Thursday, January 10, 2013

Japan's Abe Mimics US, Will Force Bank of Japan to Have Job Creation Mandate, Modify Constitution to Send SDF to Foreign Wars


It never enters the mind of the pork-cutlet-over-curry-rice 3rd-generation prime minister of Japan that what he is doing is a lap or two behind. He thinks he is ahead of the curve.

From Nikkei Shinbun's exclusive interview (1/10/2013) with PM Abe on his economic policies which are collectively dubbed as "Abenomics" in Japan, by an uncritical reporter who does not ask tough questions (for that matter, any question):

Role of Bank of Japan:

「実体経済にも責任を持ってほしい。雇用を最大化することも頭に入れてもらいたい」と述べ、金融政策を通じて雇用拡大に努めるべきだとの認識を示した。為替水準に関して「日本は為替によって競争力を失っていた。(円高を)是正するのは政府と中央銀行の責任だ。努力し続けなければならない」

"I want [Bank of Japan] to be responsible for the real economy. They should keep maximum employment mandate in mind," Abe said, indicating his thoughts that [BOJ] has to strive for increasing employment through financial policies. As to the foreign exchange, he said "Japan has lost competitiveness because of the foreign exchange. It is the responsibility of the government and the central bank to correct (a strong yen). We have to keep trying."

日銀との連携を強化する仕組みとして「協定を文書として取りまとめたい」と表明。共同文書に2%の物価上昇率目標を明記する考えを強調した。2%の達成時期は「世界の多くの国では時期を明記していない。ただ長期はあり得ない。長期というのは目標でも何でもない」

As to the mechanism of cooperation with BOJ, he said "I want to formalize the agreement." He said he would include the 2% inflation target in the joint communique. As to when the 2% target will be achieved, he said "In many counties in the world, there is no date given. However, it cannot be long. If it takes long, it's not a target at all."

日銀が2%の物価上昇率目標を達成できなかった場合、諮問会議で「日銀が説明責任を果たしていくことになる」

If BOJ cannot achieve the 2% inflation target, "BOJ will have to explain" in the advisory board meeting.

首相が日銀に雇用最大化を求めたのは、米連邦準備理事会(FRB)が根拠法で「物価の安定」と並び「雇用の最大化」を義務付けられていることが念頭にあるとみられる。

The reason why the prime minister demands maximum employment [mandate] for BOJ is the US Federal Reserve Board, whose mandates are "price stability" and "maximum employment".


Successor to Governor Shirakawa:

「2%の物価安定目標、雇用最大化について日銀が決定的な役割を果たす考え方を十分理解する方で、実行力と国際社会に対するアピール力も必要だろう」

"It has to be someone who fully understands the idea that Bank of Japan should play a decisive role in stable [inflation] target of 2% and maximum employment. The person also needs to be a man of action who will impress others in the international arena."


Japanese Constitution (Article 9):

政府が憲法解釈で禁じている集団的自衛権の行使については「今月中にも(第1次安倍政権で発足した)懇談会の結論を正式に首相として受け取り、さらに検討を深めてもらいたい」と、行使容認に向けた具体的な検討を進める方針を明らかにした。

As to exercising the right of collective self-defense which the government has interpreted as "not allowed", Abe said "I will officially receive the conclusion by the discussion group (which was established during the 1st Abe administration), and I want the group to further discuss", indicating his policy to come up with concrete steps to allow the exercise of the right.


Abe is probably unaware that it is rare for a central bank to have dual mandates like the US Federal Reserve. ECB's mandate is interest rate stability, and nothing else. I was extremely disappointed to see Governor Shirakawa of BOJ immediately folded after Abe became the prime minister and agreed to have the inflation target. I guess Mr. Shirakawa wanted to serve out his term, which will end in April 18.

I had to laugh when I read "man of action". Like him, I suppose, who can gobble up pork cutlet over rice curry in 3 minutes.

As to high yen hurting the economy, it was not very long time ago that Japan was roundly accused of manipulating the currency at extremely low level to gain export advantage.

Just like Bernanke and most Federal Reserve governors, Abe thinks it is possible to manufacture steadily rising 2% inflation. I guess he's right. The US core inflation does not include food and energy anyway, and those are the two items that have gone up significantly under Bernanke's printing press, particularly in the past 4 years.

