business

Japan slips back into recession in July-Sept quarter

81 Comments

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

© 2015 AFP

©2020 GPlusMedia Inc.

81 Comments
Login to comment

Abenomics = The single greatest economic failure of the Industrial / Post Industrial Age.

It was a scam to use massive amounts of taxpayer funds to pay for pork belly projects of the LDP's cronies in the construction industry for kickbacks. Even a first year business school student could've told you that Abenomics would not work.

9 ( +15 / -6 )

Analysts broadly expect the economy to pick up in coming quarters, as Abe is seen preparing a fresh stimulus package to boost growth.

Yeah, how many times have we been around this carousel of speculation? Let's just face the music - Abenomics has failed & the recession will only get worse. You can't 'prop up' a nation in decline, regardless of cash OR policy.

7 ( +10 / -3 )

Japan slips back into recession in July-Sept quarter

so normal transmission has been resumed...

5 ( +7 / -2 )

The result marks a fresh blow to the prime minister’s eponymous “Abenomics” policy blitz of fiscal spending and aggressive monetary policy easing aimed at reviving the world’s third-largest economy.

Even the media has stopped mentioning the original third arrow (structural reforms). Abe has lost the benefit of the doubt that it originally was given.

Analysts broadly expect the economy to pick up in coming quarters, as Abe is seen preparing a fresh stimulus package to boost growth.

Yeah! That'll bring sustainable growth to Japan's economy, just like it did every other time the government did so over the past 25 years, leading to Japan's nominal GDP to SHRINK, while other economies around the world have doubled, tripled, etc.

the central bank ... has embarked on an aggressive bond-buying program aimed at ending deflation and boosting growth.

No, financing the government's out-of-control spending is what it's aimed at. Loading the commercial banks with huge amounts of reserves doesn't boost growth, as today's figures show.

The best thing for the economy would be for the government (politicians and bureaucrats included) to resign en masse.

6 ( +9 / -3 )

Doing the same old things more, but with new slogans, didn't work? I know-- let's all work even harder!

8 ( +10 / -2 )

Another triumph for the glorious Abenomic miracle.

7 ( +9 / -2 )

It's lucky Abe is out of the country so that "journalists" cannot ask him about the latest failure of Abenomics.

Analysts broadly expect the economy to pick up in coming quarters, as Abe is seen preparing a fresh stimulus package to boost growth.

It's the same old LDP approach. It hasn't worked the last twenty times they tried it, but they are incapable of doing anything other than squander money they don't have on things that aren't needed.

9 ( +12 / -3 )

AbeFAILnomics

3 ( +6 / -3 )

These Abenomics arrows keep missing their mark and hitting Abe in the foot.

6 ( +7 / -1 )

"Analysts broadly expect the economy to pick up in coming quarters"

How many times have we heard this now? And how many times has that not been the case? The evidence that Abenomics -- a name you really only hear from critics these days -- does not work is clear, and yet the government will not accept it or cease spending taxpayers' money and praying that the economy will just happen to reverse itself.

6 ( +10 / -4 )

Recession/economic contraction in Japan is not good for the region. Japan should become integrated in the region economically and politically. For that to happen, Abe has to go, and perhaps find part-time work as a security guard at Yasukuni.

9 ( +10 / -1 )

It's not so much that Abenomics didn't work and never could - it's that the third arrow of Abenomics (the most important one) was dropped on the ground - never fired.

And the horse has since trotted off in the wrong direction.

Abe has proven to be another sad failure despite the promising initial "talk", and I'm left hoping for a new samurai in shining armour to come and take the reins.

Japan's problems are not going to be resolved by the government spending money and creating regulations, the problem IS the government spending money and not removing counterproductive regulations.

4 ( +5 / -1 )

For The First Time Ever, Japan Enters A Quintuple-Dip Recession (Courtesy Of Abenomics)

6 ( +7 / -1 )

Don't worry, they'll add three more arrows which would total to nine. Nine is a good number.

9 ( +10 / -1 )

The result marks a fresh blow to the prime minister’s eponymous “Abenomics” policy blitz of fiscal spending and aggressive monetary policy easing aimed at reviving the world’s third-largest economy.

The problem is that the spending and monetary easing don't mean anything unless you get to Abe's "third arrow" of structural reform, and Abe has never actually had a "policy" for that third arrow. All he's had are slogans. No plans, no policies, no practices, just the constant repetition that one day he's going to make Japan or Japanese people "shine". He's not leading on this issue, he's treading water.

american_bengoshi NOV. 16, 2015 - 10:20AM JST Abenomics = The single greatest economic failure of the Industrial / Post Industrial Age.

