Keynesian Yen Trashers At Work: Abenomics Triggers Soaring Bankruptcies In Japan

From Zero Hedge

Due to the depreciation of the JPY, leading to soaring raw material costs (crushing SME profitability), TSR reports that Japanese bankruptcies year-to-date in 2014 are up a stunning 140% having unerringly surged since Abenomics was unleashed. Despite constant reassurance and propaganda from various political leaders each and every night that Japan is on the right track… it simply is not and if there is a better indicator of the death spiral Abe has unleashed than surging bankruptcies, we are unaware of one.

Bankruptcies are soaring since Abenomics began…

As TSR additionally notes,

By industry, 81 of the transportation industry such as automobile cargo transportation industry (composition ratio 37.9%) is at most, fuel prices remain high is affected. Next, review the manufacturing industry 44 (20.6%), Wholesale 41 (19.2%), service industries other 19 cases (8.9%), and has spread retailing 11 (up 5.1%) in a wide range of industries.

Depreciation of the yen impact leads to soaring raw materials, profit deterioration deplete the strength of small and medium-sized enterprises. In addition to the deterioration in earnings, depending on trends of the future of the exchange rate, are also concerned about such further sales slump due to price competition.

But as Bloomberg reports,

“We’ve seen that the threat of an exchange rate weaker than 110 yen per dollar made a lot of people uneasy, so if the yen were to strengthen to 105 per dollar, I doubt we’d hear any complaints.”

A survey released last month by the Osaka Chamber of Commerce and Industry showed the majority of respondents viewed an exchange rate of 95-105 yen per dollar to be ideal. Japan Chamber of Commerce and Industry Chairman Akio Mimura said this month a “pleasing” level for the yen would be 100 per dollar, Kyodo reported.

An increasingly weaker yen won’t necessarily benefit Japan’s large exporters. Nintendo Co. booked a 15.5 billion-yen ($142 million) gain in the fiscal first half from the lower currency.

The median forecast among analysts surveyed by Bloomberg News is for the currency to weaken to 114 per dollar by the end of 2015 as U.S. and Japanese monetary policies diverge. It hasn’t been that weak since 2007.

Even though Abe and his cronies are starting to wake up to the reality…

Prime Minister Shinzo Abe said on Oct. 7 that yen depreciation is hurting small companies and households, almost two years after triggering the currency’s slide with a call for unlimited monetary easing to end deflation.

Little more than a week later, Kuroda said a weak yen can depress the non-manufacturing sector and real incomes, before reiterating on Oct. 28 that declines in the currency have been positive overall for Japan’s economy.


..Confidence among small businesses unexpectedly fell this month, according to a survey of 1,000 companies by Shoko Chukin Bank released Oct. 28. The measure languished for a seventh month below the line that signals a balance between optimists and pessimists.

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And so – if you are betting on NKY strength… reliant on JPY weakness… think again. Abe and Kuroda are boxed in.