politics

Cabinet approves massive Y20 tril stimulus budget

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48 Comments
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That's it! Spend your way out of recession! It worked in the U.S.!

Wait a minute...

3 ( +6 / -3 )

Time to buy a smaller wallet!

0 ( +2 / -2 )

more money for their traditional construction industry buddies to build more white elephants??

0 ( +4 / -4 )

Obamanomics in Japan.... who would have thunk. Time to close your yen accounts and move the money to one of the few places where governments have not bought into this insanity.

-6 ( +4 / -10 )

Every time I read "stimulus package" I can't help but think of my taxes being raised. What's the point? REALLY! What's the point?

0 ( +4 / -4 )

The mother of all pork barells is here....all except the little taxpayer aboard!

0 ( +2 / -2 )

"About 5 trillion yen would be earmarked for public works projects, with some 1.6 trillion yen for reconstruction in areas hit by the 2011 earthquake-tsunami disaster, reports said, as post-Fukushima Japan struggles to cement a recovery."

Once again, the priorities!

4 ( +7 / -3 )

They tax us more and then hand most of this extra money over to friendly corporations. Big business and big government in partnership to screw the common worker.

4 ( +4 / -0 )

@WilliB

Obamanomics in Japan.

Closer to Reaganomics, especially with the intended military build up, but maybe there is no difference between them all, which is just about how to abuse government for a giant shift of wealth upwards as part of the extractive economy.

1 ( +2 / -1 )

Risky option? Yes. Avoidable option? Probably not. Key is to make sure this breeds enough optimism in investor and consumer sentiment and gets the positive spiral rolling otherwise the risks may prevail. As with everything else in life positive thinking to bring courage and drive actions is a critical starting point for anything to become successful.

2 ( +3 / -1 )

I sincerely feel sorry for my great-grandchildren because they are the one's who are going to end up having to pay for all this debt.

It's always too easy for politicians to spend other people's money.

1 ( +4 / -3 )

@willib

in what way is this obamanomics?

this is exactly what a majority of advanced economies would do and that is to direct money towards infrastructure projects. reinforcing schools and hospitals for earthquakes, putting electrical wires underground and hooking up more homes with the internet are all good investments if you ask me.

4 ( +7 / -3 )

I actually don't have a problem with massive stimulus, as long as it's done right and the effects are lasting. Everyone's skeptical I know, but the country's at the point where something big has to be done. Restructuring the government and cutting the budget (both badly needed of course) has to come later.

1 ( +3 / -2 )

warispeace: Believe they are quite different, key difference being Reagan sought to tackle inflation through strengthening the supply side whereas Abe is trying to create inflation through strengthening the demand side. Similarity may be in corporate tax cuts, which Abe is yet to address in specific detail.

1 ( +2 / -1 )

Dear Prime Minister Abe,

I hope this letter finds you well in our midwinter season.

Congratulations on your recent electoral success. You certainly showed up the opposition, confirming that you're slightly less unpopular than them. Well done.

I wish to make one request. As I have never been fond of elephants nor or the color white, could you please make mine pink and a unicorn.

Respectfully,

A taxpaying plesiosaur

3 ( +6 / -3 )

Japan' s not in recession. japan produces for the western leech nations and inferior Asian nations

-10 ( +1 / -11 )

some 1.6 trillion yen for reconstruction in areas hit by the 2011 earthquake-tsunami disaster*

8% to go to the place that needs it. The rest goes to splashing concrete about in places already metres deep in the stuff.

Will electrical cables be buried, to make "beautiful japan" less of an eyesore? Of course not. We'll get dozens of new, empty, "cultural centres" and plenty of big bills to pay.

On the plus side, the hostess clubs in Ginza are soon going to see business pick up from the lads in Nagatacho and their buddies.

