Guy_Jean_Dailleult comments

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.

fxgai -- thanks. Like you said all that it could offerred in response was more nonsense:

And some people still claim internet message boards are not just an echo chamber.

Meanwhile today on the Bloomberg website was the following article titled "Oh, No! Japan Gets Downgraded. Oh, Wait." http://www.bloombergview.com/articles/2015-09-16/japan-downgrade-is-sign-raters-are-playing-catch-up Here are just a few quotes from the article:

"The proper response to a sovereign downgrade by a major credit rater is: “Who cares?”"

"The vast majority of Japanese government bond investors live in Japan, and probably won't be concerned about the verdict of U.S. financial services companies, especially ones with the questionable reputations of the credit raters."

"So the Japanese sovereign downgrade isn't a meaningful development. Best to ignore it, as markets undoubtedly will."

The writer of the article is a fellow by the name of Noah Smith, a professor of finance. Clearly a man who "thinks he is so clever" and is offering only "nonsense". His contact information is available at the bottom of the page. So if they've got the cojones, I think Japan Today's keyboard warriors should get in touch with Mr.Smith so that he can be "educated" on the true realities of the Japanese economy and be able to mend his ways. I'm sure he'd love to hear from them. And if we are lucky, he'll even reply with a nice, friendly evisceration of their "educatin'"

@jerseyboy You, the S&P, and all the other debt panic monkeys can believe that your fantasies and superstitions are "irrefutable facts" as much and as long as you want. But feel free at anytime to explain to all how government spending results in stagnation and government not spending results in growth. I look forward to the entertainment.

Garbage. It is because Japan has not sold their debt on the open markets that they have been able to paint themselves into a corner. If they sold their debt on the open market, the market would demand that the Japanese government manage it's spending better before the bonds could be sold.

The bonds ARE sold on the open market, the Bank of Japan then buys them from the original purchaser. If the Bank of Japan stops purchasing them at some point the effect will be that the original purchaser gets to keep them and happily collect their risk-free income like they used to. Back when bond prices and interest rates were pretty much exactly the same as now. Bond investors don't give a hoot about how government "manages its spending", they just want the free money.

And if people don't understand the difference between an individual going into a bank to try and get a loan, and the operation of the Japanese and global financial systems...I really don't know what to say except "My God!"

Complete nonsense from S&P, and entirely predictable. Whether Abenomics fails or succeeds, neither outcome has any effect on either the bogus concept of Japan's "creditworthiness" or the operation of the Japanese monetary system. And also irrelevant. Japanese government bonds are issued in exchange for Japanese yen, not foreign currency, and so what foreign "investors" think is of zero importance. What S&P really trying to do is what the real purpose of "ratings agencies" is, to intimidate a sovereign country into falling in line with the neo-liberal dogma and objectives of international finance. Japan's allegedly "nationalist" prime minister should tell them to shut-up and shove it, but of course he won't.

Just get used to the figure of speech kiddo - the point remains that it doesn't cut it, whatever you want to call it.

Apparently some people have no clue when to stop digging. "Printing money doesn't cut it" is now "Printing money is a figure of speech to describe whatever is going on that is not actually in fact "printing money" but still doesn't cut it". What the "figure of speech" is actually supposed to mean is of course left unexplained.

Yes. This much is basic knowledge, and why Japan alone is described as having suffered two "lost decades".

The key here is the word "two". If your level of "basic knowledge" doesn't extend to knowing why that is the key word, and that the same process is now taking place everywhere just from a later starting date, then you have demonstrated conclusively that you don't have any.

Printing money doesn't cut it, needs explanation?! Look to Japan, planet earth for actual results.

That's pretty much the level of in-depth "explanation" I was expecting. As for planet earth, is that the same planet where you claimed in the previous thread that people should be investing overseas "where there has been constant economic growth" and "it is only japan that has failed to grow"? It must be very exciting and a big relief for people from said "overseas" countries when they visit this website and learn such "factual information".