Let's not get too deep into hyperbole. The PRC's Great Leap Forward economic policy caused an estimated 18-45 million deaths. Abe's three arrows have failed, yes, but you'd be hard-pressed to provide evidence they've killed anywhere near that many people.

9 ( +9 / -0 )

Better wealth distribution is the answer--how many times does it need to be said.

7 ( +9 / -2 )

The Japanese economy shrank 0.2% in the July-September period, the government said Monday, slipping into recession for the second time since Prime Minister Shinzo Abe came to power nearly three years ago.

Nothing newsworthy here. Was completely predictable as Abenomics is nothing but smoke and mirrors and the fundamentals of the Japanese economy are completely out of whack, and are just getting thrown more out of whack with all the BOJ spending and "stimulus packages". The pattern of a couple of quarters of minimal growth, followed by a couple more of decline, is going to be the pattern for the Japanese economy for the foreseeable future. Unless things totally collapse.

5 ( +9 / -4 )

Let's get serious about how bad these statistics could have been if it hadn't been for the extra holiday we got this year with the Silver Week.

Don't want to say I told you so but 3 years ago on here me and others, such as SmithinJapan, were saying Abenomics would be a debt ridden path to nowhere, while Nigelboy and JeffLee were saying otherwise.

I told you so.

7 ( +12 / -5 )

The is no panacea for economy, the sustainable solution is hardworking and innovation, especially for Japan with limited natural resources.

However, the Japanese are already the most hard-working people in the world, the only solution available is innovation.

Only innovation can keep japan ahead of the world, otherwise, it's impossible for Japan to win the competition of sweating workshop against China.

Unfortunately, we find no groundbreaking innovation in Japan in recent year, but China have successfully copied the technology of high-speed train and nuclear reactor, which is the core of old innovation 20years ago of Japan.

2 ( +6 / -4 )

Abe doesn't care about these figures anyway. He only cares about supporting the 10% of the country that benefits from his reverse Robin Hood economic policies. Japan's feudal rotten borough election system will re-elect the LDP regardless as Abe buys the necessary votes with our money. There will likely be some growth next quarter, then more decline, particularly with more sales tax increases on the way. The normal people here will have a harder time with less money, but that will be partly balanced by more Chinese tourists and more mindless construction. As the yen weakens and taxes increase, we'll have even less money to spend, but the demographic time bomb continues to tick and the debt is increasingly out of control. We all saw this happening three years ago, with about 5 exceptions. What a total disaster Abe has been (again), both politically and economically.

13 ( +16 / -3 )

On the bright side, Japan's population fell by 0.08% between 2014 - 2015, so even a 0.02% negative growth rate is still positive (slightly) on a per capita basis.

1 ( +3 / -2 )

This is why Abe will be forgotten quickly. He came to power promising to revitalize the economy, but didn't. Instead spent his energy to get Japan to go to war, which is very unpopular.

7 ( +7 / -0 )

A declining population will have a declining GDP. It isn't that hard to understand.

3 ( +5 / -2 )

First of all a recession is defined by two fiscal quarters of decline. Also up until July the economy has been expanding. I have proof please take a look at this graph. I know you all hate Abe but the alternative before him was just as bad or worse. I think Abe's biggest failure is increasing the consumption tax.Can't tax your way out of debt should do the opposite to encourage spending. http://www.tradingeconomics.com/japan/gross-national-product

-1 ( +5 / -6 )

Abe just lined his mates pockets.... panels this, relief that.... more construction projects... Olympic nightmares all profited his friends.

2 ( +4 / -2 )

WHOOOPSIEDOODLE!!!! There goes the economy again! Better fund a panel to investigate what might be some possible solutions to perhaps try to maybe make a decision that might be crucial in making an effort to maintain a commitment to end recession.

lol

4 ( +7 / -3 )

Time to double down on money printing. And wonder if Janet Yellen and her crew are watching how well the whole money pumping theory is working in practice.

3 ( +4 / -1 )

I think Abe's biggest failure is increasing the consumption tax.Can't tax your way out of debt should do the opposite to encourage spending.

Yes, but that isn't going to help in Japan's case. The debt is growing by 40 trillion yen a year, because the government's spending is out-of-control.

