politics

'Abenomics' detractors brace for 'I told you so' moment

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By Tomasz Janowski and Chikako Mogi

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“If there was a single thing that would have cleared the fog and solved all problems, Japan wouldn’t have been in this situation for 15 years,” he said on March 19, his last day in office.

He is just saying what a lot of people are thinking!

Right now Abe looks unstoppable. Helped by a steady flow of well-timed policy announcements he is on course to consolidate power won in the December lower house landslide with a win in an upper house election in July.

He is riding more of a high because of his policy announcements that are not related to the economy. He is playing a smoke and mirrors kind of game with the public.

7 ( +10 / -3 )

I have no doubt that this is all going to end in tears.

6 ( +9 / -3 )

"Abenomics" effects are illusory but only thing good that now Chinese ships are not visible.

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Not a bad article! I would point out that Abenomics is an attempt to at least do SOMETHING unlike the DPJ (for which my high hopes were mercilessly dashed) policy of "wake up and breath."

Also, while I do understand the logic of the quantitative analysis, economics definitely has a psychological element as well. Abenomics could help to overcome some of the defeatism that plagues the market

That said, the heavy-lifting of reform, and not Abe's nice hair and catchy phrases, will determine whether this plane will take flight or crash in a fire ball at the end of its runway.

I think that most people regardless of their views do agree on is that it will either succeed or fail in spectacular fashion with no in-between.

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They fear that blind faith in the central bank’s firepower replaced a cool-headed assessment of economic reality and doubt a monetary shock can shift Japan into higher gear.

Fair concerns. I'd put the odds of Abenomics being the answer to Japan's problems at no better than 20% But given almost three decades now of a sustained lack of growth, and maybe the old "Hail Mary" play was in order.

-1 ( +2 / -3 )

The fact that people are pleased and in a festive mood seems to prove this policy wont work

What an astonishing comment! Happiness leads to ruin, eh?

We will need to make the same kind of efforts as in the past....That is work hard create new technologies and try to sell goods abroad.

So toil away in stoic resignation and sell more transistor radios to America. No surprise that guys like this were in charge of Japan's economy amidst its 20-year recession.

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Noguchi says the BOJ has not explained how pumping more money into an economy that has the world’s biggest stash of household and corporate savings is meant to spur investment and lead to higher prices and wages.

This is obvious. It is not necessarily about wages. The key is, as Noguchi seems to realise, the savings sitting around doing nothing much. Causing inflation is meant to chase savings out of the bank and into consumption. Investment is therefore needed to cope with more consumption. In addition, one way or another, those savings will have to pay for the debt. You could simply tax them (steal them) but that would not be a vote-winner at all. So, subtly try and reduce the value of the savings and also the value of the debt by inflation. Except this way the side effect is also increased consumption. Whether it will work is another thing.

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“For the Japanese economy to truly improve, we will need to make the same kind of efforts as in the past,” former finance minister Yosano says. “That is work hard, create new technologies and try to sell goods abroad.”

.....along with addressing the other structural problems of population growth, labor participation, private investment, innovation, free trade and productivity etc. all of which involve the risks of losing public support and provoking political conflicts with determined dissenters like you.

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"Since ancient Greece and Rome, most policies that excited people ended in failure,says Kaoru Yosano,..."

"The fact that people are pleased and in a festive mood seems to prove this policy won’t work,” the veteran policymaker told Reuters in a recent interview."

What kind of logic is this?

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At least when "Abenomics" leads the economy down the toilet it will be clear who is to blame.

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Sure there is not one magical move to solve this situation but do nothing is not an option.

“For the Japanese economy to truly improve, we will need to make the same kind of efforts as in the past,” former finance minister Yosano says How many times should one highlight FORMER. The recent economy past is the last thing this guy should have mentioned!!! Envy??!!

