politics

Japan's new stimulus package to be worth ¥117.1 tril

49 Comments
By Takaya Yamaguchi and Tetsushi Kajimoto

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© Thomson Reuters 2020.

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49 Comments
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Hoping for a small piece of that!

6 ( +7 / -1 )

And how much of that will actually go to help poor people?

14 ( +16 / -2 )

@Tokyo-m

It won’t help at all...

4 ( +8 / -4 )

And that includes all the summer bonuses that the Diet members and bureaucrats will receive while they continue to blow everything to kingdom come right? Hey, I still haven't received my abenomask yet nor my 100,000 yen. That was a great fiscal stimulus package for round one.

15 ( +16 / -1 )

If there is a second wave chances of another s.o.e are zero.

The government have no money to fund it.

-2 ( +2 / -4 )

Lots of money will be printed, I say!

Give it to the rich and those who already got it made!

The next tax-raise will pay for a small portion of those 117 trillion.

And yes, when are Abe, Aso and others belonging to that "want-to-govern-group" agree to a pay and bonus cut?

Most definitely on "Saint-Never-Day"!

4 ( +6 / -2 )

Just where exactually is the money going. Where is the accountabilty?

12 ( +12 / -0 )

There is absolutely no accountability, Sneeky doesn't describe their shinaginans.The blisrering amount of money that filtered down is pathetic. I've got squat, my friends squat so where is this obscene amount going? Ahh masks and sunderies.

9 ( +9 / -0 )

The BoJ ran out of true ammos that can boost the economy back into normalcy, before the bubble burst. It is around 2015, coinciding with Shanghai stocks crash. The Bank of Japan created a devastating self-induced deflation, as Bernanke put, idiotically destroying domestic economy and people's livelihood for the sake of keeping the currency relevant. The Yen maintains the reserve currency status.

However, BoJ's strategy of insane QE and unlimited bonds buying is particularly vulnerable to external shocks – such as the COVID19 pandemic. Since interest rates are already at record low levels, the Bank of Japan (BoJ) is left with very few tools to cushion any distress in the financial markets. If more foreign investors need to be found, the BoJ will request an appropriate yield reflecting their risk exposure. In fact, recent years have seen a steady increase in foreign buying of JGBs which threatens to undermine the BoJ’s yield control - these foreigners are likely short-sellers. Once the foreign investors lose faith in Japan's economy, the hyperinflation will happen and eventually lead into a national default.

Kuroda's biggest fear is hyperinflation, when the global market isn't fooled by Japanese mirage economy. When they realize that Japan will never pay back its bonds or investments. Qualitative Easing and Unlimited Bonds buying are now two-headed weapons that can spell doom for Japan if the BoJ does not use correctly. These times are dangerous times when a fiscal catastrophe can be triggered by monetary mistakes.

7 ( +10 / -3 )

Dirty filthy politicians at it again this money is not going to make it to the people....but there will be plenty of their associates that will get rich out of this...

11 ( +11 / -0 )

I guess taxes will be going up again.

We are still paying the supplemental tax for the relief package for the East Japan Earthquake.

9 ( +9 / -0 )

Friends and donors of the LDP elite - we now declare this trough open.

Get your snouts deep in it and fill your bellies. There will be no accountability, or awkward questions asked. Feel free to lay your serfs off any time you see fit, and pocket the cash anyway. What are they going to do about it - vote differently? Don't make me laugh.

It's party time for the well-connected, and three generations of hardship, austerity and crumbs from the table for the rest of us.

Next stop - the Olympic swindle!

10 ( +10 / -0 )

Good grief. It would be far more beneficial to cut the consumption tax back to 8% or 5%, at least temporarily.

9 ( +9 / -0 )

90% of it will be corporate welfare. Count on it.

13 ( +13 / -0 )

"Where is the accountabilty?" When is the last time anyone in Japan held their betters to account? That's the sort of thing people tradtionally lost their heads over. Literally.

