business

BOJ's corporate call to arms a sign of lost faith

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By Leika Kihara

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Japan’s central bank governor is urging companies to do more to tackle deflation

In normal economies, companies take instructions from their shareholders. Having a meager stake in Japanese equities myself, I'm unhappy with this interference from the government and central bank, and am seriously considering dumping it all for US equities.

his massive money-printing exercise has failed so far

But it has helped keep the government's finances from collapse, which was probably regarded as a very useful "side-effect" of the exercise.

policymakers are losing faith in the point of delivering more of the same.

Sanity prevails?

Kuroda should be heaping the pressure back on Abe. It's ridiculous to think that QQE can produce real, sustainable economic growth. He's struck this tune before, time to bring it out again: http://www.reuters.com/article/2014/06/15/japan-economy-boj-idUSL4N0OR4UG20140615

-4 ( +2 / -6 )

"I'm unhappy with this interference from the government and central bank,"

If it weren't for such "Interference," the capitalist system would have died a long time ago. At least by 2008, before the corporate taxpayer-funded bailouts and near trillion dollars of TARP money.

The Japanese government propped up its (private sector) financial system after the bubble with an amount of money reckoned to be big enough to end literacy throughout the world.

So does Abe and other political leaders have the right to tell these businesses what to do? They sure do.

-4 ( +1 / -5 )

If it weren't for such "Interference," the capitalist system would have died a long time ago.

The capitalist system would have died, if the government and central banks were running companies rather than shareholders?

Centrally planned economies have been an unmitigated failure, as continues to be evidenced in places like Venezuela today.

You'd like to use financial sector led recessions as an excuse to bring the entire private sector come under government control?

Should such a crazy, failed, backwards ideology ever come close to fruition, shareholders would dump their stocks hand over fist, crashing the stockmarket and taking the value of pension funds down the gurgler.

Abe and Kuroda have no business telling business what they should and shouldn't do. Their role is in nurturing an economic environment in which free enterprise can prosper. It is absolute folly (and desperation on their part) to think that these political muppets have a clue about how to run every business in the country.

-2 ( +1 / -3 )

"....if the government and central banks were running companies rather than shareholders?"

Hope. If the government and authorities didn't keep bailing them out, providing them "accomodative" monetary policy, spending on things like infrastructure (so the companies have roads to transport their goods, for example) and education, and a host of incentives and procurement opportunities.

Corporations live and die, depending on the quality of govt policies in their jurisdictions. So yeah, Abe does have the right to tell them to behave in line with this country's economic objectives.

"Centrally planned economies have been an unmitigated failure, "

Singapore hasn't. In fact, it's the most competitive place on earth and often hailed as the world's most successful economy.

-2 ( +1 / -3 )

Japan’s central bank governor is urging companies to do more to tackle deflation, a tacit admission that his massive money-printing exercise has failed so far and that policymakers are losing faith in the point of delivering more of the same.

Many posters here like myself, fxgai, smithinjapan and others "lost faith" in this "money printing exercise" the moment it was put in place. Can't believe it has taken this long for others.

-7 ( +1 / -8 )

Sell Yen and buy $$ investment. 

If you have been reading my financial posts in the past, I had predicted the failure of BOJ run by Kuroda 3 years ago. The 2% of inflation will not be attainable unless yen becomes much weaker to 150-180yen per $. That's all I can tell you.

0 ( +1 / -1 )

@JeffLee, companies going bust is a part of the capitalist system. Idiot politicians throwing everyone's money at failures for election reasons is not, even if they get lucky and make money sometimes. Failures outnumber successes.

"Procurement opportunities" where government offers contracts for otherwise uneconomic ventures are concerned are also not a prerequisite of the capitalist system.

Infrastructure - sure. Having that's part of an attractive business environment, which benefits society as a whole through the employment and wealth creation opportunities it provides.

Incentives - yes, you this one right. But incentives is the opposite of what is being discussed here, which government and central bank telling companies to what to do in a desperation attempt to make their failed policies look like they are creating incentives for wage hikes, when they haven't.

So yeah, Abe does have the right to tell them to behave in line with this country's economic objectives.

You presented no logic to lead to this conclusion, you just jumped to it.

In your mind, why would any sane worker ever decide to risk their hard-earned savings by investing in a business and becoming a shareholder? What's the point? At the end of the day if the government is to be calling the shots, why doesn't the government just tax everyone more and nationalize all the companies and skip the whole charade?

Successful business is a benefit to society as a whole, through the employment opportunities created which enable people to build wealth and save and invest in further business activity, improving people's lives.

Centrally planned cronyism fails over and over. Well done finding the small island state of Singapore as an exception to the rule, but you didn't quote any example of their government or central bank telling their businesses how to run their operations, as has been happening here in Japan recently. Japan's politicians would do well to take some economies lessons from the clever cookies who are fortunately running the show there.

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@globalwatcher totally agree while the yen @ 120 would be considered normal 150~160 is a much better target if they really want some inflation, those Chinese tourist will be coming in waves. Itll force those imported goods lovers to look at a Japanese made product instead. US feds should be raising rates soon so 130+ is just around the corner

0 ( +1 / -1 )

What you guys want to watch is when the 2% inflation target is met and BOJ stops the bond buying. So far, BOJ is already buying a long term bond. Crazy..

