Central Perk: 20 apr. 2014

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Mish's Global Economic Trend Analysis

Japan Trade Deficit Largest in History; Imports Soar, Exports Barely Up In Spite of Collapsed Yen
Glen Greenwald Wins Pulitzer Prize for Exposing NSA Spy Scandal; His Reaction on Video; My Reaction: Greenwald and Snowden are Heroes
"Low Inflation has Positive Impact and Helps Spain's Competitiveness" Says Economy Minister

Japan Trade Deficit Largest in History; Imports Soar, Exports Barely Up In Spite of Collapsed Yen

Posted: 20 Apr 2014 10:37 PM PDT

Those who think a collapsing currency are a sure-fire way to increase exports need to rethink their beliefs.

Despite a falling Yen, Japan Posts Largest-Ever Trade Deficit.

The gap between the value of Japan's exports and that of its imports grew by more than two-thirds in the 12 months through March, to Y13.7tn ($134bn), according to government data released on Monday. It was the third consecutive fiscal year of deficits, the longest streak since comparable records began in the 1970s.

Toyota, Hitachi and other large Japanese companies have enjoyed soaring profits as a result of the weaker yen, which has fallen by a fifth against other major currencies since November 2012.

But the improvement has come less from increased exports than from flattered exchange rates on overseas sales. Japanese export volumes have barely risen and the yen value of goods shipped to foreign markets has increased much more slowly than the value of imports.

Exports actually declined slightly by volume in January-March compared with the previous quarter, by 0.2 per cent on a seasonally adjusted basis, according to calculations by Credit Suisse, even as imports grew by 4.5 per cent.

A steady outflow of Japanese manufacturing jobs to lower-cost countries and declining competitiveness in some sectors, such as consumer electronics, has limited the power of a cheap yen to lift exports.

Overall Japanese exports increased 0.6 per cent by volume last fiscal year, Monday's data showed, leading to a 10.8 per cent rise by value in light of the weaker yen. Imports rose 2.4 per cent by volume and 17.3 per cent by value.

Energy Imports

Japan has 50 nuclear reactors. Every one of them is offline. Abe wants to bring them back online, but the Financial Times reports "analysts think that at most 12-15 of the reactors will ultimately be restarted."

Abenomics

A falling Yen and rising energy imports, coupled with a slowdown in China and tax hikes in Japan suggest Abenomics is going to be a dismal failure unless the goal is to goose stock prices rather than goose the economy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Glen Greenwald Wins Pulitzer Prize for Exposing NSA Spy Scandal; His Reaction on Video; My Reaction: Greenwald and Snowden are Heroes

Posted: 20 Apr 2014 08:28 PM PDT

A big round of well deserved applause for Glen Greenwald is in order for willing a Pulitzer Prize for public service. Greenwald says the announcement was "really gratifying."

Please consider Glenn Greenwald Reacts To Pulitzer Prize

Glenn Greenwald told CNN's Brian Stelter on Sunday that receiving the Pulitzer Prize for public service was "really gratifying."

On Monday, Greenwald and other journalists at The Guardian and The Washington Post were awarded the Pulitzer for their reporting on the National Security Agency. The big question as the awards approached was whether the Pulitzer Prize committee would recognize their work, and they did just that.

On Sunday's "Reliable Sources," Greenwald told Stelter that he was having lunch with his phone on the table when the announcement came, and described his reaction.

"I think there was an expectation that the committee had to recognize the reporting in one way or another, and the question was going to be how," said Greenwald. "To learn that it was the public service award and that it was given to The Guardian and to The Washington Post for the work that we had done was really gratifying, because I think that is the ideal that we always tried to fulfill, which is doing the reporting in public service."

Congressman Peter King, like other critics of Greenwald, reacted to the news less kindly, calling the win a "disgrace." When asked about King's condemnation of the award, Greenwald said it was "an enormous badge of honor." He compared it to the reactions of those who called for prosecuting Daniel Ellsberg and The New York Times for releasing the Pentagon Papers.

Greenwald and Snowden are Heroes

Glen Greenwald and Edward Snowden are heroes. Those looking for cowardly disgrace can find in in the reactions of President Obama, Senator John McCain, Congressman Peter King, and numerous other legislators who have no idea what the constitution even says.

In the above video, Pulitzer Prize winner Glenn Greenwald joins Brian Stelter for an exclusive interview.

Congratulations to Greenwald, the Guardian, and the Washington Post.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Low Inflation has Positive Impact and Helps Spain's Competitiveness" Says Economy Minister

Posted: 20 Apr 2014 12:06 PM PDT

Luis de Guindos, Spain's Economy Minister, sings the praises of low inflation.

Via translation from El Economista, please consider Economy Minister Says Deflation Has "Positive Impact".

James Daniel, Spain's mission advisor to the IMF, said that inflation close to zero in the country increases the burden of debt and real interest rates and difficult to reduce unemployment.

Daniel's words contradict the perception Luis de Guindos, the Spanish Minister of Economy and Competitiveness, who also said today at a press conference that low inflation "is having a positive impact" and help the country's competitiveness.

Guindos noted noted that, far from being a threat, "the low level of inflation is allowing Spain win competitiveness."

However, he recognized that low inflation could become a "problem" if it lasts "long" and affects the process of deleveraging in the Spanish economy. The minister expects inflation to fluctuate in the coming months at around 0.5%.

Guindos had it correct until that last sentence. Low inflation, or deflation is never a problem. Rather the buildup of debt that cannot be serviced is the problem.

Since the buildup of debt is the problem, inflationary solutions that encourage people and businesses to expand debt cannot possibly be the solution.

Falling wages have had a positive effect on Spain's competitiveness, so much so that France is bitching about the invasion of Spanish builders undercutting French firms in price.

For discussion, please see Deflation Will Return: Europe First, Then US; Global Supply Arbitrage.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com