politics

Once a backer of the BOJ's price target, Abe turns his back on Kuroda

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By Leika Kihara

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@JeffLee

Yes, and that results in a bubble of malinvestment, debt and bad resource allocation of resources. Once the stimulus end, lots of businesses who were created by artificial increase in demand will close off, many others will see their demand decrease, and not be able to pay their loans, many consumers will be left with debts who will chip off their income leaving them with less money to spend, all that and much more will create a mild recession, there will be lots of unemployment, and prices will raise for a while. You cannot seriously believe you can live in an artificial bubble forever. Also, japan did not invent QE, it was pretty much invented by John Maynard Keynes who pushed the idea of funding deficits with debt.

0 ( +0 / -0 )

The yen is not a safe heaven, 

Global investors disagree, that's for sure.

 one of the main reasons for the QE is to maintain a weak yen...

Partly, but mainly to lower borrowing costs for both companies and consumers. The US, Europe and others have been doing it, so Japan isn't unique, although it did invent it.

0 ( +0 / -0 )

QE has been happening for nearly 2 decades and the result has been low to negative price inflation, not to mention and a very stable global "safe haven" currency. How do you explain that?

Consumer prices have risen many times over the last 3 decades, even today, prices are rising, and this is something everyone can feel when shopping. Also, the Japanese yen is pretty much pegged to the dollar, and one of the main reasons for the QE is to maintain a weak yen that benefits the japanese export industry. The yen is not a safe heaven, it is a weak currency kept that way to favor the export industry on the expense of people's purchasing power.

-1 ( +0 / -1 )

JeffLeeToday  05:00 pm JST

@Simon Foston

Abe has made repeated public calls for firms to raise workers wages. I don't know of any other national leader who has been doing this quite as ardently.

Not that it's achieved a whole lot. Talk is cheap.

But I think its time for action: like rescinding the tax cut for highly profitable companies practicing wage suppression.

Exactly. However Abe doesn't seem to be good for much except blue skies talk so I don't expect any action. I suspect too many LDP politicians are scared of taking any measures that would annoy influential friends in the private sector for him to do anything unopposed.

0 ( +0 / -0 )

@Simon Foston

but I've seen no sign of the action

Abe has made repeated public calls for firms to raise workers wages. I don't know of any other national leader who has been doing this quite as ardently. But I think its time for action: like rescinding the tax cut for highly profitable companies practicing wage suppression.

@ThonTaddeo

The 10,000 yen in my pocket buys me about as much as it did 10 or 15 years ago. Less fresh food, but more of other things, like food ingredients, merchandise, clothes and wine, for example. Just visit a Daiso 100 yen store.

Fresh food prices are rising relative to other costs throughout the developed world. Japan isn't unique, and that trend doesn't really say anything about its QE policy. the point is that nearly everyone (not me) sued to say or still say QE would devalue the yen. And nearly everyone (not me) have been proved wrong.

0 ( +0 / -0 )

QE has been happening for nearly 2 decades and the result has been low to negative price inflation,

This might have been true before 2012, but not now. A visit to any supermarket will disabuse you of the idea that there hasn't been inflation. There has, and it's squeezing the working class harder every year.

If anything, it says that the pre-2012 QE was the right level, and the outrageous yen-crushing level of QE since Abe and Kuroda took over is what has been ruinous for the average person.

0 ( +1 / -1 )

JeffLeeToday  09:48 am JST

The govt in a liberal democracy should not be the position of pressuring or dictating wage rises to the private sector. But Japan's govt has found itself in that odd position due to the outrageously greedy - but legal - behavior by employers. They have decided to renege on a social compact. Action is now needed, and the govt is the only one capable of doing so.

Thus far I'd say the government's record of dealing with that outrageously greedy behaviour has been one of conspicuous failure. It's hardly a new problem, but I've seen no sign of the action that is needed or any indication that the Abe administration will do anything about it in the future.

0 ( +0 / -0 )

@ilovecoffe

You cannot keep inflation under control unless you stop the QE. 

QE has been happening for nearly 2 decades and the result has been low to negative price inflation, not to mention and a very stable global "safe haven" currency. How do you explain that?

