business

Japan's spending slump eases as economy reopens

12 Comments
By Leika Kihara

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© Thomson Reuters 2020.

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I have a limited yearly bonus, no summer 2 monthly salaries. God bless me.

Good luck for wage recovery, especially to one of my brother in law.

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But inflation-adjusted real wages fell for the fourth consecutive month in June, clouding the outlook for an economy bracing for a prolonged impact from the pandemic.

The real adjusted wages have fallen conservative months, years under Abe , the virus is just an excuse to cover incompetence. Wake up, the government needs you to believe their lies. Don't buy into their narrative. The only authority you can trust is yourself.

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Consecutive, spell check

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why those figures need to be trusted??

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I reckon people who still have okay jobs have a lot of pent up demand for travel and larger purchases so a rebound may be quick.

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Ohhh economy reopens? it seems for me like it never been closed!

I'm just curious how long we will push deeper into recession before it becomes depression.

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What lockdown? Did I miss something?

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@Crickey

 

under Abe , the virus is just an excuse to cover incompetence. 

No it isn't. The virus has had a real, devastating effect on ALL the world's economies. The new corona virus not some Abe-linked conspiracy pertaining to Japan, believe it nor not.

Japan's economic situation is relatively not bad, but that's not saying much, given the bleak state of the COVID world. As a wage-earner, I'd rather be here than in most other countries.

@Lar Flint

I'm just curious how long we will push deeper into recession before it becomes depression.

That depends, obviously, on how quickly a vaccine can emerge, and on how much and how quickly the govt is willing to pour money into the economy.

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Hang one the economy was tanking as the artical says before the virus hit? Abenomics is a failure. The economy was technically in ression months ago. Now it's being hammered home just how incompetent the government is. For the 3rd largest economy it's sure scummy on financial help for tax payers who made it the 3rd largest economy.

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Yeah, what abject failure is, the world's 3rd largest economy.

If I were you, I'd move to the largest economy, I heard they're not scummy with financial help.

Second largest economy is good option too, heard economy is actually positive overall atm but something is dragging it down.

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@JeffLee

The virus has had a real, devastating effect on ALL the world's economies. The new corona virus not some Abe-linked conspiracy pertaining to Japan, believe it nor not. 

Japan's economic situation is relatively not bad, but that's not saying much, given the bleak state of the COVID world. As a wage-earner, I'd rather be here than in most other countries.

Very good arguments. and yeah, I hear you about the Japanese economy being not so bad. And for other reasons as well, I share your sentiment about rather living in Japan. I live in the US right now, and I’m working my way to move there. Hopefully within the next couple of years, but we’ll just see.

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-GBR48 from Japan Times basically answered my whole point for a long time.

Let's have a listen!

None of these concepts can survive within political systems. And governments do not reform themselves. They consider themselves to be perfect, particularly if they have just won an election, sanctifying their perfect nature.

The reforms that the article speaks of were expected to come with Abenomics, but after gathering the booty into their coffers, Japan Inc. didn't like the idea of reform and politely declined. And very little of the 'trickle down effect', dribbled down to the ordinary people.

It is unfair to blame the stats on the sales tax rise. Hyped by the media, world+dog went out and bought everything they were going to buy for the next six months before the rise, and then didn't need to buy anything bar essentials after it. Hence, sales were cannibalised from the post-rise period creating a bump, with a trough after it. This heavily magnifies the difference in figures.

There were other options to a rise in sales tax (although it is far too low for a first world economy, and far lower than most others). But no government is going to stop sluicing cash from public funds into private pockets, directly or indirectly. All governments have done this, but the 'one party state' stability of the Japanese government, post-war, has made them experts at it. That is why the Japanese state has a huge credit card debt, and why Japan Inc. has sacks of cash. If you are staring at a big hole in the ground and a big pile of soil, it isn't difficult to work out what happened.

Abe's big idea was for the BoJ to paper over the cracks in the economy, which it has done. He also fabricated a fiscal demon - deflation - to go with the political one - Kim Jong-un.

Deflation is only a bad thing if you are lazy and want to get rich sitting on your rear by your swimming pool. It doesn't affect the ability of a well-run company to turn an honest profit, and is nothing more than an indicator. One of the things it indicated was that Japan Inc. needed reform, but Japan Inc. has only reformed twice since the start of the Edo period (in 1852 and 1945). Both came courtesy of the US government. It didn't enjoy either and it doesn't want to do it again.

To compete, the obvious requirements are to loosen up the labour market from the current, frigid model, flip to promotion according to ability (not age), embrace new concepts via start-ups and the disruptive/sharing economy, and pay fewer staff more.

But none of these are seen as 'problems' by those in charge, who can rely on 57 varieties of Communist-level state support when the balance sheet goes red. Even if they no longer turn a profit, there will always be a bail-out to be had. With so little risk, why rock the boat by adopting nasty foreign behaviour?

The rise in nationalism, putting globalisation to the sword, and the consequent collapse in global growth, intensified by Covid-19, will see Japan Inc.'s declining position relative to the RotW PLC actually improve, as the state moves to prevent damage in the way it always has. Unreformed, Japan Inc. cannot compete on global terms, but it also cannot decline quite as dramatically as the rest of the world will.

I suspect this will be an opportunity for Japan Inc. to retrench and to celebrate its inflexibility as a benefit rather than a curse.

Post-Abe, the LDP is unlikely to swing further towards economic (or any other) reform. It is more likely to take the opportunity to quietly drop Abe's less popular policies - pro-tourism, pro-China, pro-global and pro-reform. Don't expect a Japanese Trump, but do expect a reversion to an earlier model. Something a bit more Showa era. Everyone loves a bit of retro. Young and female Japanese might not enjoy it quite so much, but in a nationalist world, you either do what you are told and fit in, or suffer the consequences.

Magic Monetary Theory may be invoked, or the public debt figure can simply be allowed to rise, to fund this. [Foreign] criticism of this can simply be ignored, as the Japanese financial position is mystically 'different' and foreign economists just don't understand.

The sales tax might even be reduced to reboot the economy when the virus passes. Under Abe, Japan dipped its toe in the globalised water, more than ever before. Too much risk. Too much loss of control. Too much consequential damage. Too many tourists. The desire to return to a simpler, 'more Japanese' way will score more votes.

Is this good for Japan? Not financially, but figures can be massaged or ignored. Not in the long term, but politics is all about the short term. Japanese culture will not evolve, as all healthy cultures do, but traditional societies operate under different rules, and can freeze their cultures in a past age, regardless of the damage it does (particularly to women).

Ideally, Japan and its financial power would have become an important link in a global push to mediate against climate change. Whilst the response to the virus is actually doing that by accident, much of it will not stick when the virus passes. The new world order, based on nationalism, will have no 'global' anything, so there will be no 'global psuh' for Japan to be part. As climate change hammers the country, it will just be more of the disasters that Japan has become used to.

What a country needs, what a country wants, and what a country gets are three entirely different things.

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