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Following China’s unveiling of its air defense identification zone (ADIZ) in the East China Sea, overlapping a large expanse of territory also claimed by Japan, the Japanese media has, as The Japan Times reports, had a dramatically visceral reaction on the various scenarios of a shooting war. From Sunday Mainichi’s “Sino-Japanese war to break out in January,” to Flash’s “Simulated breakout of war over the Senkakus,” the nationalism (that Kyle Bass so notably commented on) is rising. Which side, wonders Shukan Gendai ominously, will respond to a provocation by pulling the trigger?The game of chicken between two great superpowers is about to begin has begun.
Five out of nine weekly magazines that went on sale last Monday and Tuesday contained scenarios that raised the possibility of a shooting war.
First, let’s take Flash (Dec. 17), which ran a “Simulated breakout of war over the Senkakus,” with Mamoru Sato, a former Air Self-Defense Force general, providing editorial supervision.Flash’s scenario has the same tense tone as a Clancy novel, including dialog. On a day in August 2014, a radar operator instructs patrolling F-15J pilots to “scramble north” at an altitude of 65,000 feet to intercept a suspected intruder and proceeds from there.
Sunday Mainichi (Dec. 15) ran an article headlined “Sino-Japanese war to break out in January.” Political reporter Takao Toshikawa tells the magazine that the key to what happens next will depend on China’s economy.
“The economic situation in China is pretty rough right now, and from the start of next year it’s expected to worsen,” says Toshikawa. “The real-estate boom is headed for a total collapse and the economic disparities between the costal regions and the interior continue to widen. I see no signs that the party’s Central Committee is getting matters sorted out.”
An unnamed diplomatic source offered the prediction that the Chinese might very well set off an incident “accidentally on purpose”: “I worry about the possibility they might force down a civilian airliner and hold the passengers hostage,” he suggested.
In an article described as a “worst-case simulation,” author Osamu Eya expressed concerns in Shukan Asahi Geino (Dec. 12) that oil supertankers bound for Japan might be targeted.
“Japan depends on sea transport for oil and other material resources,” said Eya. “If China were to target them, nothing could be worse to contemplate.”
In an air battle over the Senkakus, the Geino article continues, superiority of radar communications would be a key factor in determining the outcome. Japanese forces have five fixed radar stations in Kyushu and four in Okinawa. China would certainly target these, which would mean surrounding communities would also be vulnerable.
One question that seems to be on almost everybody’s mind is, will the U.S. military become involved?
Shukan Gendai (Dec. 14) speculated that Chinese leader Xi Jinping might issue an order for a Japanese civilian airliner to be shot down. As a result of this, a U.S. Navy aircraft carrier would come to Japan’s aid and send up fighters to contend with the Chinese.
“Unlike Japan, the U.S. military would immediately respond to a radar lock-on threat by shooting down the Chinese planes,” asserts military analyst Mitsuhiro Sera. “It would naturally regard an aircraft flying overhead as hostile. They would shoot at it even if that were to risk discrediting the Obama administration.”
“With the creation of Japan’s National Security Council on Dec. 4, Japan-U.S. solidarity meets a new era,” an unnamed diplomatic source told Shukan Gendai. “If a clash were to occur between the U.S. and China, it would be natural for the Self-Defense Forces to provide backup assistance. This was confirmed at the ‘two-plus-two’ meeting on Oct. 3.”
“China is bent on wresting the Senkakus away from Japan, and if Japan dispatches its Self-Defense Forces, China will respond with naval and air forces,” Saburo Takai predicts in Flash. “In the case of an incursion by irregular forces, that would make it more difficult for the U.S. to become involved. Japan’s Ministry of Foreign Affairs would protest through diplomatic channels, but China would attempt to present its takeover as a fait accompli.
“China fears a direct military confrontation with the U.S.,” Takai adds. “A few days ago, two U.S. B-52s transited the ADIZ claimed by China, but the flights were not for any vague purpose. I suppose the Chinese tracked the flights on their radar, but the B-52s have electronic detection functions that can identify radar frequencies, wavelength and source of the signals. These flights are able to lay bare China’s air defense systems. It really hits home to the Chinese that they can’t project their military power.”
Which side, wonders Shukan Gendai, will respond to a provocation by pulling the trigger? The game of chicken between two great superpowers is about to begin.
As might be expected as political and economic policy failures pile up and citizens become increasingly mad, the status quo is becoming increasingly authoritarian (recall blogger “Mish” was just fined 8,000 euros for a blog post).
In the latest disturbing news from a desperate power structure, the conservative government in Spain has passed an Orwellian bill titled the Citizens’ Security Law, which allows for fines of up to 600,000 euros ($816,000) for “unauthorized” street protests, and a 30,000 fine for merely having signs with “offensive” slogans against Spain or for wearing a mask.
