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Abe adviser calls for stimulus after 'shocking' GDP

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The fact that the country's leaders and experts all find this surprising is what disturbs me the most.

42 ( +46 / -5 )

I am not fan of Abe and his administration but I sincerely wish ABE the best to figure out strategy to simulate the economy and lead it back on track.

9 ( +12 / -3 )

“Debate needs to focus on how to support the Japanese economy,” Honda told Reuters.

I presume that means the government borrowing and spending more money, which has never been tried and resulted in failure before. (/sarcasm)

It's time for reality to sink in. Japan needs some serious change. I hope those with a vote will exercise it and try to really clean house, not that it can help, but at least the current clowns aren't the ones who'll ever get Japan out of this mess.

11 ( +17 / -6 )

More stimulus? It clearly isn't working so why do more?

6 ( +9 / -3 )

two words:

CUT SPENDING! Seriously, how many more tax-payer funded 'panels' or amakudari transfers must the taxpayer bear...

18 ( +22 / -5 )

@fxgai - in your sep 30 posts on the same topic you were betting your humble pride that GDP would be positive in the third quarter ending September despite the downturn in household spending in July and August that I cited. Are you still promoting more consumption tax at this point?

5 ( +6 / -1 )

two words:

CUT SPENDING!

Austerity never works.

-12 ( +7 / -19 )

The structural reforms that might have made a difference 15 years ago when they were proposed (but were fought tooth and nail by businesses and the bureaucrats who feared change and losing "power") sadly won't work anymore. They would be too painful for the populace to bare now. But by all means, let's keep flooding the world with yen to keep the exchange rate low to help those exporters who neither pay taxes in Japan nor hire anyone domestically anymore.

5 ( +7 / -2 )

Austerity never works.

You do realize that you can cut spending without being austere, right?

11 ( +12 / -1 )

shiboritate,

No, I concede you my humble pride, I concede that Japan's economy is in worse shape than I imagined (see my other comments today). I ponder whether (fortunately) my personal circumstances are on the better side of average, giving a rosy tint to my read on the capacity of the populace to suck up a little payback for years of government budget deficits. Some 50,000 extra tax a year didn't seem like a killer to me, but I guess it may not be the case for most others.

1 ( +3 / -2 )

If I am Japanese Premier, the first and paramount job is to conduct structure reform instead of currency manipulation.

3 ( +6 / -3 )

Abe adviser calls for stimulus after 'shocking' GDP

Shocking? Is he nuts? How can someone with the beginning of a brain find that shocking?

Abenomics is nothing new in the LDP's cook book which has been used since Japan was hit by the bubble collapse. That is spend tax payer money with no tomorrow on public works to satisfy the Yakusas behind the construction companies and do some currency manipulations (with Abenomics being the most aggressive to far) to satisfy the big "dinosaurs" Japans Incs left behind by the international competition in order to maintain them afloat.

So what have been the results of these policies? Nothing besides producing an insanely high public debt while doing nothing to fix Japan's deep structural problems like the terrifying aging population and a middle class with less and less purchasing power. These policies have always resulted in a short economical stimulus followed again by a recession. Japan has been trapped in this cycle for more than 20 years, a trap that it put itself in.

Abnomics have been a pain in the neck for all middle classes as it has only made their living cost more expensive (high importation costs associated with the weak yen) and absolutely nothing in Abe's future policy is going beyond the present Abnomics's policy, nothing, nada.

Abnomics is a failure. The increase of the sales tax in a country as already expensive as Japan but with poor social benefits (tax return) was known to be a bad idea, but Abe's government played again the typical Japanese Oyaji stubbornness game and here they are now. Pathetic.

It's not the sales increase tax that failed Abnomics, Abnomics was a failure from the start. Abnomics is a failure and for that reason Abe must quit. He has to leave, period. He has already made too much damage to Japan's population, that's enough now.

12 ( +17 / -5 )

Japan is just a hopeless economic basket case. There' s nothing that can be done. Foreigners to a man/woman have divested themselves of their stocks of yen I'm sure. Japan is simply heading for collapse, won't be pretty. Earn your cash, in foreign currencies and get out at the right time.

0 ( +4 / -4 )

The surprise is all fake and things are going completely according to plan. So far almost all the stimulus is a major transfer of wealth to the richest member of society. This slide then becomes another reason for more stimulus and to keep the class warfare waged by Abe and his neo-liberal cohorts going.

11 ( +13 / -2 )

Hopeless, terrifying hopeless and worse, you can see no way out of the enfolding disaster. Probably only a war can change things here now.

-3 ( +4 / -7 )

The increase of the sales tax in a country as already expensive as Japan but with poor social benefits (tax return) was known to be a bad idea

Whether Japan's social benefits are "poor" or not is debatable, but it would appear that they are unaffordable at least. If people today aren't able to bear the tax burden to pay for it, it'll be even harder for the tax payers of tomorrow who will have to support a more aged populace.

Tax hikes have now been proven unworkable, slashing spending will be too unpalatable for the Japanese voters. It would appear that free market capitalism is the only remaining path to any semblance of long-term prosperity in Japan, but even then something needs to be done to resolve the massive debt problem before Japan can once again move forward.

-5 ( +1 / -6 )

Madness. Isn't the definition of insanity doing the same thing over and over again and expecting a different result.? that's what this is.

I guess the only consolation is that if you can short the yen and time your entry back into the Nikkei right there is some speculative money to be made out of this. just shame if you are a Japanese pensioner or a foreigner earning yen.

2 ( +4 / -2 )

Sigh, ok the Yen is just now getting cheap. When it was 80 or so to the dollar, that was an anomaly. 105-112 or so is amount normal. With the strengthening dollar, well you can't fight that, as all currencies are weakening to it. That really is not Abenomics fault. People here really need to get over that.

Higher sales taxes suck, but the country is deeply in debt, and tons of retirees are on the way. Sorry, this has to happen as well.

Umbrella, seriously? Once the population stabilizes around 80m or so, and the old people are no longer a huge burden, things will be fine. Look at how much (despite a huge trade deficit) foreign currency Japan nets each month? So you think even companies like Toray, Toyota, Hitachi, Mitsubishi UFC bank and the rest will fall apart and die? That is laughable. As any Japanese stock worth holding has significant foreign exposure. Calm down

-5 ( +3 / -8 )

Stimulus? Really? Yeah, let's borrow more money and increase the country's debt even further! These old twits have to wake up and realise the only way the economy can recover is through supporting local produce, but that does not mean subsidising it with tax money. It means, join the TPP, increase the taxes on imported goods and reduce the tax on local produce. The sales tax hike was a move to reduce the country's public debt (the money the government owes the public - your wasted taxes). However, as expected, people stopped buying over-priced Japanese goods and they shifted to cheaper imported goods. Australia did it in the 80's and worked very well. Yeah, using Australia as an example is not good cos the GDP is a sixth of Japan's, but Japan's greatest resource is its workforce, which is being abused and not utilised!

1 ( +6 / -5 )

If anything this might force Abes gang to get on with immigration reform, TPP, deregulation, etc. Kuroda allready pulled his last monetary easing gimmick. Whats next? If I was Abe, I would of used some leverage to make things right with China. I would of told Xi that if you back off Vietnam and PI, then we will back off the Senkakus. You have to compromise. His previous yasukuni stunts soured the situationr. I havent seen any recent moves toward Yasukuni, actually I see a different Abe and gang now; seems more like desparation.

-3 ( +3 / -6 )

The lines at the two retail stores I visited last weekend were enormous. The stores were Uniqlo and ToyRus. Could have been that the stores were having trouble getting staff or that people were just starting to feel a little more comfortable spending. Either way, the good times have just started.

-1 ( +3 / -4 )

Once the population stabilizes around 80m or so, and the old people are no longer a huge burden, things will be fine.

Yeah, come back in 40 years. Sounds like a good plan actually :)

6 ( +6 / -0 )

There is nothing to debate about.

Anyone who doesn't know how to fix the economy has no right to hold the position they do.

Or maybe Abe would like to invite more friends and relations to form up yet another highly paid committee. To discuss how to fix the economy.

And they can continue to discuss it as the waters lap over the bridge and the good ship Japan finally goes to Davy Jones' locker, with Abe feverishly paddling away in a rubber dingy.

4 ( +7 / -3 )

What do they expect they have a serious case of head in the sand

3 ( +6 / -3 )

If people today aren't able to bear the tax burden to pay for it, it'll be even harder for the tax payers of tomorrow who will have to support a more aged populace.

That's all the problem that Japan faces. How to fund an expensive social welfare system due to an agin population with a shrinking work force and a population that can't afford tax hikes any more? Again Japan is already expensive enough and it's difficult to convince people to pay more tax when in the same time the country where they are living is doing so little to help them raise their children for example.

Tax hikes have now been proven unworkable, slashing spending will be too unpalatable for the Japanese voters.

That makes no difference to the (few) Japanese voters. Slashing spending and tax hikes are both austerity policies.

When it was 80 or so to the dollar, that was an anomaly. 105-112 or so is amount normal. With the strengthening dollar, well you can't fight that, as all currencies are weakening to it.

Yeah, yeah, nothing is wrong. So imported goods (including food) and fuel didn't get too expensive due to a yen too weak. Prices jus went up by themselves then.

That really is not Abenomics fault.

Yes of course nothing is Abenomics fault, sure. Lets just continue with that. Japan is just in recession.

So you think even companies like Toray, Toyota, Hitachi, Mitsubishi UFC bank and the rest will fall apart and die?

So what? Of course they won't disappear just like that.

0 ( +2 / -2 )

Austerity never works

Worked pretty darned well for Germany. And Ireland isn't doing too shabbily right now because of it either. It's all in how you package and implement it. Austerity can work in the right formulation.

4 ( +6 / -2 )

"It's not the sales increase tax that failed Abnomics, Abnomics was a failure from the start. Abnomics is a failure and for that reason Abe must quit. He has to leave, period. He has already made too much damage to Japan's population, that's enough now."

Its not all Abes fault. Its the deeply engrained nationalism, anti foriegn protectionism of the oyagi club at Japan Inc. There is an Oyaji club in the media academia, agricultural sector etc as well. Do they colaborate? Surely they do. Can Abe break this all up? Impossile. We cant just blame one man. Even if by some miracle the media exposed how deep and involved this mess was, would the sheople do anything about it? Unlikely. I think there are so many captains in the wheelhouse that the only way anything gets done is by consensus.

0 ( +3 / -3 )

LFRAgain,

Austerity can work in the right formulation.

Completely agree. Cutting spending is what is needed.

The problem is that the only thing holding Abe in his position is his handouts and perks to his rich friends.

If he tried austerity in that area, he would be out the next day.