Consumption tax revenues were 10 trillion yen before the tax hike, and 15 trillion after it was raised. Were the consumption tax cut to 0% it's hard to imagine that the 10 trillion yen of consumption tax left in people's pockets would suddenly produce enough income and corporate tax revenue to fill the 50 trillion hole in the government's finances.

So Abe's biggest failure to my mind is his failure to enact major, major reforms to unleash economic growth, or to cut back government's unaffordable spending.

3 ( +4 / -1 )

I don't mind Japan becoming poorer. Japan used to be No.2 economy now 3. Maybe 4 or 5 would be a comfortable position. I welcome strong China and strong USA but Japan should be a small economy.

-8 ( +4 / -12 )

I don't mind Japan becoming poorer. Japan used to be No.2 economy now 3. Maybe 4 or 5 would be a comfortable position. I welcome strong China and strong USA but Japan should be a small economy.

so Japan should report GPD data i.e. Gross Public Debt (?!)

2 ( +2 / -0 )

who cares about the third arrow. it would not have raised people's salaries. it would have mostly made it easier for companies to fire employess, much like in america. what needs to be done is taxing unused corporate profits. salaries have barely inched upwards while large corporations are hoarding record profits. until they are forced to raise wages or reinvest that money, abenomics will never create its virtuous cycle.

4 ( +5 / -1 )

I don't mind Japan becoming poorer.

Do you mind becoming poorer yourself?

3 ( +4 / -1 )

Japan must be about the only country in Asia with the capability but not the ability to actually pull out of a recession. Abe has shown himself to be pathetically clueless.....

6 ( +7 / -1 )

I had to laugh when I heard this news. Japan and abe are such basket cases. There is NO answer to the problems of the japanese economy. The yen and the economy will just continue diving. No wonder no one wants to put money into the dying currency yen these days!

0 ( +3 / -3 )

Do you mind becoming poorer yourself?

Not at all. I hope Japan becomes irrelevant and has less bullies;

-6 ( +3 / -9 )

Been Living here a long time. I wasn't aware we were ever out of a recession.

13 ( +13 / -0 )

Not at all. I hope Japan becomes irrelevant and has less bullies;

Bad logic Tina - the worse the Japanese economy becomes, the easier it will be for other countries to put economic pressure on Japan to do their bidding.

3 ( +6 / -3 )

@garyraynor I believe that if you go back and check the threads, Jeff Lee and Nigelboy (and me) were not saying Abenomics was going to work, we were saying that you and others on this thread don't have clue what you're talking about and that your endless Doomer babble predictions of collapsing yen exchange rates and collapsing bond markets were gibberish. But you can believe you read whatever you want to believe you read.

-3 ( +2 / -5 )

Analysts broadly expect the economy to pick up in coming quarters, as Abe is seen preparing a fresh stimulus package to boost growth.

The data also provides fresh fodder for Bank of Japan (BOJ), the central bank, which has embarked on an aggressive bond-buying program aimed at ending deflation and boosting growth.

Did anyone read between the lines? I smell trouble here.

0 ( +0 / -0 )

@Gary Raynor

"While Nigelboy and JeffLee were saying otherwise. I told you so."

You mean your predictions about Japan's economic collapse, triggered by its debt? Sorry, pal, hasn't happened, isn't happening, won't happen.

Here's one of your astute predictions from a while back.

"Within the next 2 years.....Japanese....will be as poor as your present citizenry of Zimbabwe."

Yeah, so true. You "told us so" alright. LOL.

-3 ( +2 / -5 )

@garyraynor I believe that if you go back and check the threads, Jeff Lee and Nigelboy (and me) were not saying Abenomics was going to work, we were saying that you and others on this thread don't have clue what you're talking about and that your endless Doomer babble predictions of collapsing yen exchange rates and collapsing bond markets were gibberish

LOL. So all the folks, like myself, SmithinJapan, Garyraynor, etc. who have been saying repeatetdy, that all the massive government spending/increased debt and BOJ intervention was NOT actually going to lead to long-term economic prosperity due to inherent structural issues in the Japanese ecomnomy were wrong????? Yeah, right. Nothing but hot air, Guy.

2 ( +6 / -4 )

Not at all. I hope Japan becomes irrelevant and has less bullies; so bascially hide you head in the sand and hope for the best, guess what people / countries that are irrelevant are the ones that get bullied the most, because they are treated as irrelevant and the opinion on the world stage means nothing!

1 ( +3 / -2 )

Surely, it is necessary to slip out of recession before slipping back in. When did Japan actually slip out of recession?

