Tax and Spend. Tax and Spend. Tax and Spend. Lather, rinse, repeat.

While driving along the road in front of Waikiki beach, I saw a building that said, "Department of Homeland Security" right next to the harbor. I laughed. Prime location on the beachfront and the federal government has a brand new building for the Department of Homeland Security, in Waikiki no less. Isn't that ironic?

Jack Lord would have been proud.

"Book 'em Dan-o!"

Don't forget that this is the same federal government that was in charge of security when the Twin Towers were attacked on Sept. 11, 2011. Most people who blow their jobs get fired. Not these guys. They get nice offices in Waikiki. 

Funny, you know, if you were the fire chief of some hick town and screwed up  your duties on that day and a bunch of buildings burned down, you'd be fired or would certainly lose your job. Not the government though. They increase our taxes and expand their incompetent services. That's the way the government operates, you know. Their answer to every problem is to tax and expand. 

That's how it works, you see. 

People who have been paying attention will already know that golden rule of politics. And that rule is that no matter what occurs the government response will always be an expansion of that government and that will mean higher taxes for you and me no matter how you slice it.  

So bend over and take it.

On that note, there’s a couple of news stories about Japan that caught my “WTF!?” radar yesterday. I thought I’d write about them today. See if you can catch the irony of the situation.

The clowns in control of the Japanese government claim that they need to increase the current Sales Tax rate of 5% up to 10% in order to cover shortfalls in tax revenues and a burgeoning social insurance liability. They also are using the excuse of the March 11 earthquake, tsunami and nuclear accident at Fukushima as a ruse to fool the public that this tax increase is needed and is for the public good.

If it is for the public good, well then, they are not at fault for poor management, you know. Public good and all... But hey, weren't they just claiming that they needed to raise taxes for a different reason before the March 11 earthquake? Why, yes, they were! Then it was out of control spending.

But not now! No! Now is because we are all Japanese people and we must stick together to raise taxes to help the people up north. 

By claiming that monies will be used for reconstruction of the northern Japan region of Tohoku, the government can act like they have no choice but to  increase taxes for the betterment of the public. They’ll claim that they are being “forced” into raising taxes and it can’t be helped due to circumstances outside of their control.

Never mind the fact that Japan’s public debt, by this very same government and preceding administrations pushed the debt to past 200% of GDP long before the March 11 disaster struck. 

Regular readers of this blog will know what I think about this sort of political bandwagon nonsense. 

Here are two articles that I found that I’d like to share with you that shows just what kind of shenanigans go on in the halls of power at Nagatacho.

The first from the Daily Yomiuri newspaper about how the government of Naoto Kan, in spite of being resoundingly defeated in the last election due to an insistence on increasing Sales Tax, is going to push it through no matter what. 

Public opinion and a frail economy be damned. Great timing, eh? No election coming up and all. I wonder what the angle is for the criminals of the LDP? The Daily Yomiuri newspaper:

The government and the Democratic Party of Japan agreed on tax reform plans this week, and plans to submit related bills during the Diet's ordinary session next year. 

Woah! Watch out! "Tax reform" is a code-word for "Tax increase." 

It will need to clearly stipulate in those bills when the consumption tax should be raised and by how much.

Translation: One party agrees to tax hikes and "budget cuts" as long as their pork barrel projects remain intact.

However, there are piles of tasks to be completed before that can happen, such as deciding standards by which to assess the national economy's ability to withstand the tax hike, and determining how tax revenue should be shared between the central and local governments.

Yes. The pirates must always decide how to divvy up the loot.

Thus, the government will have to overcome some high hurdles to realize the agreed plan to raise the consumption tax rate to 10 percent "by the middle of the 2010s."

Hopefully those hurdles will be so high that they kill themslves on the way back down. Faithful readers of this blog might remember my post entitled: Japan's Government Headed for Ouster? Good. The Sooner, the Better. Where I pointed out that the best government that we could possibly hope for is one in constant deadlock because, if they are in deadlock, they can't pass any news taxes. See? I was right. That slimeball Kan snookered his way back into power and now they're talking about raising taxes.

Am I genius or what? No. Not genius. All governments are the same sneaky lowlife. I am merely an astute observer at best.