It is easy to doubt or critic, but point out ways to improve is a lot harder. I, myself, am skeptical, and it has cost me dearly. But this can actually work and different to one of the first lines of the article, public opinion do matter and is also a possible game changer! I was not expecting to be where we are now. In the short run Abenomics is a big success, like it or not.

weakened yen is much more of a mixed blessing today, when Japan is running trade deficits instead of big surpluses. It may help exporters, but others feel the pain of more expensive imports as illustrated last week when Japanese squid fishermen stopped work for a couple of days in protest at high fuel costs.

Sure some things are going to get more expensive. This is called INFLATION. This is what abenomics is all about, people in business should be able to understand this concept!!!

Economy moves like a snowball and it takes many parts or sectors of the society to make it grow, in our case, the snowball has an uphill path to take and faith might just be the force to make it move.

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Paulinusa

The fact that people are pleased and in a festive mood seems to prove this policy won’t work,” the veteran policymaker told Reuters in a recent interview."

People in festive mood means, consumers are over confident about the economic growth will last forever. They will take more risks and more debt. Government spending will pump the jobs and business oppourtinies. However pumping growth will make more and more debt. Government can not print or pump the money forever. When the growth is peaked, there will be another bubble of 1990.

What kind of logic is this?

The logic is real growth come from competitiveness and innovation. Another word is high quality is export. The root cause of pro long J recession were bubble of real estate and stock market. That two sectors made speculation and short term boom. However they were the wreckers of economy and fortune.

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This I Told You So moment will be one with no winners. Especially if you are an ordinary working family.

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THis moment will be sooner than many think.

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tenacious group of “Abenomics” detractors is battling to be heard and waiting for their “I told you so” moment.

Yep, I'm one of them too! His economic policies are based on a thirty year old structure of a workforce that does not exist anymore. The only way Japan can recover is through internationalization, but his imperialistic foreign policies are screwing that up. There is only doom and gloom for the future of the Japanese economy. He should be cutting taxes and promoting spending instead of increasing taxes and expanding the world's largest foreign debt. People will start to feel the pinch within the next year and along with the TPP he will become 'public enemy #1' and the revolving door of PMs will swing again. Then, there will be another set of 'radical proposals' to remedy the damage he has done. Doom and gloom!

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People in festive mood means, consumers are over confident about the economic growth will last forever.

That's kind of a stretch. I don't think it's possible for an entire nation to go from Deflationary Spiral mode to Ignorant Overconfidence in a matter of months. Market confidence is not the same thing as overconfidence. Abe's administration has gone farther than any before it, and that (hopefully) will give the people enough hope to break out of their old saving-crazy ways.

Government spending will pump the jobs and business oppourtinies. However pumping growth will make more and more debt. Government can not print or pump the money forever. When the growth is peaked, there will be another bubble of 1990.

I think you're vastly underestimating the advances that have been made in economic theory over the last 100 years, let alone the last 10. People don't really understand how bad the recent financial crisis could have been. What happened was the stuff global depressions are made of. However, quick thinking and decisive action on the part of central banks across the world put a stopper in the potential torrential onslaught of economic hell. As much as the pundits would have us believe, governments are not completely stupid, and an advanced country such as Japan will not allow things to explode beyond their control.

The logic is real growth come from competitiveness and innovation.

And competitiveness and innovation are fueled by consumer spending, which is spurred by government spending and inflation.

Time will tell who will be the ones saying "I told you so."

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For example, Obata says there is no way incomes can rise across the entire economy because the baby boomers in fast-aging Japan are now retiring to be replaced by young workers with entry-level wages. Japan’s overall consumer spending power will therefore fall, rather than rise as Abe hopes.

The assumption this is what Abe hopes for is false. He is hoping (1) to give exporters new found hope (2) to decrease the value of bank savings (3) create more incentive to spend or invest via brokerages (4) hold up property prices.

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There are plenty of hand-wringers and teeth gnashers waiting with baited breath for this to all implode, and yet, the Japanese economy is looking better than it has for a long, long time.