8 ( +9 / -1 )

Guys it seems for me you don't understand. You either with or against.

So if you complain it goes to corporations then maybe it's right about time to get into one?

If it goes to politicians maybe it's time to become a politician?

Instead of dwelling and crying about how poor we all are!

-13 ( +1 / -14 )

Money money money!

-2 ( +0 / -2 )

Once the foreign investors lose faith in Japan's economy, the hyperinflation will happen and eventually lead into a national default.

That logic seems strange, I admit Im no economist but for the last 20+ years, there has been no inflation. The yen has always been the go to currency that investors trust in risky times due to is stability.

I do wonder however what the new debt to GDP ratio will look like.

4 ( +4 / -0 )

"nce the foreign investors lose faith in Japan's economy, the hyperinflation will happen and eventually lead into a national default."

Foreign investment into Japan is negligible as Japan is NOT INTERESTED in allowing too much ownership of JGB's.

"Japan moves to limit foreign investment in half of listed firms"

"https://www.japantimes.co.jp/news/2020/05/11/business/economy-business/japan-limit-foreign-investment-listed-firms/#.Xs4tSflKi70"

"According to the 2019 UNCTAD World Investment Report, FDI flows to Japan remain low compared to most other developed nations across the world. Furthermore, inflows are relatively unstable, with FDI reaching USD 9.9 billion in 2018, down from 17.75 billion in 2016 and USD 10.4 billion in 2017.

Finally, Japan ranked 29th out of 190 countries in the World Bank's 2020 Doing Business report, an increase from 2019, when it ranked 39th. The country has a solid net foreign creditor position and external indicators are generally robust"

"https://santandertrade.com/en/portal/establish-overseas/japan/foreign-investment"

-2 ( +4 / -6 )

If its in print, they will believe.

2 ( +2 / -0 )

fund the costs, Japan will issue an additional 31.9 trillion yen in government bonds under the second supplementary budget for the current fiscal year ending in March 2021, according to the draft.

That will push new bond issuance for the current fiscal year to a record 90 trillion yen. When including issuance to roll over debt maturing during the year, Japan's total issuance for the year would hit a record, exceeding 200 trillion yen and further straining the country's already tattered finances.

There are always the PostOffice savings accounts - lots of cash there. Well, it happened in Crete and Iceland

But Japan is different, and the Japan scenario in the end still works.

Ordinary people’s tax and 年金 could well change up and down respectively though.

-1 ( +1 / -2 )

No, Cyprus, not Crete,

Sorry!

1 ( +1 / -0 )

Peeping_Tom

agree. it is a defensive move to limit foreign investment. once the yen eventually slides vs other currencies it will make all Japanese assets much more attractive.

as well, the difficulty and inability to set up and conduct business in Japan is by design. been happening since the Dutch traders showed up in Nagasaki centuries ago.

the problem is the bone-crushing govt debt in an aging sluggish economy exacerbated by the recent COVID situation. the debt is going nowhere but up.

-2 ( +2 / -4 )

The people worried about Japan not having enough money for the latest stimulus need to explain how the Japanese govt can run out of the currency it issues, the yen.

2 ( +5 / -3 )

"the problem is the bone-crushing govt debt in an aging sluggish economy exacerbated by the recent COVID situation. the debt is going nowhere but up."

That would be the case if Japan was not earning more from its foreign investment returns than from its already gigantic domestic economy.

Plus, for as long as they remain the Word's creditor Nation, very little policy will change.

All we'll see/hear is the usual "experts" shouting "but they've got no money"; or " the debt will crush Japan", etc, etc.

Since the bubble burst; they're still predicting Japan's demise for tomorrow.

-1 ( +5 / -6 )

... for those wondering about their 100,000, i know that some people already got the paperwork they need to apply... it,s coming folks no worries... just be sure to check your mailbox...

