BOJ rift surfaces over easing as political debate heats up

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  • 2

    gokai_wo_maneku

    Dear China, Don't worry about Japan. When Abe is elected PM, Japan will self-destruct. You don't have to do anything! The mess may be a bit much to pick up.

  • 0

    JeffLee

    Having a powerful but independent organization is very much at odds with Japanese culture. Independence breeds envy and a sense of resentment among those outside the organization.

    Japan is like a big, oppressive sponge, absorbing anything that emerges -- innovative thinking, bold opinions, independence, individuality -- in its path and sucks it into "the system," where all those qualities are suffocated.

  • -1

    ubikwit

    It's obvious that the level of the yen should have been too high for too long, and that the central bank has done too little to counter that.

  • 3

    badman

    Why do seemingly intelligent people continue to perpetuate the myth that Japan is an export economy? I guess that past is a difficult thing to change in people's minds. Japan derives between 10-15% of it's economy from exporting and it's percentage of importing falls in the same range.

    Japan's problems are more affected by chronic over-employment which, in turn, leads to it's ridiculously low level of productivity (last of all industrialized nations according to the OECD) and only 65% that of the US. This low unemployment and productivity are, in my opinion, the root cause for the lack of innovation. Desperation breeds innovation as one of my professors quipped. Granted, there are cultural issues that affect things, but the longer the government (and big business) tries to over-control things, the deeper this mess will become.

    Japan has one of the highest debt ratios (about 200% of GDP and double that of the US) in the industrialized world and when you couple that with an aged population that garners fixed pension payments with rising healthcare, Japan is heading for a crash. Better to allow a controlled burn like the forest service would do with an overgrown area. The economy would drop, unemployment would rise, but the unemployed would return to school to get new skills and some would start new and innovative business which would help pull Japan out of a 25 year funk.

  • -1

    BertieWooster

    gokaiwomaneku-san,

    You make an excellent point there.

    After Abe has finished with Japan, NOBODY is going to want it!

    A much better deterrent than the US military, and a whole lot cheaper too!

  • 0

    BertieWooster

    ubikwit-sa,

    It's obvious that the level of the yen should have been too high for too long, and that the central bank has done too little to counter that.

    Maybe this eventuality wasn't covered in their manual.

  • -1

    fupayme

    Badman while your plan of fiscal reform is the correct course, it doesn't benefit my bottom line :P

    Every 1 yen per dollar inflated, causes me to do a small dance, as it makes that much of a difference immediately

    Of course I know this won't help in the long run for Most people, since most people don't invest their earnings to hedge against the coming inflation that all this money printing is causing

    As long as you can stay ahead of the curb, and reinvest your money into areas which are beating inflation, you are fine

    if you can't, then get ready to crash and burn in the next 10-20 years

  • -3

    ubikwit

    Why do seemingly intelligent people continue to perpetuate the myth that Japan is an export economy?

    I don't think the focus is strictly on being an export economy, but on balance and stability.

    Recall that Japan has maintained a relatively healthy manufacturing sector vis-a-vis the USA free-trade mogul, which off-shored and outsourced every- and anything possible.

    Job security is something that is conducive to social stability, not necessarily to be made light of. On the other hand, artificial means used to perpetuate a mere semblance serve the interests only of the politicos and those bankrolling them.

  • -2

    kiyoshiMukai

    Bussiness styles change.things always settle somehow. We are living with problems. We had alot of exports years ago but we didnt have that much money. Somehow Me and my family have much more money and living standards than before

  • -2

    ubikwit

    didn't know the difference between a trade deficit and a current account surplus

    I believe I have a basic understanding of those terms, but perhaps you'd care to elucidate your finance-sector technocrat pseudo-science?

    And how does that relate to the exchange rate exactly? It's clear that the exchange rate affect macroeconomics, even when it is being manipulate at the micro level of finance.

  • 0

    globalwatcher

    It's clear that the exchange rate affect macroeconomics

    Actually macroeconomics affects the exchange rate. It is a big difference.

  • 0

    globalwatcher

    hahaha, someone gave me a negative feedback, I guess whoever did this mixed up micro economics to macro economics. LOL.

  • 2

    globalwatcher

    ubikwitNov. 27, 2012 - 12:30PM JST

    didn't know the difference between a trade deficit and a current account surplus

    I believe I have a basic understanding of those terms, but perhaps you'd care to elucidate your finance-sector technocrat pseudo-science?

    And how does that relate to the exchange rate exactly? It's clear that the exchange rate affect macroeconomics, even when it is being manipulate at the micro level of finance.

    ubikwit, there is no short cut in education. You are asking a solid 6 hrs class here for studens who already completed a micro economics #101. I can provide a material for you to read. Please let me know.

