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Late last month, in what amounted to a tacit admission that nothing is working when it comes to pulling Japan out of its decades’ long stint in the deflationary doldrums, the BoJ adopted negative rates.

Haruhiko Kuroda’s move to plunge Japan into the NIRP twilight zone (where it joins Denmark, Sweden, Switzerland, and the whole of Europe) comes just as the BoJ effectively runs out of room when it comes to implementing further QE. The central bank is already monetizing the entirety of gross JGB issuance and is on pace to own nearly the entire Japanese ETF market.

In short, there’s nothing left to buy. Everything that can be monetized without completely breaking/distorting markets has been monetized and yet inflation remains stubbornly low.

So, in a last ditch effort to provide the spark Japan needs to hit the elusive 2% inflation target, Kuroda went NIRP. Subsequently, he promised to take rates even further into negative territory if necessary, a declaration which a year ago would have been good for a sharp equity and USDJPY rally but which now, much like other central banker jawboning, has a market half-life of about an hour.

Of course it’s not just the deflationary impulse that Japan is struggling to combat. There’s also a persistent lack of wage growth. “Wages need to rise at a 3 percent annual pace to achieve stable 2 percent inflation,” Bloomberg reminds us.

In short, Japan is nowhere near 3% when it comes to rising worker pay. In fact, data out on Monday shows that wage growth for 2015 was just 0.1%, down from an already abysmal 0.4% in 2014.

In other words: wages have flatlined.

For December, real wages fell 0.1% Y/Y. That’s the second straight month of decline. “Total wages in Japan haven’t risen more than 1 percent in any year since 1997 and they fell for the past four years once inflation is accounted for,” Bloomberg adds, in an extremely amusing indictment of the country’s complete failure to put the “lost decade” behind it.

Here’s the complete breakdown from Goldman: 

Preliminary data show winter special wages down 0.4% yoy: Nominal cash wages in December came in at +0.1% yoy, a slight increase from 0.0% in November. Basic wages continued the uptrend, coming in at +0.7% yoy (November: +0.3%), but overtime wages slowed to +0.8% (+1.2%). Special wages, which include winter bonuses and can account for around 50% of nominal cash wages, were down in December, coming in at -0.4% (preliminary data basis).

 

Over 2015, nominal cash wages rose 0.1% yoy, a slowdown from growth of 0.4% in 2014. Basic wages improved a sharp 0.3% (2014: -0.4%), but special wages were down 0.8%, and overtime wages also slowed.

 

Real wages negative for second straight month: December real wages fell 0.1% yoy, for the second straight month of decline, reflecting the small increase in total nominal cash wages of only 0.1%, and a rise of 0.2% yoy in the CPI excluding imputed rent (which is used in the calculation of real wages) in December. While basic wages remain on a growth path, albeit modestly, wage conditions in general, including bonuses and overtime wages, have deteriorated.

 

Obviously, none of that bodes particularly well for the Japanese consumer. Domestic consumption is expected to have shrunk in Q4, marking the second quarter of contraction for the year. 

“The pace of wage gains has been very slow when you think about how much labor shortage there is,” Hisashi Yamada, chief economist at the Japan Research Institute in Tokyo lamented on Monday.

Perhaps Japan’s beleaguered workerkers should take a page out of Abenomics architect Akira Amari’s book and just resort to taking bribes when they need a few extrra yen.

Unfortunately for Japan, Kuroda has very nearly reached the Keynesian endgame. That is, the BoJ’s counter-cyclical capacity is exhausted. Expanding QE any further risks seriously impairing liquidity and market function and taking rates further into negative territory risks more cancelled JGB auctions which in turn inhibit QE. There’s simply nothing else the central bank can do. 

With Abenomics having thus failed miserably, we’ll sit back and wait for the day when Abe and Kuroda finally take a long bow and fall (figuratively speaking we hope) on their swords.

via Zero Hedge http://ift.tt/1omxidk Tyler Durden

Following earlier comments from yet another Japanese talking head that deflation will be fixed any day now, the Japanese bond curve continues to collapse with yields hitting record lows across the entire spectrum. Most notably, 10Y JGBs – which were trading 24bps before BoJ NIRP – just traded with a 0bp handle for the first time ever, ready to join Switzerland as the only nations with negative  rates at 10Y. As bonds rally, and JPY surges to strongest since 2014, so Japanese stocks are crashing (NKY down 1000 points from intraday highs).

Bond yields are plunging…

• *JAPAN 10-YEAR GOVERNMENT BOND YIELD FALLS TO ZERO FOR 1ST TIME
• *JAPAN'S 5-YEAR YIELD FALLS TO RECORD -0.205%

And stocks are crashing as USDJPY tumbles…

• *YEN CLIMBS PAST 115 PER DOLLAR TO STRONGEST SINCE 2014

 

Jose Canseco will not be happy.

via Zero Hedge http://ift.tt/1Scto2Z Tyler Durden

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

The United States Preventive Services Task Force recently recommended mandatory depression screening for all Americans. The task force wants to force health insurance companies to pay for the screening. Basic economics, as well as the Obamacare disaster, should have shown this task force that government health insurance mandates harm Americans.

