politics

BOJ chief slaps down Abe's fix for economy

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Japan has been mired in deflation for years, a situation that discourages consumers from spending in the knowledge that products will be cheaper in the future,

Absolute malarky. Deflation has long been a fact of life for Japanese consumers. They factored it in to their spending habits a long time ago.

1 ( +2 / -1 )

Word Inflation is replaced by Deflation in Japan that's it, don't be deceived.

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Right on...tell it like it is Mr. Shirakawa...wonder if the public will look at the LDP a little more sceptically after this. Probably not.

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As average consumers, our consumption hasn't decreased; only the pattern has changed. Not eating out but buying high quality food; shopping less in dept stores & supers but more from internet. Imports are relatively cheap but Japan products prices haven't deflated noticeably to me.

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TIME FOR MAASAKI SHIRAKAWKA To BE "SLAPPED DOWN".....................The guy has done nothing to help J industry !...................He is a spoiled little 'Amakugari' filling a seat toooooooooooooo big for him.

-5 ( +3 / -8 )

There's not much that Japan can do to combat deflation now. Many Japanese consumers are worried about their job situations, which stops them from spending more. Besides, with the EU economy f-ed, the US' slowing down, and China refusing to buy from Japan, there's been less demand for J goods.

Here are the dilemma that Japan faces:

Further deregulation might create jobs but would lower the prices down further;

An attempt to balance the budget and correct the national finance would make the yen stronger, pushing the prices further down as a result of cheaper imports and job disappearance.

Abe doesn't get these. He still thinks that issuing more bonds and spending more on public works would kickstart the moribund Japanese economy.

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marcelito,

For once, I agree with you. The public should be skeptical of Abe and LDP. Even LDP voters must think of the value of their savings if Abe would seek to destroy the yen. Many elderly voters would struggle to live their lives if this were the case.

Hiroicci,

Mr Watanabe Yoshimi of Minna-no-tou pointed out that Mr. Abe's statements are just election call to his constituents in the construction industry.

Personally, I believe Mr Abe will flip-flop on this issue.

Unfortunately Japanese people have only one choice, and it is to vote for 3rd parties.

3 ( +4 / -1 )

Abe was a terrible prime minister but his worst quality is that he does not realize that he is an idiot. Gosh help us.

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Yes-yes-yeeees!!!!

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Abe doesn't get these. He still thinks that issuing more bonds and spending more on public works would kickstart the moribund Japanese economy.

Basic economics 101 dictates... Increased Government outlays needs to happen to correct for recession.

This is why learning something at the university level is so important, not just sleeping in class, partying and day-dreaming about the company that offered you a job, one week after you received the acceptance letter to Todai.

-1 ( +2 / -3 )

Abe has no answer. You can call J-goverment inefficient. In recent years, J-goverment annually pays out around $46 billion in handouts to farmers, which is 1 percent of Japan's GDP or equal to Japan's total defense cost. This is a big chunk of money that Japan could invest into worthwhile projects. J-goverment has to make hard choices to stop subsidies to farmers. Forget the farmers. Let them survive on their own.

3 ( +3 / -0 )

semperfiNov. 21, 2012 - 09:13AM JST

TIME FOR MAASAKI SHIRAKAWKA To BE "SLAPPED DOWN".....................The guy has done nothing to help J industry !...................He is a spoiled little 'Amakugari' filling a seat toooooooooooooo big for him.

Comment like this suggests no higher education. Pathetic and shame.

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please pay attention to the graph I am posting. Japanese QE did not help at all.

USD Fed Chairman has suggested about 10 minutes ago that there will be no more QE while we are heading to the fiscal cliff here in US. He understands the negative unintended long term consequences. Again, NO MORE QE.

I am glad my kids are not left behind. There is no way my kids will not be living there by Abe, Ishihara/Hashimoto regime. i did it right.

Mr. Shirakawa also cautioned that maintaining easy monetary policy "for an extended period" will likely yield unwelcome unintended consequences.

http://online.wsj.com/article/SB10001424052748704444304575628403102379326.html

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People don't consume because they think things will be cheaper soon? So let's print money and cause inflation. Companies will raise prices on goods but salaries won't go up to match making it impossible for people to afford to buy anything. Stupid.

The prices of goods and services haven't decreased in Japan. The price of land has and because all the banks have the majority of their assets tied up in property the numbers tell us Japan is suffering from deflation. If anything this long deflation period is a long drawn out correction of Japan's mega bubble.

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Abe said yesterday he wants to issue more debt to fund massive public works projects to boost the economy. Thank god for people like Shirakawa to stand up to the buffoons that created the mess that they are now railing against and blaming others for.

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JeffLeeNov. 21, 2012 - 10:54AM JST

Abe said yesterday he wants to issue more debt to fund massive public works projects to boost the economy. Thank god for people like Shirakawa to stand up to the buffoons that created the mess that they are now railing against and blaming others for.

He is only responsible for monetary policy of Japan. . It took good 5 decades for corrupted LDP to destroy Japan. Noda inherited this from LDP including mess from TEPCO. Why don't you give NODA a chance , so you can move forward, not back to LDP.

-1 ( +0 / -1 )

Wasting trillions on unnecessary public works projects is what the LDP did for fifty years, leaving Japan mired in debt. Now Abe proposes more of the same. I thought he said the LDP had changed? They haven't changed and haven't learnt a thing.

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globalwatcher,

Noda himself has his head bolted on correctly (with respect to Monetary policy). However, look at DPJ as a whole. It is a mess. Currently Noda leads, but there are many in DPJ that do not agree with Noda's policies. Now many politicians are leaving DPJ, not only because they will lose the election, but because they do not share his policies. DPJ has failed as an LDP alternative. This is why voters must look to new possibilities such as with Minna and Ishin.

Still, I believe Ishin is at risk of failing, like DPJ. But it is not certain yet.

1 ( +2 / -1 )

With the rats having left ship, now would be a good time to support Noda.

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A near-term inflation goal of 3% in a country suffering from deflation was "not realistic", Shirakawa said. "What the general public hopes for is not simply an exit from deflation… but an improvement in the economy as a whole," he added.

Correct, but stabilizing the situation by bringing down the level of the yen through eliminating the so-called "safe haven" status is currently has from the standpoint of the speculators is necessary. It is vodoo economics that is responsible for the artificially high yen.

Shirakawa said Abe's plans are "not implemented in any developed countries", and were at the top of the International Monetary Fund’s "never-do" list.

What is America's QE all about?

If Bernake can do it...

-2 ( +0 / -2 )

ubikwitNov. 21, 2012 - 06:41PM JST

Shirakawa said Abe's plans are "not implemented in any developed countries", and were at the top of the International Monetary Fund’s "never-do" list. What is America's QE all about? If Bernake can do it...

You need to do some basic reading. There's a big difference between quantitive easing and the central bank being compelled to buy government debt.

If it's not too difficult, have a read of this. http://www.economist.com/blogs/freeexchange/2012/11/monetary-policy-japan

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Just a reminder that hey it's the bureaucrats running the country NOT the P.M.

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ubikwitNov. 21, 2012 - 06:41PM JST

What is America's QE all about?

If Bernake can do it...

Please review what I have written listed above. HE CANNOT. i wish I can list all about IMF is saying. Shirakawa is not telling all as he wants to remain politically nutural. Japan needs to boost economy without any more QE.

Abe will be doing exactly what China is waiting for. LOL

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@Dog

Thanks for the link, I read the article, but it seems to have the stance that Abe's statement is unrealistic and too aggressive--the goal of 3%.

I have said that I agree with that. I don't think that inflation should be the goal, as that represents an artificial attempt to manipulate the market in a different manner.

I'm for bringing down the level of the yen, which is artificially high and hurting the real economy. It seems that a 0% target would be more realistic, in terms of inflation.

-2 ( +0 / -2 )

0 ( +0 / -0 )

You need to do some basic reading. There's a big difference between quantitive easing and the central bank being compelled to buy government debt.

Yes there certainly is.

