politics

Japan trade slowdown highlights growth challenge for Abe

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Abe has done absolutely nothing for the Japanese economy, other than push "easy money" and a "weak yen". Can anyone name anything of substance he has done to improve the fundamental underpinnings of the economy??

But, hey, its all good. He will get his security bill through, which is what is really important to the Japanese people and why they elected him in the first place! Right??

6 ( +7 / -1 )

Japan is the developed world’s most indebted country, with debt more than two times the size of its economic output.

And Japan is also the world's largest creditor nation, but of course that doesn't fit the narrative so is left out.

Abe’s stewardship of the economy took a blow when Standard & Poor’s on Wednesday downgraded its sovereign credit rating on Japan, and took a swipe at the government.

Yawn. Credit ratings for any currency issuing sovereign government, Japan included, are irrelevant and have no importance at all. Just more hot air from the clowns at S&P.

-4 ( +4 / -8 )

They have done a few good things with the pension fund portfolio rebalancing away from increasingly risky JGBs and corporate governance improvement measures, but this is not even 10% of the reforms they should have made.

Looks like they thought all would be rosy if just the currency were weaker and real interest rates lower. Big fail.

And so the blame is placed on China and the bad weather.

0 ( +2 / -2 )

Probably counting on tourism and defense sector; they should and Im guessing eventuallywill have to, focus on domestic consumption. Can only produce and buy from yourself for so long as the demographic ages with limited buying power. As most things in Japan are made in japan and purchased by Japanese, I cant see how thats sustainable long term. A large immigrant community and a much more open market would help turn things around, but we all know that will never happen, as their is no social infrastructure in place to transistion. Its not a paradigm of "come live with us and help our economy grow" its more like the old tired paradigm of "come help us grow abroad then leave" I dont think the folks at S&P are clowns at all, its the people who ignore the writing on the wall that are clowning away at Japans future. People have money saved up to spend, but due to a very limited domestically produced selection and overpricing, they choose to live like paranoid hermits, in their holes with garbage piled up all around them, waiting and gaman for that special time that will never come again. There are no easy solutions as a flood of cheap imports would remove many domestic producers, but eventually wont they disappear anyway? Protectionism can only exisit for so long as demand slowly disappears. I dont think its a 100% goverrnment problem, its a japanese problem. This is not to be critical of Japan, as they are watching the immigration problem around the world and how it has been grossly mishandled. Im just always curious as to what the Japan solution will be; so far I havent seen any substance.

8 ( +9 / -1 )

Abe has for more than two years pushed a huge spending blitz and monetary easing drive—called “Abenomics”—to inject life into the moribund economy and reverse almost two decades of deflation.

When he started this 2-3 years ago, economists said that this would be the easy part.

But he is struggling to make good on his pledges to cut red tape and open up the economy—a so-called third arrow of his plan

They said that too.

He hasn't helped the economy one bit. The purchasing power of the Japanese public is even further diminished thanks to this insane Ahonomics.

5 ( +6 / -1 )

And Japan is also the world's largest creditor nation, but of course that doesn't fit the narrative so is left out.

It's a mystery isn't it? Twenty one straight years.

1 ( +4 / -3 )

GDP growth is impossible for a country with a shrinking and aging population base. Time to reconsider how to measure social betterment and aim for other goals, such as equity and free time for creative pursuits.

0 ( +3 / -3 )

@nigelboy Yes, a mystery indeed. Especially as we have been learning from the media for all those 21 years that Japan is a "basket case". But as always with economics, if something is happening in the real world doesn't fit with your theory or story, just ignore it. "I don't care if that's how things works in the real world, that's not how things work in my theory!!!"

-2 ( +1 / -3 )

Ive read all the explanations by krugman and others about the need for inflation to get spending to happen, the demography problem etc. I stll feel they are disconnected from the obvious; just come to japan and look around. Protectionsim and blind ideology is king. If there is access to an unlimited supply of imported goods and services, spending would definetly begin to happen, just look at costco in Japan,, they have been making it big even during the reccesion. But the unthinkable would happen, and the very (admit, I cant even begin to understand the complexities of it) complex network of protected industry would disappear. The high wages paid to workers who produce high quality products and high prices due to the mfg to wholesale to retail price step would all disappear. For now it seems to me that people just buy enough from the very controlled market by domestic suppliers to get by; extreme frugality. You can only buy this product from this domestic supplier, get this service from this provider, and thats that.

2 ( +4 / -2 )

And Japan is also the world's largest creditor nation, but of course that doesn't fit the narrative so is left out.