@Simon Foston

So does that mean the government is also part of the problem because it could be doing more to push employers to raise wages but isn't?

Partly yes, but It's complicated. The govt in a liberal democracy should not be the position of pressuring or dictating wage rises to the private sector. But Japan's govt has found itself in that odd position due to the outrageously greedy - but legal - behavior by employers. They have decided to renege on a social compact. Action is now needed, and the govt is the only one capable of doing so.

0 ( +0 / -0 )

JeffLeeJune 18  08:44 am JST

@Yubaru Kuroda and Abe want businesses to raise wages....

And the businesses refuse, despite their record high profits. So blame them - the ones causing the problem - instead of the people trying to fix the problem.

Right, except that you also said...

June 12  09:27 am JSTPosted in: Gov't aims to create 300,000 regular jobs for people in 30s-40s  See in context

The govt should be nailing the employers. If the employers insist on their wage suppression policies, then the govt should just say, "OK, then, bye-bye corporate tax cut. And goodbye to your procurement contracts as well."

So does that mean the government is also part of the problem because it could be doing more to push employers to raise wages but isn't?

0 ( +0 / -0 )

@JeffLee

3 lost decades, heading for the 4th one, proves that it can't. It's really basic economics. You cannot keep inflation under control unless you stop the QE. QE creates a bubble of malinvestments and debt, which then has to get liquidated and removed from the economy. To do that, you have to stop the QE program, but doing so, would result in a mile recession, which they want to avoid, so they keep the printing press going thereby worsening the problem, as the inflation starts eating your saving, and increases the consumer prices, all that is happening in Japan, and has been happening since at least 30 years. There is very little productivity increases in Japan, which is why wages are not growing, but merely adjusting for the inflation.

0 ( +1 / -1 )

Stimulus measures and QE cannot go forever,

For Japan, actually, it can -- as long as inflation is kept under control.

-1 ( +0 / -1 )

Because deflation has been an on going problem here. Kuroda and Abe want businesses to raise wages, so prices will rise, yet for far too long prices on many products here are artificially kept high already.

There are far too many structural problems with the economy that keep prices artificially high, and deflationary pressures continue, hence part of the reason for the easy money policies, instituted by ABE and not Kuroda!

For whom is deflation a problem?

I don't understand what you're saying. If prices are kept high, how can deflationary pressure continue? If there was a deflationary pressure, prices would be falling.

If the wage increase is a result of productivity increases, the prices will be going down, not up. The Japanese govt. wants to raise wages by raising prices, which they do by increasing the money supply in the economy. Obviously this is not a real wage growth, as any wage growth under these conditions will be merely an adjustment for the inflation with the extra bonus of killing all your savings.

Stimulus measures and QE cannot go forever, it is not a sustainable scheme for obvious reasons. To me it's clear that they don't want to let the bubble burst, which will happen as soon as they stop with the QE program. They are forced to keep doing what they are doing until they can't do it anymore. Unfortunately it is the average Japanese who is suffering, as the standards of living are decreasing.

-1 ( +0 / -1 )

The country should introduce bi-annual big trash days. A day where people can throw just about anything out and have the municipality cart it away for free. 

That would never work. Now, you must buy a ticket and sticker just to have anything big thrown out, and if your caught taking something from the gomi bin, you can be fined, according to the scare posting on every trash cage now. Like anybody watches or cares, but there is a posting. It seems to be a good hustle, the city collects the trash pick up tax, and also gets to sell what it finds

0 ( +0 / -0 )

BOJ : BASE ON JEOPARDY.

0 ( +0 / -0 )

I thought the purpose of the 2% target was to help devalue Japan's massive government debt. If there is deflation and lower salaries the chance of balancing the books becomes ever more difficult, ultimately leading to government insolvency.

1 ( +1 / -0 )

After all the time spent and many lives put in uncertainty, these people found ou. Then they are going for the blame game ???.

0 ( +0 / -0 )

Great pic! Spot on! When Abe speaks, his eyes are open. When someone else speaks, he switches off. Strictly one way!

2 ( +2 / -0 )

@SaikoPhysco

Great post and great idea! It falls at the first hurdle though as your using..... logic!

2 ( +2 / -0 )

And of course ther is this already forgotton item: 40% of [Japan's] key economic statistics contain errors.

In addition: "The reliability of Japanese statistics, especially of GDP and other important data, is quite low. That was true even before this scandal," said Masamichi Adachi, senior economist at JPMorgan Securities Japan.

https://asia.nikkei.com/Economy/Abenomics-under-pressure-as-Japan-s-data-scandal-spreads

5 ( +5 / -0 )

browny1Today  10:49 am JST

And unemployment is at it's low rate, not becvause of Abe & Co and their flaky policies, but as all with an iota of sense know - it's the demographics stupid.

Right, and where's the "virtuous circle" that surely should have started if unemployment is so low? The salary increases leading to increased private spending?

Well, I don't suppose anyone in the government really cares if their election-winning formula still works and their Diet majority is safe. An economic recovery isn't really necessary to keep giving the over-represented rural LDP base its kickbacks.

3 ( +3 / -0 )

Stupid forever.

0 ( +0 / -0 )

oyatoi, "the Marie Antoinette of Japanese politics" is simply perfect and I'm totally stealing it

5 ( +5 / -0 )

Funny how all the posts above none of them except mine have stats to back up their comments?

Oh yeah? It does not seem you did either besides coming up with numbers that have nothing to do with the topic.

Now I am not going to waste my time giving you numbers here, but in order to put yourself out of your Japanese or Japanophile distorted reality, you can read an article from last month published by the Financial Times called "Shinzo Abe contemplates one last throw of the economic dice".

One of the main message was, quoted from the article:

Nominal activity growth in Japan, which can be viewed as an up-to-date proxy for nominal GDP, has been falling since the end of 2017, since the decline in real output growth has been greater than the rise in inflation.

I am looking forward for your answer to this and the one from Ganbare Japan.

5 ( +6 / -1 )

“Finance Minister Taro Aso went so far as to say in March that he didn't think "anyone in the general public is angry" that the inflation target hasn't been achieved.”

How very disingenuous of the Marie Antoinette of Japanese politics to be telling us that you can’t make a silk purse out of a sow’s ear.

5 ( +5 / -0 )

So simply - Abenomics and the 3 arrows have failed, because they never achieved the targets so gleefully espoused to the world taht they were expected to.

But Abe & Co can never, ever admit to making a mistake. They just lie and twist the words - you know to get "The understanding of the people".

And unemployment is at it's low rate, not becvause of Abe & Co and their flaky policies, but as all with an iota of sense know - it's the demographics stupid.

With the oldest population in the world, the most rapidly falling in numbers and an almost non-existent immigration program Japan has created the perfect storm for employment - ie demand - because there are not enough workers.

Rocket Science - not!!! But Abe & Co majored in Reconsruction in the image of Meji.

5 ( +5 / -0 )

Because Kuroda is destroying the Japanese economy and the future of its people.  And yes the photo says it all - just how much the two senior government oyaji care about the economy.

3 ( +3 / -0 )

Another fact for you think about is Child poverty record-high 16.3 % in 2012 now in 2019 the rate is 11%

Duuh...who still believes Abe govt statistics with their record of pressuring ministries, refusing inconvenient reports and numbers and twisting the stats any which way they wish?

As long as inflation is over 0.1% then things will continue ticking along nicely. I am puzzled by some people's obsession with having 2% inflation.

LOL...yeah, Im puzzled by those 2% obsessed people too, incredibly the most visible of them were your revered Abe, Aso and the rest of the LDP daimyos. Nice to see such a lovely U-turn though...

"Prices don't need to rise much. From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise."

Brilliantly argued by Hamada-san.

Rofl....He is saying the polar opposite of what Shin chan and the Aso Capone have pushed for the last 6 years, but since they all changed tack now , gotta keep in line ....this is just priceless.

8 ( +8 / -0 )

Another fact for you think about is Child poverty record-high 16.3 % in 2012 now in 2019 the rate is 11%

This is further muddled by the fact that there are less children now than ever before, and the one's included in the previous statistics are no longer children.

Overall this statistic needs the actual numbers to have any meaning, and not just a percentage!