-3 ( +0 / -3 )

What you guys want to watch is when the 2% inflation target is met and BOJ stops the bond buying. thatll be a while off yet, by that time interest rates would have risen in the US and the money will be flowing into the US, taking pressure off the safe haven currency which people seem to think Japan is and keeping the yen weak over the long term

0 ( +1 / -1 )

"What you guys want to watch is when the 2% inflation target is met and BOJ stops the bond buying."

Ok, I'll be watching. With bated breath. LOL.

@fxgai

The only thing I'll say at this point in response to your diatribe on the virtues of capitalism.....is that every time I take a flight on Singapore Airlines, I'm reminded of the evils of socialism.

-2 ( +3 / -5 )

Evils of socialism are unfortunately in display right here in Japan. Ought be less like Venezuela, not more.

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The only thing I'll say at this point in response to your diatribe on the virtues of capitalism.....is that every time I take a flight on Singapore Airlines, I'm reminded of the evils of socialism

Are you implying that Singpore is socialist? In comparison to Singapore, Japan is Stalinist. The top tax rate in Singapore is 15% for companies or indviduals, what are the rates in Japan? Singapore has one of the lowest tariff schedules of all countries, 99% of goods imported are duty-free. Singapore does not bail out failing companies, and when opening a company in Singapore one needn't grease the palms of a dozen or so bureaucrats before one can get running. Incorporation is fast, simple, and inexpensive. Singapore is the closest thing we have in Asia to a free-market capitalist system. And what is the result? a country which 50 years ago was rated as the poorest in all of Asia, and is now one of he richest. There is a reason that companies from around the world have incorporated the Asian offices in Singapore, and it is not because of Singapore's "socialist" system.

-1 ( +3 / -4 )

JeffLeeNov. 21, 2015 - 06:46AM JST

"What you guys want to watch is when the 2% inflation target is met and BOJ stops the bond buying."

Ok, I'll be watching. With bated breath. LOL.

LOL you watching? Bwhhahahaha. RIGHT!!

Do you think BOJ still in a position of flexible monetary policy? How is the sovereign national debt financed? What does it mean to you? Japan has privatized the Postal Savings and Postal Insurance recently. What does it mean to you?

-3 ( +0 / -3 )

"How is the sovereign national debt financed?"

Errr. with a currency the country has the sole authority to issue. Here's a question for you: how will Japan run out of a currency it has the sole authority to issue?

"LOL you watching?"

Yeah, I like to keep track all your predictions of Japan's impending debt default, "hyper inflation," bond crisis, debasing of the dollar, skyrocketing interest rates, a rush to gold assets due to a loss of confidence in fiat currencies, etc.

None of the predictions have even come close to coming true, in fact the real world has moved in the opposite direction, but hey,but don't let that discourage you from fantasies.

0 ( +3 / -3 )

JeffLeeNov. 21, 2015 - 11:00AM JST

"How is the sovereign national debt financed?"

Errr. with a currency the country has the sole authority to issue. Here's a question for you: how will Japan run out of a currency it has the sole authority to issue?

As of this month, Japan's sovereign debt is 1,059 trillion yen that is over 260% over GDP. How much do you want to print to make your currency worthless? Unlike US, Japan has been doing this for decades. When does it end? I love comments like yours. Bwhafhahaha......Any monetary policy with this debt?

None of the predictions have even come close to coming true, in fact the real world has moved in the opposite direction, but hey,but don't let that discourage you from fantasies.

As a matter of fact, Jim Rogers, George Soros and we big global investors do not agree with you.

-3 ( +1 / -4 )

Some people are speaking like if the US economy was healthier than Japan's. Sorry, it's a big disaster as well. What will happen if China will sell American debt?

-4 ( +1 / -5 )

And some people are speaking like if the pure capitalism is a good thing or possible.

If the companies wouldn't listen, then the govt has to change the part time law so that the companies have to hire mostly regular employees.

-6 ( +0 / -6 )

JeffLeeNov. 21, 2015 - 11:00AM JST

Yeah, I like to keep track all your predictions of Japan's impending debt default, "hyper inflation," bond crisis, debasing of the dollar, skyrocketing interest rates, a rush to gold assets due to a loss of confidence in fiat currencies, etc.

None of the predictions have even come close to coming true, in fact the real world has moved in the opposite direction, but hey,but don't let that discourage you from fantasies.

Ehhhhh Jeff,

I've been reading this site for 20 years and nobody has ever written that 2015 will be the end of financial days. The closest date predicted is mine, on the opinions opined by a lot of Japanese economists/profs who have stated the obvious fact that all of the wealth in this country will be invested in government debt by the end of November 2017.

Now you might think that Japan has invented the financial wheel, but past historical evidence, from Spain in the 18th Century to countless countries in the 20th Century, have shown us that the never-never land of fiscal irresponsibility leads to the same ending.

That's all globalwatcher is stating..............................

