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Japan's economy contracts 0.4% in April-June quarter

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The ongoing turmoil in global economy is understood to have been caused by more than one factors , falling oil prices in international market being one such factor. This Vedic astrology writer had , as early as last year on 2 June 2014, predicted that global economy is likely to have stressful time from November 2014 to about mid -2016. Keeping in view the indications of varying degree of likely stress during the said predicted time, three divisions were highlighted as follows : (1). Global economy would likely to pass through a mild slowdown from November 2014 to about April 2015. (2). The stress may be intense during May 2015 to October 2015. It was said that : “ discernible concerns would surface. Definite rumbles of distress would be heard”. (3). The stress may likely be much more intense than earlier if not critical during November 2015 to about mid- 2016. Briefly speaking, natural calamities , energy resources including oil and erroneous decisions of the rulers may be some of major causes. These predictions were made in article – Stressful times ahead for world economy in 2015 and 2016- published online at astrologyweekly.com. It may however, be observed here that astrological predictions made sufficiently in advance are indicative of likely trends or environment and are not synonymous with determinism because an appropriate and sufficient strategy has a potential to either reduce the gravity of outcome or in some cases may even frustrate outcome of such impacts. That could be usefulness.

0 ( +0 / -0 )

If you eliminate the consumption tax on various things, you are giving the RICH and the upper-middle class, who can easily afford to pay such tax, a tax break.

I don't fxgai.

VATs do more harm to the poor than any other group. Raise consumption taxes, the cost of things like housing, food, energy, transport, clothing, etc go up, making it harder for low-income individuals and families to get by

Better to have low income earners, and everyone else, keep as much of their cash as possible so that it can be invested, used to buy goods and services, saved (for retirement, childcare, education, etc). The government's role in the economy should be one that facilitates growth, not limit or stop growth.

The increase of the consumption tax is incompatible to plans for economic revival. One could argue that it would help Japan reduce its sovereign debt, but, the government continues to spend rather than cut costs. Its poor fiscal management means the debt will continue to spiral.

Taxation is an archaic, and ineffective means of fostering growth. Moreover, in the developed world, working people (median income earners) have long been overburdened by taxes on their income.

If consumption taxes are increased, then a wise move would be to cut taxes on income, and profits to offset it. This way working people have that much more disposable income to spend on discretionary purchases. Businesses would have more money available to hire more people, raise salaries and expand.

0 ( +0 / -0 )

Abe and Kuroda couldn't find their backsides with both hands. The idea we print our way out of deflation is stupid.

Its simple. People don't have money to spend. So people don't spend money. People don't spend money, so prices drop and we get deflation. Then the LDP prints money so EVERYTHING becomes more expensive. This destroys the Japanese domestic market but props up exports.

The problem..WE ARE IN A GLOBAL RECESSION PEOPLE!!! You can't count on exports to help the economy. They should be propping up the domestic market and put money into JP peoples' pockets. Then, ALOT of problems would be solved. You would have growth in the economy AS WELL AS the population.

Look, make 1500 yen the minimum wage for HS students and don't tax anyone making less than 2000 yen. Make the minimum starting full time wage 300,000 yen a month. Then begin raising the sales tax and dropping the income tax so you have an economy based on trade and business-goods and services.

Finally, liquidate japan's foreign reserves and bring the money home to help shore up the debt.

Do these things, and you will have more than just growth. You will have a bubble economy all over again.

-4 ( +1 / -5 )

It would be nice to see some "journalists" ask Abe to comment on the success of Abenomics. I suppose he would blame the weather, the oil price, North Korea etc. Look in the mirror Abe: there's the reason for the dismal performance of the economy, right there.

Abenomics will never work. It was always obvious it would not, and could not, work. The same old LDP policies of spending like a drunken sailor, coupled with declining wages and rising import prices due to a lower Yen were guaranteed to fail. Only a fool (Abe, Kuroda etc.) would think otherwise.

3 ( +4 / -1 )

convincing people to splash out on consumer goods has been a struggle after last year’s levy rise, aimed at helping pay down a massive national debt.

And has it paid down the alleged "massive national debt"? Uh, no. Because the consumption tax hikes don't raise revenue, they just speed up revenue collection. While taking away spending power, which equals taking away income, which equals reduced GDP. It's such a brilliant plan they are going to do it again in 2017. They will get the same result then too.