2 ( +2 / -0 )

How are they , in the govt going to show us, HOW THIS MONEY IS BEING USED ???.

4 ( +4 / -0 )

Nothing for the needy and common people!

2 ( +2 / -0 )

Even during the corona virus outbreak it seems like the rich are getting richer and the poor ( as well as average people ) are getting poorer! Governments are contributing to this in their failure to assist the average and poor people properly!

7 ( +7 / -0 )

Good god, where is the government getting all this money? If they had this much money to throw around they should've helped the poor and needy before the coronovirus outbreak.

6 ( +7 / -1 )

As has been stated before, 90 plus percent to corporate welfare. The previous stated figure, and I doubt the percentage going to households has increased, was roughly 4 trillion for household assistance out of the total. Scandalous, pitiful, and if the dearly held concept of shame had any real value they would be headbanging into the sidewalk in front of Kaumigaseki.

3 ( +4 / -1 )

That logic seems strange, I admit Im no economist but for the last 20+ years, there has been no inflation. The yen has always been the go to currency that investors trust in risky times due to is stability.

As I have said, Bank of Japan is actively preventing hyperinflation not deflation. They created deflation to prevent hyperinflation. The investors trust the Yen because its value is very strong. It is good if the Yen is the USD but not. Japan is still primarily an export economy that contributed 10% of global manufacturing. A strong currency is very bad, and a self-induced deflation is just a horrible monetary policy.

Foreign investment into Japan is negligible as Japan is NOT INTERESTED in allowing too much ownership of JGB's.

I assumed you are a Japanese ultranationalist who blindly believes in the LDP.

Tell me why Kabukeicho is now mostly owned by Chinese. Why the J-government allows Bain Capital buying Showa estate with lands close to a military base, or buying a big retirement firm in Japan with 1 billion USD. If I remember correctly, Japan recently passed a counterpart of CIFUS to limit foreign takeovers. Except it does not include equity firms, sovereign funds and pensions funds. Koizumi and Abe have been selling Japanese economy for decades. You have seen people getting fired easily in Japan (as in America nowadays), something is definitely not easy in Japanese society. Inequalities and poverty are skyrocketing in Japan. Things begin to change not in favor of the Japanese, and you people need to wake up and realize it.

4 ( +7 / -3 )

A big amount of money from govt. to all Japan business and too late to get application form of supporting life for individuals who are allowed to receive as citizen and tax payer + Abenomask never to arrive, is my position living downtown of Fukuoka city, that was to be smoothly and speedy (effect??) to know it's only Abe lip-service again to work out, it's the reality here on me.

0 ( +1 / -1 )

Why not just give everybody a trillion yen and call it a day? Money is pretty much irrelevant at this point.

1 ( +4 / -3 )

The Japanese Govt can absolutely pay for this - or any stimulus - by simply printing more yen, or issuing it electronically. For the 100 000 yen every citizen receives, they will order the Central Bank to print this money.

the problem is the bone-crushing govt debt in an aging sluggish economy exacerbated by the recent COVID situation. the debt is going nowhere but up.

Japan virtually has no foreign debt. The govt can pay back domestic debt by printing more yen and issuing Bonds to local investors. Macro-economics is not rocket science, to be honest.

Of all the OECD nations, because of the strong, "safe haven" yen and lack of debt worries of other nations like the USA, Japan is one of the best equipped to bounce back rapidly after the worldwide disaster. They will be eyeing the 2021 Olympics to further stimulate the economy.

-4 ( +5 / -9 )

Checked the wife's account yesterday, ¥700,000 received. 5 kids is a lot, but maybe we should have more if the gov't here is just gonna throw money around.

3 ( +3 / -0 )

@wolfpack

 Money is pretty much irrelevant at this point.

Feel free to give me all the yen cash in your savings account and wallet, for I shall free you of the interminable burden, brother.

@Peeping Tom

Many economists of doom have died since: I'm here waiting for it to happen.

