Latest data show Japan's economy shrank 1.1% in Oct-Dec

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  • 7

    Yubaru

    Need more proof that consumers are not going to use their hard earned cash to prop up a pipe dream.

  • 7

    BNlightened

    I wish it weren't so, but it is. Basically, Japan and the Japanese need to understand that, as has been happening for the past 25-plus years, slightly positive, near zero or negative growth rates are the New Normal. You can't negative-interest-rate or borrow and spend your country out of such systemically-caused stagnation without also doing some serious restructuring of the entire economic structure and government-business relationship. But what is clear is that this just isn't going to happen under Dear Leader Abe or the LDP's watch.

    It's only going to get worse, since so many major Japanese firms and even average Japanese investors now rely on stock prices to determine if they're succeeding or failing: we'll see short-term thinking hasten the demise of Japan's long-term economic position as a lot more companies ship their manufacturing overseas to SE Asia or further afield, while those huge profits earned abroad in foreign markets won't be coming home to be taxed anytime soon. And if you think the Japanese people are serious penny-pinchers now, you ain't seen NOTHING yet!

  • 5

    klausdorth

    More government action?

    More extra government spending?

    More printing?

    More, more and more ... and all this won't help.

    And of course Mr. Kuroda : "Japan’s economy has improved significantly from three years ago,.....". I don't see where.

    But then again, maybe I don't read between the lines.

  • 6

    fxgai

    Kuroda seems to be getting some stick, but it's not like he hasn't tried. Abe is the problem.

    For a laugh and a cry, I reviewed Abe's 2013 "Buy My Abenomics" speech to Wall Street. http://japan.kantei.go.jp/96_abe/statement/201309/25nyse_e.html

    In the "Regulatory reform" section, he stated, "Various regulations stand in our way"; "I consider regulatory reform to be the key change that will break through obstacles in the private sector's way in every area"; and "Action forms the very essence of my strategy for growth."

    (Needless to say, his strategy appears to have been talk rather than take action.)

    At the end he (his speech writer) references Metallica's "Enter Sandman". I'm not sure what the intent behind it was, but I suspect it was the "we're off to never never land" bit.

    Oh for what could have been, had he done what he said he was going to.

  • 1

    shonanbb

    My Motto

    "If I do not need it, I ain't gonna buy i!"

  • 0

    some14some

    Its alright, focus is on Monkey Year...Q1 contraction will be more severe.

  • 7

    Aly Rustom

    Japan’s economy has improved significantly from three years ago,” Kuroda said, noting low unemployment and record-high corporate profits

    There it is. That idiot thinks that record high corporate profit is a reason to say that Japan's economy has improved. Not even Bernanke, Volker, or Geitner would be stupid enough to say something like that. That's the problem right there. The power base is so detached from the rest of the people they make people like Trump look like a good ol boy. How do corporate earnings help the average Japanese household????

    As for low unemployment, they're counting people working in dead end part time jobs and even volunteering (yes volunteering), which doesn't even pay a wage, as part of the labor force. If they really put the numbers forward, Japan would look more like Spain or Greece when it comes to unemployment.

  • 3

    Meiyouwenti

    Abenomics was a total failure, a failure of grand scale. Everybody knows that except Mr.Abe

  • 1

    sangetsu03

    Companies and consumers will eventually begin spending more, enabling Japan to reach a 2% inflation target and vanquish deflation, he said.

    How many times have we heard this? And how many times has it been proven untrue? There are really only two options in regards to inflation or deflation. Either the economy is left alone, and deflation allows the cost of living to decrease to the point where people can afford to spend, or the central bank keeps pumping and manipulating the currency, with a risk of creating hyper-inflation should a large scale recession or other economic collapse occur. The more central banks pump, the more likely the latter scenario becomes.

  • 2

    lostrune2

    Japan’s GDP contracted at a 1.1% annualized pace in the last quarter... They showed a modest improvement over the previous estimate of a 1.4% contraction in October-December.

