Japanese Firms Admit Abenomics Failed, Government Now "Left Trying To Redistribute Wealth"

Tyler Durden's picture

Do not believe in official statistics, Japanese retailers seem to be saying, as they cut earnings forecasts and warn of lackluster consumer spending, a key growth engine for Japan at a time when exports and factory output are stalling. Despite government statistics claining a 2.9% rise in household spending, Reuters reports Japanese retailers exclaimed "Consumer spending has ground to a halt," as Japan heads for a quintuple dip recession. Amid falling wages and higher costs, on apparel maker warned "shoppers are tightening their purse strings."

Abenomics is not working...


"Consumer spending has ground to a halt," said Noritoshi Murata, president of Seven & i Holdings (3382.T). "There are a lot of concerns about the global economy and not many positives for consumption. Weak spending could continue into the second half of the fiscal year."


Seven & i, which operates Japan's ubiquitous 7-Eleven convenience stores, on Oct. 8 trimmed its full-year profit forecast by 1.6 percent to 367 billion yen ($3.05 billion) and cut its revenue forecast by 3.9 percent to 6.15 trillion yen, triggering a fall in its shares in Tokyo.

As Reuters reports, shortly after Abe took office late in 2012, the wealthy cashed in on a stock rally and went shopping. Unions got the pay increases they asked for, and companies started raising retail prices.

Since then, the monetary and fiscal measures taken by Abe to rekindle Japan's economy have delivered uneven results.


A sales tax hike last year to 8 percent from 5 percent helped tip the economy into a brief recession.


Now, the world's third-largest economy is at risk of falling into its fourth recession in the past five years as exports, factory output and consumer spending stumble.


Abe had a bold agenda of ending deflation and knocking down the barriers to growth, but many economists say the requisite policies never really materialized.


Some economists worry consumer spending is now stuck in a prolonged period of very low growth.

The main problem is wages are not rising fast enough to keep pace with rising food prices, and consumers are starting to cut back on other goods...

Real wages, adjusted for inflation, rose 0.5 percent in July from a year earlier. That was the first gain in 27 months. But wage growth subsequently slowed to 0.2 percent in August, and summer bonuses fell from last year, government data shows.


Another problem is more and more workers are getting stuck in jobs with low pay. Part-time and irregular workers comprised a record 37.4 percent of the workforce last year, according to the National Tax Bureau. Irregular workers earn on average less than half of what regular full-time workers earn, tax data show.

The third problem is the government plans to raise the nationwide sales tax again, to 10 percent in 2017 from 8 percent, and households are already changing their behavior.

And now the retail sector is adapting to a return to more subdued household spending.

"Some companies are starting to realize they've actually driven away some customers by raising retail prices," said Norio Miyagawa, senior economist at Mizuho Securities.


"The government's initial growth strategy did not really expand the pie. Now the government is simply left trying to redistribute wealth."

As we noted previously, the cultish fervor remains though among the mainstream media...

From all that you might ask yourself why would the BoJ need more QQE when its own argument put forth suggests exactly the opposite. Such contradictions are scarcely the exceptions, as the entire idea is itself at odds with itself. Apparently the only true economic danger in Japan, as elsewhere, is not the actual economy (which is always terrific or just about to be) but the evil, dreaded “deflationary mindsight.” So the BoJ upped its ante in case Japanese people start thinking unhappily about what QQE might not be able to do with, apparently, no real basis for them to actually think that way. Thus is the treasure of monetarism as it applies “forward guidance” and the Krugman version of “credibly promise to be irresponsible” as if nobody should notice anything but the intended happy ending. It really is the monetary equivalent of “the beatings will continue until morale improves.”

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Soul Glow's picture

Japan is a cut throat culture.  Work hard, play harder, drink yourself to death after working 60 hour weeks, fuck prostitutes, have misstresses, and sing karioke. 

The live by the code and die by the code.  Gotta give them that.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Soul Glow Oct 11, 2015 7:23 PM

Why the HELL has all of this QE black magic not come to a screeching halt?!?!?!

Keyser's picture

Hmm, how do you redistribute something that comes out of a printing press and is declared wealth? Just print MOAR, that's how... 

Soul Glow's picture

Yes, until we're all fucking rich.

Great plan.

JamesBond's picture

who can blame the japanese for not wanting to bring children into this mess.  shows they still care.



Soul Glow's picture

Shouldn't you sign, "007"?

You know, like John Dee.

All Risk No Reward's picture

Is anyone so disconnected with reality that they believe the Debt-Money Monopolists that finance and control government are trying to use said government to extract wealth from themselves and give it to the poor and middle class?

How stupid do they think we are?

Are they right?

I hope these article writers are making a lot of money selling their soul to lie to ordinary people about redistributing wealth to them being a primary objective.

TeamDepends's picture

"...and Honest Abe tried everything, including free hookers and blow and Fukushima powered printers, to resuscitate the failing economy all to no avail. The Japanese worked three part-time jobs unhappily ever after. Goodnight, sweetheart."

pebblewriter's picture

I think the biggest reason is that they've been using yen debasement to successfully force stock prices higher -- the yen carry trade.  It would continue to work if they were willing to continue crushing the yen.