As for looking to Japan to see why "money printing doesn't cut it", well can't do that because there is no "money printing" actually going on. Not physical money printing (and God help anybody so stupid that they believe that money printing means the BOJ is physically printing yen notes) or electronic money printing. All that is happening are asset swaps. The BOJ buys government bonds from the financial sector, which the financial sector previously bought with EXISTING MONEY. Or the BOJ buys other financial assets from the financial sector, the money being created (or "printed") when the original loans were made, not when the BOJ buys them. All the BOJ has done has paid off the loan so that the banks don't have to take any losses, and increased bank reserves but not money in circulation. Anybody who doesn't understand that (including those running the BOJ) has the exact same level of understanding of the situation as the amount of money that has been "printed", which is zero.

Just imagine if every government around the world took such a pro-growth stance. Printing loads of money just doesn't cut it.

No need for any imagination, just follow the news from all the other countries doing the same thing. And the results are the same as they have been in Japan, for reasons that are not difficult to understand. It is an asset swap, not a stimulus. And I would love to hear an explanation of "printing loads of money doesn't cut it". The statement is just so hopelessly wrong on multiple levels!!!

No, I'm stating the obvious, common sense, that some people are afraid for the future because of what the government has done, and their actions are effected by it accordingly.

No, you stated that people are scared of government debt and "consequent" higher taxes in the future and that this is affecting economic behavior. That IS the theory of Ricardian Equivalence. A theory from the year 1820. Now, you try to shift the goalposts by claiming your junk, zombie economics is "obvious, common sense...because of what the government has done". It might sound a more reasonable line than the original one, but still lipstick on a pig.

investing overseas where there has been constant economic growth, it's not hard to imagine where people see the favourable odds.

Ah, now we enter deep into Japan Doomer fantasy land. "Something is terribly wrong with Japan and the structure of its economy. It needs REFORM and and change in its CULTURE!!!! Or it will die!!! Not like overseas where there has been "constant economic growth". LOL What planet are you even talking about? Reality check time. Every country is going down the same path as Japan, with the same deflationary dynamics and low growth as Japan, and with the same bogus economic theories claiming the answer lies in the "magic of the marketplace". Japan just got there first, and if you look at Japan on a per-capita GDP basis these "overseas" countries are in fact handling the situation even worse than Japan has.

But I know fxgai doesn't care about any of that, and I look forward to more quoting of 200 hundred hokum, and whatever other zombie economic cliches he wants to waste peoples' time with.

Who are the evil villains behind all these brain-dead people thinking that loads of government debt and consequent higher future taxes is something to be afraid of?

@fxgai You aren't seriously dragging out that "Ricardian Equivalence" nonsense about higher taxes in the future to make your "case" are you? Even David Ricardo didn't take it seriously. Thanks for the laugh, and please send along more 200 year old economic "theories" to show us all what a 21st century financial and economic expert you are.

However, I bundle the two together because a large percentage of people believe that neither should be source of Japan's power generation. In the wake of the Fukushima disaster and all nuclear plants being shut down, many are arguing that these plants should remain shut down and be decommissioned.

Just because a large percentage of people (or so we are told) believe that nuclear plants should have been and should remain shut down does not mean that that is the reason the plants were shut down, or why, with one exception, they remain shut. A large percentage of people also believe the Japanese constitution should not be changed or re-interpreted, and strangely this "overwhelming" opposition has not had nearly the same level of "effect" on government policy. Those in charge will try to do what they want to do, if they can get public opinion to go along with it that just makes their work that much easier.

so much for all the scientific communities monitoring expertise

I'm pretty sure nobody in the "scientific communities" has ever claimed that their monitoring expertise enabled them to predict steam eruptions, and that in fact they say openly they are not able to. The monitoring is for magma eruptions. Unfortunately this article does not provide the information on the type of eruption. But at least we can all feel safer knowing the nuclear plant survived volcanic ash falling 156 km. away

