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Japan inflation flat; household spending slips

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It seems likely that the BOJ will have to launch additional easing,” said Junichi Makino, a chief economist at SMBC Nikko Securities.

What an idiot!! Additional easing?? That will raise prices even more and cripple the domestic consumer market even more!! Is he crazy? Raise wages significantly! Put money in people's pockets and give them the time to spend it!!

Oh for the upteenth time.......

“Private consumption and exports are much weaker than what the Bank of Japan saw a few months ago.”

Private consumption will decrease with more easing people!!

I agree with Noriko Hama. Abenomics is Ahonomics.

6 ( +8 / -2 )

Geez where are the pundits now who said wages have increased and the economy is getting better?

4 ( +9 / -5 )

Now if Abe would just get his nose out of trying to remilitarize Japan and get back to Abenomics...

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I'd say I hate to say I told you so, but everyone knew this woud happen.

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Why it's almost like the last several months of the Abe administration pushing everything but dealing with the economy were a giant waste of time...

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A closely watched labor index also released Friday was at its strongest level in 23 years at 121 job offers for every 100 people looking for work.

So does this mean as the population shrinks there are less people competing for the growing number of McJobs? If so, not the road to growth and prosperity.

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What an idiot!! Additional easing?? That will raise prices even more and cripple the domestic consumer market even more!! Is he crazy? Raise wages significantly! Put money in people's pockets and give them the time to spend it!!

You are talking about a bunch of hereditary politicians who have never worked at a real job in their lives, and they are advised by lifetime academics who could not run a convenience store profitably. Yet they are the ones with our chequebook, spending the wealth of current and future generations. Raising wages and putting money in people's pockets would have the same result as QE, it would drive up prices and negate whatever increase in pay they received. Japan's problem is not a lack of capital.

The sad thing is that nature is already trying to correct the situation through deflation. Left alone, the economy would eventually find a bottom, and the start to grow again. But with 1.157 quadrillion yen of debt, which is accumulating interest, and 27% of all government expenditure going to service this debt, deflation is unacceptable. But the effect of all this printing, borrowing, and spending will only increase the distance of the fall.

Geez where are the pundits now who said wages have increased and the economy is getting better?

Probably looking for a way to blame the bad news on anything other than the fiscal irresponsibility of the public sector. They will blame the decline in the economy on the sales tax for negating the effects of the government's stimulus programs. They will overlook the fact that the tax increase was 3%, which would have been close to the amount of "price stability" (inflation) the government had hoped to achieve through QE. Tax or no tax, the goal was to increase inflation, and the net effect to the consumer would have been the same, he would be robbed of a percentage of his income and savings because the government has spent too much.

Now if Abe would just get his nose out of trying to remilitarize Japan and get back to Abenomics...

It's rather obvious that there is no "Abenomics", and even if there was, it is probably now too late for any reforms or changes to make a substantial difference. For all intents and purposes, and for all the additional debt incurred so far, Japan is probably in recession as we speak. And when the second quarter numbers are revised, they will be revised downward (as all previous numbers have been).

The "record amounts of cash" companies are sitting on took a hit in the stock market sell off, about $10 trillion in market capitalisation vanished earlier in the week. If you want to know why companies are holding onto capital, now you know why. The markets are now completely hooked on low interest rates and continued government stimulus, and are no longer relying on old fashioned things like sales, demand, and performance. If the stimulus stops, and/or rates are pushed up, we are going to be in for a much worse hit than 2008, and we won't be able to blame Bush for it. Instead of preventing the financial crisis from becoming like the Great Depression, all the intervention and debt might produce the opposite effect than was intended.

In the 70's there was a movement begun by socialists who hoped to topple capitalism. Their idea was that governments would be encouraged to increase welfare spending to the point that the expense would be unsustainable. The resulting collapse would bring about a "revolution" in which capitalism would be replaced by socialism. Looking at the direction the world's developed companies are headed in, one wonders if this movement is still alive and working.

-1 ( +6 / -7 )

A smaller population is NOT a bad thing. For an overcrowded country like Japan, population decline is a good thing. In 20~30 years time when Japan's population falls to about 90 million, the quality of lives of the people will increase as there is less crowding, less stress and more resources can be allocated for a smaller population.

0 ( +3 / -3 )

What a crazy system it is that is still being imposed on us in the 21st century - given the earth's limited resources, it is still seen as negative that a nation consumes less and positive when prices rise and we consume more. Didn't people learn anything from the excesses of the 20th century?

4 ( +5 / -1 )

That the labor market is tight is meaningless unless it includes the discouraged, in particular, women. When they finally appear in the statistics, then, the statistics will have some meaning and inflation start.Everything else, including oil price fluctuation, is not important here to decide a long term trajectory.

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Ah, the advancements of Abenomics.