The bad news continues:

The government's plan is to raise the consumption tax rate in two stages. At first, the rate will likely be bumped to 7 percent or 8 percent in autumn 2013 or later, and then to 10 percent by the end of fiscal 2016.

Great! This means we still have a chance to boot these clowns before they do anymore damage.

It is feared that a single, all-at-once increase to 10 percent might hurt the nation's real economy.

Gee. Do you really think so? It's been proven that an increase in taxes coordinates with a corresponding decrease in tax revenues. Haven't these idiot politicians never heard of the Laffer Curve? No? OK. From Wikipedia:

One potential result of the Laffer curve is that increasing tax rates beyond a certain point will become counterproductive for raising further tax revenue because of diminishing returns. 

Gee wasn't the opposition LDP just claiming that they were against Naoto Kan's plans for reconstruction and didn't they just stand in the last election firmly against any increase in the Sales Tax rate? The Economist reports:

"...opposition parties have threatened to block implementation of the spring budget for the next fiscal year. Without big concessions..."

"Without big concessions!?" Gee, do you think that means that you grease our wheels and we grease yours?... Nah!

You know what is going on here, folks, is that the LDP wonks actually want to increase taxes too but they see a golden opportunity to increase those taxes while at the same time making Naoto Kan and the dimwitted Democratic Party of Japan (DPJ) take the blame for it.

See? The LDP gets their cake and eats it too and then win the next election because they can claim that they were against any tax hikes. Those sneaky genius bastards! Gotta hand it to them though… They didn't get to run this country for iffy years by not knowing how to play a very hardball game of poker.

Kan and those clowns are out of their league. The LDP is going to secretly get their tax increase (they were the ones who first put a Sales Tax into place) and they are going to blame the DPJ and return to power.

The next article would be a real head-scratcher except if you remember the golden rule: that no matter what occurs the government response will always be an expansion of that government and that will mean higher taxes no matter how you slice it.

The Japan Times reports that in 2010 Japanese government revenues actually jumped 7.1%!

Tax revenues for fiscal 2010 rose 7.1 percent from the previous year to ¥41.49 trillion, exceeding the earlier forecast of ¥39.64 trillion, thanks to improving corporate earnings, the Finance Ministry said Friday.

Did you do a double-take on that one? I sure did. WTF? The government coiffures  actually increased by more than 7% last year and these clowns still want to raise our taxes?!

Just to prove to you how much of a scam this all is and how completely and totally fiscally irresponsible these people are, here's another article from Feb. 24th, 2011, two weeks before the Tohoku earthquake and tsunami, that gives another totally different reason for raising our taxes: Government debt to GDP. From Bloomberg:

Moody's said that it cut its outlook on the credit rating on Japan because of “heightened concern that economic and fiscal policies may not prove strong enough to achieve the government's deficit reduction target”.

Also they said the government's policies would probably not be able to “contain the inexorable rise in debt, which already is well above levels in other advanced economies”.

Analysts said that the move by Moody's was widely expected after S&P's decision to cut its rating. However, they added that while it may have a limited impact on the bond and currency markets, it could have broader political implications.

“Politicians or the finance ministry could use this as a reason to push for fiscal reform, which could include a sales tax hike,” said Satoru Ogasawara, an economist at Credit Suisse. 

Uh oh, there's that "reform" word popping up again.

It looks like these people have their hearts dead-set on raising our taxes one way or another. It would never do to be responsible to do something like, say, cut spending. Oh no! Can't do that.

Twenty years of this sort of out of control spending and tax increases have landed this nation right where it is today: With a faltering economy and massive debt and our credit rating slashed.

At this rate, all we can realistically expect is twenty more years of the same.... That is if we don't go bankrupt before then.

What a Difference a Day (25 Years) Makes

If Japan fails to end industrial policy, its postwar developmentalism may be judged a failure.
--Yasusuke Murakami, 1996

Maria Grever - Cuando Vuelva A Tu Lado

You might recognize the melody. It is "What a Difference a Day Makes." 

This song was written by a Mexican composer named Maria Grever 

and it was originally in Spanish!

"How could this have happened?" Japan, the nation that just 25 ~ 30-years ago was predicted by many to dominate the world spent most of the 1990's and the 2000's just struggling to stay afloat. In fact, the only reason why Japan did stay afloat was massive government spending on useless public works projects and the like.

