Monday, October 02, 2006
Denial is a Team Sport
Here we see a sign outside the Finance Ministry in Tokyo. It alerts everyone to the August Ministry's location and it roughly translates into English something much like: "Do not show us the truth inside these wall because we do not wish to see it; do not speak the truth inside these walls, for we do not wish to hear it; and do not wait for truth to come from our lips, for we have no intention whatsoever of uttering it - not at least to smelly Americans or pig-dog Chinese". That is a paraphrase of course.
Such a sign is not surprising for with the the Euro again reaching new highs versus the Japanese Yen (see adjacent graph), even as the Eurozone slides in to deficit v. Japan & China both and the Japanese continue to rack up prodiguous surpluses against everyone except OPEC, we see Japanese consumer prices & property prices rising smartly, unemployment falling, and, most recently, releasing a most optmistic and promising Tankan survey, it is worth contemplating how deeply cynical such parochial selfishness and team denial actually are within Japanese policy.
Japan-o-philes and Nippon's other apologists will point to now-laughable threats of continued deflation (certainly if viewed relatively for Japan shares the same global economic risk as other OECD nations), or the need to keep rates low just in case deflation rears its ugly head again. But by now, these are so obviously just tired, lame, recycled excuses for TeamJapan to avoid doing its part in making any concessions in the desperately-needed global move towards rectifying global imbalances.
In the meantime, they seem intent (and rather pleased with themselves, I must say) to beggar jobs from Europe at an increasing pace, and the United States at a decreasing pace, and do their utmost to insure that the Chinese do NOT get the upper hand by somehow outlasting Japanese efforts to prevent the YEN from abandoning it's tether to the USD before the RMB. And so they will continue with ZIRP, a bloated fiscal policy with 6 or 7% of GDP deficits, and insure YEN is the finance currency of choice for everything from USD denominated bonds, any higher-yielding soverign & junk, a new kitchen or beach-home for the Hedgies of Greenwich, as well as a new flash fab in Milipitas, CA.