum of money from the banks and have it at home for a few weeks just to be safe until we can see what is going to happen. I fear a "bank holiday" where it might not be possible to withdraw money (or possibly even use credit cards) from banks for a few days or even a week or two (or more?)
I always follow my own advice and I think I've done pretty well. I always mess up dates, though... But I predicted a bad situation in Autumn on 2011 and, well, here it is, autumn. Please refer to: Japan's Financial Armageddon is Coming in 60 Days?
I warned people in October of 2008 to buy gold and silver and to stock up on food (click the links for proof). At that time, gold was $724.08 an ounce (today gold is $1562.30) and silver was $9.11 an ounce (today silver stands at $47.40).
If you had taken my advice, you would have easily more than doubled your investment in gold and taken over a 520% profit on silver. It's still not too late to get into gold and silver but a price correction is coming so wait a bit.* There will be no price correction on food. Stock up now, while you can.
After the big Tohoku earthquake and tsunami, when the stores shelves were bare for a week or so (and no one knew at the time how things were going to turn out on the food and water situation) my family was fine; we had 6 months of food and water, enough for 5 people, stocked up and ready to go. When people panicked and ran away from Tokyo or when they were fighting for parking spaces at the local grocery store, or fighting for bottles of water, I only watched and shook my head in disbelief.
How can people be so gullible and foolish? How can people be so negligent and irresponsible not to be prepared?
…..
Let me give you fair warning again. Especially if you live in Japan:
1) Store up enough water for at least 2 months (6 months preferable)
2) Fill your bathtub with water every night (if water stops you can use for cleaning)
3) Today or this week, buy at least 2 months of canned food (6 months preferable)
4) It is still not too late! Start saving money every month by buying gold and silver. If you have some savings, take 33% of it out of the bank and buy gold. Take the other 33% and keep it at safe place at home.
It looks like we are headed for some really rough times. Better be prepared to stay out of the way.
The point I am ultimately making is that of course no one can predict the future but just because of that fact not being prepared is just plain foolish. I'm sure that there were many people in Tohoku before the earthquake and tsunami who could make the same claim that "No one could have predicted the future" so that's why many did not have food or water or the means to escape (same as many in Tokyo)... But this is not about predicting the future, this is about protecting yourselves and your family.
If you think this is about predicting the future, then use that same logic next time you buy auto, car, fire or life insurance. Don't need them, right? No one can predict the future.
While I mention Greece, another curious thing about the situation there is that it is not being mentioned on the MSM. There's lots about demonstrations in the USA, where things are peaceful for the most part, but in places like Greece, where the sh*t is about to hit the fan? Not a peep.
I had been looking at many videos on Youtube and others showing some very heavy fighting between rioters and police. I wish I would have bookmarked them. This one, though, give a good idea. This is not a friendly party.
The most worrisome point about the situation in Greece is that the government needs the police and military to stand by them to protect them from and increasingly angry and militant civilian gathering, yet, at the same time, even the Greek police and civil servants are furious about getting pay cuts and massive slashes to their pensions. I wonder how long until they switch sides?
What would that mean for Greece and the other countries in immediate danger (Spain, Portugal, Italy, Ireland?)
And, finally, I see the ridiculous announcement from Linkedin that they finally "launched their Japanese site". Well, that's one big strike against them; they're lying. The service was actually launched sometime before May of 2010.
How to correctly handle a new product or service release? (in Japan)
A new company/product/service will need to appoint somebody in Japan to handle PR for them in Japan and work with that company to make a plan.
A necessary part of any good plan of attack would be that the representatives in Japan arrange meetings with major media at least 1 - 2 weeks before Japanese release day, as pre-press release. This is critical.
If this sort of ground-work is not fully prepared by the company and their reps in Japan, I strongly suggest that the company postpone the release of the product/service (and fire their representatives and hire a competent company) and then get properly prepared. If this sort of pre-press release is done correctly, the Japanese media will then follow-up and prepare and study the circumstances of the product/service and company so that they may be able to publish and provide better information for the Japanese audience (don't forget that the Japanese media are competing with each other, too, to provide up-to-date concise information, so this has to be done. No short-cuts here). This is critical for the success of any new company in Japan.
Even after years of repeated failures byvarious companies, to this very day, foreign companies come to Japan and repeat the mistakes Pepsi Cola and Seven-Up made decades ago. Some recent examples are Linkedin; E-Bay Japan, Google.jp, and a few others. (I strongly suspect Sugarsync is about to make the same mistake too!)
Take, for example, Linked-in. Linked-in came out with a Japanese version quite a while back but no one here in Japan uses it because no one knows about it; they had no local representation; no pre-press release information.
Kind of shocking, when you think about it; a supposedly forward thinking company coming to Japan and making such an amateurish mistake.
Well, Linkedin made that mistake. I also am quite familiar with this as I wrote a letter to Linkedin twice in early 2010 offering them a partnership with some companies that suggested tying up with Sony and placing the Linkedin software with all new Vaio computers sold. I sent them the letter twice. Twice, no response. Chuckle. Now, they've realized almost 1.5 years later that no one uses their Japanese language product (and probably won't). They blew a golden opportunity to tie up with one of the biggest companies in Japan... Now, what are they going to do?
You don't penetrate the Japanese market on the cheap and you usually have only one chance to get it right.
Let me make a prediction that I will stand by completely: Linkedin Japan will be a flop and failure along the lines of E-Bay in Japan.
Well, it's the start of another week. Keep positive. Write down your goals and smile.