Today, Japan's debt stands at 225% of GDP. The cupboards are laid bare and with the continuing troubles all around the world with rising food and oil prices, not to mention the recent disaster in Japan do not bode well. Things are headed for a clash this year, I predict.


Mike Whitney says:


....(USA) unemployment is on the rise (Initial claims rose to 424,000 on Thursday), GDP is falling (1Q GDP revised to 1.8%), durable goods are down 3.6 percent in April, the market is topping out, business investment is flat, Europe's on the ropes, Japan is in a historic slump, China is overheating, the output gap is as wide as it was 6 quarters ago, bank balance sheets are bleeding red from falling home prices and non-performing loans, and the housing market is crashing.

Most of the rest of the article that Whitney wrote is pure Keynesian nonsense but he had the above information correct. Even a broken clock is right twice a day.


I have recommended stocking up on food and water and think you should do the same.... Especially if you live in an earthquake prone country like Japan. Because if something happens, all the stores will sell out of water and most foods within a day, if that long.


The store shelves always look full because they are constantly restocked throughout the day. What's going to happen when something bad happens and the delivery trucks stop running?

Japan, in particular is in a very precarious position today. 


In 1998, Richard Katz wrote a book entitled, Japan: The System that Soured (The Rise and Fall of the Japanese Economic Miracle). It was one of any books at the time that speeled out what went wrong with the Japanese economic miracle. I bought the book when it first came out and still have it. I am amazed at how much this writer had predicted that has come true. 

He wrote: 

"Without sweeping structural reforms, Japan will continue to stagnate. Japan's productivity growth is so dismal these days that, even if it operated at full capacity, economists say the fastest it could grow is around 2 percent or so. That's half the 4 percent rate it averaged from 1975 to 1990. And yet; because of Japan's myriad macroeconomic problems, Japan has commonly been unable to operate at full capacity. In four out of the six years since fiscal 1992, Japan has grown less than 1 percent, and in three of those four years less than 0.5 percent. Japan grew less over the entire five-year period from mid-1992 through mid-1997 than it did in the single year of 1990. Unless there is massive budgetary stimulus, this negligible growth is expected to continue through at least 1998 and 1999 (see Figure 1.1). By the dawn of the new millennium, Japan will have spent an entire decade growing more slowly than the United States, the nation it was supposedly "on track to overtake by the year 2000."


"Nor is this a temporary slump. According to official forecasts, without reforms, even at full capacity, the fastest growth Japan could sustain between now and 2010 is only 1.8 percent a year. After 2010, says the normally optimistic MITI, the combination of poor productivity and a declining labor force means it will get worse. Japan's growth potential will plunge to only 0.8 percent a year."

It astounds me that this writer was so aptly able to predict the future growth rate of Japan.

I remember when I first read this, I thought, "Japan will recover!" Now, I am not so sure.

As the quote at the top of this post suggests, if Japan cannot reform its postwar industrial policy, it will be deemed a failure. The only way that is ever going to happen is that the political system that strangles Japan must collapse. The Good Old Boys and vested interests must go.

The only way that the people are going to rise up and demand that is the bottom is going to have to fall out. Just as a drug addict or alcoholic must hit rock bottom before he will admit his problems and seek help, this country will have to collapse under the strain of a massive debt to GDP ratio.

Japan is headed for some very tough times and some very difficult decisions... It's rainy season now in Japan and the weather is cool.... But in about six weeks, it's going to start getting very hot. And I don't think that is just the temperature of the summer days... I think things are all falling into place for some very difficult times for everyone. Not just Japan.

Chart Showing Japan's Gross Debt for 2010 at 226% of GDP

Over at ZeroHedge, they've got a great article about exploding government debt.

The stats on Japan were even worse than I thought. Japan's Gross Debt in 2010 was 226% of GDP!

CLICK ON IMAGE TO SEE FULL SIZED CHART

Read more at Zerohedge.

Japan Financial Situation is Past Critical

I pointed out the other day that Japan's debt to GDP ration had surpassed 200%. Now, Mish Shedlock spells out the doomsday scenario for Japan in no uncertain terms:

In spite of ever-expanding national debt, Japan's long-term interest rates are the lowest in the world. Yet, because of demographics and a rapidly aging population, Japan will soon have to draw down on its "savings", all of which went into treasury bonds at 1%, all of it already spent, and 200% more, in various nonsensical deflation-fighting efforts.

The problem for Japan is interest on the national debt will consume all revenues if Japan's long-term interest rates rise to a mere 3%. Yet, demographics show higher interest rates are nearly guaranteed unless Japan decides to default.

The interesting thing about default is that countries frequently default on external debt but seldom default on debt owed to its own citizens. Nearly all of Japan's debt is internal. Will Japan default on that debt or will Japan attempt to print its way out?

Should Japan try printing instead of defaulting, it faces a currency crash. If taken to extreme measures, Japan could conceivably see a complete loss of faith in the Yen (hyperinflation). At this juncture, hyperinflation is far more likely in Japan than the US.

The critical question for Japan is "How long can this imbalance continue before it blows up in one direction or the other?" Interestingly, Japan may blowup both ways, first in one direction then the other, so the order and timing of bets is important.


 When interest rates rise in Japan; which they must. Japan will have to default. But when most countries default, they default on monies owed to foreigners. Japan's debt is almost wholly owned domestically.


It is doubtful that the Japanese government will default on money owed to the people. So what to do? Print money, of course.


Could hyper-inflation be in the near future for Japan?

Write a Blog! But at Least Spell-Check!

By Mike in Tokyo Rogers

I wonder if Barack Obama Twitters or, at least, does Pick, or any other Social Media? I guess he certainly must not blog himself. If he does, then, judging from his White House transcripts,  those must be nearly unreadable. And, if so, forget about his Facebook or Myspace... Those must be a total mess.

Marketing, blogging and doing Social Media is a must in this day and age.... Well, duh! You knew that already. You'd think that the president of the United States would know that too. You are about to be shocked by just how useless these people in government are!

But, I guess, Barack Obama is a moron, like his predecessor... Is Obama as dim as Bushy Boy? I think he is, but you be the judge.

Many people have asked me, "How do you blog so much?" Well, the secret, I think, is to - funnily enough - not to think too much. The secret to blogging often (3, 4, 5 times a week) is to write down what you want to say in your blog, Twitter, Pick, whatever  immediately on the fly - then spell check it - then upload as soon as possible.

You've got to strike while the iron is hot!

If you keep editing and re-editing your blog, it will kill the creative juices and slow down your productivity greatly.

So, when it comes to Social Media and Social Media Marketing, in Japan or your country, then the rules and hints to frequent blogging are to:

1) Write quickly while the ideas are fresh.
2) At least spell-check before uploading
3) Edit after uploading
4) Edit as much as you like using this method. Keep doing it until you get it right.

Simple enough.

Now, just for a laugh, I've got to show you the press release from the White House about president Barack Obama's latest comments. I know how hard it is to keep from making mistakes on a blog as I make them all the time, but you'd think the President of the United States could at least arrange to have work done better than a 4th grade level. Jeez, doesn't this guy have a proof-reader?

I'm not making this up. This is the White House press release. It is full of amateurish mistakes. I have highlighted the mistakes for you (if this is the level of work we get from the White House and Obama, then we are in serious trouble):

Obama: "We need to commit to fiscal adjustments that stabilize debt-to-GDP ratios at appropriate levels over the medium tenn. I am committed to the restoration of fiscal sustainability in the United States and believe that all G-20 countries should put in place credible and growthfriendly plans to restore sustainable public finances. But it is critical that the timing and pace of consolidation in each economy suit the needs of the global economy, the momentum of private sector demand, and national circumstances. We must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession. For our part, we will pursue measures to SUppOit the recovery in private demand and return the unemployed to work. At the same time, we recognize the impoltance of setting a credible medium-term fiscal path: that is why my Administration will cut the budget deficit we inherited in halfby FY 2013 and work to reduce our fiscal deficit to 3 percent ofGDP by FY 2015, which will stabilize the debt-to-GDP ratio at an acceptable level in that year."

There are a bunch of other mistakes in this message, but I just copied and pasted one paragraph here for you. There are a bunch more at the original. Is this a joke, or what? I understand a simpleton like myself, making these sorts of spell-check errors, but the president of the United States of America? And in an official press release? Think about it folks, this guy is the leader of the western world!? Like I said, I'm not making this up... 

We're doomed. The insane have taken over the asylum.
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