Back in early 2013 we warned in article after article, that as a result of Abenomics, Japan is facing an economic disaster of epic proportions.

We recapitulated this topic most recently in June, when our forecasts were proven correct, and we summarized the legacy of Abenomics as follows: Japan's Greatest "Misery" In 33 Years. Of course, starting in 2012, throughout 2013 and into 2014, the mainstream media, like a dutiful little cheerleader has been encouraging the devastation with the argumentum ad populum (and ad baculum, and ad ignorantiam) "what other option does Japan have."

Well, one option was simply not to engage in economic suicide. But then again it was never about the economy: it was all about the BOJ's monetary stimulus that would allow the US stock market several more months of fungible bliss as Japanese reserves found their way into the US stock market at a time when the epic illiquidity in the US Treasury bond market (as we grew tired of explaining in 2013) forced the Fed to begin tapering in December (and conclude in October, or a few months before it is forced to launch yet another QE episode).

This likely explains why just like the media, Goldman, which would do anything to revel in yet another year of soaring bonuses, was a fervent supported of Abenomics, knowing well what the impact of $75 billion in Japanese liquidity would have on the S&P500, and thus Goldman's bonus pool, all the while explaining away the ongoing catastrophe of the economy with the magical "J-Curve": you see, Japan's miraculous export-boom driven recovery was always just around the corner... after all the J-curve is never wrong.

Except this time.

And now that Japan has served its purpose, with the Nikkei225 well below its January 1 level and unlikely to repeat last year's performance (in fact it will be lucky not to plunge by 10-20% by year end as the momentum chasers have long gone, just as the cartoonish government dumps the people's pensions into 30x P/E stocks and destroys what little peace of mind Japan's future retirees may have), Goldman has finally turned the corner and is now saying what we warned would happen in Japan well over a year ago.

From Goldman's Naohiko Baba:

Japan Focus of the Week: June wages disappoint; watch for BOJ’s economic assessment Slowdown in June wages, special wages disappoint June total cash wages rose 0.4% yoy, decelerating slightly from May (+0.6%). Basic wages turned to a small growth, but overtime wages decelerated. Special wage, reflecting summer bonuses disappointed with only a small +0.3% increase. Real disposable income drops sharply again in June / large negative GDP growth unavoidable for Q2 Based on the Household Survey, Q1 real spending rose 4.6% qoq on rush demand before the tax hike, but the Q2 pullback was higher at -9.4% qoq. One explanation was decline in real disposable income, which declined -8.0% yoy in June and -6% yoy on average for Q2. The difficult income environment is reflecting in consumer behavior. June production declines far steeper than expected Production decreased 3.3% mom in June (May: +0.7%), a far steeper decline than the market consensus (-1.2%) and the production outlook (-0.7%). Producer shipments were also down 1.9% mom in June, and this resulted in a sharp rise in inventories (of +1.9%).

Just as Abenomics is preparing to hit its 2-year anniversary, Japan's economy is on the verge of recession. And here is Goldman's punchline, one whose arrival we warned was only a matter of time.

The greater-than-expected weakness in the consumption snapback signals significant downside risk to our forecast of 4.6% decline for Q2 real GDP (sequential annualized). While we expect lower imports, higher inventories, and other factors to support GDP to some extent, we see negative real GDP growth of around -6.5% as likely, based on the data currently available.

Considering in Q1, Japan's GDP grew by a front-loaded 6.7%, the nearly 13% plunge to a -6.5% annualized contraction would be the biggest sequential GDP drop in Japan's history. As we showed two weeks ago:

In short: Japan's Keynesian lunacy is about to result in the worst economic collapse since the Lehman bankruptcy. Congratulations tenured ivory tower economists: your "theories" have just crushed another country.

As for Abe, he still has time to develop another mysterious case of diarrhea and to take his second and final leave from politics, leaving some other unlucky soul to pick up the pieces from his disastrous policies.