2 ( +6 / -4 )

I don't think ¥1.6 trillion for the reconstruction of Tohoku sounds enough, and how long before it actually reaches the area and how long before the 350,000 living in temporary shelters can really start to rebuild their lives, like the couple mentioned in this article, http://ajw.asahi.com/article/0311disaster/life_and_death/AJ201212110036

How much of it will be diverted into the pockets of construction companies without producing any real results for those who need it?

We'll soon reach the second anniversary of the 3/11 disasters with very little progress on all fronts.

2 ( +4 / -2 )

LDP politicians will be looking forward to huge paybacks from the construction companies pretty soon.

2 ( +4 / -2 )

These professional paper shufflers really do believe it is still 1962, don't they? Japan should change it's tacky "Yokoso Japan" slogan to "Japan - More of the Same", 'cause that's what this country seem to be about. There is nothing truly inventive or progressive going on in Japan. Nobel prize winners all work in the US, nothing envirometally ezciting is going on, even the tech industry, once led by Sony is producing nothing of interest.

Instead it is the same, tired scheme: Stimulus. And the Japanese people seem to swallow it all. Or not care. Both are equally depressing. Seems to me Japan nurtures the impossible dream of being the masters of Asia but always ends up looking like a country who dreams of the (passed) golden days.

3 ( +5 / -2 )

I sincerely feel sorry for my great-grandchildren because they are the one's who are going to end up having to pay for all this debt. It's always too easy for politicians to spend other people's money.

its how politicians get elected, promise to spend money they don't have. but don't worry about your grandchildren. the government will just print money to pay off its debt. too bad it won't be worth anything...but hey, we paid what we said we would pay! they people that will be hurt are people on a pension.

2 ( +2 / -0 )

I feel very bad for the middle income families of Japan. This is the day the middle income families of Japan have lost. What a wonderful story the LDP has not telling you that they will stimulate economy at expense of ordinary people to help the top. This is a social injustice of Japan. What a great country.

0 ( +2 / -2 )

at least the status quo government policy is changing. this trickle down economic plan is more like Reagan than Obama. In Japan's case this is exactly what the economy needs.

-1 ( +0 / -1 )

also, the middle class will benefit from this. who do you think all of these companies that will get government contracts employ? the middle class. matter of fact, 85% of Japan's population is middle class.

government projects mean companies thrive, higher bonuses and more cash pumped into the economy by consumers. THAT is what Japans economy needs the most right now is a fresh cash enema up its butt.

-2 ( +1 / -3 )

Oh deary me! Hear is another huge amount added to the debt of the next PM in a few months. I see new cars for all the LDP members over the next few weeks.

-1 ( +1 / -2 )

this is NOT trickle down economics: http://en.wikipedia.org/wiki/Trickle-down_economics

if anything, it's more keynesian, whereby the gov't is actively pursuing monetary and fiscal policies to stimulate the economy.

2 ( +2 / -0 )

in what way is this obamanomics?

this is exactly what a majority of advanced economies would do and that is to direct money towards infrastructure projects. reinforcing schools and hospitals for earthquakes

how about building schools ans hospitals that work. not just more of them. Quality not quantity aye?

4 ( +5 / -1 )

where he said the new measures were intended to add 2% to Japan’s economic growth and contribute 600,000 new jobs.

It better, because if the economy doesn't grow and create new jobs, to generate increased tax revenues, all this spending is just going to add trillions more to Japan's already staggering debt level. This kind of stimulus from the LDP has not worked for at least two decades, so let's hope this one is different.

0 ( +0 / -0 )

my great-grandchildren ...are the one's who are going to end up having to pay for all this debt.

Not really. Abe said he wants to float "construction bonds" to pay for the projects. Nearly all of those bonds would be bought by investors, mostly Japanese institutional investors like the pension funds. Thus, your great-grandchildren could be RECEIVING their pensions from the money, not have it taken away from them.

2 ( +5 / -3 )

DebuchoJan. 11, 2013 - 11:32AM JST

who do you think all of these companies that will get government contracts employ? the middle class.

The construction companies. I hardly call them middle class and the ones I know border on the criminal class.

matter of fact, 85% of Japan's population is middle class.

