Archive for the ‘Japan’ Category

Land of the Setting Sun

Friday, November 21st, 2014

Let’s pretend that the United States economy is a football team.  The coach calls the play.  The running back runs right up the middle and is thrown for a loss.  What does the coach do on the next play?  Run the ball up the middle for a loss.  And the play after that?  Run the ball up the middle for a loss.  And the play after that?  Run the ball up the middle for a loss.

Other teams see what’s happening to the U.S. economy.  So what do they do?  Run the ball up the middle for a loss.  In Japan, in Europe and elsewhere the losses mount.  What’s the conclusion?

  1. Running the ball up the middle every play will result in a loss, or
  2. We need to run the ball up the middle more often.

JapanThe answer, if you’re paying attention to central banks and the actions of Japanese Prime Minister Shinzo Abe is, of course, B., as logic and politics rarely travel on the same highway.

Formerly the world’s number two economy behind the U.S., Japan’s future couldn’t have been brighter back in the ’80s, when “Japan Inc.” was all the rage.  Today, if there really was a Japan Inc., it would have long ago declared bankruptcy.  The “Land of the Rising Sun” has become the “Land of the Setting Sun.”

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It’s Only Money

Friday, September 26th, 2014

“Money often costs too much.”                                                                               Ralph Waldo Emerson

It really does all come down to money.

Money decides the outcome of wars and elections.  It ensures that we are properly fed and clothed.  It buys us an education and pays for all of our material needs.  And it may not be able to buy happiness, but it does have a dramatic impact on that vague thing that’s often referred to as “quality of life.”

All of us, if we’re being honest, would rather have more of it than less of it.

But the value of money is variable.  The currency of one country continuously fluctuates in value relative to the currency of every other country – and those fluctuations can have a dramatic economic impact.

A Stronger Dollar

You’d think countries would be striving to make their currencies stronger, but in recent years, we’ve had “currency wars” as competing countries have tried to weaken their currencies to increase demand for their imported goods.

DollarThe United States has criticized China for its currency manipulation, but in the meantime, the Federal Reserve Board’s easy money policies have deliberately weakened the dollar.

Now, though, as other countries’ currencies have become weaker, the dollar has strengthened.  In fact, the dollar reached a four-year high this week against a basket of major currencies, as The Wall Street Journal reported, “amid mounting expectations the Federal Reserve will raise interest rates next year while its counterparts in Europe and Japan consider further measures to raise inflation and spur growth.”

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Financial Tsunami

Friday, May 24th, 2013

In a recent post, we speculated about what would happen when quantitative easing finally ends.  This week we got a glimpse.

After Federal Reserve Chairman Ben S. Bernanke said that The Fed may cut the pace of its bond purchases, first U.S. Treasuries slid, then Japan’s bond market fell.  When Japanese markets opened, the bond futures market was halted on a circuit breaker as the bond market took a swan dive.  U.S. 10-year rates climbed to 2.07 percent, their highest level since March, while 10-year yields for Japanese bonds pushed up to 1% for the first time in a year.

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90,000,000 Americans Have Stopped Working

Friday, April 5th, 2013

When the unemployment rate declines, even by a little bit, it should be good news.  But when it declines because people are leaving the workforce in record numbers, it’s not.

The U.S. Bureau of Labor Statistics (BLS) reported that the unemployment rate is now 7.6%, down from 7.7%.  But this 0.1% drop is due entirely to a drop in the labor force by 663,000 in March.

Non-farm payroll was expected to increase by 190,000 in March, with the lowest forecast at 100,000.  Instead, it increased by a meager 88,000 jobs.

As Zerohedge.com reported, a record 90 million Americans are no longer even looking for work.  The labor force participation rate dropped from 63.55% to just 63.3% – its lowest level since 1979.

The BLS reports the U-6 unemployment rate for March at 13.8%, which is a more accurate number than the U-3 rate of 7.6%, as it includes those who have been unemployed long-term.

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