Government health insurance mandates raise the price of health insurance. Consumers will respond to this increase by either choosing to not carry health insurance or by reducing their consumption of other goods and services. Imposing new health insurance mandates will thus make consumers, many of whom are already suffering from Obamacare’s costly mandates, worse off by forcing them to deviate from their preferred consumption patterns.

Mandatory depression screening will not just raise insurance costs. In order to ensure that the screening mandate is being properly implemented, the government will need to create a database containing the results of the screenings. Those anti-gun politicians who want to forbid anyone labeled “mentally ill” from owning a firearm will no doubt want to use this database as a tool to deprive individuals of their Second Amendment rights.

If the preventive task force has its way, Americans could lose their Second Amendment, and possibly other, rights simply because they happened to undergo their mandatory depression screening when they were coping with a loved one’s passing or a divorce, or simply having a bad day. As anyone who has been mistakenly placed on the terrorist watch list can attest, it is very difficult to get off a government database even when the government clearly is in error. Thus, anyone mistakenly labeled as depressed will have to spend a great deal of time and money in what may be a futile attempt to get his rights back.

Mandatory depression screening will endanger people’s health by increasing the use of psychotropic drugs. These drugs often have dangerous side effects. Their use has even been linked to suicide. The fact that almost every mass shooter was on psychotropic drugs is another good reason to oppose any policy that will increase reliance on these medicines.

The Preventive Services Task Force’s mandatory depression screening mandate is based on the fallacy that diagnosing mental health problems is analogous to diagnosing cancer or diabetes. Even mental health professionals acknowledge that there is a great deal of subjectivity in mental health diagnosis.

Consider that until 1973 homosexuality was considered a mental disorder by the American Psychiatric Association. Today, some mental health professionals think that those who believe in limited government, free-market economics, or traditional values suffer from mental disorders. If mandatory depression screening becomes a reality, it is likely this mental health screening will be expanded to cover screening for other mental illnesses. This could result in anyone with an unpopular political belief or lifestyle choice being labeled as “mentally ill.”

Even if mandatory health screening could be implementing without increasing costs or threatening liberty it would still be a bad idea. Government health care mandates undermine the basic principles of a free society. If it is legitimate for government to tell us what types of health care we must receive, then it is also legitimate for the government to tell us what to eat, when to exercise, and even how to raise our children.

To paraphrase C.S. Lewis, a tyranny imposed for our own good is the worst form of tyranny because it is a tyranny without limits. All who love liberty must therefore oppose mandatory depression screening, or any other health care mandate.

via Zero Hedge http://ift.tt/1O0tinw Tyler Durden

Being "paid to wait" in high-yielding stocks last year was a death by 394 cuts. As Bloomberg reports, the number of dividend reductions far surpassed 2008, almost 100 more than at the outset of the Great Recession – a time when the implosion of Lehman caused equity markets to plummet in the later stages of the third quarter.

Just ignore it – it's transitory!!

 

As Bloomberg reports,

The ratcheting down of payouts to shareholders is a function of weak commodity prices, sluggish growth dampening corporate profits, and a tightening of credit conditions. This combination—and in particular the stingier lending—could exacerbate the carnage already seen this year in financial markets, further dampening economic activity.

 

Because of the stigma associated with cutting dividends, management is loath to go down that path unless the need is dire. The trend toward trimmed payouts hasn't let up so far in 2016, especially among companies under stress from soft commodity prices. In recent days, ConocoPhillips slashed its dividend by 66 percent and Potash Corp. of Saskatchewan Inc. reduced its payout by 34 percent.

And as credit markets shut off the source for economically rational shareholder-friendliness, the situation is only going to get worse…

Buybacks…

 

via Zero Hedge http://ift.tt/20kQm7n Tyler Durden

Submitted by Mac Slavo via SHTFPlan.com,

Back in the 1970’s as recession gripped the world for a decade, stocks stagnated and commodities crashed, investor Jim Rogers made a fortune. His understanding of markets, capital flows and timing is legendary.

As crisis struck in late 2008, he did it again, often recommending gold and silver to those looking for wealth preservation strategies – move that would have paid of multi-fold when precious metals hit all time highs in 2011. He warned that the crash would lead to massive job losses, dependence on government bailouts, and unprecedented central bank printing on a global scale.

Now, Rogers says that investors around the world are realizing that the jig is up. Stocks are over bloated and central banks will have little choice but to take action again. But this time, says Rogers in his latest interview with CrushTheStreet.com, there will be no stopping it and people all over the world are going to feel the pain, including in China and the United States.

