The IMF Tells Japan: Abenomics Is A Miserable Failure, Recommends "Forcing Companies To Raise Wages.. Or Else!"

Tyler Durden's picture

For those confused as to whether or not Abenomics was working, all one has to do is glance at the recent export data released by the Ministry of Finance for confirmation that it's been a complete disaster.

Japan's exports fell 11.3% in May on a y/y basis, the eighth consecutive month that exports have fallen according to Bloomberg. Exports to the US fell 10.7% from a year earlier, and exports to China, Japan's largest trading partner plummeted 14.9% y/y.

However, do not be alarmed, as the IMF is all over the matter. In a statement released on Monday, the IMF had a lot of sage advice to provide Prime Minister Abe about his Abenomics policies that have failed to produce literally any of the intended results.

As the Nikkei Asian Review summarizes, the IMF said that "Abenomics needs to be reloaded", arguing that income policies and labor market reforms should be moved to the forefront. What stands out immediately here, is that the IMF is advocating a policy whereby companies are made to raise wages by at least 3%, and if they fail to do so, penalties are imposed. If central planning hadn't jumped the shark a long time ago, we'd submit that this would be that point.

From the Nikkei Asian Review

Despite initial success, progress under Abenomics, Prime Minister Shinzo Abe's trademark economic policies, has stalled in recent months. The inflation rate has dropped to negative territory again, while economic growth has remained anemic.The IMF now expects Japan's economy to grow by about 0.5 percent in 2016, before slowing to 0.3 percent in 2017, with potential growth sliding to close to zero by 2030, due to the declining demographic.


"Abenomics needs to be reloaded," the IMF said in its report and argued that income policies combined with labor market reforms should "move to the forefront" of the country's fight against lagging growth.


"The government can introduce a 'comply or explain' mechanism for profitable companies to ensure that they raise base wages by at least 3% and back this up by stronger tax incentives or -- as a last resort -- penalties," the IMF wrote. Promoting intermediate contracts that balance job security and wage increases will "reinforce income policies," it added.


"Our perception is that much of the stasis of inflation [in Japan] comes from the legacy, the history of having negative inflation," said David Lipton, first deputy managing director at the IMF, in a press conference in Tokyo. "Certainly firms have at this point the cash flow and resource at hand to provide some wage increases. There are wage increases evident in a wide range of companies across this economy, so our thought is to suggest that this be a broader practice and that it be more uniform."

Upon learning of the news that Abe delayed Japan's long awaited tax hike, we pointed out that it was an admission of failure for Abenomics, and Japan had no hope of ever reducing its debt load. The IMF is now pushing Japan to not only put the tax hikes back on the table, but incresae the percentage to "at least 15%." as part of a "credible fiscal plan." - good luck with all of that.

The fund noted that these reforms need to be backed up by measures to support demand as well as credible fiscal plans, and argued that the consumption tax hike to 10%, which the government delayed until October 2019, should be replaced by a gradual increase towards "at least 15%."


"Starting the increases soon and replacing the currently planned 2019 hike with such a pre-announced, gradual path would enhance the credibility of the long-run fiscal adjustment, reduce uncertainty for consumers and avoid large intertemporal shifts in spending around the time of the tax hikes," the IMF said.

The IMF even admits that NIRP has failed to generate any domestic demand at all, and is calling for the BOJ to scrap any expectation of inflation in order to be more realistic.

The Bank of Japan in February introduced a negative interest rate in part to support domestic demand. However, in the event that the IMF's suggestions will not be implemented, Japan will lack growth and therefore would need a longer time to get its fiscal books in order. In that scenario, the IMF called on the bank to scrap its time frame for achieving its 2% inflation target, which the BOJ now sets at somewhere in fiscal 2017.


"The monetary policy framework would need to become more flexible, with the BOJ abandoning the use of a specific calendar date for achieving its inflation target," the IMF said. "While such a shift should raise BOJ credibility by setting a more realistic goal, the transition will need to be well-communicated to avoid perceptions that the BOJ is reducing its commitment to achieving its inflation target and to limit the potential for adverse market reactions, including yen appreciation."

* * *

So in summary, the IMF has studied Japan's economy and has come to the conclusion that Abenomics has been a miserable failure. The advice now is to scrap all of the plans for hitting any kind of economic targets, and just start forcing companies to raise wages, while simultaneously raising everyone's taxes 15%. The central planners are literally starting to lose their collective minds.

