Thursday, September 24, 2009

Japan Exports Plunge, China Trade Surplus Disappears

"Every sentence I utter must be understood not as an affirmation, but as a question." - Niels Bohr

The U.S., for its part, is an importer not a manufacturer.

Japan's exports tumbled 36 percent in August -- with car shipments falling by half -- and imports also contracted sharply, the government said Thursday, showing the world's No. 2 economy remains mired in a deep slump.

Declines in automobile and steel exports were especially pronounced, the Ministry of Finance said. Exports fell for the 11th straight month to 4.5 trillion yen ($49 billion).

"We are not seeing an improvement in exports due to a continued slump in global demand," said Hiroshi Watanabe, an economist at Daiwa Institute of Research. "Japan's exports were particularly hit hard by stagnant demand in Asia and China."

Imports, meanwhile, dropped 41.3 percent from a year earlier to 4.3 trillion yen, reflecting weak consumption within Japan, where the jobless rate is at a record high as companies shed workers. Consumer finance company Aiful Corp. said Thursday it will cut 2,000 jobs, or about 44 percent of its work force.

This is not the stuff of expansions.

And the hits keep coming...

China's prodigious trade surplus appears to be coming to an end, and with it China's ability to fund the U.S. trade deficit.

But as import growth continues to outpace the nation's export growth after bottoming out earlier this year, the world's largest foreign-exchange accumulator is now on a path to start reporting trade deficits soon, according to Eric Fishwick, head of CLSA Asia-Pacific Markets' head of economic research.

"China will be recording, at the current run rate of exports and import growth, monthly trade deficits early next year or the turn of the year," Fishwick said Monday at the CLSA Investors' Forum 2009. "What is remarkable about its composition of imports is not just the pace, but the breadth. Nearly everything is going up at more or less the same sort of rate."

Official data released earlier this month showed that China's exports slumped a larger-than-expected 23.4% in August from the same period a year earlier, while imports narrowed by a margin of 17%

This explains the Treasury's Tic Data (hat tip to the Mad Scientist) which clearly shows China's lack of appetite for U.S. Treasuries of late. After all, if China does not have the DOLLARS that would naturally accumulate from a TRADE SURPLUS how can they buy U.S. Treasuries? They can't.

"He who would be serene and pure needs but one thing, detachment." - Meister Eckhart

Back soon,



Publius said...

Hi Greg and readers.
I've been thinkin' a bit this morning, which is probably dangerous.
Thomas Kuhn, the great historian of science, invented the term "paradigm shift." It's a concept worth reading about in his magnum opus "the Structure of Scientific Revolutions."

I will boil this down as much as possible.
The Mainstream, in this case mainstream economists, will continue to tout and believe in the old paradigm until the paradigm shift is absolutely unavoidable.
In the case of economics, that will mean that they will believe in a recovery, green shoots, and massive Keynesianism until the point at which the current system (political and economic and perhaps even social) collapses.

When scientific paradigms change, the results are much less catastrophic for society. In this case, however, human lives depend on getting it right, and they are not getting it right.

When the facts of science (or economics) start to "not add up," or indicate that the current paradigm has problems, the initial strategy is to just chalk it up to exceptions or outliers or "spurious" data.

Eventually, it becomes clear that the theory is wrong. In the world of science, the new paradigm is only completely accepted when the "old guard" dies off or retires.

In the current situation of peak oil, crazy-ass levels of debt, and other associated environmental and social trends, the old regime of Keynesianism, fiat currency, central banks, and globaloney will unfortunately kill a fair number of real people as it goes down.

Not many Americans have a family farm left to go back to during the transition to what comes next.

The latest data that Greg posted shows us that we are getting close to the dark times coming. Or maybe they will be light times, or red times, or yellow times. The politicians are certainly proving to be yellow. We need more yellow journalists to expose them.

oOOo said...

Nice info. Seems nobody told the talking heads on TV though. I was in LA last week, and as I switched through 30 channels of advertising in the hotel, the occasinal 'news' channel was talking up the recovery, before another ad came on and I had to switch the TV off. I havent really watched TV for about 8 years (apart from movies) and on seeing how completely devoid of any substance it has become I was a little wiser as to the level of disinformation and lack of real information being beamed into people heads (In super nice quality HD)
Good to read this post with some solid data. Thanks for keeping it real.

