Bloomberg: Abenomics has chance to reshape Japan

[CityFarmer]

The Abenomics remains challenging for Japan. Consumers behavior is as unpredictable as Mr. Market's

Revised data show Japan second-quarter GDP shrank more than expected

TOKYO - Japan's economy shrank an annualised 7.1 percent in April-June from the previous quarter, more than a preliminary estimate, underscoring concerns the hit from an April increase in the sales tax may have been bigger than expected.

The revised contraction was the biggest since January-March 2009, when the global financial crisis hit Japan's exports and factory output, keeping policymakers under pressure to expand fiscal and monetary stimulus should the economy fail to recover from the disruption of the April tax hike.
...
http://www.todayonline.com/business/revi...e-expected

[CityFarmer]

The productivity is the ultimate prerequisite for wage increment, rather than by policy...

Japan to refrain from pressing firms to raise wages: sources
11 Sep 2014 07:07
[TOKYO] Japan's government, reversing its recent stance, will refrain from directly urging businesses to raise salaries by intervening in annual wage negotiations between management and labour unions next year, government sources told Reuters.

The government will instead focus on deepening debate on labour reform to raise productivity at Japanese firms, through a joint meeting between the government, businesses and labour unions, to be resumed later this year, they said.
...
Source: Business Times Breaking News

[CityFarmer]

Latest update on Abenomics...

BOJ chief tells Abe ready to take steps if price goal in doubt

TOKYO - Bank of Japan Governor Haruhiko Kuroda told Prime Minister Shinzo Abe he is prepared to take whatever steps needed to achieve the central bank's 2 percent inflation target if it comes under threat.

In a face-to-face meeting about the economy, however, Kuroda said he received no particular instructions from Abe. Kuroda said he discussed the economy after a sales tax increase in April and told Abe that Japan's economic momentum remains intact.

Kuroda's optimism about the economy suggests he sees no need for immediate action, but the meeting with Abe could fuel speculation the BOJ will ease policy again sometime in the future as another sales tax increase is scheduled for next year.

"I told the prime minister we will steadily continue with qualitative and quantitative easing launched in April last year to achieve our 2 percent price goal," Kuroda told reporters after Wednesday's meeting with Abe.

"If that goal becomes difficult to achieve we will not hesitate to take whatever steps necessary, including additional monetary easing in adjusting policy. But at the moment, the positive cycle in the Japanese economy is continuing."

The first such meeting between the two since April comes ahead of Abe's crucial decision on whether to proceed with a second sales tax hike to 10 percent planned for October next year.

The two, who meet one-on-one regularly about once every quarter, likely discussed a slew of recent soft economic data. Kuroda did not offer much details, except to say he told Abe that the global economy is on the recovery path.
...
http://www.todayonline.com/business/japa...n-persists

[specuvestor]

The focus should not be inflation. The focus should be on how to grow the economy, employment, wages so that inflation returns. Asset inflation for example is not going to help.

Contrast that with how US deals with deflationary threat. The focus is always on restoring production and employment. QE is a way to reduce cost of money and encourage capex and production expansion. But if demand does not pick up for these consumption based countries, then it becomes a spiral. Sales tax from the beginning sounds like a bad idea.

Pouring hot water over an engine to make it hot is very different from the engine getting hot after running

[greengiraffe]

BoJ pledges fresh action if needed
DOW JONES NEWSWIRES SEPTEMBER 16, 2014 8:00PM

Bank of Japan Governor Haruhiko Kuroda offered businesses assurance that the central bank won't hesitate to take fresh easing action if needed to achieve its inflation target and get the economy out of years of deflation.

"I assure you that, through the BOJ's monetary-policy management, prolonged deflation will be overcome and an economy based on a moderate inflation rate of 2.0 per cent will be achieved," Mr Kuroda told a meeting of business leaders in the Kansai region of western Japan.

Mr Kuroda has stuck to his bullish views on prices and the economy, saying consumer inflation is following a steady path toward the 2.0 per cent target.

In attempting to demonstrate that the economy is continuing to recover moderately, despite a sharp annualised 7.1 per cent contraction in the April-June period from the previous quarter, Mr Kuroda cited a different figure, maintaining the economy grew an annualised 1.0 per cent in the first half of this year from the previous six months.

Business leaders cited a number of concerns, including the prolonged hangover from an increase in the sales tax in April, a labor force shortage, sluggish exports and geopolitical risks.

