politics

'Abenomics' in trouble as challenges mount up

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By Linda Sieg and Tetsushi Kajimoto

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I've said this Abenomics will fail a year ago. Everyone in my profession had seen this coming.

I don't know how so many Japanese can't foresee the hollowness of his ill-advised planning. Its absolutely mind-boggling.

Another question I have posted in over a dozen related articles is, since Japan is re-upping its military, and in the same time lacking the energy source to sustain its future planning, just how the hell can Japan afford all this with raising tax significantly?

Then here comes the hypothesis, are Japanese so "patriotic" and "self-sacrificing" that Japanese voters are willing to continue to follow this slippery slope blindly? Are Japanese voters so uninformed and naive that they actually believe Abe's hogwash policies would work?

There's a term that Abe likes to use, "Hope". Well, that is as hollow of a word as you can possibly use. Abe is supposed to be an ultra conservative. Raising taxes shouldn't be in that equation but yet, that's what he's been doing and will be doing for the foreseeable future.

This is worse than Senior Bush when he said "read my lips, no new taxes". That made him a one term president. But the structure of the Japanese appointment system is so messed up that so long as Abe creates fear and an apparent self-reliance image, he will continue to hold position and bank on his empty promises on the economy.

After all, without a strong economy, what else can Japan use as leverages to the rest of the world?

1 ( +2 / -1 )

shiboritate,

Not raising the tax could have been an enormous mistake too.

You're quite right that the sales tax hike isn't making the debt smaller, but as a first step to balance the budget the government needs more tax revenue or less spending (or a combination). With a whopping budget deficit I for one can't see how Japan could reduce the budget just by cutting spending, given the increasing weight on the nation's finances of the aging population.

And it does so at the expense of the lower income households - the tax applies to all, but disproportionately affects those with the lowest income.

It's only fair that costs are broadly shared by all generations. Those on the lowest income pay very low rates of income tax. Under 3.3 million yen the tax rate is less than 10%. This shouldn't be ignored.

Why make the poor pay for these problems?

They do live here and receive the benefits of public services too, so why shouldn't they pay their fair share through consumption tax? They are getting big breaks on their income. The incentives in this system are good too. Want more money? Work for it, improve yourself and find a job with a better salary. Coddling people is no way to help them progress.

And when the economy slumped due to the tax hike what was proposed? More stimulus! I.e. take on more debt to support the tax hike designed to cut the debt!?!?! Absurd.

I agree, that part was absurd.

Reducing the sovereign debt would require raising income taxes (progressively), cutting government waste

Income tax rates have started moving up for the top income earners, a new tax bracket was introduced at 45% for those on 40 million or more a year. But the problem with income tax is that it does not generate tax revenue in a stable manner, it fluctuates greatly with the economic conditions. It therefore can't be relied upon as a means to fixing Japan's finances steadily.

Cutting government waste should happen of course, although that alone wouldn't be enough.

More productive, wealthier families would revive the economy, provide more tax income, spend more, and possibly kick start inflation AFTER wage inflation has begun.

It's chicken and egg isn't it. Does a revived economy making families wealthier, or is it the other way around?

-1 ( +0 / -1 )

Is Abenomics faltering? Of course it is... long story short ALL THE JOBS ARE GOING TO CHINA that is the problem!!! Govt must create policies for businesses to start manufacturing in Japan once again. Obama pulled US economy out of the hole with jobs growth and that's what ABE should of done instead of fiddling with the market and looking for the perfect solution. Start giving tax breaks and incentives to make it hard for businesses to resist manufacturing in Japan... Tell business executives that only way for their businesses to survive in Japan is by creating Jobs here in Japan and not in China. When there are Jobs and people have money in there pockets, price increase or inflation still can be handled with some ease.

0 ( +1 / -1 )

"A nation trying to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Winston Churchill

1 ( +2 / -1 )

Raising consumption tax was an enormous mistake and was not an "arrow" anyway. First of all, even 10% consumption tax is not enough to even start to make the debt smaller. And it does so at the expense of the lower income households - the tax applies to all, but disproportionately affects those with the lowest income. Why make the poor pay for these problems? And when the economy slumped due to the tax hike what was proposed? More stimulus! I.e. take on more debt to support the tax hike designed to cut the debt!?!?! Absurd. Reducing the sovereign debt would require raising income taxes (progressively), cutting government waste, and providing daycare and cultural support for families to have both parents working, including getting the parents home by reducing face-time / unproductive work until midnight every day. More productive, wealthier families would revive the economy, provide more tax income, spend more, and possibly kick start inflation AFTER wage inflation has begun.

