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Japan should push back if Trump takes 'wrong' economic policies: Abe adviser

By Kaori Kaneko and Sumio Ito

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'Hamada, an architect of the Bank of Japan’s massive money-printing aimed at ending decades of deflation, now emphasises spending and lower taxes to spur growth.'

And what did Mr Hamada emphasize before?

Was it reckless loans to encourage land sales or was it the policy of granting inter generational house loans that forced the Japanese to bring up their children in a 1 or 2ldk?

And what should the Japanese waste their money on now to achieve 'growth' ?

How about building care homes?

One every 5 blocks?

2 ( +3 / -1 )

Why don't Mr Hamada and Mr Abe go to Washington and explain economics to Mr Trump?

After the brilliant success of Abenomics, I'm sure he'd be eager to learn!

6 ( +9 / -3 )

Maybe they could have picked a better picture. This guy looks like he just woke up on a park bench. At least fix your collar, sir!

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Abe could relax his timetable for balancing the budget in the next four years and should be ready to further delay a planned sales-tax hike

There is zero chance of the budget being balanced in the next four years as the LDP much prefer to spend money like drunken sailors. Similarly, Abe will never raise the consumption tax whilst he is in power as he doesn't have the courage to do so (plus Abenomics has failed and the economy is too weak).

6 ( +6 / -0 )

Japan took the "wrong" policies for 30 years during the postwar era, and ended up with an economy that was the envy of the world.

-4 ( +1 / -5 )

Maybe they could have picked a better picture.

He's modelling his Japanese version of the Trump 'do. I think he looks much better than the original.

1 ( +3 / -2 )

"Wrong economics, meet Abenomics."

2 ( +3 / -1 )

Why doesn't this clown take a hint and lower tariffs on his own. Get us some cheap and tasty butter from New Zealand, America and Canada.

2 ( +5 / -3 )

It wasn't the policies that gave Japan its growth. It was the outsiders in the Japanese economy- Toyota and others who followed the practices that were derived from overseas but not used overseas. Now Japan is following back to its old ways and growth is following with it. It was also buying growth from future to the present but it can't keep going.

-4 ( +1 / -5 )

Cut corporate taxes? Hmm, I'm guessing that would be countered with a big rise in income/pension tax?

-1 ( +1 / -2 )

Ha ha ha ha ha ha! The current system is what's wrong and broken. Time to make some major corrections!

1 ( +2 / -1 )

Japan took the "wrong" policies for 30 years during the postwar era, and ended up with an economy that was the envy of the world.

Ah yes, decades of currency manipulation, and getting low or zero tariffs from America (while not returning the favor). Unfortunately, the former is now not legal, and the latter looks about to change.

4 ( +6 / -2 )

So after reading this lengthy article, it has become my understanding that Japan's only way of "pushing back" is to tell Trump to listen to his advisers and delaying a tax hike for their own people........daaamn, take it easy!

“If the United States were to be led by a near-autocrat and if Japan cooperates just to please him, that would break the whole world system,” he said.

One, that's always been the case, and in fact, it is the whole world's system. Two, Japan can be labelled as a near-autocrat too, more so than the US.

1 ( +2 / -1 )

Not a fan of Trump however Japan has been run by generally the same people/type of people for the past several decades and its performance has been abysmal. Thus Hamada-san really has no room to talk.

I really like Japan and like to be here. I like the people and I enjoy doing business here. However the complete lack of common sense leadership at the higher levels in Japan's government and some of the larger corporations is both frightening and saddening.

The problem that has put Japan in this condition are old out of touch politicians/appointees such as Koichi Hamada.

Like Trump or not, these clowns would be better off keeping their mouths closed about this specific issue and and focus on fixing Japan's own systemic and entrenched problems. The best thing a lot of these old politicians can do is get out of the way and allow some fresh ideas to take develop and take hold. I work with alot of engineers and businesses which are medium to large size companies that compete globally in the technical arena and I have no doubt Japan has capable people....Japan would be well served if some of these people took on national leadership roles. It would also be interesting to see how Tokyo Governor Koike-san would perform if put in a position of national leadership.

Expanding on what PBot said...Japan is much more autocratic than the U.S. and likely much more than what Trump could potentially be.

0 ( +3 / -3 )

ldp have been sucking up to america since the 50s i dont see them changing. they will just be usas battered girlfriend.

0 ( +0 / -0 )

It's not like Japan can threaten American imports, as these are already so restricted that any further regulation would be unnoticed by the American economy.. Japan can try to dump it's holdings of US debt, but this would only weaken the dollar and strengthen the yen. This would only help America and harm Japan.

Unfortunately for Japan, it's trade deals with America have been so one-sided that there is really nothing they can do to forestall or retaliate against America. They can threaten to make a deal with China, but China will never allow any treaty which gives Japan the advantages which Japan has with America.

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Hamada is one of the clowns who put Japan in the economic position it's in. He's right about Trump being a failure in business, and that his economics are wrong, but what he expects is for Japan to be an exception to any border taxes, and that would suddenly be the "right economics".

Japan is screwed either way -- they either have to kiss Trump's butt and give in to everything he demands, or defy him and face massive penalties. There really isn't much damage they could do back, since they already still keep stiff tariffs on many US imports.

-4 ( +1 / -5 )

On Japan’s economy, Hamada stressed growth over austerity,

That could be acceptable, but Japan's economic growth rate has continued to be pathetic under Hamada's advice. After more than 4 years of Abenomics there is still no sign of growth boosting "3rd arrow" reforms.

If these guys want to push back fixing the budget mess in the name of boosting growth, they had better actually produce growth, or resign when it is obvious that they've failed (e.g. already).