0 ( +1 / -1 )

GDP/capita can be used, but only in conjunction with PPPs (Purchasing power parities) otherwise it is a very crude measure of individual wealth/poverty.

All figures based on arithmetic a 'mean' calculation are open to a variety of conclusions. For arguments sake I employ 200 people. 180 of them are paid a $10000/year; 10 are paid $30000/year and 10 are paid $50000/year. The business is incredibly successful and generates a profit of $20,000,000 per year, all of which accrues to the business. If we use this ‘average’ across a nation, it conceals fundamental differences in the 'whole'. An ‘average’ salary would be near $112,000/year so how does the compare to the 180 people receiving the minimum wage and define their standard of living. It is a distortion, the figures for Tokyo where some people are incredibly rich, would 'cloud' the areas of poverty.

Purchasing power parities – measurement and uses......

http://www.oecd.org/std/prices-ppp/2078177.pdf

1 ( +1 / -0 )

So, yay for Abenomics? I wonder how long this charade will continue.

0 ( +0 / -0 )

Abenomics was 2102, if the same conversations are resurfacing in 2015, ding dong merrily on high, something is missing a clue ...

The pace of reforms, particularly shaking up a protected agricultural sector, has lagged however

like the 'Mary Celeste' lost a sea with the lifeboats missing.

sternerJapan87 there is a marked difference between populous overcrowding, and fertility rates, Japan de-population is 'weighted' toward older people, by 2050 Japan population will have declined to 89 million people, 52% of them will be over 65. Without a serious 're balancing' the country simply won't have enough revenue to support its retirees

-1 ( +0 / -1 )

The reported trend of slowdown during Quarter 2 of 2015 ( April -June 2015) in the economic growth of Japan is in line with this Vedic astrology writer's predictions of last year on 2 June 2014 published in article - " Stressful times ahead for world economy in 2015 and 2016 - at astrologyweekly.com. Prediction for around April 2015 to October 2015 reads as :- " discernible concerns would surface" ; definite rumbles of distress would be heard". It may be observed that outcome of planetary impacts can either soften or become negligible if appropriate and sufficient strategy is followed. So effort must be continued for a better tomorrow.

-1 ( +0 / -1 )

Perfect storm of declining population, ageing population & inflation.

I'm out of here next year.

Sighclops -- agreed. Although actually I reached the same conclusion(s) several months after Fukushima. Inflation was not an issue then as an ingredient to the "perfect storm", but the enormous fiancial and social costs of the recovery efforts were, and my ten years in Japan drew me to conclused that it, in combination with the other factors you mentioned, would be too much for the Japanese economy.

-3 ( +2 / -5 )

The biggest problem is that the rich leaders still do not comprehend how a consumption tax should work as it does in other countries.

Do not make it a regressive tax and tax such things as food staples, medicines, diapers, kids school uniforms, books supplies etc. Anyone with a 1/4 brain can figure out this no brainier, but the rich are not affected by 8%. They do not give a damn at all.

If the purpose of consumption tax is to raise revenues efficiently with minimum distortionary effect on the economy, keeping consumption tax flat across the board is the way to go.

If you are concerning yourself with dealing with so-called inequality, then it's simply a matter of dishing out money to those who need it.

If you eliminate the consumption tax on various things, you are giving the RICH and the upper-middle class, who can easily afford to pay such tax, a tax break. Instead, if you gather that tax from everyone, then redistribute the tax from the rich and upper-middle class to the poorer, you achieve the desired results.

Countries like New Zealand and I think Singapore do have perfectly fine flat consumption taxes, and they are doing just fine.

1 ( +3 / -2 )

Japans is the only country in the OECD that has seen average pay decline since 2000

This is due in part to what you mentioned earlier in your post. The number of working women has increased considerably in Japan in the last 15 years. For the 25 to 35 year old group, the % of women who are working has increased 10%. Since the majority of women who work (60%) are part-timers, it only makes sense that the overall pay would decline.

1 ( +2 / -1 )

japan is doing great overall , this kind of news happens all the time in all countries

-2 ( +2 / -4 )

This is what we were reading a few days ago here:

Japan now faces a critical stage in its battle to defeat deflation, and is being helped by falling oil prices boosting Japan’s terms of trade and getting the economy nearer its full potential, the Cabinet Office said in its annual economic report on Friday.

Now given the new economy contraction (it has been going on like this since the end of the bubble), either the Cabinet Office is located on the moon and has no idea on what's is really going on, or the only thing they are able to do is propaganda by throwing to anyone listening wrong information about the country economy.