One of the great urban myths sprouted by the Japanese who've never seen a real middle class and Japanophiles who've never ventured outside of their Hiroo and Roppongi bubbles. I don't know where you're from but the middle class in my country don't live in rabbit hutches and have a certain quality of life which is only open to a very few in Japan

government projects mean companies thrive, higher bonuses and more cash pumped into the economy by consumers. THAT is what Japans economy needs the most right now is a fresh cash enema up its butt.

Again you seem to be completely devoid of any real knowledge of Japan. The last time this was tried in the 2000 - 2006 period the trickle down effect, in terms of bigger salaries and bonuses, did not happen. The companies. including Sharp, kept the profits. The simple truth is that Japan does not have an effective muscular labor movement to compel companies to allow more of their workers to feed from the table of profit and the companies are well aware that that this package will be a short economic high. Therefore they will store away the profits for the oncoming rainy days, rather than pay their workers higher bonusesand salaries.

What the Japanese economy really needs, rather than this government directed expenditure is a complete economic and social restructuring so that the Japanese public consume more of what they manufacture and manufacture less of what they've been manufacturing for the last 30 years.

-1 ( +3 / -4 )

Again you seem to be completely devoid of any real knowledge of Japan. Then I guess my 20 years working in corporate Japan were for not!

they will store away the profits for the oncoming rainy days, rather than pay their workers higher bonusesand salaries. I work for the 25th largest corporation in Japan and our bonus was huge last year in part to the slowly recovering economy. Does the Japanese company you work for go about like this? Or do you not work for one?

What the Japanese economy really needs, rather than this government directed expenditure is a complete economic and social restructuring so that the Japanese public consume more of what they manufacture and manufacture less of what they've been manufacturing for the last 30 years. Actually the Japanese buy what they manufacture more than most other developed countries. What they need is exactly what Abe is doing to boost exports.

-2 ( +0 / -2 )

So trillion on this, a raise in the defence budget and our taxes are being raised to pay for Fukushima even though half of the money hasn't gone to the area? Where exactly is Abe planning on getting this money from? Surely he won't back his cronies salaries so it is health care, pension, education?? What?

More roads to no where, more yakuza making money, more politicians lining their pockets. Japan, their own worst enemy is... themselves.

0 ( +2 / -2 )

Dog,

One of the great urban myths sprouted by the Japanese who've never seen a real middle class and Japanophiles who've never ventured outside of their Hiroo and Roppongi bubbles. I don't know where you're from but the middle class in my country don't live in rabbit hutches and have a certain quality of life which is only open to a very few in Japan

Very well put.

I, too would agree that spurting out trampled myths about majority of Japanese being middle class is BS. Look at how people live. Cramped, unisulated buildings, mass produced by conglomerates to make as much money as possible by using the very cheapest materials they can find. True, Japanese own a lot stuff, like TV's, cars, brand bags, but to be middle class involves more than just owning stuff. And what about work conditions? That is not middle class. More like serfdom.

5 ( +6 / -1 )

DebuchoJan. 11, 2013 - 12:42PM JST

Actually the Japanese buy what they manufacture more than most other developed countries. What they need is exactly what Abe is doing to boost exports.

Well actually they don't buy enough, otherwise Abe wouldn't have to try this 'begger thy neighbour policy' to get Japan out of its fiscal and economic mess.

Japan is still the biggest creditor nation in the world and runs a current account surplus every year. Yet it can't get its economic and fiscal policy in order and the only way forward, as far as Abe is concerned, is to impoverish the manufacturing potential of other nations, who are running current account deficits.

Japan's economic and fiscal problems are not the problems of others, they have their own, and really Abe is a pretty stupid man if he believes that the developed world are going to allow a repeat of the 2000 - 2007 cheap Yen policy.

Kozumi's government then, of which Abe was a member, had promised that with the breathing space of a cheap yen and increased exports that would follow, they would implement the structural reforms needed for a future Japan to economically stand on tits own feet. They renaged on that agreement and just carried on with the same old mercantilist policy of stifling domestic consumption and maximizing manufacturing for the export market.

