Consensus Now Believes Abenomics "Recovery" Will Fail

Tyler Durden's picture

Despite Shinzo Abe proudly proclaiming at the Tokyo Stock Exchange that "Abenomics will be a 'buy' next year as well," Bloomberg notes surveys of economists believe his policies will fail to spark the wage increases required to outpace inflation. In fact - due to the collapsing JPY - those surveyed expect consumer prices to rise 3% next year - 5 times faster than wage growth at a mere 0.6%. Officials are concerned; Japan can’t wait one or two years for salary gains, which are needed sooner for the economy to enter a virtuous cycle of rising profits, wages and growth, Deputy Economy Minister Yasutoshi Nishimura said. But, any increase in wages depends on a pick-up in demand, not just pleas by Abe for companies to do their part for economic recovery.


Via Bloomberg,

Japanese employers will fail in the next fiscal year to heed Prime Minister Shinzo Abe’s goal of wage increases that outpace inflation, highlighting risks that the nation’s recovery will stall, surveys of economists show.


Labor cash earnings, the benchmark for wages, will increase 0.6 percent in the year starting April 1, according to the median forecast in a poll of 16 economists by Bloomberg News. Consumer prices will climb five times faster, increasing 3 percent, as Japan raises a sales tax for the first time since 1997, a separate Bloomberg survey shows.


The squeeze on consumers from higher prices risks undermining public support for Abenomics and dragging on retail spending, unless Abe can convince companies to boost wages to cushion the blow.




Wage increases will be slower than the rise in prices at least until 2015, dealing a blow to Prime Minister Abe,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “It will take a while for companies to change their mind-set, which is still mired in deflation.”




Abe said today at a Tokyo Stock Exchange closing ceremony that Abenomics will be a “buy” next year as well.


The prime minister has pressed Japan Inc. to pass some of the windfall to workers through higher base pay, in meetings with business and union leaders since September. The three sides said in a joint statement this month that increased profits should be linked to wages. Japan can’t wait one or two years for salary gains, which are needed sooner for the economy to enter a virtuous cycle of rising profits, wages and growth, Deputy Economy Minister Yasutoshi Nishimura said.




Any increase in wages depends on a pick-up in demand, not just pleas by Abe for companies to do their part for economic recovery, said Kaoru Yosano, a former finance minister, in an interview in October.

Now, where's the anti-diarrhea medicine?

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Seize Mars's picture

Oh it's a "buy" alright.

Too bad those nominal returns won't buy you a loaf of br...rice cake, whatever.

Wheelbarrows of zero's and one's, baby.

AngelEyes00's picture

I popped by CNBC yesterday and one of those cheerleaders said, "When we come back learn about the incredible success story of Japan." with a chart to the side showing Japan's stock market rise.

So as long as the stock market rises, all is well?  I guess we must be doing great cause just look at the Dow!  I guess the more QE the better? 

BigJim's picture

To be fair, Abe was hoping to perform miracles by doubling the monetary base.

Ask any REAL economist (like Paul Krugman!) - and s/he'll tell you a mere doubling of the central bank's balance sheet is nowhere near enough to overcome an economy swamped in debt; you need to quadruple, quintuple even, the amount of debt in an economy to overcome that much debt.

- this message brought to you by the Cognitive Dissonance Division of the New World Order.

markmotive's picture

Christine Hughes says deflation (not inflation) is the challenge. Abenomics is proving this.

I tend to agree, but that hasn't stopped many of my bills from rising in the double-digits.

Dudeskis's picture

You're so right. The US is proof Krugman is right. $2trilluon to jump start our economy? Not nearly enough. We should have had a $6-7 trillion stimulus in order to make an impact. Wait, who are we kidding? Krugman would have needed at least $10 trillion to pay for all his dreams!

Stoploss's picture

Well, the radiation psychosis is clearly set in..

zerozulu's picture

Basically Japan is robbed by the bankers. People used to keep their savings in the local post offices and they had a lot of it. Nothing is left in their accounts.

aVileRat's picture

Sucks to be all those investors who are long NIKKI 20-year.