-4 ( +1 / -5 )

Some people are speaking like if the US economy was healthier than Japan's. Sorry, it's a big disaster as well. What will happen if China will sell American debt?

Alex80 -- you must have missed the US economy that has added 3 trillion to the GDP in the past seven years, and brought unemployment down to 5%. And the one where the Fed is actually going to RAISE interest rates next month because the economy is performing so well. Is that the "big disaster" you mention? LOL.

-3 ( +3 / -6 )

The closest date predicted is mine, on the opinions opined by a lot of Japanese economists/profs who have stated the obvious fact that all of the wealth in this country will be invested in government debt by the end of November 2017.

Yep. Many Japanese business are buying foreign investments.. Government of Japan is already free from all legal obligations of postal saving and postal insurance in the time of financial collapse. Recently, they are changing hands to common stock shareholders.

-1 ( +1 / -2 )

Recently, they are changing hands to common stock shareholders

Postal privatization was a US request for a long time, and Koizumi realized it (but he couldn't get the Joint Congress address!). The govt says they use the revenue for Tohoku.

-1 ( +2 / -3 )

tinawatanabeNov. 21, 2015 - 11:46PM JST

The govt says they use the revenue for Tohoku.

?? The revenue, you mean profit? If they ever make some, they should go to the shareholders, not Tohoku. I am not so clear what you are talking about. Please clarify. Thanks.

0 ( +1 / -1 )

Jerseyboy...continue to dream, while your country is collapsing. ;-)

-1 ( +3 / -4 )

Jerseyboy...continue to dream, while your country is collapsing. ;-)

LOL. Alex, I'll take my country"s "collapse" any time over Japan's "propserity". I guess all those U.S. companies like Apple, Facebook, Google, Microsoft, etc. that are global leaders, including in Japan, are just my imagination and part of this supposed collapse.

-3 ( +2 / -5 )

Jerseyboy, I see you didn't understand what is happening yet. Continue to live in your bubble, where you think an economy is healthy just because it has some big companies in internet business, while the middle class is disappearing basically everywhere in the old developed countries. I never said Japanese economy is in a better condition than US economy, but unlike you, I am able to see how bad the situation is also in the US and in Europe. Continue to live in your Wall Street Bubble, in your Google, Facebook and Apple magic world.

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you mean profit? If they ever make some, they should go to the shareholders, not Tohoku.

??? By the IPO, the govt received money because they were the shareholers.

-4 ( +0 / -4 )

Alex80: "I never said Japanese economy is in a better condition than US economy"

Yes, you did, you insinuated it in an earlier post when you hijacked the thread to, yet again, bash the US: "Some people are speaking like if the US economy was healthier than Japan's."

jerseyboy and others are bang on, and even the economists quoted in the article. Kuroda has been a disaster, keeps changing his predictions, flip-flopping, shirking the blame, and still thinking himself a genius when he's a proven failure.

“Kuroda seems to be reverting to the old BOJ style, when policy decisions weren’t rule-based and were arbitrary.”

Exactly!

-3 ( +3 / -6 )

Because you can't reply except to make off-topic rants about ancient games in other sports or blaming the US for everything, then when asked legitimate questions run away.

0 ( +0 / -0 )

@smith: you hate Japan and you express your blatant hate in every thread. You are also free to write all the off topics you like. I don't blame the US for everything in a random way. It's only you decided that I am always off topic when I show America hypocrisy. Jerseyboy enjoys Japanese economic crises and speaks like if America economy is okay, while all the West is sharing the same kind of problems with some minor differences, but the scenario is gloomy in general.

1 ( +4 / -3 )

Smith, you can't manipulate my mind like you think. You hate Japan, you hate me, and specially you hate free speech.

-1 ( +0 / -1 )

be it intentionally deflating the yen to try and boost the economy through exports

If you are american or Korean, your country is doing that too in much larger and longer scale. Japan was forced stronger yen year on year for two decades, which completely destoyed Japan's economy. And which countries did it and benefited?

be it printing money without end, or constantly changing what he says when his promises and methods,

Your country is not?

I don't hate Japn one bit

You seem to be the most famous Japantoday poster among the Japanese community. They are not that stupid.

-1 ( +2 / -3 )

tinawatanabe: "If you are american or Korean, your country is doing that too in much larger and longer scale."

I'm neither, tina, so I guess then you just validated my point. Thank you.

"Your country is not?"

Nope.

"You seem to be the most famous Japantoday poster among the Japanese community. They are not that stupid."

While I appreciate the celebrity status, if they think that then yes, they are stupid. But just to prove my point a little, if I am "Japan bashing for saying that Kuroda is, and always has been, a disaster, is this guy not Japan bashing also?

“The threshold for monetary easing has become considerably high,” said Hideo Kumano, a former BOJ official who is now chief economist at Dai-ichi Life Research Institute. “Kuroda seems to be reverting to the old BOJ style, when policy decisions weren’t rule-based and were arbitrary.”

He also thinks that Kuroda is being reckless. So what does that make him? Let me guess, "It's different!", right? Always is.

-3 ( +2 / -5 )

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