Japan from the inside out

Seamoon in the Cabinet

Posted by ampontan on Monday, June 11, 2012

SUSPICIONS have arisen about the real identity of Japan’s Finance Minister Azumi Jun. It was already a working assumption that he was a haribote — a papier-mâché stage property — installed with a special operating mechanism and set up on stage to personify a Finance Ministry spokesman for the news media and overseas governments, and ministry liaison with the ruling party. He’s never held a Cabinet post before, even one of the trivial portfolios set aside for the aonisai newbies and the women brought in to decorate the photo op when the Cabinet stands on the stairs for its formal portrait. The only thing he knows about government finance or economics is how to write the words in Chinese characters. It is also suspicious that he looks like such a nice boy on television. Now tell me — when was the last time you’ve seen a good-looking finance minister ? Then again, being a television host and reading from teleprompters was the only thing he did before being a politician.

Azumi Jun and his remote controller

His statement on Sunday, however, really has people scratching their heads:

Japanese Finance Minister Jun Azumi hailed the 100 billion euro financial lifeline for Spain, calling it a “major first step” toward stabilising the European and global economy.

If the bailout given to Spain is a “first step”, what would he call all those euros — sorry, euro — firehosed on Greece, Ireland, and Portugal? Well, the cash forked over to Ireland and Portugal, anyway. The bailout given to the Greeks is known in the financial industry as “throwing money down the sewer” (TMDTS).

He also called on European leaders to continue taking flexible actions to ease the region’s financial woes, which have threatened global economic health and sent the Japanese yen to record highs.

“The confirmation of the scheme worth 10 trillion yen (100 billion euros or $125 billion) should greatly contribute to stabilisation,” Azumi told local reporters on Sunday, referring to both the global economy and Spain’s troubled banking system. “I hope that such actions will continue to be taken flexibly with a sense of speed. In that respect, I think this is a major first step,” he said.

Other people — the people whose business it is to manage money — seem to think Europe is speedily running out of steps to take and has limited flexibility:

Spain’s bank rescue news is out, and the obfuscation is very high, as usual. The rescate (rescue) amount offered is 100 billion euros, a mere two and a half times last week’s estimate. This tells us the Spanish banks are under-capitalized by at least 100 billion euros. That’s positive? We already knew the ESFS and ESM would lend Spain money, the question is in what manner?  This uses up about all the capacity Europe has on its own.  This opens up more cans of worms.

Once Spain takes the money, then their obligation in the EFSF and ESM bailout mechanisms would be taken over by others. Those “others” are Italy, whose share rises from 19% to 22%.  France’s share rises from 22% to 25%, and Germany’s from 29% to 33%. The smaller core countries like the Netherlands, Belgium, etc will pick up a little more as well.  By piling more on Italy and Belgium, the credibility of the guarantees given to EFSF bonds would collapse.

Just because the next fellow is selling his services doesn’t mean we should overlook what he says:

Things have gotten so bad that Spanish citizens are pulling their money out of Spain en masse: over €100 billion left the Spanish banking system in 2012 alone.

As bad as they are, even these data points don’t do justice to the toxic sewer that is the Spanish banking system.

Case in point, over HALF of all Spanish mortgages are owned by Spanish cajas…Until recently, the caja banking system was virtually unregulated… until about 2010-2011 there were next no regulations for these banks (which account for 50% of all Spanish deposits). They didn’t have to reveal their loan to value ratios, the quality of collateral they took for making loans… or anything for that matter.

So, with Spain today, we have a totally unregulated banking system sitting atop HALF of ALL Spanish mortgages after a housing bubble that makes what happened in the US look like a small bump….Oh, I forgot to mention, the cajas primary lending market during Spain’s housing boom were subprime and sub-sub prime borrowers.

That’s just the warm-up for his explanation of the nationalization of Bankia. It was formed only two years ago through the merger of seven insolvent cajas.

The ESM, by the way, hasn’t been ratified by the Germans, and the Spanish think the bailout “doesn’t carry economic policy conditions”.

So Spain has shockingly agreed to a bank bailout without conditions. Has Germany? The chips will commence falling, where they may, shortly. In the meantime, we are days from finding out just what Germany thinks when it has to ratify (that’s right, the ESM has still not been ratified by the one country which will fund the Spanish bailout) the direct rescue of the Spanish banks. Without conditions.

Recall how Mr. Azumi thinks this new plan is a major first step toward stabilization? It’s a shame he didn’t tell the Irish:

From the AFP: “Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.” And with Ireland on the renegotiation train, next comes Greece. Only with Greece the wheels for a bailout overhaul are already in motion and are called a “vote of Syriza on June 17.” And remember how everyone was threatening the Greeks with the 10th circle of hell if they dare to renegotiate the memorandum? Well, Spain just showed that a condition-free bailout is an option. Which means Syriza will get all the votes it needs and then some with promises of a consequence free bailout renegotiation.

It’s also a shame he also doesn’t seem to be aware that no one knows yet where all the money is going to come from.  Has he seen all that data on Spanish debt? Spain is Greece, only bigger.

A former banker puts it quite succinctly:

Because the Spanish government and banks have engaged in a vast coverup of the financial crisis, it is of course impossible to say how deeply the banks are in the hole. My best guess (based on the lending volume of Spanish financial institutions) is that the real number will be in the $300 billion range. This is a scam, a ripoff, a Ponzi scheme, not a national economy…(T)o save the credit of Germany and other solvent European countries, the best thing to do is to sacrifice Spain, and draw the line at helping the French banks (who own a lot of Spanish debt)…

Political cowardice in the face of financial scams on an epic scale is not exactly news these days, but the utter incompetence of the European finance ministers and lack of coordination among the international organizations involved in the deliberations are deliciously new. Never before in the course of human events have so few wiped out so much credibility for so many.

The problems now being created are not only economic, they are political:

Germany, loaded with cash, recently upped its retirement age to 67. Nearby France, almost insolvent, lowered its retirement age from 62 to 60 for certain workers. The former is supposed to lend cash to broke EU members, the latter not only cannot, but needs some itself…France is sending an ultimatum that its own citizens will work seven fewer years than Germans to enjoy the good life, while Germans — replete with historical baggage — not only will pay for it by giving up their retirement years, but ought to pay for it. Given the other overt and implicit EU member insults to Germany, the greatest German backlash in the last 80 years is not a matter of if, but when.

So, here are the conclusions we can draw. First, the scriptwriters for the virtual controllers of the Azumi bot in the Finance Ministry have run out of convincing lines to feed him.

Second, Azumi Jun is really a Seamoon covered with an artfully designed skin composite. Another creation from those wild and crazy guys at Maywadenki, Seamoons are “machines with lungs and vocal cords that ‘sing’ on command from a computer”.

Go ahead, get clicky with that video and see for yourself. It’ll only take a couple of minutes.

You have a better explanation?

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