politics

Budget requests at record Y99.3 tril for next fiscal year

14 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© (c) Copyright Thomson Reuters 2013.

©2019 GPlusMedia Inc.

14 Comments
Login to comment

So it seems as though increased sales tax will simply be used to service higher and higher budgets. Round and round we go!

4 ( +6 / -2 )

They request more money to service debt? Getting more debt to service more debt? Not fiscally prudent I imagin.

2 ( +4 / -2 )

Government spending does not stimulate the economy, especially when the spending requires even more borrowing. The basic economic problems now faced in every develped country have been caused by excessive government borrowing and spending. The private sector is being bled dry through taxation, and there is little money left for people, businesses, and companies to buy, hire, or grow.

Excess government spending and borrowing has skewed the value of currencies, meaning that you are getting less and less value for your work. Governments have reduced interest rates not to "stimulate" the economy, but to make it possible for them to borrow even more. The artificially low interest rates have made it difficult for banks to earn a profit on loans, so they have been getting involved in ever more risky ventures. The low rates also discourage people from saving money, so banks also have less in deposited assets to loan to companies and businesses. The high rates charged to subprime borrowers prior to the economic collapse was largely the fault of the government, because prime rate mortgages have become less and less profitable as the interest rates continue to be driven down.

The only people calling for more "stimulus" spending are companies which contract with the government.

0 ( +4 / -4 )

This is a really worrying situation - borrowing more to pay interest on existing borrowings is not a recipe for turning the economy around.

4 ( +4 / -0 )

"The private sector is being bled dry through taxation, and there is little money left for people, businesses, and companies to buy, hire, or grow."

You seem to inhabit a different planet. Corporations (on planet earth) are earning the highest profits in the history of mankind. The problem is that they are not investing or hiring in developed countries.

The gov't, meanwhile, offers them ultra-cheap credit (low interest rates) in the hope they hire more of us workers. But they don't, and they won't.

"Those jobs are gone, and they're never coming back," as Steve Jobs once boasted.

1 ( +3 / -2 )

You seem to inhabit a different planet. Corporations (on planet earth) are earning the highest profits in the history of mankind. The problem is that they are not investing or hiring in developed countries.The gov't, meanwhile, offers them ultra-cheap credit (low interest rates) in the hope they hire more of us workers. But they don't, and they won't. "Those jobs are gone, and they're never coming back," as Steve Jobs once boasted.

If you are talking about Apple and Facebook, then you are right, they are earning well. But if are talking about the majority of companies throughout the world, then you are wrong. Name a single blue-chip company in Japan which earned record profits thsi year, or last year or any of the last 10 years. The few who have seen any growth have done so at the expense of moving their manufacturing outside the country.

Sony, Panasonic, Sharp, Hitachi, etc. have been posting regular losses for the past several years. The automakers have done better only because they have divested themselves from Japan, and can move manufacturing and operations elsewhere. Corporate tax hovers at around 40%, and this is only one of myriad taxes and fees which must be paid. Profits from capital gains earned from investng within developed countries are subject to an additional 33% tax. Why would I ever want to invest my capital (upon which I have already paidtax) in my home country when I face losing yet another 1/3 to tax?

In developed countries a company's largest expense is tax, not payroll. The government offers ultra-cheap credit because they have lowered the benchmark rate to almost zero so they can afford to service their own astronomical debts. And even then, you can't get a loan unless you are connected to someone in the government. The interest might seem low, but these deals are loaded with fluff which is divided between the lender and the borrower.

I often wonder what planet most people live on. People seem to think that spending 10 times what you earn, and borrowing from your great-grandchildren is acceptable. Americans don't seem to mind that 101,000,000 are collecting state benefits, while only 87,000,000 are employed full-time. They don't seem to care that fully half their annual income is absorbed directly or indirectly by their government. When will people wake up?

0 ( +2 / -2 )

There are over 2000 Japanese companies listed on the 1st board alone of the Tokyo Stock Exchange. For the March 2013 fiscal year 233 of those companies , not including the banks, made record profits. Some examples Wacom, KDDI,Otsuka Holdings, Daikin, Bridgestone. Japan Inc is more than Hitachi, Sony, Sharp and Panasonic.

2 ( +3 / -1 )

made record profits. Some examples Wacom, KDDI,Otsuka Holdings, Daikin, Bridgestone. Japan Inc is more than Hitachi, Sony, Sharp and Panasonic.

how? by selling their domestic/overseas assets?

0 ( +2 / -2 )

There are over 2000 Japanese companies listed on the 1st board alone of the Tokyo Stock Exchange. For the March 2013 fiscal year 233 of those companies , not including the banks, made record profits. Some examples Wacom, KDDI,Otsuka Holdings, Daikin, Bridgestone. Japan Inc is more than Hitachi, Sony, Sharp and Panasonic.

These companies did not "earn" any substantial money, their paper value rose because stock prices increased in the recent bull market. Actual sales were not so good, official economic growth in Japan for the last quarter was 2.5%, which was far below the amount necessary to translate into "record" profits. And when you deduct government spending from the growth report, real growth was only .6%. Remember Amazon.com during the tech bubble? It's stock value and market capitalization rose to incredible heights, despite the fact that the company hadn't earned single cent in profit.

The stock market runs according to it's own rules and standards, and though market results affect the value of companies greatly, the stock value needn't have anything at all to do with a company's performance or profits. The markets change direction much as the wind does, they generate momentum, both positive and negative. We are in a positive cycle right now, and Japan Inc is already cashing out of Japan and setting stakes elsewhere. But the cycle will eventually turn negative again, and the paper values of publicly traded companies will have about as much value as the paper they were written on.

1 ( +2 / -1 )

Government spending does not stimulate the economy, especially when the spending requires even more borrowing.

It does stimulate the economy in the short term, as the Abe and Obama stimuluses both showed, but the effects are short-lived and end up being shovel strokes in the deeper hole that you intimated.

2 ( +2 / -0 )

Thanks, randoman, for introducing a thing called "facts." Sangatsu's bold, outspoken worldview is based on the thinking that profits at Japanese companies don't count because they aren't real profits, eh? Too funny.

Further reading, Japan Inc. Profit Doubles to Add Support to Economic Rebound http://www.bloomberg.com/news/2013-08-11/japan-inc-earnings-double-to-give-momentum-to-economic-recovery.html

1 ( +1 / -0 )

The stock price increases market capitalization and does not increase profitability. The profits referred to are EBITDA (earnings before interest, taxes, depreciation and amortization). You can also look up their sales revenue growth over a three year period. The Government isn't responsible for increased investments, spending and wages, its up to the J- companies which require future economic confidence to do so. J-companies are sitting on a record amount of cash and very little debt but they refuse to part with their stronghold.

2 ( +2 / -0 )

The Government isn't responsible for increased investments, spending and wages, its up to the J- companies which require future economic confidence to do so. J-companies are sitting on a record amount of cash and very little debt but they refuse to part with their stronghold.

Do you think Japanese companies really want to sit on piles of cash? With interest on deposits at nearly zero percent, and the yen falling in value by 25% over the past year, they have taken a heavy loss on their holdings. And where do you suggest they invest this supposed cash? In Japan? If Japanese companies were sitting on as much cash as you imagine, things would not be as bad as they are now.

I suppose these companies have acquired all this cash during the last four years of negative growth, or perhaps it was earlier than that, during the "lost decade"? The truth is that many Japanese companies are still saddled with losses dating to the collapse of the bubble economy more than 20 years ago.

Japanese companies are hugely in debt, and this is held by Japanese "mega" banks whose largest assets nowadays are JGB's. If the Japanese government can't get it's financial house in order, and defaults on servicing it's vast debts (debt service costs are now 25% of GDP, and are projected to become as much as 50%), then the entire house of paper will collapse.

1 ( +2 / -1 )

Do you think Japanese companies really want to sit on piles of cash? With interest on deposits at nearly zero percent, and the yen falling in value by 25% over the past year, they have taken a heavy loss on their holdings. And where do you suggest they invest this supposed cash? In Japan? If Japanese companies were sitting on as much cash as you imagine, things would not be as bad as they are now.

Actually, last year's still continuing Endaka resulted in record M&A by Japanese firms of foreign companies. (Takeda Pharmaceutical, Toshiba, Kirin Holdings, etc.) With the yen falling, what they paid for and what they are worth is on principle, a 25% gain.

The balance sheet adjustment on the "lost decade" was pretty much completed during the 2000's and now the movement has shifted to excess cash holdings by corporations which is the key factor in the deflationary spiral.

http://www.research-soken.or.jp/reports/economic/pdf/number44.pdf

Japanese companies are hugely in debt, and this is held by Japanese "mega" banks whose largest assets nowadays are JGB's. If the Japanese government can't get it's financial house in order, and defaults on servicing it's vast debts (debt service costs are now 25% of GDP, and are projected to become as much as 50%), then the entire house of paper will collapse.

Not quite. The loans outstanding by Japanese corporations (non financial entity) has been decreasing over the course of last 15 years coupled with the fact with the excess cash holding by megabanks, they in turn are investing in JGB in masses contributing to the continuos low yield levels.

You can find out the loan balances year by year in below link.

http://www.boj.or.jp/statistics/sj/

As JeffLee stated on many similar articles which I agree to, the JGB to GDP ratio is nothing but a net sum zero game on Japan's balance sheet in light of the fact that well over 90% of the JGB are owned by Japanese. With Japan's being the largest net creditor in the world for 20 consecutive years, the Kyle Bass "sky is falling" is simply a desperate fear mongering tactic muchon par like the nuclear fear mongerers of Fukushima Daiichi.

-4 ( +2 / -6 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites