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Gov't compiles ¥26 tril stimulus package to prop up economy

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So, now they have to create a stimulus package to cover the cost of poor spending after the tax hike? And this stimulus will of course need to be funded by taxes, which will in a few years need to be increased to 15%, then 20%. And I LOVE how they say, "It's a powerful package designed to jump-start the economy and spending..." when Abe has failed to do this every single time he's tried. But hey, he got those corporate tax cuts through!

18 ( +24 / -6 )

flood of fake money!

You , yes you, you will pay the bill later!

18 ( +20 / -2 )

The government said, "We have to increase taxes because the national debt is too high." Now look at them blowing a tone of money without any care for the national debt. Brilliant!

18 ( +18 / -0 )

I guarantee you the people who need this money most won't see a single yen of it.

17 ( +17 / -0 )

So, now they have to create a stimulus package to cover the cost of poor spending after the tax hike? 

A fine display of Japanese “logic.”

15 ( +17 / -2 )

So they increased the sales tax because of the country's bad financial situation and now they decide to basically make that financial situation even worse therefore making the sales tax rise totally pointless. And an apathetic Japanese population continues to pay for the tremendous incompetence of the government.

10 ( +12 / -2 )

Not everyone has a smartphone to get free money.

Most of my elderly family don't have.

9 ( +9 / -0 )

No thank you to that 5000 yen. (Really just giving back a pittance of our own tax money).

Please stop wasting the tax money we already pay. It will cost the government bundles more to administer this act of largess.

I saw an article today about how Swedish parliamentarians are not provided with cars and drivers, but are expected to use public transportation and live like ordinary citizens. Brilliant idea. https://mg.co.za/article/2019-05-31-00-no-perks-for-swedish-mps

9 ( +9 / -0 )

This move doesn’t really make any sense and logic indeed.

Releasing more liquid money won’t ease a stagnant economy.

7 ( +10 / -3 )

Does the economy need "propping up"??

7 ( +7 / -0 )

I trust this free money for cashless payments is not going to Paypal. That company in Japan is worse than a Japanese bank. "We are retaining 20% of your receipts for 180 days". Yeah, just kill my cashflow.

If everyone in Japan is getting 5,000 yen free, I bet it's A5 wagyu time at cashless payment companies like Paypay. 25000 (20000 plus the free 5000) times 3.5% commission times 100 million people is 90 billion yen. That should be enough to open the amakudari gates for the boys at the MoF.

7 ( +7 / -0 )

To prop up the economy? I would have said to further the massive public debt.

7 ( +7 / -0 )

The government is considering providing 5,000 yen worth of points to spend at stores across Japan to consumers who load 20,000 yen in their account for smartphone payments....

Does anyone know what this means? To me, it is simply another way to unnecessarily complicate life.

6 ( +6 / -0 )

This stimulus spree is like smoking crack, great now but awful effects later. Japan's addicted to pretending it has money instead of dealing with its problems, but nobody wants to go to rehab...

6 ( +6 / -0 )

measures to spark consumer spending by promoting cashless settlement

That's all fine but thanks to recent hacking cases, Japan might want to look into beefing up cyber-security if you want people to trust cashless payments.

5 ( +5 / -0 )

Another paper-over-the-cracks "stimulus" package that flies in the face of "effort" to stop spending 30-40 trillion yen more than tax revenues each year. When you're already 1,100 trillion in the hole, I guess another 25 is another drip of oil on the fire.

And an apathetic Japanese population continues to pay for the tremendous incompetence of the government.

This sales tax hike was agreed almost a decade ago by most parties, but it must be noted that the Japanese population is the one that keeps voting the incompetent government into a position of power. 

I'm not sure they are apathetic so much as just plain clueless, in the majority. But when you've got an aging population clinging to the status quo, perhaps that has a lot to do with it too.

5 ( +5 / -0 )

Man,

The sinking ship that is Japan is taking on so much water that it won't be long before it is down there resting on the ocean bed just like the Titanic.

The politicians are just living on Cloud Cuckoo Land.They are just kicking the can further down the demographic ladder.I would have to say that nowadays to have a baby in Japan is totally irresponsible because of the amount of debt the newly born would incur upon arrival.

5 ( +5 / -0 )

This government is utterly incompetent. It is printing money to paper over its own lack of competence,and the repair is not going to hold. At some future point, the citizens are going to be born into the same sort of penury or servitude that generation after generation before the Heisei Era were. Guess that's the LDP plan for squaring the circle...

4 ( +4 / -0 )

I guarantee you the people who need this money most won't see a single yen of it.

