Japan's Struggle Continues

It’s more of the same old news for Japan. The global economy continues to savage the country.

From Market Watch:

Japanese data sets released Wednesday suggested the global recession continues to take a toll, showing up in both lagging and leading indicators.

Japan’s current-account surplus slipped 34.2% in May from that month last year, as the trade suplus fell 22.1%, data from the Ministry of Finance said, painting a picture of tough times for the month for Japan’s trade-oriented economy.

Separate data from the Cabinet Office suggested the effects will continue in months to come, with companies delaying outlays on new plants and equipment. Core machinery orders, which are considered a leading indicator of capital expenditures, fell 3.0% in May from April.

The machinery-order data were much worse than the consensus expectation for a 2.0% rise, according to economists polled by Nikkei and Dow Jones Newswires.

In April, core machinery orders also missed expectations, falling an even wider 5.4% on month.

Japan seems to be totally dependent upon a return of the world’s economy to some sort of increased consumption. The country truly appears unable to curb its economic decline. Here’s hoping they aren’t the proverbial canary in the coal mine.

Disclosures: No positions

Comments

[Moon Kil Woong:]

Japan's struggle will soon be ours. For we are following their same path of QE they have. However, we are in a much much worse financial situation.

Jul 08 09:36 AM

[Mad Hedge F...:]

And it is about to get worse. It’s sad to see a once great country fall on hard times. It’s likewatching a formerly leading hedge fund manager apply for food stamps.I’m talking about Japan, which in 1989 boasted the world’s mostvaluable stocks, largest banks, and strongest currency. Oh, how themighty have fallen. This week the Ministry of Finance published thetrade figures for May showing a 42% YOY drop, and that the cataclysmicfall in exports continues unabated, as foreigners keep their money intheir pockets instead of buying high quality cars and electronics. Evenexports to China fell 29.7%. I’m sure the chart below will be found inbusiness school textbooks for decades to come as proof of the risks ofrunning an overly export dependent economy. Although a giant fiscalstimulus package will start to hit in the second half of this year,most economists have GDP forecasts for the year of minus 6.8% or worse.This would take GDP back to the 2004 level, and make our economy lookpositively bubbliscious by comparison. This is all happening when thenumbers of those retiring is going through the roof, causing welfarepayments to skyrocket. Taking a page out of Obama’s playbook, thegovernment is borrowing to meet these costs, so the national debt isexpected to reach the certifiable nosebleed territory of 197% by nextyear! Prime Minister Taro Aso has so far fought off increasedconsumption taxes, but it is just a matter of time before those effortsare tossed out the window. Continued deflation is a no brainer. Realestate prices are still stuck at 30% of their 1990 levels. This is what an “L” shaped recovery looks like up close and ugly. In the meantime,the yen strengthens, making exports ever more expensive anduncompetitive. Better to stand aside from the Land of the Rising Sunand watch with tears. Is the US next?

Jul 08 02:30 PM