Anonymous said...


You are dead on.

What worries me most is that there is no public recognition of the roots of the problem nor plans to mitigate it. The US still has a lot of coal and NG in the ground. Both can be converted to liquid fuel. There is no reason to burn either one for fixed applications. Lots of uranium and unknown but larger quantities of thorium is still in the ground for that. Of course, these will also run out, but will slow the slide as we adapt. Then, there is ammonia that can be made from water and thin air as transport fuel and fertilizer. It may be a good way to store the uneven energy output of wind and solar powered generation.

Of course, there are the changes that can be made to the transportation infrastructure. More public transit, more electric rail etc.

Some of these are old technology, some new. All are helpful. Our situation should be vigorously attacked on all fronts. The powers that be simply refuse to accept that the driving force behind our continued slide is the cost and availability of liquid fuels. It is already a large component of the trade deficit that is killing us. The paradigm has shifted and the level of denial is unfathomable.

A major infrastructure turnover has typically taken 25 years. We don't have anything like that amount of time. As time passes, and we become poorer, there is less capital available to make the change, what ever that may turn out to be. Our fearless leaders haven't recognized that there is even a problem.

We live in an age of ignorance.


Coal Guy

Greg T. Jeffers said...


Good to hear from you again. I hope you enjoy your visit in the states.

Pub and Coal Guy: As always, a rational, well reasoned commentary on the state of things.

Still, I think that this is NOT the fault of any political party/entity/power. This is the phenomena that is our system.

I don't think that if they appointed the group of us as "Czar" that we could "solve" this to anyone's satisfaction - because that deals in people's expectations. And therein lies the rub: It is those expectations that need to/will be changed.

Since I am a free market/libertarian type I cannot help but to think in terms of how to further the interests of me and mine, and to make a living peddling these same services. And, I know this is hard for some of my international readers to understand, but I LIKE being an American and would very much like America to continue as a liberal democracy with the Constitution as our organizing structure... I am deeply concerned about the outcome of what I see as the ineluctable collapse of the US$ and the concomitant effect on politics and policy.

And no, I am most certainly NOT running for office, though I am going to support Peter Schiff.

Anonymous said...


I am also glad to be an American, and there are certainly enough people around to develop and peddle solutions. May the best peddler win for all of us!

Since government has both feet on the brake on any possible solution, and will not publicly recognize the problem, nothing will improve until this crisis becomes a CRISIS.

Just as the Republicans disillusioned their base, disgraced and damaged themselves for the next 20 years, the Democrats are hammering nails in their coffin with their ignorance of the real problems. Who will fill the vacuum as both parties implode? None of the issues that they claim to care about will matter much.


Coal Guy

kathy said...

Hi Greg. I am always a bit intimidated when posting here. I am not an economist or an energy expert-just a soccer mom with a good basic education in math,a pile of kids and my own little doomstead out in the country as this does not seem to be going anywhere but down. I wondered if you are at all concerned that Peter did not address energy depletion in his most recent MSM interviews when he disclosed his intention to run.

Greg T. Jeffers said...

Hi Kathy!

You are too modest. I always enjoy your input and value your view point.

Schiff is no more a wizard that BHO (and I already pointed out that I would be equally impotent to correct the course we appear to be on). But at least he speaks the language. At THIS moment, the zeigeist tells me we need folks trained or experienced in other fields besides the Law. Schiff is numerate and financially as well as economically sophisticated.

Does he give good speech? Not in BHO or WJC's league, but that is not the point.

I did not see his speech. I have read his stuff at for years, and I think he understands the problems AND his own limitations.

Not a bad combination (if it turns out to describe him accurately).

bureaucrat said...

While Schiff has the basic rap down right (don't borrow what you can't pay back), I still see him as someone who would let you die for your own good. Clinton was no barrel of laughs (he benefited hugely from cheap oil/energy), but at least when he saw something wrong, he did something about it. If you are drowning, don't expect Schiff to throw you anything but a heavy anchor. I gave $25 to Schiff's campaign anyway this week if only cause he'll drive the establishment up the wall. Oughta be entertaining.:)

Greg T. Jeffers said...

Driving the establishment up the wall is very much worth the price of admission.

Since you put it that way, I am getting really excited about Schif's campaign.