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(World Review)   Abenomics is ROCKIN' Japan. Prime Minister Shinzo Abe proves his critics wrong and has turned the economy around after 20 years of economic stagnation. Being one of the only countries in the world not to suffer from the global downturn must feel good   (worldreview.info) divider line 23
    More: Interesting, Abenomics, Japan, Prime Minister of Japan, consumption tax, secondary sector of the economy, recessions  
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977 clicks; posted to Business » on 31 Jan 2014 at 7:49 AM (30 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



23 Comments   (+0 »)
   
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2014-01-31 08:24:00 AM
They tried everything else. Might as well give Bernanke and Krugman's advice a shot.

And, hey, look at that.
 
2014-01-31 08:56:34 AM
This, of course, neglects the looming reality that Fukushima Daiichi is far worse than has been let on, and it will cost ungodly amounts of money to fix the damage.
 
2014-01-31 10:28:05 AM
I'd put off those tax hikes in '14 and '15 (and I wouldn't do consumption tax hikes period).  Pedal to the metal until you're clear of deflation, Shinzo.  Don't fark it up like the rest of us.

FTA:  However, interest rates of Japanese public debt remain low, currently at around 0.7 per cent for the 10-year government bond.

One of the reasons is that about 90 per cent of the debt is held by domestic creditors - particularly the Bank of Japan, the national pension fund, and private-sector investors such as banks, pension funds and life insurance companies


Sigh.  No, that's not why interest rates are low.  Japan controls its own currency, and like all countries who control their own floating currencies, interest rates reflect expectations about future monetary policy.  (That's why we get things like inverted yield curves.)  Interest rates are low because bond-buyers expect the BOJ to keep interest rates low.

It's why the bond vigilantes attack these imbeciles in the Eurozone but not Japan despite the Eurozoners having much lower debt-to-GDP ratios.  Same with the Eurozone vs the US, Britain and others.
 
2014-01-31 10:41:01 AM
Don't get any ideas, libs. We still need to cut food stamps, basic research, the EPA, PBS, and Social Security in order to Fix the Debt™.
 
2014-01-31 11:21:39 AM

Wendy's Chili: Don't get any ideas, libs. We still need to cut food stamps, basic research, the EPA, PBS, and Social Security in order to Fix the Debt™.


AND STOP DEVALUATING ARE CURRENCY
 
2014-01-31 11:27:34 AM
The global recession of 2008-20009 hit Japan's real economy hard

Wow, that was a really long recession.
 
2014-01-31 11:53:43 AM
Currency Wars are now under way.
 
2014-01-31 12:29:43 PM

aaronx: And, hey, look at that.


Need to be careful.  You are spurring a bit of growth and inflation, which they need.  However, with a debt load like they have, they need to be very careful about interest rates.   As such, Moody's is already issuing warnings.

With the ballooning debt, you will eventually have to pay the booming interest rates.  Right now they are able to hold these interest rates down.  If they can't continue to control this, they will find themselves in a heap of trouble.

www.acting-man.com
Their current debt at the end of FY 2014 is estimated at 1,145 Trillion yen.  If they can keep the economic growth fast enough to offset the impact of that black line, they may be able to pull this off.  I am pretty skeptical.
 
2014-01-31 12:32:56 PM

RickyWilliams'sBong: interest rates reflect expectations about future monetary policy.


Generally, yes.  However, QE is an artificial manipulation that can be done by central banks to somewhat bypass this market driven impacts.
 
2014-01-31 03:02:48 PM

Stile4aly: The global recession of 2008-20009 hit Japan's real economy hard

Wow, that was a really long recession.



Thanks, Obama.
 
2014-01-31 03:09:20 PM

HeadLever: aaronx: And, hey, look at that.

Need to be careful.  You are spurring a bit of growth and inflation, which they need.  However, with a debt load like they have, they need to be very careful about interest rates.   As such, Moody's is already issuing warnings.

With the ballooning debt, you will eventually have to pay the booming interest rates.  Right now they are able to hold these interest rates down.  If they can't continue to control this, they will find themselves in a heap of trouble.

[www.acting-man.com image 850x533]
Their current debt at the end of FY 2014 is estimated at 1,145 Trillion yen.  If they can keep the economic growth fast enough to offset the impact of that black line, they may be able to pull this off.  I am pretty skeptical.


Japan controls its own currency like the US and unlike the member states of the EU. They can't have debt problems like you're describing. Central banks set interest rates. You cannot go down the crap when you (the government) are the sole manufacturer of what you owe people (in this case yen).
 
2014-01-31 03:14:02 PM
It's a goddamned shame Abe is such a sack of shiat when it comes to Japanese cultural issues like the veneration of the soldiers who butchered the Chinese during WW2. If he was a bit more progressive on these issues (I understand how insular and conservative Japan is and how difficult these cultural changes would be, so maybe I'm being overly wishful) all of his press would be about how he and the LDP are proving how ridiculously wrong the austerity freaks are.
 
jvl
2014-01-31 03:54:04 PM
A bit early to take a victory lap methinks.
 
jvl
2014-01-31 03:55:12 PM

Tripp Johnston Private Eye: all of his press would be about how he and the LDP are proving how ridiculously wrong the austerity freaks are.