1 ( +2 / -1 )

Yet Abe can manage to fund projects in the various stans,nams and ers out there-good for Japan Inc and managers on expense accounts though.....

2 ( +2 / -0 )

JeffLeeNov. 16, 2015 - 08:41PM JST

You mean your predictions about Japan's economic collapse, triggered by its debt? Sorry, pal, hasn't happened, isn't happening, won't happen. Here's one of your astute predictions from a while back. "Within the next 2 years.....Japanese....will be as poor as your present citizenry of Zimbabwe."

Nope.... stop trying to play with the quote button.... I, not SmithinJapan or Jerseyboy, stuck my colors to the wall and said that Japan, by the end of 2017 would be in a Zimbabwe style crises.

All three of us said, in early 2012, that Abenomics would fail. This is 2015, who has been right so far and who has been proven wrong?

Stick your colors to the wall and tell us, like you and others did in 2012, that Abenomics is/ is going to work.

-2 ( +4 / -6 )

@garyraynor Feel free at any time to attach to this thread any quote by myself, Jeff Lee or Nigelboy where we said Abenomics was going to work. There are however many you can find on the other hand saying it won't. There are also many quotes that can be dragged up from GaryRaynor, jerseyboy, fxgai, sangetsu etc making idiotic predictions that have never come true and never will. Seriously, stop wasting peoples' time with the BS

-2 ( +2 / -4 )

All three of us said, in early 2012, that Abenomics would fail.

Pretty impressive ability to see the future you must have shown to do that, considering Abe wasn't even prime minister then.

-6 ( +1 / -7 )

StrangerlandNov. 17, 2015 - 12:02AM JST

Pretty impressive ability to see the future you must have shown to do that, considering Abe wasn't even prime minister then.

This maybe difficult for you to get your head around.....

Abenomics was an election proposal long before the actual election in December 2012... that is when we all commented on its future success or failure

-2 ( +4 / -6 )

Abenomics was an election proposal long before the actual election in December 2012

Why would they have called it Abenomics when Abe wasn't even the Prime Minister?

-6 ( +1 / -7 )

I agree with Tina. A world that is slave of GDP is a world slave of wars. Indeed we leave in such a horrible world today because some big countries don't want to accept their economical decline. The West doesn't want to accept its model is collapsing. So we have always more wars. I welcome a decline in Western economies and less wars rather than vice versa.

0 ( +4 / -4 )

StrangerlandNov. 17, 2015 - 12:38AM JST

Why would they have called it Abenomics when Abe wasn't even the Prime Minister?

Are you serious????

In the same way that Reaganomics or Thatcherism where doctrines, before their respective named associates entered the White House or 10 Downing Street.

Enough feeding the troll and up the meds.

-1 ( +4 / -5 )

In the same way that Reaganomics or Thatcherism where doctrines

So in early 2012 you were disputing the ideas that would become abenomics. Not abenomics.

-3 ( +1 / -4 )

Do you mind becoming poorer yourself?

Not at all. I hope Japan becomes irrelevant and has less bullies;

Um, I don't actually think Abe has consciously set out to make us all poorer. That's probably what's going to happen and he probably doesn't care much about it, but given all his (poorly articulated) promises and big (vague) ideas when the economic conditions do continue to get worse it's going to kind of look as if he's messed up big time. But that's not going to matter to the LDP as long as they keep just enough of their over-represented rural base happy with the same old pork barrel bribery.

1 ( +1 / -0 )

we leave in such a horrible world

I meant we live

0 ( +2 / -2 )

I don't mind Japan becoming poorer. Japan used to be No.2 economy now 3. Maybe 4 or 5 would be a comfortable position. I welcome strong China and strong USA but Japan should be a small economy.

@tinawatanabe: Your comment accurately reflects the thinking of many Japanese people when suggestions are made to allow large scale immigration to improve the Japanese economy. A lot of Japanese people don't mind allowing the economy to shrink to a more appropriate, proportionate level for a small island nation and keep the population 94% Japanese. The social cost that immigration would bring is not worth it.

1 ( +1 / -0 )

Japan is indeed a small country. It's impressive it is the 3rd largest world economy but at this point it's completely developed, there's no space for further growth. Quality is better of quantity. Less people can mean a smaller GDP but progressively a more suitable model of society for such a tiny country. Italy - my country - is a bit smaller than Japan. We have half of his population - 60 millions including some millions of migrants- and we are the 8th largest economy in the world. I think also my country performance is impressive but now we have to accept a reative decline because such a small country can't compete with China, India, Brazil, etc. The small countries like Italy and Japan must find a new model of society more based on social welfare than GDP numbers. There will be an economic collapse if and when the state won't be able anymore to pay welfare for old people, but after the shock the countries will find a new model of development.