The Kansai region, which includes Osaka and Kyoto, is home to major electronics makers such as Panasonic and Kyocera.

While business leaders welcomed a correction to the yen's excessive rise over the past two years, some executives called for stability in the currency rate, as the yen's recent weakening could take a toll on businesses by raising import costs.

"I am concerned that the negative aspect of imported prices on the economy could become pronounced," said Shigetaka Sato, head of Osaka Chamber of Commerce and Industry.

With the economy gradually losing momentum and a weak yen failing to lift exports, "Abenomics faces a formidable phase," said Mr Sato, referring to Prime Minister Shinzo Abe's pro-growth policies.

Amid calls for currency stability, Mr Kuroda toned down recent remarks, saying: "I totally agree that stability in currency rates is extremely important to businesses."

The remarks contrast those he made earlier this month that further yen weakening won't necessarily hurt the economy.

[gzbkel]

A depressing article about Japanese university students dropping out due to financial problems.

One line caught my attention:
"In Japan, the top 20% of the population earn about JPY5m a year, whereas the bottom 20% have to live on just JPY2.3m."
That would make the average Japanese poorer than the average Singaporean?

---
The Economy and the University Drop-out Rate
Submitted by Terrie Lloyd on September 29, 2014
http://www.japaninc.com/tt774_the-econom...p-out-rate

The basic premise of Abenomics is that if you loosen up the supply of
money to economic producers, i.e., companies and investors, the
resulting financial stimulation will create a trickle down of spending
to the rest of the population, via wages, plant upgrades, and other
investment. That would be great if it actually worked, but it seems
that there are two major problems standing in the way.

Firstly, top management believe that the Japanese economy will
continue to shrink, and so they are not willing to put any more
investment into domestic business than they have to -- meaning that
unless Abe introduces a surplus-capital tax on companies, their cash
piles will continue to build and they will continue with domestic
economy-unfriendly spending, such as buying back their own shares or
investing offshore.
[...]

[greengiraffe]

What is so depressing... now the theme is BTC... too many graduates will mean oversupply of white collars and shortage of blue collars... an issue that our leaders are trying to arrest after years of relying on cheap imports and hallowing out much needed handson and skillful blue collars.

Arm with the right technology, wages of blue collars need not be inferior to that of white collars...

Everyone is different. Doesn't mean that you BTC, you are destined to fail. As long as one is hardworking, efforts need to be adequately rewarded... when must everyone be so pressured to study when they can't and be pressured to be suicidal like our recent RI misery and almost Nanyang Primary innocent death?

BTC
GG

A depressing article about Japanese university students dropping out due to financial problems.

One line caught my attention:
"In Japan, the top 20% of the population earn about JPY5m a year, whereas the bottom 20% have to live on just JPY2.3m."
That would make the average Japanese poorer than the average Singaporean?

---
The Economy and the University Drop-out Rate
Submitted by Terrie Lloyd on September 29, 2014
http://www.japaninc.com/tt774_the-econom...p-out-rate

The basic premise of Abenomics is that if you loosen up the supply of
money to economic producers, i.e., companies and investors, the
resulting financial stimulation will create a trickle down of spending
to the rest of the population, via wages, plant upgrades, and other
investment. That would be great if it actually worked, but it seems
that there are two major problems standing in the way.

Firstly, top management believe that the Japanese economy will
continue to shrink, and so they are not willing to put any more
investment into domestic business than they have to -- meaning that
unless Abe introduces a surplus-capital tax on companies, their cash
piles will continue to build and they will continue with domestic
economy-unfriendly spending, such as buying back their own shares or
investing offshore.
[...]

[gzbkel]

What you said is very true.
But until the Japanese society changes, lack of college job usually means lower pay, less job security, poorer marriage prospects, etc.
Of course there will be exceptional people winning a good life due to talent, business skills etc, but these are the rare cases.

By the way, what does BTC stands for?

[specuvestor]

GG was an analyst. How can he be BTC

But I agree that everyone has their purpose and gift. A Phoenix would never dig worms faster than a chicken.

[greengiraffe]

no CFA no first class honours... full of conspiracy theory sure BTC lah...

GG

GG was an analyst. How can he be BTC

But I agree that everyone has their purpose and gift. A Phoenix would never dig worms faster than a chicken.