Japan Update: GDP Sinks, Record Trade Deficit, Fukushima Temperature Surpasses 752 Degrees, Pension Funds Nightmare Scenario

23 years into the depression following the Government and Central Bank sponsored the real estate and credit bubble in Japan, and with trillions of dollars wasted on Keynesian stimulus, there's still no end in sight, and things are actually getting worse and worse — depending on what the government will do, the end game is either going to be: massive multi-trillion default on the JGBs or hyper-inflation. Nice huh?

Here are main items from the past week or two:

Feb. 13 (Bloomberg) -- Japan’s economy shrank an annualized 2.3 percent in the fourth quarter, more than economists estimated, as slumping exports undermine a recovery from last year’s record earthquake. 

The contraction compared with the median forecast for a 1.3 percent decline in a Bloomberg News survey of 26 economists. Growth was a revised 7 percent in the previous quarter, the Cabinet Office said today in Tokyo.

Another report, another opportunity for the economists — usually referred to as "the useless bunch of highly overpaid ignorants" — to prove how useless they are and how little they understand about the economy.

Feb. 19 (Bloomberg) -- Japan posted a record trade deficit in January as the yen’s strength and weaker global demand eroded manufacturers’ profits and slowed the nation’s recovery from last year’s earthquake and tsunami. 

The gap widened to 1.48 trillion yen ($19 billion) and shipments dropped 9.3 percent from a year earlier as energy imports surged, a Ministry of Finance reported in Tokyo today.

[...] In Japan, the country’s trade deficit of 2.49 trillion yen in 2011 was the second largest since World War II. That also contributed to the nation’s current-account surplus sliding to a 15-year low in 2011.
[...]
“Clearly Japanese manufacturers are struggling,” Hiroshi Shiraishi, an economist at BNP Paribas SA in Tokyo, said before the report. “We aren’t really expecting a major pick-up in external demand because the U.S. and Europe are undergoing balance sheet adjustments.”
[...]
Japan’s exports to the EU, its third-largest export region, fell 39 percent from 2007 to last year, according to Ministry of Finance figures.
[...] 

With global demand for imports out of Japan dropping, and energy imports into Japan surging, I guess that the BoJ must be very clever to try to weaken the Yen, right?

 And in addition to the economic depression, the natural and human catastrophes are pilling in. Here's an update on Fukushima — an made in Japan, man made global disaster:

Feb. 13 (Bloomberg) -- Tokyo Electric Power Co. said the temperature in one of the damaged reactors at its Fukushima nuclear station rose to levels above safety limits even as it injected increased amounts of cooling water. 

One of three thermometers indicated the temperature at the bottom of the No. 2 reactor pressure vessel rose to 93.7 degrees Celsius (200.7 Fahrenheit) today, higher than the 80 degrees limit, Ai Tanaka, a spokeswoman for the utility known as Tepco, said by phone today. 

 But Zero Hedge claims:

But major Japanese news sources Yomiuri and Jiji note that the thermometer in reactor 2 has since climbed to 272.8 degrees Celsius, and then hit the upper limit of the thermometer at 400 degrees Celsius (752 degrees Fahrenheit).

Finally, pension funds are struggling in Japan with rates at record 0.5% for the past 2 decades or so, and equities not performing globally. Fraud and lies will not help solve the issues.

Feb. 23 (Bloomberg) -- Japan’s financial regulator ordered AIJ Investment Advisors Co. to halt its business after finding the asset manager’s clients funds of about 183.2 billion yen ($2.3 billion) may be “adversely affected” and started a probe into the 263 asset managers operating in the nation. 

“We’ve ordered AIJ to halt business for a month in order to safeguard investors, as it appears client assets have been adversely affected,” Financial Services Minister Shozaburo Jimi told reporters at a briefing in Tokyo. The regulator is still investigating the firm and can’t comment on losses. The suspension lasts from today until March 23, the regulator said. 

AIJ, a Tokyo-based asset-management firm, may have lost most of the 200 billion yen ($2.5 billion) it manages for companies’ pension plans, the Nikkei newspaper said today, citing unidentified securities investigators. Regulators have been investigating AIJ since the end of January and are unable to explain where some money went, the Nikkei reported. 

Japanese pension plans have been suffering from two decades of slumping markets and an aging population. Alternative investments were becoming one of the options for the retirement funds, which have traditionally invested mainly in bonds, as ways to maintain steady returns and fund retiree benefits in a country where more than one in five people are over 65. 

AIJ, led by Kazuhiko Asakawa, was established in April 1989, and had 120 clients including pension plans with 183.2 billion yen in assets as of the end of 2010, according to a statement from the Financial Services Agency, adding it has 12 employees. 

Only 12 employees?? Wow, you might start from here. How can a firm with 12 employees manage 120 clients and manage many billions of asset?