Just like the US Obama administration eager to ditch the 2nd Amendment of the Constitution, Japan's LDP has been itching to modify the Article 9 so that Japan can jump into action when an ally is attacked by a hostile force and attack the aggressor even when Japan itself is not attacked (right of collective self-defense). So whenever the US soldiers in Iraq, Syria, Afghanistan, Libya, etc. are attacked, the SDF soldiers will get to go and use live ammunition? How exciting it must be for a chicken hawk like Abe.

I have a suspicion that most Japanese do not understand what the "right of collective self-defense" actually means. They may be thinking it is a right to collectively defend their country. If they are not curious enough to know what it really means, I'd have to say they deserve what they get.

There is also a long article at Nikkei site that covers the entire interview, but as soon as I started to take a look my head started to hurt because of his sheer, utter economic ignorance. If you read Japanese, the link is this (you have to sign up (free) to read the whole article).

From what I could tolerate to read the long article, Abe says he will going to somehow force companies to pay more salaries to workers. That will drive the companies that still remain in Japan out.

Lunacy that has been with Japan for the past 20-plus years has just got out of proportion, if that's possible. ("My kind of place" must be the thinking at Goldman Sachs, though.)

In both Nikkei articles, there is not a single word about the nuclear accident, radiation contamination, or even the recovery in the disaster affected areas.

12 comments:

Vyse Legendaire said...

So Shirakawa didn't announce he was going to enact the 'drop pork-cutlet-curry from helicopters' plan?

Anonymous said...

Since 2011/03/11 the DPJ and LDP have been crying that fossil fuel imports, now more necessary because of the nuclear shutdown, are what is killing the economy. However, with a weak yen policy, these imports get more expensive. The pursuit of a weaker yen just shows that this argument for nuclear restarts was always utterly false and cycnical.

Anonymous said...

This administration is so cynical that it is hardly distinguishable from the US administration. Would make a great match. Both will be eaten by the bankers like Goldman. Vultures only eat dead meat.

Anonymous said...

Hello, actually the inflation seems to be here already - but your tweeters should be more reliable than I am.
I have had stays in Japan for years, and was amazed at the prices remaining stable, and the JPY getting stronger and stronger vs USD and Euro.
Since summer 2011 I noticed three things :
a raise in energy and transportation costs,
a raise in food prices, if you reject food from the contaminated areas.
and then a general raise in food products, nation wide.
Plus a recent four months drop of the JPY against Euro - and probably against the USD.
Except for employment his "action" might be already on the tracks.

Anonymous said...

OT :

Locals don't see the "Fuku 50" as heroes

"Before the meltdowns, Seiko Takahashi never thought of activism. Now the middle-aged mother from Fukushima City is a passionate anti-nuclear campaigner. And she admits there is little sympathy for the Fukushima workers.

"They are not heroes for us," she says. "I feel sorry for them, but I don't see them as heroes. We see them as one block, they work for Tepco, they earned high salaries. The company made a lot of money from nuclear power, and that's what paid for their nice lives."

http://www.bbc.co.uk/news/world-asia-20707753

Two US plants seen as next likely catastrophe

"Paul Blanch, a retired nuclear engineer who used to work at the Indian Point nuclear facility in Buchanan, N.Y., and Lawrence Criscione, a risk engineer at the Nuclear Regulatory Commission (NRC) headquarters, sent a letter to the senator, warning that a Fukushima-like meltdown is in America’s future if no action is taken to improve the facilities at Indian Point and Oconee."

http://rt.com/usa/news/two-nuclear-nrc-facilities-604/

arevamirpal::laprimavera said...

Anon above, thank you for the depressing BBC article. The ignorance of that Fukushima City housewife is painful. High salaries? Subcontractors and local workers who were made to stay at the plant? What is she talking about?

Anonymous said...

Excellent analysis. Japan is now in the death throes.

Anonymous said...

Japan can't get into much inflation while its population is decreasing (while its number of consumer is decreasing, or its total yearly consumption is decreasing). Add to that that most younger worker pay more and more to health insurance, the remaining Japanese consumers have even less money to consume. There is no exit from this situation for Japan, until maybe one day all the Abe of this world are gone. What worries me is to see so many young Japanese thinking like them the more they become part of the working society.

Anonymous said...

The lower the populaton the less you consume. It's not such a bad thing.

Darth 3.11 said...

That photo (like the others) tell me this man is a charlatan. What is wrong with his face? Why is his hair so out-of-the-bottle black?

Anonymous said...

As with most moneied politicians, Abe was born on third base and thought he hit a triple. No douche you were born lucky, end.

Anonymous said...

Utter ignorance that is Japan in a nutshell, they think they are so fucking unique but they are in for a rude awakening...

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