12 ( +13 / -1 )

The year on year household spending numbers remain negative. As this is 60% of GDP it's a big deal. Take a look at the graph in this link - http://www.stat.go.jp/english/data/kakei/156.htm

from April on every month has been in the gutter. The tax hike, together with wage deflation and price inflation, has killed consumption. As I had previously stated, those with lower income have cut their consumption in an amount proportional to the tax hike.

Best scenario would be to lower the consumption tax, raise income tax progressively, cut government spending, and create family friendly programs. Doubt it will ever happen though.

3 ( +4 / -1 )

@fxguy: An extra ¥50,000 a year in taxes? Try more like an extra ¥120,000+ per year. That's just the 3% extra sales tax calculations. Most things have gone up a lot more than that, so it's more like an extra ¥250,000 a year in added expense with no pay increase and nothing more to show for that money spent.

2 ( +5 / -3 )

The lines at the two retail stores I visited last weekend were enormous. The stores were Uniqlo and ToyRus. Could have been that the stores were having trouble getting staff or that people were just starting to feel a little more comfortable spending. Either way, the good times have just started.

Anecdotal evidence does not equal proof.

2 ( +4 / -2 )

Less jobs, (full time). More tax, defunct industry model. Declining population, huge debt, corruption at all levels and a government regurgitating policies from 30 years ago! Same bucket of vomimit in the same penguin suits with the same family names. What could go wrong?

2 ( +4 / -2 )

In brief ... Abenomics is a failure. Abe keeps promoting his ill-advised financial program with lie after lie. It's about time the citizens of Japan realize they are being taken for dupes. They can take revenge on Abenomics by voting against Jiminto in the anticipated upcoming lower house elections. It's as simple as that ...

2 ( +4 / -2 )

“Debate needs to focus on how to support the Japanese economy,” Honda told Reuters

That should've been the focus from the get go. The economic data presented in July made that clear. Putting off the tax hike is a smart move, although bringing it back down to 5% would be better.

"Stimulus" spending = deficit spending: terrible idea.

Cut spending, taxes on income and profits, and free up the economy. Higher net incomes, and returns after taxes are all the stimulus that's needed.

The Japanese economy needs less government intervention. If PM Abe is really concerned about the economy, he'll step aside and allow the market to work more freely.

4 ( +5 / -1 )

This isn't being reported n here that I can see but I found this on another news site some may find interesting

"Monday's data is preliminary, with a revision due Dec. 8. Since some of the decline was due to reductions in inventory, things may not be as bad as the GDP reading suggests, economists said.

Rising business orders for industrial equipment and other big ticket items should boost output in coming months, said Pierre Ellis, senior economist at Decision Economics in New York.

Abe is planning extra stimulus worth about 3 trillion yen to 4 trillion yen ($26 billion to $35 billion) that could include subsidies to low-income families and help for smaller companies squeezed by rising costs for imported energy and materials, Nishioka said."

We seem to get very selective news in here mostly centering on the negative, I found that to be the case with the Japan china disputes over the islands too.

-5 ( +1 / -6 )

Casino's here we come!!!!

1 ( +1 / -0 )

A stimulus, eh? There's a surprise. All the LDP ever do is spend money "stimulating" the economy and it doesn't work. How about raising the minimum wage and enforcing overtime payments? That would put money into people's pockets, which they would spend.

5 ( +6 / -1 )

Daito, do you mean the yen in weak when compared to 2008, or do you mean historically? As it is basically in it's historical average as of now. Esp if you compare it to the Euro. You simply have a short memory.

Japan has to either cut it's social spending, ie less medicare and pension. Or raise some taxes. Pick your poison. As QE had to happen here, as deflation is BAD. Yes it's nice for buying stuff, but in the long run it is awful

-2 ( +0 / -2 )

The worst thing Abe can do is to "do something."nothing. Politicians and governments only make things worse.

0 ( +0 / -0 )

Talking is cheap, instead, Japan should do something that is right for long-term gain not just for borrowing time.

Bottom line is that Abe Admin has failed so many fronts including the long-waited third arrow. In short, it has lost credibility per se.

Spin doctors won't save Japan's economy, that's for sure.

1 ( +2 / -1 )

On March 1, 2013, JT published an article entitled Japanese shoppers upbeat as Abe pushes spending.

http://www.japantoday.com/category/business/view/japanese-shoppers-upbeat-as-abe-pushes-spending

I posted a comment to that article, and I think that what I had said then proved now to be true.

1 ( +1 / -0 )

Funny, back when they released the Q2 figures, I said right here that Q3 growth would be negative 1.5%. Unfortunately, I was right. But the government does not hire economists who give them numbers they don't want to hear. My prediction for the fiscal year 2014 was -2.1%, anyone care to bet that I am wrong?

So Japan is back in recession again, and I wasn't the only one who predicted that it would happen. The drop in GDP has far and away erased any increase in revenue that was to have been gained by the increase in the consumption tax, and that is before subtracting the 5 trillion yen blown on "stimulus" spending to counteract the negative effect of the tax. Bravo Abe!

When Abe called for snap elections last week, I knew that today's report would be negative. The elections will be a waste of time and energy, and will not accomplish anything. Now that the time has come to put up or shut up, Abe is waffling. We now see what kind of "leader" he is, since he is calling for an election instead of making the hard choices which need to be made here and now.

So, expect the next step to be the building of yet another coalition after the election to delay the tax increase, and to approve yet more stimulus spending, which will be borrowed at interest from a shrinking population and economy. Abe has no more cards to play, and he will never do what must be done, and that is to substantially reform the economy, and cut the size of the government. We will see part of the private sector reducing wages, decreasing their hiring of full-time workers, while other parts have to lay off staff, outsource, or shut their doors. But the government will not reduce their salary, or laying off workers.

4 ( +7 / -3 )

3rd arrow Abe-san, 3rd arrow! It's time now. Good luck with that one!

0 ( +0 / -0 )

@Pandabelle "Austerity never works."

It's working fine in the UK,.

-1 ( +3 / -4 )

3rd arrow Abe-san, 3rd arrow! It's time now. Good luck with that one!

There never was a "third arrow". But the third arrow was the only one which was necessary. Had they deregulated economy and trade, they could have gotten by without stimulus, asset purchase, and public works spending. But these latter "arrows" are the bread and butter of our current Japanese politicians, and they would rather have theirs, even if it means taking it out of our mouths.

2 ( +4 / -2 )

Yes, spending your way out of a recession worked in the 60's but not now. Austerity is needed to balance the budget and the only way is to cut government spending or discover some oil.

0 ( +2 / -2 )

It is time to send Mr Abe and his party packing and don’t forget to take the casino idea with them as well. Good riddance!

1 ( +2 / -1 )

During a recession you should cut taxes and increase spending. As far as imports are concerned by devaluing your currency you have increased not only the cost of imports but you will pay more for buying locally the things you use to buy cheaper through imports. Protective tariffs are never good. Other countries respond by taking similiar actions.

Yes Japan seems to have a population problem. But when you encourage smaller families thats what happens isn/t it.

1 ( +1 / -0 )

I presume that means the government borrowing and spending more money, which has never been tried and resulted in failure before. (/sarcasm)

Only thing worse than tax and spend is borrow and spend. At least there'll be plenty of young-uns to pay off the debt. (/sarcasm)

0 ( +1 / -1 )

Disillusioned

These old twits have to wake up and realise the only way the economy can recover is through supporting local produce, but that does not mean subsidising it with tax money. It means, join the TPP, increase the taxes on imported goods and reduce the tax on local produce.

Great idea!

Oh, wait. Raising taxes on imports while protecting domestic supply is exactly what the TPP and every other existing trade agreement in the history of the damned planet exists to prevent. Seriously, for all the commenting you've done on the TPP, one would think that you would be aware of this simple concept.

2 ( +4 / -2 )

Thanks, Abe! And now people are demanding MORE stimulus to pay for the mistake of giving them too much to begin with. STOP putting the money where CLEARLY it is not helping, and put it where your mouth is in terms of the third arrow!

But no, this is Japan. Abe will bail out companies suffering from what he and the BOJ have done under his watch, and during all of next year we're going to hear about how necessary more tax hikes are, and how we must all 'ganbarou' and spend more despite making less, and when everything costs more and is smaller. How anyone could be surprised that Abenomics has gone completely wrong is the only thing that is truly surprising.

0 ( +7 / -7 )

Maybe Japan with its largest trading partners, China and South Korea, can work out a productive and sound economic policy/plan for the whole Northeast Asian region. In today's interconnect globalized economy, especially given the huge trade between Japan , China and South Korea, it is more effective if these three countries work coherently together, than apart, to combat economic downturns and grow their respective economy.

if only.

2 ( +3 / -1 )

The economy has gone down the carsie for a number or reasons but one of the big reasons was that stupid tax increase in March.

0 ( +2 / -2 )

It's not only Japan. The whole global economy is slowing down. Go back to basics as wage increase, immigration reform. Need to stimulate growth from within country rather than flooding with more cash & accumulate debt. Corporations that are benefiting from overseas profits with currency need to do their part. Spread wealth & change consumer sentiment so they will spend. Spend on R & D to secure future growth. Good luck.

-1 ( +0 / -1 )

The economy unexpectedly shrank at a 1.6% annualized pace, throwing Japan into recession

Gee, guess all those arm-chair economists (one in particular who shall remain nameless) who were touting the fact that the Nikkei was at a near recored level, and Japan's economy was "booming", were as wrong all along as Abe has been. As I said weeks ago, Abenomics is just the Japanese version of "voodoo economics" -- all smoke and mirrors. He was just hoping reality would not set in before he got through a snap-election to keep him and his LDP-cronies in office a while longer, so they can continue to throw the public's money around for no good other than rewarding their rich supporters.

0 ( +5 / -5 )

Seems like a very simple equation: price increases across the board+stagnant wages=failure

3 ( +3 / -0 )

PM Abe's motto is "When Japan grows up, it wants to be just like USA. " Quantitative easing, free cash, middle class tax cuts, etc., all tried under US Pres. Obama. The result ? The USA has the world's biggest external debt, US$ 17900 billion, and growing bigger at around US$500 billion to US$ 1000 billion a year. The US debt ceiling has to be raised and approved by the US Congress every year, or most of the US government will shut down. It has already happened at least once. PM Abe needs to resign and let someone else takes charge.

2 ( +2 / -0 )

On my last trip to Japan I was able to buy a bottle of Canadian Club whisky for 1000 yen, that is less than half of what I pay in Canada. It is even slightly less than what I used to pay when I lived in Japan. So, while some things may be going up, you can still get loaded for less in Japan than almost any other first world country. Compai Japan, compai!

0 ( +1 / -1 )

How to lower expenses one stop paying for US bases 300 billion yen, stop foreign aid 2,200 billion yen. Sure the budget deficit is 35,000 billion yen but it is a start. It would allow the reversal of the last tax increase.

