By Bruno de Landevoisin
The zero sum game of competitive global currency devaluations is on like Donkey Kong. Anyone still sleeping comfortably, confident that all will end well, best brace themselves for a resounding wake up call. Be alarmed, Japan just jacked the joint, and the jerry rigged monetary jig is up. Moving forward, all the other Asian export centric economies will promptly be forced to keep up with their FUBAR neighbor, the juiced Japanese Joneses.
Each Nation State in the Far East is now completely compelled to competitively devalue in tandem, so as to maintain export market share, in a desperate attempt to avert their outbound container super ship cargoes from running westwards on empty.
Take one quick look at the above chart and the official photo op below. You tell me why Mr. Xi nearly gagged when shaking hands with Mr. Abe the other day.
Throughout the new millennium, China has made great technological strides, repositioning itself away from a predominantly low tech manufacturing economy, towards a value added high tech producing exporter. In this capacity it has converged with Japan. The Japanese, on the other hand, over the same time period, have seen both the Chinese and the Koreans, as well as the other Asian Tigers, ravenously devour more and more Hamachi and California rolls, promptly snatched from their stale sushi shop lunch box.
The following excerpt from a Bloomberg article titled; Japan’s Export Reach Three Year Low as Recession Looms, published shortly before Abe’s December 2012 election, clearly outlined the sagging soggy sushi state of affairs:
Japan is suffering its worst year for exports since the global contraction in 2009 as Europe’s crisis, China’s slowdown and a diplomatic dispute with the Chinese hurt manufacturers and deepen the risk of a recession.
Shipments totaled 53.5 trillion yen ($653 billion) for January through October, down 2.3 percent from the same period in 2011, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo today. The trade deficit for 2012 so far is a record 5.3 trillion yen.
The so-called hollowing out of Japan’s export champions, highlighted by a cut in Panasonic Corp. (6752)’s debt rating to one step above junk status by Moody’s Investors Service yesterday, underscores the urgency of kindling domestic demand. Japan’s political parties are facing off ahead of an election next month on how hard to press the central bank to boost stimulus.
Japan’s exports fell for a fifth month, hampered by trade tensions with China and weak demand in Europe, pushing the world’s third-largest economy closer to recession ahead of December elections.