business

Japan faces recession risks with dearth of ammunition

11 Comments
By Leika Kihara and Stanley White

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11 Comments
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Face the facts; Abenomics is an abject failure because it is based on Keynesian tomfoolery. Raising the consumption tax again will inevitably have the same effect of pushing the domestic economy into recession again(same experiment = same results).

The BOJ have no tools for anything.

2 ( +5 / -3 )

Face the facts; Abenomics is an abject failure because it is based on Keynesian tomfoolery. 

Fact: The Japanese economy is considerably better now than before Abenomics was launched. Remember when Japanese workers got year after year of wage and bonus cuts and negative GDP was common? Some people have short memories

"...using government spending as a primary policy tool to boost employment and spur inflation - an idea dubbed “Modern Monetary Theory” (MMT) ...are off the table for now..."

Why? Because it works?

The BOJ have no tools for anything.

That's what they said before negative int rates, before yield curve control, before massive bond purchases, and so on and so on. Every time the boffins say the BOJ cant do anything, it does something.

4 ( +6 / -2 )

It's nice to have 2 experts here on JT to hash things out for the rest of us.

-1 ( +2 / -3 )

@Bugle Boy

It's nice to have 2 experts here on JT to hash things out for the rest of us.

You're welcome. I like to post here while taking a break from my job of writing about Japanese business and finance. Check the archive for more of my insights.

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Here's the reality; Keynesian theory is what has been the impetus for the many poor economic policy decisions in Japan since at least the 1960's. The ramifications of those decisions aren't clearly felt(usually) for a decade or more.

Regarding Abenomics, that's little more than the same actions taken after the real estate market bubble burst revisited. Abe devalued the yen by over 30% (great for exporters, but terrible for imports and the public, i.e. consumers who heavily rely on imported products). The saving grace for Abe has been the fortunate crash in the oil prices. If/when oil prices return to the $100 mark, there will be great pain.

And let's not forget that what drove the rush to Abenomics was the so-called Lehman Shock, itself the red-headed stepchild of MMT.

-1 ( +0 / -1 )

This article is quite informative :

Central Banks Are Driving Us Toward A Stagnant Global Zombie Economy | Zero Hedge https://www.zerohedge.com/news/2019-04-09/central-banks-are-driving-us-toward-stagnant-global-zombie-economy

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@JeffLee

Maybe your situation is different but I don’t know many people getting financially healthier.

Many Japanese are stuck in dead end jobs with no chance of a future.

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I Think the people who needs to face facts are you guys.

Abe, just like every other PM before him is dealing with the unfair treaty forced by the US on Japan, the reason for the lost decades.... But Let's ignore facts, inconvenient to talk about what America did to Japan's economy for the last 30 years.

0 ( +0 / -0 )

@Herve

Keynesian theory is what has been the impetus for the many poor economic policy decisions in Japan since at least the 1960's

Back when Japan's economy was the envy of the world? Um, OK. When Keynesian theory was in vogue in the postwar years, the West experienced a growing middle class, rising living standards, global economic dominance and no financial crises. That ended after the Reagan-Thatcher "revolution" of neo-classical, "free market" economics. Since then it's been hello, stagnation! Hello, rocketing private debt, Hello, Communist China as No. 1.! And middle class households that need 2 full time incomes just to tread water.

@kurisupisu

Maybe your situation is different but I don’t know many people getting financially healthier.

Take a look around, Housing, infrastructure and public services in Japan are way, way better now than when I first stepped foot here a couple of decades ago.

0 ( +0 / -0 )

@JeffLee

Houses are still constructed for a 30-40 year period after which they will be torn down.Apartments are the only choice in some cities and good luck paying death duties on those!

By infrastructure you mean roads I guess? Well apart from laying different new surfaces or upgrades to LEDs then there aren’t really many areas to which one can go that haven’t already been built, are there?

Apart from higher sea walls in Tohoku and replacing defective weak highways ie Hanshin highway in Kobe, then I can’t see who really benefits

Car ownership is on the decline and those taking the train largely give their money to private companies.

You don’t mention which public services but having just renewed my driving licence after five years, I see the same the same exact number of counters and the same quantities of paper given out to each and every candidate.The hanko system is still in play-no tech revolution in the public sector yet.

For the local elections in my area, there was a candidate on the microphone spewing out facts and figures and opinions about politics. Stood next to him was a homeless man selling the Big Issue.Ironic?

In a local hospital on my wife’s ward only 12% of the staff are married.

An anomaly?

Perhaps not.

With fewer births every year and more deaths who will generate funds for ‘public services’ ?

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