    In quarterly terms, the economy shrank 0.3% in the last quarter compared with a preliminary estimate of a 0.4% contraction.

    Japan’s economy grew 0.5% in 2015 after flat-lining in 2014

    So it wasn't as bad as initially estimated

  • -1

    Akula

    Given current demographics, where the population is declining, and the population of working people is declining even more quickly (and has done so for 20 years) economic growth is nigh on impossible.

    One thing that could help is Japanese companies being a bit less cheap with what they pay their workers. I'd say there are a lot of lowly paid workers who would spend an extra 10000-20000 yen a month if they had it.

  • 0

    fxgai

    Disagree with you there Akula, wages would be best set by free market forces.

    Best thing for lowly paid people is to get more skills or change jobs.

  • -1

    Commodore Shmidlap (Retired)

    People need to work harder for less money. And stop complaining so much. If you just work harder, complain less and expect nothing in return for your labor then everything will be hunky-dory.

  • -2

    Strangerland

    Disagree with you there Akula, wages would be best set by free market forces.

    Best thing for lowly paid people is to get more skills or change jobs.

    Lowly paid people don't make enough money to be able to afford to skill up, and as such changing jobs just keeps them in a similarly lowly paid job.

    The free market has been shown that it will squeeze as much as possible out of its workers, giving the least possible in return. And that's what's created this disaster in our planet with so little of the population holding so much of the wealth.

    The free market is probably the worst way to be setting wages. It ends up as a race to the bottom.

  • 2

    fxgai

    Government should offer assistance through training programs etc to help those on low wages get more skills, if they didn't pick up enough while they were going through the education system. Not mess with market forces.

    The point of changing jobs is to get better conditions like wages, so yes if nothing better is on offer, little point in changing. To fix this, the government should reinvigorate the business environment by basically getting out of the way and making it easier for people to make money.

    The free market has been shown that it will squeeze as much as possible out of its workers, giving the least possible in return.

    Which free market? There isn't one in Japan, it's a highly regulated one. If Japan becomes a more attractive place to do business, there will be higher demand for labour, which means the price of labour (wages) will go up.

    And that's what's created this disaster in our planet with so little of the population holding so much of the wealth.

    Bill Gates is a billionaire, yes, but I don't see how that is a disaster.

    I think the problem is that the world isn't growing now because of all the over-regulation, and as a result the most vulnerable aren't doing so well, and thus we hear complaints about people having more than they do. But if they were getting richer through faster economic growth, I don't think they'd be complaining any more.

  • -2

    Strangerland

    Government should offer assistance through training programs etc to help those on low wages get more skills, if they didn't pick up enough while they were going through the education system.

    I agree.

    Not mess with market forces.

    That's still messing with market forces, though in a less direct manner.

    Which free market? There isn't one in Japan, it's a highly regulated one.

    Japan has a highly regulated free market, but to say there is no free market in Japan is ridiculous. I say this as someone who makes his living on the free market in Japan.

    Bill Gates is a billionaire, yes, but I don't see how that is a disaster.

    Me neither, I have no idea why you'd bring up a single person I didn't mention, to talk about a trend. An anecdote does not disprove anything.

  • 4

    sangetsu03

    So it wasn't as bad as initially estimated.

    It will be worse. These numbers are almost universally revised downwards. And if you subtract the amount of "growth" that was paid for with deficit-spent public sector money, the numbers are much worse.

    The free market has been shown that it will squeeze as much as possible out of its workers, giving the least possible in return. And that's what's created this disaster in our planet with so little of the population holding so much of the wealth.

    So funny. Japan has triple-digit tariffs on many goods, non-tariff barriers the government regulates the economy to great extent, price fixing is rampant in the domestic economy, and competition among businesses for sales, skilled workers, or new sources of income are almost non-existent, and you blame the free market for Japan's problems? There is no free economy in Japan, there has been none since MacArthur was forced to let the zaibatsu regain control of their companies, and then the government itself. Once again, there is no free market in Japan, nor is there one in America, Europe, or anywhere else. The only places which had anything resembling free markets were Hong Kong and Singapore.

