business

BOJ keeps economic outlook despite recession

20 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© 2014 AFP

©2024 GPlusMedia Inc.

20 Comments
Login to comment

Stand pat? There's nothing left to do but sit back and cross your fingers and hope that this works. Perhaps add a few trillion more yen in stimulus next year while watching the yen plummet. Kuroda is joking trying to make it sound as if they're not doing anything more to undermine the currency, it's too late the damage is done. We've all got a front row seat to the boldest socio-economic experiment in modern times. Do you like what you see?

0 ( +1 / -1 )

I think we all understand now that Kuroda inhabits la-la land.

"Do you like what you see?"

I was more terrified by what I saw in 1992 and 2008. The banks and corporations kicked the legs out from under the economies of the developing nations, and are today sitting on record profits and cash while the rest of us suffer.

We need to have the govt and central banks fix things, before the banks scr*w us one more time. Unfortunately, officials like Kuroda are the wrong people for the job.

0 ( +2 / -2 )

The banks and corporations kicked the legs out from under the economies of the developing nations, and are today sitting on record profits and cash while the rest of us suffer.

Let me see here, last year 70% of Japanese companies reported a loss. I would guess these companies aren't sitting on any record profits, are they? Panasonic, Sharp, and Hitachi have posted profits this year, but these profits are a scant fraction of the losses they have incurred over the past few years, so I would guess they aren't sitting on much cash either.

Next, the big automakers had a pretty good year, but not in Japan. None of them earned a yen in profit on their Japanese sales, all their profit was made overseas. This profit was taxed overseas, and it will probably be reinvested overseas, right?

The banks have had a great run up in stocks. Companies have seen about $1 trillion in stock-value increases. But why? Most of these companies were profit-neutral, some earned a profit, many made a loss, yet their stock prices went up significantly?

Your government and central banks decided to implement easy money policies, which allowed these companies to issue debt to buy back their own stock, and thus drive up it's price, even while their companies were earning little or no profit. Executive pay is based on stock performance, not profit, so these executives have found a way to bump up their pay without having to make their companies perform.

You can bet the families of Kuroda, Aso, Amari, and Abe will be able to find good jobs in these companies in return for the good work they have done to bump up executive pay. But that's how politics works in the real world. You make a big mistake when you believe that the government exists for the good of the people, and that the policies they create benefit you and I. The banks and corporations do not own politicians, the politicians own the banks and corporations, and that has always been the case.

There are no "record profits" in Japan. There are no piles of cash, there is only a yen value assigned to a piece of paper which is a share in a company which was inflated in value because money borrowed from the central bank caused a demand increase when it was used to buy such shares.

GDP fell by 1.6% in the Q3. If there are record profits, and companies and banks are doing so well, why did GDP decrease?

-2 ( +3 / -5 )

The banks and corporations kicked the legs out from under the economies of the developing nations, and are today sitting on record profits and cash while the rest of us suffer.

You're suffering? Maybe you aren't playing your cards right? You analyse stocks, I recall, and the stock market has been going up. Did you pick a bunch of losers? I'd have thought stock market folks would have been making a killing in recent years, despite the evil banks and corporations.

3 ( +3 / -0 )

You're suffering? Maybe you aren't playing your cards right? You analyse stocks, I recall, and the stock market has been going up. Did you pick a bunch of losers? I'd have thought stock market folks would have been making a killing in recent years, despite the evil banks and corporations.

He said a few months ago that his portfolio had doubled since 2008, but then he wouldn't have had to do anything special, as the market itself has doubled over the same period. My portfolio doubled between 2008 and 2009, and has continued to do well. I am not doing as well as I would like, but I am not suffering, mainly because I depend on myself to make ends meet, rather than a bank, company, or government handout.

-1 ( +2 / -3 )

"You analyse stocks, I recall..."

No, I write/comment on Japanese business and the economy.

"He said a few months ago that his portfolio had doubled since 2008,"

Actually, since around late 2009. That's right, but it was after it lost about 40 percent of its value thanks to the subprime-Wall St. scandals, which wiped out trillions of dollars of wealth from people like me around the world.

"Suffering" as in low GDP growth and stagnating, if not falling, real wages. Those are the realities of post 1991 Japan and post 2008 USA. Guess what folk,s those years marked financial crises not government crises. IE, the banks, etc. inflicted the wealth destruction, not the governments.

Indeed, since then, the banks and corporates have been relying on the govt and central banks - with stimulus, dereg. etc., - to fix the damage they created.

