Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit | Forex Factory

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit | Forex Factory

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit

From testosteronepit.com

The new salvation religion being preached in Japan to a hardened and cynical bunch who’ve lived through one of the worst bubbles and busts in recent history is this: prodigious money-printing by the Bank of Japan would devalue the yen, among other things, causing exports to skyrocket and imports to shrink. The resulting trade surplus would save Japan. But the opposite is happening – and it’s happening fast! So there was a thimble of good news: exports jumped 12.2% in July from a year ago, the Ministry of Finance reported on Monday. Alas, they were valued in weakened yen. In terms of volume, exports rose only ... (full story)

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Aug 20, 2013 3:26am

When you consider everything that Japan has had in the past 50 years or so, like the lions share of the worlds automotive industry.....not only cars and parts but also motorcycles and trucks, plus various electronics etc etc etc....it beggars belief how the then worlds 2nd largest economy could be so monumentally mishandled by so many, for so long. Kuroda, Abe et al are yet more in a never end line up of muppets.......

Aug 20, 2013 3:51am

Quoting Spreadbetter

Disliked

However, its not just poor management they've faced incredibly strong competition from emerging markets over the past decade; Honda, Suzuki, Yamaha is challenged by a raft of new manufacturers making small efficient bikes and motors, as is Sony for electronics. The new competition were able to slash prices due to an incredibly low wage base and produce goods to rival Japan's for performance whilst the status of the new kids on the blocks were raised. Think Kia in terms of cars, Samsung for electronics as just two examples.

Ignored

That's all true...but these competitors came from a position of weakness against the 2nd largest economy in the world......and made some impressive in roads into Japans market share. That alone smacks of incompetence on Japans part......they had the ability to crush competitors, but failed to do so. Either it is complacency, or arrogance...either way, it is incompetence....and we have seen that incompetence in Japanese governments ever since......

Aug 20, 2013 4:52am

Quoting Spreadbetter

Disliked

But they didn't have the ability to "crush the competition" not when certain new manufacturers could undercut wages and tooling costs. The new fresh competition was impossible for Japan to fight, on so many levels and from so many directions. Japan wasn't incompetent or arrogant they were genuinely trapped.

Ignored

Absolute rubbish!! When a country as rich as Japan was at the time the can price the competition out of the market. This is basic capitalism!!

Aug 20, 2013 4:54am

Quoting Exodus

Disliked

Japan's dominance of cars, electronics, etc stems from the 60s. Initially they copied everything; then they re-engineered things; then they became innovators. Their efforts with cost reduction and quality manufacture took them forwards with automation in huge bounds. The only other country to succeed with automation in the same way is Germany, both countries now have impressive industry leaders; Panasonic, Hitachi, Kawasaki, Sharp, also Siemens, Bosch, Leibherr. Notice how I left out some of the famous brand names.

[ American mass production...

Ignored

Got nothing to do with it. Japans 20+ year deflation cycle, massive debt to GDP rate, ageing population have been met by successive groups of incompetent and ineffective politicians who have ALL failed to stop japans slide. It's sad that this happens, but it is a fact

Aug 20, 2013 5:04am

Quoting Spreadbetter

Disliked

Except its not rubbish, its fact/history. Japan was left impotent by the volume and quality of competition from so many new and excellent brands, for example Korean brands that eat into japanese firms market share in extraordinary quick time.

You can't price competition out of the market when that competition is tooling up and employing from a zero base with massive govt subsidies.

Ignored

Oh very well...whatever you say then....

Aug 20, 2013 4:29am

Quoting realjumper

Disliked

That's all true...but these competitors came from a position of weakness against the 2nd largest economy in the world......and made some impressive in roads into Japans market share. That alone smacks of incompetence on Japans part......they had the ability to crush competitors, but failed to do so. Either it is complacency, or arrogance...either way, it is incompetence....and we have seen that incompetence in Japanese governments ever since......

Ignored

Japan's dominance of cars, electronics, etc stems from the 60s. Initially they copied everything; then they re-engineered things; then they became innovators. Their efforts with cost reduction and quality manufacture took them forwards with automation in huge bounds. The only other country to succeed with automation in the same way is Germany, both countries now have impressive industry leaders; Panasonic, Hitachi, Kawasaki, Sharp, also Siemens, Bosch, Leibherr. Notice how I left out some of the famous brand names.

[ American mass production was strong during WW2, I don't know how it stacks up now]

Now go back and look at the value of their currencies at those times. The Euro has saved the Germans from extreme pressures. I don't have anything older than this century to hand, but I remember when then Yen went through the 450 barrier and people moaned about the rising price of Japanese goods. The Japanese responded by globalising their production, the Europeans responded by introducing trade barriers - cars have to have 80% locally sourced components to be sold in the EZ (which is why the UK cannot afford to leave the EU).

A trade deficit is a necessary part of restoring competitiveness, it will drive down their currency. Eventually.

Aug 20, 2013 7:39am

Quoting realjumper

Disliked

Got nothing to do with it. Japans 20+ year deflation cycle, massive debt to GDP rate, ageing population have been met by successive groups of incompetent and ineffective politicians who have ALL failed to stop japans slide. It's sad that this happens, but it is a fact

Ignored

It has everything to do with it. Japan is living the aftermath of balance sheet correction. Their prosperity in the 80s encouraged corporate corruption and fuelled huge asset bubbles. Commercial property crashed 87% when the Nikkei crashed from 40,000. This in turn spawned a huge carry trade that persisted until recent times, when the carry trade unwound the Yen again appreciated massively - just what Japanese industry didn't need.

I can't argue the ineffectiveness of the successive governments to fix some issues, particularly in labor it seems.