"BOJ to stand pat even as goals depart from reality". That is a really interesting headline as it implies their goals actually had some connection to reality in the first place. The "reality" here is that for 15 years they have been pursuing their "goals" while having a false understanding of how the monetary system works, using kindergarten level concepts like loanable funds and the money multiplier. And like all good ideologues and economists, when the evidence shows that reality is not behaving like their theory says it should they assume there is something wrong with reality. "QE not having the desired effect? We must not be doing enough of it! We must do more!!!". As for their "goal" itself, 2% inflation targeting is an idea that was dreamed up by the Bank of New Zealand in the 1990's, and the number 2 was chosen because it sounds good. Amount of actual analysis and observed real world evidence that went into coming up with the number was zero, as is the amount of evidence that people actually behave the way the "inflationary expectations" theory claims they will. The BOJ's goals have not "departed" from reality, they have never been there.

Do you deny the reality that many people are scared?

So what? Small children are afraid of the dark, does that mean people shouldn't go out at night? People are scared of what they are told to be scared of, the only questions here are who is telling people to be scared and why. What people claim is scary "massive debt" is actually the amount of yen currency that has been issued by the Japanese government over time and not been taken back in taxes. If it's high in total or in relation to GDP it is a symptom of economic weakness, not a cause of economic weakness. All governments issue currency when they spend, and if they don't spend there is no net money supply. Of course, that's not how it works in the fantasy land of economics textbooks but that's how it works in the real world. Get over it.

I would rather see the free market work things out but that would require banks taking responsibility for their careless investments

The BOJ and the Japanese government had three options when and since the bubble popped, in order of effectiveness. 1) Rescue everybody (real economy AND the banks) through a combination of debt jubilee and cash injections. That was the original concept of "quantitative easing" that was proposed and it was rejected for political, not economic, reasons. 2) Rescue nobody. Let the free market punish those who misallocated resources. While that would have made a lot of rich guys unhappy, it would also have been what free market theory says is supposed to happen. Of course, that is the one part of free market theory that free market "believers" always ignore, even though it is the most important part and the part that justifies using the theory as a way of organizing society. 3) Rescue the banks and not the economy by making the banks whole and protecting them from their losses while leaving the debts in place to drag down the real economy. Which is of course what they did. Because they are bankers, and no other reason

There are no rational scientific or public safety justifications for turning off nuclear plants and burning coal in their place, and there haven't been since Day1. It's all just been about taking advantage of the situation to push through what the big boys wanted to do all along, which is shift Japan away from nuclear power and more heavily into fossil fuels.

@cardsfan - You don't really expect me bother to answer that do you, "kiddo"?

Seriously? Somebody who thinks shareholders "give money to companies in the hope that they will put the money to efficient work" has the cheek to refer to another poster as '"kiddo"? Priceless

The writer also sees Twitter as a good example because it doesn't have "the constraints of long-term employees who are difficult to dismiss." The writer fails to consider another option for management. Perhaps if these long-term employees are trusted more and less repressed in their jobs they will perform much better and won't need to be "fired".

@warispeace The "We'd hire more people if we could fire more people" line of thought is deeply ingrained in all those who have swallowed the mantra that Japan's economic problems are cultural and structural in origin (and ignore that identical economic and systemic failure is now seen in all countries) and who believe religiously that "reform" is needed, especially reform of the "inflexible" labor market. Even though the reforms made so far have had disastrous effects economically and demographically, they don't care because GroupThink practitioners don't know what the word "evidence" means. So don't expect your use of logic to get very far either.

“Steadfast policies are required to overcome the yoke of supply constraints due to the decreasing population,” the government states in a revision of the nation’s growth policies, released July 10. Translation: Fewer Japanese due to a declining population means more need for foreign cash, and Japan is not doing enough to attract it.