-2 ( +2 / -4 )

@Gary Raynor

"This is 2015, who has been right so far and who has been proven wrong?"

Do you seriously believe that your prediction of Japan becoming hyperinflated Zimbabwe is correct? Or that the fiscal debt has triggered an economic meltdown? Err....OK

You may recall that Guy and I said stimulus under Abenomics is the right thing, but that the consumption tax hike would derail the plan. We said that before the higher tax came into effect. And of course, what we predicted came true. (By the way, the hike was not part of Abenomics.)

We also dismissed any risk from the fiscal debt. If you can point to real evidence of damage or risk caused by the fiscal debt, feel free.

-7 ( +0 / -7 )

As others have pointed out, demographics make it tough. Rather than looking at the overall population which is decreasing slowly, the working age population is decreasing at a much faster pace. Hard to grow an economy when that is going on.

-1 ( +0 / -1 )

Quality is better of quantity. Less people can mean a smaller GDP but progressively a more suitable model of society for such a tiny country.

It can, but it probably won't. I seriously doubt that any decline will be well-managed so that everyone will get a fair chance at a better quality of life. There'll be more layoffs, doubled with welfare cuts, slashed budgets for education and healthcare, and while the well-off will probably be okay people who are already struggling at the moment are going to be seriously shafted. The government, of course, will deny the reality of what's happening and continue to throw away money on fixes that don't fix anything at all.

1 ( +3 / -2 )

Gary,

I'm not even sure what Guy's economic prescription is, I've never read anything other than his commenting about how economically clueless everyone is, without stating the specifics of what he'd have the government do instead (which I suspect is wacky and unorthodox). JeffLee at least is more clear in that he would have the government strengthen, rather than dismantle, its failed central planning model (financed with infinite amounts of freshly minted money).

I personally think Abenomics would have worked better had the "third arrow" been the main one, rather than the one that was just talk. It had my expectations high from that perspective, although a lot of people still think that QE etc help.

nakanoguy,

who cares about the third arrow. it would not have raised people's salaries. it would have mostly made it easier for companies to fire employess, much like in america.

When people's wages are raised, by what mechanism do you think that is?

As with virtually anywhere, America's economic performance versus Japan's over the past 25 years has been far better. Japan's government has now accumulated more public debt than any other in modern history.

Perhaps a lack of "labour market flexibility" is one of the reasons for Japan's relative underperformance versus the rest of the world? Perhaps when people realise that they are able to be fired, they have an incentive to work harder and produce more, so as to make themselves more valuable to their employers?

what needs to be done is taxing unused corporate profits.

For what purpose does that "need to be done"?

I can see that would just put companies under pressure from their shareholders to pay out higher dividends, rather than just see the money handed over to the government.

If the subsequent response to that was to tax dividends at higher rates too, that'd reduce the incentives for shareholders to invest in Japan, and instead they'd invest more overseas. That reduction in investment would see a reduction in demand for Japanese labour, not an increase, and thus be negative for worker wage growth.

The solutions that are proposed need to be sustainable in order to be successful.

salaries have barely inched upwards while large corporations are hoarding record profits.

That companies aren't investing their own money suggests that there is a dearth of attractive opportunities for investment in Japan. If it were YOUR money, what would you invest it in? If you had a chance in front of you to make money, you'd take it, right? There are reasons why this doesn't happen in Japan. Negative population growth is an obvious headwind. But that doesn't mean that there is nothing that could be done.

Rather than try to bash businesses into making uneconomic decisions (which wouldn't help in the long term), it be more productive if the government were to open up a range of new opportunities by enacting regulatory overhaul and change.

until they are forced to raise wages or reinvest that money, abenomics will never create its virtuous cycle.

Trying to force businesses to do this-and-that by central command or coercion wouldn't work any better.

Japan has its strengths, but the decision making out of Kasumigaseki is not one of them. One of its strengths is its people. If the government would make it easier for the populace to do a whole range of things by getting out of the way.

