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Japanese Cash Earnings Spike Most In 21 Years (But Spending Slump Continues)

Courtesy of ZeroHedge. View original post here.

In the best example of how Japan’s balance-sheet-recession has crushed the animal spirits within it is the dueling headlines tonight as cash earnings surge 3.6% YoY (most since 1997) but household spending contracted YoY for the 5th month in a row.

Japan’s labor cash earnings exploded in June (rising 3.6% YoY – the most since 1997) , more than double the +1.7% YoY expectations…

But, household spending continued to contract, dropping 1.2% YoY in June - the fifth month in a row of annual contractions…

Debt reduction or saving is the preferred allocation of excess in the land of the setting sun. As Richard Koo writes so clearly,

The key difference between an ordinary recession and one that can produce a lost decade is that in the latter, a large portion of the private sector is actually minimizing debt instead of maximizing profits following the bursting of a nation-wide asset price bubble.

Coming to America, soon.

So now what does the BoJ do?

Well get a clue from Reuters, who reports that The Bank of Japan had considered raising rates later this year before market turbulence in January and weak inflation data scuttled the plan, citing unidentified people familiar with the BOJ thinking.

“Everyone at the BOJ knows what they’re doing now is quite radical and needs amending at some point,” another source said.


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