Lending cheap money to private banks who in turn does nothing but buy JGB does nothing to the economy except deflation. While ECB and Fed have doubled and trippled the monetary base since the Lehman shock, the inflation rate for the most part are around 2% area. (This, for the most part, is to stop this hyperinflation BS argument). Japan's monetary base increase is not that drastic, hence the consumer price index during that time has been declining.

Therefore, the purpose of Abe's plan is rather than continuing this delfationary transactions (Bank of Japan-->Private Banks-->JGB), he wants specifically for Bank of Japan to purchase the Construction bonds(which has been stagnant at 200 trillion yen oustanding balance for decade) where it will be earmarked for public works. At least, this will certainly be distributed to the private sector as opposed to the aforementioned "deflationary transactions".

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Yes there certainly is.

Lending cheap money to private banks who in turn does nothing but buy JGB does nothing to the economy except deflation. While ECB and Fed have doubled and trippled the monetary base since the Lehman shock, the inflation rate for the most part are around 2% area. (This, for the most part, is to stop this hyperinflation BS argument). Japan's monetary base increase is not that drastic, hence the consumer price index during that time has been declining.

Japanese economy is quite differen from US and Europe. Japan needs to do more structural overhaul in economy.

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That's a very dated article, and anachronistic in light of the fact that not only is no "recovery is underway" scenario happening, it is rather the opposite. And there is no mention of the high yen...

That's music to the ears of the white-collar criminal class in finance, especially the most superfluous of that breed: currency traders.

-2 ( +0 / -2 )

That's a very dated article,

And irrelevant since it was supported by LDP and Komeito. The recent passage of the bill is to, first and foremost, to consolidate the social welfare while specifically earmarking the sales tax revenue to fund them. It's more "psychological" in view of the fact that the government believes that doing so, the older generation would have some sense of "assurance" thereby hoping that they would loosen the several hundred trillion yen in savings that they hold.

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Abe's plan might be good for short term in Japan. Long term, this might be one of the worst ideas every. What are they thinking? Build more roads for less people? They are already have plenty of roads, trains, buses and other infrastructure. If this plan goes into place the yen could go in the next couple of years. Result is a short term boom and a long term bust.

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sfjp330Nov. 22, 2012 - 04:26AM JST

Good post. You may want to read how global hawk; Soros made money on Bank of England. Abe is stupid sending a signal to global market he is willing to do this. Every global hawks are already making a big move including China. These hawks are willing to bid on Japan.They have no moral compass except making a huge return .I have alreay bid big on commodity futures. Thanks to Abe. This is a perfect storm for global investors and they will eat up BOJ. They do not care about a common good for Japanese society. A biggest victims are Japanese people.

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It's more "psychological" in view of the fact that the government believes that doing so, the older generation would have some sense of "assurance" thereby hoping that they would loosen the several hundred trillion yen in savings that they hold.

Heck no, the well educated Japanese do not think so. They are moving assets to something else other than Yen based investment. That's is already happening in global bond/equity market. Hahaha.

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nigelboyNov. 22, 2012 - 01:43AM JST

Therefore, the purpose of Abe's plan is rather than continuing this delfationary transactions (Bank of Japan-->Private Banks-->JGB), he wants specifically for Bank of Japan to purchase the Construction bonds(which has been stagnant at 200 trillion yen oustanding balance for decade)

Oh dear, it seems that the exponent of this crackpot idea has back tracked on implementing it.

Abe also said that he did not want the central bank to directly underwrite government debt, which is how markets interpreted his earlier call for the BOJ to buy construction bonds issued to fund infrastructure spending.

“What I have been saying all along is that we’d like the BOJ to buy construction bonds from the market, not directly from the government,” Abe said.

hahaha.

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@Ch1n4Sailor

Basic economics 102: Keynesian economic theory doesn't work so well in an already developed country, like Japan or America. Why ? Because the governments aren't very efficient when it comes to spending money, too much bureaucracy, too many meetings, too many signature/stamps they need.

That's why it's so important that you study more than introductory 101 classes at the university level.

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Oh dear, it seems that the exponent of this crackpot idea has back tracked on implementing it.

Geez Dog. That's how I interpreted from the beginning considering that the current law does not allow central bank to underwrite government bond.

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