“There is no need for Japan to follow such a strict timeframe,” Hamada said.

They gave themselves more than a decade so far to meet the modest goal of a balanced primary budget (doesn't include debt service costs, and the central bank has manipulated interest rates lower anyway), even though they've pushed it back to 2020. It's only "strict" now in 2017 because they've squandered so many years away already with little achieved.

“Under the changing world situation, it’s good for the world too if the Japanese live an affluent life and buy goods from abroad, instead of just attaining the government balance.”

Back in reality, lots of Japanese people have fears about their future and want to save money as a result. And the government has ridiculously high tariffs on some goods from abroad that precludes Japanese consumers from behaving affluently. The government needs to implement policies that address these issues, but instead they do almost nothing and focus the meagre efforts on currency manipulation via money printing exercises.

Abe has twice delayed the second promised tax hike after the first increase, from 5% in April 2014, tipped the world’s third-biggest economy into a recession from which it is only now crawling out.

Typical. The currency dropped in value by way more than 3% due to Abenomics, but the 3% consumption tax hike is blamed for Japan's poor economic performance. And despite delaying the next tax hike twice, Japan's growth hasn't picked up anyway. It's clear to me that Japan's poor economic growth record has little to do with the 3% consumption tax hike.

“If it moves 7 yen or 8 yen a day, I think the government should intervene to punish speculators,” Hamada said.

Silly idea. If the yen moves that much in a day then something would have happened to prompt it. If it weren't for speculators such moves would be even bigger. A lack of liquidity is the biggest culprit behind volatility. The moves go in one direction when everyone wants to buy or sell and no one is there to take the other side. You want speculators to be there to take the other side, no one else is going to risk their money doing so.

0 ( +1 / -1 )

Koichi Hamada, emeritus professor of economics at Yale University and cabinet adviser,

The problem with such academic economists is that they live in a world of paper and numbers, and not the real world. Economics is fundamentally a form of common sense which one does not need a degree to understand. To be economical is to be efficient, to get the most effect for the least amount of effort.

But people like Hamada repackage economics into a highly specialized science which needs priests like himself to deliver to politicians and the public. If he is a professor of economics at Yale, and he gives such advice, I'll make sure my kids don't become students of his.

“There is some danger if he bases his decisions on wrong economics without listening to good advisers, and if he thinks that he could manage national economic matters as he does his real-estate company,”

This is stupid. Trump's real estate business is far more related to real economics than Hamada's theories. Business in the private sector know all about the principles of economics, far more than politicians, and worlds more than professors of the subject like Hamada, who could not run a lemonade stand without losing his shirt.

that would break the whole world system,

The "whole world system" is already broken, and the likes of Hamada bear a lot of responsibility for it being so. If this weren't the case, Trump would never have been elected.

The prime minister has promised to achieve a budget surplus, excluding interest payments on debt, in the fiscal year to March 2021, a commitment Finance Minister Taro Aso reiterated.

I don't think the Olympics is going to create enough activity to create a surplus, which is what Aso is counting on. And what happens after 2021? An accelerated decline, that is what.

“Under the changing world situation, it’s good for the world too if the Japanese live an affluent life and buy goods from abroad, instead of just attaining the government balance.”

I can live an affluent style in the way the government is by going on a shopping spree with my credit cards. I'll have a bit of fun for awhile, at least until the bills come due. Then, not only do I owe all that I have borrowed, i have to pay whatever fees and interest accrued.

And unless the government somehow attains a balance, the value of the currency falls out of market control, as do interest rates. This causes prices for goods, labor, and credit to move outside their natural value, resulting in bubbles, and collapses.

“If it moves 7 yen or 8 yen a day, I think the government should intervene to punish speculators,”

If the government does this, the yen is essentially destroyed. The money belongs to the people, not the state, contrary to what professor emeritus Hamada says, and though the market may be fooled or swayed, it can never be defied. The harder it is pushed by Abe and Aso, the harder it is going to push back.

If it comes to a fight, Trump is holding a howitzer, and Abe is holding a piece of overcooked spaghetti.

4 ( +4 / -0 )

As Trump is so unpredictable it is better to be prepared.

0 ( +0 / -0 )

There is a misunderstanding among politicians that if something does not suit or meet the expectations of or the ideals of one group, that any action or thinking by another is "wrong" or "bad" or even "irresponsible". Trump is a leader for his country and he is looking out for his country. Trump is NOT obligated nor responsible directly to answer to and satisfy any other nation than his own. Who is to "judge" the leader of another country based upon one's own desired or expected course of action. China and Russia is doing exactly the same. Trump's actions just started and there are no direct effects or results yet. Brexit too still have not been felt by the rest of the world yet. Both China's and Russia's action have shown its effects and the results are there to evaluate.

All leaders as with all corporations and people domestic and foreign must "deal" with any changes made by any foreign government, corporation or people by facing that change. USA is doing exactly what all nations worldwide would do if they faced a situation where they must change and adjust their position with regards to the world. Japan is not a part of the USA nor is it a dependent of the USA.

Japan too as with all other nations have manipulated or used such international agreements to favor themselves. So find ways to deal with it. It is Japan's problem.

Japan's internal problems economically probably has more to do with misuse of taxes and excessive social benefits with declining working population and not so much with trade.

The fact is that most nations have gotten the idea that trade is to get money (profit) from other nations to make one's country better at the expense of other countries. There was a time when trade meant, selling what was "extra", a "surplus" or items that was not needed to get what was needed. Trump is doing exactly that for his country.

The thing is "Free trade" does not necessarily mean "Fair" trade. That is in the eyes of those who "profit" and not necessarily of those who "benefit."

-3 ( +2 / -5 )

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