Wednesday, December 07, 2005

New York Times Can't Puzzle Out Why Japan is Flourishing And We Are Collapsing

By Elaine Meinel Supkis

Of course the NYT won't read my blog or look at my cartoons so they are clueless about the yen/dollar dynamic that eats away at our infrastructure every time we let the yen drop in value. To keep this unhealthy dynamic, the Japanese peddle loans for us which only makes things much worse in the long run! During the Clinton Golden Years, we spurned Japanese loan offers because we were solvent and could keep the value of the yen at 100 or less per dollar. Now it is back to the Bush I value: 130 yen to the dollar! Sinking ship, America!

From the NYT:
New Optimism About the Japanese Economy After a Bleak Decade
No kidding. The boom years when America sailed ahead, optimistic and powerful, balanced budget and prosperity, Japan did terrible! Boy, did they do badly. I remember the eighties. We were all supposed to imitate the Japanese business style. Of course, they left out the important lesson: close the country to free trade at all costs whatever means possible, the trickier the better, and manipulate the currency for trade advantage which also locks out imports!


Clinton and his group, being smart people, increased the value of the yen vis a vis the dollar and forced the Japanese to open their markets. The Japanese responded by committing economic hari-kari and simply shut down. They waited impatiently for another corrupt Ronnie Reagan to bribe and along came Bush and his merry family of thieves! Now Japan is enjoying a very unbalanced trade with America.
College graduates face the best job market in a decade, and wages are rising again. The lead stock market index has doubled in value in two years. Corporate profits are the highest in recent memory. And for the first time since 1990, land prices in Tokyo are up.
Andy Rain/Bloomberg News
Shoppers in the Ginza district of Tokyo are considered more likely to spend money if they see the country's economic prospects as promising.
Could it be that Japan, long the sick man among major global economies, has finally recovered?

This is, after all, the country where the words "gloom" and "malaise" have been used for so long that many Japanese have come to view them as facts of life. Even the upturns, such as they were, proved to be short-lived as Japan was unable to shake off the doldrums it fell into in the early 1990's, when its stock and real estate bubbles burst.

But this time, most economists and analysts agree, the recovery seems to be real, its roots extending through the Japanese economy. After more than a decade of working off excessive debt, bloated payrolls and overbuilt factory capacity, Japan seems to have addressed its bubble-era problems and emerged leaner and more competitive, the economists say. In fact, the economy here is projected to be growing at a faster rate than Europe's this year.
Hahaha. The "lean and mean" hoax raises its ugly head. Why isn't Europe's economy taking off? Guess what happened to the euro! The USA caused the euro to shoot up in value while the Japanese purchased an absolute mountain of endless American red ink and so the dollar increased in value against the yen and decreased against the euro, knocking the European export market for a loop-de-loop while the Japanese ran all over the American import market, increasing the trade deficit we carry by over 11% during the Bush reign of terror.

This is insanity! The article which proports to explain this oddity while not once mentioning currency values and debt loads, except to only talk about how the Japanese "wrote off bad loans" from their real estate/business collapse during the Clinton years...Guess where all those "bad loans" were cleaned up?

Here. We now carry the Japanese load of bad loans, they are our debts now! By devaluing the currency, they could "write off" loans made when the yen was worth 89 to the dollar as 130 yen to the dollar significantly reducing the risk and downside of these loans! On top of this, the loans we get from Japan are at an interest rate of over 4% while they loan each other at 0.1%, a tremendous differencial!

Click here for many charts on Japanese trade.
In recent years, Japan has continued to produce a trade surplus. Regarding Japan's international trade on a customs clearance basis in 2004, exports (FOB-type value) showed an annual increase of 12.1 percent to 61.17 trillion yen, marking the third consecutive year of increase. Imports (CIF-type value) grew by 10.9 percent to 49.22 trillion yen, an increase recorded for the second consecutive year. As a result, Japan's trade surplus increased by 17.3 percent to 11.95 trillion yen -- the third straight year of the growth.
Note the "third straight year." Ever since Bush aggressively and deliberately drove our government into the red, our control over interest rates and the value of the dollar has collapsed. Each year, it gets worse. This hemmoraging of power has only one ending: bankruptcy and poverty. Our nation will sell its soul for a handful of beans.

Look at the charts about major exports. Automobiles: 39% of their auto exports are to the USA and this stat is from last year. This year it is nearly 50%! Anyone yapping at me about how we are building Japanese autos here should hang their heads in shame. As I keep saying, the factories here are all Potemkin enterprises to keep Americans silent and stupid.

Figure 11.5 shows relative trade of Japan with the world. The USA is the most imbalanced by far. Nearly 14,000 billion yen exporting to America and only 6,000 billion importing. Namely, they have a 50% trade advantage over us and it is increasing. Normally, when this state of affairs exists, the currency of the trade winning country rises in value. But not in this case. The greater the trade imbalance/the cheaper the yen.

During the Clinton years, the Japanese had no mechanism to drop the value of the yen because America wasn't printing up dollars at a mad rate. And we were slowly bringing our trade into some sane balance. Now, everything on our end is out of control. Like a drunk buying drink after drink from the bartender, yelling, "Put it on my bill!", we will swill away all our wealth. Our seeming prosperity has been dearly purchased.

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