Not to mention ending pointless bureaucratic procedures (or at least getting with the IT age and automating them). That alone would free up people's time and enable productive, valuable activities to be performed instead. I recently completed a certain transaction, and part of the paperwork would have involved paying 40,000 - 50,000 yen to some paper pusher to do it for me. Instead I did it myself in exchange for sacrificing some time, but the inefficiency I saw in the bureaucracy was eye-opening. To think that there are legions of people paid to do this sort of pointless work, and it is just the tip of the iceberg, convinces me that Japan could do so much better if it would only wake up and see what it is electing to miss.

-1 ( +2 / -3 )

And the third quarter should be the strongest of the year, as it is when new car models are being built for release, the build up for the holiday season is building up, and materials for the New Years holidays are ordered.

If the third quarter is bad, it is nearly certain that the next two quarters will be bad too.

You may recall that Guy and I said stimulus under Abenomics is the right thing, but that the consumption tax hike would derail the plan. We said that before the higher tax came into effect. And of course, what we predicted came true. (By the way, the hike was not part of Abenomics.)

I have been more right than any of you. My prediction for last year's "growth" was spot on. My prediction for this year's is also spot on.

Tell us exactly how stimulus can in any way help Japan's economy. Even in the absence of a sales tax increase, it appears that stimulus spending would have no positive effect. The increase of the tax was 3 percent, the goal of the easing and stimulus programs was to increase inflation to 2% to 3%, the result of either would be the same, to rob the people of their money, or the value of their money.

Lastly, where has this stimulus money gone to? It has gone into the pockets of the politically-connected, who are always the main beneficiaries of any government spending. Since neither the money, nor the economic effect of the money has made it into the mainstream economy, then it was an exercise in futility, which benefited the chosen few at the expense of the rest of us.

3 ( +4 / -1 )

The unproductive jobs that allow bureaucrats to be involved in the making of passports,driving licences,car number plates, family registers, toll collecting etc are just a massive burden on the population here.No wonder Japanese don't have kids when the politicians are trying to make it even MORE expensive. The government (what an apt word) are seeing a Ghandian type response from their population and are too dumb to recognize it......

1 ( +2 / -1 )

America's economic performance versus Japan's over the past 25 years has been far better.

You are comparing Japan with the key currency and military hegemony country

-6 ( +1 / -7 )

@JeffLee,

I said stimulus under Abenomics is the right thing, but that the consumption tax hike would derail the plan.

So you've made a claim, now go ahead and present a proof that it was the 3% consumption tax hike, and not the 30% depreciation in the value of the yen for example, that "derailed" it.

One wonders for how long into the future you intend to blame the 2014 sales tax hike for Japan's (frequent) technical recessions.

If you can point to real evidence of damage or risk caused by the fiscal debt, feel free.

Such as been pointed out numerous times, but you have always had your head in the sand regarding the existence of risk - you won't acknowledge a risk until it actually comes to fruition (a ridiculous stance, as has also been pointed out).

The largest public debt burden creates uncertainty for one, and for another the risk of an eventual nasty rise in long term interest rates if confidence in the government's ability to repay its debts can not be maintained. Indeed whether confidence is still there today or not is uncertain, as the BOJ is currently snapping up bonds as part of your beloved "stimulus", which may be masking what might otherwise occur were the market free.

The limits to the BOJ's purchase program are well-publicised. Indeed, unless the government indebts itself further and at a faster rate than it is doing now, the BOJ will not be able to continue it's existing QQE program indefinitely.

If it isn't interest rates that eventually give, it's the currency that will fall further. (Those who dumped their yen when Abenomics commenced know who was right and wrong about this.)

-1 ( +1 / -2 )

You are comparing Japan with the key currency and military hegemony country

Excuses, excuses. The rest of Japan knows their economy is stagnant and long gone are the bubble yrs. You should try coming to those terms to.

-1 ( +1 / -2 )

I'm not even sure what Guy's economic prescription is, I've never read anything other than his commenting about how economically clueless everyone is, without stating the specifics of what he'd have the government do instead (which I suspect is wacky and unorthodox).

fxgai -- that is slightly unfair. His "economic prescription" is pretty clear -- Japan should just continue to borrow/print money, because it can. Unfortunately, he misses the whole point, which you, myself, smithinjapan, sangetsu and others, including even BNP Paribas recognizes:

"Abenomics' first two arrows of monetary and fiscal stimulus were meant to buy time, but Japan failed to make progress with painful reforms needed to boost its growth potential," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

"Without reform (the 'third arrow'), the economy's growth potential remains low, making it vulnerable to shocks and to suffering recessions more often."

But, rest assured, Guy will no doubt classify Shiraishi-san as "clueless", along with all the folks at Moodys, S&P, the IMF, etc..

