Japan's wholesale prices tumble 2,2 % yoy

A

ASusilovic

Japan’s wholesale prices fell at the fastest pace since 2002 as the global slump deepened.

Producer prices, the costs companies pay for energy and raw materials, sank 2.2 percent in March from a year earlier, after falling a revised 1.6 percent in February, the Bank of Japan said in Tokyo today. That compares with a median estimate of 27 economists surveyed by Bloomberg News for a 1.8 percent decline.

The Bank of Japan’s quarterly Tankan survey this month showed manufacturers expect the costs they pay for goods and materials to fall to the lowest level in seven years. Central bank Governor Masaaki Shirakawa said last week policy makers must carefully watch the risk that inflationary expectations by companies and consumers would weaken.

“The pace of declines in wholesale prices is expected to gather momentum toward the middle of this year,” said Taisuke Nakamoto, an economist at the Dai-Ichi Life Research Institute in Tokyo. “Makers of steel, food, electricity, gas and vehicles are highly likely to slash their prices in coming months.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aapV2GGRtCvk&refer=home

Inflation shall become a problem ? What are some pundits dreaming of ?:confused:
 
Inflation shall become a problem ? What are some pundits dreaming of ?


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Journalists studied journalism....


And have the public podium....


But have become ¨overnight economists¨.....
 
Libertad - I respect your thoughts on economics. What do you think will happen. Will economies collapse and cause hard asset prices to go down in real and nominal terms?


I see U.S. real estate still being severely overpriced and I see our economy having to retreat from artificially juiced levels.

I therefore see countries who export to us suffering severely because our market will have to retreat since lenders are going to demand appropriate risk premiums which will not be protected by CDOs.

But, I wonder what will happen with all this spending.

Will hard assets deflate but food prices go up.

Will real prices go down but nominal prices for goods the world wants go up?

What will happen to price of oil in real an nominal terms.

Not saying you have to give us your trading plan... I just think I may be missing a few pieces of the puzzle.

is it possible our real GDP to crack dramatically buy our nominal one rebound quickly because of inflation.

could this cause wages to rise and therefore cause real estate and hard assets to rise.... or is the gdp crack going to be so hard that demand will slack so much that even with all this stimulus we we see prices fall.


Will all this stimulus cause the bond market to react and cause interest rates to rise virtually ensuring a gdp contraction and therefore no lowered demand for hard assets.

Can the gov't stop this from happening.
 
In simple speak....

Depends on what prices one is attached to....
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Preface....

Market Peak Total economy....$70 Trillion

Over $30 Trillion Lost....

$40/70 ....deflationary

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Fed adds false $12 Trillion....

$52/70....deflationary
$40/70....real

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Those who have basis at 40/70 see rising prices at 52/70....
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Those who have basis at 70/70 still have losses.....deflation....
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So it depends on one´s basis at 40/70.....70/70...etc....
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Catch 22

Monetized recoveries are ¨recovery mirages¨....
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The current path.......back to 90% tax rates in the 60´s....
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The real issue........

Entitlements.... and notionals attached to derivatives are basically
impossible to pay....

Reason.....Literally not enough money in the world....
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End game........

The battle of ¨paralleling the fiats¨....
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A real solution.......

10% Consumption tax.....

Why .....True competitiveness....could rebuild the manufacturing base....real wealth.....

All else is false wealth....again....

Another reason why....cannot pay entitlements or notionals anyway....might as well self finance 100 year 0% bonds....
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Basic truth.....

One is either truly rebuilding wealth.....

Or is not....
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Interesting point point about the the 40/70 but inflation caused by 52/70.

Its almost like the market just made that same calculation.
 
Libertad,

There's a few problems with your assumptions.

First, global GDP is annual recurring and cumulative. Each year, if we use your stats, some 70 Trillion worth of goods and services are produced.

But that 70 Trillion isn't reset to zero when Jan 1 hits. Much of that 70 Trillion is banked, stored, and later spent on top of the new 70 Trillion to be produced in the coming year.

So GDP is cumulative YOY, going forward and looking back. That means the world is probably sitting on something like a few QUADRILLION (thousands of trillions) in electronic wealth, amassed over the decades.

When 30 Trillion in losses are considered next to say, 2 Quadrillion in wealth, the losses aren't as stark and the picture, so dire.

Second, annualized GDP hasn't lost 30 Trillion. That would infer a 45% drop in Global GDP, YOY!! Far worse than the Great Depression!!! Again, correct perspective is needed for interpretation. Yea, the global economy has lost some 30 Trillion in wealth or asset values. But that's only 30 Trillion from a global pool of 2 Quadrillion in amassed wealth!!

Third, GDP doesn't remain static. Slack demand is met with reduced supply. The World will not continue to produce 70 Trillion worth of goods to be bought with 40 Trillion worth of income (deflationary). Output will adjust downward to meet demand and prices will stabilize.

Its conceivable global GDP has contracted 10-15% from its high water mark and will bottom at those levels. In that case, asset values will fall commensurate to that decline (some more, some less), where they will stabilize as gross income (equivalent to GDP) can afford gross output (another definition of GDP).
 
Not as it seems....


http://seekingalpha.com/article/130...ebt?source=feed


The break out:

$9.7 Trillion in bailouts
$11 Trillion in national debt
$17 Trillion in corporate/financial debt, and $13.8 Trillion in household debt
$1 Trillion in credit card debt
$10.5 Trillion in mortgages
$52 Trillion in social security/medicare obligations



In the context of the consumer balance sheet:

$20.5 Trillion of residential real estate
$8.8 Trillion of equities
$7.7 Trillion of deposits and cash
$4.1 Trillion of consumer durable goods
$1.6 Trillion of corporate bonds
$960 Billion of municipal securities
$920 Billion of agency paper
$273 Billion of treasury notes and bonds

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One has to review the total which is somewhat loose as the author mentions....

However one can get the picture....

No one knows the actuals.....
 
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