This passage makes zero economic or logical sense. One, there is no relation between the Japanese population and the amount of Japanese yen, and two, even if there was foreigners don't supply Japanese yen. As for foreign cash it is not used in Japan, it is used in, um, foreign countries.

This isn't true, the money supply can be increased in the absence of government deficit spending / in the face of fiscal consolidation.

This is a correct statement. Happens when there is real economic growth creating investment opportunities and confidence among the public to take on debt because they know they will be able to make the money to pay it back. Or it happens when there is an insane asset bubble, when people borrow to try to be one of the winners. Both cases increase the money supply, and neither case applies to Japan in 2015.

It is certainly not the case that the 1080 trillion yen of public debt accumulated over the past 2 to 3 decades is too little for Japan's 500 trillion yen economy to be healthy

This is also a correct statement. However, that 1080 trillion yen public liability, or "debt", is on the asset side of the balance sheet the net money supply of Japan, and most of it sits on corporate balance sheets and in rich old folks' bank accounts. Dead money not circulating in the real economy, and not invested because, surprise, surprise, the economy is not good. There is plenty of money, it is just not being used for the purpose that money is issued for in the first place.

This is the greets example of quackery imaginable, it goes well beyond the borders of stupidity.

Then I guess you are not aware of the opinions of Milton Friedman on this issue, but then Milton was a raving, left-wing commie pinko!

but offering no suggestions for needed policy change.

LOL, ok I spell it out for you. "Fiscal consolidation" and "fiscal credibility" are quack economic theories, debunked many times and failures every time they have been attempted without a matching increase in private debt levels. And as Japan's economic problem is that private debt levels are not increasing, well it will fail here too.The simple policy change is for the Japanese government to stop sabotaging and vandalizing the Japanese economy due to their following of quack theories. "Reflating" an economy is incredibly simple and only requires the government to issue the correct amount of currency, aka running a deficit, to make up for the shortfall in money creation by the private banking sector. Money creation by private banks has a limit, which is the amount of debt that can be taken on and serviced by the private sector. Currency issued by the government has no such limit, and the only constraint is the point where demand-pull inflation sets in. But they don't want to run a deficit, they want to run a surplus because they think they have too much "debt", aka the sum of all the previous deficits. And because "Zimbabwe" and "Weimar" and "hyperinflation". And because they comically think they "borrow" money in the government bond market without ever asking where that money came from, and that one day "soon" if the "debt" keeps getting bigger nobody will lend them this mysteriously obtained money. So they think they need "fiscal consolidation" and that by reducing the deficit today they will reduce the deficits of yesterday. Which is like saying "if I don't go to Vegas this year I'll be able to get back the money I lost in Vegas last year".

Or for a shorter suggestion, they have no clue what they are doing and should be immediately fired and replaced with people who do.

Well, no kidding. They are suffering from extreme cognitive dissonance and trying to do two contradictory things. Fiscal "consolidation" just means you are reducing demand in the economy and reducing the money supply, so of course you are not going to get any growth. It is also the exact opposite of what "Abenomics" fiscal policy originally stated would be done, and more than cancels out any positives (if they even exist) from imaginary monetary "stimulus" and 3rd arrow supply-side growth "reforms". But it's the same story in every other country where hack mainstream economists have been applying their quack theories, why would anybody expect things to work out any differently in Japan? There's nothing unique about Japan, it is just the first country where the credit-expansion economic growth scam stopped working and now every country is in the same boat. And all still equally clueless about what to do about it.

The LNT assumption suggests that any increase in dose, no matter how small, incrementally increases risk.

"Assumption" is indeed the correct word. It is an embarrassment that such a piece of politically motivated junk science is used to set policy and safety standards in the 21st century.

Our happy little narrative does not include a nuclear meltdown as was had in 2011.

Actually your happy little narrative does include a nuclear meltdown, and the narrative claims that people must never acknowledge that there are health and financial costs to the present solution for avoiding another nuclear meltdown, let alone bother to calculate those costs.

