Japan's Crisis Has Arrived? Japan Has First Trade Deficit in 32 Years!

The floodgates are creaking. If Japan needs foreign loans to float the government debt, the country is sunk. The other option is to destroy the value of the yen.

Will the Japanese public stand hyperinflation? If interest rates go to just 3% they would consume ALL of Japan's tax revenue. Even doubling the Sales Tax won't help.


Mish Shedlock reports in Japan Faces Moment of Truth:

Japan is in deep serious trouble the moment it enters a sustainable period of negative or neutral current account balances. If Japan becomes dependent on foreigners to finance rollovers on its debt either the Yen sinks or interest rates rise. Interest rates at a mere 3% would currently consume all of Japan's tax revenue.

Bloomberg reported; “Japan’s government said it will probably miss its goal of balancing the budget by 2020 even with its proposed doubling of the sales tax, underscoring the scale of the nation’s fiscal challenges.

The primary budget deficit, which excludes the cost of servicing debt, will be the equivalent of 3.1 percent of gross domestic product for the year through March 2021, the Cabinet Office said in Tokyo today. Hours after the release, Prime Minister Yoshihiko Noda reiterated his call for opposition lawmakers to engage in talks on boosting the sales levy.

‘To balance the budget, the rate needs to rise further.’”

What did I tell you the last time I wrote against an increase in Sales Tax? No matter how much the taxes go up, the government will always spend what it takes and, no matter how much it is raised, it will never be enough. History shows us that! When the first Sales Tax came in at 3% in the early 1980s they said that was going to fix the budget problems. Guess what? Surprise! It didn't.


Why didn't it? Because they spent the money!

The article above really goes into how stupid and into the outer limits of insanity the current government of Japan is by stating that there are some who think Japan should have a 25% Sales Tax.

Like I predicted, this prime minister, Noda something or other (no need to remember his name, he is a goner) will be gone this summer. Bank on it.

Instead of raising taxes, how about cutting spending?

The Japanese Titanic: Japan's Public Debt Will Surpass ¥1 Quadrillion Yen Any Day Now

How much is a quadrillion? That's a thousand trillion....


Recently, I've been getting my daily money market news fix from the usual suspects: Mish Shedlock, Karl Denninger and Mad Max Keiser but there's another blog that I've found that hits the mark consistently and updates more than several times a day. It's called Zerohedge. I highly recommend it because the guy that runs it seems to get the scoops on what's going on days and even weeks faster than all the rest.

The latest one rings the alarm bells for Japan once again. Japan's Public Debt is about to surpass ¥1 Quadrillion any day now. Jeez! How many zeroes are there in a quadrillion? I didn't even know without having to look it up.


Let's see that's a one with fifteen zeroes after it. Like this: 1,000,000,000,000,000.


Zero hedge reports in Japan Will Raise More Cash From Debt Issuance Than Taxes For Forth Year in a Row


Japan's marketable public debt, already the largest in the world at $11.2 trillion compared to America's $10 trillion (of course this assumes the whole SSN sleight of hand is funded, which it isn't), is due to surpass ¥1 quadrillion any month now (aka the exponential phase). And that's just the beginning. As Bloomberg reports, "Bond sales to the market will climb to a record 149.7 trillion yen ($1.9 trillion), while the national budget’s reliance on debt for funding will rise to an unprecedented 49 percent in the year starting April 1, Japan’s government said Dec. 24.


The article goes on to stomp on these Keynesian "economists" (read: clowns) who claim that the government should increase spending to pick up on falling consumer spending and loosen monetary restraints (read: print like hell) in order to pump up the economy before a recovery starts:


In other news, and to all the neo-Keynesians out there, we post the following thought experiment: according to the head priest economic growth derives from debt issuance. And since apparently every country (yes, yes, that has its own currency) can issue infinite amounts of debt, why doesn't the US and Japan (and the EU post Eurobonds), simply announce it will monetize, aka print, an infinite amount of debt tomorrow? Shouldn't that lead to global GDP promptly rising by infinity %? Or is there an actual problem with this hypothetical scenario which takes current debt trends to their ludicrous extreme.


Want to see what a quadrillion pennies look like? Here ya go!

Here we have buildings (in front) used for scale at a trillion. They're now dwarfed by the large cube of pennies in back (quadrillion). The large cube is a quadrillion, or a thousand times one trillion. This cube is roughly a half-mile wide and would weigh an astonishing three billion tons.

Translation: Japan is doomed. 2012 and beyond are going to be rough ones.


Happy New Year! If you are in Japan, may I suggest drinking as much as you can, while you can. 

Rock Solid Case For Ron Paul in Two Paragraphs and Facebook

Establishment (Prior to) Ron Paul Victory in Iowa: "The Iowa Primary is the most important election since the establishment of our nation".

Establishment (Post) Ron Paul Victory in Iowa: "Iowa is not significant, these aren't the droids your looking for". (Waves Hand) - Blog commentator


Mish Shedlock gets my award for the best economics blog of 2011.