Moonraker is correct. Japan owns it's debt in the sense that it's 'household' savings effectively cover the amount it has borrowed, but it needs to unlock these savings to start paying the bill. It needs to get people circulating money into the system so that it can be skimmed off, as well as provide all of the other benefits of injections of cash into an economy. People complain bitterly about the stimulus spending packages, well, here it's the same thing done another way. Locking money in banks that offer no interest is a dead end, a roadblock. Inflation gets people spending. It also starts to affect salaries, interest rates and investment.

He should be cutting taxes and promoting spending instead of increasing taxes and expanding the world's largest foreign debt.

No, they should be increasing tax - which they are doing with the Consumption Tax heading to 10% by 2015. In reality, it needs to go further - to 15%, the OECD average. Why? Because, simply put, you have to pay your debts. It might hurt a little at first, but only because Japan has had it good for so long. In the long term, you canned coffee going from 105 yen, to 115 yen will be a very good thing.

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Business and consumer sentiment surveys are pointing up

Yeah J-exporters are happy about the exchange rate but sorry I just DONT see consumer sentiment improving at all, thats just BS the media have been told to say is all.

Folks all abe has done is some currency manipulation & print & promise to print a ton of $$$ & waste most on construction.

Nothing new at all here, Japan needs to seriously start accepting reality of its demographics & act based on that, but I fear it may be too late

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ScroteMay. 01, 2013 - 09:09AM JST

At least when "Abenomics" leads the economy down the toilet it will be clear who is to blame.

The foreigners..... as usual.

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The economy is really improving at the moment with higher GDP growth projected for 2013 than the US or anywhere in Western Europe. It's still too early to tell whether Abenomics will be successful in taking the Japanese economy to the next level, however I believe that what he has aimed to implement (aggressive inflation targeting, structural reform in the energy sector, joining the TPP, expansionist state spending and monetary policy) is very bold.

If it does succeed, he will go down as one of the great prime ministers of Japan no doubt.

-5 ( +0 / -5 )

Abenomics is designed not just to improve the economy but with a big intention to change the Constitution to be more militant. The Japanese people are given a temporary high with gadzillions of yen so he can buy more votes this way to change the law. Before the year is out, Abenomics will most likely lose steam and Japanese will understand Abenomics is just a game they cannot win simply because Japan cannot compete with other lower cost countries plus Japan's own limited consumption per Obata. Just ask US multiple quantitative easing. Does the 'shock and awe' results in fantastic economic growth? None that I know of.

"For example, Obata says there is no way incomes can rise across the entire economy because the baby boomers in fast-aging Japan are now retiring to be replaced by young workers with entry-level wages. Japan’s overall consumer spending power will therefore fall, rather than rise as Abe hopes."

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SauloJpnMay. 01, 2013 - 09:26AM JST

Sure some things are going to get more expensive. This is called INFLATION. This is what abenomics is all about, people in business should be able to understand this concept!!!

No abenomics is about increasing consumption and increasing production as a result of that increased consumption. Increased production will expand the economy.

What you seem to fail to understand is that there is a distinction between PRICE INFLATION and WAGE INFLATION.

Abenomics will increase PRICE INFLATION, while doing nothing to cause WAGE INFLATION and in all likelihood will lead to WAGE DEFLATION. This will lead to falling consumption, which will decrease production and shrink what was already, because of demographics, a naturally shrinking economy.

Abenomics is the eikaiwa of economics: It's an excuse for not doing anything constructively, sincerely and real to resolve the initial problem.

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Disillusioned

He should be cutting taxes and promoting spending instead of increasing taxes and expanding the world's largest foreign debt.

Japan is by far the largest net creditor nation in the world.

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CH3CHO - Regardless of its creditor status Japan still holds the world's largest foreign debt.

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DisillusionedMay. 01, 2013 - 11:08AM JST

CH3CHO - Regardless of its creditor status Japan still holds the world's largest foreign debt.

Exactly and those people who keep churning out the same mantra that the Japanese debt is not a real debt because nearly all of it is domestically owned, I have news for you. Nearly all the debt of every G8 economy is domestically owned.