Aug 20, 2013 2:17pm

Quoting Squeeze

Disliked

The other issue never mentioned much in the mainstream press, Japan's nightmare toxic liquid waste that's being leaked into the Ocean and ground at the rate of 300 metric tonnes a day. Already many are suggesting its 100 times worse than Chernobyl.

Ignored

yes, very sad. impact will be global.

Aug 20, 2013 7:48am

The other issue never mentioned much in the mainstream press, Japan's nightmare toxic liquid waste that's being leaked into the Ocean and ground at the rate of 300 metric tonnes a day. Already many are suggesting its 100 times worse than Chernobyl.

Aug 20, 2013 5:19am

Quoting Spreadbetter

Disliked

Except its not rubbish, its fact/history. Japan was left impotent by the volume and quality of competition from so many new and excellent brands, for example Korean brands that eat into japanese firms market share in extraordinary quick time.

You can't price competition out of the market when that competition is tooling up and employing from a zero base with massive govt subsidies.

Ignored

A lot of Japanese manufacturers read the writing on the wall back in the early 1990's and tried to respond by relocating a sizeable amount of their manufacturing to China etc. Had to end their lifetime employment policies as a result and a lot of Japanese executives and workers started hitting the recruitment market around that time.

That was in addition to the move which began in the 1980's to open manufacturing plants in the US and Europe.

The last thing they needed in recent years as regards their Japan based manufacturing has been the strong Yen.

Aug 20, 2013 3:51am

The USD is weakening vs most currencies... the reasons could be many but the lead up to tomorrow's Fed minutes release is one of them

Aug 20, 2013 3:04am

Go big or go home right? Kuroda is Moses, turning water into yen. Japan can join the US in monthly trade deficits

Aug 20, 2013 5:36am

Quoting Spreadbetter

Disliked

out 'Japanned' Japan.

Ignored

You took the words out of my mouth lol! China too to some extent.

P.S. And learned to out Kaisen them

Aug 20, 2013 3:47am

However, its not just poor management they've faced incredibly strong competition from emerging markets over the past decade; Honda, Suzuki, Yamaha is challenged by a raft of new manufacturers making small efficient bikes and motors, as is Sony for electronics. The new competition were able to slash prices due to an incredibly low wage base and produce goods to rival Japan's for performance whilst the status of the new kids on the blocks were raised. Think Kia in terms of cars, Samsung for electronics as just two examples.

Quoting realjumper

Disliked

When you consider everything that Japan has had in the past 50 years or so, like the lions share of the worlds automotive industry.....not only cars and parts but also motorcycles and trucks, plus various electronics etc etc etc....it beggars belief how the then worlds 2nd largest economy could be so monumentally mishandled by so many, for so long. Kuroda, Abe et al are yet more in a never end line up of muppets.......

Ignored

Aug 20, 2013 4:30am

But they didn't have the ability to "crush the competition" not when certain new manufacturers could undercut wages and tooling costs. The new fresh competition was impossible for Japan to fight, on so many levels and from so many directions. Japan wasn't incompetent or arrogant they were genuinely trapped.

Quoting realjumper

Disliked

That's all true...but these competitors came from a position of weakness against the 2nd largest economy in the world......and made some impressive in roads into Japans market share. That alone smacks of incompetence on Japans part......they had the ability to crush competitors, but failed to do so. Either it is complacency, or arrogance...either way, it is incompetence....and we have seen that incompetence in Japanese governments ever since......

Ignored

Aug 20, 2013 4:59am

Except its not rubbish, its fact/history. Japan was left impotent by the volume and quality of competition from so many new and excellent brands, for example Korean brands that eat into japanese firms market share in extraordinary quick time.

You can't price competition out of the market when that competition is tooling up and employing from a zero base with massive govt subsidies.

Quoting realjumper

Disliked

Absolute rubbish!! When a country as rich as Jan was at the time the can price the competition out of the market. This is basic capitalism!!

Ignored

Aug 20, 2013 5:33am

And as the article points out, supported by the balance of payments data published yesterday, even a cheap currency is not enough to arrest the slide in overseas demand for Japanese products. Even GM and Ford are now eating into Japanese small car market share in the USA, unthinkable five years back.

The Japanese saw the competition gearing up and as you pointed out took every concievable option to compete, but ultimately free trade allowed new cream to rise to the top. The massive benefit is the quality of life for many in South Korea is unrecognisable to what it was 20 years back, they out 'Japanned' Japan.

http://wallstcheatsheet.com/stocks/have-ford-and-gm-killed-the-japanese-midsize-car.html/?a=viewall

Quoting TraderBen

Disliked

A lot of Japanese manufacturers read the writing on the wall back in the early 1990's and tried to respond by relocating a sizeable amount of their manufacturing to China etc. Had to end their lifetime employment policies as a result and a lot of Japanese executives and workers started hitting the recruitment market around that time.

That was in addition to the move which began in the 1980's to open manufacturing plants in the US and Europe.

The last thing they needed in recent years as regards their Japan based manufacturing has been the...

Ignored

Trader#FBC3

Aug 20, 2013 3:12am

can someone please explain to me why when there is time of crisis or when japan is not doing well .... the yen strengthens? how long can this logic defying trend of weak japan = strong yen phenomenon last? at the rate this is going it does not seem like yen's gonna weaken and this is setting itself up for a major currency blowout in japan much like the 1997 AFC where overvalued thai baht eventually imploded.

Aug 20, 2013 3:56am

maybe we should phase this question in another way ... why is the yen strengthening against all currency majors despite negative news?

Trader#0E21

Aug 20, 2013 3:35am

WHY is the USD weakening against JPY?

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Aug 20, 2013 2:52am
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