2 ( +2 / -0 )

Nice post Kazuaki Shimazaki, good to see someone else understands.

-2 ( +0 / -2 )

The joke is that money printing and huge deficit zspending is all that thisnis. how it got called "Abenomics" is a mystery. the supposed 3rd arrow is an illusion that will never make it thru the tangle of local oligarchy and bureaucracy.

0 ( +2 / -2 )

The hundreds of billions of cash reserves must stop.

Here is something you may not know. Companies do not have hundreds of billions of cash reserved. Their stock prices are high, which gives the impression that they are indeed holding a lot of cash, but this is not really the case. A company's value is often thought to be it's market capitalization, or the value per share times how many shares are in circulation. This value nowadays has little or nothing to do with a company's performance or profits.

Here is what has happened. The world's governments are the world's largest spenders and debtors. To maintain their irresponsibly heavy spending, they are issuing bonds, and buying these bonds themselves. Right now Japan buys 70% of JGB's. To keep bond rates low, and keep payments low on their debt, these governments have pushed interest rates almost to zero.

This has done a couple of things. The liquidity addd to the the market has increased the money supply (in America) up by 400%. The added liquidity and cheap credit has allowed companies to borrow by issuing debt, and the proceeds are used to buy stocks. The market is ridiculously over-leveraged, and the high stock values and resulting high market caps are offset by the fact that all of it is funded by borrowed money. The high stock prices they are enjoying now are not the result of sales, profit, or growth. Nearly all of the added value is on paper.

In reality, many if not most large companies are not sitting on cash. They are sitting on piles of paper, and the numbers on this paper are of questionable value, they are certainly not worth as much as the figures show. How much more "profit" is your company earning? Has it seen a 100% increase in business and sales over the last couple of years? Probably not.

2 ( +3 / -1 )

Right now, Japan’s consumption and wage go to the same direction - the south , so Japan may not be able to be back as Abe promised international audienceson his worldwide tours . (That may hurt Abe’s credibility in all directions)

Although the Jury is still out, one thing is pretty clear at this juncture that is Abenomics has not transformed the Japan’s economy that we all hoped for, and what-is-next is anybody’s guess.

0 ( +0 / -0 )

Abenomics is a gruesome failure because it is the resultant policy of economic theory based of fallacies propogated by Marx,Keynes, Krugman, and more recently the Marxist Picketty.

1 ( +3 / -2 )

If any of you had the slightest idea about economics you wouldn't be in a dead end job a high school grad could do.

That's not necessarily true. Any "successful" economy relies on a plentiful supply of cheap labor at the bottom of the pyramid and, even for some rather well-educated souls, cheap labor jobs are all that's on offer nowadays.

6 ( +6 / -0 )

Eikaiwa economic experts LOL. If any of you had the slightest idea about economics you wouldn't be in a dead end job a high school grad could do

Lovely to know that some Nobel prize winners also take part in the discussion!

Back on topic: my opinion is that is that my opinion doesn't matter, I'll wait till our Nobel prize winner writes down his take on the crisis. From now on I'll start each discussion with "although I'm just a simple English teacher and my opinions are probably equal to a high school grad.. "

3 ( +4 / -1 )

gaijintraveller,

BertieWooster, I would agree with your point about Abe, sooner would be better than later as long as the next PM doesn't happen to be Taro Aso.

Well, Aso has similar qualifications to Abe, family politically connected, failed PM, ultra right wing.

So it's not beyond the bounds of possibility.

But I agree with you. He would be FAR worse!

0 ( +1 / -1 )

Apart from the propaganda, it does seem to be failing unless your a non tax paying global company based in Japan. Workers get taxed more companies less, you really would have to be the product of a brother and sister to think that's going to encourage spending. But after 60 odd years go Government who's to argue.

2 ( +2 / -0 )

Doomed to fail, how can you spend money you don't have, a mystery

0 ( +0 / -0 )

Duh! raising taxes without raising salaries and expecting consumers to go all out on spending sprees...I understand the Japanese people to be patriotic but, not that patriotic. Plus all prices in shops do not display with the tax included (as was required by law before), confusing a lot of consumers. Most vendors will have that below the displayed price in small print or just add ー税抜

2 ( +2 / -0 )

...drafting a long-term vision for addressing Japan’s shrinking population.

