business

Japan's economy crawls out of recession in Oct-Dec quarter

87 Comments

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

© 2015 AFP

©2019 GPlusMedia Inc.

87 Comments
Login to comment

LOL!!!!!!!!!!!!!!!

-8 ( +0 / -8 )

"below the forecast, massive national debt, brakes on consumer spending, recession, enormous national debt ....."

... is there more to come? Doesn't look too good in my honest oppinion.

5 ( +6 / -1 )

Hahaha, I am not a professional economist, but that does not look like anything has crawled out of recession to me!

2 ( +6 / -4 )

The tax rises are aimed at paying down Japan’s enormous national debt

The article is off target.

Before they can start to pay it down, they have to first bring their spending into balance with their revenues. Paying it down is the step subsequent to that. Until then, Japan's enormous national debt increases.

But the only timeline the government has is fiscal 2020 for balancing revenues with expenditures, excluding servicing the 1,050 trillion yen of outstanding debt, which at a quarter of total expenditure, is massive and must be dealt with before the debt can start to be paid down.

Yet the latest information presented to the government last Thursday was that they aren't going to hit their easier fiscal 2020 target unless they find another 10 trillion yen, while praying for consistent annual growth of at least 3% in the meantime.

The tax rises are aimed at paying down Japan’s enormous national debt, but they have put Abe in a tricky position as he tries to balance them with his growth plan.

Abe's 'pro-spending growth' plan doesn't mesh with the tax hike because he's making the debt problem worse, while hoping things will miraculously get better inspite of it.

Japan needs a leader who recognises that years of 'pro-spending growth' plans have been a part of the problem.

4 ( +8 / -4 )

Well said fxgai.

2 ( +4 / -2 )

Japan's economy crawls out of recession in Oct-Dec quarter

But Japan has been seeing signs of a recovery—including an uptick in factory output and a tight labor market.

At least its heading in the right direction, but the sky is still falling isn't it ?

-4 ( +5 / -9 )

At least its heading in the right direction, but the sky is still falling isn't it ?

It's good that the economy has some positive signs, and that growth at least increased.

It's not all rosy though, either you must admit. Consumption is something like 60% of the economy and the rise in import prices thanks to Abe's depreciated yen has been a kick in the guts.

Over time as the economy adjusts a weaker yen should help boost Japanese competitiveness though. (I believe the government is now trying to manipulate the exchange rate to stay steady around where it is. To the extent that they are successful, this should help, but I don't think they will be successful all that long.)

marcelito, thank you sir.

4 ( +6 / -2 )

Abe's 'pro-spending growth' plan doesn't mesh with the tax hike because he's making the debt problem worse, while hoping things will miraculously get better inspite of it.

https://www.mof.go.jp/jgbs/reference/appendix/hakkou01.pdf

Actually, the ratio of JGB issuance rate dropped.

-4 ( +5 / -9 )

fxgai for Prime Minister!

2 ( +6 / -4 )

StormRFeb. 16, 2015 - 12:07PM JST

At least its heading in the right direction, but the sky is still falling isn't it ?

Yes it is.

So that you can understand it, I'll explain it simply. It's a bit like you placing $10 on each dog in a 6-dog greyhound race and the winning dog comes in at 3:1 odds. After you pick up your winnings, you announce to all and asunder that you won on the race, even though you're $20 dollars down.

For this paltry periodic economic growth, the national debt has increased the already unsustainable national debt by 20% and the BOJ has become, for the first time, since 1935, the biggest holder of government debt - holding more than 30% of it.

Within the next 2 years, on present variables, all Japanese wealth will be invested in national debt and the Japanese who are already, for the first time, net spenders more than savers, will be as poor as your present citizenry of Zimbabwe.

Still there's always this year's shunto, that's sure to be the saving grace for us all and Toyota will still be going as strong as ever on foreign profits converted to a currency worth more as toilet paper - if they are stupid enough.

2 ( +8 / -6 )

That's good news for the economy. The prospects are better for the Japanese economy when compared to the Eurozone due to the limitations imposed on them by the Euro. The debt isn't that much of a problem yet, Japan doesn't ever need to worry about paying it back.

-3 ( +1 / -4 )

For this paltry periodic economic growth, the national debt has increased the already unsustainable national debt by 20% and the BOJ has become, for the first time, since 1935, the biggest holder of government debt - holding more than 30% of it.

Why would it be unsustainable when it's yen denominated issued and bought almost exclusively within Japan?

Within the next 2 years, on present variables, all Japanese wealth will be invested in national debt and the Japanese who are already, for the first time, net spenders more than savers, will be as poor as your present citizenry of Zimbabwe.

If majority of the Japanese become net spenders, that is a sign that Japanese have finally got out of the deflationary spiral.

-7 ( +5 / -12 )

Looks like Japan headed for sales tax rise to 10 pct in 2017.

I don't get that bit "Abenomics is expected to address these challenges, by raising labor productivity, boosting capital investment, and increasing female labor participation." in the Nikkei article below, though. "Expected" by whom? Do people really believe in it?

http://asia.nikkei.com/Japan-Update/Japan-govt-Primary-budget-won-t-be-balanced-in-2020

... But another target of balancing the primary budget by 2020 won't be achieved, even under optimistic assumptions that his pro-growth economic programs, known as Abenomics, will successfully rejuvenate the economy. ...

... Abenomics is expected to address these challenges, by raising labor productivity, boosting capital investment, and increasing female labor participation.

The projections assume that the nation's sales tax will be raised to 10% from 8% in 2017 and that other tax revenues will grow an average 4.6% a year between 2015-2020.

But even assuming these things happen, Japan will still be left with a primary budget gap equivalent to 1.6% of GDP in 2020, according to the projections. ...

1 ( +2 / -1 )

The government said? Bwahaha! The only thing that has grown is the fat cat's wallets at the expense of the other 95% of the population. How can they make this ludicrous claim when unemployment has increased and families are 10-20% worse off? Do people actually believe this guff spouted by the Japanese economic ministry?

5 ( +8 / -3 )

So basically, after all the money printing on a much accelerated scale, (after all, it's not like Japan wasn't already borrowing money like mad in the previous decades, is it?) this is the positive growth Abe can crow about? It's positive, no doubt, though lower than predicted by his cheerleaders over at Nikkei, and is basically the same as what Japan historically grew from 2001-2008. Nevertheless....prepare yourselves for a slew of politicians shouting "we've made it out of recession!!!"

It's early days, of course, but then again one needs to factor in the "must be implemented, no more exceptions" additional sales tax hike coming down the pike next year. So basically, Abe's Arrows have about a year to go from no growth, to disappointing growth...to amazing just before the 10% tax on everything kicks in...and then crash into recession once again just as with last year! (While keeping in mind that during Abe's thee years, Japan's total debt burden has already increased from 211.7% of GDP to 227.2%, and is only set to increase!)

As for the "weak yen increasing competitiveness," well, maybe for those huge conglomerate exporters at the top...but still one has to ask...isn't a weaker yen making everything imported by the small and medium sized firms under contract with the big guys...much more expensive? Perhaps this is just one reason why average wages aren't increasing, even though the big boys are rolling in money over at the stock market: everything costs more to import for the all those small guys on the export production chain (which comprise the real backbone of Japan's manufacturing base.)