Obviously. Only people able to afford a smartphone, charge it with 20.000yens in one go and find out how to make cashless payment can benefice of it. And we do not even know the other requirement to get the 5000points. So very poor are already out of the picture. Store will have to pay cashless companies so loss in their benefice.

The one going to win from this are the construction company and the cashless payment company. Are they the one to really need help-money from the taxpayers ?

4 ( +4 / -0 )

Take if from this Canadian, whose country almost became a third-world monetary joke, twenty years ago - this is going to hurt Japan big-time. Stop printing money and get your house in order!

4 ( +5 / -1 )

The first stimulus package in three years centers on measures to spark consumer spending by promoting cashless settlement and public works

"Cashless settlement" does not stimulate anybody, but yeah, here we go with the "public works" again. More pork to connected construction companies.... haven´t we heard that song before?

3 ( +4 / -1 )

The yen is the top safe haven currency among global investors.

Professor Google, Ph.D. Economics, completely disagrees with you.

3 ( +6 / -3 )

The other day it was a ¥13 trillion package but now the double. If the government wants us to spend more then give us more.

3 ( +4 / -1 )

Where's the money? How can this much overspending be healthy for an economy? No wonder they're discussing the implementation of the MMT-theory in Japan's fiscal policy.

3 ( +3 / -0 )

Reality: Keynesian economic policies fail to achieve the desired results because of faulty theory. This is a rehash of previous attempts at boosting the economy.

3 ( +4 / -1 )

I'm convinced that the entire purpose of this kind of economic farce is to bankrupt Japan so that the IMF can bale us out and effectively buy Japan.

Or is it just stupidity?

3 ( +3 / -0 )

The yen is the top safe haven currency among global investors.

For now, it is a safe haven, yes. It is safe until it's not.

2 ( +3 / -1 )

Complete BS, public works equals Abe's friends and yazuka. I knew it before even reading the article.

2 ( +2 / -0 )

LIke when the gov' gave us all ¥10,000.

2 ( +2 / -0 )

) times 3.5% commission 

i never understand the rush for cashless payments, yes its convenient but these companies dont do it for free, there can be fees from 1~4% which the seller normally has to pay which means higher prices for almost everything. My local gas station is an independent but very cheap on fuel, and actually charges about 3% less for cash at the pump compared to using a card, the pumps are always busy and guess what most people are paying with.! lol

2 ( +2 / -0 )

YOU SHOULD ALL KEEP SOME GOLD NOW. WHATEVER YOU CAN AFFORD !!

If your Japanese Yen drops it will keep value. 10-20% of your savings would be prudent now

2 ( +2 / -0 )

I would have to say that nowadays to have a baby in Japan is totally irresponsible because of the amount of debt the newly born would incur upon arrival.

Agree with the gist of what you're saying, but at least now Japan is a free country and the kids can always make like a tree and leave. 

But you never know what might change when things really go south. So parents who can make for dual-nationality children should set their kids up with the insurance of an extra passport, so they've always got that escape hatch should it be required.

1 ( +1 / -0 )

T hey have beem propping up the economy since the early 1990's. It proves only two things: Corrupt to the core and they will never learn.

1 ( +1 / -0 )

My local gas station is an independent but very cheap on fuel, and actually charges about 3% less for cash

I would love for all business to go the same way. I am do not like these money sucker which charge money for doing almost nothing (in regarding of the amount they are charging). They feed in the in between growing richer when the other one grow poorer.

Give them one thump up for me (I do not need fuel so no chance I will ever be able to show my appreciation to them).

1 ( +1 / -0 )

This is either very stupid economically, or it's a way to transfer wealth from the average Japanese person (and resident of Japan) to Abe's buddies.

1 ( +1 / -0 )

Long time ago, I heard from my American friend that their government urges people to spend money and if you are saving money, you are punished. I was surprised about his exaggeration but at the same I was impressed very much. They know about capitalism. That is the way economy of America goes around. I think the Japanese government recently recommending people to use E-money is with their intention of letting people spend more money.

0 ( +1 / -1 )

They're already debt ridden as it is and yet Japanese continue to travel abroad spending thousands of dollars on luxury items. Do they really think they can compete with the Chinese who actually have money and don't charge it to a credit card because they can't afford it?

0 ( +1 / -1 )

That’s an expensive prop and it is getting pricier all the time!