6 ( +6 / -0 )

At work and enjoying the longest run of economic growth in post war history.

BS, there have been no sustained and significant economical growth whatsoever. In fact there have been several periods of economical retraction since Abe took power. I have been living in Japan for long enough to have observed that Japan has been for decades in this cycle with periods of essentially insignificant economical growth followed with periods of economical retraction or total stagnation. There have been also no significant increase of wages whatsoever in contrary to what Abe promised.

And I note that you don't reply to my point which was about the government inflation policy which failed. Or do you context that? And since Abenomics idea was that with inflation, they will counter decades of economical stagnation associated with deflation and produce an economical recovery, it's clear that this so-called recovery never happened.

Another fact for you think about is Child poverty record-high 16.3 % in 2012 now in 2019 the rate is 11%

Non sense, this is another topic. If we believe the government figures (which I tend to doubt given the LDP "relax" manipulation of data), this has nothing to do with any economical recovery but with better social welfare allocated to the parents of these children which are often single mothers with low wage jobs. Those woman are still working in the same jobs with low income. The difference is just that they are getting more governmental support which would mechanically reduce child poverty without any economical growth since those extra welfare are funded with debt.

6 ( +7 / -1 )

Is not interesting to note that article did not say the the US did not hit inflation target, the ECB did not either. Funny how all the posts above none of them except mine have stats to back up their comments?

-8 ( +2 / -10 )

At work and enjoying the longest run of economic growth in post war history.

Well said, alwaysspeakingwisdom, well said! The Abe Cabinet has been very successful in achieving record jobs and growth figures. As long as inflation is over 0.1% then things will continue ticking along nicely. I am puzzled by some people's obsession with having 2% inflation.

"Prices don't need to rise much. From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise."

Brilliantly argued by Hamada-san.

-11 ( +3 / -14 )

"The photo says it all: Taro reading comics (because that's appropriate for anyone older than 11)"

It is policy paper.

"Shin-chan grabbing a nap (because Jaoanese people work so hard)."

In Japan, it is common to close your eyes to help focus thoughts.

-8 ( +4 / -12 )

I'm from western Canada. And most of my main expenses are lower in Tokyo than in my home country, where an affordability crisis rages.

Right...yet statistics prove otherwise!

https://www.expatistan.com/cost-of-living/country/comparison/canada/japan

-2 ( +2 / -4 )

" Where are they now?"

At work and enjoying the longest run of economic growth in post war history. Another fact for you think about is Child poverty record-high 16.3 % in 2012 now in 2019 the rate is 11%

-6 ( +3 / -9 )

When the stupidly called Abenomics was made public, we were many to say that its policy and target for inflation were doomed for failure. Yet I remember that we were told by the blind defenders of Japan that we are just anti Japanese and anti Abe. Where are they now?

8 ( +9 / -1 )

@madmanmunt: Kuroda is a globalist. He's spreading Japan's worth to the globalists.

Care to elaborate? We all know there are only 2 arrows and one limp noodle. Structural reform that weakens the LDP won't happen.

2 ( +2 / -0 )

Wow Abenomics is not working so lets blame Kuroda. Kuroda must feel backstabbed.

The country should introduce bi-annual big trash days. A day where people can throw just about anything out and have the municipality cart it away for free. 

Not sure what the difference is with the monthly soutaigomi day?

2 ( +2 / -0 )

The photo says it all: Taro reading comics (because that's appropriate for anyone older than 11) and Shin-chan grabbing a nap (because Jaoanese people work so hard).

Nothing wrong with reading comics, people of all ages do so. But yeah, perhaps not while at work.

4 ( +5 / -1 )

The photo says it all: Taro reading comics (because that's appropriate for anyone older than 11) and Shin-chan grabbing a nap (because Jaoanese people work so hard).

spot on chip!

3 ( +4 / -1 )

@Yubaru

"...yet for far too long prices on many products here are artificially kept high already."

I'm from western Canada. And most of my main expenses are lower in Tokyo than in my home country, where an affordability crisis rages.

Kuroda and Abe want businesses to raise wages....

And the businesses refuse, despite their record high profits. So blame them - the ones causing the problem - instead of the people trying to fix the problem.