1 ( +5 / -4 )

dcog9065Feb. 16, 2015 - 12:50PM JST

The debt isn't that much of a problem yet, Japan doesn't ever need to worry about paying it back.

nigelboyFeb. 16, 2015 - 12:55PM JST

Why would it be unsustainable when it's yen denominated issued and bought almost exclusively within Japan?

Mugabeenomics at their best.

It doesn't matter what you do with your domestic debt, if you're self sufficient in all ways, but Sakoku is long gone and dead.

At present Japan has a current account surplus and although it runs a trade deficit, the interest and payments on foreign investments puts it in the green. The Japanese, or more precisely the dankai generation, if you haven't noticed, , have started to become spenders rather than savers and as they withdraw their savings, thus goes the current account surplus. Unless others think your currency is worth anything, you can't use it to buy non-domestic goods/resources

Then you have a choice, you either conform to the economic wishes of the international financial community, like Greece, or you use an alternative internationally accepted currency to operate your real economy, like Zimbabwe.

3 ( +7 / -4 )

At present Japan has a current account surplus and although it runs a trade deficit, the interest and payments on foreign investments puts it in the green. The Japanese, or more precisely the dankai generation, if you haven't noticed, , have started to become spenders rather than savers and as they withdraw their savings, thus goes the current account surplus. Unless others think your currency is worth anything, you can't use it to buy non-domestic goods/resources

Where is it going? You seem to think that money spent by "Dankai" generation simply disappears into thin air as if the money is burnt.

-4 ( +6 / -10 )

Japan Hobbles Out of Recession With Growth Below Estimates -- that is the Bloomberg headline. The growth below estimates is key. Uncertainty and lack of confidence still run rampant. The flight of the arrows has slowed.

3 ( +4 / -1 )

nigelboy, it is "good" that the rate of new issuance slowed slightly, but that is not much consolation given the scale of the problem.

It's like an obese person getting congratulated for going from 1,040 kgs up to only 1,078 kgs, instead of the previously expected 1,080 kgs. I'm not about to applaud.

1 ( +5 / -4 )

nigelboy, it is "good" that the rate of new issuance slowed slightly, but that is not much consolation given the scale of the problem.

We've been over this fxgai. Japan's government expenditure as a percentage of GDP is within the norm of OECD while the national burden rate is among the lowest. You're at a school where you place an exordinate amount of importance on balancing the budget but where I come from is that such ideal scenario is not necessary as some government expenditure which is long term fixtures simply cannot be paid in full outright with tax revenues. In other words, there will be a shortfall regardless.

-3 ( +7 / -10 )

That is great. Some things just need to be taken one step at a time. Good start for the economy. Keep it up. The Prime Minister is showing how much of a great man he is to the country.

-1 ( +2 / -3 )

Salvor Hardin

As for the "weak yen increasing competitiveness," well, maybe for those huge conglomerate exporters at the top...but still one has to ask

Not only the big conglomerates but also many smaller business are benefiting , imported goods are no more expensive now than they were prior 2008 to import.

Oh and the sky is still falling isn't it ?

-3 ( +2 / -5 )

Japan's government expenditure as a percentage of GDP is within the norm of OECD while the national burden rate is among the lowest.

This shows why the debt is a problem. A lot of people think about this mismatch between the size of government and what they pay in taxes, consider what (they think) it means for the future, and act accordingly.

You're at a school where you place an exordinate amount of importance on balancing the budget

The issue I have is more with the 1,040 trillion yen of public debt for Japan, which has gone from a greater than 500 trillion GDP economy to one less than 500 trillion, during the period most of this debt has been racked up.

3 ( +4 / -1 )

This shows why the debt is a problem. A lot of people think about this mismatch between the size of government and what they pay in taxes, consider what (they think) it means for the future, and act accordingly.

Nope. Trying to "pay down" which in a form of increase in consumption tax is exactly the reason for the recession that lasted tow quarters.

The issue I have is more with the 1,040 trillion yen of public debt for Japan, which has gone from a greater than 500 trillion GDP economy to one less than 500 trillion, during the period most of this debt has been racked up.

Like I stated, why do you have a problem with it?

-6 ( +2 / -8 )

More predictable idiocy about Japan's "massive" and "enormous" national debt. That "debt" is the money fools, and your money comes from government spending and nowhere else. And taking more money out of the economy by increasing the consumption tax does not "pay down" this supposedly evil "debt". It just speeds up tax collection while reducing GDP, as can been seen clearly if anybody bothers to look at the evidence of the last year.

The amount of "debt", aka money issued by a currency issuing government is of no importance whatsoever in terms of creating economic weakness. It could be a billion times GDP and it wouldn't be a problem in terms of "paying it down". The only objective is to issue the correct amount and distribution of money, and if too high or too low then you will get economic problems. The fact that people in the Japanese government don't understand such basic , kindergarten level reality means they should all be fired. In any other profession than politics and economics they would in fact be locked up for criminal negligence.

0 ( +5 / -5 )

StormRFeb. 16, 2015 - 02:25PM JST

imported goods are no more expensive now than they were prior 2008 to import.

Brent crude oil was $40 a barrel at the end of 2008, they are now $60 a barrel.

Iron ore was $60 -$90 a tonne at the end of 2008, depending on the grade. They are now near the same rates, However Australian high grade ore has declined since 2008, yet most Japanese companies, apart from the big 2, Nippon Steel and JFE, have used and still use the low grade ore, which is about the same price as 2008.

The Yen is now $118 to the dollar, when at the end of 2008 it was $106.

4 ( +5 / -1 )

Gary . I said prior to 2008

And to answer your statement about crude oil Crude Oil was in 2008 Jan 87.06 Feb89.41 mar98.44 april106.64 may118.55 june127.47 july128.08 aug112.83 sept98.50 oct73.18 nov 53.67 dec 36.80

Oil was as high as US$127 a barrel in 2009 but after the lehman collapse it plunged to US$36, go check the price in 2007 check the exchange rate in 2007 go take a look.

So what is the point you tried to make ? Do you know anything about it or the economy 5 years ago or 10 years ago ?

-2 ( +2 / -4 )

nigelboy,

why do you have a problem with it?

For one thing, as I said "a lot of people think about this mismatch between the size of government and what they pay in taxes, consider what (they think) it means for the future, and act accordingly."

That is, they tighten their purse strings.

1 ( +2 / -1 )

I mistyped 2009 instead of 2008, why is there no edit feature on this board ?

-1 ( +2 / -3 )

"This shows why the debt is a problem."

Japan's fiscal debt has never been "a problem." It's merely a big number that scares people who don't understand how public finance works. All the predictions about loss of confidence in financial markets, spiking int. rates, hyperinflation, bond meltdowns, etc. have been wrong...again and again and again.

The only danger from the debt is that dumb politicians will react to it in the wrong way, like raising taxes when private damn remains weak. Oh, damn, they did that.

-2 ( +3 / -5 )

Japan's fiscal debt has never been "a problem." It's merely a big number that scares people

And that is one reason why it is a problem.

All the predictions about loss of confidence in financial markets, spiking int. rates, hyperinflation, bond meltdowns, etc. have been wrong...again and again and again.

"Just wait! Zimbabwe!", as they say. Until the BOJ has wound down it's long term JGB infested balance sheet, your argument is jumping the gun.