The only difference between the US/UK and Japan is that the US/UK aknowledge that borrowing money from their relatives is one degree short of borrowing it from a stranger and the Japanese relatives are dumb enough to keep lending the debtor money, even though the debtor has long gone past the stage where he/she can realistically repay monies owed.

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I'm trying to start a company and the cost of importing goods now is really hurting a lot. It will definitely slow things down. I miss the days of a stronger yen.

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bfg4987

Time will tell who will be the ones saying "I told you so."

Japan was already told by Economists in 1990. Within a few yrs, it will be told again. One factor is demographic. Working population is shrinking. Due to touch time, even some part of working age population are underemployed and unemployed.

One factor is Japanese economy has matured. Getting decent growth is not easy. For reviving good old days, need new and fresh idea and attractive products. So far many J famous brands are swimmng in the red sea known as losing market share and over manufaturing of inventories.

One factor is government spent too much on defense and infrastuture. Defense is unprofitable. Infrastruture is profitable however it will take many years to recover the capital. It will not make decent return overnight.

Another silly mistake is Japan wrote off many bad loans of developing nations such as Myanmar. Those loans are not charities. However Japan wasted a lot of development loans for diplomatic and strategic interest. Japan did not gain any cent from infrastructure projects of those corrupted nations. It has no concern about commerical return and bank liquidity.

Almost empty banks can not write off bad loans for a long term. J households can not bail out government waste and misadventure. Japan have to concern more about own finance is in order instead of others.

.

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If you really want to understand the Japanese economy you should read "The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession" by Richard Koo, that explains it all.

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I'm in export, and my profits are way up this year. I'll be paying lots of taxes and we just hired new staff. Hate if you like, but Japan needed to do something, and it's working well so far.

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The only thing that Abe has done right thus far is to take on the no-brainer task of addressing the ridiculously overvalued yen. Reversing the damage caused by Noda under the yoke of his Goldman Sachs handlers is the easy part.

-6 ( +0 / -6 )

Japan is by far the largest net creditor nation in the world.

borrowed money speaks truth keeps silent (!)

-2 ( +0 / -2 )

I suspect Abe's well timed policy announcements are for consumers consumption to prepared for the July Upper-House Election. If he could control both Houses he would have a free hand to implement his policies and achieved the mandate he intended for. Whether he could lead Japan out of deflation and revives the economy is questionable. The manner his government intends to entice consumers to spend and improves the terms of trade is vital including deep rooted structural change if he still target annual inflation to 2%.

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Regardless of its creditor status Japan still holds the world's largest foreign debt.

Don't understand that statement. You mean sovereign debt issued by other countries? Yes, Japan does hold lots of that, making it a major creditor nation...a good thing.

Furthermore, nearly all of Japan's debt is held by the Japanese, mainly institutions. So when Japan services its debt to the private sector, it becomes private income, and to the public sector it flows into the treasury. That's why Japan, unlike Greece, needs no bailout despite being much more heavily indebted.

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JeffLeeMay. 01, 2013 - 03:37PM JST

Furthermore, nearly all of Japan's debt is held by the Japanese, mainly institutions. So when Japan services its debt to the private sector, it becomes private income, and to the public sector it flows into the treasury. That's why Japan, unlike Greece, needs no bailout despite being much more heavily indebted.

You need a basic lesson in public finance. Once again ALL OF THE G8 NATIONS HOLD NEARLY ALL OF THEIR OWN SOVEREIGN DEBT ; UK institutions hold more than 70% of the UK sovereign debt and the US is close to that. The issue is not about who is or isn't a creditor nation, it's about attitude towards sovereign debt. The UK, the USA and the EU see such sovereign debt as a long term cancer, while the LDP think they have reinvented the wheel of public finances.

The problem for Japan is that Japan's sovereign debt is soon to reach 245% of GDP and it will be soon in a position where it cannot service that debt with incoming revenue and therefore the Japanese institutions who financed that debt will go bankrupt and the Japanese investors will lose all their savings in those institutions

Yet Japan, as nation, will still have it's creditor status, but it's citizens will have no financial credit.