It can't happen -- unless ignorant politicians want it to happen. By ignorant, they would believe that fiscal debt in a currency sovereign nation works exactly the same as private debt in a household. Insane, yes, but it's scary how many people believe that, including those who should know better.

-2 ( +0 / -2 )

It will help business owners that ride around in a Benz, but not much for the common worker

2 ( +2 / -0 )

Imagine a huge lake where the supply of fresh water is being restricted day by day-that is Japan!

It’s a Titanic where the bilge pumps are burning out!

The problems?

Low birth rates as the young Japanese don’t have confidence to have kids without a.regular growing income to raise a family and b.savings to adequately do so.

The vicious circle of less tax payers and increased expenditure means the burden of the older generation’s healthcare falls on the diminishing number of younger workers.

And the rapidly increasing taxes and diminishing services ram that home everyday.

If the Japanese worker were more productive than any other country it might fine but Japan’s GDP trend is negative.

Education spend by Japan is one of the lowest in the OECD and schools routinely limit winter classroom heating due to lack of adequate budget.

Where is the money?

Obviously not being spent on the young nor on equipping the next generation with 21st century skills.

The high tech knowledge society is not being developed as is in China and Korea.

Where is the advance of science as in China with its all electric transport cities, robot room service, maglev trains and drone transportation?

In the 21st century the education ministry doesn’t deem IT important enough to teach in schools.

Where are the immigrants?

Immigration as per the UK and the US (improves the demand for goods and services) has failed,due to a lack of structured debate and historical context as well as lack of monetary and legal protections.In a nutshell potential immigrants don’t want to come here as they do to the US and the UK.

The wealthy old and the poor young.

The bubble generation (now dying out) might have wealth but the young do not.

So easy for the risk averse aged to place their cash into protected Nihon Ginko accounts, capital protected up to 10,000,000 yen than anything moderately of higher risk.

What good is having non productive wealth stuck in an account producing close to 0% return?

The elderly are sure of a pension to live off but their offspring are not.

Even land is not a store of wealth.

When the property holder passes on the death duties on property are not paid, due to lack of savings and the property becomes delapidated.Alternatively, they are paid from the sale of property and the title passes out of the family-only the very rich keep property on an inter -generational basis by having the capital to pay the extortionate taxes!

Anyone is welcome to their opinion on what Japan is or isn’t but just forming an opinion without being anything other than a tourist will only lead to a perpetual state of ignorant.....bliss.

2 ( +2 / -0 )

@JeffLee: Feel free to give me all the yen cash in your savings account and wallet, for I shall free you of the interminable burden, brother.

Hilarious - and beside the point.

It can't happen -- unless ignorant politicians want it to happen. By ignorant, they would believe that fiscal debt in a currency sovereign nation works exactly the same as private debt in a household. Insane, yes, but it's scary how many people believe that, including those who should know better.

There are many historic examples of nations that print their way to poverty. That’s sovereign debt. There seems to be this idea that today’s modern sophisticated world is different from those barbaric old days when mismanagement during good economic periods suddenly came to a screeching halt. Deficits and debt are reasonable up to the point that it risks scaring away investment. We are putting this tipping point to the test now.

As for sovereign debt - you cannot print an entrepreneur to start a business in a bad business environment. And yes business is important- they are the engine of growth that allows for a tax base to fund the existence of government.

-1 ( +1 / -2 )

JeffLee: Insane

What’s insane is believing that money grows on trees.

-1 ( +1 / -2 )

It can't happen -- unless ignorant politicians want it to happen.

Ignorant politicians do not control the value of the Monopoly money printed in this country, the markets do.

There is more than one way in which Bad Stuff May Go Down

-2 ( +0 / -2 )

90% of it will be corporate welfare. 

Yeah but not sure that is a bad idea.

Sure, we could let more businesses go under during these times, than would otherwise be the case.