-1 ( +2 / -3 )

It appears many people here can't separate the difference between Abenomics and consumption tax increase.

-6 ( +4 / -10 )

It appears many people here can't separate the difference between Abenomics and consumption tax increase.

Really, why don't you enlighten us, since Abe and his cabinet approved the consuption tax incease, and, since his massive pump-priming before the increase was supposed to help the economy withstand the impact of it? You really are clutching at straws, and in an area that you are not expert in, as evidenced by your recent numerous posts saying how the high level of the Nikkei was proof Abenomics was working. Perhaps you can't separate true economic prosperity from wishful thinking.

-4 ( +2 / -6 )

Really, why don't you enlighten us, since Abe and his cabinet approved the consuption tax incease, and, since his massive pump-priming before the increase was supposed to help the economy withstand the impact of it?

If it doesn't withstand it, you're talking about lowering it back to 5%.

The law in of itself was passed under the Noda cabinet.

You really are clutching at straws, and in an area that you are not expert in, as evidenced by your recent numerous posts saying how the high level of the Nikkei was proof Abenomics was working.

Not only Nikkei, employment and wage are up as well.

-5 ( +4 / -9 )

Yuriotani,

Not sure getting rid of your countries security is a good idea,however,starting some nuclear plants would save some cash and get rid of Abe's hourly self promotion commercials on CNN

0 ( +0 / -0 )

It is too early to judge whether Abenomics failed or not. I personally think the third arrow, a growth strategy, is the most important among three arrows of Abenomics. I don't disagree on Abe's way of thinking that the growth stratgy requires deregulation. But blind deregulation would never be the best option because it would merely bring the so-called "gap-widening society". I hope the brains around Abe shoot the third arrow up in the air.

0 ( +1 / -1 )

B.B.Q.Demon,

An extra ¥50,000 a year in taxes? Try more like an extra ¥120,000+ per year. That's just the 3% extra sales tax calculations.

¥120,000+ would imply consumption of 4 million yen a year / 333,333 yen a month. I don't think I consume that much. Maybe I'm a relatively frugal kind of guy?

A good thing about consumption tax, is that you don't have to pay it if you don't want to (for the sacrifice of not spending now). Another is the fact that the rich have to pay consumption tax too, and the rich tend to consume more than the poor and thus pay more tax. It also hits the elderly, who in Japan have all the money. Alas it does seem to have put the economy into technical recession.

sangetsu03,

While largely in agreement...

The drop in GDP has far and away erased any increase in revenue that was to have been gained by the increase in the consumption tax

...this I'm not so sure about. As of the end of September, tax revenues are up on last year. http://www.mof.go.jp/tax_policy/reference/taxes_and_stamp_revenues/h201409.htm Of course with the economy in technical recession I'm not saying I think it will last.

0 ( +0 / -0 )

The law in of itself was passed under the Noda cabinet.

With the support of the LDP, if I recall correctly.

1 ( +2 / -1 )

Abe also promised Noda that he'd do something about reducing the number of parliamentarians, but then Noda was foolish to believe a Japanese politician would keep his word once coming to power.

0 ( +0 / -0 )

With the support of the LDP, if I recall correctly.

And Komeito.

-4 ( +1 / -5 )

Not only Nikkei, employment and wage are up as well.

Wages are not up (unless you are a bureaucrat), overall employment is down, but full-time employment is at a record low level, and we all know that part-time workers in Japan are considered second-class citizens, who cannot get credit cards, car loans, or morgages, and whom after working long enough in their part-time jobs will be considered "damaged goods" by companies, who will never give them full-time jobs. Is this not so?

The Nikkei's increase is utterly irrelevant. One of the bad things about the easy monetary policy you advocate is that it allowed companies to pump up the value of their stocks by borrowing money to buy back their own shares. Since GDP shrunk, this means sales and economic activity are down, this being the case, the increase of the Nikkei is obviously not related to actual economic performance, right? And this being the case, we cannot use the value of the Nikkei as an economic barometer.

The greatest indicator of economic success is the rate of population growth. In this regard, how well is Japan's economy doing?

0 ( +1 / -1 )

Wages are not up (unless you are a bureaucrat), overall employment is down, but full-time employment is at a record low level, and we all know that part-time workers in Japan are considered second-class citizens, who cannot get credit cards, car loans, or morgages, and whom after working long enough in their part-time jobs will be considered "damaged goods" by companies, who will never give them full-time jobs. Is this not so?

http://www.esri.cao.go.jp/en/sna/data/sokuhou/files/2014/qe143/pdf/gaiyou1431_e.pdf

http://www.stat.go.jp/data/roudou/sokuhou/4hanki/dt/pdf/2014_3.pdf

Wages are up. Overall employment for 7 consecutive years. Private consumption is also up.

-2 ( +1 / -3 )

Wages are up. Overall employment for 7 consecutive years. Private consumption is also up.

Are these figures to be taken as seriously as all of the other published figures? like those which predicted GDP growth of 2.4% for Q3? Or 2% annualized inflation? Or the tax increase generating 5 trillion yen in additional revenue? Have any of these numbers, which were predicted by the best minds which the finance ministry and their Todai and Harvard-edcuated economists panned out?

How much have your wages gone up? How many people here have seen they wages go up? Anyone? Anyone? Anyone?

How many people here have increased their consumption? Anyone? Anyone? Anyone?

-1 ( +1 / -2 )

Are these figures to be taken as seriously as all of the other published figures? like those which predicted GDP growth of 2.4% for Q3? Or 2% annualized inflation? Or the tax increase generating 5 trillion yen in additional revenue? Have any of these numbers, which were predicted by the best minds which the finance ministry and their Todai and Harvard-edcuated economists panned out?

I meant to say "Overall employement up for 7 consecutive periods (quarters)"

It's not a prediction. It's government's official data and not the "private" ones predicting the 'growth'.

-2 ( +1 / -3 )

In Japan, the number of lifetime jobs has been declining for decades and part-time positions make up almost 40 percent of the workforce. These jobs also earn substantially less per hour than full-time positions. In the past decade, majority of employment offers were for temporary positions. The rise in part-time economy, the average pay has consistently fallen, dropping 15-20 percent in the last two decades. It’s a permanent, low-wage existence. Parents don’t want their daughter to marry temps, banks won’t give them home loans, and employers don’t want to spend money training them.

1 ( +1 / -0 )

How much have your wages gone up? How many people here have seen they wages go up? Anyone? Anyone? Anyone?

How many people here have increased their consumption? Anyone? Anyone? Anyone?

Odd, isn't it, that if wages, employment and consumption are indeed all up according to the government's no doubt reliable figures (sic), Japan is in recession. Something does not quite add up.

1 ( +1 / -0 )

Odd, isn't it, that if wages, employment and consumption are indeed all up according to the government's no doubt reliable figures (sic), Japan is in recession. Something does not quite add up.

The determination of 'recession' were based on the so-called government numbers. Don't resist that either? Lol.

You could have a private consumption go up and the wages go up and still have a negative GDP growth. You just have to understand the BASIC concept of what constitutes a GDP.

In any case, my first link above gives you the breakdown. It looks like you didn't bother to read them.

-2 ( +1 / -3 )

It's not a prediction. It's government's official data and not the "private" ones predicting the 'growth'.

Funny, it seems "the government's officlal data" has generally been wrong, hasn't it? As Simon said, if unemployment is down, and wages are up, why isn't the economy growing? If more people are working, and getting better pay, shouldn't things be getting better instead of worse?

I work in economics myself, in the private sector, and sometimes in the government. I made my own predictions last year, and guess what, they were correct.

According to the government, someone who is working one or two days a week for minimum wage is "employed", even if they are not making enough money to make ends meet. In such cases, these "employed" people are adding less to the economy than they are taking out of it, which is certainly no help.

Having worked for more than one government myself, I have learned the hard way that the figures and information they publish is generally less trustworthy than that which is published by the private sector. If I am a company, and I publish false or misleading figures, I can be sued, or charged with a crime. But if I am a politician or bureaucrat, I can pretty much publish whatever I like, and face the consequences (unlikely) in the next election. People only listen to what they want to hear, and if you tell them what they want to hear, they are happy, even if what you tell them is completely wrong. Your "official government figures" are a good example.

America's "official" unemployment rate is at a 5 year low, but the labor participation rate (the percentage of the population which has a job) is at a near 30 year low, so there are fewer people actually working than at anytime since 1977. This figure shows that 37.2% of Americans are not working, while at the same time the governement reports that unemployment is only 5.9%? Japan and Europe use the same convoluted math as America, you cannot believe what these reports state, they are simply not true.

0 ( +3 / -3 )

Funny, it seems "the government's officlal data" has generally been wrong, hasn't it? As Simon said, if unemployment is down, and wages are up, why isn't the economy growing? If more people are working, and getting better pay, shouldn't things be getting better instead of worse?

As I alluded to Simon above, are you stating that the 'shocking GDP' report in this article could be WRONG as well? Or do you simply believe the figures that best suit your argument?

Your assertion that "Wages are not up (unless you are a bureaucrat), overall employment is down" was wrong. That was the base of your long paragraph above. But if you are going in the route of not basing your judgement on government figures, what are you basing it on?

-3 ( +1 / -4 )

sangetsu03NOV. 19, 2014 - 10:25AM JST

If more people are working, and getting better pay, shouldn't things be getting better instead of worse?

As I alluded to Simon above, are you stating that the 'shocking GDP' report in this article could be WRONG as well? Or do you simply believe the figures that best suit your argument?

You needn't bother posting links to this .pdf or that if you can't just answer a simple question.

0 ( +0 / -0 )

One things for sure - looking over most of the comments here (and the up/down votes), it's pretty clear that most on here know significantly less about the issues than Abe and Co. And that's saying a lot - and it is much scarier than this report...

0 ( +0 / -0 )

You needn't bother posting links to this .pdf or that if you can't just answer a simple question

Have you ever considered that the question in of itself is 'vague'?

-3 ( +0 / -3 )

Re: consumption tax hike

The law in of itself was passed under the Noda cabinet

True, but, PM Abe embraced it, and made it a big part of his economic plan. He was under no obligation to implement the tax. He could've repealled the law, but, rather bizarrely, thinks higher costs are an incentive for people to spend more.

Wages are up. Overall employment for 7 consecutive years. Private consumption is also up.

Wages aren't up by much, and certainly, the increase isn't enough to offset the higher costs the new tax imposes everybody. Not to mention the affects of a devalued yen will have on the economy.

Wages are up. Overall employment for 7 consecutive years. Private consumption is also up.

http://www.tradingeconomics.com/japan/household-spending

Consumer spending is up from what it had been in the summer, but it's nowhere near where it was January-March of this year. That should've been a very clear sign to the government that an increase in consumption taxes isn't wise in this anemic economy.