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Abenomics is nothing more than Keynesian nonsense on steroids. Yeah, it's going to end badly, for everyone.

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I don't understand diddly-squat about economics, but, if the consumption tax is about to go up by 3%, hasn't Abe already more than exceeded his 2% inflation target without doing, er, diddly-squat? And if he does achieve 2% inflation, on top of the consumption tax rise, then inflation will be 5%, won't it? Everything going up by 5% seems like a really good way to get re-elected. (Irony). I foresee tummy troubles on the not too distant horizon. Next, please!

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Dog,

Why do we have to worry about debt service? GoJ can borrow as much money as it wants from BoJ free of interest, if the Diet so decides. The ratio of debt service to GDP is 245%XGDPX0.0%=0. BoJ can print as much money as it wants. That is what Japan is different from EURO countries. Worried about inflation? I have been long for it for decades.

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@Dog

CH3CHO is right.

The problem for Japan is that Japan's sovereign debt ...will be soon in a position where it cannot service that debt with incoming revenue

It doesn't need "incoming revenue." Japan issues its own fiat currency, and its debt is denominated in that currency. Thus the debt can always be serviced under these conditions. Furthermore, debt servicing is a matter of electronically crediting the accounts of the relevant institutions, like pension funds. There's no need to go out find any "revenue."

Ever since Nixon took the US off the gold standard, that's the way it's been. Money is just paper and coins with no intrinsic value.

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He is riding high simply because of the favourable news reporters. Control the press and you've got control of the people. Most people just follow.

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On the long run, monetary and fiscal policies are only tools to soften and moderate the real economy (value creation) excesses. It is a fact that Japan is in a decline situation due to lack of swift innovation and contracting population. Printing money is not more than printing flyers saying that the life is beautiful!

Hope I am wrong, but I would not bet a penny on it!

1 ( +1 / -0 )

No abenomics is about increasing consumption and increasing production as a result of that increased consumption. Increased production will expand the economy.

Nope. Abenomics is a about stimulating demand in investments among private sectors. In order for that to happen, the financial institutions that lends needs a firm and a long term commitment from the central bank that such funds will be available at low cost.

Abenomics will increase PRICE INFLATION, while doing nothing to cause WAGE INFLATION and in all likelihood will lead to WAGE DEFLATION. This will lead to falling consumption, which will decrease production and shrink what was already, because of demographics, a naturally shrinking economy

Essentially, they are intertwined especially during the deflationary spiral that Japan is currently experiencing. As others have alluded to, the psychological factor is very vital in order to shift the excessive amount of savings to spending and investing and there is definitely a positive spike on consumer confidence as indicated in the below link.

http://www.esri.cao.go.jp/jp/stat/shouhi/2013/1303shouhi.html

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Dog

What you seem to fail to understand is that there is a distinction between PRICE INFLATION and WAGE INFLATION

As always, you hit the nail. Loved to read all your posts.

This is good for Mrs. Watanabe. Mrs. Watanabe is laughing to the bank.

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Upgrayedd,

Great work. When comparing economies, especially over time, it is important to make apples-to-apples comparisons. Thank you for doing the leg-work.

0 ( +1 / -1 )

As always, you hit the nail. Loved to read all your posts.

He hasn't hit anything. What he's essentially doing is crying about the non core CPI due to exchange rates which can also fluctuate just as much depending on climate (crop output) and the decision of cartels within the energy sector.

-2 ( +1 / -3 )

People against Abenomics will put their money into physical gold/silver or some other tangible asset like property. Physical gold and silver market has a very tight supply so if all this inflating Japanese money is put into this market the big banksters will not like that and the IMF/BIS will demand change of policy from Abe. ==> Should be fun to watch.

The people of Turkey did this in a time of high inflation and won big. =People of Turkey hold most of the currency value and not the banks.