As for Japan's rising profits, read this:

http://www.bloomberg.com/news/2013-11-17/japan-inc-profits-double-as-cost-cutting-ceos-set-recovery-pace.html

0 ( +0 / -0 )

If Abe, Amari, Aso, and Kuroda were like the samurai of old, they would be contemplating seppuku by now.

What is amazing is not that Japan's monetary easing, asset purchases, and stimulus spending failed to generate GDP growth, but that the Japanese government and economists (including economists outside Japan) believed that it would.

Is modern economics that far detached from basic common sense? Economics is simple cause and effect, and involves repatively simple math. But like in other sciences, economists are financially or politically motivated to produce results which comply with the desires of those who pay them, or which fit their own ideological outlook.

Japan's basic problem is demographics, namely the rapidly falling population. The cause of the falling population is absurdly simple, it is simply too expensive to raise children in Japan. Your average Japanese (politicians not included) has a pretty good understanding of math. He can look at his present and future salary, and the cost of raising and educating a child. When he subtracts the latter number from the former, he will likely determine the cost to be too high.

The deflationary cycle Japan has found itself mired in is a natural reaction to the current situation. The combination of an uncompetitive business environment, an overly-protected domestic economy, heavy regulation, and heavy taxation have pushed the cost of living higher than people find acceptable. So the people consume less, and have less children. Left alone, prices would eventually find a floor to settle on, consumption would resume, and growth would return.

But the current policy of increasing inflation while simultaneously raising taxes only bumps up an already overly-high cost of living. The result is even less consumption, even fewer children being born, and economic collapse.

Our politicians and central bankers are like the doctors of the middle ages, whose main remedy for all illnesses was to bleed their patients. This always hurt, and never helped, but it took doctors centuries to learn that their treatment was useless. How long will it take our politicians and central bankers to learn the same thing?

-2 ( +2 / -4 )

@Sangestsu

"so I would guess they aren't sitting on much cash either."

Your "guess," once again, is wrong. From this week's Economist: "Japan’s private companies...sit on ¥229 trillion ($1.9 trillion) of cash and deposits, according to the Bank of Japan.....But real wages fell by 2.9% in September."

"The combination of an uncompetitive business environment, an overly-protected domestic economy, heavy regulation, and heavy taxation have pushed the cost of living higher than people find acceptable."

Asia's highest costs of living can be found in Singapore and Hong Kong, which are also the regions's great bastions of business-friendly capitalism: with the least protected economies, lightly regulated and low taxation. So sorry, but "liberalizing" economies is what often pushes up prices.

1 ( +1 / -0 )

I am not suffering, mainly because I depend on myself to make ends meet, rather than a bank, company, or government handout.

Bingo, I feel the same way. Whether I like what the politicians and central bankers are doing, I can't change the cards they are dealing, so I play those cards as best I can. Dumping yen has served me reasonably well under Kurodanomics.

the banks, etc. inflicted the wealth destruction, not the governments.

It's easy to lose money and blame it on someone else. At the end of the day, people need to take responsibility for their own wealth themselves, and humbly learn from their mistakes.

-1 ( +1 / -2 )

At the end of the day, people need to take responsibility for their own wealth themselves, and humbly learn from their mistakes.

You have a yen creation machine??? Brilliant advice there, there's a global economic systemic meltdown going on and the solution is for everybody to become currency traders.

1 ( +2 / -1 )

At the end of the day, people need to take responsibility for their own wealth themselves, and humbly learn from their mistakes.

If everyone took responsibility for their own wealth, there would be no employees anywhere, and society wouldn't be able to function. Someone needs to do the work, and those people expect for the person/company they are doing the work for to appropriately compensate them.

-1 ( +0 / -1 )

A global economic systemic meltdown? To me things look relatively better in other places than they do in Japan. And there's no requirement to keep the fruits of my past labour here, subject 100% to the impact of the prevailing political winds in Tokyo.

and the solution is for everybody to become currency traders.

Call it what you will, but the approach of holding one's savings in yen over the past 2 years has netted a loss in value of some 30%. It's not as bad in my (diversified) case.

If everyone took responsibility for their own wealth, there would be no employees anywhere

That makes no sense to me I'm afraid.

Someone needs to do the work, and those people expect for the person/company they are doing the work for to appropriately compensate them.

Work is work. Returns on investments aren't guaranteed. If you are ultra rich and have a private banker, we do need to make decisions for ourselves and accept responsibility for the outcome.