OK, there's been some improvement, but, it's way to early to celebrate the recent rise in consumer spending. It could very well be seasonal. Kids going back to school, spending for the upcoming winter holidays, etc.

If the government is smart it will delay the second tax hike, and work on getting the economy back on track to growth.

http://www.economist.com/blogs/freeexchange/2014/11/japans-economy

The above article makes a good case for delaying the tax hike (although I disagree on the handling of the debt). The priority should be getting Japan in the TPP, or, failing that, Japan opens its markets on its own terms.

A more market friendly, less interventionist approach would go much further in reining in debt, and fostering growth.

from Joe Oliver, Finance Minister of Canada

“We simply can’t afford a return to a mindset that assumes governments can tax and spend as they please, without economic consequences.”

This applies to Japan as well. Taxation had its place decades ago, but, now, it only serves to weigh down the economy, and reduce disposable income (necessary to spur inflation).

Abenomics is unsound, and only perpetuates the heavy-handed interventionist government activity that has held back the Japanese economy, and people, for decades.

1 ( +1 / -0 )

True, but, PM Abe embraced it, and made it a big part of his economic plan. He was under no obligation to implement the tax. He could've repealled the law, but, rather bizarrely, thinks higher costs are an incentive for people to spend more.

No he did not. The tri-party agreement was concluded when Tanigaki was the head of the LDP. With the upward economic number during last year, Abe had very little choice but to accept the initial raise as per what the law indicated (as per article 19)

Wages aren't up by much, and certainly, the increase isn't enough to offset the higher costs the new tax imposes everybody. Not to mention the affects of a devalued yen will have on the economy.

That's my point. Some people who posted here can't separate between the affects of Abenomics and the affects of the rise in consumption tax.

Consumer spending is up from what it had been in the summer, but it's nowhere near where it was January-March of this year. That should've been a very clear sign to the government that an increase in consumption taxes isn't wise in this anemic economy.

You are essentially comparing the months leading up to the implementation of the increase in tax rate which most economists as a one time anomaly.

OK, there's been some improvement, but, it's way to early to celebrate the recent rise in consumer spending. It could very well be seasonal. Kids going back to school, spending for the upcoming winter holidays, etc.

The link I gave above is 'seasonally adjusted' and is comparing the same quarter from last year.

-3 ( +0 / -3 )

The tri-party agreement was concluded when Tanigaki was the head of the LDP. With the upward economic number during last year, Abe had very little choice but to accept the initial raise as per what the law indicated (as per article 19)

So it's the LDP's fault, not Abe's. Makes sense, I can't actually recall what he was doing with himself at the time, certainly nothing to suggest he deserved a second go at the premiership after his first disastrous tenure, Well, in December the voters can vote against their local LDP candidates and punish the party rather than the leader.

Some people who posted here can't separate between the affects of Abenomics and the affects of the rise in consumption tax.

What's to separate? They have both been failures. If either had actually had the desired effect then the economy would be in better shape and the tax hike could go ahead as scheduled.

0 ( +0 / -0 )

No he did not. The tri-party agreement was concluded when Tanigaki was the head of the LDP. With the upward economic number during last year, Abe had very little choice but to accept the initial raise as per what the law indicated (as per article 19)

PM Abe hasn't spoke against the tax hike. No one disputes the origin of the tax hike, but, there's no arguing that Abe supports it, and has made it part of his overall plan for the economy.

Laws in democracies can be repealled, or modified by future governments. Granted, that's often easier said than done, but, there's no excuse for PM Abe's choices. Allowing the tax hike to go through, unchallenged, unchanged, was irresponsible, and economically unsound.

You are essentially comparing the months leading up to the implementation of the increase in tax rate which most economists as a one time anomaly.

Actually, I was more interested in the months AFTER the tax increase. Apologies for not being more clear on that. However, you have a point. Let's go back further, and get a better picture of the tax hike's impact.

http://www.tradingeconomics.com/japan/household-spending (starting from January 2010)

Yes, the spike in the first quarter was an anomaly, but, it does show that the tax gives consumers no incentive to increase their spending, especially on discretionary goods. Looking at the graph, we see much higher consumer spending in the years leading up to the tax hike.

Abenomics and the tax hike are two separate things. I do not argue that point, and never have. However, that the tax hike wasn't his idea, doesn't mitigate his decision to support it, and push it through. As the head of state, he bears the responsibility for whatever actions he takes, or fails to take. The tax increase is definitely one of them.

-1 ( +0 / -1 )

PM Abe hasn't spoke against the tax hike. No one disputes the origin of the tax hike, but, there's no arguing that Abe supports it, and has made it part of his overall plan for the economy.

The word you used was "embrace" for that's the reason why I countered. He accepted it because the economic clause indicated in the amendment called for it.

Laws in democracies can be repealled, or modified by future governments. Granted, that's often easier said than done, but, there's no excuse for PM Abe's choices. Allowing the tax hike to go through, unchallenged, unchanged, was irresponsible, and economically unsound.

He's not excusing it. He accepted despite that it would result in negative numbers. To what extent neither Abe nor the rest of the experts knew.

Abenomics and the tax hike are two separate things. I do not argue that point, and never have. However, that the tax hike wasn't his idea, doesn't mitigate his decision to support it, and push it through. As the head of state, he bears the responsibility for whatever actions he takes, or fails to take. The tax increase is definitely one of them.

But he is taking responsibility for it. Put it another way. Not knowing the significant decrease that it resulted, when can one determine such increase can be made? In addition, even with this negative impact, majority of his expert panel still insisted the raise as scheduled in October of next year.

-4 ( +0 / -4 )

A population fearful of their future income will save rather than spend.

0 ( +0 / -0 )

Few talk about one of the real issues--the govt. pensions are give out at 60...it should be 67 or higher. Look at what the UK and the US have done, and the life expectancies are even shorter for those countries..

0 ( +0 / -0 )

The word you used was "embrace" for that's the reason why I countered. He accepted it because the economic clause indicated in the amendment called for it.

Embrace, accept, etc, at the end of the day it all means one thing: PM Abe supports the increase in the consumption tax. He accepted it because he hasn't got any idea on how economies work. He has no bold or original ideas.

PM Abe is the head of state, with a majority in both the Diet and the Upper House. If he wants change, it's within his power to make it happen. Going throuh with the tax hike was unnecessary, and unsound.

Not knowing the significant decrease that it resulted, when can one determine such increase can be made?

http://ieconomics.com/japan-growth

http://ieconomics.com/japan-wages

http://ieconomics.com/japan-disposable-personal-income

Stagnant and/or shrinking incomes, anemic growth, low consumer confidence, etc...This is not the time for tax hikes. One need not be an expert in economics to realize that.

The question that needs to be answered is:

How can the economy fixed?

Taxes aren't part of the solution. They are the problem.

-1 ( +0 / -1 )

Embrace, accept, etc, at the end of the day it all means one thing: PM Abe supports the increase in the consumption tax. He accepted it because he hasn't got any idea on how economies work. He has no bold or original ideas.

What part of "He accepted despite that it would result in negative numbers" did you not understand?

PM Abe is the head of state, with a majority in both the Diet and the Upper House. If he wants change, it's within his power to make it happen. Going throuh with the tax hike was unnecessary, and unsound.

So when is it 'sound'? Can you at least be specific (which means economic numbers)?

-4 ( +0 / -4 )

What part of "He accepted despite that it would result in negative numbers" did you not understand?

I understood perfectly, I just don't see how that mitigates the decision to go through with the tax hike in the first place. That simply confirms what I wrote before: Abe's policies are economically unsound.

I don't buy into your argument that Abe had no choice. If he truly understood the tax increase would impact the economy negatively, then going ahead with it raises questions as to PM Abe's competence, and common sense.

The financial crisis, the earthquake of 2011, the uncertainty caused by the tensions with China (not mentions those around the world), and a struggling economy....How can tax increases be justified in such circumstances? Why ignore all common sense, and proceed with a policy that will not deliver the economic results needed to deal with the debt?

So when is it 'sound'? Can you at least be specific (which means economic numbers)

It's sound when the economy is growing at a robust, sustainable pace. Best to wait when the economy is growing at 5%.

Business taxes should be at 25% or lower. This would allow businesses to keep more of their profits. Higher profits, more funds available for wage hikes, expansion.

The economy has to be a priority because that's how the other problems get fixed. A growing economy can pay its debts. Raising taxes, be it on income or consumption, impedes growth, if not puts the brakes on it altogether.

Think back to Bill Clinton's presidential campaign's slogan. "It's the economy, stupid."

This is not to say you're stupid, but, to illustrate a point. There's no economic benefit to the sales tax hike. Zero.

0 ( +0 / -0 )

@JB

"PM", or "Prime Minister" isn't a title like "President", it's a job. He's "Mr Abe, the Prime Minister."

In the same way, he's certainly not "Head of State", that would be the Emperor.

All Abe is is the leader of the majority party in parliament.

Until people stop talking about Japanese politics as if this were the United States then nothing's going to be seen in the correct way....

-2 ( +0 / -2 )

"PM", or "Prime Minister" isn't a title like "President", it's a job. He's "Mr Abe, the Prime Minister."

Where did I write that PM Abe's position was in anyway similar to that of an American president's? I certainly never have seen Japanese politics as being similar to the US system.

Fair enough, on paper, the Emperor is the head of state, and Mr Abe heads the government. However, Emperor Akihito doesn't impose taxes, or decide policy, Abe does.

0 ( +0 / -0 )

"Abenomics is unsound,..."

No it isn't. The tax hike is unsound, but that isn't Abenonomics as it was legislated between the previous DPJ and Abe's LDP predecessor. People have short memories but the mantra of late 2013 was "Japan is back," a period when Abenomics was in fact working.

-2 ( +0 / -2 )

I understood perfectly, I just don't see how that mitigates the decision to go through with the tax hike in the first place. That simply confirms what I wrote before: Abe's policies are economically unsound.

It's not his policy.

I don't buy into your argument that Abe had no choice. If he truly understood the tax increase would impact the economy negatively, then going ahead with it raises questions as to PM Abe's competence, and common sense.

Because all tax increases impact negatively. Doesn't mean you ignore it. How do you think the other nations were able to implement their increases?

The financial crisis, the earthquake of 2011, the uncertainty caused by the tensions with China (not mentions those around the world), and a struggling economy....How can tax increases be justified in such circumstances? Why ignore all common sense, and proceed with a policy that will not deliver the economic results needed to deal with the debt?

It seems like you are confused with the later years of Noda cabinet.

It's sound when the economy is growing at a robust, sustainable pace. Best to wait when the economy is growing at 5%.

Japan is not a 'developing' nation. They are part of a G7. Please. Get real.

-5 ( +0 / -5 )

//stop paying for US bases 300 billion yen

Nice idea, but then someone, somewhere in the US would be fractionally poorer, and put off buying that new Japanese car for another year...international economics is mostly counter-intuitive.