0 ( +0 / -0 )

nigelboyMay. 02, 2013 - 12:43AM JST

He hasn't hit anything. What he's essentially doing is crying about the non core CPI due to exchange rates which can also fluctuate just as much depending on climate (crop output) and the decision of cartels within the energy sector.

Normally I just ignore your posts, but this one even goes lower than is usual.

In a country which is 100% dependent on imported fuel and 60% dependent on imported food stuffs, there is no distinction between core and non-core CPI, and the exchange rate is by far the greatest determinate of the cost of both.

As for your other post on what you understood Abenomics actually entailed, well it must be news to Abe, http://www.businessinsider.com/what-is-abenomics-2013-3

For someone who prides himself on his pro-Japan stance on all things Japanese, history and all, you seem pretty clueless on labor relations in Japan. However let me give you a taster of the real Japan and how under the heel we, who work in Japanese companies, are.

Scene. Annual Union meeting with all company workers attending. The President of the union stands up (a man who will automatically go into a company management position at the end of his tenure. That was his reason for standing for a union position in the first palce) and announced to us that they had asked the company for only a 1/2 month bonus for this summer's bonus, with no rise in the base salary. However the company had generously offered to give us one month's salary for our summer bonus with no increase in the base salary, He smiled and we stood up and clapped at the 'great' news.

This scene was replicated a thousand times over Japan this year, last year and will be next year. Until there is a proper trade union movement in Japan, instead of the Japanese worker being one peg up from his Chinese counterpart, there will be nothing but price inflation in Japan and to make up for the higher cost of materials and production, next year, under Kuroda who once said that Japan could get all the inflation it needed by forcing up the prices of imports, there will probably be wage deflation because the producers, to keep their market share, will be unable to increase the selling price of their products.

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I am impressed at the amount of discussion over this and see many interesting points. ==> I didn't expect that and didn't expect that many comments.

A big issue because many people in Japan are older and need the interest money to live. The low interest rates and rising costs are going to be a problem for these people.

The other issue with inflation is how do I lower my costs?

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In a country which is 100% dependent on imported fuel and 60% dependent on imported food stuffs, there is no distinction between core and non-core CPI, and the exchange rate is by far the greatest determinate of the cost of both

How did Japan manage to survive when the yen rate was 120 yen? Please bear in mind that economists were still calling that Endaka.

As to your theory,

http://www.stat.go.jp/data/cpi/sokuhou/tsuki/pdf/zenkoku.pdf

Nice try. CPI (which includes everything), is down. Know why? They're "weighed" appropriate to reflect reality and no some wild leap that 30% decrease in yen rate=30% increase in cost of living.

As for your other post on what you understood Abenomics actually entailed, well it must be news to Abe, http://www.businessinsider.com/what-is-abenomics-2013-3

What is this? Abenomics for english speaking dummies? But in any case, it states

"That means manufacturers are selling more, which feeds into corporate earnings and hopefully translates to increased business investment."

For someone who prides himself on his pro-Japan stance on all things Japanese, history and all, you seem pretty clueless on labor relations in Japan. However let me give you a taster of the real Japan and how under the heel we, who work in Japanese companies, are.

So you offer an "anectodotal" scenario that allegedly happened this year? Like I said, look up ”春闘” 定期昇給. And yes. It's quite a contrast from last year and also again bear in mind that NONE of the monies of Abenomics have been implemented thus far.

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Dog

For someone who prides himself on his pro-Japan stance on all things Japanese, history and all, you seem pretty clueless on labor relations in Japan. However let me give you a taster of the real Japan and how under the heel we, who work in Japanese companies, are.....

I think this is the first time I've ever seen someone claim that record bonus increases are a bad thing.

0 ( +1 / -1 )

@Dog

It's silly to compare historic conditions. Monetary policy works very differently now. Countries are no longer on the gold standard, nor are their currencies tied to anything with intrinsic value. So they can print as much money as they want, although they're usually constrained by inflation and bubble fears...and that's no worry for Japan these days!

