What’s With Japan? A Commentary by doublewood

The Japanese are prone to act in extremes.  For example, they see aesthetics and poignancy in their own death.  But that depends on whose point of view it is when a Japanese kamikaze pilot plunges his plane to kill his American enemies.  When Japanese politicians continue to worship their WWII war criminals twice a year in a national shrine, repeal their history books to describe their brutal invasion of China and the rest of Asia as having “gone in and out”, and profess that forced sex slaves are willing “comfort women” who got paid, it makes non-Japanese quite incensed and perplexed at the same time.

A few days ago, the newly-elected prime minister Abe demonstratively led a delegation to the island of Iwo Jima to pay tribute to the 22,000 Japanese soldiers who died there defending against the US during the closing stages of WWII.  Not a single word was mentioned in relation to the 6,500 US soldiers who also gave their lives there as a result of that decisive battle.  But the timing of Abe’s visit is even more outrageous.  He chose April 14, the day before US Secretary of State John Kerry visited Tokyo on his first mission to Asia after assuming office.  Diplomatically, this is very deliberate and outright inappropriate.  But to this day, Japanese do not see anything wrong with what they did in WWII, only “regret” (that they did not prevail)!  There is nothing hidden in Abe’s determination to turn Japan back into a “normal nation”, translated to mean a militaristic power.  Japan is like a pitbull who is daring to yank the leash loose from the US, whom it now perceives to be a weakening but bullying master.

It is no different when you follow the Japanese handling of their financial affairs.  If they try something intended to address a problem and it doesn’t work, they will forage and then do the exact same thing, only 10 times more extremely.  Bonzai..ai..ai..ai..ai !!!!!

(1)  After inventing the contemporary version of money-printing to deal with its debt problems 20-odd years ago, calling it “quantitative easing” (then a new term not yet found in economics textbook), the Abe administration now launches the biggest QE/GDP injection in human history , aiming to double the base money supply over the next two years.  It is making midgets out of all the other countries that have lately started imitating Japan with QE of their own.   Since the inception of QE 20 years ago, Japan’s government debt/GDP ratio has ballooned to almost 250% (vs. Greece 150%, USA 110%, UK 100%, Germany 90%, etc.) and the economy is barely crawling, even with additional massive government-subsidized activities.  All that QE accomplishes is to roll-over debts when they come due, so that nobody defaults, but nobody can repay their ever-increasing debts outstanding either.  Like addiction to heroin, the economy needs bigger and bigger dosages in order not to suffer withdrawals.

(2)  Abe is announcing the program in order to help his party win absolute majority in both houses of Parliament in the upcoming July election.  His right-wing hereditary clans of politicians have major agendas if they manage to succeed in that election.  Many of them belong to the same families running Japan’s war machine during WWII, and the US did not purge them out of the establishment after the War because of the priorities in the Cold War.   They will now seek to repeal the constitutional provisions that are meant to prevent Japan from rising again as a military power.  That, they believe, is the “real” economic solution that had eluded the nation during its 25-odd “lost years”.

(3)  Because of the huge size of money supply involved and the multiple speculative activities that would be triggered by it, the Japanese action will potentially wreck havoc in the global open market platforms.  Money and credits, on the one hand, and financial instruments, currencies and commodities on the other hand, will rock one another in increasing waves of volatility.  Money sharks will try to feast from one meal to the next and the next, leaving behind trails of defunct credits.

(4)  The all-too-deliberate Yen devaluation resulting from this action will threaten the world with a spiralling currency war.  By nakedly grabbing comparative advantage in an inter-dependent global economy, Japan is exporting deflation into a world already deficient in its recoverability.  And if every country reciprocates in rounds of competitive currency devaluation, we will once again retrace the 1930s’ depression tracks.  That journey brought us into World War II, and the only way in which everybody had a job.

No wonder it is time our number 2 man, Joe Biden, has summoned Japan’s number 2 man, Aso (known otherwise as you-know-what), to a conversation about Japan’s latest actions.

– doublewood

Leave a Reply

%d bloggers like this: