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Abenomics Is 2 Years Old - Households Even Deeper In The Hole
Submitted by Jeffrey Snider via Alhambra Investment Partners,
For Japan, the comparisons for March 2015 estimates are going to be tough as the yearly look-back aligns to March 2014 and the great surge prior to the tax increase. The distortive base effects make it more difficult to figure out just how little was gained (or lost) in spending and income. So the large granular declines are not suggestive of a massive downward turn, but they aren’t necessarily showing any recovery either. That is especially true in real terms where a reduction in official “inflation” rates has bolstered that side of the ledger.
I think we can get a sense of how things are still declining, though, from some of the subcomponents less aroused by the tax increase. For instance, household spending on food continues to be highly negative with a much smaller tax footprint for the yearly comparison.
In terms of spending on utilities, there was no tax change applicable so the general direction in spending is not distorted by the fiscal shift. Instead, the direction is all economics, specifically monetary economics.
The reason for that is income, or the very distinct lack of it. The reason why the tax increase was such a major alteration in the flow of spending was that incomes have been sinking steadily, including periods of nominal declines, since QQE began. In other words, QQE has accomplished the exact opposite of its stated purpose by bringing about inflation that did nothing toward furthering economic gains in labor and wages, instead blatantly robbing Japanese consumers of purchasing power – and thus proclivity to spend any actual nominal gains when they happen to appear.
This seems to be the common thread in every region suffering the blight of QE in all its forms, as there is an intentional narrowness in the standards by which its practitioners wish (demand) to be judged. In the US, as noted earlier today, that has meant a singular focus on the unemployment rate or the Establishment Survey but only from 2010 forward as if the relative change full cycle was not relevant. In Japan, economists only see the second derivative changes from April 2014 forward, measuring only that spending or income isn’t nearly as bad as that transition point.
The reason for that is obvious, because on a longer-term basis QE and QQE are utter failures. Japan has been at it far longer than the US, dating all the way back to March 19, 2001. While the Bank of Japan has not been in constant disruptive mode, it has been far more than it hasn’t.
Economists only talk about the far right hand side of the chart immediately above, and see “recovery” out of the fact that spending isn’t declining as fast because “inflation” has backed off contrary to what the BoJ actually wishes to see. So in response, the BoJ threatens and whispers about doing more of the thing that pushed spending so low to begin with.
But what is also plain is that from almost the very start of the very first QE there is almost a straight line of descent in household “demand” despite the clear monetary intent to conjure it. Again, for all the effort and yen created and expended in the pursuit of “aggregate demand” there is a shocking lack of it. The final line into QQE has only heightened that very obvious negative deflection.
You could even make the case that spending had begun to self-correct out of the earthquake/tsunami ravages in 2011, punctuated and deterred once more by the BoJ that just won’t sit still long enough for anything to actually bloom (economically speaking). It has become, nowadays, habitual as monetarists are taking the wrong lessons from all this.
I think that point is emphasized further and quite well by the longer-term trend in Japanese income. After the initial drop past QE1, incomes in Japan (real terms) were almost stable, interrupted only by global recession. That is, of course, deficient on its own, but at least there wasn’t a tendency toward making it obviously worse through monetary means; that all changed with QQE.
Notice the trends in both income and spending moved downward not at the inception of the tax increase but at the very start of QQE itself. Science is the study of observation whereas monetary economics has become the science of avoiding them. If economists want to see recovery in that they should be honest about so redefining the term. BoJ is two years into QQE and the hole that has been dug for the Japanese people is enormous, so it will be extremely difficult at this point just to get back to even without ever accounting for lost opportunity for compounding and time. Maybe that doesn’t count as the typical, natural recession but it is nothing short of a man-made disaster.
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Two years is two years and they probably have done the same thing with building up an internal military to fight the people if they can't keep the system afloat. They are banksters. That's what banksters do. Maybe there would be a way to socialize the robots and tax those critters.
Now that the economy is doing so well, we are announcing the innovative plan to clean up the Fukushima reactor cores with origami.
This is true Bushido!
Thank goodness the Japanese have lots of children that can pay for their parent's mistakes.
not so many human children,
but working on lots of robotic children starting with pet robot dogs.
The Japanese will want war to escape their problems. The US needs a military ally in the Pacific. The sun will rise again shortly. A US - Japanese Alliance v a Russia - Chinese Alliance will happen. Ground Zero will be Korea, South China Sea and the Arctic.
It will be Russo-American alliance vs Sino-Japanese alliance.
That way, we won't need uniforms.
I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing... www.jobs-review.com
WAR...Bring it on.
What is happening in Japan now is commencement of final stage of destruction of Japanese workforce and modern society.
An abandonment of "work for life for loyalty" kind of jobs that brought quality, commitment and productivity to Japanese industry, utter de-industrialization initiated in 1980-ties, collapse of scientific and tech funding, culturally driven demographic low in a wake of collapsing incomes of young Japanese men, massive elderly and retirement pool with associated enormous costs to society and the most blatant theft and corruption of Japanese elites including emperor, selling out Japanese culture, history and population as slaves to world oligarchs, culminating with suicidal monetary policies which already claimed tens thousands of lives to suicide and disease on the top of continuing victims of Fukushima nuclear disaster.
A rare and honest take on Japan’s last 70 years of history of success and failure in context of current genocidal policies I found at:
https://contrarianopinion.wordpress.com/2015/02/20/japan-miracle-that-wa...
More monetary focused take on Japan economic collapse I found at "Princess of yen"
https://www.youtube.com/watch?v=p5Ac7ap_MAY
While the history of the article is not bad, considering it's an opinion piece, I live here, and some of it is really full of shit. This "There are almost no new family formations in Japan." being the most stupid.
We're all slaves to this bullshit eceonomic battle they're waging against us. I'd really like to ask one of those puppet masters what their end game is. As for me, I think space travel would be much better than divide and conqure.
1.4 children per women is the same as no new familly formation IMO.
Today it's more hook-up and shit like that: no real familly.
It'll take the greatest game of cards for the Japanese to get the pot.
Remember, for every buyer there's a seller. So when Japan goes broke who benefitted?
Oh those crazy bankers and Goldman Sachs and JP Morgan! They took everybody's money and they think they're gonna get away with it!
When a business model profits from the rest of society crumbling, and they have the power to make it happen, watch out.
If the governments were not so determined to treat humans as if they are non-entities there would be solutions to humanity's existence on this world.
Unfortunately all of the non-human corruptoids in government seemingly make this impossible. They cannot relate to actual human beings.
Eventually a critical mass of people will realize that the governments do not actually live in the same "logical" (as opposed to physical) country as the people and will just start ignoring the government. What does it matter which government claims to be over the people if none of them are part of the same logical country?
RedRum..RedRum!!
In Bitcoin during the bubble back in 2013 spending was the highest when the price was at 1200 $ but reducing when the price decreased.
Not surprised that peoples don't spend when currencies like Yen is losing value years after years.
Once again Keynesian economics big fail.
Where is that fucking Gold standard already ?
All Abenomics is is an attempt to default on Japan's enormous, unpayable debt so as not to make anybody look bad. Forcing banks to take losses, much less fail, would be embarrassing, you see.
Abenomics will go down in history as one of the stupidist economic ideas ever.
Everyone except im and his bankers, knew that it could not work.