0 ( +2 / -2 )

fxgai Japan is far form being another zimbabwe, how much in assests did Zimbabwe have, how about foreign debt, how about savings, how about manufacturing, export, and also abe is not about to give the farmland and business to the blacks here is he, your parallel is not even in the bounds of reality.

-3 ( +1 / -4 )

The tax rises are aimed at paying down Japan’s enormous national debt, but they have put Abe in a tricky position as he tries to balance them with his growth plan.

As stated so articulately by fxgai, the spending has to be reined in, and, so far, that's not happening. The government continues its programme of deficit spending as though economic growth can only be driven by the state.

PM Abe is showing himself to be a self-defeatist leader, enacting policies that work against his goal of economic revival, and a "virtuous cycle of consumption". There's no incentive for people to increase discretionary spending in a way that will make a difference.

Incomes are essentially stagnant, and without cuts in income taxes, or pay increments, raising VATs only makes the consumer feel that much poorer. Abe has failed to help working people, worse, his policies negatively impact the buying power of families and individuals.

Saying Japan is out of a recession is premature, unless you're an economist. In real terms, the recession continues.

2 ( +3 / -1 )

The stock market is the most forward-looking reliable mechanism that there is. As long as the yen remains fairly stable and doesn't go under the 110-115 range, things are very positive IMO.

0 ( +1 / -1 )

'as consumer spending dropped sharply following an April sales tax rise'

I hear the tax will rise to 15% by 2020, and then possibly as high as 20% soon after. But then the government couldn't possibly be this dumb...

-2 ( +1 / -3 )

A "high" debt to GDP ratio for a currency issuing government, as in Japan, is not a cause of economic problems, it is a symptom of the problem. That problem is that you are doing things wrong, following bogus economic theories and having a brain dead understanding of the monetary system, leading to a problem with income (money) distribution and aggregate demand. To then turn around and claim the solution is to take people's money (aka deficit reduction) away from them is Dark Ages level stupid. The net savings of the public is the mirror image of the government's deficit, always.

0 ( +1 / -1 )

Sorry guys, Japan is out of recession. They can still press the delete button after transfer the debt to an account. If people believe it worth something, then it worth.

0 ( +0 / -0 )

This writer has been contributing astrological comment in Japantoday in relation to global economic growth for last about three months. The main advice was that there is always room for reform and improvement through sufficient and appropriate strategy. It is right that Japan has made advancement in economic growth though it is said to be a little below expectations. So well done.

0 ( +1 / -1 )

Japan's fiscal debt has never been "a problem

LOL.. Japan's total government revenue is $450 billion. The expenditure on servicing the interest on their debt however is at $225 billion. So half the government revenue is spent on interests alone. What's the killer? The fact that Japanese expenditure is $950 billion - meaning, every year, Japanese government is $450 billion in shortfall which gets added onto the national debt.

So how does Japan even survive? They have an obedient Japanese tax payers who are like sheep, who keeps buying the Japanese government debt. The trouble is, these people are getting old rapidly, so there will come a time when they can't continue to buy, instead, they'll want their money returned, so that they can live on them in their retirement years. Imagine what will happen if the Japanese government can't pay them back. They'll have to make the printing presses go into overdrive, which will inflate away their obligations to their citizens.

Short the Yen, it's going down massively.

-3 ( +2 / -5 )

So how does Japan even survive? They have an obedient Japanese tax payers who are like sheep, who keeps buying the Japanese government debt. The trouble is, these people are getting old rapidly, so there will come a time when they can't continue to buy, instead, they'll want their money returned, so that they can live on them in their retirement years. Imagine what will happen if the Japanese government can't pay them back. They'll have to make the printing presses go into overdrive, which will inflate away their obligations to their citizens.

Nope. The problem with the deflationary spiral has been that these 'older folks' didn't spend which is the reason why the household financial assets exceeded 1,600 trillion yen.

http://jp.reuters.com/article/topNews/idJPKBN0JW00B20141218

The excess money held in financial institutions are simply buying JGB as opposed to lending (i.e. investments and purchases by the said individuals as well as the corporations).

So the deflationary spiral has been a repeat of Government spending paying these old folks retirement--->old people don't spend but put their retirement income in the bank---->bank has excess cash which they in turn buy JGB--->repeat the process.

As I addressed Gary Rayonor, the money (yen) does not simply dissapear into thin air but is circulated in a stagnant way which is the very cause of this deflationary spiral.

-1 ( +2 / -3 )

old people don't spend but put their retirement income in the bank

So old people don't need to eat or need housing? They just save and save? Are they machines who don't need daily necessities who will just buy Japanese government debt until they die? OK, fine, let's say you are right. That could be true for those Japanese who were fortunately enough to save their money during the heydays of Japan in the 1970's and 1980's. What about the current generation of people who are at working age, when they grow old? Will they be able to continue the tradition of buying Japanese government debt? Remember, their wages are decreasing, taxes increasing, and they're not nearly as good as their forefathers during the best days of Japan. They don't have the same luxury as the former generation of Japanese, which means Japan's pool of people who will support the Japanese government financially, is decreasing by each year.

-4 ( +2 / -6 )

So old people don't need to eat or need housing? They just save and save? Are they machines who don't need daily necessities who will just buy Japanese government debt until they die? OK, fine, let's say you are right. That could be true for those Japanese who were fortunately enough to save their money during the heydays of Japan in the 1970's and 1980's. What about the current generation of people who are at working age, when they grow old? Will they be able to continue the tradition of buying Japanese government debt? Remember, their wages are decreasing, taxes increasing, and they're not nearly as good as their forefathers during the best days of Japan. They don't have the same luxury as the former generation of Japanese, which means Japan's pool of people who will support the Japanese government financially, is decreasing by each year.

You seem to be confused much like that of other debt hawks who are utterly clueless in regards to public finances.

As to your first couple of sentences, the older generation tends to not spend as much as the working generation for the simple reason that their large item spending (like real estate, automobiles, children education) were completed long ago so with their fixed income, on average, are mostly kept in their respective financial institutions.

Secondly, you're still under the false impression that the government payout, which in turn are financed by JGB, simply vanishes into thin air when it is basically transferred from one entity to another and so on, circulating. Hence, the 'pool' is and always are there.

The government, more than anything, would prefer that these elders to spend more and for the coporations who also have excess cash to spend more as opposed to cash sitting in the banks only to be invested in JGB. This simply means that while the JGB rates will rise, the consumption and investment increased so both have positive effect on the GDP as well as tax revenue.

-1 ( +3 / -4 )

The usual Nigelboy falsehoods.

Nigelboy

'the older generation tends to not spend as much as the working generation for the simple reason that their large item spending (like real estate, automobiles, children education) were completed long ago so with their fixed income, on average, are mostly kept in their respective financial institutions.'

According to government data, nearly a quarter of its population of about 127 million is above the age of 65.......households headed by those aged 60 or above accounted for more than 40 percent of total consumption in 2011, http://www.cnbc.com/id/49472404

Nigelboy

The government, more than anything, would prefer that these elders to spend more.