0 ( +0 / -0 )

BertieWooster, I would agree with your point about Abe, sooner would be better than later as long as the next PM doesn't happen to be Taro Aso.

1 ( +1 / -0 )

"WHERE ARE THE PAY INCREASES?! HMMM?!"

Ichiro got one, anyway.

0 ( +0 / -0 )

bruinfan,

People need to retire later.

Generally speaking, I would agree with you.

In the case of Mr Abe, I think sooner rather than later would be a really good idea.

He's done enough damage, economically and diplomatically.

3 ( +4 / -1 )

People need to retire later. The pensions shouldn't be given out until about 67 (except in the case of disability).

0 ( +0 / -0 )

In summary:

Cut government spending dramatically; Smaller government, not bigger. Increase bureaucrats productivity & accountability: no overtime allowed. Long hours of meetings after meetings without clear decisions with lots of paperwork is useless. One-off jubilee write-off of JGBs debts from BOJ to MOF; bringing debts ratio to below 150% of GDP. Free the labor market regulations.
1 ( +1 / -0 )

I say inevitable because anyone who thinks the big companies, who were salivating at Abe's proposed tax cuts for them and the guarantees of profit, would turn around and put their newly found riches back into society were truly kidding themselves.

Where would they put their riches? In large money vaults like Scrooge McDuck? What good would it do them there? What good is money which isn't being used?

All companies hate holding large amounts of cash. Cash which is not being used is of no value. Companies are no different from banks in this regard. A typical bank's cash assets are 8% or less of their total assets, the other 92% is at work. Companies invest their cash the same way.

But once again, take a look at the world around you. Exactly where are the safe investments? People here have been claiming that Abenomics is not working (which is true), wages are decreasing, and that the economy is in trouble. What should companies be doing in the present environment? With the population falling, and outside competition increasing, what options do they have? Most who can are investing what they can outside Japan, it has become one of the only options they have.

How much do you know about Japanese companies, and the way they operate? Do you know that many Japanese companies often have two managers for each department? The reason being is that an unproductive or bad manager cannot be fired or demoted, so a second manager must be brought in to do the work. But this doesn't end here, the unproductive manager can expect to get the same promotions and pay raises which a productive manager receives. How much do you think this affects a company's performance and competitiveness? Why do you think that 70% of Jaoanese companies do not earn a profit? Now you know one of the reasons. And for those who do earn a profit, more than 1/3 goes to the government. You are damn right if you think companies are salivating over possible tax cuts, or changes in employment regulations. Without these, domestic companies are more or less doomed.

2 ( +3 / -1 )

WHERE ARE THE PAY INCREASES?! HMMM?!

1 ( +1 / -0 )

I don't know what to think of economists as people, but it seems fairly obvious that if you have an aging population, you are going to have less productivity as they retire. The options are either find a way to double the birth rate or massive immigration. Some would say only the latter will fix things in time.

0 ( +1 / -1 )

Wow, that momentary increase in popularity after the big drop sure didn't last long. What's going to be the next gimmick to try and dupe the public into thinking that throwing themselves on the sword for the sake of big companies is the right thing to do? SO many predicted that Abenomics will fail while Abe and others were throwing around the word as some sort of magical model of economics that the world sure watch and follow, and now that the inevitable is happening you hear the term being used less and less in a positive light (which means less and less in Japan, period).

I say inevitable because anyone who thinks the big companies, who were salivating at Abe's proposed tax cuts for them and the guarantees of profit, would turn around and put their newly found riches back into society were truly kidding themselves. And NOW you have Abe once again not only NOT doing anything about that, but turning to the public and asking them to trust him. What's just as bad is that he's done the typical Japanese PM thing of forcing himself into a corner -- he either raises the sales tax while not having lived up to his promise of gains to the public, forcing further increase in the price of products while the consumer has no means of catching up to the increases and in the end screwing the companies, or he doesn't raise the tax, not living up to his promise to do so and immediately spurring more growth in certain parts of the economy. Either choice will be his end, but I'm guessing he'll opt again for the ones that immediately help out the companies and screw the majority of people here. But hey, he'll still be rich, and the LDP can later say Abenomics was not their idea and they have to raise taxes and the people 'gaman' so they can beat it and shore up the economy, etc. etc.

