Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on April 9, 2016
Japan: The Canary in the Coal Mine
One of the epicenters of the global financial crisis that started during the second half of last year is Japan, and it looks like the markets in the land of the rising sun are entering yet another period of great turmoil. The Nikkei was down another 390 points last night, and it is now down more than 1,300 points since a week ago. Why this is so important for U.S. investors is because the Nikkei is often an early warning indicator of where the rest of the global markets are heading. For example, the Nikkei started crashing early last December about a month before U.S. markets started crashing really hard in early January. So the fact that the Nikkei has been falling very rapidly in recent days should be a huge red flag for investors in this country.
I want you to study the chart below very carefully. It shows the performance of the Nikkei over the past 12 months. As you can see, it kind of resembles a giant leaning “W”. You can see the stock crash that started last August, you can see the second wave of the crash that began last December, and now a third leg of the crash is currently forming…
And of course the economic fundamentals in Japan continue to deteriorate as well. GDP growth has been negative for two out of the last three quarters, Japanese industrial production just experienced the largest one month decline that we have seen since the tsunami of 2011, and business sentiment has sunk to a three year low.
The third largest economy on the entire planet is in a comatose state at this point, and Japanese authorities have been throwing everything but the kitchen sink at it in an attempt to revive it. Government stimulus programs have pushed the debt to GDP ratio to 229 percent, and the quantitative easing that the Bank of Japan has been engaged in has made the Federal Reserve look timid by comparison.
But none of those extraordinary measures has been successful in stimulating the Japanese economy, so now the Bank of Japan has been been trying negative interest rates. Unfortunately, these negative rates are also having some unintended consequences. According to the Wall Street Journal, the negative interest rate program is putting additional stress on the Japanese financial sector…
The Bank of Japan started imposing a minus 0.1% rate on some deposits held by commercial banks in February, meaning that those banks now have to pay a small fee when they add to their money parked at the central bank. The financial sector has suffered amid worries that banks can’t pass on negative interest rate to their depositors and therefore will take a hit to their profits.
I would keep a very close eye on the big banks in Japan. It is my conviction that there is a lot more brewing under the surface than we are being told about so far.
In addition, many analysts in Japan are complaining that all of this manipulation by the BOJ is essentially destroying normal market behavior. The following comes from Bloomberg…
Nobuyasu Atago, who also had worked at the BOJ and is now the chief economist at Okasan Securities Co., pointed out that instead of serving as a important source of cash for borrowers, the credit market has become a profit center for dealers looking to buy securities from investors and sell them to the central bank. While the strategy may be lucrative now, financial institutions face the risk of massive losses, he said.
“By making the trade with the BOJ the only source of profit, markets are exposed to unexpected volatility when that trade ends and the BOJ moves toward the exit,” Atago said. “Markets are being destroyed.”
The more global central banks try to “fix things”, the more they make our long-term imbalances even worse.
To me, it makes no sense to have a bunch of unelected, unaccountable central planners constantly monkeying with the financial system. In a true free market system, we would allow market forces to determine the course of events. But of course we don’t have a free market system anymore. Instead, what we have is a heavily socialized system that is greatly manipulated by the central planners.
That is why global financial markets gyrate wildly if Janet Yellen so much as sneezes. They know who holds all the power, and investors are constantly on edge as they wait for the latest pronouncement from our central banking overlords.
At this point, 99 percent of the global population lives in a country with a central bank. Our world is more deeply divided than ever, and yet somehow everyone in the world has agreed to adopt this insidious system.
It sure is quite a coincidence, isn’t it?
Getting back to Japan, things are so bad now that the Japanese government is actually considering giving gift certificates directly to low-income young people. The following originally comes from Bloomberg…
The Japanese government plans to include gift certificates for low-income young people in its fiscal 2016 supplementary budget, Sankei reports, without saying who provided the information.
Recipients would be able to use them for daily necessities.
The government sees gift certificates as more effective in stimulating consumption than cash handouts, which may be deposited.
This is what the end of democracy looks like.
When the government just starts handing out money like candy, you might as well turn out the lights because the party is over.
Since 2008, global central banks have cut interest rates 637 times and they have injected approximately 12.3 trillion dollars into the global financial system through various quantitative easing programs.
Has all of this monkeying around solved our problems?
Of course not.
Instead, our long-term problems have grown progressively worse and now a new financial crisis has begun.
Keep an eye on Japan, and also keep an eye on Europe. Huge problems are bubbling right under the surface, and when they come bursting into the open they will deeply affect the United States as well.
22 Comments on "Japan: The Canary in the Coal Mine"
onlooker on Sat, 9th Apr 2016 8:02 am
Welcome to the start of full on collapse of the world economy. The manipulations are not having any effect. The interrelation between all the markets and countries are pushing them all down. Like quicksand, everyone is sinking under the weight of the realities of a deeply corrupt world economy dependent on growth which cannot be attained and trying stimulus which has no effect. Like it or not Contraction now is inevitable.
makati1 on Sat, 9th Apr 2016 8:38 am
Visiting Japan?
“Tourists – not suspected terrorists – will have to give their fingerprints to travel, shop and stay in Japan, making clear that the future will use your own body to control your actions in society. Control is the future, unless we avert it.
There is every attempt to force a global society into using bio-metrics to ID and complete all transactions. If they succeed, it is a society where rights will be abolished, every transaction is monitored and privacy is an insider’s joke about the past. Subsequently, the population will become completely dependent on the system for their livelihoods.”
http://www.shtfplan.com/conspiracy-fact-and-theory/japan-to-force-tourists-to-use-fingerprints-as-currency-for-all-transactions_04082016
Coming to a country near you …
onlooker on Sat, 9th Apr 2016 9:08 am
wow good points Mak. This has been a developing feature of our current age. Now with the so called “War on Terrorism” they have the perfect excuse to monitor and label everyone. I sometimes believe all this New World Order is quite real. However, I think their plans will be frustrated by both rebellion and also the contracting nature of the world economy and network so that attempts to centrally control and monitor this planet will be an almost impossible task. Not only that unlike the fictitious book “1984” people will not be blindsided by attempts to install a world totalitarian government.
makati1 on Sat, 9th Apr 2016 9:27 am
But what happens until they wake up? I think the who;e “security” system will break down long before they can get total control. The Us is on the brink of a crash that will make the Great Depression look like a birthday party. I do not want to be there when it happens. I plan to be on the farm 100 miles form Manila.
paulo1 on Sat, 9th Apr 2016 9:29 am
Just to set the record straight, the Guy that runs the Ec Collapse blog is a religious crackpot who thinks God speaks to him and provides his insights. He has been predicting this collapse for 5+ years. I would take anything written with a grain of salt. He’s up there with Orlov and Ruppert for immediate Doom. Certainly, things look dodgy these days but we seem to be chugging along. People are more resilient than the hardcore doomers indicate. Even Kuntsler, with his dismissal of ‘southern man’ and his talk of ‘cornpone crackers’ miss the fact that people have a strength and resilience beyond what cheese doodles and Dr. Pepper provide.
Let the Market collapse, big deal. Who is to say that Society won’t improve for the reset? Maybe the NA oligarchs will find a home in prison? Who knows? I know I plan on tomorrow and don’t feel like wasting today.
regards
Boat on Sat, 9th Apr 2016 10:00 am
Market corrections are normal. What is your definition.
Boat on Sat, 9th Apr 2016 10:00 am
Market corrections are normal. What is your definition.
Boat on Sat, 9th Apr 2016 10:00 am
Market corrections are normal. What is your definition.
penury on Sat, 9th Apr 2016 10:31 am
Japan has been the “Canary in the coal mine” for twenty years and counting. Japan also has a demongraphic problem, Japan also has Fukishima, Japan has a predicament. And yes most things are possible.
peakyeast on Sat, 9th Apr 2016 11:24 am
The longer time we have 7bil people on the planet on current consumptions the nearer we get total annihilation.
Its a great plan if you want to ruin the entire earth for as long as possible.
Thats real political leadership – that we have paid dearly for in wars, famines and loss of our freedom.
peakyeast on Sat, 9th Apr 2016 11:29 am
@paulo: Its hardly likely that a reset will improve things.
Which countries has benefitted from this happening recently? It was/could be another matter some 50 years ago when there still was abundant resources and relatively small populations compared with today.
Today IMHO it will just make things worse, but while making it unavoidable and “politically” possible to take a huge step down in conditions.