The Tokyo Olympics, an idea brought to you from the vivid imagination of one Shintaro Ishihara, with all the planning, wisdom, and forethought you would expect from a project with such a starting point.

Of the total budget requests, debt-servicing costs accounted for a record 26.0543 trillion yen,

It takes about 5 minutes and a couple of Google searches for the easily available figures on total "debt" and the rate of interest paid on this "debt" to prove that the "debt servicing" numbers put out by the Ministry of Finance are fraudulent. Overestimated by at least 10 times, the real figure is around 2 trillion yen. They obviously have a political agenda of trying to scare the clueless politicians and the clueless sheeple with scary numbers so they can push through more of their bogus "policies"and "reforms", in particular another consumption tax hike recession.

The myth of nuclear safety myth rises again. The accident was caused by the failure to adequately defend the plant from the risk of a tsunami in the Pacific ocean. Belief in the safety of nuclear power, whether justified or not, had no connection to the financial, corporate decision to not do so. By what logic does anybody say "I believe this technology is safe, so I'm not going to bother protecting it from natural disasters"? In fact, if somebody had a strong belief in the safety of the technology they would have had MORE incentive to make sure nothing happened to the plant, not less, because they would want to avoid giving any ammunition to the opponents of the technology if something did happen. Ammunition that those opponents have been running with for four and a half years now. The "safety myth" myth is just another of the many made up media narratives about Fukushima, only surprise is to see it parroted by the IAEA.

Yep, no brownouts means there are no other problems and no other issues to be considered. No need to mention increased CO2 emissions, increased pollution from use of coal and the health effects of that pollution, effects on overall economy of increased fossil fuel imports, effects on individual companies and people (especially those on fixed incomes like pensioners) of higher electricity prices. And of course no need to mention the hundreds of billions of dollars that have been pocketed due to the nuclear shutdown by the fossil fuel and renewable energy companies through increased sales, higher prices, and higher stock prices. Not that anybody would have intentionally tried to profit from the situation, I'm sure the nuclear industry has been shut down purely due to a deep concern for public safety among the powers that be.

Yes, life is amazingly easy if you just ignore all the stuff that contradicts your happy little narrative.

Good article, writer is correct that China today is just a replay of Japan 25 years ago. The mechanics of credit bubbles and credit expansion economic "growth" are exactly the same in both cases. Question now is whether the Chinese government will handle the situation correctly, or if like Japan, they waste 25 years in "free market" neo-liberal fantasy land and rescue their banks and not their economy.

I'm all for equality in the workplace

Me too, and I'm all for women having better opportunities if they want to go down the career path too. And to the extent these things can be improved, sure go ahead and try to make it happen. But that's as far as it goes. The idea that improving the role of women is somehow going to solve bigger picture economic and demographic problems is nuts, and smacks of people exploiting the situation to push their pet ideas and projects (which pretty much sums up the whole "third arrow" anyways). The role of women in the Japanese economy is the same as it always has been, nothing has changed to contribute to the economic and demographic situation of today. It is the same or better than when Japan was booming and, according to the "experts" of the day, going to take over the global economy. The real problems and solutions are elsewhere, no matter how much time the government wants to waste pretending otherwise. But dealing with those issues would require actual competence and understanding of economics, so we get superficial nonsense like this instead.

No air-conditioning (and no roof) also means no summer music festivals / concerts and all the other events which were, you know, supposed to generate the revenue to operate and pay for the stadium after the Olympics are over. Much better to build a giant white elephant in the center of Tokyo, I guess, so you can say you "slashed costs" and "saved money". Good Lord...

Such a move occurs because of a lack of liquidity, not because a "flurry of buying/selling".

A lack of liquidity in the foreign exchange market eh? What, some traders were having difficulty liquidating their cash and were unable to convert their cash into cash?