-1 ( +4 / -5 )

MarkX:

I keep reading about labor reforms and how this is absolutely necessary for the economy to recover. My question is what kind of reforms are they talking about? PM Koizumi really relaxed the practice of hiring and using "haken" workers,which many companies happily did, so what other reforms do they want?

I think what is needed is a relaxation in rules that keep companies from firing workers. That is why companies use so many "hakken" workers in the first place- they're afraid to hire someone directly they aren't sure is going to work perfectly because once someone is in the company, it's incredibly difficult to fire them. Even with dispatch workers, I've seen organizations get saddled with grossly incompetent employees for months who do nothing but waste everyone else's time covering for their mistakes. So even though I'm normally very pro-regulation and as a foreigner especially at risk if a capricious boss decides to abuse their new firing ability, I'm a cautious supporter of relaxing these rules. Right now there are just too many people who don't know what they're doing gumming up the works, and it seems a lot of employers think it's not worth their time to train hakken workers because if they don't work out they can just be fobbed off on another company.

1 ( +1 / -0 )

One area of the economy that could be opened up for a year is the housing market, first time buyers end paying 14% on top of the actually cost of a place that is already expensive. Cut some of that cream off that the estate agents get and BANG... growth, especially that extra money you have to pay for a home that's not been sold brand spanking new.

0 ( +2 / -2 )

Abenomics was a crock from the start. It is simply just money printing and government spending, just like the equally useless Obamanomics -- of course that is not a recipe for economic wealth. But politicians always like to take the easy path, and simple spending non-existant money and the accompanying short-term high is just too tempting for them. Like an alcoholic taking to the bottle to feel better. For a moment.

0 ( +4 / -4 )

Corporations should never save, it should spend/reinvest all its profits. Individuals should always save. But the world is upside down, Corporations hoard cash, individuals spend too much and get into debt.

GM didn't save, did they? What happened to them in 2008? The American taxpayers are still paying for GM's failure to pay it's own way through the recession, this money will likely never be recovered. Many other companies which had not set aside cash prior to 2008 went bankrupt, and all of their employees lost their jobs, didn't they?

Ford did hoard cash prior to 2008, and they got through the recession without borrowing a dime from the government. They remembered when they were on the edge of bankruptcy back in the late 70's, and since then they had been deterrmined never to be in that situation again. They were able to keep their factories open, and to pay their workers.

Which company do you think was wiser?

Corporations hate more than anything to hoard cash. Cash is meant to be used to make more cash, that is the way it always has been. I own a company, and I reinvest as much of my money as possible. But there are times when there is nothing to invest in, when the risk too heavily outweighs the potential profit. If I invest, and lose, the money is gone. I can't issue bonds to sell to myself with money I printed in my basement. I have a respnsibility to my staff, suppliers, and customers to run my business wisely.

Take a look at the world right now. Growth in devloped countries is nil. For the last five years governments have been manipulating the basic mechanics of their economies, which used to be controlled by the market (companies and their customers). This current, unnatural situation, has led to skyrocketing public debt, and an overinflated stock market which has been fueled by artificially low interest rates, and central banks increasing liquidity. There has been a 100% increase in the value of the Nikkei average, while the economy has barely touched 1% growth per year. Companies have high market capitalization, but they don't have strong, if any, earnings. If their value was determined by their earnings, many companies would have no money at all right now. Let's not forget that only 30% of Japanese companies earned a profit last year, and last year was one of the best years in recent memory.

Then we have the volatile situations in eastern Europe and the middle east. If there is an outbreak of violence, or the I.S. starts a large scale conflict, all of the gains seen by the stock markets in the past two years could be erased. This "cash hoard" you mention that companies are hoarding could vanish overnight, leaving them with no money, and many employees to pay.

Unlike your government, companies have a much more realistic vision of the world. They actually have to answer to the consequences of their actions. They have to pay their employees with money which they earn. They cannot print their own money like the government does. Companies have to live in reality, and deal with things as they are. Politicians live in a dreamland far-removed from the reality working people and businesses face.

5 ( +6 / -1 )

"The incredibly high cost of living has made it too expensive raise children...."

The least affordable places on the planet are Vancouver and Australia's major cities -- places with among the most open policies for foreign investment in the world, according to research. Your theory about "reforms" lowering prices is absurd. IF anything, they raise living standards, based on a ton of real world examples I could cite.

