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Japan Falls into Recession

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Re: Japan Falls into Recession

#71

Post by guelo »

gw wrote: post #66
jusben1369 wrote: post #41

Earlier quoted context omitted.

You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. The US has turned the corner and is a job creating machine again including the first real signs of inflationary pressure through rising wages. The most unusual thing I can see about Japan is it's…

> You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. You cannot isolate variables in two separate economies; any conclusions assuming you can are bogus.

Then we can never look at any real world examples for guidance because there are always too many variables.

That leaves us with untested partisan theories pushed by ideologues.

I mean, how can it be that all the American conservative economists that have been predicting massive inflation since 2008 have not changed their theories at all?

Re: Japan Falls into Recession

#72

Post by mimighost »

mc32 wrote: post #22
techdragon wrote: post #18

Earlier quoted context omitted.

Immigration is painfully unlikely due to cultural issues. It's oft suggested by non Japanese people looking at the problem but at least from what I can see, the majority of the Japanese voting public don't want immigration. There's reasons if you want a fun read. Particularly interesting is the history of people of Korean decent who are native Japanese residents for a generation or two.

It's true Japanese aren't very accepting of immigration, historically --and having to be blood to be a true national is a bit of an odd theory for citizenship; however, unless they (or anyone else) devise an alternative to neo-liberal capitalism which provides a decent living for its population while that population is in decline, the Japanese may have to reconsider their position on immigration.

Well if they change their mind on immigration, they better be quick. Japan's neighboring countries are quickly catching up, if not surpassing, in a lot of respects, such as PPI and HDI.

Even in China, on the east coast, in certain sector, especially high-tech and finance, local companies can offer competitive salary and a better potential for career progress.

It is not like in 80s, when Japan is the envy of all kids in the class, the interests is quickly fading, with a aging population and stale economy.

Re: Japan Falls into Recession

#73

Post by melling »

gear54rus wrote: post #67
8ig8 wrote: post #65

Earlier quoted context omitted.

> Can't we just look this up somewhere else instead of encouraging this bullshit paywall behavior? Or is the quality of information that different? I honestly don't know, but I think in news, time is a factor. Use this post as a test: what non-paywall link would you submit?

Just above this comment tree, there's a link to BBC: http://www.bbc.com/news/business-30077122 Not sure how they differ since non-paywall wsj link does not work for me (still has paywall in 2 different browsers).

It doesn't seem to provide nearly as much information. Not everyone's business model is to give self-entitled individuals free stuff.

By posting urls to good articles that are behind pay-walls, you do provide a place to discuss the information, etc., and everyone can still learn. That is assuming at least some of us can read it.

I pay for the wsj. Why wouldn't I pay for good research, good writing, knowledge, etc.? People need to earn a living.

Re: Japan Falls into Recession

#74

Post by cynicalkane »

ekianjo wrote: post #57
dimitar wrote: post #43

Here is the common ground and controversy between most economists on the situation, I think it is interesting how much common ground there is: The common ground: * The government of Japan faces budget constraints; it cannot tax more than a certain amount and that includes seigniorage (taxing using inflation). * Right now Japan doesn't seem to be immediately close to those constraints since interest rates and inflatio…

> Additionally Increased GDP will bring more revenue The thing is with the current policy you won't get much increased GDP. Prices are going up in Japan now, which will lead to decreased consumption, decreased savings (or maybe actually an increase in savings vs spending if Japanese feel the worst is yet to come) and negatively impact GDP. Wherever it's going, it's not good anyway.

This is incorrect. GDP growth in Japan jumped when it became clear Abenomics was going forward, and un-jumped when the recent tax increase went in.

The annualized growth[1] in between these two periods has been greater than 2%, with falling unemployment, despite a declining workforce. The growth right before Abenomics was negative and falling.

[1] For this comparison, make sure to use annualized QoQ figures. Data-illiterate people have been using YoY figures to argue Abenomics doesn't work, but these are distorted by the pre-Abenomics recessionary plunge in 2012.

Re: Japan Falls into Recession

#75

Post by j_lev »

ekianjo wrote: post #51
jusben1369 wrote: post #41

Earlier quoted context omitted.

You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. The US has turned the corner and is a job creating machine again including the first real signs of inflationary pressure through rising wages. The most unusual thing I can see about Japan is it's…

> Deflation tells consumers not to buy as you wait 6 months and it'll be cheaper. I live in Japan for many years and I have never seen such thing as deflation here. Prices have remained stable for most items or have increased a little bit. The idea that stuff becomes cheaper as you wait is ludicrous in Japan.

The deflation is often masked by advances in technology.

A new 150,000/month condo in Tokyo in 2014 has much better facilities than a then-new 150,000/month condo in Tokyo in 1994. Indeed, the latter is probably struggling to achieve rents of half that today.