We’re all going to suffer… I can think of very few places that won’t suffer. But most people are going to suffer the next time around.

 

 

Central banks will panic. They will do whatever they can to save the markets.

 

It’s artificial… it won’t work… there comes a time when no matter how much money you have, the market has more money.

 

…

 

I don’t know if they’ll even call it QE (Quantitative Easing) in the future… who knows what they’ll call it to disguise it… they’re going to try whatever they can… printing more money or lowering interest rates or buying more assets… but unfortunately, no matter how much P.R. or whitewashing they use, the market knows this is over and we’re not going to play this game anymore.

The entire world is about to get hammered and the average person on the street is the one who will pay the price, as is usually the case.

We can expect more losses in markets, more losses in jobs and more losses to freedom as governments and central banks point the finger at everyone but themselves.

via Zero Hedge http://ift.tt/1O0rI52 Tyler Durden

Debt – the other 4-letter word…

 

 

Source: Townhall.com

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“What’s going on in Syria can only go on for so long. At some point it has to change,” Turkish President Recep Tayyip Erdogan told reporters on a plane back to Turkey from Latin America over the weekend.

As we’ve documented extensively over the past several days, Ankara, Riyadh, and Doha have their backs against the wall when it comes to the effort to oust Bashar al-Assad and perpetuate Sunni hegemony in the Arabian Peninsula.

Hezbollah has surrounded Aleppo and their advance is backed by what’s been described as an unrelenting Russian air campaign. The rebels’ supply lines to Turkey have been cut and without a direct intervention by either the US or the Gulf states, the battle for Syria will have been lost for the opposition which pulled out of peace talks in Geneva citing the ongoing aerial bombardment by Moscow.

Now, with time running out, both Saudi Arabia and Turkey are weighing ground invasions.

“You don’t talk about these things. When necessary, you do what’s needed,” Erdogan said, when asked if Ankara was considering sending troops into Syria. “Right now our security forces are prepared for all possibilities,” he added.

For Erdogan, there’s only one acceptable outcome: Sunni militants oust Assad and take control of Damascus. Assad’s ouster is the desired outcome for the Saudis as well, but Erdogan has a secondary agenda in Syria: preventing the conflict from strengthening the Kurds. That means he’s against any support for the YPG – even if such support would help facilitate regime change.

Over the weekend Erdogan blasted both Russia and the US.

“What are you doing in Syria? You’re essentially an occupier,” he said, in a message to Vladimir Putin. “How can we trust you? Is your partner me, or is it those terrorists in Kobani?” he asked Obama’s envoy for the international coalition against Islamic State. By the “terrorists in Kobani”, Erdogan is referring to the YPG.

Erdogan’s frustration reflects the fact that the various groups fighting to take control of Syria are now virtually guaranteed to lose. As we said from the time Russia first flew combat missions from Latakia on September 30, the opposition has virtually no chance of winning a war with Hezbollah and the IRGC as long as Moscow is providing air cover. The rebels have no air presence whatsoever and no anti-aircraft capability and on top of that, there’s no advantage to be had in fighting an asymmetric battle with Hezbollah. Hassan Nasrallah’s army practically invented urban warfare.

The only option now is a coordinated ground invasion by the rebels’ Sunni benefactors.

“With rebels losing ground, Gulf states said they would be prepared to send in ground troops as part of an international coalition battling Islamic State,” Bloomberg reported on Sunday.

Please note: that quote makes no sense. The rebels aren’t losing ground to ISIS, so why should their battlefield losses trigger international calls for ground troops to “battle Islamic State”?

This is a ridiculously transparent attempt to fabricate an excuse to shore up Sunni militants who are about to be relegated to the annals of sectarian history by the combined military prowess of Hezbollah and Russia.

Sure, there’s an ISIS presence in Aleppo, but if anyone was actually interested in eradicating the group, they’d be talking about Raqqa and Deir ez-Zor, not Latakia nand Aleppo. 

Underscoring just how close the world is to careening into World War III, various reports out over the weekend indicated that the Saudis may be preparing to stage 150,000 troops in Turkey. That comes on the heels of reports out of Russia which indicate that Moscow believes Erdogan is on the verge of sending in troops to prop up the rebels. And then there was this, out earlier today from Reuters:

• U.S KIRBY SAYS WELCOME SAUDI, UAE OFFER FOR TROOPS IN SYRIA 

Saudi foreign minister Adel al-Jubeir confirmed that Washington would support Riyadh if the Saudis did indeed decide to invade Syria just as they have Yemen.

For what it’s worth, AA denied the Saudi troop reports.  

