Japan Q4 GDP: -12.7%

[ByLoSellHi]

Excellent, excellent post.

The world is awash in production, goods and services.

Labor is the most abundant commodity.

Conspicuous consumption ran rampant in the U.S. for the last decade.

This is why we're seeing the type of consequences we are - it's just beginning - with this new shock to the structure of our economy and the paradigm, structural change in our employment markets and consumer and business psychological consumption patterns/beliefs/actions.

Even relatively inflexible things such as gasoline, medications, food and housing will feel the pain.

People will skip meds or cut their pills in half, parents will move in with their children, young adults will move back home with their parents, people will ditch driving nearly as much nor will they buy or lease new cars, and restaurants and retailers will feel max pain.

It's all coming true. This is the new realism that some people speculated in past years could only be viewed through pessimistic lenses.

Quote from clacy:

I agree. It's great to be an export country......until the importers stop buying your stuff. That seems to be happening right now.

I feel there is a real paradigm shift happening with the American consumer. I am hearing friends for the first time in their lives are very scared about their jobs and finances (I'm in my mid 30's). I see people cutting back spending on almost everything.

When you think about how much of our spending is on frivolous and unnecessory things like buying a new car every year or a new TV/computer every 12-18 months, you realize how much many consumers can and will cut back.

There are so many items that we can easily extend the life of by 2-3x if we need to, and that seems to be happening. How many people buy new clothes every season due to changes in fashion, rather than actually NEEDING new clothes? I would say the wealthiest 70% of Americans buy new clothes for this reason, rather than due to wear and tear.

How many people eat out every single day and spend $50/month or more on coffee?

The crazy thing is that a large percentage of our spending can vanish over night and we all can still function. On the other hand, that reduciton in spending hurts those that make a living buy making or selling goods/services that are unnecessary.

 

[noob_trad3r]

Maybe if China and Japan would have bought American products or worked with the US for a more balanced trade things would be in better shape.

Instead of working towards a more equitable trading environment where I buy some from you and you from me they decided lets screw America and sap them dry.

Well now there is no more blood to give.

Maybe China should have paid for American software for example.

 

[Spectre2007]

I'm fortunate to be well off, and even I see that its better to be conservative with spending habits ..

I've pretty much stopped a lot of auto-bill stuff and not renewing leases on places I dont need.

Pretty much most everyone is forced to do what I'm doing voluntarily..what I do more now is tip everyone 20% or more and am more charitable when I see someone working their butt off.

 

[scriabinop23]

Quote from achilles28:

When America sneezes, the world catches a cold....

The Asian Tigers - including Japan - are mecantalistic economies that require a surplus trade balance (exports>imports) to maintain GDP.

America is the worlds economic engine. When it fails, all the "feeder" countries crash.

Take Canada. We're export dependent on US trade and commodities to asia.

US is cooked. Our commodity exports to China are largely used for production in goods re-exported to the US and Europe.....

Without America, and to a lesser extent Europe, the global economy is pretty much screwed...

Hmmm... GDP contracting out of control... Massive deficit spending... 30 yr bonds under 2%... JPY near record strength... 8T+ in national debt, with likely REDUCED savings rate of Japanese workers going forward (to finance that internal debt).


And everyone here is spending all of their time complaining about the US debt and currency.

If Japan policymakers don't start getting more aggressive ...

 

[Spectre2007]

the feds will loosen up the cocaine traffic interdictions.. one way to spur growth is reinflate with loose money in high speculative growth areas..like miami/florida...

if you can catch the youtube clips..

'cocaine cowboys'.... you will see what kind of effect it had on growth in miami...

trickle down effect...works..when its grassroots..

when drug traffic increases, hugo chavez will be blamed.. and in a few years we will go in and use the drug violence as a excuse to take him out.

 

[ByLoSellHi]

Same here.

I'm looking at all this shit I can buy cheaply - not just shit in the form of toys like boats and nice cars - but assets that I would have normally jumped on - and I'm asking myself "why?" and "why now?"

'Why now?' is the more scary tell, IMO.

That says I expect deflation to gain momentum. If I think so, surely others do.

If I have money to spend, but won't, surely I'm not alone.

It's all bad.

But it will turn around on a global basis at some point in the future. I don't think I'm crazy to think it won't be within the kind of time frame we've come to associate with 'normal,' though.

It could be many, many years.

Quote from Spectre2007:

I'm fortunate to be well off, and even I see that its better to be conservative with spending habits ..

I've pretty much stopped a lot of auto-bill stuff and not renewing leases on places I dont need.

Pretty much most everyone is forced to do what I'm doing voluntarily..what I do more now is tip everyone 20% or more and am more charitable when I see someone working their butt off.

 

[achilles28]

Quote from scriabinop23:

Hmmm... GDP contracting out of control... Massive deficit spending... 30 yr bonds under 2%... JPY near record strength... 8T+ in national debt, with likely REDUCED savings rate of Japanese workers going forward (to finance that internal debt).


And everyone here is spending all of their time complaining about the US debt and currency.

If Japan policymakers don't start getting more aggressive ...

Yes, another Iceland could be in the works.

America was Japans life-support for the "lost-decade" (post-80's real estate/Nikkei crash). Now that America is rapidly contracting, the Japs have little to fall back on.

Record debt financed by record deficits and unemployment?? Doesn't add up!!

Seems we've forced the entire world to scale down production from the untenable levels of debt us rich, Westerns have taken.

We're going from 120% consumption to sub 90%. The only thing that could solve this bubble is equal or cheaper credit than the last....

And the banks can't handle it as they got caught on the wrong side of the last one. So, will the stimulus fix it? doubt it.

 

[scriabinop23]

Quote from achilles28:

Yes, another Iceland could be in the works.

And the banks can't handle it as they got caught on the wrong side of the last one. So, will the stimulus fix it? doubt it.

Problem is total lack of aggression. We are 1.5 yrs into this mess and still haven't done one thing substantial on housing.

Either the spiral continues or the authorities figure the only way out is to print. (debt forgiveness for developed countries is not an option, since that will have Lehman-similar ramifications in the credit markets)

Add a 0 when in doubt, right?

Gold and silver make more and more sense every minute.

In the near term: I'm just waiting for the US 30 yr bond to take off upwards. The JGB defies gravity in comparison...

 

[suriNotes]

Nikkei 225 chart...

Regards,
Suri

 

[trader_arb]

Quote from scriabinop23:

Problem is total lack of aggression. We are 1.5 yrs into this mess and still haven't done one thing substantial on housing.

Why should they though? With unemployment climbing, the only thing they can do is artificially prop up home prices. This would probably be in the form of some sort of mortgage payment/subsidy for irresponsible homebuyers, which wouldn't be fair to EVERYONE else.