This law is a perfect example of the increasing neo-feudalism being implemented across the globe by a corrupt, decadent and depraved status quo. Such laws must be immediately resisted or they will only get worse, much worse. It is quite obvious what the power structure in Spain in trying to do. It is putting into place an egregious punishment framework that could bankrupt a person by merely protesting. Such a threat is intended to make people not even consider their rights as human beings to express grievances to a crony government.
Instead of eye for an eye, it is like 25 eyes and a limb for an eye. If this does’t tell the Spanish people all they need to know about their government I don’t know what will. Below are some excerpts from a Reuters story covering the law:
(Reuters) – Spain’s conservative government agreed on Friday to toughen penalties for unauthorized street protests up to a possible 600,000 euro ($816,000) fine, a crackdown that belies the peaceful record of the anti-austerity protests of recent years.
Street protests and strikes have became increasingly frequent in recent years following huge cuts to education and health spending aimed at shrinking Spain’s public deficit to adhere to European Union demands.
But in contrast to Greece and elsewhere, where many similar protests have turned violent, Spain’s have remained largely peaceful, despite unemployment of 26 percent, rising poverty, and changes in labor laws that make firing easier.
Among other measures, protesters who cover their faces at demonstrations could be fined up to 30,000 euros while “offensive” slogans against Spain or its regions could reap a similar sanction.
The government also plans a new law restricting labor protests.
“This law … attempts to criminalize the act of protest,” said United Left lawmaker Gaspar Llamazares, questioning whether it complied with Spain’s constitution. “The government is trying to turn its political opponents into delinquents.”
”Compare events in Spain with those of other countries around us,” wrote conservative columnist Jose Antonio Zarzalejos on the website El Confidencial. “This security law … will add the stigma of authoritarianism to the political failure of the PP.”
It’s not just Spain though. This sort of panic attack from desperate members of the status quo is popping up elsewhere. Japan is another example, and over the weekend I read that Liberal Democratic Party Secretary-General Shigeru Ishiba compared demonstrations to “acts of terrorism.” From the Japan Times:
Citizens demonstrating against the controversial state secrets bill are committing “an act terrorism,” according to Liberal Democratic Party Secretary-General Shigeru Ishiba.
In a blog post Friday, he wrote: “If you want to realize your ideas and principles, you should follow the democratic principles, by gaining as much support as you can. I think the strategy of merely shouting one’s opinions at the top of one’s lungs is not so fundamentally different from an act of terrorism.”
My take is that people worldwide will not stand for such nonsense. Increasingly citizens have very little to lose and if they all say no together, there is not much the state can do. Just look at how Ukrainians responded to a ban on protests. Hundreds of thousands of them filled the streets in defiance. Below is a video of just one of the many incredible street scenes from over the weekend. In this case we see demonstrators using a tractor to break police barricades.
Interesting times indeed.
The Failure Of Abenomics In One Chart… When Even The Japanese Press Admits “Easing Is Not Working” | Zero Hedge
Since late 2012 Zero Hedge has been very critical of Japan’s Abenomics experiment, and its first and only real arrow: a massive increase in the monetary base thanks to the BOJ’s shock and awe QE announced in April, resulting in the collapse of the Yen (although in a not zero sum world this means ever louder complaints from US exporters such as Ford competing with Japanese companies), a soaring Nikkei (if only through May), and what was expected to be an economic renaissance as a result of a return to stable 2% inflation.
We repeatedly warned that the only inflation anyone would see in Japan is in imported energy costs and food prices, which in turn would crush real disposable income especially once nominal wage deflation accelerated, which it has for the past 16 months straight. So far this has happened precisely as warned.
Another thing we warned about is that the result of the bank reserves tsunami – just like in the US – lending in Japan would grind to a halt, as everyone and their grandmother sought to invest the resulting excess deposits in risk markets as exemplified best by JPMorgan’s CIO division.
Today, with the traditional one year delay (we assume they had to give it the benefit of the doubt), the mainstream media once again catches up to what Zero Hedge readers knew over a year ago, and blasts the outright failure that is Abenomics, but not only in the US (with the domestic honor falling to the WSJ), but also domestically, in a truly damning op-ed in the Japan Times.
We will let readers peruse the WSJ’s “Japan’s Banks Find It Hard to Lend Easy Money: Dearth of Borrowers Illustrates Difficulty in Japan’s Program to Increase Money Supply” on their own. It summarizes one aspect of what we have been warning about – namely the blocked monetary pipeline, something the US has been fighting with for the past five years, and will continue fighting as long as QE continues simply because the “solution” to the problem, i.e., even more QE, just makes the problem worse.
We will however, show the one chart summary which captures all the major failures of the BOJ quite succinctly.