South Korea is actively looking at how to lock them out of the markets in the Pacific Rim. China will begin pushing their car & electronic brands on WMT / BBY around 2015. Inflation has nearly obliterated the foreign yield carry trade that was supporting the lost generations.

Wages can not grow in Japan due to their 60 year policy of Kaiban. To improve their current salary would be to admit to the shop worker or salaryman that their black-loaded corporate pension plans are a ponzi who's time has run out. Japanese pension funds and trading houses are some of the most undercapitalized on the planet.

Look at the near revolution that happened when the Japan Postal was floated for spin-out. Now imagine if the Toyoda's or Mitsubishi's suddenly had to announce a 5% wage hike, (4% clawback to paper over the pension fund), and oh yeah: 40% headcount reduction.

The 3rd arrow will fall flat (the structural reforms listed in article and above), the 4th will never leave the quiver but will always be 'there' like how Fed used Taper talk as a soft policy instrument.

Would not be shocked if Abe is thrown out of government by October 2014. Would be more shocked if Abe somehow gets a free-skate to continue on inflating to 1998 NIJ high's on the alternative being the mother of all Argentinian crises.


Mine Is Bigger's picture

What is Kaiban?  I've never heard of it.

Uber Vandal's picture

I believe Kaiban refers to Kanban, or JIT, which was first implemented ca. 1953.

It works great when things go right, but when something is not there on time, or your inventory is a bit off, or your supplier falls off the end of the Earth for whatever reason, then it works very not so great.

Basically, you have very little to no back up reserve of inventory.

Much like the nursery rhyme about the want of a nail.

Dudeskis's picture

If he's talking wages I believe he's trying to refer to the Nenko wage system that allows wages to rise as a person reaches retirement. It locks the wages of younger workers and makes them more reliant on the pension plan of their employer. This keeps labor turnover rates in Japan among the lowest of industrialized nations. It also presents a problem if Abe wants wages to go up since that means it would bump the already exaggerated wages of older employees higher presenting a straw that may break the back of the already strained pension funds.

aVileRat's picture

Yeah I was referring to the Nenko system. Apologies on the poor word smithing yesterday, I blame New Years eggnog.


surf0766's picture

Mincome for everyone in the new Japan.

wisehiney's picture

Just when I was convinced that abenomics will fail......

wisehiney's picture

The death knell.......

Gartman sees continued bull market in Japan
Stuck on Zero's picture

Hundreds of attempts by governments to spur the economy have failed the people miserably.  They routinely succeeded to make the rich richer, however.  Guess they need to try again.


FieldingMellish's picture

Time for another takedown in PMs courtesy of the BIS Hong Kong branch. Target for tomorrow to close the year: sub $1180. Down we go because the world is such a righteous and beautiful place what with no poverty or unemployment anywhere and mankind living in peace and harmony throughout the planet... so forth and so on...

maskone909's picture

War happens......first?

tahoebumsmith's picture

All I know is my kids are completely fucked! Abenomics, Keynseianomics, Bernakomics, fustercluckomics,kickthecanomics,pipedreamomics what frickrn ever!!!!!! All I see is the debt rising in every nation to match the total GDP growth? Anybody can live on a credit card, including countries. This whole Ponzi is a joke if you really understand it. Here in America they used the 5 too big to fail bitchez run by the Squid and Fed pimpdaddys to launder money at .025 % interest? WTF? This is not going to end well once the petrodollar collapses... It is happening now, Wake the fuck up! I have a hard trying to calculate the endgame however all arrows point to chaos...Happy Fricken New Year America with your 17 TRILLION NATIONAL DEBT AND YOUR 230 TRILLION IN UNFUNDED LIABILITIES AND THE 672 TRILLION IN DERIVITIVES BACKING THE WHOLE PONZI! LOL

AngelEyes00's picture

tahoebumsmith, I'm sure we can double those derivatives one more time to 1344 trillion, so buff up the golden parachutes before shtf.

FredFlintstone's picture

You say "your" don't you mean "our" debt, unfunded liabilities and derivatives?

