politics

Abe unveils massive coronavirus stimulus worth 20% of GDP

35 Comments
By Tetsushi Kajimoto and Takaya Yamaguchi

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© Thomson Reuters 2020.

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35 Comments
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Abe stopped short of providing further details

I suspect that we can be sure that the construction industry will be well taken care of.

Abe is petrified of doing even more damage to the economy than he and the LDP have already done. The 4th quarter of 2019 saw a 6% contraction of the economy. Two quarters of that in a row and the economy is officially in a recession. At 236%, Japan has the highest govt debt as a % of GDP of any country in the world, 30% higher than #2 Greece, and 80% than Italy. Abe and the LDP gambled on the Olympics. They bet on the wrong horse.

11 ( +13 / -2 )

Though the details aren't many, based on what has come out, I don't see how this will help small and mid-size companies, which employ the majority of workers.

1) Social Security and tax deferrals just push the pain off for a while.

2) Even with a non-interest loan, which businesses want to go further into debt with no revenues for a while and likely lower revenues post-virus as the recovery will take time?

3) To qualify for full "9/10 wage assistance, the employee has to not work at all and even then, "9/10" is capped at 8,800/day. So if its a 21 day month, that covers roughly 185,000. It's great if all the workers are already low-wage workers, but if they get a decent salary, the business still has to make up the difference or cut their salaries to subsistence levels, increasing the already large number of precarious workers. When employees work a few hours a day, the assistance goes down.

Overall, this means businesses need to top-off wages to keep employees and continue to pay rent and some other operational cost and possibly also pay back loans for capital costs. Without rent moratoriums and some grants, I can't see how many small business will be incentivised to keep going. Something more along the lines of Germany will be needed.

9 ( +9 / -0 )

it's not known that avigen even works on COVID-19

and the room is still packed

sigh

8 ( +10 / -2 )

No social distancing in sight.

7 ( +11 / -4 )

Still, the package turned out far bigger than the amount anticipated by market players, giving a sense of security for people facing income declines and staying indoors, some analysts say.

Rightly put, giving a sense of security because that is what it is and that is the intention.

The bulk of that 6 trillion yen will go to businesses and not household.

It should be questioned why they why they lump households and businesses together.?

The condition that the income of a household should fall below half and not the income of working individuals in a household effectively disqualifies most households.

When collecting taxes, every working member of a household is taxed without any consideration as to the number of children in the household etc but when it comes time to give back every working member of a household is lumped together as a household.

A household with husband and wife both working, if the wife part timer annual income is 1.2million yen and it has not fallen by half whereas the husband with an income of 3million yen drops by half due to the virus won't qualify as the income of the household as a whole hasn't dropped by half.

Does someone living alone qualify as a household?

A family of 5 gets the same 300,000yen as a family 2. Where is the fairness, really boggles the mind.

Other countries are giving money out, we don't want to but lets also do it not to look like we are not doing anything but we have to make it difficult for people to qualify and recieve the cash handout.

7 ( +7 / -0 )

why wait? why the constant delays?

6 ( +8 / -2 )

What about the 300,000 yen financial assistance? The criteria is not clear it and still very sketchy. Will people actually be able to receive this? Seems like the Japanese Government just wanted to show other countries as well as the Japanese people that it’s giving 300,000 yen as financial assistance but in reality maybe only 1-2% will end up getting this! Many other countries have given (100,000 - 400,000 yen ) in the form of cash handouts across the board to it’s residence but the 300,000yen handout ( selected by authorities without clear criteria) in Japan seems to be just for publicity!

6 ( +6 / -0 )

Article image check.

Closed space? Check.

Crowded? Looks like 25+ people within 40㎡. Check.

Conversations in close proximity. Likely. Check.

Great leadership!

6 ( +6 / -0 )

Why the lack of details?

5 ( +8 / -3 )

@drlucifer

You have raised some important points.

This month I have lost 100% of my work yet the household income has not dropped by half due to my wife’s income

I am meant to be totally reliant on my wife yet still continue to pay all taxes and keep my kid at college?

Something has to break...

5 ( +6 / -1 )

No details because they are clueless. Even with advice from "expert Pannels" and an inability to use something called the Internet.

4 ( +6 / -2 )

@warispeace

Excellent post.

4 ( +4 / -0 )

massive scale of economic package worth 108 trillion yen

package features cash payouts worth more than 6 trillion yen to households and small and midsize firms

Where does the 102 trillion yen go to?