Think for example, profitable restaurants that make great food. But aren’t now, because of COVID-19. We could go on and on with examples.

So, we can either have no corporate welfare for these businesses, have them shut down and/or lay off their workers.

Or we could do some corporate welfare until this Covid19 situation passes.

Once it passes, do we want to be in a crap economic state, or a far worse, total depression era scenario?

I am good with the corporate welfare because corporations are what is the basis of the majority of the economy that most of us depend on.

The problem Japan has is that it spent the kitty up big time already, and that does not make for a brighter future. The public spending should be proportionate in the good times, so that during a crisis they can step up to be the economic supporter of last resort.

-1 ( +0 / -1 )

Japan is still primarily an export economy that contributed 10% of global manufacturing. A strong currency is very bad, and a self-induced deflation is just a horrible monetary policy.

That part I agree with, but its puzzling to see people like Kyle Bass predict Japans demise, but it never happens. Their GDP to debt ratio keeps getting bigger, population decreasing and local economy in a perpetual deflationary zombie like state for as long as I can remember. Im trying to figure out how it all works. Most of the jobs are service sector, who support the elite salaryman who work for the keiretsu groups. There seems more to it than just an "export" economy, meaning, they must have massive investments and assets abroad, with those remittances supporting the domestic scene? Because without extreme protectionism, it seems that the domestic scene would fall apart; there just isnt much there. If the income from abroad is the key, where does it ago, because companies dont spend, but have huge savings.

Maybe its the massive black ink that make it all work?

Feel free to contribute as I have no idea, being a cog in the wheel.

0 ( +0 / -0 )

"Japan is still primarily an export economy”

Certainly NOT.

Wrong on all accounts.

"Japan is the 4th largest export economy in the world and the most complex economy according to the Economic Complexity Index (ECI). In 2017, Japan exported $694B and imported $632B, resulting in a positive trade balance of $62.4B. In 2017 the GDP of Japan was $4.87T and its GDP per capita was $43.3k."

"https://www.theglobaleconomy.com/Japan/Exports/"

"Japan is the 4th largest export economy in the world and the most complex economy according to the Economic Complexity Index (ECI). In 2017, Japan exported $694B and imported $632B, resulting in a positive trade balance of $62.4B. In 2017 the GDP of Japan was $4.87T and its GDP per capita was $43.3k.

The top exports of Japan are Cars ($101B), Vehicle Parts ($34.9B), Integrated Circuits ($26.5B), Machinery Having Individual Functions($22.6B) and Industrial Printers ($13.6B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($57.7B), Petroleum Gas ($37.1B), Broadcasting Equipment($22.1B), Integrated Circuits ($21.8B) and Coal Briquettes ($19.5B)."

"https://oec.world/en/profile/country/jpn/"

Despite being the World’s 4th largest economy, exports amount to ONLY 18.45 percent of GDP.

Therefore, out of a $5.9 Trillion GDP, 18.45% are exports.

Well below the World average (2018) based on 162 countries, at 44.70%.

Hardly the hallmark of a "primarily export economy" me thinks.

Consequently, your statement is totally incorrect.

0 ( +0 / -0 )

Primarily: adverb

essentially; mostly; chiefly; principally:

More exports than imports.

0 ( +0 / -0 )

"Japan is still primarily an export economy”

In this context, the poster implies, even states that Japan's economy depends primarily on exports.

A country mostly dependent on exports.

This is incorrect.

Nothing to do with exports exceeding imports.

0 ( +0 / -0 )

Despite being the World’s 4th largest economy,

Holy cow, Japan used to be 2nd, and then overtaken by China. When did it get overtaken by some other country to be 4th?

The trajectory is worrying.

0 ( +0 / -0 )

Maybe it’s this other measure, which isn’t mentioned much:

https://en.m.wikipedia.org/wiki/List_of_countries_byGDP(PPP)

0 ( +0 / -0 )

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