Abenomics remains a dumb idea. It has failed.
Rather than admit the stupidity of the idea, Financial Times writer Robin Harding says Japan Will Have to Double Down on Stimulus to Save Abenomics.
Like a man selling ice creams in a snowstorm, Haruhiko Kuroda could not have timed his late January move to negative interest rates any worse. Within a few days of the Bank of Japan governor’s shock decision came weak data on the US service sector, a Mario Draghi pledge of “no surrender” on fighting deflation and a fresh bout of fear about eurozone banks.
Such signs of global weakness quickly overwhelmed Mr Kuroda’s latest bazooka; far from falling, the yen burst out of its Y118-Y125 range to trade at Y114. For the first time since prime minister Shinzo Abe launched his Abenomics stimulus in 2012, he cannot rely on rising foreign demand.
The logic for Mr Kuroda to ease again is powerful. If markets stay weak and the yen stays strong, Japanese consumers and companies could lose their faith in inflation ever reaching 2 per cent. Given that Mr Kuroda has the ammunition for a further cut, it makes sense to use it straight away.
Mr Abe and Mr Kuroda’s determination to revive Japan’s economy now faces a test. If they no longer have the will to double down on stimulus, it will be RIP Abenomics, 2012-2015.
Japan Flirts With Deflation Again
As obvious proof of the stupidity of Abenomics Japan Back to Flirting with Deflation.
Japan is flirting with deflation again as a fresh slide in commodity markets left prices flat in January over the last year.
In a worrying development for the Bank of Japan, there were also signs of weakness in broader prices beyond energy, although preliminary data for February pointed to a rebound. However the services index, an important part of domestically generated inflation, was up by 0.4 per cent on a year ago.
Mr Kuroda is battling to shore up public confidence in his inflation target of 2 per cent as weakness in the global economy pushes up the yen, reducing demand for Japan’s exports, and lowering the price of imports.
Instead of attempting to shore up confidence in sheer economic stupidity, I suggest a different tact: Bury Abenomics on the ash heap of failed policies as soon as possible.
Mike “Mish” Shedlock
FROM WHAT I’VE READ ABOUT JAPAN’S ECONOMIC PROBLEMS THEY SEEM TO COME FROM WASHINGTON. IT IS MY UNDERSTANDING IS THAT INITIAL NIKKEI STOCK MARKET CRASH WAS THE DIRECT RESULT OF A USA FINANCIAL ATTACK ON JAPAN. THIS WAS FOLLOWED BY THE COLLAPSE OF THE OVERHEATED REAL ESTATE MARKET. THEN BUSH1 DEMANDED AND GOT, IF I REMEMBER CORRECTLY, GOOD JAPANESE YENS IN EXCHANGE FOR WORTHLESS TREASURIES.–THESE COUNTRIES BUYING WORTHLESS TREASURIES DO SO AT GUN POINT. THEN NEAR THE END OF THE BUSH2 REIGN AND DURING THE OBAMA ADMINISTRATION THE FEDERAL RESERVE IS DRAINING MONEY OUT OF THE SAVINGS OF THE JAPANESE PEOPLE. KIND LIKE THE “VAMPIRE SQUID” KEEPS GOING BACK TO THE JAPANESE FOR MORE AND MORE BLOOD. I’VE ALSO HEARD AND SEEN SOME CONVINCING EVIDENCE ON YOU TUBE THAT JAPAN’S EARTHQUAKE/ TUSNAMI WAS RETRIBUTION FOR THE GOVT DOING OIL BUSINESS WITH IRAN IN EUROS. SADDAM HUSSEIN WAS ATTACKED, IF I RECALL CORRECTLY, WITHIN 90 DAYS OF SIGNING AN OIL CONTRACT WITH CHINA DENOMINATED IN EUROS. THEN OF COURSE THERE WAS THE ATTACK OF LIBYA WHEN GADDAFI WAS PREPARING TO RELEASE HIS DINAR. AND QUITE FRANKLY I AGREE WITH SOME THAT GERMANY IS STILL AN OCCUPPIED COUNTRY AS IS THE EUROPEAN CONTINENT EN TOTO. THIS HELPS TO EXPLAIN WHY EUROPEAN POLICITICANS MAKE DECISIONS THAT WORK AGAINST THEIR BEST INTERESTS. OR WHY MERKEL MADE IDIOTIC STATEMENTS ABOUT THE REFUGEE PROBLEM.
CHECK IT OUT FOR YOURSELF. THE AMOUNT OF AMERICA MILITARY PERSONNEL IN GERMANY IS EQUAL TO THE GERMAN FORCES. IF, THE EUROPEANS WANTED “NATO” AND ALL THOSE SHADOW AMERICAN MILITARY BASES OF THE CONTINENT AND WASHINGTON REFUSED, EUROPE DOESN’T HAVE THE MILITARY MUSCLE TO FORCE THEM TO LEAVE. THE MANPOWER OF NATO IS OVERWHELMINGLY AMERICAN AS IS THE FUNDING OF ITS OPERATIONS. IN A REVERSE PERSPECTIVE IF THE USA ECONOMY COLLAPSES AND CONGRESS HAS TO BACK OUT OF THE NATO TREATY THEN EUROPE WOULD BE PRETTY MUCH UNABLE TO DEFEND ITSELF SAY FROM, THE RUSSIANS OR CHINESE OR INDIANS FOR THAT MATTER.
Why Are American Troops Still Stationed In Europe? – Forbes
http://www.forbes.com/…/why-are-american-troops-still-stationed-in-eur...
Forbes
Oct 29, 2012 – A U.S. soldier participates in a training exercise at the U.S. Army’s Joint Multinational Readiness Center near Hohenfels, Germany. (Image …
You have quite an imagination, Sarah.