In fairly central Tokyo, you can buy a new detached home for $600,000, in the distant suburbs $350,000. In Vancouver - where local jobs pay lower salaries - it would at least one million, and London....another "big bang" reformed capitalist bastion of free trade.....2.5 million dollars and rising. Local born people simply can't afford to live in those places anymore. The middle class there is drastically shrinking, while food, energy and education costs are also soaring, a trend that open, free market policies do nothing to fix.

Tokyo, meanwhile, is one of the developed world's most affordable capital cities. Let's keep it that way.

0 ( +4 / -4 )

Corporations should never save, it should spend/reinvest all its profits. Individuals should always save. But the world is upside down, Corporations hoard cash, individuals spend too much and get into debt.

0 ( +4 / -4 )

Failure could leave Japan’s economy stuck in a low-growth mode

Low growth is better than no growth.

Some countries have declining growth or no growth and merely stagnate.

-6 ( +1 / -7 )

Well, Abe is in a tough spot. While admittedly the public works programs are not helping, we do have to realize the single biggest glut in the Japanese budget is actually Social Services (read: pensions and healthcare), NOT public works.

Worse yet, companies are preparing for what they are beginning to see as an inevitable collapse in the economy, and they will need as much money as possible to get through it.

And this lack of confidence (perhaps willingness to try) may well be the biggest single problem. Ultimately, Tom Clancy despite being a fiction writer has it right in Debt of Honor) when he mentioned the importance of confidence in economy. Easing or deregulation or any other restructuring plan depends vitally on the people and corporation having "confidence" so they'd exploit the circumstances to try and move the economy rather than trying to hold onto what they have.

That's why my eyes rolled so much when I saw all the doubters in the beginning. They may have valid points, but all these doubters can actually potentially ruin the chance for any economic plan to succeed, simply because of this confidence issue.

2 ( +4 / -2 )

Potentially more worrisome, real wages have fallen for 13 straight months as wage growth lags price rises

Somebody tell Mr Kuroda, the Bank of Japan head, as he keeps claiming the opposite.

That has some Abe advisers worried politicians may revert to old-style wooing of voters with spending, rather than reform.

Abe isn't capable of reform, all he does is spend money, just like every other LDP government. At least by calling it "Abenomics" the people should be able to figure out who is responsible when it all goes pear-shaped. They will still vote him back in though.

3 ( +3 / -0 )

Meanwhile, force companies to reinvest 20% of their gross profits back into the company by means of wage hikes, new hires, capital investments. The hundreds of billions of cash reserves must stop.

Sorry, but with the Japanese population falling as quickly as it is, there are not enough present or future customers to justify more hiring, higher wages, or capital investment. Doing these things would only lead to early bankruptcy, and all of the workers losing their jobs.

Companies are not holding onto their money because they are stingy misers. Like most people and entities they want to put the money to use to make more money. But there are few opportunities for doing so. Worse yet, companies are preparing for what they are beginnng to see as an inevitible collapse in the economy, and they will need as much money as possible to get through it. Many companies without cash reserves disappeared in the 2008 financial crisis. Companies now do not want to make the same mistake.

Japan's main problem is that it's economy is uncompetitive. Years of keeping out competition drove up prices and promoted inefficiency. The incredibly high cost of living has made it too expensive raise children, and caused the population to fall. Keeping out competition gave Japanese companies a captive audience, and 60% of their sales were made domestically.

But now the domestic market is shrinking. The natural result of this would be deflation, less people means less goods bought, sold, or made. Companies adapt to the shriking market by also decreasing in size. Eventually prices reach bottom, the cost of living reaches what is naturally stable, and then growth starts again.

Strong reforms should have been done back in 1989 after the economic bubble burst. Markets should have been opened, and competitiveness increased. Instead, it was thought that there was nothing wrong with the system, that growth would eventually come back. So, a long cycle of borrowing ensued. Even today, many large Japanese companies are still carrying debt which stretches back to 1989. The recent Olympus scandal was an example of a large company still grappling with bubble-era losses.

During the bubble era, the Japanese government enacted many spending policies and projects; all assumed that long-term growth would return, and future revenue would be sufficient to pay for them. This was foolish, as even back in the bubble era there were symptoms of trouble, the population was already beginning to fall.

The last nail in the coffin was the rise of other economies in Asia. Since Japan had come to rely largely on it's large protected domestic market, it did not produce and sell to the internatioal market as aggressively as it had back in it's growth days. Now Japan faces both a rapidly shrinking domestic market, and much stronger competition for the international market.