Furthermore, Japan can pay its deficits by issuing bonds, and despite all the doomsday scenarios over the last 5 years or so, demand for JGBs remains strong despite their super low yields. That is a sign of faith in Japan among investors.

If your scenario were even close to being true, there would be upward pressure on JGBs' yields. There is none.

How do you explain that? How do you explain that the yen was the world's "safe haven" currency before Abe talked it down? Why would savvy investors park their $$$ in a country set to implode from debt? Makes no sense.

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Abe is just lucky the Japanese are big savers and have faith in him and Japan and so buy the bonds he is issuing to enable him to flood the market with yen. They won't be so faithful and happy once they get stiffed but knowing the Japanese they will just say shogenai. The bonds will pay f all interest and yet they will still have the initial money value at half the exchange rate. Prices may go up due to more expensive electricity but doesnt mean people will be able to pay more and so people will live without the imports and have poorer lives and Japanese will get shorter still.... And of course taxes will go up to be able to pay for all the paper being produced

0 ( +1 / -1 )

JeffLee

Why would savvy investors park their $$$ in a country set to implode from debt?

Investors were misled by institutions their saving will be safe forever. They were seduced by clever marketing gurus. Reality is they will lose their hard earned cash. Not only J investors, world wide investors have seen their retirement saving evaporated before. That tradegy will be repeated sooner than later.

Makes no sense.

You will makes sense after reading the following articles how Abenomics is the grave concern for J investors.

http://articles.economictimes.indiatimes.com/2013-01-11/news/36279777_1_low-interest-rates-government-debt-japanese-growth

http://www.telegraph.co.uk/finance/recession/7393155/Why-the-sun-looks-poised-to-set-on-Japans-era-of-cheap-government-debt.html

http://beforeitsnews.com/alternative/2012/09/land-of-the-setting-sun-japan-at-the-crossroads-2468846.html

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@Octagon

The Telegraph article is 3 years old, and none of the predictions the guy makes have happened. In fact, the opposite trends - low bond rates, etc. -- have occurred instead. That makes him, and the other debt doomsayers, wrong, I'd say.

Thanks for supporting my argument. (The other article was written by a blogger, the other no longer posted)

1 ( +2 / -1 )

Inflation is a beast. Its good that the yen is being driven down by Abe, currency manipulation aside and not likely the US will beat the drum about that since ultimately our recession was due to the fact that the American's forced us to appreciate the yen many years back. But before domestic consumption increases in teh hope that it will stimulate investment leading to higher employment. There will be much to suffer during such lags, as the economy has been in recession for so long and without a sound social welfare system, the people will suffer more before thing get better, if they get better.

0 ( +0 / -0 )

Jeff Lee

In fact I did not support your argument as J bond is safe heaven for investors. It may be a bit misleading. Japan has not imploded yet. It is because it has got some decent profits from oversea assets. That oversea assets cushioned Japan bad debts which have not recovered.

When the government spending money like drunken sailor, there will be high risks of many bad loans which will be defaulted. If there are many bad loans have to write off by banks, banks will be running out of the money as US and EU. Unlike them Japan has more luck to exploit the domestic investors. However investors park their money not as patriotic duties.

Sorry for unopened link. If you google he Setting Sun – Japan’s Forgotten Debt Problems, the article still can be read. The author is Satyajit Das ·posted on January 15th, 2013.

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Correction for my last paragraph first sentence as The Setting Sun-Japan's Forgotten Debt Problems.

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Q4 2013 is my bet.

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Higher prices? To whose benefit? Japan is already overpriced compared with the rest of Asia! I am seeing a decline in my wages not a rise! Spending on services in Japan is already subject to double taxation in some areas - Abe expects the Japanede people to pay for this from where exactly?

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@kurisupu From the salaries of the newly employed, for one. The overvalued yen hits the manufacturing sector and puts people out of work. That creates added strain on the social welfare system at the same time as resulting in reduced income from taxes. The American QE is all about keeping the economy afloat and reducing unemployment. The Empire Finance sectors of the US and UK and their crony politicos are responsible for the present debacle.

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