Abe is offering the same promise, but this time the developed world is not going to allow it.

3 ( +4 / -1 )

Japan launched a number of "stimulus packages" during the last two decades. Did it work? No. So why would it work this time? Japan is the perfect example of bad political policies: massive Keynesian stumulus, protectionist policies, crony capitalism (instead of free market competition), strong bureaucracy, no reform.

2 ( +3 / -1 )

I, too would agree that spurting out trampled myths about majority of Japanese being middle class is BS.

Dog and Knox,

I feel the same about the middle income BS. The J. govt has successfully created the illusion (propaganda) that 85% are in the middle income. LOL. They never live (really LIVE) abroad to compare. This reminds me a short tale of Emperor's New Cloths. Japanese in the middle income people are the last one to know they are not in the middle class. They are in the lower middle class to poverty level.

3 ( +4 / -1 )

Guillaume VarèsJan. 11, 2013 - 01:36PM JST

massive Keynesian stumulus, protectionist policies, crony capitalism (instead of free market competition), strong bureaucracy, no reform.

Why don't you go and do some basic research on Keynesian economics? You might discover that what Abe is doing has nothing to do with Keynes. Keynes talked about government fiscal policy as being an instrument to aid an economy, when the private eneterprise was not able to. His model was a public rehousing policy for South London.

In layman's terms, so you don't get confused, Keynes observed that the substandard housing and poverty of South Londoners would never be remedied by the private sector. He proposed that the state, through public expenditure on housing, should inject a feel good factor into the South London economy and at the same time stimuate jobs and services (building jobs in the construction of the house, service jobs in retail to cater for the newly housed residents and manufacturing jobs through the furnishing by the new residents of their place of residence). Keynes never ever talked about specific areas of an economy getting a hand up from public expenditure, but the economy as whole benefits from public expenditure.

Now Abe, nor any of those before him, have ever followed the basics of Keynes principles for public expenditure. Sure the bears of Hokkaido have a more trouble free rummage on those roads to nowhere and an exhausted seagull or two can take a mid-flight rest between islands on one of those newly constructed bridges, but the public expenditure of the government since Hosegawa has never been geared to injecting a feelgood factor into the Japanese populace. The majority of Japanese still live on top of each other in their cramped sub standard housing and struggling through the day's daily toils with millions of others at exactly the same time; whether it's going to work or taking a holiday.

Neither have Abe or those before him ever followed the larger principles of Keynesian public expenditure that public expenditure should benefit the economy as a whole, rather than just sectors. Abe's stimulus packages benefit very specific sectors of the Japanese economy, but does very little for the Japanese economy as a whole. Look at the difference between Obama's bailout of GM and the Japanese government bailout of JAL. If you can see the difference, then you will understand why one is following a genuine Keynesian principle and the other is following corrupt self interest.

And please don't blab on about the virtues of free market competition. Incase you've forgot, it was the unregulated world of free market banking that got us into this present mess.

2 ( +4 / -2 )

The money has always been available as interest rates have always been low. Small to medium enterprise are not keen on borrowing to spend on a shrinking market here and is simatenously frankly afraid to move overseas to expanding markets. All that stimulus will go to construction unfortunately.

2 ( +2 / -0 )

Friendly election backers line A, friendly construction corporations line B, friendly energy boards line C, and hush hush dudes in glasses line D

0 ( +0 / -0 )

Let's talk about so called the middle income of Japan.

First raise your hand if you believe you are in the middle class. If your answer is YES, then proceed.

1)Have you ever gone to a major hospital waiting more than an hour before your name is finally called to be seen?

2)Have you ever been told that 90% inpatient available rooms are "private or semi private" and you need to come up with at least 20,000 yen/day in addition to national health care coverage? If you are not willing to pay any additional cost, then you are forced to take a room with several other patients? Often it is always full.