The household savings rate in the fiscal year ending in March dropped to minus 1.3 percent, ending up negative at $30 billion (3.7 trillion yen), according to Thursday’s report by the Cabinet Office. The figure has special significance for Japan, as a major part of the government’s debt is funded by the country’s own savers. http://rt.com/business/217771-japan-savings-rate-falls/

However people who compare Japan 2015 to Zimbabwe or Weimer Germany are equally wrong, Japan in the not so distant future will be a combination of both. When the BOJ is seen moneterizing government debt, which it is, Japan will have hyper inflation, like Weimer Germany, and when the Japanese government is unable to service existing bebt, not future debt which at present has only one buyer, the BOJ, then the Yen will be worthless for international transactions, like the Zimbabwe dollar.

The real comparison of Japan 2015 would be Spain in the 17th Century, when Spain financed government debt through South American bullion. Just like that bullion eventually dried up, so will Japan's current account surpluses as the dankai generation spend their savings in retirement. Just like Spain in the 17th -18th Century was forced to go bowl in hand to the international community to pay for basic services, so will Japan. And just like Spain, those international financiers bled Spain dry with the interest rates on the loans they charged.

A final note...This spending of the dankai's savings is being speeded up under Abenomics because the dankai's fixed pension incomes are not keeping up with Abe's artificially induced domestic inflation and a crises that would have happened in the 2020s will happen in this decade.

-1 ( +3 / -4 )

@Hotmail

"So half the government revenue is spent on interests alone."

Wrong, and you've fallen for one of the biggest myths out there. The Min. of Fin calculates "debt service" as not just interest payments but the principle each year (even when the principle isn't due). The true debt service payments - ie, on interest and eventual redemption - are massively less, especially given that Japan has among the world's lowest rates.

Even if that were not the case, no big deal. Japan easily meets the obligations by issuing its own currency, which it can do with the press of a button. If anything you believe were remotely true, concrete risks would have emerged ages ago. They haven't. Never.

-1 ( +2 / -3 )

Nigelboy is 100% correct. It makes no difference at all to the bond market if old people run down their savings and cash in their government bonds. The money goes nowhere, all that happens is that somebody else becomes the nominal holder of the bond. It also makes no difference, contrary to media myth, if the bonds are held domestically or by foreigners. Money in the financial system doesn't care who "owns" it. For evidence, look at a little country called "The United States of America", where a very large % of bonds are held by foreigners and interest rates are also at rock bottom levels.

0 ( +3 / -3 )

Guy_Jean_DailleultFeb. 17, 2015 - 07:29AM JST Nigelboy is 100% correct. It makes no difference at all to the bond market if old people run down their savings and cash in their government bonds. The money goes nowhere, all that happens is that somebody else becomes the nominal holder of the bond.

You, like Nigelboy, have misunderstood what Abenomics is aiming to do. Abenomics is not concerned with specifics , but with the general, a creation of a virtuous cycle. In Abenomics, the movement of private investment from the bond market is a causation, not a solution to Japan's financial woes.

Abe wants people and companies to get the maximum reward for their labors and investments. JGBs offer the minimum reward for an investment ergo sum get them to move their investment elsewhere. He does not want them to spend their investment principal, he wants them to spend interest payment on that principal. The higher the interest the payment the more they have to spend.

The same is applicable to the labor market. He wants workers to receive higher rewards for their labor, The higher their wages, the more disposable income there is to spend

The same is with business as a whole. From their transactions, Abe hopes that they will have more profits to spend on capital and labor.

These 3 above variables, not government public spending and BOJ QE are the essence of Abenomics. Government public spending and BOJ QE are meant to be the means to these 3 variables. , HOWEVER!!!! after 2 years of Abenomics and public spending/QE none of these variables are being met, Salaries, excluding last month's bonus blip, wages have decreased, in real terms, for the last 18 months. For the first time since records began, Japanese became net spenders, rather than savers and used Y30 billion of their investment principal. While capital spending increased in the last quarter, its a bad gambler who will bet the same on the next 2 quarters, especially when domestic spending only increased 0.6% in the last quarter from the lows of the previous quarter.

To believe that Japan can export itself out its economic mires - most of the growth in last quarter was exports - is economic cukooland thinking for a number of reasons.

Basically by any quantitives, Abenomics is not working and the only thing growing, in real terms, are the national debt and prices in the shop.

-1 ( +3 / -4 )

According to government data, nearly a quarter of its population of about 127 million is above the age of 65.......households headed by those aged 60 or above accounted for more than 40 percent of total consumption in 2011, http://www.cnbc.com/id/49472404

http://www.mhlw.go.jp/wp/hakusyo/roudou/12/dl/02-2.pdf

Pg. 167

The household savings rate in the fiscal year ending in March dropped to minus 1.3 percent, ending up negative at $30 billion (3.7 trillion yen), according to Thursday’s report by the Cabinet Office. The figure has special significance for Japan, as a major part of the government’s debt is funded by the country’s own savers. http://rt.com/business/217771-japan-savings-rate-falls/

I'm not interested in the rate. I'm interested in the total amount which exceeded 1600 trillion yen as linked above.

As to another lame hyperinflation argument, do you even know what the numerical number to achieve this?

-2 ( +2 / -4 )

the older generation tends to not spend as much as the working generation for the simple reason that their large item spending (like real estate, automobiles, children education) were completed long ago so with their fixed income, on average, are mostly kept in their respective financial institutions.

That's the old generation that's dying off. What about the current working generation, when they grow old? Decreasing wages, economic deflations, lack of permanent full time jobs, etc, all mean that the current working generation isn't as well off. When they grow older (a shrinking number to boot), they will be far more dependent on the government because they hold far less assets, compared to the current older generation who were responsible for Japan's best economic days of 1970's and 1980's, therefore have far less to spend on Japanese government bonds.

-3 ( +1 / -4 )

Even if that were not the case, no big deal. Japan easily meets the obligations by issuing its own currency, which it can do with the press of a button. If anything you believe were remotely true, concrete risks would have emerged ages ago. They haven't. Never.

If this were truly the case, why sell bonds at all? Why carry debt at all? Why spend 26% of all tax revenue collected (not "half") on debt servicing? Why not just print money to pay for it's expenditures?

I will wait for the revised numbers, which, if history holds true, will be revised downward. 2014 will be a negative growth year.

0 ( +3 / -3 )

To believe that Japan can export itself out its economic mires - most of the growth in last quarter was exports - is economic cukooland thinking for a number of reasons.

Basically by any quantitives, Abenomics is not working and the only thing growing, in real terms, are the national debt and prices in the shop.

WRONG - and please tell me the just some of the many reasons it is cukooland ?

The economy is growing , the work force is growing, machinery orders are growing, exports are growing, tourism is growing the share market is growing, and wages are growing , 40 Something % of companies will raise wages, some already have.

But please don't forget to tell us why exporting is cukooland thinking, I wait with baited breath.

0 ( +0 / -0 )

StormR,

Japan is far form being another zimbabwe,

You must have missed the post, but "Just wait! Zimbabwe!" is a little joke that started up here sometime back, as a retort to those who believe that unlimited central bank asset purchases have no potentially negative side-effects whatsoever.

nigelboy,

debt hawks who are utterly clueless in regards to public finances.

Abe and Aso say they are sticking with their 2020 fiscal consolidation targets, one way or another. Are they clueless debt hawks? Kuroda, who has consistently urged the government to get itself in order?