0 ( +0 / -0 )

Might have been better to cut the Tax rate from 8% to 3% for daily necessities, such as food, and leaving the rest at 8%

0 ( +2 / -2 )

Might have been better to cut the Tax rate from 8% to 3% for daily necessities, such as food, and leaving the rest at 8%'

Yeah, it might have.... .but nah, can,t do that... .because that might, you know actually benefit the lower class more than the LDP cronies and their companies. We all know full well that LDP is there to look after their own, not the average Taro. Another stimulus paid for by the taxpayer, Ginza club drinks all around for Abe, Aso and co. TIJ.

0 ( +1 / -1 )

It's all about keeping the faith :)

MMT is an experiment and Japan is most heavily MMT country. The Canary in the coal mine.

What happens in Japan will go viral in world.

I expect Trump to devalue the USD $ While Christine Legard will reset or bankrupt or whatever they call it out of debt issues. The next 2 years may be very wild.

The best any country can do is protect their ideas and businesses and take back those that migrated to maintain as much employment as possible.Japan is still the best quality maker in world but you let too much go to China and Korea.

0 ( +0 / -0 )

@whatsnext

People saying government taking money out of everybody (customer tax) to give it to the owing class (reduction of tax for company, incitment to use private company costly cashless payment, ... ) making the working one poorer and the owing one richer is a problem are embracing capitalism. So desu ka ? I think we didn't have the same capitalism 101 class.

Capitalism have no problem with big government and taxes as long it go its way.

0 ( +1 / -1 )

The socialist commenters start to embrace capitalism once they realize big government and more taxes historically lower living standards. 

This socialist commenter doesn't embrace capitalism. I remember when building social housing boosted living standards enormously. I would embrace the capitalists' wealth though.

0 ( +0 / -0 )

The socialist commenters start to embrace capitalism once they realize big government and more taxes historically lower living standards. 

And then in reality Canada and the Nordic countries - bigger government and more taxes - all have a higher living standard and rank higher on happiness indexes than the US.

But let’s not let reality get in the way of your rhetoric, right?

0 ( +1 / -1 )

meh, more spin than a lazy suzanne. Every budget the government announces some kind of huge, gimongus stimulus package. Then later on, it's revealed that it was all part of the budget, and no increase in the overall budget at all.

On top of all this, the government borrows from rich Japanese, and sometime even from itself. So the cycle of working Japanese feeding rich corporations just go on and on. The Samurais may be no more but the system lives on.

0 ( +0 / -0 )

2) Erase current debt. To get out of the current hole it is in, Japan likely needs to do both in tandem. International bankers would be furious, and Japan's pension system would end up in meltdown.

Not necessarily, I think but not sure how much is it exactly but 50-70% of Japanese debt has been already bought by Bank Of Japan - since 2010 or so.

Let's assume it's 70% of Japanese debt than actually Japan has very little to pay back! Don't worry they already thought way out of this whole. That's why they keep printing money because they actually want this bubble to burst.

We all know this system can't work forever so do Bank of Japan that's why they will keep pumping money until bubble burst, then government will announce it can't keep going like that, BoJ will cancel debt and switch to the new monetary system. But what it will be? That's a good question to ask.

Read latest report by BoJ they say the economy situation in Japan is exactly same as it was in 80s before the bubble burst.

-1 ( +0 / -1 )

smithinjapan:

So, now they have to create a stimulus package to cover the cost of poor spending after the tax hike? And this stimulus will of course need to be funded by taxes, which will in a few years need to be increased to 15%, then 20%. 

They may but they do not have to. What they CAN do is to increase spending and decrease tax AT THE SAME TIME because they can increase amount of currencies to spend by printing without relying or taxing. They should keep increasing debt and decrease tax, which then increase surplus in private sectors.

-1 ( +0 / -1 )

tajToday  05:23 pm JST

No thank you to that 5000 yen. (Really just giving back a pittance of our own tax money).

Then I'll be happy to take yours. JY5,000 on JY20,000 charged is 25%. That's hardly a "pittance" in anyone's book.

-1 ( +1 / -2 )

"Professor Google, Ph.D. Economics, completely disagrees with you."

Looks like Professor Google disagrees with you instead.

"https://www.reuters.com/article/global-forex/forex-yen-rises-as-investors-flock-to-safe-haven-assets-idUSL5N25N2PN"

“The yen has been one of the best-performing global currencies this year and continues to benefit from building downside risks to global growth from escalating trade tensions,” said Lee Hardman, currency analyst at MUFG.

The Japanese currency was last up 0.3% at 105.755 against the dollar. That wasn’t as strong as Monday’s gain, when it reached a three-year high, excluding the January flash crash. The yen has gained 3.5% against the dollar this year as the trade war drives traders to safe-haven assets.