Japan's economy is not too good, one idea might be to shorten the working day, and cut out all this unpaid overtime crap. People just hanging around the office until 10pm every night just waiting for the boss to go home aren't out there shopping, or doing something more useful in their own time, like starting a small business online or in the real world.

And some way around the paradox of thrift...Japanese people just save too much money. Person A at Sony decides to make their own bento, to save money, so the person B in the bento factory gets less cash, which means s/he doesn't go buy that music produced by Sony...

0 ( +0 / -0 )

When Japan was in good shape, Leaders never thought of making disance from US. Now Japan is paying for that attachment.

-1 ( +0 / -1 )

@JB

You still don't get it. Abe doesn't "impose" taxes. The LDP, of which he happens to be the leader, submits a bill to impose taxes to parliament, which then votes yes or no.

The idea that Abe is some kind of Obama-like national leader is dangerously misleading.

0 ( +0 / -0 )

It's not his policy.

PM Abe didn't create the tax hike policy, but he implemented it. That makes it his.

You still don't get it. Abe doesn't "impose" taxes. The LDP, of which he happens to be the leader, submits a bill to impose taxes to parliament, which then votes yes or no.

So, as prime minister, and leader of the LDP, Abe bears no responsibility for the legislation which he supports, and votes into law? I think you're the one who doesn't get it.

Because all tax increases impact negatively. Doesn't mean you ignore it. How do you think the other nations were able to implement their increases?

All tax increases impact the economy negatively. That means they have to be timed properly, not passed during times when the economy is in an anemic state. Wages are stagnant, consumers aren't exactly optimistic.

I never wrote that taxes shouldn't ever be passed. Countries that implement tax increases in harsh economic times suffer from years of economic stagnation, capital flight, and high unemployment.

You're living in the past, when taxes had may have had some economic benefit down the road. This isn't the 50s. Countries have had taxation on income, profits, consumption, even manufacturing. What have they delivered? Recessions, income inequality, low growth, etc.

We've reached the limits of what taxation can do. The time now is for government to cut spending, and use tax revenues more efficiently. People don't needed government going deeper into their pockets.

Japan is not a 'developing' nation. They are part of a G7. Please. Get real.

Besides being smug, you're clearly confusing my post with another's, as I have never stated, or implied that Japan was a developing country. Get over yourself, please.

Look at the numbers.

http://www.tradingeconomics.com/japan/gdp-growth

That Japan is a G7 country doesn't mitigate policies that negatively impact the economy. Growth numbers that begin with a minus sign aren't things we can just blow off because Japan is a G7 country.

It seems like you are confused with the later years of Noda cabinet.

No, I'm not...I'm saying that the economy hasn't fully recovered from those events, and so, the tax increase was

-1 ( +0 / -1 )

PM Abe didn't create the tax hike policy, but he implemented it. That makes it his.

No it does not.

All tax increases impact the economy negatively. That means they have to be timed properly, not passed during times when the economy is in an anemic state. Wages are stagnant, consumers aren't exactly optimistic

There is no such thing as "timing them properly" when it almost always results in negative.

Besides being smug, you're clearly confusing my post with another's, as I have never stated, or implied that Japan was a developing country. Get over yourself, please.

You're the one that came up with a 5% increase target to a developed nation.

No, I'm not...I'm saying that the economy hasn't fully recovered from those events, and so, the tax increase was

You mentioned financial crisis. The only one I can think of is the aftermath of Lehman shock when the DPJ did nothing. 3/11 was during the DPJ. Tensions in China? What does this have to do with economic recovery?

-4 ( +0 / -4 )

You're the one that came up with a 5% increase target to a developed nation.

From my earlier post: "It's sound when the economy is growing at a robust, sustainable pace. Best to wait when the economy is growing at 5%."

Hmm...where are the words developed nation in that sentence? In your imagination.

Fair enough, we disagree on the merits of the tax rise, but, don't make up comments I never wrote.

There is no such thing as "timing them properly" when it almost always results in negative.

My point is that there's a time and place for tax increases, and that time isn't now. Growth stats that begin with a minus sign don't support argument that Japan needs higher taxes. That simply isn't true.

You mentioned financial crisis. The only one I can think of is the aftermath of Lehman shock when the DPJ did nothing. 3/11 was during the DPJ. Tensions in China? What does this have to do with economic recovery?

The financial crisis didn't just disappear. G7 nations are still getting crushed with debt that may well take billions of years to pay down. Income inequality is becoming worse, and economic growth globally is down.

Perhaps I'm over-estimating its impact, but, the situation with China doesn't help trade relations. Trade could be hindered, which doesn't help the economy. However, I point out that the worsening relations with China are a factor to be considered, not a direct cause or Japan's recessed economy.

You're a good writer, nigelboy, but the economic data doesn't support your argument. Implementing the consumption tax increase was not necessary. All it has achieved is a recession.

http://www.businessweek.com/articles/2014-11-17/japans-in-recession-blame-the-tax-hike

http://ieconomics.com/japan-income-growth

http://ieconomics.com/japan-gdp-annual-growth-inflation-rate-mom

-1 ( +0 / -1 )

Hmm...where are the words developed nation in that sentence? In your imagination.

Fact. Japan is a 'developed' nation. Hence, by setting a numeric target of 5% is completely unrealistic.

My point is that there's a time and place for tax increases, and that time isn't now. Growth stats that begin with a minus sign don't support argument that Japan needs higher taxes. That simply isn't true.

It did not. The decision to increase to 8% in April of 2014 was done in October of 2013 based on the economic numbers prior to that.

The financial crisis didn't just disappear. G7 nations are still getting crushed with debt that may well take billions of years to pay down. Income inequality is becoming worse, and economic growth globally is down.

Those are not defined as "financial crisis."

Perhaps I'm over-estimating its impact, but, the situation with China doesn't help trade relations. Trade could be hindered, which doesn't help the economy. However, I point out that the worsening relations with China are a factor to be considered, not a direct cause or Japan's recessed economy.

In an evolving economy, trade volume with China doesn't simply dissappear but is offset by other nations (namely SE Asia).

-3 ( +0 / -3 )

It did not. The decision to increase to 8% in April of 2014 was done in October of 2013 based on the economic numbers prior to that.

Even then, it wasn't justified...

http://ieconomics.com/japan-growth-2013?ref=tradingeconomics.com

Those are not defined as "financial crisis."

Never said they were. I merely said that the effects of the economic crisis are still being felt. Governments the world over took on huge debts to bailout reckless bankers, and financial companies. Japan didn't have to help out its banks but it took a hit.

In an evolving economy, trade volume with China doesn't simply dissappear but is offset by other nations (namely SE Asia).

Never said trade would disappear. I wrote that trade could be hindered, especially if there's an escalation.

Fact. Japan is a 'developed' nation. Hence, by setting a numeric target of 5% is completely unrealistic.

How does setting a target of 5% growth infer that Japan isn't a developing nation? Fact: I never wrote that Japan was a developing country.

You think 5% is unrealistic, I get it. It's all well and good to disagree with opinions. However, making claiming people think and say things they do not is spurious, to say the least. Stick with what;s I've written down. You're not putting anything over on anyone.

FACT: Japan is a developed nation with a very well-educated, hard-working, and talented workforce. If the economy were freed up, and the government didn't weigh it down with reckless taxation, and regulation, it could very well hit that mark.

Raising taxes only ensures that robust growth doesn't happen. It doesn't fix the economy, so, why do it? The IMF, and OECD may pat PM Abe on the back, but, that won't bring higher incomes for Japan's heavily taxed workforce,

More importantly, an economy "growing" at below 1% isn't something that should be allowed to continue. Resigning to mediocrity, and stagnation is what produced the economy Japan has now. A target of 5% may well be unrealistic, but, it is well worth shooting for.

0 ( +0 / -0 )

Even then, it wasn't justified...

Based on hindsight, anyone can look like a genius.

Never said they were. I merely said that the effects of the economic crisis are still being felt. Governments the world over took on huge debts to bailout reckless bankers, and financial companies. Japan didn't have to help out its banks but it took a hit.

In other words, pretty much the entire world has to be in good order for Japan to increase tax, another hurdle on top of the unrealistic 5% growth.

You think 5% is unrealistic, I get it. It's all well and good to disagree with opinions. However, making claiming people think and say things they do not is spurious, to say the least. Stick with what;s I've written down. You're not putting anything over on anyone.

It is.

-4 ( +0 / -4 )

Based on hindsight, anyone can look like a genius

My stand has been the same since the tax hike was announced more than a year ago. The economy was still reeling from the earthquake, and the fallout from that.

In other words, pretty much the entire world has to be in good order for Japan to increase tax, another hurdle on top of the unrealistic 5% growth.

You mean in your words. Where did I write that the world has to be in good order for Japan to increase taxes? Don't write words and say their mine, please. Specious comments don't make a good impression.

Japan should be in good, economic shape for it to raise taxes on its citizens. You forget that incomes aren't growing at the same pace as taxation, In fact, monthly salaries now average 320000yen. 20 years ago they were closer to 500000yen/month.

With budgets stretched, incomes stagnant, it makes no sense for the government to impose higher costs on business, and consumers. There's no economic pay off to be gained.

Inflation should be from market forces, higher demand for scarce or limited goods and services. Government fiat should never be used to spur inflation. The government would be better off if it ended its heavy-handed intervention, and let the economy be more free.

Again, 5% growth may not be possible, but the government should be doing what it can to get close to that goal instead of weighing the economy down with needless taxation.

Earlier this year, the Canadian province of Ontario had an election. The conservative party leader, Tim Hudak, ran a campaign with the slogan "a million jobs". He was ridiculed, and, unfortunately lost to the Ontario Liberal Party (which had sunk a once strong economy).

However unrealistic the goal, a person who works to achieve those goals is far more likely to deliver positive results, than the mindset you convey. Better to work to a higher goal than to be resigned to a mediocre, anemic economy.

http://ieconomics.com/japan-growth-2014-to-2040?ref=tradingeconomics.com

What is truly unrealistic is the mindset that says the government can tax and spend as it pleases with no regard to the economy. Believing that taxation will lead to a "virtuous cycle of consumption" and an economic revival is the very definition of living in a dreamland.

-1 ( +0 / -1 )

My stand has been the same since the tax hike was announced more than a year ago. The economy was still reeling from the earthquake, and the fallout from that.

Except for the inconvenient fact that there appears to be nothing from you when such decision was made in October of 2013. Like I said, hindsight makes everyone look like a genius.

You mean in your words. Where did I write that the world has to be in good order for Japan to increase taxes? Don't write words and say their mine, please. Specious comments don't make a good impression.

You didn't. I basically added another of your "hurdles" to come up with a conclusion.

Japan should be in good, economic shape for it to raise taxes on its citizens. You forget that incomes aren't growing at the same pace as taxation, In fact, monthly salaries now average 320000yen. 20 years ago they were closer to 500000yen/month.

Comparing the 'bubble era' which subsequently burst to that of today is not a good comparison.

With budgets stretched, incomes stagnant, it makes no sense for the government to impose higher costs on business, and consumers. There's no economic pay off to be gained.

Incomes weren't stagnant. They rose in 2013.

Inflation should be from market forces, higher demand for scarce or limited goods and services. Government fiat should never be used to spur inflation. The government would be better off if it ended its heavy-handed intervention, and let the economy be more free.

Which ended up in a deflationary spiral. At least the Fed Reserve was smart enough to take immediate measures which is what the BOJ started to do last year. IMHO, they need to do more.

Again, 5% growth may not be possible, but the government should be doing what it can to get close to that goal instead of weighing the economy down with needless taxation

5% is not possible. But taxes imposed while also trying to fix the economy is virtually impossible. That I agree with. And no doubt, Abe didn't like the idea of this law when he set office for he never wanted anything that would derail his "Abenomic' vision. But during October of 2013, he was pressued by his advisors, MOF bureacrats, LDP colleagues, and IMF to increase accordingly. He did it so reluctantly. Now, he made the decision to extend despite the still opposing voices from the same people. This election, if he wins, by default, would silence these people for the time being.

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Except for the inconvenient fact that there appears to be nothing from you when such decision was made in October of 2013. Like I said, hindsight makes everyone look like a genius.

So, you're saying I had supported the tax hike in the past, but then changed my mind? False assumptions aren't cogent arguments. They're just assumptions.

Like I said, my position on tax hikes is a long standing one. I've written on many message boards condemn senseless tax policies on sites like the CBC, the Financial Post, and more.

I support tax cuts, free enterprise, free trade, and entrepreneurial ventures, and other measures that build up the economy. You've no basis in fact to infer otherwise.

Incomes weren't stagnant. They rose in 2013.

Meagerly, and not enough to spur the "virtuous cycle of consumption" that would make the sales tax hike work. Incomes haven't not grown very much at all.

Comparing the 'bubble era' which subsequently burst to that of today is not a good comparison.

The point is incomes are down, not up. Nor are they growing at the same rate as taxes are going up.

Which ended up in a deflationary spiral. At least the Fed Reserve was smart enough to take immediate measures which is what the BOJ started to do last year. IMHO, they need to do more.

People don't feel comfortable spending money if the government doesn't commit to tax cuts. Saving money is the only option a consumer has if the government is bent on taking more of their hard earned wages. The growth of their income slowed, if not stagnated. There's no incentive to spend money on discretionary, big ticket items.

If taxes on income, and businesses were cut, we'd see more robust consumer activity. Punishing people for saving there money instead of spending it isn't the answer to deflation.

The government needs to instill confidence that people's money won't be taxed more than it already is. The government has got to get out of its citizens pockets in order for them to spend money.

The Fed and the BOJ's money printing spree didn't create jobs, boost incomes, or rein in national debts. The only beneficiaries of the such actions are large financial institutions. There's been no real economic payoff. No higher wages, no real economic growth.

The Japanese government is trying to control the economy, force prices up when there's no market impetus to drive them up. Inflation needs demand to go up. For demand to go up, disposable incomes must rise. That is economics 101. Reducing the buying power of people's money through QE, and tax hikes only produces the kind of numbers we see today.

5% is not possible.

Yeah, you've made your self-defeating, non-constructive views clear. 5% growth isn't possible while the government implements anti-growth policies.

If everyone had taken your kind of attitude, we'd be in a lot worse shape. No technological, or entrepreneurial innovation would've occured. That something isn't possible, doesn't mean that we should all sit back, and resign ourselve to situations that are less than ideal, or detrimental to our interest.

And no doubt, Abe didn't like the idea of this law when he set office for he never wanted anything that would derail his "Abenomic' vision. But during October of 2013, he was pressued by his advisors, MOF bureacrats, LDP colleagues, and IMF to increase accordingly. He did it so reluctantly. Now, he made the decision to extend despite the still opposing voices from the same people. This election, if he wins, by default, would silence these people for the time being.

Excuses, excuses, and more excuses for the same, lackadasical, uninspired, cowardly leadership that has held back economies for decades. Bowing to pressure from self-interested bureaucrats isn't stateman-like, or bold. From what you're telling me, it seems like Abe decided to shoot himself in the foot, and compromise his own objectives to revive the economy.

Not the characteristics of bold, strong, innovative leadership, in my view.

But taxes imposed while also trying to fix the economy is virtually impossible. That I agree with.

The first sensible thing you've written in our debate. Although, I don't get your stand against free market economics, you're absolutely right on taxation.

The decision to go through with the tax rise this year was unwise, and doesn't accomplish Abe's stated goal to revive the economy.

Yeah, the tax increase wasn't his idea, but, PM Abe brought a (pardon my language) crap to the table, and asked everyone else to eat it. Give him a pass if you like, but, in my book, PM Abe let the country down, and squandered an opportunity to make a difference.

If he wins the election, I hope he embraces more pro-growth, market-friendly ideas that facilitate job creation, and investment.

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So, you're saying I had supported the tax hike in the past, but then changed my mind? False assumptions aren't cogent arguments. They're just assumptions.

Nope. You were nowhere to be seen when the decision was made so how in the world am I to assume" My stand has been the same since the tax hike was announced more than a year ago?"

Meagerly, and not enough to spur the "virtuous cycle of consumption" that would make the sales tax hike work. Incomes haven't not grown very much at all.

Meagerly? No. The spring labor negotiations resulted in annual increases, bonuses, and with some companies, "base up". "Not enough to spur" is again based on your convenient hindsight.

The point is incomes are down, not up. Nor are they growing at the same rate as taxes are going up.

Income is up.

http://www.mhlw.go.jp/toukei/itiran/roudou/monthly/26/2609r/2609r.html

Let's get the basic premise correct, first. As to the growth rate not catching up to the rate of increase in taxes, you are correct. But it will.

Yeah, you've made your self-defeating, non-constructive views clear. 5% growth isn't possible while the government implements anti-growth policies

No. Your target number is essentially a "wishful" thinking with no regard to comprehending the growth rates of developed nations historically.

Anybody can aspire to high targets but when it's long term planning, a more realistic number is much more worth considering.

Excuses, excuses, and more excuses for the same, lackadasical, uninspired, cowardly leadership that has held back economies for decades. Bowing to pressure from self-interested bureaucrats isn't stateman-like, or bold. From what you're telling me, it seems like Abe decided to shoot himself in the foot, and compromise his own objectives to revive the economy

Sorry. Abe simply cannot decide unilaterally even in his own cabinet. The decision to increase in October was a cabinet decision which includes ministers.

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Nope. You were nowhere to be seen when the decision was made so how in the world am I to assume" My stand has been the same since the tax hike was announced more than a year ago?"

You do know that the Internet has a vast number of message boards, don't you? Do you know that people can join many forums, and often spend months away from one them? Are you aware that people can also have face-to-face conversations as well as chats on the web?

I could just as easily say the same thing about you, nigelboy. You write well, but, at the end of the day, you're making rather silly, baseless assumptions. Whether I've been "seen" or not, has no bearing on the validity of my comments.

Meagerly? No. The spring labor negotiations resulted in annual increases, bonuses, and with some companies, "base up". "Not enough to spur" is again based on your convenient hindsight.

No, it's based on my living here in Japan, getting feedback from students from varied professional backgrounds. It's not based on hindsight.

Income is up.

Not by much. Like, I said, meager. Japanese incomes have been sliding for more than ten years. A small bump doesn't make up for that lost income.

Let's get the basic premise correct, first. As to the growth rate not catching up to the rate of increase in taxes, you are correct. But it will.

Assuming taxes on income don't go up, and businesses flourish. I don't see how higher taxes will accomplish that.

No. Your target number is essentially a "wishful" thinking with no regard to comprehending the growth rates of developed nations historically.

It's called positive thinking with great regard for the potential talented human beings have, and what can be accomplished if the government, especially in Japan, stops meddling with reckless, anti-growth policies.

Whether 5% growth is realistic or not, Japan's growth rate doesn't justify higher taxes. The economy is in a terrible state. Higher costs brought on by taxation doesn't generate more demand for goods and services. Higher incomes, and profits do.

The course the government has taken now will not help facilitate better profits, higher consumer confidence, better profits or wages. It won't work.

Growth rates that are 1% or in the minuses aren't don't justify higher taxes; neither do low consumer confidence, or stagnant incomes.

Shamanistic, half-baked, economic policies that involve higher taxes, government direction, and printing money aren't going to work.

Tax cuts, open markets, investment, a thriving entrepreneurial class, and fiscal restraint in government. These are the way to economic revival.

Consumers will spend more money if they know it won't be taxed and wasted, if they can keep more of their income. The same goes for businesses. Allow them to keep more of their profits, and we'll see much better increases in wages.

Sorry. Abe simply cannot decide unilaterally even in his own cabinet. The decision to increase in October was a cabinet decision which includes ministers.

Yes, a weak leader can't do much to bring on positive change. No one is saying Abe has dictitorial powers, or that he should bully people. There's no excuse for not taking a stand, and bringing other people's crap to the table. All you're doing with these comments is confirming Abe's shortcomings as a leader.

PM Abe has the ear of the media, business leaders, and his own citizens. If he had taken a principled stand against the tax hike, he would've had the political support to repeal it, or at least delay it till the economy is on its feet again.

Great leaders are known for fighting against pressure, not caving for the sake of some misguided notion of harmony. If Abe can't stand up to those in his own party, he shouldn't be PM.

Look at Canada's PM, Stephen Harper. While I don't agree with ALL of his policies, he has done well in leading his party, and resisting those who'd pull the Conservative Party to the fringes of the political right. Abe needed to do a better job of fending off those pushing for anti-growth policies like the tax hike.

What Abe is lacking is clarity to see what needs to be done, and doing it.

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You do know that the Internet has a vast number of message boards, don't you? Do you know that people can join many forums, and often spend months away from one them? Are you aware that people can also have face-to-face conversations as well as chats on the web?

Yes. But boasting something you allegedly stated without proof is simply I do not take at value.

No, it's based on my living here in Japan, getting feedback from students from varied professional backgrounds. It's not based on hindsight.

But you didn't get a feedback from the rest of the population so your conclusion is nothing more than pseudo science.

Not by much. Like, I said, meager. Japanese incomes have been sliding for more than ten years. A small bump doesn't make up for that lost income.

That's not the point. We're discussing the wage level increase when Abe took office unless you are changing goal posts again.

Assuming taxes on income don't go up, and businesses flourish. I don't see how higher taxes will accomplish that.

Taxes on income? Shifting goal posts again. Please remember what you just wrote.