Everything Abe has done so far has been a mistake. Monetary easing has driven down the value of the yen against foreign currencies. The goal was to increase growth by reducing the cost of exports, but this was doomed to fail, it is simply not possible for Japanese exports to compete with Chinese exports. Most Japanese exporters import materials, so as the cost of their exports fell, the costs of their materials rose, negating gains. But food costs also soared, so the domestic market had less money to spend on Japanese goods.

Keeping interest rates low, and trying to encourage deflation by diluting the money supply was also foolish. Low rates do make ir easier to borrow, but the main beneficiairies of the low rates has been the government itself, as well as those large companies who have been running in the red since Bill Clinton was in office. Diluting the miney supply to cause inflation is foolish, and does not encourage growth. The inflation caused by weakened money merely robs the people of the value of their labor and savings. Inflation is supposed to be the result of growth, which increases demand, prices, and resulting productivity. Japan cannot continue to pay for it's current incompetence by borrowing more heavily against the people.

If Abe wants Japan to recover, he has to open the domestic market fully to competition. He has to end many of the bubble-era policies and regulation which are now too expensive to pay for. He has to end the uncompetitive business practices in Japan which are patently illegal in all other developed countries. He has to reduce the size and cost of the government to a level which can be born by the economy. He has to find a way to balance the budget by cutting costa, and not increasing taxes, or handing out "stimulus" payments to his political friends.

Good luck,

3 ( +7 / -4 )

The recovery is not faltering, it never existed. Abe's deliberate currency devaluation gave a very short-term boom to exporters, which was combined with the recovery from the earthquake, but the only real growth has come from Japanese companies overseas repatriating yen. The domestic economy has taken a hit so that Abe's mates in industry could benefit. We are all paying more taxes so that Abe can pass the money to bureaucrats and right-wing construction firms that often donate money to support his agenda. Because the top Japanese firms are all exporters, the weaker yen moved the stock market. Dollar/Yen rate is easily the biggest driver of the Nikkei, but the Nikkei is still down in 2014.

The debt is through the roof, now around 250% of GNP, and the government plans to increase this debt even further because it wants to pass more tax money to be wasted in bureaucracies and construction firms. The economy here won't improve until bureaucrats stop working from 9:00am to 2:00am, being paid fortunes in overtime before taking a taxi home (on the taxpayer), having spent all day in "meetings" and "preparing the document". Government spending is too high, often on the type of stupidity that you hear every time you speak to someone from MOFA, METI etc. Japan has gone nowhere in two decades because nothing changes structurally and people confuse hard work with sitting around for long periods of time doing nothing useful. There is no efficiency in the domestic economy and there is no will to improve efficiency.

Abe is the old guard; we are really yet to see anything positive from this government apart from the inclusion of 5 very right-wing females to the Cabinet to attract female voters. People need money in their pockets to spend it, but domestic consumption obviously decreases when real wages fall and when prices and taxes increase. Posters on JT have all known this from day one (with about three exceptions) so why don't the world's economists understand it?

10 ( +14 / -4 )

The sales tax part of the plan should have been slowly implemented over a long period of time and I believe having it go from 5 to 10% was a big mistake. In fact, I think that it should end at 8%.

0 ( +2 / -2 )

MarkX, I suppose you need to read between the lines to imagine the 'labor reforms' and see the 'challenges' for why 'Abenomics is in trouble':

"increase competitiveness" = work more for the same or less pay and/or pay less tax

"boost productivity" = work more for the same or less pay

"increase company profits" = work more for the same or less pay and/or charge more to customers

"deregulate labor" = remove required overtime rates; remove minimum wages; reduce company pension/insurance contributions; remove price guarantees to farmers

"get people to buy more" = pay more and/or reduce prices

"allow people to afford inflated prices" = pay more

"give people the time to buy more" = work less

So essentially there has been a third arrow promise all along that Abenomics will magically make all those things happen at the same time. Finally, bankers, the media, journalists, and the general public are waking up to the contradiction.

1 ( +2 / -1 )

Serrano,

EXACTLY!

DRASTICALLY CUT GOVERNMENT SPENDING

Stop paying "protection money" to the US military.

ABENOMICS = FAIL

4 ( +9 / -5 )

Raise the tax now, or never." Let's go with never. And CUT GOVERNMENT SPENDING ALREADY!