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The Abenomics is a hoax to fool japanese people support his hawish security bills. The economy shall never recover under Abe, it just made situation worst.

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Sangetsu- that movement does exist and pure capitalism hasn't been used in a long time. But when the big crash comes from all this manipulation and unacceptence that markets need to go down sometimes, guess what is going to be blamed. Capitalism. Bubbles need to pop when they are supposed to pop and the long they keep trying to prop these fake markets up, like you said the harder the fall will be. I don't understand why speculators gamble in high risk investments and they just expect now governments to save their ass. Capitalism is dead. There is no free market and one the shit hits the fan those two will be to blamed and most people will buy it because they are just ask economically illiterate as most of the politicians making these stupid moves. You can just wave a magic wand and have people spend more money when you take away the purchasing power. This easing has nothing to do with improving the economy. They just spin it in the media for the masses. It's all about protecting their asses and bad investments.

If they really wanted to improve the economy cut taxes. People spend more and the money would move through the economy more quickly resulting in more sales tax receipts. And it would cause inflation because places would raise p product prices eventually.

Because they don't do this they are either dumb and failed economics 101 or just more concerned about their own pockets. I think it's a bit of both.

0 ( +3 / -3 )

There were 30% more deaths than births last year.

BOJ might pull a rabbit out of their Showa era hat, but not sustained growth.

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"If they really wanted to improve the economy cut taxes"

Japan IS cutting taxes -- corporate taxes. I'm sure everything is going to peachy as a result.

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sangetsu03 as always, your post are unbiased and to the point and reality of what is going on.

-5 ( +2 / -7 )

If they really wanted to improve the economy cut taxes.

not neccessarily. it depends heavily on the mindset of consumers at the time of the tax cut. if they feel positive about their future prospects, then they will spend. if not, then they will just save the money and wait for sunnier days.

here's another take on it:

http://graphics8.nytimes.com/news/business/0915taxesandeconomy.pdf

3 ( +3 / -0 )

The Abe administration and the Bank of Japan's Kuroda have failed to meet their 2% inflation target. The yen has depreciated more than 30% against most major currencies since Abe took office, pushing up import prices. Now is anyone going to take responsibility and resign? I doubt it very much.

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Meiyouwenti AUG. 28, 2015 - 02:57PM JST The yen has depreciated more than 30% against most major currencies since Abe took office, pushing up import prices.

Problem with Japan is that they import over 60 percent of the food. Many of the basic household goods are imported from China and other countries. The currency manipulation by Japan government has improved the bottom line of the debt at the expense of average Japanese citizens.

0 ( +2 / -2 )

...that movement does exist and pure capitalism hasn't been used in a long time. But when the big crash comes from all this manipulation and unacceptence that markets need to go down sometimes, guess what is going to be blamed. Capitalism.

"A program whose basic thesis is, not that the system of free enterprise for profit has failed in this generation, but that it has not yet been tried". FD Roosevelt

The Great Depression was of course blamed on capitalism, but when you look at what happened closely, it was not capitalism which caused the greater damage, but the intervention which followed it. Markets and economies collapsed in 1929, but they were recovering from this collapse while the New Deal was being created. It wasn't until after the New Deal was enacted that America, any by extension the rest of the world, fell into the deep depression. Had the federal reserve done the job it was intended to do, and prevented the run on the Bank of the United States, it is quite possible the depression could have been averted. The "Bank of the United States" was not sponsored by the United States, or affiliated with the government, but immigrants in New York did not know that, and many deposited their money there, including the bulk of small businesses in the New York area. But since the bank was owned by Jews, the federal reserve and other banks were reluctant to help. When the Bank of the Unites States failed, the depression began. Even so, the bank runs eventually stopped, unemployment stabilised. Then the New Deal was enacted, a country and system unused to the welfare state reacted in a negative way, and a depression became the "Great Depression".

This easing has nothing to do with improving the economy. They just spin it in the media for the masses. It's all about protecting their asses and bad investments.

The following is something I found in the Fiscal Times.

When you make it more affordable to invest in a particular thing, in the long run that leads to an increased supply of that thing and ultimately lower than expected prices.

Unless, of course, you keep supporting those prices with more interventions. We just can't face up to the fact that those investments were unjustified or that the policy was unwise. So we devote the nation's treasure to making the lies true.

A smaller population is NOT a bad thing. For an overcrowded country like Japan, population decline is a good thing. In 20~30 years time when Japan's population falls to about 90 million, the quality of lives of the people will increase as there is less crowding, less stress and more resources can be allocated for a smaller population.