3)How long did it take for you to get a MRI test done because there are too many patients waiting ahead of you? A week or a month?

4) How many senior citizens do you know who cannot take care of themselves and there are not enough professional assisted living facilities?

5) How many major competent hospitals (not clinic) available for you within 30 minutes?

6) How many times were you told that the medication is not covered by the government health insurance?

7) How often do you go out to coffee shop on weekends to find your own space as the house is too small?

8) How often do you stay overtime to accomplish the task? None, once a week or everyday? Did your company invest to help you succeed?

9) How much time do you spend for commuting to work every day? Less than 30 minutes?

10) You pays for tall fee for conjested traffic and missed appointments?

What I am saying here is a foundamental structural change in society and economy that is overdue. You all need to produce something what you need within Japan. You have enough market to stimulate economy without even exporting. I hope you see my points. Go big for the fundamental economic and social changes of Japan.

0 ( +1 / -1 )

If only we could go back to the 80s when we had U.S. President Reagan, Prime Minister Nakasone, zero percent consumption tax, a dollar bought over 240 yen, and both economies were booming...

0 ( +1 / -1 )

Ahhh more crummy concrete...

@Dog

Good post!

1 ( +1 / -0 )

SerranoJan. 11, 2013 - 08:30PM JST

If only we could go back to the 80s when we had U.S. President Reagan, Prime Minister Nakasone, zero percent consumption tax, a dollar bought over 240 yen, and both economies were booming...

What you are talking here is a supply side economics that failed both US and Japan. We are dealing with the mess as we did not deal with it head-on (demand side). What Japan needs today is a foundamental structural change in economy and society that is what Dog and I have been advocating on JT.

The true GDP is a summation of Consumption Spending, Investment Spending, (Export Trade Surplus - Import Trade Expenditures), and if this is not fully utilized successfully, then add Government Spending to shift the curve to uptrend. The Government Spending ONLY needs to be used when everything else failed. Japan has been using this trick too casually and too often without even trying any fundamental changes that's one of the reason your debt ratio over GDP is over 240% and you are only heading to distruction with no budget balancing act in place. .

1 ( +1 / -0 )

Dog,

Very good post on Keynesian how it should be applied as I posted above. Japan has been using Keynesian too often, too casually just like flying a Kite baloon without any structural reforms in the past. Now the same Kite baloon has a big hole and no air to fly. This so called stimulus package is heading to more debts and distruction without balancing budget act at the end beyond repair.

1 ( +1 / -0 )

Good news. The stimulus should work well for Japan. The reason it did not work in the USA and much of Europe is that people dont want to work anymore and they expected a magical fix. A Stimulus only works of the people of the society are wiling to contribute their own efforts..and not just expect the government to do it all for them. In Japan i am very hopeful it will for that reason work and work well. Good move.

-4 ( +0 / -4 )

CrisGerSanJan. 12, 2013 - 04:11AM JST

Good news. The stimulus should work well for Japan. The reason it did not work in the USA and much of Europe is that people dont want to work anymore and they expected a magical fix. A Stimulus only works of the people of the society are wiling to contribute their own efforts..and not just expect the government to do it all for them. In Japan i am very hopeful it will for that reason work and work well. Good move.

The US productivity is No 1 yet it failed. It is nothing to do with hard working people.It is a failing policy.The kite baloon has a big hole with no air no wind to take off. If the foundamental is not fixed, you are heading to the bust beyond repair. Good luck.

1 ( +1 / -0 )

The reason it did not work in the USA...is that people dont want to work anymore

LOL! American workers are among the world's most productive. Japanese workers are much less productive, around the same level as Spain's. Time for a reality check, buddy.

4 ( +5 / -1 )

China is delusional. China is sick. Its take on reality is paranoid. I hope to God it is only the government of China that is sick in this way and not its people. I cannot imagine a quarter of humanity believing what the Chinese government is spewing as fact, as the way it understands reality. Please, God, make it just be the CCP that is delusional, not the Chinese people.

1 ( +1 / -0 )

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