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Japanese machine orders just sank to a 22-year low...
IF WE ARE SLIPPING into a Japan-style depression, as signaled perhaps by the swollen
demand (and supply) for government debt worldwide, then recovery might take
longer than almost anyone guesses.
Twenty years could be too
soon, in fact. At least on the Japanese model.
"Clearly, the
Japanese economy is not performing as many expect it to," reports the
ever-invaluable Japan Economy News.
No fooling. Rising 54% to
new monthly highs from the first-quarter of 2002 to the start of 2008 (and
spiking as the US Dollar collapsed together with Bear Stearns that March),
the Yen-value of Japanese machine orders has sunk back to the level of 22
years ago.
That was prior to the top
of Tokyo's
real-estate and equity bubbles in 1989 – a whole heap of going nowhere
that says over-capacity is baked in the crust yet again.
"The Cabinet Office
announced that core machinery orders in Japan
fell 3.0% in May to ¥668.2 billion [$7.2bn]," Ken Worsley goes on,
citing the data with orders in more volatile sectors stripped out.
"Although this is less than the 5.8% drop seen in April, it still means
that machinery orders have fallen to a new all-time low. May was the third
month in a row that core machinery orders have fallen."
Capital spending in the
iron & steel sector fell 46% from May '08. Transport orders fell 50% on a
year earlier.
Okay, you can blame it on
Lehmans failing last autumn if you must. Everyone else will, even if global
demand and output had clearly turned down long before then. But the idea that
depleted stockpiles of consumer and industry goods will at some point spark a
self-inspired rebound is just the kind of "How bad can it get?"
hopefulness Japan repeatedly poked in the eye over its first decade of
post-bubble slump.
Now "More and more
Japanese firms are going bankrupt," Worsley continues, noting how Tokyo
Shoko Research said June saw 1,422 firms with debts above ¥10 million
($100,000) go under – the worst June for bankruptcies since 2002, back
when the threat of US deflation first led the Fed to follow Japan towards
near-zero interest rates.
But cheer up – that
all worked out fine. I mean, how bad can it get?
Adrian
Ash
Head
of Research
Bullionvault.com
City correspondent for The Daily Reckoning in London,
Adrian Ash
is head of research at www.BullionVault.com – giving you direct access to investment
gold, vaulted in Zurich, on $3 spreads and 0.8% dealing
fees.
Current gold price, no delay
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