  • 0

    gokai_wo_maneku

    Badman has it right mainly. The portion of the economy dependent on exports is only 10 to 15%. I say "only", but 10 to 15% of something huge (third largers economy) is also something huge, so you can't underplay that.

    Also, the 200% GDP to debt ratio is a little misleading. If you net off the government's assets, it is more like 100%, which is not good but not so bad considering the total wealth of the Japanese economy (government assets include, for example, 51% ownership of trains, JTB, and lots of other stuff that was "privatized" by Koizumi.

    Of course, Japan has problems, but it also has lots of resouces to maintain its standard of living. The problem is the dumb politicians who are only out for "ME" and their farmers.

  • -2

    ubikwit

    globalwatcher

    Here are the simplistic definitions from Wiki:

    microeconomcs - a branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources

    macroeconomics - involves the "sum total of economic activity, dealing with the issues of growth, inflation, and unemployment." Microeconomics also deals with the effects of national economic policies

    I'm not sure what you people are in denial about.

    Under ideal conditions, the macroeconomics state of a country should determine the exchange rate, but you folks chose to ignore the fact that the finance sector is manipulating the market, resulting in a state of affairs where the exchange rate does not reflect the macroeconomics state.

  • 2

    gokai_wo_maneku

    ubikwit: hear hear!

  • 0

    globalwatcher

    ubikwitNov. 26, 2012 - 07:26PM JST

    It's obvious that the level of the yen should have been too high for too long, and that the central bank has done too little to counter that. And how does that relate to the exchange rate exactly? It's clear that the exchange rate affect macroeconomics, even when it is being manipulate at the micro level of finance.

    Under ideal conditions, the macroeconomics state of a country should determine the exchange rate

  • 0

    globalwatcher

    Like I said, it will take a solid 6 hrs for reasonings and a conclusion (concept) explaining this chapter.

    What Japan needs to do is a STRUCTURAL CHANGE in economics changing export driven economy to domestic consumer consumption driven economy. Keynesian theory never worked in Japan as the Consumer Consumption and Investment (Quality of Education, R&D, Innovation, Capital investment to high tech and engergy development) were not fully utilized for the past 50 years.

    Japan has been advisred to do this by IMF if Japan wants to excel for the next centuries. IMF has a solid economic data of Japan filled with a top of cream and crop world economists. IMF wants every country including Japan to succeed, and IMF means well.

    People in Japan still live in a small shoe box size house with a 56 inch flat TV that takes up a half of living room. They have been told an illusion by J. Gov. that they are in the middle class. Are they really? High price goods, fewer choices of goods, working too long too much heading to Karooshi-die young syndrome.

    I assure you that Abe's plan will not work and it will be eliminating Japan as a good competitor in global market. Maybe that's the reason the world are not saying anything about this.

  • -3

    ubikwit

    A couple of points should be mentioned, and I really don't think i need the refresher course, but thanks anyway.

    First, Japan wins more Nobel prizes in the sciences than any country except the USA. Some Japanese researchers are at the leading edge of their respective fields, and the advances they make do often translate into economic growth.

    Second, the disparity between the level of the yen and the economic fundamentals of Japan is similar to that of the disparity between the high debt costs of Italy and the economic fundamentals of Italy, as has been adroitly articulated by Italian PM Monti, who just happens to be a "respected economics professor".

    http://www.reuters.com/article/2012/08/08/us-italy-monti-idUSBRE8770SS20120808

    Here is the relevant passage from that article (emphasis mine).

    The government insists that Rome, which has a primary budget surplus, does not need a bailout like Greece, Ireland and Portugal, but European measures to enforce stability on bond markets to allow them to cut the debt. Italian officials say the country's economic fundamentals warrant a divergence of its 10-year bonds against German Bunds of around 200 basis points instead of 440 at present. Each 100 points of "spread" adds 20 billion euros a year in debt service costs, equivalent to the entire revenue raised by unpopular new housing taxes. A senior government economic official, speaking on condition of anonymity, said soaring borrowing costs distorted normal macroeconomic mechanisms, compounding Italy's pain. "The European Central Bank lowers its rates but our rates go up... interest rates are going up instead of down in a recession," he said. "Countries that don't need low interest rates get them and those in recession get high rates."

    The question in Japan is not as to whether Abe's exaggerated plan works, it is as to what monetary mechanisms can be deployed under government efforts to disuade the currency speculators and other finance industry cretins from trying to use Japan as a safe haven to park their ill-gotten gain and shelter it from the exigencies and of the free market.

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