‘150,000 [Saudi] soldiers will enter Syria from Turkey’ are not true, say Turkish prime ministry sources: report http://pic.twitter.com/KRO64Tg3gi

— ANADOLU AGENCY (ENG) (@anadoluagency) February 8, 2016

While that particular “rumor” may be unfounded, Turkey and the rest of the Sunni world will need to make a decision in the next few days as to just how they plan to proceed, because as is abundantly clear from the following first-hand account from a rebel fighter, this war is just about over.  

“Our whole existence is now threatened, not just losing more ground. They are advancing and we are pulling back because in the face of such heavy aerial bombing [by Russia] we must minimize our losses.”

*  *  *

Or, for those who need a visual summary of the above:

via Zero Hedge http://ift.tt/1T1ngJM Tyler Durden

Submitted by Simon Black via SovereignMan.com,

In 578 AD, a Korean immigrant named Shigemitsu Kongo made his way to Japan at the invitation of the royal family.

Buddhism was on the rise in Japan at the time; though it had only been introduced a few decades prior, the Empress consort had been actively encouraging the adoption of Buddhism across Japan.

But since the Japanese had no experience building Buddhist temples, they looked overseas for help.

That’s where Kongo came in.

Shigemitsu Kongo was a renowned temple builder, and the royal family in Japan commissioned him to build the Shitenno-ji temple, which still stands today in Osaka.

Kongo saw an incredible opportunity. Buddhism was catching on fast, and he knew he could be kept busy for decades building temples.

It turned out to be centuries. Over 14 centuries, in fact.

Shigemitsu Kongo formed his construction company Kongo Gumi in 578 AD, and it lasted 1,428 years.

It’s extraordinary that any single enterprise could last so long.

Even as late as 2004, temple building accounted for more than 80% of the company’s revenue, which exceeded USD $60 million.

But ten years ago the company finally went under due to the massive debt burden they had accumulated.

It started back in the 1980s. Japan was in the midst of an epic financial bubble thanks to unconstrained credit growth and expansion of the money supply.

Go figure, central bankers artificially suppressed interest rates, keeping them way too low for way too long. And it created a huge asset bubble.

Asset prices in Japan got so out of control that for a short time during the 1980s, it was said that the grounds of the imperial palace in Tokyo were worth more than all of the real estate in the entire state of California.

As part of this bubble, banks had relaxed their lending standards and were handing out loans to just about anyone.

And many Japanese companies took on vast amounts of debt, including Kongo Gumi.

Debt was like a popular drug. Everyone was doing it.

But when the bubble burst in 1989, asset prices collapsed. And companies that had borrowed heavily were left with nothing but debt.

Kongo Gumi didn’t go out of business right away. The company was able to limp along for more than two decades on basic life support.

Soon they were borrowing money just to pay interest on the money they had already borrowed, even though interest rates were at record lows.

But eventually the company’s revenues were no longer sufficient to service the debt.

And in 2006 Kongo Gumi was forced into liquidation.

This company lasted over 1,400 years.

They survived countless political crises, wars, and natural disasters.

They survived the Meiji Restoration in the 1800s, a period in which the government set out to eradicate Buddhism from Japan, and hence, the temple building industry.

They even survived two atomic bombs.

What Kongo Gumi couldn’t survive was debt.

It doesn’t matter if you’re an individual, a company, a government, or even a central bank; if your balance sheet doesn’t add up, sooner or later you’re going under.

*  *  *

It’s concerning to see consumer debt once again on the rise in the Land of the Free, at the fastest pace since the days of the financial bubble.

Perhaps most appropriate was a Superbowl commercial from Quicken Loans advertising how easy they have made it to obtain a loan.

“Push button. Get mortgage.” says the commercial.

More appropriate would be “Push button. Get into debt. Then buy more useless stuff.”

It’s a blatant snapshot of how far along we are in this latest financial bubble.

Of course, most western governments are in this position as well; they can go further into debt with a few strokes of the pen.

No surprise that many governments must borrow money to pay interest on money they’ve already borrowed, even at a time when interest rates are at record lows!

And yet the leading mainstream economic minds claim that debt (and money printing) are actually CURES to economic problems, and not causes of them.

As my colleague Tim Price points out, medieval doctors used to advocate leeches as a way to cure sick people.

Yet this approach turned out be largely ineffective and tended to kill the patient.

Sometimes the final consequences take years. Even decades.

Old, established institutions have the ability to kick the can down the road, just like Kongo Gumi did.

And even in terminal decline they can even give the appearance of strength.

Just a few years before its demise, Kongo Gumi was still a media darling that seemed strong, fit, and likely to last another 1,400 years.

The LA Times, for example, ran a story in 2003 praising the company for its deft ability to outlast Japan’s tough economic conditions.

Kongo Gumi folded less than three years later.

This is an incredibly important lesson: debt is a killer. And no one is immune to this inevitability.

via Zero Hedge http://ift.tt/1PhJW62 Tyler Durden