Even with low oil prices and a weak yen, the country's economy is still contracting so why is it so difficult for the Japanese oligarchy controlling this country to understand that even with all the yen manipulation they want and all the public money they keep giving to construction companies, Japanese economy has a fundamental more profound problem?

It is because the data also includes people from 15 to 20 and over 65.

Wel no it is more because most women are employed as part-timers and they make the majority of those 40%, actually around 60% (data from government survey in 2013).

Also note that:

1) Temps and part-timers—who often work 40 hours a week—accounted for all of the nation’s job growth in the past five years or so; 60 percent of employment offers in March 2014 were for temporary positions.

2) Japans is the only country in the OECD that has seen average pay decline since 2000 (graph here: http://www.bloomberg.com/infographics/2014-05-30/japanese-job-market-shifts-to-part-time.html).

Anyone would then understand why Japan is where it is now.

-1 ( +2 / -3 )

The biggest problem is that the rich leaders still do not comprehend how a consumption tax should work as it does in other countries.

Do not make it a regressive tax and tax such things as food staples, medicines, diapers, kids school uniforms, books supplies etc. Anyone with a 1/4 brain can figure out this no brainier, but the rich are not affected by 8%. They do not give a damn at all.

3 ( +4 / -1 )

sighclops, you said it. Right 100 percent.

2 ( +4 / -2 )

Amazing given the hype of Abenomics over the last two years. Abe is killing the middle class as all conservatives world wide are doing, in order to curry favor with the 1%. UK and USA the same. Income inequality is increasing in Japan dramatically, started under the hair man Koizumi who followed neocon economic policies. The Japanese people better wake up soon and kick out the LDP. The LDP is robbing them of a future.

5 ( +6 / -1 )

With a very low value of the Yen, you would think Japan would be cleaning up in their export markets.

What are they supposed to be exporting? With increased costs due to the yen rate making importing the necessary raw material to export anything it's probably a break even kind of thing.

Japanese manufacturing has moved a lot of their business to SE Asia where costs are lower so their exports have gone down.

2 ( +2 / -0 )

40% of workers on part time and contract

Yes, it's true that 37% of the total workforce are not "full-time" employees. However, if we look at Japan's main workforce (men between 35 to 55) we see that over 90% of them are full-time employees. So why are there so many part-timers? It is because the data also includes people from 15 to 20 and over 65. If we look at the numbers for men over 65, over 70% of them are part-time. For women under 20 or over 65, it is around 80%. This is not surprising, as most young people are students and most retire by 60 or 65. However, it is also true that overall the % of non full-timers is on the rise, which I believe is not a positive trend.

5 ( +5 / -0 )

Population is falling - all things being equal so should GDP. On a finite planet only the deluded beleve economic growth can be infinite. Policies that move towards Steady-state Economies are the only vialble alternative and the current system of continuous growth at the expense of all else is doomed to fail.

Population growth isn't the only engine of economic growth. Not by a longshot. Productivity growth important.

4 ( +4 / -0 )

mindless money printing and currency devaluation has clearly only had a marginal impact on the prospects for Japan. Unless we assume things would be even worse but for Abenomics (!!??). These daft policies are being pursued in one form or another all over the world, with potentially catastrophic consequences for us all.

1 ( +1 / -0 )

Peter, is 75% the marginal rate that would affect you?

1 ( +2 / -1 )

Declining populations and growth obsessed leaders obviously means those left working are the ones getting squeezed even harder from all directions, to meet the greedy politicians targets. One day, hopefully, we might actually start electing leaders who focus on things like, I dunno, quality of life?

0 ( +3 / -3 )

Yeah... people aren't buying because of "bad weather"! Right.

0 ( +4 / -4 )

What does a Japanese college kid get paid for part time? Y800/hr?

Minimum wage in Tokyo is 869 yen, but will be 888 yen from October. It has gone up 169 yen in the past 10 years. I personally think it should be at least 1000 yen.

7 ( +7 / -0 )

(Quietly making plans to leave before the inheritance tax jumps to 75%.)

2 ( +2 / -0 )

With a very low value of the Yen, you would think Japan would be cleaning up in their export markets.

What happened?