Personally I think these guys are all a little loopy, but they still come across as being more grounded in reality your band of debt doves.

This simply means that while the JGB rates will rise, the consumption and investment increased so both have positive effect on the GDP as well as tax revenue.

That's what is known as a "best case scenario". However the reality is you are not omniscient and have no more clue than anybody about exactly what will happen. (People who think they do are the ones who get burnt most when things go downhill.)

When rates rise, other scenarios have Japanese banks suffering nasty losses on their bond holdings (the FSA and BOJ jointly started investigating this area last year - you think it's a waste of time?). It's odd that the BOJ was involved, since these days the bank most at risk of JGB valuation write-downs is the BOJ, and they just happen to issue the currency that is used in Japan.

sangetsu03,

If this were truly the case, why sell bonds at all? Why carry debt at all? Why spend 26% of all tax revenue collected (not "half") on debt servicing? Why not just print money to pay for it's expenditures?

Yes, that's right. Whoever invented fiscal policy? What were they thinking? Some utterly clueless debt hawk, no doubt.

0 ( +1 / -1 )

Gary Raynor - Savings do not create investment, it is the other way around. Forcing savings out of JGBs just creates a hot potato effect which pushes up stock and asset prices, which in turn REDUCES the rate of return on the investment. The opposite of the effect you say they are trying to achieve. And the money itself is still stuck in the financial system, not in the real economy, only now not receiving the interest payments from the JGBs. Except for any possible "wealth effect" where people spend more because they feel richer, or spend money they received by selling their asset (both very dubious scenarios) the effect of QE on the real economy is negative.

And for the millionth time, old people do not finance the Japanese government, unless you think Mrs. Watanabe has a yen counterfeiting machine. Their savings rate and amount of savings is irrelevant to the bond market.

-1 ( +0 / -1 )

There are two types of people, those who make business work, and those who just talk about it, and why it doesn't work.

I notice there are a lot of talkers on here and very few doers.

If these really clever economist type degree holders on here were as smart as they think they are, they'd be twice as smart as they need to be, thing is though they aren't even close. How come they arn't advising large banks, investment fund managers, or even governments , I mean come on, some cant even manage their own household budget effectively. They read some theory on economics at high school and think that is all there is.

1 ( +2 / -1 )

StormRFeb. 17,

WRONG - and please tell me the just some of the many reasons it is cukooland ?

Because the rest of the world is not going to let Japan implement a 'beggar thy neighbor' currency policy, I know that macroeconomics is not high on the agenda of selling used cars to New Zealand, but it is in international economics. For Japan to be allowed to export herself out of her economic problems ( manufacturing over-production and manufacturing under consumption), would mean that they would allow Japan to export its deflation to the rest of the world.

Since the curse of deflation is the number 1 enemy of early 21st Century macroeconomics, domestically and internationally. The world economic community would be utterly crazy to allow Japan to do this and any Japanese politician who thinks otherwise is living in cuckooland. So far Japan has gotten away with its currency weakening because

Japan says that it an indirect result of QE and not an intended policy, However voices in both Europe and the USA (both houses of congress now want a currency manipulation clause placed in the TPP) are started to question this, since the weakening of the yen was meant to be a breathing space for Abe to implement the third arrow, which he hasn't. So far the weakening of the yen has not been passed on in the prices of Japanese products. The Japanese companies took the profit, rather than increase sales. However Japanese companies have started to lower the price of their products and this is not acceptable to South Korea or more importantly China. We are now, in north Asia, in the first round of a currency war, which Japan cannot win,

StormRFeb. 17,

The economy is growing.

The Japanese economy grew.......0% in 2014...... Go look at the statistics.

I remember a year ago you were claiming that Japanese industrial production increased in April 2014, compared to March 2014, and wouldn't accept the evidence put before you that it wasn't so.

Then somebody was kind enough to point out to you that because the Japanese always have the weekly Golden Week holidays in April, Japanese production is always weaker in April, compared to March, where there is only one national holiday.

Don't make the same mistake, save yourself, go check the statistics... the Japanese economy grew 0% in 2014.

1 ( +3 / -2 )

You think used cars to NZ is what its all about ? Laughable comment.

The economy is growing, look at the results just released, The economy is recovering like it not dog.

Unless there is a major crisis or event on the horizon it will continue to grow.

Production & manufacturing is moving back to Japan, exports are increasing and will increase more. Tourism is way up and will continue to grow.

Machinery orders are up 24% alone, this tells us companies are investing in plant and machinery to replace old ones and increase production, surely they arn't thinking to sell the increased products all domestically, or is it just that govt bought new printing presses to print more cash do you think ?

Korea cant do much about the yen and never has been able to, Chinas currency is artificially low anyway so who else ? The euro ? ha dream on.

-3 ( +0 / -3 )

StormR wrote

The economy is growing, look at the results just released

I give up!!!!

'In 2014, Japan's economy grew by 0.04 per cent compared to 2013'. https://au.finance.yahoo.com/news/abenomics-keeps-japans-economy-afloat-234609322.html

'Growth remains sluggish. There was no expansion at all in 2014.' http://www.theguardian.com/business/economics-blog/2015/feb/16/japan-beats-recession

For all of 2014, the world's No. 3 economy stagnated, neither shrinking nor expanding http://www.chinapost.com.tw/asia/japan/2015/02/17/429210/Japan-manages.htm

In 2014, Japan's economy grew by 0.04 percent compared to 2013 http://www.globalpost.com/dispatch/news/agencia-efe/150216/abenomics-keeps-the-japanese-economy-afloat

StormR wrote

They read some theory on economics at high school and think that is all there is.

At least they got to high school

0 ( +1 / -1 )

Japan's economy grew at a 2.2 percent clip in the last quarter on a sharp recovery in exports. The preliminary data released Monday, Feb. 16, 2015, show the world's third-largest economy emerged from recession in October-December, as many economists had forecast.

You say what? This was on here in the news yesterday..........................................

Oh the sky is still falling ! Isn't it ?

-1 ( +0 / -1 )

StormRFeb. 17, 2015 - 12:14PM JST

You say what? This was on here in the news yesterday..........................................

You and my goldfish may live in only the present now, but there are 360 days in a fiscal year.

I repeat, in the fiscal year proceeding yesterday's economic data, the Japanese economy grew by .....

Meanwhile the Japanese public debt increased by .......... and the biggest owner of Japanese government debt is now.....

Abenomics is working ............. me thinks not!!!!

0 ( +1 / -1 )

I tell you what its sure as hell working for me compared to the last seven years, its working for a ton of other people in business too.

-2 ( +0 / -2 )

Production & manufacturing is moving back to Japan, exports are increasing and will increase more. Tourism is way up and will continue to grow.

Source? Most business that I know is scrambling to get OUT of Japan. Not return BACK to the current mess it is in. It simply wouldn't make logical sense for manufacturing to up and move back to Japan. What would be the benefits of doing so if a business had already established manufacturing in a lower cost area of Asia?

0 ( +2 / -2 )

Source: http://www.marketpulse.com/20150108/weak-jpy-bringing-manufacturing-back-japan/

What would be the benefits of doing so if a business had already established manufacturing in a lower cost area of Asia?

Reasons are given in the article.