0 ( +1 / -1 )

Basically unlimited JGB buying with unlimited funding from the bank of Japan-what could go wrong? Meanwhile,the cost of living rockets up for the average Taro! Let's beat deflation by paying more for food,transport,clothing etc? And how does Abe expect to rally the average Japanese to have kids while it takes 80000 yen to kit out a JHS kid with a school uniform towear?Factor in food,holidays,school excursions,web access etc-Abe wants it all more expensive! I know companies already unable to function now-killing consumer demand (worse recession?) even more will lead to mass bankruptcies. The rest of the world in deflation and Japan in inflation? Where would I produce things to export? Certainly not in a country where already too high prices go up more? This sounds like political suicide to me.

0 ( +0 / -0 )

Like a ship captain you need to be able to read the winds and tides and change your course as required to sail these financial and economic seas.

The yen is weak use that to your advantage, sit on your hands whining and complaining isn't going to get no where, same when the yen was strong you need to trim your sails to the conditions.

I love the weak yen right now, if you don't like the situation you find yourself in then change it, you are the only one who can do anything about it, don't blame the economy, abe, the tax hike, the weak yen or anything else, blame your self and fix it.

In every situation there is opportunity look for it and work it.

-1 ( +1 / -2 )

On that I agree with you 100%, comrade.

1 ( +1 / -0 )

As for Japan's rising profits, read this:

You are making me to read an article for the third quarter of last year? What does anything which happened a year ago have to do with right now? A decrease in GDP is caused by a decrease in economic activity, which does not happen when companies are earning good profits, right?

You have a yen creation machine???

Luckily, I get paid in dollars. I exchange these dollars for yen, and as I am getting more and more yen for my dollars, apparently people are seeing less value in the yen. If you are paid in yen, you have seen a great deal of the value of your savings evaporate into thin air over the past three years.

If everyone took responsibility for their own wealth, there would be no employees anywhere, and society wouldn't be able to function.

Why not? I am not an employee, and I make enough money to get by. There is such a thing as working for yourself. Another term for "employee" is "wage slave". At least when i work for myself, I don't have to grovel for a raise or promotion. If I want more money, I find new ways to make it. It isn't especially easy, but on the other hand, I am my own man. There is a lot to be said for personal and economic freedom. If you let other people take responsibility for your wealth, don't be surprised if you never have any wealth.

The problem we have in Japan is that too few people have the courage to work for themselves. It is people who create businesses, and businesses which create work for employees or other businesses.

-1 ( +3 / -4 )

sangetsu03

I am not an employee, and I make enough money to get by. There is such a thing as working for yourself. Another term for "employee" is "wage slave". At least when i work for myself, I don't have to grovel for a raise or promotion. If I want more money, I find new ways to make it. It isn't especially easy, but on the other hand, I am my own man. There is a lot to be said for personal and economic freedom. If you let other people take responsibility for your wealth, don't be surprised if you never have any wealth.

The problem we have in Japan is that too few people have the courage to work for themselves. It is people who create businesses, and businesses which create work for employees or other businesses.

Absolutely, too many people are either too lazy or too scared to have a go and make it work so they are wage slaves, their choice !

Working for yourself is the way to go.

On another point you made, the value of peoples savings is only affected if they take that money overseas or buy imported goods.

Yen in the wallet is still worth the same amount as yen in the bank no difference ! 10,000 Yen kept in japan is still 10,000yen. If you let other people take responsibility for your wealth, don't be surprised if you never have any wealth.

-2 ( +1 / -3 )

Luckily, I get paid in dollars.

Why do you get paid in dollars in Japan if you don't work for anybody?

0 ( +0 / -0 )

Call it what you will, but the approach of holding one's savings in yen over the past 2 years has netted a loss in value of some 30%. It's not as bad in my (diversified) case.

No. When the subject is about macroeconomics, it's useless to discuss ultra micro.

With the devaluation of yen, there are corporations in Japan that are netting record profits as a result of ROI overseas or high margin in exports.

30% in devaluation doesn't mean people in Japan are subject to 30% increase in costs. If that's the case, the CPI would be reflecting those numbers.

-3 ( +0 / -3 )

earlier calls for Tokyo to press on with tax rises aimed at generating fresh revenue to trim an enormous national debt.

"Fresh revenue" won't trim the debt if the government keeps spending money it doesn't have."Fresh revenue" will be extremely meager if the economy continues to slide.

There's the issue of stagnant wages which won't rise in the near term, so consumer spending will not grow enough to make a huge difference. High business taxes don't incentivize companies to give raises.

“The growth data have been negative for two quarters in a row, which shows that the economy is in a bad state,” he said.

Mr Ueno is absolutely right. PM Abe, BOJ governor Koruda, and the rest of them are proceeding as if it were otherwise.

To trim the debt, the economy has to generate more revenue, not less. The combination of taxation, deficit spending, and printing money will only aggrievate an already bad situation.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites