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Weak spending, inflation data hit Japan recovery hopes

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'The bank said it would cut back on the number of longer dated bonds the bank holds. That should reduce the price of long-term securities, which—in turn—should increase their yield. It was the latest effort to convince Japanese consumers that the price of goods and services will rise in the future.'

It will be a wasted effort as all Japanese consumers are well aware of the future of Japan's economy.....

2 ( +4 / -2 )

Japanese officials are under intense pressure to deliver, as many economists increasingly write off Prime Minister Shinzo Abe’s spend-for-growth policy to fire up the economy, dubbed Abenomics.

Are there still economists who think Abenomics is going to work? Seriously?

It was the latest effort to convince Japanese consumers that the price of goods and services will rise in the future.

Great. Way to create more economic pessimism..

Some analysts, however, said the move was an admission of defeat and a warning of the limits of central bank power.

of course it is.

But Abe’s promises to cut through red tape have been slower, and his plan to buoy Japan’s once-booming economy have looked increasingly unrealistic.

Its always looked unrealistic. I've been saying this for ages now: We have deflation because of poor consumer spending. We have low consumer spending because people don't have money to spend. You can't spend money you don't have. And QE just only raises prices on the average consumer, which in turn depresses spending. In addition to that, the people with any kind of financial stability are working 6-7 days a week. When are they going to go out and spend anything?

The only way Japan is going to itself out of this mess is by raising the minimum wage and by seriously curbing overtime. Clinton and Sanders talked about a $15 minimum wage. Well how about a 1500 yen minimum wage law here? Spending would increase and if you cut the number of hours people have to work, they will actually go out, have fun, and spend money.

2 ( +6 / -4 )

The Bank of Japan's strategy of quantitative easing doesn't work; it doesn't achieve the goal of boosting household spending.

It is a trickle down approach with very little trickle down. That much should be obvious to them after so many years of failed QE outcomes. It puts money into the hands of the rich (through near-zero rates of borrowing, free money welfare for the 1%) at the expense of everyone else, and drastically widens the income gap.

The only way the BOJ will fuel household spending is if they put money directly in the hands of the public through monetary policy, without going through government/fiscal channels.

3 ( +4 / -1 )

How can any rational person expect an economy with 40% of its GDP derived from consumer spending grow if the population is declining?

6 ( +7 / -1 )

Honestnomics is working a charm.

0 ( +2 / -2 )

Failed logic with the way they done things so far in Japan, however they have succeeded in more than 10 to 27% inflation for EVERYONE outside of Japan trying to either visit Japan or buy Japanese products. The Yen is a constant inside of Japan so you'd really never feel it unless the businesses you buy your imported goods from inside Japan passed on those savings for the strong Yen and there's your deflation.

Perception is everything so if Japan wanted to devalue the Yen it would serve two purposes, one you'd get your magically inflation inside of Japan and two you'd bumpstart your economy again with the weaker Yen. I find it so hard to believe that in the past, Japan manipulated the Yen on a whim and now it suddenly can't as it's about to have serious financial troubles from which there may not be a reasonable return.

Why would anyone invest in the Yen when the house of cards it's built on is about to fail. I despise conspiracy theorists but in this case you'd almost think that people are buying the Yen with the expectation that when the timing's perfect they'll short it and collapse Japan. What other logical reason would drive so many to buy the Yen when it's NOT a safe haven and do so knowing that it will weaken Japanese exports and damage the Japanese economy?

Something doesn't quite add up here..., yeah, I did.

2 ( +2 / -0 )

But... According to Abe, his economic policies are a roaring success!!! Because, you know, the people keeps voting his LDP back into power.

2 ( +3 / -1 )

I'm just waiting for those Japanese helicopters to lift off.....

1 ( +3 / -2 )

Liberalize the market! There are so many hurdles to going to market with a product/idea. The middle class isn't going to spend the way out of this financial mess. People with new and novel ideas and a free, open market will be the key to growing out of this morass.

2 ( +3 / -1 )

"...which indicates that the Bank of Japan still has plenty of work to do to reach its two percent inflation target.”

The target that was supposed to be reached two years ago, them last year, then this, and now failed again.

2 ( +3 / -1 )

The disappointing data marked the latest red flag for the world’s number three economy

How many red flags is that now? I'm sure if they line them up they could make a slalom course.

1 ( +2 / -1 )

Aly Rustom said-- The only way Japan is going to itself out of this mess is by raising the minimum wage and by seriously curbing overtime. Clinton and Sanders talked about a $15 minimum wage. Well how about a 1500 yen minimum wage law here? Spending would increase and if you cut the number of hours people have to work, they will actually go out, have fun, and spend money.

Absolutely correct. People here don't have enough earnings with many working part time and jobs with nil benefits of any sort. The minimum wage must increase and all these employment brokers find work elsewhere. Japan is around second to lowest minimum wage out of all OECD countries surveyed.------------------------------------------------------------

The government is desperate to collect pension payments and employ companies to hound the public to make the payments. Of course it is impossible for so many people to pay as they barely can make ends meet as it is. Don't politicians have the brains to see that there is a better chance of collecting the payments if the minimum wage is raised a reasonable amount. A wage rise can only benefit the government through extra tax and more money spent internally is good for everyone, even if it means some price increases in certain retail fields.

Other countries fund the pension through the normal tax take- but that is another story which I hope will end in some serious discussion one day.

2 ( +3 / -1 )

Sensato,

Agree 100% on the failure of the BOJ's trickle down policies. I'm taking advantage of them as best I can personally, but I don't see that what is benefiting me is benefiting the economy...)

I don't agree that the BOJ can fuel household spending though. I think the government is the actor that might be able to do that, but it's not easy, and also virtually zero probability given that Japan's gutless career politicians and bureaucrats have no personal incentives to take the hard decisions.

3 ( +4 / -1 )

Weak spending? What are you talking about?

Abe's pledged trillions to third world countries, millions to refugees, millions to review panels to see if his pledges make him more popular, and Japan's spending on the Olympics hasn't even begun!

I'd say the spending of our tax money and pension is already in high gear!

3 ( +4 / -1 )

"Japan recovery hopes?" There aren't any. There will be no recovery.

2 ( +3 / -1 )

people are too old to spend. japan needs immigration!!

-1 ( +2 / -3 )

people are too old to spend. japan needs immigration!!

Umm, no, just no!!

0 ( +1 / -1 )

"Once booming economy",........yeah, right! There's no point invoking the horn of plenty bubble years which preceded the economic funk of the previous twenty. If the authorities here really were that concerned about things, and not simply content to muddle through as they've been doing, they'd be lining up to dismantle the raft of protectionist measures that forever stymie penetration of the domestic market by foreign competitors, be pushing for immigration liberalization, stop forever trying to artificially weaken the currency, be enforcing labour laws, giving teeth to laws that punish corporate malfeasance, abolishing amakudari, and so on and so forth. Actions speak louder than words.

0 ( +1 / -1 )

Quite simply, the government needs to slash spending on government projects and slash income and sales tax too. That will put money directly into the pockets of consumers who will spend it, making profit for companies and increasing corporation tax revenues but it will not line the pockets of large construction firms or pay for contract kick backs or guarantee ex politicians lucrative positions on corporate boards when their political career is over. The choice is end the gravy train to save the economy or continue full steam ahead until the economy derails the gravy train in another financial crash.

1 ( +1 / -0 )

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