September 28, 2008
Elaine Meinel Supkis
I periodically torment the geniuses published by Seeking Alpha. When a featured writer is particularly dense, I try to educate him or her, mostly males. Here is a classic example of a guy who says something stupid and who gets mad when I begin a real debate. It reminds me of all those famous economic professors who run blogs online. The instant we begin to debate Japan, they go nuts. They cannot understand something that is painfully obvious to me: the top levels of Japanese money and power are NOT in a depression/recession or anything nasty! They are taking over everything the Chinese can't nail down, themselves! They are growing vastly more powerful, fast!
These misguided bailouts and bans may seem like a good idea at the time and appear to have gained public support if recent election polls are any indication. But this action does not change the inevitable albeit painful reality.
Recessions are a necessary part of maintaining healthy capital markets long-term. They remove excesses that have been built up over years of easy money and rapidly appreciating asset prices as the inevitable bubbles build. To try to interrupt this cycle makes about as much sense as trying to suspend the law of gravity. The problem is that such action only extends the pain that in its worst form turns into a Japan-style economic recession that lasts decades instead of a year or two.
As always, I can't resist it when a deluded American spouts Japanese propaganda. Japan needs desperately to have Americans believe they are in this miserable depression so the US won't demand the yen be stronger and the giant trade surplus Japan has with the US, be closed. Japan will artfully whine, 'We can't buy your exports because we are in a depression!'
But this is a lie. The wages of workers in Japan are very depressed. So they can't buy imports from America. Or even their own stuff. But exports are booming and Japan's top corporations are rapidly rising in global trade and are dismantling American markets and overtaking and overwhelming the biggest American manufacturing corporations. This is a catastrophe for the US and is a very important issue. So, look at how this pathetic economics advisor reacts when I give him useful information:
Culture of Life News here!
Japan's 'recession' ended YEARS ago! They had an average GNP growth bigger than the US during the last 5 years. They have the biggest export profits on earth next to the Germans!
Their economy has grown greatly and their international economic power has doubled in the last 5 years. They even have 2.3% inflation this last year!
Japanese WORKERS have suffered hideously. Thanks to the LDP, their wages have been ruthlessly cut and they are unable to buy cars now, for example. But Toyota's car sales have soared due to exports.
The workers suffer in order to keep the yen cheap so Japan can export. This is their problem. NOT some sort of 'depression'.
Few commentators on the economy bother to read Bank of Japan statistics which they publish every quarter. It is a real eye-opener. Repeating mindlessly old propaganda is a sign that this analyst, Mr. Blackman, is ill informed.
The US government can bail out the economy ONLY if it is solvent. It is not solvent. These bail outs are based on the quicksand of vast and growing government debts.
Just take a look at the Nikkei225. On Friday it closed a hair about 12,000, 70% below where is it was trading in 1990. That is a moribund performance not matter what you choose to call it. You are incredibly naive if you rely on "official statistics" from any central bank or government including the BoJ which by the way, has shameless manipulated the yen to keep in artificially low. And as you said it yourself, Japanese workers have suffered "hideously" because real growth has been abysmal even in the face of near zero overnight lending rates for the last 15 or more years. It is also why the carry trade has been so successful as traders effectively shorted the yen to go long currencies like the Icelandic krona or New Zealand dollar.
I'm a trader and its not the recession I follow because by the time a recession is "officially" confirmed, my portfolio is in tatters, its the bear market. My point is that the myriad of bailouts and misguided market impediments (like the short ban) has the potential leave us in a position with a multi-decade bear market like Japans' with moribund economic real performance like Japan. Please spare me the economic lecture. Anyone who thinks that real economic performance in Japan has been impressive over the last two decades is delusional.
He isn't just a 'trader'---I bet he is one of the many thousands of water-carries for the Japanese carry trade. Everyone is desperate to believe there is a depression, not raging inflation, in Japan. If we all demand Japan raise interest rates to the levels required for inflation, it wouldn't be 0.5%, that is certain! But if they raise it, that kills the carry trade. And many US 'investors' desire this hideous and totally noxious carry trade to expand, not vanish.