    The failures we are seeing in the world's economies are not the fault of the free markets, but the consequences of control, corruption, and mismanagement by governments.

  • 0

    fxgai

    That's still messing with market forces, though in a less direct manner.

    Yes, such policies would increase the supply of certain types of skilled labour and reduce the supply of low-skilled labour, so all things equal there would be effects on the market.

    But dictating what the price of certain things shall be is pushing market forces aside completely. Who needs a market when government will tell us what the price shall be? And what will happen if government sets the price "wrong"?

    Japan has a highly regulated free market, but to say there is no free market in Japan is ridiculous.

    My point is that Japan should make its markets freer than they are. Free markets have lifted millions of people out of poverty around the globe. Highly regulated markets have invariably resulted in social disasters. Look at Venezuela.

    I have no idea why you'd bring up a single person I didn't mention, to talk about a trend.

    You described a "disaster". I don't see it as a disaster that there are some extremely rich people, because millions of the rest of us have been lifted out of absolute poverty in the process.

    People are complaining about relative poverty these days, because poor policy has the global economy struggling to grow and increase everyone's wealth in absolute terms.

  • -2

    Strangerland

    You described a "disaster". I don't see it as a disaster that there are some extremely rich people

    The disaster is that the wealth has all been funneled up, and unfortunately very little trickles down.

    because millions of the rest of us have been lifted out of absolute poverty in the process.

    Originally yes. But now many of those who were brought up to the middle class are no being pushed down to poverty.

    The current wealth distribution in our world is a complete an absolute disaster.

  • 2

    sangetsu03

    The current wealth distribution in our world is a complete an absolute disaster.

    And this is what happens when a third party tries to redistribute wealth. In effect, wealth redistribution punishes the successful by taking away the rewards for their ideas, risk, and hard work, and rewards failure essentially by paying people to fail. The ones who benefit most by wealth redistribution are the politicians and bureaucrats who do the redistributing. If a rich person pays a $100 tax to alleviate the poor, how much of that money is left by the time it reaches the poor? Very little. Kind of like the national charities (United Way, Unicef) who, after paying their president, executives, staff, and overhead, end up with 3% to 5% left over to go to the poor.

    Remember the late Hugo Chavez? The man who promised to take from the richest in Venezuela and give it to the poorest? Do you know who is the richest person in Venezuela? It is Hugo Chavez' daughter. He took a lot from the rich, paid a pittance to the poor, and kept the rest for himself, and between him and Maduro, they have managed to destroy Venezuela's economy in the process. The poor of Venezuela are no better off than before, the rich certainly aren't, and what little exists in Venezuela's middle class was hurt the most. Venezuela is an extreme example, but essentially all wealth redistribution schemes produce opposite results than intended.

    Wealth redistribution does not work, and when you try to redistribute wealth, the group which is hit the hardest is the middle class.

  • -2

    Strangerland

    And this is what happens when a third party tries to redistribute wealth.

    No, this is what happens when capitalism is left to itself without enough regulation. The rich will always get richer and the poor will always get poorer in unregulated capitalism.

    In effect, wealth redistribution punishes the successful by taking away the rewards for their ideas, risk, and hard work, and rewards failure essentially by paying people to fail.

    That's a pretty selfish attitude. I make a lot of money from my companies. If I made less, in order to help the poorer, I would still live very comfortably, as I would still be rewarded for my efforts and the risks I've taken. But the other side of it is that I would be living among people with a higher quality of life, and with more possibilities for their future. This creates a more uplifting attitude among the people as a whole, and I would be better off for it even as a rich person who doesn't get as much. I'd rather live among a higher educated population than a lower one. And I'm not even close to the upper end of the wealth scale, I'm just doing a lot better than most of those at the lower end.

