Wednesday, May 18, 2011

American Empire on the Brink

By Nicholas Contompasis

The deliberate neglect of the ailing America capitalistic system by the Obama Administration is now spreading to our allies like Japan similar to a cancerous tumor enveloping a host body. It is this that can more effectively destroy the American way of life, more than any terrorist attack.
Like anything in motion, momentum gains and the force of the decline becomes insurmountable with its weight ever pressing and ultimately crushing any resistance till there's a complete collapse.
This is where we're headed if something isn't done soon. Many are saying we are now beyond repair, I hope not, for the sake of our children and grandchildren.
Japan and other loyal allies could be lost forever. American Empire on the brink.

Japanese Economy Collapses: Q1 GDP Drops At Double Consensus Rate, Epic Nominal Plunge Of -5.2%
Submitted by Tyler Durden on 05/18/2011

Confirming once again that Wall Street economist (and sell side in general) is the most useless profession in the world (though gladly accepting a 7 figures compensation), is the latest data out of Japan which is yet another stunner to most, as nobody, nobody, could have possible predicted that the Japanese economy would literally fall off a cliff in Q1, plunging at a 3.7% rate (down from -3% previously), which is double the consensus print of -1.9%. DOUBLE. And in nominal terms the collapse was simply epic: -5.2%! And yes, this is officially a recession. Of course, anyone reading Zero Hedge would have been perfectly aware of this outcome. 4 short days ago we said: "Increasingly we have come to believe that the real marginal economy over the next several quarters will be neither that of the contracting US, nor that of the rapidly tightening, yet still very much inflationary China, but the (arguably) third largest one: that of Japan." Today our prediction is more than confirmed. And instead of hiding deep in the whatever holes these morlocks cralwed out of, Bloomberg for some inexplicable reason continues to look to their blatantly horrendous opinion. “The negative economic impact from the disaster will be on full display during the second quarter,” Hiroshi Watanabe, a senior economist at the Daiwa Institute of Research in Tokyo, said before the report. “This recession may be deep, but short.” Yeah, sure. Short. We'll just hold our breath. And for it to be short, it means that the BOJ will be forced to print a few hundred trillion in Yen asap (just as we predicted here and here) right? Which in turn means that the USDJPY will surge and shift the Japanese recession even faster over to the US. And yes it means that the turbo print button among the central banks will get the F5 treatment as the second round of currency devaluation completes a lap.
Some more much delayed reality:
Highlighting the disaster’s effect on companies, Toyota Motor Corp. said profits plunged while Nippon Steel Corp. reported its first net loss in six quarters, after the quake closed plants, cut supply chains and caused power shortage.
Factory output fell by a record and retail sales and exports declined in March because of power shortages spurred by a nuclear accident in Fukushima, northeast of Tokyo, and damage to transportation facilities after the temblor.
“It’s hard to think that companies will become aggressive about increasing business spending when uncertainties remain strong,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “Capital spending will likely be in a declining trend as corporate profits may do worse than expected.”
Capital investment dropped 0.9 percent in the first quarter, the first decline in six quarters, today’s data showed.
Consumer spending fell 0.6 percent in the January-March period from the previous three months, today’s report showed.
But since the conspiracy of optimism needs its daily fix, there is of course a hopey-changey silver lining:
“We look for a classic V-shaped recovery in the July-to- September period and after,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “A self-sustaining recovery in production, an increase in government consumption and reconstruction demand centered around public works will likely support the economy.”
Front lobe bleeding may now commence.



Anonymous said...

Um, the GDP shortfall is due to Japan experiencing a little earthquake you may have heard about in the news.

Guess anyone with a megaphone (read: blog) can make speculative claims that have no real foundation in the truth. Maybe you should actually understand the economic implications of forecasts before relating to US's economic situation.

Blog Start Date 8/11/09 said...

For your uninformed mind - analysts had already calculated the quake and tsunami effects on the economy - yet they were off on their estimates by 100% - there's more to this decline and goes right back to Obamas attempt to destroy our capitalist economy and I'm amazed you don't see it. So sad and typical.