At the same time, it's not like the entire economy is roaring. StormR's sector may be doing well, but take the Economy Watchers survey results for example. The survey showed things were good when Abenomics was first starting, as everyone had high expectations. Now that people's expectations have been let down by Abe, the survey results have dropped again.

0 ( +1 / -1 )

Thanks fxgai! Will have a look!

-1 ( +0 / -1 )

fxgai Wrote

At the same time, it's not like the entire economy is roaring. StormR's sector may be doing well, but ...

That's because the Kiwi dollar is at a near high to the Yen.

This has got very little to do with Abenomics, but more to do with high New Zealand interest rates and weak US interest rates.

By September, at the latest, the Kiwi dollar will come crashing down because the Federal reserve will raise interest rates, the RBNZ will reduce interest rates and Chinese growth, because of the property slump, will go below 5%. Yet Abenomics will still be blundering along for another couple of months.

I had a lot of Kiwi trader friends who took a serious hit in 2008-2009, when the Kiwi dollar dropped below Y50.

0 ( +1 / -1 )

The weak yen is good for us and other exporters, in turn good for manufacturers too who ship off shore, as can be seen by the increase in machinery orders.

A weak yen is good for us? Yes and no.

A low yen benefits exporters, and firms with overseas business. Toyota, Sony, and the rest of them are happy. You're right there.

However, it hurts those who import goods, like fruit, lumber, and steel. Also, the weak yen's negative impact is mitigated largely by low oil prices. If oil goes back up again, a weak yen could hurt Japan's economy by driving up energy costs.

I know a lot of people in business who are much happier now than prior to Abe coming to power. Not just exporters either

That might be true, especially if those business people work for large, established corporation with deep coffers. However, for consumers, small businesses, and importers, the situation has got worse.

The Japanese market remains over-regulated, and distorted to favour incumbent companies over start-ups, and foreign investors. Taxes on business remain high at %35; incomes also remain heavily taxed, and stagnant.

PM Abe, so far, has done more to hurt the economy than help it.

0 ( +0 / -0 )

Abe and Aso say they are sticking with their 2020 fiscal consolidation targets, one way or another. Are they clueless debt hawks? Kuroda, who has consistently urged the government to get itself in order?

Not to a degree as you are for they are more concentrated on achieving greater revenues.

That's what is known as a "best case scenario". However the reality is you are not omniscient and have no more clue than anybody about exactly what will happen. (People who think they do are the ones who get burnt most when things go downhill.)

Like I said, where else does the money go when JGB is not an option?

When rates rise, other scenarios have Japanese banks suffering nasty losses on their bond holdings (the FSA and BOJ jointly started investigating this area last year - you think it's a waste of time?). It's odd that the BOJ was involved, since these days the bank most at risk of JGB valuation write-downs is the BOJ, and they just happen to issue the currency that is used in Japan.

It's essentially a gradual shifting one asset to another if in the case I mentioned would mean increase in new loans. What you have stated are huge spikes based on sudden monetary policy shift.

-1 ( +0 / -1 )

The Japanese government has cut corporate tax, but it needs even more revenue to make up shortfall other than recent increase in consumption tax. The problem is that J-government has increased the inheritance tax which in the past usually affected only the wealthy since there were enough deductions and exemptions to make little concern to the middle class. The middle class are now worried. The new inheritance tax rules will lower the asset holdings that determines whether or not they owe tax and how much the amount will be. The change in rules are designed to collect more money from people who have homes in major cities. With many now entering their retirement years, it’s assumed there will be a windfall in inheritance tax revenues. In many cases, when someone dies with property in central Tokyo or Osaka, unless their heirs are incredibly rich, many will have to sell the land in order to pay the inheritance tax on it. People work all your lives paying tax and when you manage to finally accumulate some assets to hand on your children the governments come to steal it.

2 ( +2 / -0 )

nigelboy,

Not to a degree as you are for they are more concentrated on achieving greater revenues.

I see you do appear to categorize Abe and Aso as "debt hawks", but I would emphasize that I too am all in favour of greater revenues - to the extent that it is feasible and realistic. (With current revenues at 50-odd trillion yen, I don't think the government could be able to sustainably produce an extra 40-45 trillion yen in revenues, anytime soon.)

Like I said, where else does the money go when JGB is not an option?

Stocks. Foreign bonds. This is what the banks and insurers etc have been doing, after selling down their JGB holdings (to the BOJ) in recent times in the wake of QQE, according to various news reports in recent times.

It's essentially a gradual shifting one asset to another if in the case I mentioned would mean increase in new loans.

Hopefully things do work out in a favourable sequence that you envision, but I don't think it's a sure thing.

What you have stated are huge spikes based on sudden monetary policy shift.

I don't know your definition of a "huge spike", but things can happen even in the absence of the sudden monetary policy shifts. "The JGB market has undergone volatile swings this year", reports a Reuters article from yesterday. The volatility has occured even without any BOJ policy change this year (as of time of writing - I hedge that since there is a BOJ meeting concluding today).

0 ( +0 / -0 )

I see you do appear to categorize Abe and Aso as "debt hawks", but I would emphasize that I too am all in favour of greater revenues - to the extent that it is feasible and realistic. (With current revenues at 50-odd trillion yen, I don't think the government could be able to sustainably produce an extra 40-45 trillion yen in revenues, anytime soon.)

No. You went as far as suggesting cutting the social service and pension costs which is the largest government outlay by a mile.

Stocks. Foreign bonds. This is what the banks and insurers etc have been doing, after selling down their JGB holdings (to the BOJ) in recent times in the wake of QQE, according to various news reports in recent times

So it doesn't disappear. Like I said, investment. Positive effects on the economy.

Hopefully things do work out in a favourable sequence that you envision, but I don't think it's a sure thing

I didn't say it was. But without the loose monetary policy, Japan would be stuck in a deflationary spiral. Forget the equity markets. Forget lending.

I don't know your definition of a "huge spike", but things can happen even in the absence of the sudden monetary policy shifts. "The JGB market has undergone volatile swings this year", reports a Reuters article from yesterday. The volatility has occured even without any BOJ policy change this year (as of time of writing - I hedge that since there is a BOJ meeting concluding today)

Like what "volatile swings this year"? .

.

.

0 ( +1 / -1 )

nigelboy,

No.

Yes...

You went as far as suggesting cutting the social service and pension costs which is the largest government outlay by a mile.

Sure. That doesn't mean I don't support increasing revenues to the extent feasible. It is illogical to assume otherwise.

I didn't say it was.

Well, that's an important admission. Fingers crossed.

But without the loose monetary policy, Japan would be stuck in a deflationary spiral. Forget the equity markets. Forget lending.

Loose monetary policy is one thing, essentially monetizing the debt is another.

Like what "volatile swings this year"? .

Read Reuters etc, like I do, if you want to know the news...

0 ( +0 / -0 )

Sure.

So you are different from Abe and Aso. Their policies aren't really about cutting outlays.

Well, that's an important admission. Fingers crossed

Yeah. I didn't say it was a 'sure' thing. Nothing ever is.

Loose monetary policy is one thing, essentially monetizing the debt is another.

Your infatuation with this 'debt' and how it should be treated like a regular household debt is simply mind boggling.

Read Reuters etc, like I do, if you want to know the news

Why don't you just simply explain it to me? Put your 'spin' on it.

0 ( +1 / -1 )

nigelboy,

So you are different from Abe and Aso. Their policies aren't really about cutting outlays.

They don't actually have a policy yet (still...), we have to wait for June. But they have no realistic other choices to acheive the goal that they say they will acheive.

Your infatuation with this 'debt' and how it should be treated like a regular household debt is simply mind boggling.

Well, you are the one out on the fringe, I have to say. The government itself is saying it is going to try to get its books in order. What a bunch of morons they are, says the entire world... or not. It's just you and your band of merry debt doves who don't see any issues with the status quo.

Yeah. I didn't say it was a 'sure' thing. Nothing ever is.

Good man. Some people don't even seem to be able to admit this much.

Why don't you just simply explain it to me?

With an illiquid, volatile bond market, rates could rise more rapidly than is people hope for, and this could have various negative consequences and knock-on effects. (If you were looking for info about the recently illiquid and volatile JGB market, you can Google for that and find plenty.)

1 ( +1 / -0 )

They don't actually have a policy yet (still...), we have to wait for June. But they have no realistic other choices to acheive the goal that they say they will acheive.

It's not like they haven't passed a budget like the ones that surpassed the outlays of all previous cabinets. It's not like they didn't achieve this by reducing the new issuance of JGB.

Well, you are the one out on the fringe, I have to say. The government itself is saying it is going to try to get its books in order. What a bunch of morons they are, says the entire world... or not. It's just you and your band of merry debt doves who don't see any issues with the status quo.

By 2020. I sense an urgency. If they don't meet it, I see a collapse of gigantic proportions. (sarcasm)

Like I said, stop thinking as though it's a household debt. There will be no foreclosure or collection company harassing you.

With an illiquid, volatile bond market, rates could rise more rapidly than is people hope for, and this could have various negative consequences and knock-on effects. (If you were looking for info about the recently illiquid and volatile JGB market, you can Google for that and find plenty.)

There are no negative consequences from a macroeconomic standpoint. The knock on effect is simply those losses are somebody's gain within the holders of Japanese Yen. In most case, it's probably the same holder who happens to be diversified in both bonds and equity markets.

What we know is that the efforts to 'lessen the debt' via increase in consumption tax killed any momentum. Period.

-2 ( +0 / -2 )

nigelboy,

To a clueless debt hawk like me, it seems like wishful thinking to believe that because something worked to meet the 2015 targets, it'll work just as well to meet the 2020 targets. If the situation was this simple I have to question why the government wants until June to come up with a plan for their 2020 targets. But then they are a bunch of clueless debt hawks too.

Like I said, stop thinking as though it's a household debt.

There's a brilliant strategy. Tell people how they ought to think (hope they abide), then everything is bound to be rosy! Maybe the government could get into the censorship business to strengthen this program.

What we know is that the efforts to 'lessen the debt' via increase in consumption tax killed any momentum.

Any momentum before the consumption tax hike, was probably due largely to the impending consumption tax hike... and never mind the higher import prices.

0 ( +1 / -1 )

Simply letting citizens know what the government is planed to do to improve social welfare by its increased budget and spending money eventually help the economy back on its track would be one factor to rejuvenate the domestic economy.

-1 ( +0 / -1 )

To a clueless debt hawk like me, it seems like wishful thinking to believe that because something worked to meet the 2015 targets, it'll work just as well to meet the 2020 targets. If the situation was this simple I have to question why the government wants until June to come up with a plan for their 2020 targets. But then they are a bunch of clueless debt hawks too.

They are. Balancing the budget and reviving the economy are polar opposite ends where if one tries to do both, it results in a recession.

There's a brilliant strategy. Tell people how they ought to think (hope they abide), then everything is bound to be rosy! Maybe the government could get into the censorship business to strengthen this program.

It's not about trying to put a rosy picture but actually undertanding the concept that it's simply net/sum zero game on Japan (government, financial institutions as a median, and private sector).

Any momentum before the consumption tax hike, was probably due largely to the impending consumption tax hike... and never mind the higher import prices.

That wasn't the momentum I wasn't referring to since that number (a quarter before the implementation of consumption tax hike) is simply a one time event.

-3 ( +0 / -3 )

They are. Balancing the budget and reviving the economy are polar opposite ends where if one tries to do both, it results in a recession.

Not necessarily, nigelboy...If the government allows working people to keep more of their income, there would be more discretionary spending, making the consumption tax actually work the way it's supposed to.

Cutting business taxes down to about 15% to 20% (along with tax incentives) would make robust investment, and higher wages that much more feasible.

These two scenarios would more likely lead to higher investment, and discretionary spending which generate more revenues. Forcing more taxation on consumers with stagnant incomes simply won't deliver the kind of revenue the government needs to balance the budget.

The Japanese government is very much like all other governments in the developed world: it imposes too many, and too much taxes on its citizens. No government in the G8 can say it doesn't levy enough taxes.

Much of your argument assumes the government doesn't collect enough money via taxation. That simply isn't the case. People in Japan pay a lot of taxes on income, property, profits, and more.

If the economy is going to be revived, the government has to get off people's backs, and out of their pockets. It has to hold the line on wasteful spending, eliminate inefficiencies, incompetence, and/or corruption.

0 ( +1 / -1 )

Not necessarily, nigelboy...If the government allows working people to keep more of their income, there would be more discretionary spending, making the consumption tax actually work the way it's supposed to.

That wasn't the case, hence the deflationary spiral.

And no. You haven't followed my argument at all.

-3 ( +0 / -3 )

Your net zero sum game on Japan concept is not misunderstood, it's more that it has no practical real world implication for anyone who is to you a "clueless debt hawk", which would seem to include almost everyone given that you clump the current Japanese administration in that camp.

That wasn't the momentum I wasn't referring to

Well whatever, make it up as you go along. It's just BS in the end - if the economy wasn't good enough to take the tax hike when it was brought in, when would it have been? "Later". Unless everyone were an insane debt dove, which in the real world everyone is not, it doesn't wash.

That wasn't the case, hence the deflationary spiral.

I never saw a deflationary spiral myself. I never experienced, say, cans of coke "spiraling" in price down from 100 yen to 95, 90, 75, 50 yen.

-1 ( +0 / -1 )

Your net zero sum game on Japan concept is not misunderstood, it's more that it has no practical real world implication for anyone who is to you a "clueless debt hawk", which would seem to include almost everyone given that you clump the current Japanese administration in that camp.

https://www.boj.or.jp/statistics/sj/sjexp.pdf It's really simple. Money doesn't evaporate. There is a reason why there is no panic. The word "unsustainable" is not applicable.

Well whatever, make it up as you go along. It's just BS in the end - if the economy wasn't good enough to take the tax hike when it was brought in, when would it have been? "Later". Unless everyone were an insane debt dove, which in the real world everyone is not, it doesn't wash.

Never did. The only BS is that you and others bring id this "unsustainable debt" argument every time when such article appears.

I never saw a deflationary spiral myself. I never experienced, say, cans of coke "spiraling" in price down from 100 yen to 95, 90, 75, 50 yen.

Perhaps looking at consumer price index statistics would help.

-1 ( +0 / -1 )

Money doesn't evaporate.

It's unclear what relevance you think should be assigned to this.

Japanese yen didn't evaporate during Japan's past high inflation episode post WWII either, did it? Back then the government was issuing bonds to pay for its war expenses, today it's for social security, etc.

