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For Whom Are Japanese Leaders Kuroda and Abe Making Their Monetary and Fiscal Policy?

Interest-Rates / Japan Economy Nov 02, 2014 - 04:49 PM GMT

By: Jesse


The expansion of the BOJ asset purchase program was timed to start with the end of the Fed's asset purchase program.  I mean, come on.  Could it have been any more obvious?
There is no big question that the Bank of Japan has been acting in concert with the Fed for the better part of this century at least.  And politically, Japan is a client state of the US.

And reader know that I have a long standing observation that one of the great difficulties in recovering from the long period of Japanese economic stagnation since the collapse of their great real estate and stock market bubble has been the inability to clean up their interlocking financial system dominated by industrial combines called keiretsus and a closely associated political system run by a surprisingly well connected minority of insiders.

Beyond that I wondered why was Japan pursuing the purchase not only of domestic equities and non-sovereign paper, but foreign equities as well with their very large pension fund?  Are these intended as 'investments?'  Or are they a form of cross subsidies in support of a more global agenda?

It makes me wonder if the policy being pursued by the BOJ is not designed to help the people of Japan now, so much as to support the requests of the international banking concerns, more specifically the US Federal Reserve.

This made me wonder if Kuroda is pursuing the same type of trickle down stimulus in buying large amounts of financial paper by printing money, rather than engaging in policy actions to stimulate aggregate demand.

And there is that nasty consumption tax hike in April which tends to have a regressive effect on lower income households.  A weak yen is good for the exporters and multinationals, but is hard on small businesses and consumers. 

Although the Japanese GINI coefficient for economic equality is lower than that of the US, in terms of power Japan is a very top heavy, insider dominated society.   Their incorporation of University pedigrees into the success ladder would make the Ivy League envious.

Here is a thoughtful discussion of Japanese quantitative easing from just a few weeks ago from Sober Look.   As you can see, the consensus was running heavily against an expansion, making the surprise from BOJ the day after the Fed taper even more of a surprise.
"With wage growth remaining sluggish (particularly for non-union workers), rising import costs could undermine consumer demand - particularly in the face of higher consumption taxes. Given these headwinds, there may be sufficient political pressure to put the BoJ into a holding pattern."
I am not sure of all the specifics of what is happening in Japan, but I am becoming increasingly persuaded that the Anglo-American financial cartel and some of its client states are engaging in an intensifying currency war with regard to the international dominance of the dollar.

This extends not only to the dollar as the primary benchmark for international valuations, but also to the more compelling power that such an instrument, in the hands of a single governmentally affiliated entity, provides to those who wield it to set international and domestic policies that go far beyond mere terms of trade. 
So I think it is fair to ask for whom the Bank of Japan and their political leadership are making some of their policy decisions.  And further, it is incredibly naïve not to ask the same questions about the Federal Reserve and the political leadership of the US.

Money power is political power, in every sense of the word. 

Employment In Japan

It has been quite some time since I have been doing business in Japan, and I was curious to know if the culture of the 'salary man' had changed.  What is the employment picture in Japan really like for the average person?   What are things like behind the statistics put forward in the international press?

While unemployment in Japan is very low at 3.6% or so and the Labor Participation Rate is still fairly high, it looks like 'underemployment' might be something worth looking at given the slack in wage growth.  Certainly Japan is experiencing deflation, but is that a 'cause' or an effect as part of some other economic feedback loop? 

What happened to the NAIRU non-accelerating inflation rate of unemployment theory?  It is the theory put forward by Friedman and the monetarists that refers to a level of unemployment below which inflation must rise due to wage pressures.   Personally I think the growth of monopolies, the globalization of markets, and the relative political weakness of labor has knocked another dodgy economic theory into a cocked hat.

Places like the old South might have had nearly full employment, but I don't think slavery was adding seriously to wage pressures. Quite the contrary. But it may have put pressure on selective prices, like transport, whips, and chains for repression.  But this is just my opinion and I could be wrong.

Sometimes it is not always easy to find things because people tend to be very positive about their country, especially when speaking with others.  And I dislike looking at OECD statistics and other compendiums because they tend to lose quite a bit with time lag and a lack of insight past government statistics which, and I know this is hard to believe, tend to paint a pretty picture.

But I did get this in from a long time friend in Japan.

"It is difficult for many young people who are part-time or temporary, particularly the men. It is hard for them to "attract" a mate. Many couples are both employed but when they have children there is pressure to find a nursery and often times the wife cannot return to her former job. This obviously complicates the demographic conundrum. Although I do not have figures, this sort of conversation comes up even on the TV.

This is from JIJI dot com. Sorry but Japanese.

The chart shows average monthly salary after subtracting inflation for 2013 having dropped 0.5%.

According to the latest government statistics there are 33.1 million "full time employed" (seiki shain) and 20.4 million "part-time" (hi-seiki shain).

This means that the hi-seiki  非正規 or part-time/temporary account for 38% of the work force.

You can see the numbers I quote "3311" and "2042" in the second line of the page linked below.

Note:  Hi-seiki refers to any type of employment other than full-benefit employee of a company. I have also seen figures that suggest 40% of those employed earn an average of less than 3 million yen  (about $26,710 per year at current exchange rates).

Jesse's Note:

There is an English tab on the site, but unfortunately the tab goes to a different site and does not 'match up' with the Japanese page.

Here is a google translation of the relevant line on the page. 

Heisei "regular staff and employees" of the October time year 24 33,110,000 people, "non-regular staff and employees" is 20,420,007 thousand (Excel: 2985KB)


By Jesse

Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In plewis

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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