politics

Lackluster economic data paints gloomy picture for Abe

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Just to maintain inflation around 1% the yen needs to decrease around 10% against the US$ EVERY year. After the election Abe and friends(read Kuroda) should be in charge for another 4 years. Expect the yen to drop to at least 150 at the end of Abe's term. In other words, in 2018 the yen will be at 150 or higher, sales tax at 10%, inflation at 1% with little or no wage growth, indeed a gloomy picture for anyone living in Japan!

8 ( +9 / -1 )

Oh for heaven's sake. He failed once and has failed miserably again. He wants to spend 60 billion yen of OUR MONEY to try to get reelected. This guy doesn't have a clue about basic finance.

Let's get rid of him. You never know, the next guy just MIGHT have some ideas about getting Japan back on the road.

6 ( +8 / -2 )

Gloomy is not the right word. Dark as a sackcloth.

3 ( +5 / -2 )

The yen weakened further after the reading with the dollar at 118.21 yen against 117.74 yen in London on Thursday. Links? Names?

Goldman forecasts 130 by the end of next year, some more aggressive forecasts give 140 at the end of 2015. I think it's pretty much a sure thing that it'll be above 150 when Abe leaves office in 4 years. Some other lackluster economic data that wasn't mentioned in the article is exports not picking up. Sure there's been an increase in October but it's probably just an outlier, not the start of a new trend. Indeed a gloomy picture for Abe.

http://www.cnbc.com/id/102194955#.

http://www.reuters.com/article/2014/11/21/us-markets-forex-goldman-sachs-idUSKCN0J51MM20141121

2 ( +3 / -1 )

Look! Look! The Emperor has no clothes! The king is in the altogether!

1 ( +4 / -3 )

Then: "Japan's Back!!" Abe proudly crows two months ago in the US. Now: "Wish I Could Walk That Back!!" Abe petulantly mutters to himself.

What's next? "Mission Accomplished?"

1 ( +1 / -0 )

The data doesn't look so gloomy. The core inflation rate at 0.9% is not so bad a news for those who don't spend much and are accustomed to live in a modestly small way. Cheap yen gets tourism balance in the black for the first time in decades (Tokyo is awash with Chinese tourists) while the recent plunge in the crude oil prices will reduce the cost of energy imports, a good news for both consumers and industries. This country, though rather down on its luck now, is still something of an industrial nation ranking with Germany. So cheap yen and cheap energy cost, if both come to stay, will improve exports in time. But the problem is that the money the BOJ supplies with its asset-buying program does not actually cause much credit easing in Japan but is invested in the financial market of the US where FRB just ceased its QE after it has allowed "Bad credit no problem" type of spending spree to be occurring again. We had better brace ourselves for another sub-prime loan crisis rather than what the lackluster economy data paints for the immediate future.

1 ( +1 / -0 )

"That created a deflationary spiral that held back wage growth and new hiring as firms capped their expansion plans."

A red herring. The reforms to date have weakened labor unions, and created a new underclass of workers getting lower wages. They dont spend because they dont have much money, and thus the economy goes into its "spiral."

The wage growth is down because companies are devoted record high amounts of the revenues into profits and cash and dividends.

0 ( +3 / -3 )

150 to the dollar is being forecast by everyone now

Links? Names?

0 ( +3 / -3 )

As gloomy as these figure appear, employment accounting for the wage disparity is relatively stable and factory output is holding it's own. Abe's should bless his lucky stars the people of Japan will tolerate the intolerable, except the unacceptable, without fear or favour, complaint or grievance. A society Abe san and the LDP don't deserve. In the Eurozone inflation is at it's lowest level in five years. Eurostat has consumer inflation hoovering precariously at 0.3. With oil prices heading southward the December figure could drop to 0.1. Unemployment hitting 12%, pushing wages to there lowest level in five year, as prices fall, snuffing out factory production, the inevitable political fall out will see public disorder and rioting in the south.

0 ( +0 / -0 )

3 years ago 80 cents, bought a tack load. Now 118. Waiting for 130, off loading and grinning. Turn ou Yen to US dollars or Sterling, or buy solids.

0 ( +2 / -2 )

Yes of course UK9393, hold anything but yen or Russian Roubles! Like everybody else, my money is in US dollars. I don't keep even 1 yen except for daily needs.

0 ( +1 / -1 )

That  RT goldmans link, (grats to CanadianJapan), with it negative currency analysis forecast would signal a full blown currency war. It would export deflation across the Asia Pacific ....