Zimbabwean dollars didn't evaporate in Zimbabwe in 2008 either. (Some tourists took off with 20 billion dollar notes as sovenirs in the end, though.)

The only BS is that you and others bring id this "unsustainable debt" argument every time when such article appears.

You might as well get used to it, because a whole bunch of organizations, from the Japanese government itself to the BOJ, IMF, OECD, behind-the-curve credit ratings agencies etc, are all going to continue to point this out. You would have it that they are all clueless - as objectively as possible, how plausible do you think that is?

Perhaps looking at consumer price index statistics would help.

No "spiral" there either. Japan has had ever so mild deflation, at worst.

If there was any issue it was that the rest of the world had relatively higher inflation, and Japan's leaders decided ostensibly to try to join the club to avoid becoming everyone's beggared neighbour.

-1 ( +0 / -1 )

Japanese yen didn't evaporate during Japan's past high inflation episode post WWII either, did it? Back then the government was issuing bonds to pay for its war expenses, today it's for social security, etc.

And today's social security doesn't evaporate. Seriously, how desperate one has to be to bring up a war torn Japan era.

You might as well get used to it, because a whole bunch of organizations, from the Japanese government itself to the BOJ, IMF, OECD, behind-the-curve credit ratings agencies etc, are all going to continue to point this out. You would have it that they are all clueless - as objectively as possible, how plausible do you think that is?

Point what out? How has their 'warnings' ever turned into a massive sell where the rates spiked? Is this type of argument like your security blanket because you seem to use this a lot.

No "spiral" there either. Japan has had ever so mild deflation, at worst.

No. Before the BOJ's policy preceding Kuroda, from 2002, the CPI core index are 104, 103.7, 103.1, 102.7, 102.3, 102, 101.2, 100, 99.1, 98.5, 98.1.

-2 ( +0 / -2 )

Seriously, how desperate one has to be to bring up a war torn Japan era.

I don't see anything desperate about the comparison. The scale of the government's debts today is equivalent (or greater) to what it was at the end of WWII. However the borrowed money is spent, be it to pay soldiers then or pensioners today, the mechanics appear to be comparable.

How has their 'warnings' ever turned into a massive sell where the rates spiked?

It's not rational to expect to see something resembling a crisis before one accepts that such risks exist.

But anyway, it is now well established that you think the government, BOJ, IMF, World Bank, OECD, and any other obvious examples I forget, are all bonkers, whereas you, posting comments at JT, are not.

No.

Err, no.

-1 ( +0 / -1 )

I don't see anything desperate about the comparison. The scale of the government's debts today is equivalent (or greater) to what it was at the end of WWII. However the borrowed money is spent, be it to pay soldiers then or pensioners today, the mechanics appear to be comparable.

It is desperate. You are comparing a war torn nation which had to basically start from scratch. It didn't matter what level of government debt existed at that time.

It's not rational to expect to see something resembling a crisis before one accepts that such risks exist.

So the rates didn't spike but on occasions went even lower despite the 'unsustainable ' fear mongering from IMF in 2011 or these joke of the so-called credit agencies who downgraded them.

But anyway, it is now well established that you think the government, BOJ, IMF, World Bank, OECD, and any other obvious examples I forget, are all bonkers, whereas you, posting comments at JT, are not.

Like I said this is your security blanket argument since you yourself can't come up with an argument.

Err, no.

11 consecutive years of core CPI decline is a deflationary spiral.

-2 ( +0 / -2 )

You are comparing a war torn nation which had to basically start from scratch.

Generally, I take it that the debt dove argument is that outstanding debt due to be repaid/serviced can be dealt with indefinitely by simply issuing further debt. But now you make out that being war torn doesn't count, even though Japan was rebuilt after the war and demonstrated quite some productive capacity last century.

Perhaps you should have just claimed that the administrators after the war were clueless debt hawks, like the ones now. (Of course, we can trust that today's clueless debt hawks would never take actions similar to those of the post-war debt hawks, even though they have used pre-war QE in Japan as a reference for current day policy).

So the rates didn't spike but on occasions went even lower

"Like I said", you are pointing to the fact that something resembling a crisis didn't happen recently as some kind of forecast for the future. What one can currently see in the rear-view mirror doesn't tell one much about what lies on the road ahead.

11 consecutive years of core CPI decline is a deflationary spiral.

No, there was no spiral.

http://www.tradingeconomics.com/japan/consumer-price-index-cpi

As the chart shows if you adjust the dates, from the late 1950's until the 1990's you could say there was an "inflationary spiral".

From the 1990's until now, prices would be best described as flat. You can get mild deflation depending on which dates in between you choose, but it's only if one is myopic that one could think there were ever a "deflationary spiral".

1 ( +1 / -0 )

Generally, I take it that the debt dove argument is that outstanding debt due to be repaid/serviced can be dealt with indefinitely by simply issuing further debt. But now you make out that being war torn doesn't count, even though Japan was rebuilt after the war and demonstrated quite some productive capacity last century.

Yes. A currency of a developed country is treated as polar opposites of currencies of war torn countries or third world countries. Currency in of itself s an I.O.U. or a debt. There is a reason why certain currencies can be converted rather easily while others are not

"Like I said", you are pointing to the fact that something resembling a crisis didn't happen recently as some kind of forecast for the future. What one can currently see in the rear-view mirror doesn't tell one much about what lies on the road ahead.

Yes. But you and your types have been saying this for years now. Can they ever be right? Do you even question why you've been wrong?

From the 1990's until now, prices would be best described as flat. You can get mild deflation depending on which dates in between you choose, but it's only if one is myopic that one could think there were ever a "deflationary spiral".

Dude. We're talking about CPI core which excludes food and energy. Those are the numbers I gave. It's a fricken downturn spiral.

0 ( +1 / -1 )

The first and third parts of my previous comment are left to stand as they are.

As for the second part, my response is that people could theoretically talk about risks for years and be "wrong", as you define it.

Then days like 2011/3/11 come along.

A risk not eventuating until an arbitrary point in time such as "today" does not constitute a proof of the inexistence of risk. You seem to think only in the short-term.

1 ( +1 / -0 )

If the government allows working people to keep more of their income, there would be more discretionary spending, making the consumption tax actually work the way it's supposed to.

That wasn't the case, hence the deflationary spiral.

The operative word is "if", nigelboy. The Japanese government has long taken a large chunk out of people's incomes. The deflationary spiral is the result of declining incomes, and low confidence in the economy.

Allowing working people to keep more of their income would deliver more economic benefits to a far wider range of people, faster, than stimulus spending (i.e., deficit spending) or tax hikes.

if the economy wasn't good enough to take the tax hike when it was brought in, when would it have been?

Good question, fxgai...but, a better one would be "How can the economy be fixed so it can handle a consumption tax hike?"

Raising the consumption tax was essentially kicking the economy when it was down. A fiscally responsible approach would've been to cut wasteful spending.

Countries around the world have raised taxes on consumption, profits, property, and income, yet remain crushed by high debt, and, worse, poor economic growth. We have gone well past the point where tax increases can be effective.

PM Abe's goal is one that is supposed to be about economic revival, and fiscal responsibility, yet he has done everything to ensure none of these happen.

1 ( +1 / -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