"The point is incomes are down, not up. "

It's called positive thinking with great regard for the potential talented human beings have, and what can be accomplished if the government, especially in Japan, stops meddling with reckless, anti-growth policies.

"Positive thinking" and realistic growth are two separate matters especially when recent history has shown that developed economies do not grow at the rate you suggested.

Consumers will spend more money if they know it won't be taxed and wasted, if they can keep more of their income. The same goes for businesses. Allow them to keep more of their profits, and we'll see much better increases in wages.

Consumers will spend more if they foresee a country that is positioned towards long term growth (which is not the deflationary spiral Japan has experienced which Abe is trying to put an end to it). Doesn't matter what the tax rate is. They'll fully leveraged themselves to the max to consume if the long term outlook is positive.

Yes, a weak leader can't do much to bring on positive change. No one is saying Abe has dictitorial powers, or that he should bully people. There's no excuse for not taking a stand, and bringing other people's crap to the table. All you're doing with these comments is confirming Abe's shortcomings as a leader.

No. You are asking Abe to do exactly that which is to bully people when in reality, such decisions which includes start up of NPP and redefining of article 9 requires a consensus among the cabinet members.

PM Abe has the ear of the media, business leaders, and his own citizens. If he had taken a principled stand against the tax hike, he would've had the political support to repeal it, or at least delay it till the economy is on its feet again.

Dare I say that is the "easiest" way to appease the voting public without taking any fiscal responsibility which the prior PM's dodged to do.

Great leaders are known for fighting against pressure, not caving for the sake of some misguided notion of harmony. If Abe can't stand up to those in his own party, he shouldn't be PM.

I beg to differ. This latest GDP figures is Abe's way of saying "I told you so" and is the reason why the LDP colleagues who wanted to increase the next round will keep their mouth shut (WHICH THEY WILL, including Aso)

Look at Canada's PM, Stephen Harper

Insignificant country with more social problems that Japan doesn't haven't to deal with.

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That's not the point. We're discussing the wage level increase when Abe took office unless you are changing goal posts again.

I was looking at wage increases over a much longer period of time. That wages went up by a very small amount is the point. The tax rise means those slightly higher wages have even less buying power.

Taxes on income? Shifting goal posts again. Please remember what you just wrote.

I think, more importantly, you ought to quote from statements in their entirety, not just little snippets that you feel suit you.

You: . As to the growth rate not catching up to the rate of increase in taxes, you are correct. But it will.

Me: Assuming taxes on income don't go up, and businesses flourish. I don't see how higher taxes will accomplish that.

Income taxes are often increased, even if wages themselves don't go up. Governments reset levels of taxation all the time. My point is that you're assuming tax rates, be they on income, profit, or consumption will not go up in the future.

Yes. But boasting something you allegedly stated without proof is simply I do not take at value.

I don't really care. One, no one is obliged to provide you with "proof" of their long held values. I've got a year's worth of posts on this board, many more on The National Post, The Financial Post, The CTV, and the CBC, and more. Plus, I use different pseudonyms.

It's a double standard to say one must prove to you that your baseless comments on values and views are false. The onus is on you to prove your point as you made the accusation first.

"Positive thinking" and realistic growth are two separate matters especially when recent history has shown that developed economies do not grow at the rate you suggested.

I never implied or stated that the two were the same. You put a lot of stock in the past, whereas I think more about potential, and the future. That something isn't easily attainable, or "not possible" doesn't mean that we settle for the mediocre.

The Japanese government thinking is small, pedestrian, and very, very traditional. Mediocrity may be easily attainable, but it shouldn't be the aspiration. There's nothing wrong with striving for high goals. Positive thinking has led to great technological advancement, creativity in the arts and business, social change, etc.

You think "in the box", and prefer traditional means as a way of fixing problems. Fine. However, you shouldn't just dismiss, or denigrate more unconventional approaches.

Consumers will spend more if they foresee a country that is positioned towards long term growth (which is not the deflationary spiral Japan has experienced which Abe is trying to put an end to it). Doesn't matter what the tax rate is. They'll fully leveraged themselves to the max to consume if the long term outlook is positive.

Consumers will spend more when they have more disposable income, and see long term, growth across aboard. Higher wages, gross or net, make more discretionary spending possible.

The kind of inflation needed doesn't come from government fiat, it comes from rising demand for scarce and/or limited goods and services. The hike in the consumption tax does nothing to raise disposable income or demand.

Japan is being positioned for a serious recession right now. Robust, long term growth won't happen if the government continues on its tax-and-spend course.

No. You are asking Abe to do exactly that which is to bully people when in reality, such decisions which includes start up of NPP and redefining of article 9 requires a consensus among the cabinet members

No, I'm asking PM Abe to take a stand against cranks, and self-interested parties who would inflict unsound policies on the country. Ensuring that policy grows the economy isn't bullying.

What you say is consensus is actually toadying, and pandering. It's not leadership. Harmony is all well and good, but, trying to appease those whose policy ideas are detrimental to the economy is irresponsible, and shows a troubling lack of strength.

If PM Abe can't stand up to bureaucrats and politicians whose ideas jepordise, if not torpedo, his goal of economic revival, he shouldn't be PM. He should step aside, and do something else.

Leaders need to listen not only to their colleagues, but to the people who elect them. They need an understanding of the economy, and how the average person experiences and lives the economy. The LDP, DPJ, PM Abe, and the rest of them have shown that they do not understand the economy.

Dare I say that is the "easiest" way to appease the voting public without taking any fiscal responsibility which the prior PM's dodged to do.

Elitism doesn't become you.

First of all, tax rises aren't the only way to take fiscal responsibility. You have heard of SPENDING CUTS, haven't you? Audits can be useful to find, and correct inefficiencies, uncover incompetence and/or corruption.

Raising taxes, printing money, deficit spending, strong-arming business-these aren't the characteristics of a fiscally responsible government.

I beg to differ. This latest GDP figures is Abe's way of saying "I told you so" and is the reason why the LDP colleagues who wanted to increase the next round will keep their mouth shut (WHICH THEY WILL, including Aso)

The GDP numbers?

You're actually serious?

http://ieconomics.com/japan-gdp

That's your idea of bragging points? You need to re-evaluate you're ideas on what healthy GDP numbers are, and those aren't them.

Insignificant country with more social problems that Japan doesn't haven't to deal with.

As a Canadian, I disagree with that smug, pompous comment. In fact, denigrating countries isn't really a saged response to any statement. Plus, Canada doesn't have any more or less social issues than most democratic, western countries.

I use PM Harper of Canada, because he's a good example of a leader not allowing those on the political fringes take over his party's agenda. The Conservative Party has stayed focused on growing economy, unfettered by the unsound policy ideas of its opposition, or nutters in its ownranks.

PM Abe is making the same mistake. Raising the consumption tax is a horrible, anti-growth policy. An anemic economy (which is an apt description of Japan's economy) doesn't need to be slowed down. It needs robust, consumer activity, investment, trade, and liberalization.

PM Abe is often called a conservative, and perhaps he is on social/political issues. However, on economics, he's on the misguided left,

Countries all over the world have been raising taxes for hundreds of years. What has been the result? High debt loads, both sovereign and consumer (which is a serious problem), low growth globally and domestic, rising income inequality (which taxation plays a real part).

PM Abe acquiencense to those who would raise taxes isn't taking fiscal responsibilty, it's being fiscally reckless. Also, raising taxes is unoriginal, and archaic. Intractable problems like the national debt, and the economy, require unconventional, and new methods to solve or mitigate them.

Cut spending, cut taxes on income and profits, and open the economy to trade and investment-that's fiscal responsibiity.

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I was looking at wage increases over a much longer period of time. That wages went up by a very small amount is the point. The tax rise means those slightly higher wages have even less buying power.

This is exactly what I meant by changing goal posts.

Income taxes are often increased, even if wages themselves don't go up. Governments reset levels of taxation all the time. My point is that you're assuming tax rates, be they on income, profit, or consumption will not go up in the future.

And you are including various other factors while the discussion was about the effects of the increase in consumption tax and whether or not the economy will ever rebound. This last quarter came up short on two main factors which the largest was private housing investment.

I don't really care. One, no one is obliged to provide you with "proof" of their long held values. I've got a year's worth of posts on this board, many more on The National Post, The Financial Post, The CTV, and the CBC, and more. Plus, I use different pseudonyms.

Then stop responding. I don't believe you. Let's leave it at that.

I never implied or stated that the two were the same. You put a lot of stock in the past, whereas I think more about potential, and the future. That something isn't easily attainable, or "not possible" doesn't mean that we settle for the mediocre.

And my point is that government in implementing a centralized plan shouldn't go giving pep talk type goals. Save that for half time in football.

Consumers will spend more when they have more disposable income, and see long term, growth across aboard. Higher wages, gross or net, make more discretionary spending possible.

I agree. Chicken or egg but the question is which should come first. You have no plans how to achieve this. This has been the case for the opposition parties as well.

Yes. Increasing consumer tax hurt the economy. You also now agree that the economy was rising prior to the decision to increase the consumption tax.

Now you come up with spending cuts. How does this help the economy? Do you even know which Ministry has the highest budget? Do you want to start cutting there?

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This is exactly what I meant by changing goal posts.

That's why you're incorrect. I have consistently pointed out on JT that incomes are lower than they were 15 years ago. You're focused only on the time since your hero came to office. I've been talking about the state of wages over the long haul, not on a couple of years. So, your rant about changing goal posts is fallacious.

And you are including various other factors while the discussion was about the effects of the increase in consumption tax and whether or not the economy will ever rebound. This last quarter came up short on two main factors which the largest was private housing investment.

The overall economy is affected by the tax increase. The economy has gone into a recession-that's well beyond fall short. It's in a terrible state. You ought to be focused more on business starts, income, consumer confidence, and investment.

That people aren't buying houses the way they used to is of no surprise. Their incomes are getting squeezed, and working people have yet to see a real, tangible improvement in their wages. You're also ignoring overall growth numbers. The hit to the economy can't be blown off with stats on housing investment.

Then stop responding. I don't believe you. Let's leave it at that.

Indeed, as it as nothing to do with the debate, and shouldn't have been brought up in the first place.

And my point is that government in implementing a centralized plan shouldn't go giving pep talk type goals. Save that for half time in football.

I'm talking about pep talks. There's nothing in my post about pep talks. The government is implementing a centralized plan that will weigh the economy down, not lift it up. I'm saying the government should think bigger, and make more moves like the special economic zones, openning Japan more to free trade, etc.

There' s no grand ambition in the governments plan. It offers more of the same: anemic growth, deficit spending, heavy-handed intervention, and higher taxes.

Also, the government should be a facilitator in the economy, not a driver. It should step back, cut taxes, liberalize the market, and free up the economy. Centralized plans are for communist "economies", not free markets.