So I debate Matt some more:
Just as the value of the yen doesn't matter so long as it is weak, ditto the Nikkei.
LOOK AT THE TRADE STATS. That is what matters. As Japan reams us out, they care only about that matter. Look at the US workers: they are being treated to the same 'depression for workers/expansion for exporters' business. We cannot understand what is happening unless we understand the ultimate goals of free trade: to decimate the earnings of workers in all the first world nations.
So when we look at statistics, we have to differentiate between debt and credit, the value of workers versus profits for export powers, etc. The US is the dying nation since it has a national budget deficit that is worsening, a trade deficit that is nearly a trillion dollars a year and is being rapidly deindustrialized.
Japan is NOT being deindustrialized. The workers there are being demonetarized. They are losing fiscal power. But Japanese manufacturing is growing stronger, not weaker. And of course, it is also expanding across the planet. Toyota, not General Motors, is now the global #1 power in the auto manufacturing fields.
As for central banks lying: why would the Japanese boast about their progress? Eh? They do this happily, AT HOME. I read the Nikkei News every day. When the yen goes up against the dollar, they whine. When it goes down, they celebrate.
This is because profits selling in the US goes up when the yen gets weaker.
Indeed, Japan doesn't want you, Matt. Fortress Japan doesn't want Chinese investors. Nor Americans or Europeans. They want you to think they are 'moribund' while they strong arm all markets and drive out our own corporations. I know this is impossible for Americans to understand but it is laughably easy for Asians to understand: they are all playing the same game the Japanese are playing.
I am betting Matt will demand that Seeking Alpha cease seeking anything and banish people who dare to disturb his sleep. The fact that he sinks instantly into insults and threats is very typical of small minds. But then, I am insulting him here. Of course. But then, he deserves this. On the other hand, if he came here, we would all happily chat with him. I could bombard him with hundreds of cartoons about Japan and the carry trade/yen business.
You are trying to turn this into your own personal soap box. I'm not sure what your agenda is but it certainly isn't about investing or trading. Take it elsewhere.
This forum is devoted to serious investors, not wannabe economists with some other agenda that quite frankly has little to do with the topic of my article.
Japan has been engaged in a 20 year bear market by definition, and one which is you obviously have little understanding. After seeing value decimated over the last twenty years in Japanese stocks since 1990, the Japanese investor has my deepest sympathies and if we pursue bailout economics in the US, we will see the same pathetic long-term performance.
You have clearly demonstrated that you have little understanding of how markets work and what a bear market is.
I always find people who appear in a public forum seeking to spout out wisdom and great debate powers always collapse when someone doesn't agree with them. This desire to control debates by eliminating anyone who argues is classic. This is why so many people never learn anything new. When you debate someone who is shot dead, for example, your world image remains intact. But this doesn't help much when reality is going totally haywire.
So I attack this idiot Matt with a low blow because he pisses me off:
You can't stand debate with a woman, can you? Ha.
Look, Japan has something the US doesn't have: A TRADE SURPLUS. They are not the same as us. We have tremendous debt...held by foreign powers including and especially, Japan! True, their stocks aren't forming huge bubbles like ours.
This is because they don't want YOU in their markets! They want to be the ones shopping, here. And they are now buying up our banks. Some depression, eh?
We are up to our eyeballs in debt and this has been enabled by the Japanese carry trade. But I am not an 'investor' like you...I am an INVESTIGATOR. Heh. Huge difference.
If anyone wishes to have fun with Matt, be my guest. I suppose eventually the Seeking Alpha people will ban me because I don't mouth the same lines everyone is mouthing. But then, isn't this how we got in trouble in the first place? Walking in lock-step, ignoring reality? Imagining something was working when it was broken? Taking the wrong road all the time?
Ignoring important data, refusing to look at everything at once? Heh. Lost, like lambs driven off the cliff by wolves.