Serrano has nailed it on the head. The public debt is best reined in by cutting spending, better yet, wasteful spending. Higher consumption taxes won't put a dent in the debt if spending remains profligate.

I have nothing against public works: infra-structure is vital to the economy after all. However, they should never be the centre or a big part of economic policy. Fix roads, sewage systems etc as they are needed.

The tax burden on Japanese people and business needs to be reduced if there are to be higher profits, bigger salaries, and more robust consumption. There's only so much business, and working people can afford to pay. Taxation is already excessive.

Higher net salaries mean consumers have more disposable income to spend on goods and services. Lower business taxes mean more profit, which in turn enables companies to raise wages. This is especially true for small and medium sized businesses,

Abenomics is unsound, government driven, and does nothing to fix the economy. Abenomics doesn't work: that's why it's failing.

6 ( +7 / -1 )

"Raise the tax now, or never."

Let's go with never. And CUT GOVERNMENT SPENDING ALREADY!

20 ( +21 / -1 )

Yep! No surprises here! If you build an economic strategy based on increased spending and then increase taxes it has to fail. You don't have to be an economist to figure that out. I too have been against his policies since the outset. His export expectations were built on OS markets that don't exist anymore. He gave tax cuts to corporations without ensuring salaries were increased to offset the sales tax increase. He has dithered with the TTP, which would have flooded the Japanese marketplace with cheaper goods and increased spending so the sales tax hike would have meant something. The subsidies for rice farmers are a ridiculous joke and is what keeps the unemployment rate down. Without their subsidies they would have to work for half the year or, in many cases, work for the full year. Then, there is Abe's interpretation of Globalisation. To him, it just means expanding Japanese business overseas, but that is only half of it. They have to give foreign companies a reason to invest in Japan. I've said before, the only way out for Japan is through innovative economic strategies and investing in new technologies instead of recycling the same old rubbish from 40 years ago. Hang on to your cash people! This is only the beginning of the end for Abenomics and the Japanese economy.

8 ( +12 / -4 )

I keep reading about labor reforms and how this is absolutely necessary for the economy to recover. My question is what kind of reforms are they talking about? PM Koizumi really relaxed the practice of hiring and using "haken" workers,which many companies happily did, so what other reforms do they want? Just wondering? Also I keep reading about how there is a shortage of workers and many companies are struggling to find enough skilled workers, but can anybody tell me why a self serve gas station has 6 people standing around directing traffic all day. What a waste! In North America, you would have one worker in the cashier's booth, and that is it.

4 ( +5 / -1 )

Public dept = wasteful government spending passed on to election supporters.

7 ( +7 / -0 )

“Abenomics is in trouble - because it’s not happening fast enough,” said Robert Feldman, head of research at Morgan Stanley MUFG in Tokyo, who like many others says Abe must move faster on steps such as labor market reform to boost productivity.

Everyone with half a brain predicted this when Abenomics first started. Abe's own party is the most entrenched with special interests, so there is no way any meaningful reforms were going to happen. Do people not remember what happened to Koizumi's reform of Japan Post? As soon as he left office, it was "re-reformed" back to its original state. Failure could leave Japan’s economy stuck in a low-growth mode or worse, unable to begin to curb public debt already more than twice the size of a $5 trillion economy, the biggest burden in the industrialised world.

8 ( +11 / -3 )

"Meanwhile, force companies to reinvest 20% of their gross profits back into the company by means of wage hikes, new hires, capital investments."

Fascism much? Private ownership under direct government control seems to be what just advocated.

Abenomics is a gruesome failure because it is the resultant policy of economic theory based of fallacies propogated by Marx,Keynes, Krugman, and more recently the Marxist Picketty.

-5 ( +6 / -11 )

Raise the tax now, or never. Short term pain is better than thinking about raising the rates for years and years, while the debt keeps rising. Meanwhile, force companies to reinvest 20% of their gross profits back into the company by means of wage hikes, new hires, capital investments. The hundreds of billions of cash reserves must stop.

-1 ( +7 / -8 )

It's sooooo obviously the tax hike, which isn't even part of Abenomics. The 3rd arrow reform too, but everyone knew that would take time.

Hiking the tax again will be suicide. Hello, you don't remove consumers purchasing power during the early stage of recovery while private demand is still insufficient. Simple as that. These politicians need to to enroll in an economics class.

11 ( +14 / -3 )

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