I REMEMBER BACK WHEN KISSINGER WAS DOING HIS SHUTTLE DIPLOMACY THING THAT HE SAID WITH THE NUCLEAR WEAPONS AND THE DISPARITY IN MILITARY SIZES OF NATIONS THAT FUTURE WARS WOULD BE COVERT.
SO IT SEEMS THAT WASHINGTON HAS BEEN RUNNING A COVERT WORLD WAR SINCE THE NIXON ADMINISTRATION. IT TECHNIQUES AND WEAPONRY HAVE CHANGED OVER TIME ALONG WITH TECHNOLOGY BUT HERE ARE ITS BASIC TECHNIQUES:
# TERROR. TERROR IN TRADE UNIONISTS OR TERROR IN RELIGIOUS EXTREMISTS OR TERROR IN ETHNIC CONTROVERSIES.
# CURRENCY WARS PRESENTED AS “FREE TRADE” AND THE AMERICAN SYSTEM. BUT IN REALITY THE FIRST STEP IS TO BULLY A COUNTRY INTO DROPPING ITS PROTECTIONIST LAWS.
# WEATHER WARS ( I GIVE YOU SOME REFERENCES BELOW). BUT THE TUSNAMI IN JAPAN, THE 3 TYPHOONS AND 1 TORNADO IN THE PHILIPPINES AND THE HURRICANE AND EARTHQUAKE IN HAITI (WHICH BY THE WAY IS SITTING ON A LARGE POOL OF PETROLEUM).
SOME BOOKS OF INTEREST ARE:
JEFF FAUX’S “THE GLOBAL CLASS WAR”
NAOMI KLEIN’S “SHOCK DOCTRINE:
WILLIAM ENGDAHL’S “FULL SPECTRUCM DOMINANCE”
Stop shouting, Sarah. It’s really just annoying. It does not help your message at all.
I don’t think she is shouting. It is far easier to read her CAPITAL letters than the tiny ones we are using. For the first time I could read a comment without a head-ache.
Not sure if anyone else is having this issue, but whenever I first connect to mishtalk.com, I get a security warning from Chrome, with the following message:
Your connection is not private
Attackers might be trying to steal your information from mishtalk.com (for example, passwords, messages, or credit cards). NET::ERR_CERT_COMMON_NAME_INVALID
This server could not prove that it is mishtalk.com; its security certificate is from *.wordpress.com. This may be caused by a misconfiguration or an attacker intercepting your connection.
**
Is anyone else seeing this when connecting? I sent an email to Mish about it, but have not heard back.
Not heard about this Chris
But I have had this happen to my old blog on Google as well
I suspect you are running some obscure security program or setting.
Will forward to WordPress but I think your security software is to blame.
Mish
Mish are you a monetarist? Read Ben S. Bernanke’s FAVAR 2002 paper, which shows money is largely neutral long *and* short term. You’re smart enough to know what I’m talking about. 3.2% to 13.2% effect of Fed policy shocks on a range of variables from 1959-2001, out of 100%. So if GDP for example (see paper for details) changed 3%, then only at most 13.2% of that change was due to a Fed policy shock. “Statistically significant” but largely trivial. You might however lose readers if you become like Fisher Black and believe money is largely neutral at all times, not just long term as even monetarists acknowledge. Blog on! – Ray Lopez
No – I am not a monetarist
I am firmly in the Austrian camp
Mish
Call Krugman. He’s a genius. He’ll fix it! 🙂
You have to laugh reading “Japanese consumers and companies could lose their faith in inflation ever reaching 2 per cent”. Could? They could lose their faith? What kind of drugs are these fools taking? It doesn’t seem to matter what kind of economic reality hits them in the balls – they just keep on going driving the economy further into the ground. Nothing short of armed revolution and killing every economist alive is going to be what it takes.
The ONLY way to salvage stupidity is by doubling…or even tripling down. Ask anyone in government…they will tell you. When your only goal is proving your ideology, actual results are secondary at best.
It’s not stupid, It stings out a deadens situation
If Japan tanks the rest of the industrialized western world will be up next. Therein lies the problem. The stimulus men and women will be proven wrong. We cannot have that now can we. QE seems to be in rotation and right now the USA cannot do it because of the election year and most people now finally get that it did not do a darn thing to help them out, unless you bought a home or a subprime auto loan. Commercials now stating less credit checks, easier access to money will put us right back where we were in 2007.
QE went to the banks, corporations, and individuals that have first access to the money. We pleebs did not get squat unless you want to consider we will be the ones paying it back. Not sure if this is spelled correctly but Japan has created a quadrillion Yen to stimulate the economy and it still has not worked. We and the EU will eventually do the same darn thing and all the Keynesian economists will still state we have not done enough you need to create more fiat currency out of thin air. What a crock maybe it is time to let these banks fail or break them up. Maybe it is time to allow losing corporations to fail. Maybe it is time to allow our corporations to bring profits home without taxes on them, after all they already paid taxes on the money in the country they made the profits in.
I do not have the answer but printing is not going to help economy. Strip out government spending in the GDP and it is negative.
So you prefer negative GDP?
It isn’t that a negative GDP is preferable, it’s that it is a more honest assessment. Perhaps “more accurate” is a better term. A large portion of government spending is not productive. It’s the equivalent of eating your seed crop,as opposed to something which provides a greater return over time. Most spending is now either transfer payments or wasted on assets that will ultimately be written off without ever accomplishing the stated aims for which it was spent.
Jon I prefer honesty. It is scary in my mind that the GDP is basically government spending or those spending government money. I prefer the truth.