"Japan's Abe Is the World's Best Leader"

[matsuki]

Lower wages, higher consumption tax, in a place that routinely had major cities in the top 10 most expensive places in the world listing. (until this year when the cheaper yen made everything more affordable...WTF?)

[Coligny]

Thinking about this ...

At a time when such a surprising number of Japanese are actually living below the poverty line, is any kind of consumption tax increase really a good idea? The more I think about it, the more it looks like a very shortsighted move.

Japan's economic troubles hit single-parent families and children especially hard

Tsss... Let them eat cake...

[Samurai_Jerk]

until this year when the cheaper yen made everything more affordable

Too bad that doesn't work when you're being paid in yen.

[matsuki]

until this year when the cheaper yen made everything more affordable

Too bad that doesn't work when you're being paid in yen.

Exactly...the Abe-beat down on the Yen has benefited the average Daisuke how?

[Mike Oxlong]

The Bank of Japan Lays an Egg
Japan’s central bank loses credibility as it tries to create inflation

The Bank of Japan announced Friday a change in its asset-buying program to include new exchange-traded funds, longer-dated bonds and more risky assets. But if Governor Haruhiko Kuroda thought the new measures would reassure markets that the BOJ has enough firepower to reach its inflation target, he was soon disabused. Stocks fell in Tokyo and the yen strengthened.

The episode highlights the BOJ’s credibility problem. When Mr. Kuroda took the helm in March 2013, he claimed that the BOJ had the power to stop deflation but hadn’t used it. Last year he predicted that inflation wouldn’t fall below 1% again in his lifetime. It did so a few months later, despite asset-buying of ¥80 trillion ($660 billion) a year, including virtually all new government bonds. That represents a more radical expansion of the central bank’s balance sheet than any of the U.S. Federal Reserve’s quantitative-easing programs.

On current trends, the BOJ has little chance of meeting its 2% inflation target in the next couple of years. The latest Tankan survey shows Japanese firms expect prices to rise 1% next year, down from the 1.2% expectation they reported in September.

Failure to reach the target creates pressure for Mr. Kuroda to undertake even larger asset purchases. But he and the Shinzo Abe administration seem to realize that this would be ineffective and difficult to implement. And if it further weakened the yen, tensions with the U.S., China and other trading partners would rise.

The new measures also raise concerns about political interference in business decision making. The BOJ said it would buy funds comprised of companies “proactively making investment in physical and human capital.” The government has been pressuring managers to invest more and raise wages.

It appears the BOJ plans to buy funds based on the JPX-Nikkei Index 400, which is based on corporate governance and profitability, so the policy seems confused. Using the central bank’s powers to promote the government’s political goals also runs the risk of misallocating resources, which would harm growth. It sets a precedent that could undermine the bank’s independence.

Japan’s companies don’t want to borrow and invest because of the country’s slow growth potential, which the BOJ estimates at 0.5%. Monetary policy can’t do much if Shinzo Abe fails again to undertake deregulation and tax reform to unleash competition. The disappointment with Mr. Kuroda’s monetary tweaks is a reminder that Japan’s economic fate rests with the Prime Minister, not the central bank.

http://www.wsj.com/articles/the-bank-of ... 1450652587

[Takechanpoo]

and krugman, who is the very man to agitate this inflation policy, continue to be an economist with an innocent air.

[matsuki]

egg? an ostrich egg maybe....