And this is the only reason that Japan remains solvent. Eventually, the balance of Japan's domestic debt will negate the value of their foreign debt holdings, making Japan's "creditor nation" status irrelevant.

3 ( +4 / -1 )

As most things in Japan are made in japan

I would dispute this. Do a survey of your home, I'd bet you find a majority of "Made in China" tags. Big stores like Nitori import a lot of Chinese crap and charge way too much.

4 ( +5 / -1 )

Abenomics has failed and more BOJ stimulus won't work; all it does is inflate asset prices. Measures are needed to increase job security and wages so that people will feel able to spend again, but Abe is doing the opposite.

2 ( +2 / -0 )

Japan's inward looking had caused self inflicted deflations to the economy. the internet changed the economic formula by making things cheaper, and an aging demography with fewer and fewer productive workers who can actually innovate and challenge orthodoxy. So long as they continue the superior and unfriendly card with the outside, the declining is quite reasonable.

1 ( +1 / -0 )

They should hire an economics university graduate. Lol

1 ( +2 / -1 )

Japan is also the world's largest creditor nation

It's a mystery isn't it?

It's no mystery, because that doesn't make things much better.

That statistic refers to Japan the nation including not only government, but also businesses and individuals, whereas the sovereign credit rating applies to the Japanese government.

Thus the statistic is only worth as much to Japan's credit rating as the government is capable of confiscating those assets (it already attempts to tax them).

Even if it were able to go to the extreme of completely confiscating those assets, there are only approx 360 trillion yen's worth. That's less than a third of total public debt, which as we all know exceeds 1 quadrillion yen.

So confiscating the assets would enable the government to bring the debt level down, but in the absence of fiscal consolidation, the government's position would just head back in the wrong direction again (and things would get worse too, due to the asset confiscation itself).

0 ( +1 / -1 )

Big stores like Nitori import a lot of Chinese crap and charge way too much.

But these stores are Japanese, aren't they? Their share of the sales of their junk is higher than what the maker's is.

And these companies do charge too much, because all companies in Japan charge too much. They have to because for the most part, their companies are bloated and inefficient, and their margins are low. Regulations are cumbersome and time consuming, overhead costs are high. Abenomics' "third arrow" was to have addressed these problems, but as well all know, this third arrow doesn't exist, and was probably never intended to exist in the first place.

3 ( +5 / -2 )

Nittori is just a spin off of IKEA and a poor one at that. Why you would use Nittori as an example of domestic made products puzzels me; its a DIY store like IKEA, so of course most of their products would be made in China, otherwise they cant pass any value whatsoever to the customer. Its not exactly a retail outlet like other stores that have assembled products. Check cars, bikes, bicycles, machine of any kind in any resturant, hotel factory etc, youll find they are all japanese. Visit any home center and try buying any paint tools etc. Its all Japanese. Take a trip out of the country and visit another retail outlet and see the variety. Almost all of your resturants in japan are japanese chains as well, as well as the equipment inside them. There will be no 3rd arrow, they were betting on China. China is continuing to do poorly, so expect more funky data out of japan.

0 ( +0 / -0 )

That statistic refers to Japan the nation including not only government, but also businesses and individuals, whereas the sovereign credit rating applies to the Japanese government.

Yes. I believe both GJD and I are aware of this.

Even if it were able to go to the extreme of completely confiscating those assets, there are only approx 360 trillion yen's worth. That's less than

Thank you. At least you are now aware that such moves does not help the Japanese economy as a whole so why are you advocating it? You seem to still think that government spending has some sort of negative impact on the economy as a whole as if the government is taking money away from the population.

-1 ( +0 / -1 )

Ya know, what really pisses me off off the most is the 100% jump in wood prices, for example, the 2 by 4's and the 4 by 4's. What's going on. I love doing DIY projects but I haven't took on a project in over a year and now the prices have doubled? Oil is cheaper so I can't understand except for the typical "use a local (yakuza) company" if you need any repairs.

1 ( +1 / -0 )

@FizzBitSep

use a local (yakuza) company" if you need any repairs.

ur so right, trying to do a self build but every architect-designer-builder all send me in the direction of old scar face.

But back on point people aint dum and Japanese are good with money in general, after the Abe printing press went out of control and the yen lost 20-30% of its value what do they think is gonna happen. Interesting thing if you search for gold vs dollar/pound/euro/NTD/ anything over a 5 year period they look similar but check out the yen OUCH!

0 ( +1 / -1 )

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