More importantly, we will repost the Japan Times Op-Ed from last night, titled “BOJ’s money mountain growing but debt may explode” because it not only copies all we have said over the past year, but is a dramatic reversal from the Japanese population eagerly drinking Abe’s Koolaid long after its expiration date. Because once the media starts asking questions, the broader population can’t be far behind.
From Japan Times, November 17, 2013 highlights ours
BOJ’s money mountain growing but debt may explode
by Reiji Yoshida
Haruhiko Kuroda hit the ground running when he was appointed by Prime Minister Shinzo Abe in March to take charge of the Bank of Japan.
Out of the blue, the central bank’s new governor unveiled a super-aggressive easing policy the next month to double the nation’s monetary base in just two years. He said the BOJ would buy more than ¥7 trillion in long-term Japanese government bonds per month to flood the financial system with money to end more than a decade of deflation.
The BOJ’s nine-member Policy Board unanimously supported Kuroda’s goal of stoking 2 percent inflation in two years — a surprise about-face from its stance under his predecessor, Masaaki Shirakawa, who was concerned about the potential side effects of embracing such radical quantitative easing.
More than six months have passed. How has the BOJ’s strategy changed Japan’s financial markets and the real economy?
Critics say Kuroda’s monetary easing scheme isn’t working, although most of the public apparently believes otherwise.
There are growing signs of inflation, but not the sort heralding the start of Abe’s much-advertised recovery and rising wages. Instead, imported fuel and other products have become more expensive because of the weak yen ushered in by Kuroda and Abe, and this bodes ill for the public’s living standards.
Meanwhile, Kuroda’s aggressive plan is allowing the debt-ridden government to issue fresh bonds continuously, further increasing the likelihood of a fiscal crisis, they said.
“People have been deceived by ‘Abenomics,’ ” Yukio Noguchi, a prominent economist and adviser to Waseda University’s Institute of Financial Studies, told The Japan Times in a recent interview.
“Monetary easing is not working, and it’s going nowhere,” Noguchi said.
Since April, the BOJ has been gobbling up JGBs from banks and the open market. Its purchases amount to roughly 70 percent of the value of all new JGBs issued.
But the banks are just stowing that money in their accounts at the BOJ because they can’t find any companies interested in borrowing it.
“There is no demand for funds on the part of businesses. That’s why the monetary easing is not working,” Noguchi said.
Japan’s monetary base — the sum of cash in circulation plus banks’ current account balances at the BOJ — surged from 23.1 percent in April to 45.8 percent in October, thanks to the BOJ’s aggressive operations.
But its money stock — the total amount of monetary assets available in an economy including credit created by bank loans, but excluding deposits held by financial institutions and the central government — only rose to 3.3 percent from 2.3 percent in the period.
This means banks are just depositing the massive funds provided by the BOJ in their own accounts at the central bank. The unloaned cash is thus having little affect on the real economy.
Meanwhile, the long-term interest rate, which theoretically factors in an expected rate of inflation, has fallen and is dwindling at an ultralow level of around 0.6 percent.
This signals that the market does not yet seriously believe that inflation in Japan will reach Kuroda’s 2 percent goal, said Kazuhito Ikeo, an economics professor at Keio University.
“When the policy interest rate has effectively fallen to zero, monetary policy won’t work much any more,” Ikeo said in a recent interview.
Ikeo believes the economy is stuck in a rut because its potential for economic growth has declined and monetary measures alone can’t solve the problem, he said.
“I think it has become clearer that there is a limit to what monetary policy can do,” Ikeo said.
Much of the public believes the drastic easing measures adopted by Abe and Kuroda helped weaken the yen and benefitted exporters. The yen-dollar rate has fallen from around 78 to about 100 over the past 14 months. This helped send the Nikkei stock index soaring from December, one of the main reasons Abenomics has public support.
But the yen started depreciating last fall, long before Kuroda’s widely proposed takeover at the BOJ officially took place in April, Noguchi said.
Abe was just “lucky” to see the yen fall, Noguchi claimed, crediting the easing of the eurozone debt crisis last fall rather than clear signs that Abe’s Liberal Democratic Party was getting ready to boot the unpopular Democratic Party of Japan from power.
In September, Japan’s consumer price index rose 0.7 percent from the same month last year to log its fourth consecutive rise, hinting at inflation. The uptick, however, was misleading. It was largely caused by the costly rise in energy imports, exacerbated by a weaker yen.
This, of course, is not a sign of economic recovery, both Noguchi and Ikeo said.
Workers’ real wages fell 2 percent in August compared with the same month the previous year, logging two drops in a row. Inflation without wage hikes will only erode people’s living standards.
“It is wages that matter. If prices go up without a rise in wages, the real income of the people just goes down,” Noguchi said.
Abe apparently is well aware of this risk and has repeatedly urged top business leaders in Keidanren, the nation’s largest business lobby, to push for wage hikes to generate “a virtuous cycle” of raises and economic expansion.
