The Nikkei is soaring, and along with the Japanese stock market, so are expectations of the policies espoused by Prime Minister Shinzo Abe.

Will this be a case of buyer’s remorse?

I think so, and so does Bloomberg writer William Pesek in Japan Prepares to Vote. Not That You Would Know.

With elections to the upper house of parliament on July 21, Japanese voters seem ready to hand Prime Minister Shinzo Abe one of the bigger blank checks in memory.

What’s most noticeable, though, is the silence of the citizenry. Try finding the slightest hint that voters are fired up. If recent contests have been notable at all, it’s for setting low-turnout records. This one could top them all.

Japan confronts a fast-aging population; the world’s biggest public debt; a skyrocketing energy bill, and a pension time bomb. Abe has pledged vague but far-reaching reforms, including lowering trade barriers, empowering women, deregulating industry and possibly revising the pacifist constitution. There are questions about how many U.S. soldiers Japan should host, and whether loose monetary policy is creating a giant bubble.

Yet the Japanese are debating none of this. A victory for Abe’s Liberal Democratic Party will be taken as vindication of policies that he’s laid out only in the sketchiest terms.

To some degree, the Japanese are apathetic because they can be. Even after almost 20 years of deflation, Japanese society hasn’t unraveled into widespread homelessness, crime and deprivation. Also, Abe’s decisiveness is scoring points with the electorate. Japan is on its 16th prime minister since its asset bubble burst around 1990 and not since, or long before, Junichiro Koizumi (2001-2006) has it had a truly audacious leader pledging to shake up the status quo.

It’s important, though, that reforms move Japan forward in accordance with the aspirations of its people. It’s up to voters and opposition politicians to tell leaders what those goals are and hold them accountable. By giving Abe such carte blanche, Japanese may be setting themselves up for buyer’s remorse.

Apathy Sets In

Apathy has clearly set in for the Japanese. Is there a lesson? 

I Think so, and it should be easy to spot.

The average Japanese citizen is quite comfortable with deflation and falling prices. Only the financial elite and some corporations are upset about the matter.

Yet here we are. The next election in Japan will likely give Prime Minister Shinzo Abe one of the bigger blank checks ever, simply because the Nikkei stock index has soared.

Bloomberg writer William Pesek says “Japanese may be setting themselves up for buyer’s remorse.”

Change “may be” to “will be” and Pesek is 100% accurate.

Mike “Mish” Shedlock