Help suffering Japanese people more!!

4 ( +4 / -0 )

Abe stopped short of providing further details

What a huge surprise that is, NOT! They have to figure out how to share it among the cronies first and then divi up whatever is left for the minions.

4 ( +4 / -0 )

Miopic.

Knee-jerk, vote chasing policy making.

Thowing money around that just creates more debt for future generations to deal with.

3 ( +12 / -9 )

If this govt had chocolate for brains it wouldn't fill a smartie.

3 ( +3 / -0 )

kumagaimin:

Japan can print its own money. Virtually every other country has its printing presses running full steam right now so inflation isn't a problem.

Err, yes it is. Are you confusing inflation with FX rate? Inflation refers to the value of money vs goods.

3 ( +4 / -1 )

All of those index of GDP isn't important in a big picture. The world is in the same economic leveling. Nowhere is gaining with this pandemic disease, only some hygiene/medicine product industries. LIFE first!

2 ( +4 / -2 )

@Kumagaijin

Japan can print its own money. Virtually every other country has its printing presses running full steam right now so inflation isn't a problem.

Review economics 101

2 ( +2 / -0 )

And in order to pay for this, when can we expect a 5 point increase to the consumer tax?

2 ( +2 / -0 )

They’re still testing the waters with the ¥300,000. When they work out that it will cost them more in paperwork, admin and time then they’ll hopefully come to their senses and helicopter money a set amount to all. As most countries are doing this, this can’t be wrong. ¥80,000 to ¥100,000 will do.

Typical Japanese government trying again to be sen wise, Yen foolish. There’s no perfect solution here only damage limitation. The sooner they realise this the better, put the excel spreadsheets away please! It’s too late to calculate data you don’t have when you’re still using fax machines I’m afraid are the facts!

2 ( +2 / -0 )

Still NO ONE is social distancing... how are you expecting other people to do the same

1 ( +1 / -0 )

In addition, queueing up at ward offices to receive the cash contradicts prevention of spreading of COVID-19. As the queues at each ward office will be huge this isn’t viable. Posting cash handouts is way more safe and efficient.

1 ( +1 / -0 )

They will have had meeting after meeting after meeting, the Japanese way. Hopefully their decisions will be well thought out and correct as usual

0 ( +2 / -2 )

I think if you followed every statement with ..the company said so... that would explain a lot

More people are going to need help

0 ( +0 / -0 )

Someone will have to pay later...

0 ( +0 / -0 )

Abe unveils massive coronavirus stimulus worth 20% of GDP*

I bet 80% of it will be wasted.

0 ( +0 / -0 )

If your income is drastically reduced from one year ago for this month, you will be getting ¥2,000,000 from what I just heard.

0 ( +0 / -0 )

Japan can print its own money. Virtually every other country has its printing presses running full steam right now so inflation isn't a problem.

-1 ( +3 / -4 )

Fuel tax breaks for private cars purchased up until March 2021, from the current period through September 2020.

Can someone explain this to me? It makes no sense as written.

-1 ( +0 / -1 )

Abe, go! I think we’re all behind you. What choice? Do it well.

-1 ( +0 / -1 )

Stimulating the economy should come after fighting the coronavirus epidemic, and saving lives. When the epidemic is under control, then worry about the economy.

-1 ( +1 / -2 )

This is worse than I thought. The lack of Olympics 2020 severely damages the economy of Japan. The lack of any tourist, especially Chinese tourists, can exacerbate the already-declining economy. If this package is passed, it only proves that Japan will be very susceptible towards external shocks in the future. China or the US can have a very powerful influence on Japan via administering each shock as their politicians please.

-2 ( +0 / -2 )

For citizen, due to government request of ristrict our behavior, we lost our work,so we seek compensation toward the government.

For government, in order to support our lives,it issued the emergency declaration.

We should not take this compensation for garanted.We should have prepared the emrgency.

It's wrong to blame this situation for only gavernment.

Too many people jump on the bandwogn and criticized the government.

-4 ( +0 / -4 )

A good start - this is just the first stage - but probably double that will ultimately be needed to rebuild after this war.

Thowing money around that just creates more debt for future generations to deal with.

Remember- this will likely be ALL domestic debt, not so dfifficult to service.

-6 ( +5 / -11 )

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