But, a cheaper yen means higher US dollar-based imports (mostly oil.)  It was killing Japanese consumers and businesses alike.  IMO, this unwanted inflation was what led to last year's oil crash, timed precisely to coincide with USDJPY's spike higher.  It made a cheaper yen more acceptable -- but, only to a point.  Now they've painted themselves into a corner.

You'd have already seen USDJPY spike higher again, but now oil is so cheap that it's hurting not only oil companies but their lenders.  TPTB are now stuck between a rock and a hard place -- can't further devalue yen without killing off already ailing consumer spending.  But, it's either that or kill off the yen carry trade and the $trillions it supports.  And, remember, between BoJ and GPIF, they have directly invested $700+ billion in stocks -- essentially on margin.

Damned if they do; damned if they don't.

yogibear's picture

We have all seen what occurs when countries try and print out of debt in history.

The Fed is amazed that all the printing hasn't lead to inflation so they'll print much more until inflation shows up. 

Of course the government doesn't count inflation in the CPI because it has payment obligations tied to it.

uhland62's picture

Unlike in the 1920s current money printing seems not to have caused inflation because it is spent on basics or horded offshore, as opposed to inflate asset prices which pump up all other prices. 

All developed economies have built in job insecurities - sorry - flexible jobs. So people do not spend because they don't know what tomorrow will bring. Rent needs to be paid every month, whether your employer opts for zero hours or 60. When they had permanent jobs, people were spending. It is the same thing in Australia, Britain, Germany, everywhere.

They need to make up their minds if they want the money in the economy or in bombs, if they want short term contractors who hang on to their money or permanent employees who spend generously. Must be rocket science.

Bangin7GramRocks's picture

If only those people would just open their eyes to what is happening to their country.

Big_Hitman's picture
Big_Hitman (not verified) Soul Glow Oct 11, 2015 9:01 PM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

tarabel's picture



Dude, you're not listening. You gotta do this instead, if you want real money.



earleflorida's picture

don't worry abe, we've got your back...?!?


okinawan's are,... on the contrary, paying dearly for the mainlands usury?


Teh Finn's picture
Teh Finn (not verified) Oct 11, 2015 7:21 PM

Sad to think that we were worried this tiny island nation was going to buy up all of America 35 years ago.  Now they are in the final stages of progtard policy, redistributing whatever is left over.

knukles's picture

Bought the upper half of Citicorp Center and Pebble Beach.
Didn't work well. 

                           We're not called Yankee Traders for Naught.

knukles's picture

We are well into the Japanese model (Which has been ongoing there now for many decades) of low to negative rates, excessive monetary stimulus, QE and profligate fiscal largess (Like many shovel ready roads and bridges to nowhere) which have done Naught, Squalooch, Nada and Zipola for them.
Welcome to your New Normal.

Don't forget kiddies, it was only back in May of 1989 that 10 yr JGB's were yielding 8.9%.  Yep.  8.9%
Today, 0.375%  Yes, ZERO plus 3/8ths of 1%

Get ready to rock and roil.  The Western G7 (whatever) countries are doing absolutely nothing as in Zilch, Nada, Zip and Zero, different policy wise.

The road has been traveled and we are going meekly into the night.

US rates are going Much Much lower.

Tasty Sandwich's picture

I don't see how we can get away with it for nearly as long though.

Japan ran consistent trade surpluses until this decade and their debt was largely internally funded.

LetThemEatRand's picture

As in Japan, the central banks -- Rothschilds -- made all of the real money from the printing.  The question should be how long the Rothschilds and their ilk will get away with what they've done.

buzzsaw99's picture

Abe had a bold agenda...

it was bold. blow a stock market bubble to benefit their cronies. then take pension fund money and give that to their cronies too. bold. real bold.

knukles's picture

Plus, Abenomics was nothing except the same old shit renamed and with straight serious faces sold as something entirely new and different.

JamesBond's picture

I think the US does that in the area of education every 5 to 10 years, too.  So can we call it a meme at this point?

yogibear's picture

Watch as the Federal Reserve tries it in Japan first before the US.

Japan is the Fed's proving ground.

What happens in Japan occurs later in the US.

Crocodile's picture

Wait till the big failure of the upcoming Holiday season; lead by a huge miss in earnings (less buybacks) of APPLE.

yogibear's picture

They'll cover it up, then they'll go back and make the adjustments.

It's all perception and economic fantasyland now. 

Lie until everyone believes the lie. Everyone, including the media, goes along with it.

Trade the fantasy, not the reality.

buzzsaw99's picture

i've been waiting for that since 1976. never bet against the usa consumer at xmas time. never.

Crocodile's picture

Good, you are way overdue...enjoy the show!

silverer's picture

Go long on helicopters.

tommylicious's picture

Kuroda to the rescue!!   BASTARD!!!!!!!!!!!!!!!!!!!!!

Shadow1275's picture

Sayonara Japan. You will be sorely missed but don't worry. You won't be alone for long. Socialism and government are killing us as well. If it wasn't for immigration our population woul be aging too.

kappal_toba_dhurr_ne_thook's picture

Rubbish article.  We were  just there.  Consumers are buying as always.  Don't believe this dribble.