Re: Japan Falls into Recession

#76

Post by akg_67 »

We have been traveling in Japan for past 4 weeks (another 2 weeks to go). Talking to regular folks, there seems to be divergence between what regular folks thinks need to be done compared to government.

The regular folks want to see Dollar-Yen parity. As Yen drops, things become more expensive and regular folks cut back more on spending. I am not sure why increasing cost of imports doesn't show up as inflation. Things would have been worse if not for drop in oil prices (major import for Japan). These folks don't believe dropping Yen is the solution as majority of investment by Japanese companies is outside Japan and weaker Yen just reduces that investment, in turn less profit flow back in the country.

The expectation of deflation is deeply rooted in regular folks. Everyone is waiting to spend on large items, just not right now. Land prices are falling so no one wants to buy a house now. We were interested in buying a place in Sapporo but everyone told us to wait until we really need to buy. An apartment costing $200-300K rents for $500-700/mo in Sapporo compared to similar place in Seattle renting for $1,000+/mo. One of our friend mentioned that they just sold their house in Sapporo and had to offer healthy discount to the buyer.

I don't have a solution to Japan's problems. But QE, weaker Yen, and raising taxes doesn't appear to be the solution. Rolling back tax increases may be a start in the right direction.

Regular folks seems to have better pulse on the problem than establishments.

Re: Japan Falls into Recession

#77

Post by j_lev »

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

I don't agree that increased immigration/population growth is necessarily the key (for Japan or other developed nations). Technology should be able to go a long way to replace the workers who support the nation. Japan, of course, is doing its utmost to prove this wrong.

Re: Japan Falls into Recession

#78

Post by dimitar »

hindsightbias wrote: post #64
dimitar wrote: post #43

Here is the common ground and controversy between most economists on the situation, I think it is interesting how much common ground there is: The common ground: * The government of Japan faces budget constraints; it cannot tax more than a certain amount and that includes seigniorage (taxing using inflation). * Right now Japan doesn't seem to be immediately close to those constraints since interest rates and inflatio…

> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start raining from the sky first. You don't go anywhere if consumers expect prices to remain the same or deflate.

Oh wow, it is certainly a challenge to find a public intellectual to admit something like that, especially considering that not everyone can be neatly placed in one of the two camps. But you can get close to that by reading between the lines, by the viewing the context.

Enjoy reading Kenneth Rogoff:

http://www.project-syndicate.org/print/austerity-and-debt-re...

A close reading will show him admitting, quite begrudgingly :

* we aren't that close to a "sudden stop" after all.

* homework shows that rates do seem to stay low, when having high debt. It is "sobering".

* more inflation is desirable (to be fair, this was always his position)

* balancing the budget "tomorrow" is "facile"

But if you look at my post carefully, the case for him looks stronger:

* Cumulative costs - more debt, more problems. Now its worse.

* there are other factors beside monetary and fiscal policy (this is definitely true, but a distraction, no reason why B shouldn't agree)

* no admission that inflation is hard to do

So here you go, Rogoff admits he was wrong, but finds his case only strengthened. Since he was wrong the other side was right, correct? Not exactly, since he invents a straw-man (simplistic Keynesian) to deny how much common ground there actually is. There might be a better admission somewhere, maybe in private or after a bit more time, but this is pretty close.

edit: for a typo

Re: Japan Falls into Recession

#79

Post by cturner »

hindsightbias wrote: post #64
dimitar wrote: post #43

Here is the common ground and controversy between most economists on the situation, I think it is interesting how much common ground there is: The common ground: * The government of Japan faces budget constraints; it cannot tax more than a certain amount and that includes seigniorage (taxing using inflation). * Right now Japan doesn't seem to be immediately close to those constraints since interest rates and inflatio…

> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start raining from the sky first. You don't go anywhere if consumers expect prices to remain the same or deflate.

Why is this? Computers get rapidly cheaper for example.

Re: Japan Falls into Recession

#80

Post by mc32 »

toomuchtodo wrote: post #69
mc32 wrote: post #58

Earlier quoted context omitted.

Right, but point me to a society that's been able to make that work. The formula has yet to be cracked.

Show me a society/country who has actually made a go at making it work in the last 40 years. If you're not attempting to execute theory in the real world, you're not trying hard enough.

I'm not sure I'd agree with you. It's not the kind of thing you try in order to see if it sticks. Communism tried with two out of your three criteria and it didn't turn out all that well --mostly ended up a terrible 'experiment' for those whom it affected. So, I don't think 'trying' is the way to go, when otherwise what you have is working well enough.

That said, Japan has to try something --they are entering 25 years of being in a standstill, so relatively speaking, they are in decline. They (politicians and population, by large) may not have the will to try anything radically different from the status quo --which is a quasi neo-liberal economic model, so they may just end up crashing hard or slowly becoming kind of irrelevant, economically speaking.

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