    The ones who benefit most by wealth redistribution are the politicians and bureaucrats who do the redistributing.

    No, the ones who benefit most are those who are able to pull themselves out of poverty.

    Wealth redistribution does not work, and when you try to redistribute wealth, the group which is hit the hardest is the middle class.

    What a ridiculous claim, from start to finish.

  • 1

    sangetsu03

    No, this is what happens when capitalism is left to itself without enough regulation. The rich will always get richer and the poor will always get poorer in unregulated capitalism.

    This is absolutely wrong, and painfully ignorant, actually, it is outrageously stupid. It is only through regulation that companies can negotiate a competitive advantage without having to provide better products, services, or improve efficiency. Monopolies are not created by companies or industries, they are awarded by governments.

    Take for example the US federal income tax code. The tax is progressive, and, nominally, the more you earn, the higher your tax is. Sounds simple? Yet, this code is more than 10,000 pages long, and contains more than 70,000 rules and regulations. Why so many? Because it is through the tax code that politicians reward those who support them, and punish those who oppose them. These taxes give some companies an advantage, or take away advantages of other companies. If you want a tax credit, lower rate, or federal subsidy for a certain product or service in order to give your business an advantage over your competitors, then hire a lobbyist to wine and dine your local representative, and if he can make a good deal (a large bag of money, donations to his reelection campaign, or a job for his son-in-law), a bill will be introduced in congress, or attached to another bill, and if all goes as it usually does, you get your exemption, credit, or subsidy. And often it isn't the business which is hunting for an advantage, it is a politician who is out hunting for money. He may come to your office one day with a deal, and if you don't want to be out of business in two years, you had best accept the deal, and pay him what he wants.

    By this system we end up with the "Big Three" automakers, instead of the dozens we once had. We end up with banks which are "too big to fail", and corporate welfare on a huge scale. We end up with two financial companies which hold most of the mortgages in America. All of these are the result of regulation, not free markets.

    In Japan we end up with Mitsui, Mitsubishi, and a handful of other companies running almost every industry in every part of the economy. I live in a Mistui apartment building with Mitsui windows, a Mitsui elevator, and Mitsui insurance. Across the way is a Mitsui owned shopping center, in the center of which is a branch of SMBC bank, also owned by Mitsui. Is Japan a true free market when such things occur?

    In an unregulated market, there is no advantage to be had against competitors, unless it is a better product, a better price, better efficiency, and constant innovation. There are many small companies operating and competing, rather than a handful of large companies negotiating favors with regulators to give them the market, and shut everyone else out.

  • 0

    fxgai

    The disaster is that the wealth has all been funneled up, and unfortunately very little trickles down.

    No no no. The disaster is that the economy has not been growing, which makes life a struggle for more people.

    The world is better for all because people created iPhones (employing loads of people in the process) and got rich as a result. Someone creating iPhones and employing loads of people doesn't push people into poverty. It improves the lives of people around the world, including poorer countries like those in Africa, where people treasure and take pride in their mobile devices.

    You are assigning the blame for a perceived problem to the entirely wrong place. That's not going to help.

    this is what happens when capitalism is left to itself without enough regulation.

    Here we have more than enough regulation.

    Where exactly do you think there is unregulated capitalism?

    If I made less, in order to help the poorer,

    What are you thinking? You making less wouldn't help a poor person.

    I'd rather live among a higher educated population than a lower one.

    Rich people becoming poorer and thus paying less taxes does not help poor people to get more educated. The richer people get, the better, because the richer they get, the more tax they will pay, and the more tax they will pay the more there is to go to improving public education systems.

    the ones who benefit most are those who are able to pull themselves out of poverty.

    People who are able to pull themselves out of poverty are more likely to be able to do so when rich people invest their money in businesses, creating jobs!

    Socialism fails. Let's not do that again.

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