Noguchi calls Abe’s approach “sheer nonsense” because Japan is not a planned economy and the government thus cannot force businesses to raise wages against their will.
Probably the biggest risk with Abenomics, however, is a potential crash in JGB prices that would cause long-term interest rates to spike and gut the debt-laden government.
Ikeo pointed out that the BOJ’s massive bond purchases are in fact helping the debt-ridden government finance itself, even if the central bank claims this is not its intention. If the BOJ keeps up this charade, confidence in JGBs might crash, Ikeo said.
“Soon or later, concerns over fiscal sustainability will emerge. You can’t rule out the possibility of a surge in the (long-term) interest rate at a critical point,” he said.
The resulting surge in debt-serving costs would devastate the government, which has already racked up a public debt totaling almost 200 percent of gross domestic product — the highest of all developed countries. Nearly half of Japan’s ¥92.6 trillion general account for fiscal 2013 is barely being financed by fresh JGB issues.
According to Noguchi’s simulation, if the average JGB yield jumps to 4 percent in fiscal 2014, debt-serving costs will leap to a staggering ¥50 trillion in fiscal 2025 alone, which is more than half the size of the fiscal 2013 budget.
“This is nothing but fiscal bankruptcy,” Noguchi warned.
For some two decades, fears and rumors have swirled about just such a scenario. Economists who warned of the impending crisis were labeled alarmists while speculators who bet on it always lost.
That situation may soon change.
Japan’s trade balance has turned into a deficit and the current account surplus has shrunk. Japan posted a surplus of ¥3.05 trillion in the current account for the April-September half, the second-lowest level since 1985, when comparable data became available.
Ikeo warned that if the current account balance sinks into red and people are convinced the yen will no longer strengthen, investors may start buying foreign bonds and ditch their JGBs.
Another possible danger is, ironically, a full-fledged economic rebound, which would also push up long-term interest rates, Ikeo said.
The government needs to walk “a dangerous narrow path” of seeking a recovery while trying to prevent interest rates from surging at the same time, he said.
It is only fitting that on the day the Stalingrad & Poorski 500 rises to a new record high, that that other centrally-planned catastrophe, the exploded Fukushima nuclear power plant, in the aftermath of Japan’s Radioactivetyphoonado reports a completely different record: namely the level of beta radiation levels at Fukushima. Bloomberg notes that the nationalized utility Tepco, which has taken denial to a different superstring dimension altogether, has detected beta radiation levels of 400,000 becquerels per liter in a water sample taken yesterday from a monitoring well near storage tank area H4 at Fukushima Dai-Ichi nuclear plant. This was the highest reading on record. This number compares to Beta radiation levels of 61 Bq/L in the sample taken Oct. 16 and 90 Bq/L in the Oct. 15 sample.
The highest level yet of beta ray-emitting radioactive substances, including strontium, has been detected at one point in a drainage ditch at the crippled Fukushima No. 1 nuclear plant where measurements are regularly taken, Tokyo Electric Power Co. said Thursday.
According to Tepco, a water sample taken Wednesday at a point in the ditch some 300 meters from the ocean was found to contain 1,400 becquerels per liter of beta ray-emitting radioactive substances, the highest level ever detected at that location.
Tepco said water that passed through the ditch may have entered the sea.
A water sample taken Tuesday at the same point contained 19 becquerels of such radioactive substances.
The radiation level surged after heavy rain caused by Typhoon Wipha, which hit the Tohoku region, including Fukushima Prefecture, on Wednesday, Tepco said. It is thought the rain washed out radioactive substances that had been absorbed by the ground.
Radiation levels also hit record highs in water samples collected Wednesday at three upstream points in the drainage ditch, which passes close to the storage tank from which highly radioactive water spilled in August, with the amount of beta ray-emitting radioactive substances ranging from 2,000 to 2,300 becquerels per liter.
And while 400,000 may sound like a lot, keep in mind it is substantially less than the P/E Ratio that Mr. Yellen has in store for the S&P before this whole manipulated farce ends up in a just as radioactive pile of dust.
- Toxic flush: Typhoon causes radioactive leaks at Fukushima (rt.com)
- Japan: Radiation level in Fukushima No. 1 ditch hits record high (crofsblogs.typepad.com)
- Deadly Japan Typhoon Affects Fukushima Nuclear Plant (novinite.com)
- Typhoon Wipha wreaks deadly destruction on Japan (theguardian.com)
- Radioactive Tritium At Record High Levels In Fukushima Ground- And Sea-Water (rvnewstoday.com)
- Fukushima radioactive groundwater rises (news.com.au)
- Fukushima survey wrongly estimates radiation exposure of 16,000 people (english.kyodonews.jp)
- Radiation exposure data inaccurate for 16,000 Fukushima residents (japantimes.co.jp)