-2 ( +3 / -5 )

Wc - it was not Japan that wanted the stronger yen since the bubble yrs..

-6 ( +1 / -7 )

I know tina. And for a while there (80's), Japan was beating the US at their own game. Then suddenly- stagnation as a result of japanese corporations unable to innovate to the times.

-1 ( +2 / -3 )

fxgai NOV. 17, 2015 - 10:39AM JST Perhaps a lack of "labour market flexibility" is one of the reasons for Japan's relative underperformance versus the rest of the world? Perhaps when people realise that they are able to be fired, they have an incentive to work harder and produce more, so as to make themselves more valuable to their employers?

In Japan, approximately 40 percent work part-time. Japan can be a very stressful society to live in as the employment system is very rigid and it is not easy for those who have been laid off to find another job. They work in poorly paid jobs for hourly rates and many do not pay taxes or pay into pension system. Benefits are all but non-existent. Moreover, people working part-time are less likely to marry and have children. If Japan is to solve its demographic problem, it will have to tackle the labour issue. Japan needs to narrow the gap between over-protected permanent workers and under-protected non-permanent ones. That coddling one section of the workforce does not serve Japan’s interests well. Simply making life less cushy for permanent workers is not likely to do any good on its own. The big push should be on improving the wages and conditions of temporary workers. It should be made far easier for them to migrate to permanent jobs and for workers of all descriptions to move more freely between companies.

2 ( +2 / -0 )

"another the risk of an eventual nasty rise in long term interest rates if confidence in the government's ability to repay its debts can not be maintained."

Which means confidence in Japan's fiscal soundness IS being maintained. Why?

"you won't acknowledge a risk until it actually comes to fruition"

The upshot is we got record low rates and deflation when you warned of surging rates and deflation.. So.... you austerity folks are about as wrong as wrong can be. Next.

"The limits to the BOJ's purchase program are well-publicised"

Sorry the "limit" passed a while ago. That was when Japan's major institutions stopped buying govt bonds, thereby refused to "bankroll the economy." Ah, if memory serves me correctly, your lot moved the goal posts when that particularly prediction didnt come to "fruition." At any rate, where's the meltdown ya'll predicted?

-1 ( +1 / -2 )

Unfortunately, Japan's economy is built around exports, and it can no longer compete on price in many of them. With the shrinking population and concentration of wealth in an ever-decreasing numner of hands, the possibility of creating a doestic economy based on consumer demand is nigh on impossible. The government has mismanaged the economy for decades (remember the bubble economy, runaway land prices, and the stock market at 37,000?) and is committed to providing subsidies to an increasingly elderly population in order to stay in power, while there is no viable political opposition. There are only bad options, and no good solutions.

1 ( +2 / -1 )

JeffLee NOV. 17, 2015 - 02:04PM JST The upshot is we got record low rates and deflation when you warned of surging rates and deflation.. So.... you austerity folks are about as wrong as wrong can be. Next.

Japan is back into deflation due to lower oil prices.

0 ( +1 / -1 )

Unfortunately, Japan's economy is built around exports

No. Japan has been suffering from trade deficit for a long time. It is domestic business that is supporting Japan's economy. It is China and SK that are built around exports.

-6 ( +1 / -7 )

sfjp330,

I completely agree, I think serious labour market reforms should be made in Japan. This country is backwards in how it is set up - the full timers have it set, the contract workers don't. In healthier overseas labour markets, contract workers often have pricing power over their labour, decide how much they want to work, and are well compensated. This is the price companies have to pay in exchange for labour when that labour doesn't have benefits such as those that the full-timers enjoy.

Equivalent reforms if brought to Japan will not be met with happiness by everyone initially (I have to think the full-timers would feel they were losing out), but at the end of the day I think people would realise that they are better off if it contributes to boosting Japan's growth potential.

There is a cultural element too - Japanese workers generally appear to crave stability and loyalty. A little more selfishness on their part is required if people are to embrace job-hopping.

JeffLee,

Which means confidence in Japan's fiscal soundness IS being maintained.

The BOJ is vacuuming up the bond market - I don't regard that as genuine "confidence" myself. And again, today is not tomorrow, or 2, 5, 10 years down the track. A risk not having come to fruition by yesterday doesn't prove that it won't in future.

As before, you demonstrate an extremely short-term view, which is likely to prove unhealthy for you in the long term. (I recall your wailing about losses inflicted on you by bankers during the financial crisis - it sounds like your short-term instincts had you sell out near the bottom.)

you austerity folks are about as wrong as wrong can be. Next.

There are a lot of "wrong" folks out, and yeah, virtually everyone said the US housing market wasn't in a bubble too, until it popped. "Next."

That was when Japan's major institutions stopped buying govt bonds, thereby refused to "bankroll the economy." Ah, if memory serves me correctly, your lot moved the goal posts when that particularly prediction didnt come to "fruition."

You missed the point, but the BOJ announced it would start buying 30 trillion extra bonds a year on the same very day that the government pension fund announced it was rebalancing 30 trillion bonds a year into equities. What that was, was the government and BOJ moving the goalposts, not me. The same risk is still there, with one less domino standing. (The BOJ back-stopped for the GPIF's escape, but who do you think is going to back-stop the BOJ?)

And the point you missed was the fact that the BOJ is on track to eventually own the entire government debt market. At that point the BOJ can not continue to ease further, without the government continuing to issue more extra debt for the BOJ to monetize in its 80 billion yen a year program (versus budget deficits of 40 trillion). This is the main "limit to the BOJ's purchase program".

anotherexpat,

With the shrinking population and concentration of wealth in an ever-decreasing numner of hands, the possibility of creating a doestic economy based on consumer demand is nigh on impossible.

Yes, but new wealth can be created through thrift and enterprise. If Japan would focus on economic growth above all else, those on lower incomes could find themselves earning a bigger slice of a growing pie. I give the Japanese some credit, it wasn't just a fluke that they once had the 2nd largest economy in the world. They really need to concentrate their attentions, but the Japanese can be effective when they really want to be.

1 ( +2 / -1 )

"I think serious labour market reforms should be made in Japan."

There have been a couple of big labor reforms, in the form of amendments to the labor standards law, in case you weren't aware. Guess what? They didn't work. Most workers got poorer afterward, and hence the low level of private demand, which is the main factor dragging down economic growth.

-2 ( +0 / -2 )

In healthier overseas labour markets, contract workers often have pricing power over their labour, decide how much they want to work, and are well compensated.

You sure about that? It seems like a lot of people instead are forced into taking work that isn't classified as full time, specifically to prevent them from having access to certain rights and benefits. And they earn at or barely above the legal minimum wage. Under fear of being feared - and to an employer, that fear is an incredibly useful tool - they can be pushed into working undesirable hours or at undesirable locations: this branch today, the other side of the city later on or tomorrow. Transport paid by the worker.

In Britain one form this peonism takes is the "zero hours contract".

But perhaps you would call it "flexibility" and "pricing their own labour".

3 ( +4 / -1 )

wipeout,

You sure about that?

Seen it first hand. Good enough?

-2 ( +0 / -2 )

Seen it first hand. Good enough?

Certainly vague enough.

2 ( +3 / -1 )

OK then. Pricing one's labour didn't refer to the segment of the workforce who are on the minimum wage, which you brought up. I was referring to people with more valuable skills.

Workers on the minimum wage aren't supposed to be able to price their labour. They are competing with loads of others who are also capable of doing the same work - it's a labour oversupply. The solution for those people is to enable themselves to provide a different sort of rarer labour, so that they can earn more money, e.g. by acquiring some more valuable skills. For able bodied and minded people, I don't think this is unrealistic or unfair, it's certainly the way lots of people go about it.

0 ( +1 / -1 )

The comparison between American economy and Japanese economy is so out of place. The US is huge, plenty of natural resources and its population is three times bigger than Japan's. I can understand why some Americans feel so embarrassed when they think about the 80s, when Japan, even if so tiny and poor in terms of natural resources, apparently was buying the whole America...but Japan had also at that time the current blatant territorial, demographic and political limits, so it was obvious it couldn't become the world's first economy. Some Americans have still that Japan bashing attitude developed during the bubble years because of envy and embarrassment. These people should stop this childish attitude, because they continue to embarrass themselves also now. Americans should compare their country's economy to the one of countries with similar characteristics, not with a tiny island.

-1 ( +3 / -4 )

I'm amazed that a Japanese paper would publish such a facile and superficial analysis of Japan's economy. You do realise, don't you, that GDP is largely affected by the size of the population - especially the working age one? Therefore, if the population is falling faster than the fall in overall GDP, then GDP per head is actually INCREASING, and people are becoming richer. That's why GDP per head is the important statistic - so why don't you publish that? Also look at the fall in unemployment. Japan's economy is actually not doing too badly at all.

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