(More)
Investment Drops -
Annualised Growth 2.6%
Recently folks were applauding the turn around in profits for some of JAPAN INC's biggest exporters, as short-term delusional benefits of its managed currency devaluation jumped earnings in the second quarter, leading some to even proclaim that the two decades of economic decay had finally come to an end. That celebration was short lived, as overall GDP growth for the period, did not meet expectations.
Moreover, business confidence, as measured by capital investment, drifts hesitantly despite improved profits. Consumers can look forward to a possible increase in sales taxes, that certainly cannot add to their feel good levels. Plus, as import costs increase, they can expect their pocket books to be squeezed much more in the months ahead.
In all, the deflationary overhang is still there as low interest rates cause both consumers and businesses to act cautiously. It is still hard for commercail banks to lend too, because lenders " collateral values" can disappear in an overnight whisper of a rate increase. These internal structural weaknesses play into foreign competitions' hands as they can invest capital more effectively. That's not good for the export business.
At some point, Japan's deflation should disappear with the import of hyper-inflation on materials from other countries, at same time, so should exports. Then what? Growing global populations and shrinking resources will not work to save this economy from the fix it entered after its financial bubble burst and the finite constraints of a shrinking planet set in.
INVESTORS' INSIGHTS
First Financial Insights
August 9, 2013