-8 ( +1 / -9 )

tell a lie often enough and people believe it, tell a lie for 6 years and there are questions?

the PM suddenly has no clothes.

10 ( +10 / -0 )

I am shocked such a common sense statement can come out of a Japanese politician's mouth. But then again, if he really believes this, why is he advocating for monetary easing aka inflation? Again with the contradictions.

Because deflation has been an on going problem here. Kuroda and Abe want businesses to raise wages, so prices will rise, yet for far too long prices on many products here are artificially kept high already.

There are far too many structural problems with the economy that keep prices artificially high, and deflationary pressures continue, hence part of the reason for the easy money policies, instituted by ABE and not Kuroda!

1 ( +3 / -2 )

. "But the real purpose of having this target is, for example, to create jobs and achieve full employment.

PM Abe right on! The unemployment rate is what people really care. Full employment has been achieved. Corporate profits are at all time high and corporate bankruptcy are at all time low. No one cares that inflation rate is not at 2%. Japan is on roll.

-8 ( +3 / -11 )

The backtacking, denials and lies coming from Abe administration are reaching ever higher ....Abe who pushed Kuroda into the 2 % inflation target now pretending he has nothing to do with it, throwing Kuroda under the bus and this gold nugget ' Prices don't need to rise much. From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise."' The exact opposite of the BS Abe administration has pushed for the past 6 years .....There wouldnt be an election coming up soon, would there?

14 ( +14 / -0 )

From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise."

I am shocked such a common sense statement can come out of a Japanese politician's mouth. But then again, if he really believes this, why is he advocating for monetary easing aka inflation? Again with the contradictions.

9 ( +9 / -0 )

Like rats from a sinking ship

8 ( +8 / -0 )

Increase the minimum wage and all problems will be solved. Inflation will reach target, participation rates will increase, and young Japanese couples will plan for family.

If you think couples, working on the minimum wage with plan for families if their wages are increased, I would say you are far off the mark.

Odds are that any families with parents working at minimum wage "started" their families BEFORE thinking about employment.

Not to mention, that it's damn near impossible to raise a child working on minimum wage, EVEN if it gets raised!

8 ( +9 / -1 )

The captain set sail towards the arctic at full speed and has now decided to rearrange the deck chairs.

10 ( +11 / -1 )

Monetary easing?

Should've invested in Bitcoin.

We'd all be rich!

Yes and...

Kuroda is a globalist. He's spreading Japan's worth to the globalists.

Boomers are the craziest. Their parents fought and ended WWII,

and now Boomers just give up their country's wealth

hand over fist.

-1 ( +4 / -5 )

Increase the minimum wage and all problems will be solved. Inflation will reach target, participation rates will increase, and young Japanese couples will plan for family.

10 ( +13 / -3 )

Thinking of next Golf Session.

10 ( +11 / -1 )

The other day there was an article about tourists in Japan littering too much. And it got me to thinking about how Japan could provide stimulus to the economy just by making it easier for regular Japanese citizens to get rid of old furniture and things around the house. Thank God Japan started to embrace 2nd Hand Stores.... for the longest time the Japanese have been brainwashed into thinking they should only buy new. But they still need to get rid of the clutter in their homes before they can buy new products. And as we all know... getting rid of anything bigger than a toaster is a pain and can cost money. The country should introduce bi-annual big trash days. A day where people can throw just about anything out and have the municipality cart it away for free. Heck, we had them in the USA when I was a kid and I loved those days! I would go around the neighborhood looking for anything I could use. One man's junk and all that. Japan should also think about putting out public trash bins again too.

13 ( +15 / -2 )

Japanese Prime Minister Shinzo Abe hand-picked the country's central bank chief. But his administration is inching away from Bank of Japan Governor Haruhiko Kuroda's elusive inflation target, seeking to deflect criticism that the signature policy has been a failure.

Just looking for the first of many fall guys for the continuing and ongoing failure of Abenomics!

13 ( +15 / -2 )

The photo says it all: Taro reading comics (because that's appropriate for anyone older than 11) and Shin-chan grabbing a nap (because Jaoanese people work so hard).

20 ( +22 / -2 )

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