I agree. Chicken or egg but the question is which should come first. You have no plans how to achieve this. This has been the case for the opposition parties as well.

Tax cuts would allow for working people to keep more of their wages. They could then engage in the "virtuous cycle of consumption" Abe has been counting on to make his plans work. They could also invest more in private retirement plans, or other investments.

Cutting business taxes further would free up cash for businesses to expand, raise salaries, and invest. Openning up the economy to foreign investment creates competition for human resources, thereby driving wages up, not down. The government doesn't need a "plan" to increase wages. It needs to stay off people's backs and out of their pockets.

Yes. Increasing consumer tax hurt the economy. You also now agree that the economy was rising prior to the decision to increase the consumption tax.

No, I stated that it was anemic, and that's why the tax hike shouldn't have been raised. If you look at the GDP numbers, "rising" isn't the right word. It wasn't getting worse, true, but it still had a long way to go before it could recover.

If you concede the tax hike hurt the economy, why do you see it as the definition of fiscal responsibility? Why do you think it was such a smart move for the government to impose higher costs on consumers and business?

Now you come up with spending cuts. How does this help the economy? Do you even know which Ministry has the highest budget? Do you want to start cutting there?

On JT, and other message boards, I've been consistent on spending cuts, and tax cuts. I didn't just come up with it. Look at the articles in the business section relating to the economy, and the tax hike.

The reason stated for the hike in the consumption tax was to rein in the debt. I have always had the position that spending cuts would go much further in bringing the fiscal situation under control. High sovereign debt means that too much cash is used on servicing that debt diverting much needed funds from things like healthcare, retirement benefits, infrastructure, etc. Adding to the national debt doesn't help the economy.

Spending cuts across the board, combined with audits to root out waste (incompetence, and corruption) would make it easier to bear. Spending cuts aren't easy, but, they have to happen. Japan's debt situation is the direct result of government deficit spending, not a lack of taxation (of which their had always been plenty).

Do you even know how hard people have to work to make ends meet, here and abroad? Have you seen the stats on income inequality, and the impact it has had? Do you even understand how much money the government rakes in, and wastes?

You're essentially arguing that a heavily taxed population, living in a very high cost market, should pay more of their stagnant wages and lackluster profits to the government. You're saying that more money needs to be taken out of the economy.

Spending cuts are the most viable, and most economically sound approach for dealing with the debt. Whether the consumption tax is raised again, or not, deficit spending has to stop.

Cutting taxes on income, and profits leaves more money for people to consume more actively, finance homes, care for aged relatives, educate their children, build their business or start new ones. The economic pay off tax cuts alone offer are tremendous.

Tax and spend policies don't work

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That's why you're incorrect. I have consistently pointed out on JT that incomes are lower than they were 15 years ago. You're focused only on the time since your hero came to office. I've been talking about the state of wages over the long haul, not on a couple of years. So, your rant about changing goal posts is fallacious.

No you did not. Face it. You were under the false impression that the income was down. I corrected it then you went on shifting goal posts.

The overall economy is affected by the tax increase. The economy has gone into a recession-that's well beyond fall short. It's in a terrible state. You ought to be focused more on business starts, income, consumer confidence, and investment.

Again, we're not discussing your hindsight. What I was discussing was how much of a negative impact it had on the economy.

That people aren't buying houses the way they used to is of no surprise. Their incomes are getting squeezed, and working people have yet to see a real, tangible improvement in their wages. You're also ignoring overall growth numbers. The hit to the economy can't be blown off with stats on housing investment

No. The decision to buying houses peaked prior to the implementation of the consumer tax. It's a no brainer that you would see a significant decline because those who bought them decided to do so before the increase.

I'm talking about pep talks. There's nothing in my post about pep talks. The government is implementing a centralized plan that will weigh the economy down, not lift it up. I'm saying the government should think bigger, and make more moves like the special economic zones, openning Japan more to free trade, etc.

Yes. It's combating the deflationary spiral. What you have indicated above does nothing to offset them.

Tax cuts would allow for working people to keep more of their wages. They could then engage in the "virtuous cycle of consumption" Abe has been counting on to make his plans work. They could also invest more in private retirement plans, or other investments.

Those are 'wish lists'. You simply can't achieve such cycle unless the deflationary aspects is eliminated.

Cutting business taxes further would free up cash for businesses to expand, raise salaries, and invest. Openning up the economy to foreign investment creates competition for human resources, thereby driving wages up, not down. The government doesn't need a "plan" to increase wages. It needs to stay off people's backs and out of their pockets

Wages are up. How many times do I have to address this? If the businesses aren't making money, there won't be any wages increases.

If you concede the tax hike hurt the economy, why do you see it as the definition of fiscal responsibility? Why do you think it was such a smart move for the government to impose higher costs on consumers and business?

Because the tax revenue is up. That's in of itself is part of fiscal responsibility.

Spending cuts across the board, combined with audits to root out waste (incompetence, and corruption) would make it easier to bear. Spending cuts aren't easy, but, they have to happen. Japan's debt situation is the direct result of government deficit spending, not a lack of taxation (of which their had always been plenty).

So you don't know which ministry has the highest cost. Thank you. It's the MNHLW where many of the funds are allocated towards social security and pension payout. You want to cut this? How in the world does a receipient of such funds are going to react? You think they'll spend more? Hell no. That's the deflationary spiral that Japan is trying to get out of. Do you even know Japan's government spending/GDP ratio and how it compares to other developed nations? It's lower than your country.

What you offered in essence are simple repeat of the deflationary spiral with no end in sight.

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http://ieconomics.com/japan-income-growth?ref=tradingeconomics.com

No you did not. Face it. You were under the false impression that the income was down. I corrected it then you went on shifting goal posts.

Incomes are down. That's not a false impression, it's the reality. 15 years ago, the average monthly salary was near 500000yen, now it's about 320000yen

Wages are up. How many times do I have to address this? If the businesses aren't making money, there won't be any wages increases.

Yes, wages are up by a meager amount, but not to the point where we can pop open the champagne and start celebrating. The buying power of those wage increases is being systematically reduced, so, in real terms, incomes aren't really going up.

Businesses can make more money if they are allowed to keep more of their profits. How does driving up costs help businesses pay higher wages? You call tax cuts a 'wish list', yet, ignore the tremendous benefits they'd have for businesses. Lower business taxes would give companies more leeway to raise wages.

No. The decision to buying houses peaked prior to the implementation of the consumer tax. It's a no brainer that you would see a significant decline because those who bought them decided to do so before the increase.

That doesn't teach you something about the "merits" of the tax hike? If consumer spending goes down, the revenues from the higher tax won't be as high as they could be. Whatever revenue increase the government may see will be meager, and ineffective.

It's combating the deflationary spiral. What you have indicated above does nothing to offset them.

Free trade creates jobs, that's a fact. It would allow Japan to sell that much more of its goods overseas, or at least reduce the cost of bringing those products to new markets. Other countries can send their goods and services here, creating much needed, more vigorous competition in many sectors.

Open markets mean companies can set up shop in new markets, creating jobs. Competition for human resources would help move wages up as well.

Regarding the special economic zones, those are good ideas for incubating possible ventures, and they'd give the government more of an idea on how to liberalize the economy

Those are 'wish lists'. You simply can't achieve such cycle unless the deflationary aspects is eliminated.

You can't achieve a natural cycle of deflation until people have significantly more disposable income to drive demand. That's basic economics. You're essentially saying that reducing people's buying power, while forcing costs up will create inflation. That makes no sense.

Tax cuts aren't wish lists, they're practical necessities to get Japan out of its deflationary cycle, and economic tailspin. If people's incomes don't go up, or businesses profit don't increase, how can inflation occur? If there's less money in the economy to invest and spend, how will the cycle of deflation be broken?

The government having more revenue doesn't help the economy. Being from Canada, I know how taxation hurts the economy. Higher taxation doesn't garauntee lower deficits, or budgetary surpluses. High taxes discourage investment, or make it less accessible, and drives much needed capital away from the domestic economy.

Notwithstanding your rather pompous comments, Canada has the second best environment for business. Lower tax rates have done a lot to improve the economy, combat unemployment, and promote foreign investment. The Japanese government needs to get away from the tax and spend mindset, and adopt a more market friendly approach.

So you don't know which ministry has the highest cost. Thank you. It's the MNHLW where many of the funds are allocated towards social security and pension payout. You want to cut this? How in the world does a receipient of such funds are going to react? You think they'll spend more? Hell no

Well, actually, I did know, so, thank you yet again for yet another one of your smug, false assumptions. The social security and pension pay outs have been effectively cut anyway. Their buying power has been significantly reduced by higher taxation.

You also assume that pension benefits are completely tax free. Even it they're not taxed at source, taxes on property, consumption, capital gains, etc, means the government actually gets much of the cash back. Being retired doesn't save anyone from the taxman.

You're also forgetting that the public pension payouts are pitifully low, and that many live more off their employer pension plans, and savings. Tax driven inflation will hurt retirees a whole lot more than spending cuts. Higher VATs don't help the working poor, low incomes earners, or those living on a fixed income.

Spending cuts across the board, combined with audits to root out waste (incompetence, and corruption) would make it easier to bear. Spending cuts aren't easy, but, they have to happen. Japan's debt situation is the direct result of government deficit spending, not a lack of taxation (of which their had always been plenty).

Best to quote the entirety of a statement rather than just misrepresent people's arguments. You do know what across the board means, don't you? I'm talking about cutting from the PM's office on down.

Uncovering corruption and/or inefficiencies would save the government a lot of money. Waste and inefficiency have high costs as well. Plugging these money-sucks would greatly offset any pain caused by spending cuts.

Without spending cuts, whatever revenue the higher consumption tax brings in will be for naught if the government continues spending more money than it takes in. You wrote of fiscal responsibility. Control spending is the very definition of fiscal responsibility.

You have a rather polly-anna notion that more revenue for the government will somehow bring on some economic revival. Cash disappearing into the black hole of government coffers won't stop deflation.

I get it that you have rather leftist ideas which have a certain appeal, but they don't work. The role of the government isn't to plan, or drive the economy, but to facilitate economic growth through responsible, pro-growth policies that allow business and consumers to participate in the economy more actively.

Inflation can only happen if DEMAND goes up, that's a fact-one you seem to dismiss as being unimportant. Higher net incomes and post-tax profits are more likely to break the cycle of deflation than taxation and deficit spending.

What you offered in essence are simple repeat of the deflationary spiral with no end in sight.

What you have offered is a continuation, if not an aggravation, of deflation, and economic malaise. More taxes, more deficit spending, less trade, more heavy handed government intervention: these do not promote growth.

What I've offered is, in essence, a pro-market, pro-entrepreneurial, pro-consumer, pro-business (large and small) alternatives that would allow people to keep more of their wages, and businesses more of their profits. .

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