The yen is “likely to strengthen further if tensions continue to build,” Hardman said."

https://www.scmp.com/comment/insight-opinion/hong-kong/article/2181105/will-japanese-yen-be-safe-haven-investors-2019

"Last week’s “flash crash” that saw the value of the Japanese yen surge on the foreign exchange markets may have been a particularly violent move, but demand for Japan’s currency might not be just a flash-in-the-pan occurrence. Investors may well conclude that, compared to other economies, Japan’s prospects are good in 2019, resulting in steady demand for the yen. "

-1 ( +1 / -2 )

@Peeping_Tom

I do not know if yen is reliable or not, but I will not base my opinion on someone working for a japanese bank. You should try someone else

And the less worse than the 2 before and perhaps/feeling one is barely engaging in my point of view. So this one is also not so engaging.

After, as short term Japan can look reliable but I will be worried about the middle and long term. It s like Japan is walking over some precipice on a tight rode whose fiber are brooking up and put some tap to fix it. So will they be able to reach the other side or will the rope broke before is the big question. I hope they (as any other country trying to cross the same precipice) will make it to the other side (without going berseck) because after all what make a country is its people (review your One Piece if you do not get the reference) and if that crash everyone will fall (except some which built their parachute of the other skin).

-1 ( +0 / -1 )

Wth all that money they could pass a tax cut to consumption tax.

I don't really like consumption tax - it punishes the poorest most and applies to even the most basic of subsistence goods.

-1 ( +0 / -1 )

@Chip Star

"..... completely disagrees with you."

I'm not stating a opinion but an irrefutable fact. The yen remains one of the world's most stable currencies, which global investors stock up on when markets look risky.

All of the predictions by the mainstream economists, neo-libs, free marketeers and others that Japan's spending and deficit are risky and dangerous have proven over many years not just to be wrong, but beyond wrong. While the debt keeps growing, Japan has built up a world-beating currency, extremely low interest rates and a solid current account. None of these things are supposed to be happening according to the orthodoxy, which predicts the opposite happening.

When the facts consistently undermine your worldview, it's time to get a new worldview.

-1 ( +0 / -1 )

Inflate!!!

Japan is now rapidly pursuing the only option its massive government debt allows: inflation over time will reduce the value of the debt so that Japan can manage debt over time. Japan will never pay its debt off, only keep it at levels so that economic growth (or, in the absence of economic growth, monetary inflation) allows Japan to keep servicing and expanding the debt. It will never be a winning game for Japan. Countries that try to inflate their ways out of debt only end up in more debt.

Japan raises spending in order to stimulate the economy, except that Japan's government spending is grossly inefficient. A hundred yen of government spending does not add a hundred yen or more to the value of the economy. So then Japan has to raise taxes to combat the rising debt, which is increasingly going to drag down the economy as Japan's workforce shrinks and ages. But the tax increase also is a drag on the economy, and so the government has to spend more to stimulate the economy. The stimulus spending is always ultimately bigger than the tax hike. Japan already spent that tax hike money on free kindergarten, which is supposed to stimulate the birth rate and economy (except that it won't). Now it's trying to spend that same money a second time on an economic stimulus, which will have a fleeting effect at best. In the end, Japan is only digging the debt hole deeper.

Japan has two measures that would be effective: 1) Slash spending so that Japan no longer runs deficits; 2) Erase current debt. To get out of the current hole it is in, Japan likely needs to do both in tandem. International bankers would be furious, and Japan's pension system would end up in meltdown. But Japan's pension system will end up wrecked regardless. It's really a question of how badly Japan wants to get out from under the thumb of international bankers and how much Japan cares about keeping a "good" opinion with those crooks.

-2 ( +0 / -2 )

These article are great. The socialist commenters start to embrace capitalism once they realize big government and more taxes historically lower living standards. Living through it.

-2 ( +1 / -3 )

Is this real, are all of U really intellect and studing , what all of U, had done ???.

-3 ( +0 / -3 )

Well Done PM Abe Well Done!

The money will go to:

1) Schools for new computers

2) Improve Japan infrastructure.

3) Disaster relief.

and much more.

I am so proud of PM Abe and I very glad that I voted for him. Good Job MR PM. Good Job!

-5 ( +0 / -5 )

flood of fake money!

The yen is the top safe haven currency among global investors. It is anything but "fake."

So Japan is going to borrow its own money from itself and then back itself back...with its own money. Yeah, that' really something worth worrying about. LOL.

-13 ( +5 / -18 )

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