Mine Is Bigger's picture

We all know by now if "Consensus believes" one thing, the opposite will be the actual outcome.  So, Japanese stocks will continue to melt up for some time to come.  Then POP!.  Because people will never learn.

cassotto's picture
Abenomics doesn't have to work, war rhetoric will
Spungo's picture

Plan to destroy Japan is working as intended. He doesn't even try to hide this. He's openly saying that he wants people to dump Japanese bonds in favor of Japanese stocks. This would cause the interest rates on Japanese bonds to soar until the interest alone consumes 100% of the budget. Then he can take over as a dictator. He explicitly said this when comparing himself to Hitler. Why is anyone surprised when his policies do exactly what he said they would do?

cassotto's picture

I don't even get why they want "growth" and inflation. Anyone ever been in Japan? I have: it's clean, you feel save walking anywhere and you get free radiation, but no trailer trash, gangstas with gold teeth or other low-life street criminals. Country is a bit like a finished sim city game: nothing left to achieve. OK, they should do something about the horrible architecture, every town looks the same. But then doesn't most of the stuff built after the war look cheap and ugly anywhere in the world. 

disabledvet's picture

they called taking all the deposits in Cyprus a "bail-in." Japan will not be bailed will be bailed in. while the wording is incongruous I think I in fact means "full dollarization."

evernewecon's picture






At some point allowing investing

in the adversity one creates from

inordinate control can become a 



Take the processed food aisles

in our grocery stores.


GMO's, sugars, salt.

And if you need to clip coupons 

to get by you'll just have to 

do that.  *****


What was a hook is the true price

then.   And it's also prices

based on ability to pay, at least

largely, though maybe legitimately

hook, partly.  The question is how 

much of the aisle, and how many cos.



But for the carry trade that siphoned

applied borrowed yen to the kited 

mortgage bubble by way of Icelandic

Krone, Japan conceivably could have 

ended its recession long ago.


Right now cheap dollars are used by

TBTF banks, though others fear 

rising rates and suffer the wide

net interest margin.


Then, the tsunami.


The possible fates of Japan's giant 

corporations is one of the most

underappreciated areas of 

questioning, even as they're 

mortally divided from China and thus

aligned with Americans, whose firms

compete with those corporations, though

their plutocratic imitation of the

West, even if MITI was the natural

outgrowth of the samurai, seems to 

have not served them well in the end.


It's all so irrelevant in the face of this.

Democratic process centric to each

fuller population is preferable.



Democratic processes should rightly

allow for better lives, one generation

following the last.


But our grandparents enjoyed wholesome

air and water, and ate whole food not

necessarily dietician recommended but

generally preferable to what's still 

on the labels of most processed foods.

Even here.


A thought on hedonics occurred to me.

When a food product is replaced with

GMO's, does it increase the food price


(No.  It doesn't.)










cassotto's picture

"surveys of economists" uhhh? economists + predictions = blablabla

(the same applies to their after-the-fact explanations)

boeing747's picture

Today I was surprised when I drove thru Alum Rock ave, San Jose, there is liquor store  called "Abe's Liquor".

GreatUncle's picture

Prices rise faster what is a person to do?


Save, cut back

Debugas's picture

go figure

"any increase in wages depends on a pick-up in demand"

but the demand can only come from increased wages (because no more debt can be loaded onto consumer anymore)

so who will blink the first ?

Notarocketscientist's picture

How is Gartner still in business?  He gets just about everything wrong.....

MagicMoney's picture

It's funny how Japanese officials think that printing money will be beneficial to them. Japan has a low birth rate, this impacts GDP, & inflation figures. Japan is dependant on imports, even if on net it "use to be" a export economy, because Japan imports a lot of raw materials (lower goods), & uses those materials to produce technology like electronics (higher goods). Japan today is even more dependant on imports than before, how does devaluing the yen reduce import costs of raw materials promote exports? It's seems like a paradox to me. Maybe the yen needs to be debased another 20% maybe? Nevermind that, let's consider now that Japan is a import economy now, how does devaluing the yen again important to economic growth? Seems to me that money printing seems to be merely a destablizing activity than anything that delivers benefits.


Maybe Japan is really just trying to monetize it's debt. Anyhow, Abenomics is pretty amusing for me, because reality can't be overturn.