Unfortunately, for governments population decline is a bad thing. This is because all government spending and entitlement programs are designed in such a way that they can remain solvent only if an ever larger number of people subscribe and pay. Without a growing population Japan's National Pension Plan, and numerous other entitlement programs cannot be maintained. If the population declines, you are going to be in for a bad time when your turn comes to retire. I hope you are saving a lot. But then again, with the government printing money to pay it's bills, your savings may be worth no more than toilet paper when it comes time for you to retire.

Didn't people learn anything from the excesses of the 20th century?

People have learned, governments have not. You yourself are probably careful not to spend more money than you earn, you cannot spend excessively as you will go bankrupt or worse. But your government does not apply anything resembling economic responsibility to itself. It is easy to be responsible when you are spending your own money, but you might not be as careful if you were spending someone else's, particularly if you are spending the money of people who haven't even been born yet, which is what your government is doing.

I am watching stock prices right now, and of course they are going up. They are going up because China had lowered interest rates (for the fifth time time year) to resuscitate the Chinese stock market. Stock prices are also going up because the BOJ has promised more welfare for the stock market if prices slide. In less than two years we have seen a 15% increase in Japan's debt, largely as the result of this stimulus nonsense. This was supposed to stimulate growth, and the amount of growth generated was supposed to pay off the extra money printed, borrowed, and spent. But right now growth is at a standstill. The stock market is flush with freshly printed and distributed easy money, but everyone else is no better off than before, and the government's debt burden on society is 15% heavier.

Because they don't do this they are either dumb and failed economics 101 or just more concerned about their own pockets. I think it's a bit of both.

They have been this way throughout time. Anyone who things politicians serve the people before they serve themselves is simply ignorant. They are buying your vote with your money, and getting a large cut for themselves in the process. That is the way it is done in a democracy. At least in a monarchy or theocracy the ruling class is honest in it's intentions. I love to rant against the system, as countless generations have, but in the end the best thing I can do is take advantage of it.

-1 ( +3 / -4 )

I keep telling the company I work for if they gave me any kind of salary increase I could contribute more to the economy...

1 ( +1 / -0 )

Japan inflation flat; household spending slips

And 2% inflation will not be attainable after all..

1 ( +1 / -0 )

Abenomics helps the rich not the poor,it is obvious by now that government intervention in Japan is a failure....

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OK, let’s put the blame on China and oil prices. Abe’s administration is not to blame at all, everything is out of their controls. Sh*t happens, you know. Forget about the inflation goal of 2%, it’s too hard to achieve. As a consolation, Abe is going to be around for quite some time because not a single person in Japan can challenge him. Get it right, Japan is democratic not at all authoritarian. Abe can get anything through without any sweat as seen from Secrecy Law and now change of Constitution. No, No, No, Japan loves peace, so it has the right to sell and bear arms and in the future Japanese soldiers will die with their allies. Bright Japanese students are expressing their freedom by starving themselves for some brief moment of flame. One of those four may turn out to be PM of Japan someday, they just have to learn politics from Abe. Heck, economists are sometimes proven wrong so why not get another sales tax increase in again, not to worry there are plenty of other excuses that can be used. Japanese people are so smart, well at least half of them believe so that Abe can make a change for them and go beyond the normal. You see the labour index still looks good, brought it out fast so that people can have a chance to appreciate. There must be more other good indexes or news to bring up, maybe mention about the debt levels.

0 ( +1 / -1 )

Geez where are the pundits now who said wages have increased and the economy is getting better?

Yubaru -- spot on. Amazing how we haven't heard from those folks in months. Guess us "Japan bashers" and "doom and gloom" folks who said that Abenomics was nothing more than good old-fashioned LDP pork-barrel spending, which would work no better than it had for the previous two decades, were right afterall, as sangetsu so well states.

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The real economy is not like a market. It takes time, especially if it's infrastructure as opposed to cutting withholding tax on wages, to feed into the entire economy. Nominal wage increases when labor market is tight and it's not tight enough yet although in some segments increase is already visible. A few years ago, no one was really sure about anything but now we have a clear case of U.S. and Europe. The previous policy didn't work well because the monetary and fiscal policy were not coordinated, in fact, sometimes contradictory to each other and the scale of the monetary policy was not adequate, a lesson U.S. took to apply after 2008.

-1 ( +0 / -1 )

"Guess us "Japan bashers" and "doom and gloom" folks who said that Abenomics was nothing more than good old-fashioned LDP pork-barrel spending,"

LOL. I suggest to take a look at other countries right now. Japan is still doing better than most. Canada is now believed to be in a technical recession, Australia is suffering from a plunge of business confidence, Brazil: recession, China of course is slowing down sharply, dragging down much of the rest of Asia. Europe's tribulations have barely improved since the depths of its euro crisis. And lots are doing...that's right....monetary easing.

One of the few bright spots is the US. True, Japan isn't doing better than the US, but is still doing better than just about everybody else.

-3 ( +0 / -3 )

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