-1 ( +4 / -5 )

Yet the government continues to spend, and spend, and spend. All the while putting more pressure on the average household - with the government expecting the public to just shouganai, gaman & ganbarou. The way I see it, Japan is heading for the mother of all collapses due to the following:

Perfect storm of declining population, ageing population & inflation. Both the healthcare & pension systems are on the verge of collapse (with the latter being a massive pyramid scheme) Real wages continue to decline - meanwhile part time positions continue to increase. Pork barrelling is an open chequebook Japan Inc. is being left further & further behind as the old boys' club are inert to change - and will NEVER adapt nor concede that change is needed. Too much govt. & big business corruption & leniency towards the Yaks

Now, I could handle all of the above if I weren't continually being squeezed for more & more by the govt. without things improving. Why should the taxpayer have to foot the bill of the government's out-of-control spending?! I'm out of here next year.

5 ( +8 / -3 )

My son makes over Y1400/ an hour in Canada doing part time student work. What does a Japanese college kid get paid for part time? Y800/hr?

1 ( +5 / -4 )

Weak domestic consumption and slow exports weighed on the world’s third largest economy, which shrank an annualised 1.6%, after posting growth in the previous two quarters, according to the Cabinet Office.

Simply cannot be. The Cabinet was assuring everyone just three months ago that the spike in the economy was the first real sign that the economy was bouncing back from the tax increase, and Abenomics was beginning to really take hold. LOL. Japan's ecomomy is stagnant at best, for many of the structural issues other posters have mentioned, but Kuroda still foolishly wants to chase an arbitrary infaltion target anyway. Guess he missed the U.S.'s painful expereience with this condition.

1 ( +6 / -5 )

Despite wage rises at some big firms and a tight labor market, convincing people to splash out on consumer goods has been a struggle after last year’s levy rise,

SOME? More like a few from what I have been led to believe. Plus with more and more companies hiring contracted workers the real data is going to be skewed anyway. Raise the pay of the full-time employees, which makes good press, but hide the fact that percentage wise there are less and less full-time employees.

2 ( +5 / -3 )

GDP decline isn't actually bad, considering that the population is declining. What the analysts should focus on is GDP per capita.

The problem with this is, the government's huge spending continues to rise, despite the falling population.

Japan is in a chicken race between the sustainability of its public debt and the day when this country starts to grow strongly again.

5 ( +7 / -2 )

I've made this point before, but the precarious class is growing and digital technology will take away even more jobs, meaning more challenges to the economy, particularly those workers already marginalised. It would be nice to think that new voices are being heard by the powers that are and new approaches will be taken, starting with a dramatic reassessment of the education system. Is computer programming being taught in schools? Hardware design? Basic critical thinking skills? I believe AI Singularity is more than just science fiction, and that any society that doesn't prepare for it will struggle. Except perhaps those already privileged.

4 ( +4 / -0 )

abenomics hangover

this country is due for an epic crash.

0 ( +4 / -4 )

“The sharp plunge from the previous quarter’s surprise growth was partly due to disappointing demand for Japanese products in the U.S.,

PS4 yes. Rice cookers, no.

-1 ( +0 / -1 )

Falling population and 40% of workers on part time and contract rubbish positions. Of course, consumption is falling.

5 ( +10 / -5 )

Household spending has struggled to recover following a sales tax rise last year

Japanese household spending has been struggling for more than a decade, it ought be said.

On a finite planet only the deluded beleve economic growth can be infinite.

Humans might hit a limit one day, but technological progress continues for the time being. Some people believed in "peak oil" back in the 1970s. Maybe not.

3 ( +6 / -3 )

Real wages in Japan fell 2.9% in June. The real wages of expats in Japan have not grown at all and even decreased. No wonder people are buying less things. Also, population decline is a good thing. Japan is way too crowded for its own good. Japan has the highest youth suicide rate in the world, most likely due to intense competition from high school and the job market. GDP decline isn't actually bad, considering that the population is declining. What the analysts should focus on is GDP per capita. GDP growth in itself is not a reliable way to track changes in the quality of life of the citizens of a country. For example, look at China and how they developed so many ghost cities, which inflated their GDP. GDP is a useless and meaningless number. Every economist knows this, yet the media and governments will use the numbers game in order to release their propaganda into helping the big businesses export more and fuel the big banks' ponzi schemes.

4 ( +8 / -4 )

Population is falling - all things being equal so should GDP. On a finite planet only the deluded beleve economic growth can be infinite. Policies that move towards Steady-state Economies are the only vialble alternative and the current system of continuous growth at the expense of all else is doomed to fail.

9 ( +12 / -3 )

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