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NoDebt's picture

From each according to their abilities to each according to their needs.  As determined by government.  I propose this time around we call it Neo-Capitalism.  Has a nice ring to it, don't you think?  Much better than that stodgy old name we used to call it.



t0mmyBerg's picture

Next up the IMF will call on the UN to send peacekeeping forces to force the Japanese to copulate at gunpoint so as to reverse the demographic source of the problem..  Or they will just send the guys from the African missions in to rape them into population expansion.  And get some diversity to boot.  Two birds with one stone.

mofio's picture
mofio (not verified) t0mmyBerg Jun 20, 2016 9:43 PM

Agree with Tommy. Who the hell do these IMF people think they are?

BarkingCat's picture

additional irony for tge IMF being run by a French Lawyer.

Lawyers have proven over and over again to be unfit for public office and are nothing but parasites tgat eventually kill the host.

The French are simply economically retarded. 


This elitist cunt has both afflictions.

A Nanny Moose's picture

Socialist French Lawyer. Perhaps I am being redundant?

Let's break this down, shall we? IMF admits that its standard rule of dumping money into an economy (standard Keynes shit here), which A) IS INFLATION, and B) subsidizes inferior products, is not working?

Thanks Captain Le Obvi-fucking-ous! As with any lifetime bureacrat, blame is shifted to firms who are often working within the legal constructs foisted upon them by these lifetime communist bureacrat fucking cunts. Fuck these fucking fucked up Communists. It's time for some helicopter rides!!!

BarkingCat's picture

helicopter rides???

I prefer open ocean fishing.

Let's just combine the two. 

philipat's picture

Actually, at the rate they are going manipulating all "markets" it won't be too long before the Central Bannks own every Company. At that time, the Central Banks can raise wages all they want. I'm not sure if what we have at point is communism or fascism but it definitely isn't capitalism? Print money and buy all "private" assets appears to be a new economic "system" which hasn't yet appeared in the taxt books.

css1971's picture

The point where the public and private sphere merge is called feudalism. Whether you get there through communism or corporatism (fascism) is  pretty irrelevant. The end result is the same.

mtl4's picture

Just keep kicking that can down the road, what could go wrong?!


Government interventions remind me a bit of the cane toads in Australia, looked good on paper anyway.

peddling-fiction's picture

Remember also that Lagarde, like most of the elite and lawyers, are into occult knowledge and messages.

peddling-fiction's picture

That is the point. The Central Banks, aka as the Redshield et al owning all companies protected by TTIP and TPP, thus placing the corporations above the rule of law in most countries.

Archibald Buttle's picture

our owners? yep, that's who they think they are.

agNau's picture

They are your new masters.
And don't talk,
And don't do it in that order.
The trannny LaGard (Good friend of Obama btw.) has told us already there will be a reset. They are merely bringing about the conditions to convince the sheep we need governments' help. Not really difficult if you give it some thought.
Remove the food and after a brief loss of a % of population offer a solution that meets with the needs of your masters. Sell your soul. Freedom will be a thing of the past that did not work.
You lost your freedom when real money was replaced by fiat.

doctor10's picture

The Ivy League and OxBridge platonic idiots have constructed a fantasy world devoid of reality-where nothing works-least of all their narcissistic commands!!

OldPhart's picture

I'm still waiting for the one country to say "Dear IMF, go fuck yourself!" in a public forum.  Something pretty much verbatim.

Words that I hoped Ireland, Greece, Cyprus, and soon, England say.


MsCreant's picture

Wow, talk about lifting up your skirt and exposing yourself...Sheesh!

WTFUD's picture

Especially when you've got a rabbit hidden up there.

diniweidrwydd's picture

Oh please! I've just eaten...

neutrino3's picture

In this  60+ gender Brave New World  ... it might be quite a surprise.


holgerdanske's picture

if they ever had one

NoDebt's picture

3% higher wages?  3% fewer employees.  

At some point maybe it will become obvious that the government is really only trying to save itself.  THEY are the ones who have spent to the point of bankruptcy.  THEY are the ones utterly dependent on a constantly growing economy (nearly impossible in the face of a population that is both aging and shrinking) to save their over-indebted asses.  When central banks lose their credibility, their governments will quickly follow.  And that day will be worth living to see.  (p.s. Tell your kids- it could still be a long way off.)


Antifaschistische's picture

the IMF is only trying to protect TPTB who own Japanese Debt....must have been a hot topic at Bilderberg meeting.

booboo's picture

Give em a 3% raise and institute a higher consumption tax, brilliant! one step rearwards two steps back.

