The US TIPS curve has become inverted — US becoming the next Japan?

One could argue that this is a positive development for the US consumer because it could mean price stability. However this move in TIPS certainly raises the risk of near-term deflation, driven by weak demand growth. Anddeflation is notoriously difficult to get under control. This feels (though only in the near term) a bit like Japan, a nation quite familiar with zero to negative inflation expectations.

Read it at Credit Writedown

The US TIPS curve has become inverted

by Sober Look

US becoming the next Japan?

Dr. Housing Bubble — Japanification of US RE market?

The case of having a Japan like correction in our real estate market grows stronger as each year goes by.  The entire notion of zombie banks derives from the crisis in Japan.  Shadow inventoryand the suspension of mark-to-market accounting are part of the life support that is keeping many US banks operating.  Two decades later, with low interest rates and no signs of real estate values going up, the Japanese housing market is virtually stuck in a holding pattern.  One thing is now different however as Japan is now starting to run trade deficits.  Japan recently posted a record trade deficit because of a strong yen and rising imports on fuel.  Yet the real estate market has yet to recover and is back to 1980s values.  Can you imagine housing values in the US going lower or sideways well into the 2020s?  Hard to believe but let us examine a few areas where the pattern is playing out on a similar note with new data.

Read it at Dr. Housing Bubble
A mirror in the real estate sun – Japan posts record trade deficit while real estate values go deep into the 1980s. US has decade long collapse in real estate values in spite of record low mortgage rates. The path of two lost decades in US real estate values is looking very similar to Japan.
by Dr. Housing Bubble

Tim Duy: "No way to put lipstick on this pig"

Tim Duy at Fed Watch is perplexed:

The employment report polishes off what was already a depressing week. The turn of events in the budget negotiations was deeply distressing. It just seemed like it should be impossible to imagine that budget cutting is the order of the day when unemployment is over 9%, 10-year Treasuries hover near 3%, and a Democrat is in the White House. Yet possible it is.

The extent to which our leadership seems determined to follow in the path of the Japanese is absolutely stunning. My impression of the last two decades is that Japanese policymakers were never able to keep their eyes on the weak economy, instead always eager to turn their attention back to "normalizing" policy – raising interest rates, raising taxes, cutting spending. Our leadership suffers from the same obsession.

The employment report should be a wake up call. A slap in the face. A bucket of cold water poured over your head. But it won’t. I suspect it will be seen as further evidence that stimulus is pointless, that austerity is the only solution.

By trying to avoid becoming the next Greece, the US is becoming the next Japan.