Things Japan has never tried: austerity.
 
2014-01-31 04:15:08 PM

Tripp Johnston Private Eye: They can't have debt problems like you're describing.


Sure you can.

Central banks set interest rates.

No, central banks set the target interest rate and the fed fund rate, but the market ultimately sets the long term interest rate for treasuries.  There are things that the fed can do to influence these rates, but they are not the only determining factor.   See more here:

 You cannot go down the crap when you (the government) are the sole manufacturer of what you owe people (in this case yen).

BS.  You can destroy an economy in either case.  The issue with floating currencies is that it becomes very hard not to inflate your debt away when it gets out of hand.  You may not technically default, but you the end result is pretty much the same.
 
2014-01-31 04:18:23 PM

jvl: A bit early to take a victory lap methinks.


Yep, Interest costs are starting to skyrocket.  This could be a huge deal, especially if they cannot keep interest rates down.
 
2014-01-31 04:34:05 PM

HeadLever: jvl: A bit early to take a victory lap methinks.

Yep, Interest costs are starting to skyrocket.  This could be a huge deal, especially if they cannot keep interest rates down.


If by "skyrocket" you mean "mostly flat and still nearly zero," then yes.

http://www.bloomberg.com/quote/GJGB10:IND/chart

I get what you're saying, but let's not exaggerate.
 
2014-01-31 04:53:13 PM

jaerik: If by "skyrocket" you mean "mostly flat and still nearly zero," then yes.


That has nothing to do with my point.  Just because they and we have had pretty tame interest now has nothing to do with what happens when you start to enter a debt spiral such as this:

www.taxnetwealth.com

We are not at that point yet, but if we don't get our fiscal hose in order soon, we very well could be.
 
2014-01-31 05:11:08 PM

HeadLever: jaerik: If by "skyrocket" you mean "mostly flat and still nearly zero," then yes.

That has nothing to do with my point.  Just because they and we have had pretty tame interest now has nothing to do with what happens when you start to enter a debt spiral such as this:

[www.taxnetwealth.com image 800x427]

We are not at that point yet, but if we don't get our fiscal hose in order soon, we very well could be.


Oh.  You were using an article about Japanese economics to make a point for US fiscal conservatism.

My mistake.  I assumed we were still even remotely on topic.

Good luck with your hose.
 
2014-01-31 05:29:42 PM

jaerik: Oh.  You were using an article about Japanese economics to make a point for sound economic policy  US fiscal conservatism.



Fixed it for you.

In many cases the issues are somewhat the same regarding over-leveraging yourself.  It is not the debt that eats you up, but the interest.
 
2014-01-31 07:36:13 PM

HeadLever: Need to be careful.  You are spurring a bit of growth and inflation, which they need.  However, with a debt load like they have, they need to be very careful about interest rates.   As such, Moody's is already issuing warnings.

With the ballooning debt, you will eventually have to pay the booming interest rates.  Right now they are able to hold these interest rates down.   If they can't continue to control this, they will find themselves in a heap of trouble.

[www.acting-man.com image 850x533]
Their current debt at the end of FY 2014 is estimated at 1,145 Trillion yen.  If they can keep the economic growth fast enough to offset the impact of that black line, they may be able to pull this off.  I am pretty skeptical.


No one gives a shiat what Moody's and S&P and the rest of these clowns say.  Did people not learn anything about the rating agencies after the US debt downgrade (which resulted in lower interest rates)?

And they can continue to control it.  That's the whole point of having your own currency.  As logically follows from your above comment (not sure why you're contradicting yourself here), the central bank can make the interest rate whatever it wants.

That's sort of the whole point of monetary policy.
 
2014-01-31 10:39:33 PM
Good to see that there are some positive effects.

However, unless the improved economy makes the Japanese people more comfortable investing in larger families, the tax base may not grow in proportion to the debt.

So...Japan...start farking. Have some kids. Good luck
 
2014-01-31 11:53:24 PM

RickyWilliams'sBong: No one gives a shiat what Moody's and S&P and the rest of these clowns say.


You would like to think that wouldn't you.  If that was the case, it wouldn't have made the news, would it?

Did people not learn anything about the rating agencies after the US debt downgrade (which resulted in lower interest rates)?

The downgrade did not result in lower rates, the fact that the fed was buying the vast majority of the debt did.  When you bypass the standard market, interest rates become mostly detached from your standard pressures.

And they can continue to control it.

Somewhat.  I wouldn't say control, but they can definitely influence the market.  The problem is that the fed appears to be reaching saturation on how much debt they are willing to hold.  Notice the news where they are accelerating the QE tapering?

As logically follows from your above comment (not sure why you're contradicting yourself here), the central bank can make the interest rate whatever it wants.

Again, only to a certain point.  When you have a high debt load, interest rates are a double edged sword.  If you keep them too low during good economic times, you run the risk of spurring inflation.  On the flipside, if you use interest rates to stave off this inflation, you start to increase your interest obligation on the national debt.
 
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