For example I dont see a single arabian spring success, but perhaps I havent looked well enough?
makati1 on Sat, 9th Apr 2016 6:37 pm
peaky, we have entered a world in chaos and I do not see it getting better until it passes the point that most of us are gone by disease, starvation or war. By then, the climate changes will have made life impossible for us on this planet. How long? If there are any humans left alive in 2100, I would be surprised.
derhundistlos on Sat, 9th Apr 2016 7:10 pm
The charlatan, Guy McPherson, who claims to speak truth to power, after being humiliated and called out by his own readership for pathological lying and ad hominem attacks on his detractors now disallows all critical commentary. Chairman McPherson ordered his internet security political correctness police to remove any negative commentary of him. The guy is a fraud from the word go.
Boat on Sat, 9th Apr 2016 9:53 pm
mak,
I can walk into any home depot and buy a huge variety of cordless tools at great prices. Just about anything to build a house that will be very efficient. I for one loves the times we live in. Electricity and it’s many uses is cheap and fabulous.
makati1 on Sat, 9th Apr 2016 10:10 pm
Boat, I am sure those tools are NOT made anywhere near your Home Depot. In fact, most come from Asia. And the materials to make them come from all over the planet. So, the end of oil will mean the end of all those tools and even the end of Home Depot itself, and it is fast approaching. I hope you are preparing by buying hand tools for the day there is no electric. A solar flare could take it out anytime, permanently.
Boat on Sat, 9th Apr 2016 10:21 pm
mak,
News flash, were not even at peak oil let alone running out. Huge discoveries of nat gas has lowered energy prices around the world. Btw shipping is going to nat gas. No fear here.
dooma on Sun, 10th Apr 2016 2:10 am
Japan is just slightly ahead of the rest of the developed world.
We face the same problems as them. An aging population, putting a massive strain on heath spending. A transition away from actually making “stuff” for example, countries like South Korea are making cars of similar quality for much lower sticker prices. And we all know where electrical gadgets are made now. I remember the quality of the stuff Japan used to make back in the 70’s when my late father owned a stereo store. Sure a good sound system cost an arm and a leg but I still have amps, portable “ghetto blasters” and Toshiba turntables that work like that were made yesterday. And let us not forget the quality of their cameras for the price. They have destroyed their manufacturing industry by making products that were of too high a quality. They were not cheap but there was a good reason for that. Unlike the crap that China now turns out.
Also, much of the average Japanese diet is highly reliant on the ever depleting oceans of the world.
Yes, they are definitely a future version of the rest of the developed world. Our turn is next.
joe on Sun, 10th Apr 2016 3:10 am
Yeah, there are those who believe neg rates are a positive thing. The bots that run the NYSE are told to ignore reality, if humans (minus day traders who are glorified gamblers) were in charge reality would have hit long ago.
Bots working for corrupt hedge fund managers, investing dodgy oil money and FED fiats, mixed with pension funds clinging to life trying to avoid the age pyramid timebomb, is not a real market. And lets not forget oil powered distraction companies known as the services sector and last but not least, ultimate socialism, the MIC.
makati1 on Sun, 10th Apr 2016 8:45 am
Boat, what does the amount of oil left have to do with the end of petroleum as an energy source YOU can afford to purchase? Already millions are being cut out of the oily market by the ongoing depression in most of the Western countries. Yes, I said depression. The fake numbers do not hide the declining wages, loss of good paying jobs, increasing debt, collapsing infrastructure, etc, in the West and especially in the FSofA.
You are one bank closing away from a 3rd world existence, if you are not preparing for that coming event. Cannot happen in America? I bet the Romans were claiming the same thing until…
Kenz300 on Sun, 10th Apr 2016 9:03 am
If you can not provide for yourself you can not provide for a child.
Birth Control Permanent Methods: Learn About Effectiveness
http://www.emedicinehealth.com/birth_control_permanent_methods/article_em.htm
Poverty in the Philippines –
https://www.youtube.com/watch?v=XldM4DtlA-Y
Dredd on Mon, 11th Apr 2016 8:11 am
Japan is merely a microcosm.
So, warn someone already (The 1.14% vs. The 100%).
Roman on Mon, 11th Apr 2016 7:03 pm
Kenzero just curious how many births have you prevented? Now I never wanted and probably never will have kids. But you just make me want to just go on an insemination spree.