BOJ chief nominee sticking to familiar playbook, at least for now

BOJ chief nominee sticking to familiar playbook, at least for now….

> Bank of Japan governor nominee Kazuo Ueda is signaling that financial markets should not expect big surprises or magical solutions, as he braces for the monumental challenges facing the central bank.

Oh well, it’s a good thing everyone went thru hell to finally change leadership there.

I mean how else would we get NO CHANGES AT ALL?

Welcome to the same old same old. Same garbage different year.

Would be dumb to tighten policy now. Core inflation at 4.2% is finally putting pressure on employers to give proper wage rises, which are essential for the "virtuous cycle." We'll see soon at the spring negotiations.

Because they are all cut from the same cloth. Lunatics

This is precisely why he was hired in the first place.

Would be dumb to tighten policy now.

The notion that just printing money like crazy to bankroll government spending would solve Japan’s economic ills was dumb.

Japanese government spending is part of Japan’s economic sickness, so ceasing to aid and abet it can only bring positive results, but to get well again will require taking some unpleasant medicine.

Central government controls and regulations are other parts of the problem.

Core inflation at 4.2% is finally putting pressure on employers to give proper wage rises, which are essential for the "virtuous cycle."

The virtuous cycle ideal seems like wishful thinking to me, much like the idea of trickle down presented by Abe’s people with respect to monetary policy. The hilarious part is that trickle down was supposed to be a caricature of pro growth supply side policies, but the fools actual said that trickle down was the Abenomics policy (which contained precious little pro growth policy)

It is a good playbook. The west is getting rip by inflation and the US is heading for a debt crisis.

If the US is heading for a debt crisis how about Japan?

(well, gold has been appreciating…)

This picture represents the Japanese government in a whole. Old and dusty.

@fxgai

Japanese government spending is part of Japan’s economic sickness...

How? Why? Japan's main "economic sickness" is that private-sector employers are raking in record high profits yet sharing less and less with their workers through wage suppression.

On the macro front, the Ukraine war has crimped supply in one of the world's biggest energy and food production regions, while China's draconian covid measures crimped supply in the "world's factory." These developments have a devastating effect on import-export dependent Japan. That's the source of the "sickness."

How?

The misuse of Japan’s scarce economic resources. I do not think I need to make the case that Japanese government spending doesn’t provide good value for money.

Case in point - I have been drinking beer on the yen of the Japanese taxpayer (myself included) since the beginning of the year. A government subsidy for beer makers.

And that’s just the start of it.

private-sector employers are raking in record high profits yet sharing less and less with their workers through wage suppression.

And what do they do with the money? Put it under the futon?

Why do you believe this “wage suppression” is a thing in Japan?

How does it compare to elsewhere?

You believe private sector Japanese employers are greedier than employers elsewhere?

More so than the US for example?

@fxgai

 I Japanese government spending doesn’t provide good value for money.

By keeping thousands of small businesses in business during the depths of the pandemic?

Japan’s scarce economic resources

Huh? The small island country that churns out millions of Toyotas, Hondas and a host of other vehicle brands every year while supplying the world with nearly half of its industrial robots and much of its machine tools, and while being the world's biggest creditor nation has plenty of "economic resources." How obvious is that?

And what do they do with the money? Put it under the futon?

Yes, under the "proverbial futon."

See: "Corporate Cash Retention Behavior in Japan"

https://www.jri.co.jp/en/MediaLibrary/file/english/periodical/jrirj/2021/03/yasui.pdf

Why do you believe this “wage suppression” is a thing in Japan?

Greed. although Leo Lewis at the FT puts Japan's lack of capital deployment down to a deep mistrust in Japanese banks.

More so than the US for example?

Yes. Wages have been rising steadily in the US over many years. In Japan, they have stagnated for a couple of decades and are now, finally starting to see substantive movement due to inflation pressure.

By keeping thousands of small businesses in business during the depths of the pandemic?

Denying economic realities isn’t good use of money.

You like airline bailouts too I take it.

nation has plenty of "economic resources."

That reminds me of this:

“The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” - Thomas Sowell

Yes, under the "proverbial futon."

Ok so it’s a proverbial futon, but entertaining that, says your link,

“Why have Japanese companies resorted to holding cash even during periods of economic expansion? We can point to their memories of the severe cash crunch during the past economic crisis and their low growth expectations in Japan.”

So, if low growth expectations are a cause, then boosting growth expectations would be an… and government spending more money and producing more public debt is not going to boost growth expectations now after failing to do so for the 3 lost decades.

Different (genuine) pro-growth policy could well produce different results.

Greed

Where can I see the greed in Japan, where according to you wages have been suppressed, whereas in the US (known as a greedy place normally) you observe wages have been rising?

It doesn’t add up if you ask me, but I take it you think the Abenomics, Kishidanomics mix is finally on the verge of success…

I have it that wage rises in the US, where greed is often good (but elsewhere too), are a result of a more normally functioning economy. Wage rises do not cause economic growth. Wages are but a price. Manipulating prices does not facilitate economic growth, but stifles it.