In today's blog post, he links to a piece he found at the European Disunion Blog and says that this quote is a rock-solid case for the election of Ron Paul in just two short paragraphs.


The post?

Don't want endless foreign wars, but do want a strong military for defense? Vote Ron Paul. Do want bankers to be subjected to greater scrutiny and accountability? Vote Ron Paul. Don't want the government to tow the line of corporate interests? Vote Ron Paul. Do want to be allowed to say and think what you will - even do what you will - provided that it does not harm or infringe upon the rights of others? Vote Ron Paul. 

Ron Paul is the only candidate who does not accept donations from big business - his campaign is funded entirely by individuals. Yet it forms policy from a conservative outlook: pragmatic, rather than idealistic, with any reforms carefully considered before implementation, with a strict doctrine of fiscal prudence to boot. In short, it is the perfect blend for individualistic yet reasoned and cash-strapped America. 


Read more great commentary daily from Mish at the Global Economic Analysis Blogspot. I like it so much that I read it everyday and have it bookmarked.


Also, by the way, Ron Paul is skyrocketing on Facebook while the others are dropping like flies. Check out the Elections Inside Facebook Page:

CLICK ON IMAGE FOR LARGER VIEW

Why I Shuttered my Marketing Agency for Tourism

I had started a new business venture about two years ago. It was a section of my company that was dedicated to tourism and travel and it was a very profitable business actually. Because of my background in the mass media and operating on the receiving end of marketing and advertising companies, I saw how clients were, well, getting ripped off. I knew I do do a hundred times better for clients. I set targets and goals and I saved the clients big money too!


I knew that I could make decent money by arranging huge promotions between client companies for 1/50th the cost of what a major Japanese marketing company like Dentsu or Hakuhodo or even the smaller agencies could do. 


I did arrange many of these campaigns for little cost to my clients. Many were nationwide internet and TV campaigns. Some were huge multi-media tie up with networks, major magazines and non-traditional media. My concept was to find clients that had needs that could be met with a sort of mutual promotional campaign. Everything had to make sense and be organic. Then I spread the costs evenly around to each client. Instead of charging them separately.


So, instead of spending, say $400,000 ~$500,000 (USD) on a campaign (if a sponsor bought it through, say, Dentsu) I could arrange it for $12,000 total or so. I did it too, many times.


Here's a good example:


Domino Pizza Japan wants to get more people ordering online in order to more efficient promote its product and cut down on expenses (telephone ordering is not cost effect nor efficient).


A airlines or foreign tourist board wants Japanese to go to visit their country.


A wine company wants to get the word out on their services.


What should I do? I thought about it and got them together and created a cost effective, mutually beneficial campaign that cost each of these parties next to nothing. 


In this example, I arranged for a vacation to a foreign country for anyone who would join and become a member of the Domino pizza online ordering system. The top winner would get a vacation for two, business class, to a foreign country and hotel. The airline & hotel prize supporting companies would get the massive promotion that goes along with the campaign. The wine company provided all the second place awards: 100 people win a set of quality red & white wine.


The campaign runs for two months!


Domino Pizza prints (get this):
7.8 million newspaper inserts
2 million menus
1.6 million direct email magazine to subscribers
250,000 pizza box top ads
750,000 regular direct mail


Airlines provides 2 business class tickets and 5-star hotel for 4 nights.


Wine company (iwine.jp) provides 200 bottles of quality Coppola wine. 


Cost to Domino if using Dentsu? Approximately $200,000
Cost to airlines if using Dentsu? (considering the reach of ad materials): Approximately $400,000 
Cost to wine company if using Dentsu? Approximately $100,000


My company total charge: $25,000 that's inclusive to all three clients!


You can see the results of this campaign here: http://modernmarketingjapan.blogspot.com/2011/09/two-people-win-vacation-business-class.html


(By the way, the campaign ends on 10/31 so you still have time to join the campaign and win the trip to New York!)


Why did I make these types of campaigns? A two reasons: First, I liked the clients. Second, I think Japanese advertising agency business is way too over priced. If I can help to lower advertising costs, then prices might go down and that makes life better for everyone, no?


But I am thinking about closing this business. 

All vacations come complete with helmet and baton!

Why would anyone close a profitable business, you ask? Well, since it was tied to tourism and travel every time I organize a campaign, something bad would happen:


Here's a list of those bad things:


1) Airlines goes bankrupt
2) Riots in destination cities
3) Huge earthquakes, tsunami and nuke disasters
4) Riots in destination cities


and, finally, 


5) Riots in destination cities, bankruptcies, etc., etc., etc., 


You might think I am just unlucky or have bad timing... But I don't. I am very lucky and have great timing that's why I am out of the tourism and travel advertising business...


Things tied up with tourism don't seem like good ideas in this day and age. The world economy is collapsing and things are getting nasty. As Gerald Celente says, "When people lose everything, they lose it." People are losing it all over the world. Read this from my friend, Mish Shedlock: http://globaleconomicanalysis.blogspot.com/2011/10/occupy-wall-street-protests-go-global.html


... I was about to line up an Italian campaign.... But, after watching that video on Mish's page... I think not!