ItsyBitsy90's picture

This is in addition to the Japanese government demanding lower levels of overtime...

Freedumb's picture

Ah, right, they just forgot to mention this was necessary over decades of attempting to justify hocus pocus monetary policy and all of the other policies they have been putting in place, it would have been fine otherwise. Minor oversight. Just THIS one last step and THEN the economy will be absolutely perfect as has been promised.

Lazarus Long's picture

bottomline the IMF wants gov't to take more money out of the private sector. and into the hands of the gov't. Taxes only make everyone poorer

BarkingCat's picture

 "Taxes only make everyone poorer"


Not everyone. 

Skiprrrdog's picture

Whatever happened to the long running joke known as the FBI probe of Hyena Rodent Clinton?

Does anyone remember that?

Broken vows of secrecy?

Illegal servers in basements?

Deleted emails?


NoDebt's picture

Oh, that old thing.  What difference at this point could it possibly make?

She walks.  Period.  No indictment.  She was promised the presidency and the presidency she shall have.  Investigation's over.  Obama endorsed her.  End of story.

NotApplicable's picture

In other words, she's compromised enough to be a dependable (i.e. fully controllable) POTUS. Meaning she is the most qualified for the position.

I can only imagine the destruction of her rule.

ebworthen's picture

How about making shit, 7% return on bonds, the rule-of-law, and no Central Banks jiggering valuations?

I can dream, can't I?  So far down the rabbit hole it isn't funny anymore; and wasn't in 2008 or 2001.

css1971's picture

Japan was 1991. They are 17 years... A generation ahead of everyone else.

ATM's picture

So why doesn't Kuroda simply do a helicopter drop? Is it because that sort of funny math might cause eople to question the little paper chits they use to trade for goods and services? Might such a move be too transparent?

Yes, better to do like the US government and force employers to hide things like payroll taxes and make the people happy by tricking them into believing they are worth 3% more! Yes, they will all have the great look of the passengers on the emergency instructions in each airplane seat back. That glazed look of the zombie headed for sure death but they do not know the exact second.


NotApplicable's picture

I can only imagine the rate at which Mises is spinning in his grave. He's likely beyond gyroscopic at this point.

gwar5's picture

Isn't cutting taxes the normal way for a government to put more money in peoples' pockets rather than having a supranational entity like the IMF demand that private employers increase wages?

I guess the way to create 'one world government' is to pretend like there already is one.

diniweidrwydd's picture

Yup, cut taxes, reduce and make government spending more efficient! Funny, isn't it, how the old ideas still work?

MalteseFalcon's picture

So has the IMF been telling the US to cut wages over the past 40 years?

Yen Cross's picture


  I want my € 500 note back Bitchez.

I Write Code's picture

Three percent, we're saved!

loveyajimbo's picture

I think Legarde looks damn good for a 3000 year old mummy... and I always thought that papryus panties were a turn on...

MsCreant's picture

Orange you glad she lifted her skirt and we got a peek? Orange is the new black. 

CTG_Sweden's picture





“[- - -] The fund noted that these reforms need to be backed up by measures to support demand as well as credible fiscal plans, and argued that the consumption tax hike to 10%, which the government delayed until October 2019, should be replaced by a gradual increase towards 'at least 15%.' [- - -]"






My comments:


They should probably have raised the sales tax to 15 % long ago. These tax revenues could – indirectly – have been generated by decreasing irresponsible waste in the Japanese economy such as scrapping cars when they are less than 10 years old on the average and scrapping residential homes when they are 30 years old. By decreasing unnecessary waste a sales tax hike would have been a smaller burden to the consumers.


JamaicaJim's picture

There's always hope that LeGarde....

will die quickly of melanoma of the ass

NotApplicable's picture

I don't think she's human, so you might want to lose a bit of the specificity.

gatorengineer's picture

Give the little nippers 3 percent and they will just save it.  The real solution is to send them a couple million muzzies.  That would stir the pot in a lot of ways.


What has Christine Lagarde accomplished in her time as IMF Chairman aside from a public persona, and international stature? Lagarde is a failure and always comes out with unrealistic threats of punishments like the countries she is dealing with are children. Lagarde infantilizes sovereignty of nations and thinks she will garner support for her tyranny. The old bag has to go IMHO. Mr. Yellen has to go too.

Flankspeed60's picture

I would tell LeGargle and her symphony of stooges that, unless she can point to a country that has taken her advice and subsequently been successful, to just FO.

WTFUD's picture

The Nips are Sadomasochistic; just ask Timmy Geithner.