(Apologies for my shameful 1st grade spelling mistakes)

0 ( +0 / -0 )

"with inflation hitting its lowest level in a year,"

This is good for me, being as how my income has not increased one iota whilst everthing I buy went up 3% last April.

0 ( +0 / -0 )

The good news is that PMs are at reasonably low prices (if you can get supply), so a good time to buy for the long term. The bad news is that as the exchange rate goes up you'll pay higher premium. Keeping JPY is a fool's errand. Not that USD or Euro is much better with the oil price war heating up. The future of the USD as the reserve currency is short-lived.

0 ( +0 / -0 )

The IMF working paper below entitled: Japan's corporate income tax: facts, issues and reform options.

Section ii after the intro is entitled, Japan's corporate income tax distortions.

It would tax even the most skilled auditors sanity to sign off any business account. The entire system is designed to confound and confuse in its complexity.....How can any revenue collection service trawl there way though this. Any company could post losses to avoid paying there 'fair share'. Bonkers. .

<www.imf.org/external/pubs/ft/wp/2014/wp14138.pdf>

0 ( +0 / -0 )

Japan's back?? Back in the sewer for sure

0 ( +1 / -1 )

The wage growth is down because companies are devoted record high amounts of the revenues into profits and cash and dividends.

Is it not true that currently 70% of companies registered right now in Japan are classified as "loss-producing"? That means 70% of Japanese companies are not earning any profits, let alone record profits, right? And if more than two-thirds of Japanese companies are reporting a loss every year, they can't really increase wages, can they?

Of the 30% of Japanese companies who earned a profit, what percentage earned "record" profits? And which of the companies which did earn record profits, were they on domestic or intermational sales? Of of those who earned profit on international sales, how much of what they sold was produced in Japan? And if the goods were not produced in Japan, how can Japanese workers get more wages for producing them? And let's not forget that many Japanese companies still have to make up for losses incurred over the last few years. Panasonic's profit this year is 180 billion yen, but they lost 1.5 trillion yen in 2012 and 2013, didn't they? Many other Japanese companies are in the same boat. What do you think Panasonic will do first? Raise salaries? Or pay off their debts? As you have pointed out in the past, the government's debt is "fiscal" debt, but what about the debts of companies?

Wage growth is down because consumption is down, and continues to fall each and every year. With less consumption, there is less demand. When there is less demand, less goods are made. When less goods are made, the labor market reacts by paying less, hiring less, or reducing hours.

Why is consumption down? Because prices are high. Why are prices high? Because tariffs, labor costs, and lack of laws restricting non-competitive business practices drive up prices, not to mention txes and public-sector costs. Your argument that globalisation has harmed the Japanese market is nonsense, because of all developed countries, no other country has protected it's domestic market more than Japan, and as a result, no developed country is in as much financial trouble as Japan. And how many people around the world have been lifted out of poverty by globalisation? About 1.5 billion, right? Tell me which is the greater evil or good.

The overly high cost of living in Japan is the source of deflation and population decline. There is no other cause.

-1 ( +2 / -3 )

"Of the 30% of Japanese companies who earned a profit, what percentage earned "record" profits? And which of the companies which did earn record profits, were they on domestic or intermational sales?"

Profits of Japan's listed companies have returned to pre-2008 levels.

"Is it not true that currently 70% of companies registered right now in Japan are classified as "loss-producing"?"

Yeah, predominately the very small ones, Your factoid ignores scale, making it meaningless.

"Why is consumption down? Because prices are high."

Compare prices of land, food, transport, energy in Tokyo compared to other world capitals, like London, New York, Hong Kong. In many respects, Tokyo is a bargain. Land in Japan's provincial areas may as well be free, it's so cheap.

-1 ( +0 / -1 )

Gloomy and hopeless indeed. Can't see japan being able to attract all these mythical skilled foreign workers it needs. Zero attraction. Unskilled workers such as factory workers, english teachers and cleaners will still rush in, but people that can do something for the country, well, not a chance.

Abe is a very wealthy guy, if he wants to play around with elections, he should pay this 60 billion out of his own pocket for this farce.

150 to the dollar is being forecast by everyone now and so will become a self fulfilling prophecy. But apart from the elder population of Japan, I guess nobody keeps any savings in the laughable yen anymore.

-3 ( +2 / -5 )

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