Goodness me it’s been a while
I know I always write that, but there you go. I think I wrote at Christmas that it was about time for a proper post so getting it done at Easter isn’t too bad, is it? Anyway I’m a busy person, cut me some slack.
The return of Silent Shinzo
Yes, I know it’s been a while since Yoshihiko Noda got dumped for trying to do the right thing, since September 2012 to be precise, that’s when the LDP clawed their way back to power, so how has the new boy, Silent Shinzo Abe, been getting on?
Well he’s invented a new word, or rather he’s had one invented for him, the so-called Abenomics, a cunning and inventive blend of Abe and economics. So what is it? Well, as far as I can tell it’s the same as the quantitative easing that worked so effectively at kick starting the economy in the US and Europe. The idea, as far as I can see, is that the central bank prints lots of extra yen and uses this to buy lots of government bonds, I think they buy the bonds from Japanese banks who up until now had been propping up the government by buying these bonds thereby proving the government with cash (I could well be wrong about that, I’m not an economist; if I am wrong, what do you expect, go read Bloomberg).
The effect, hopefully, of this central bank buying spree is that it firstly provides liquidity to the banks who can then start using the money to give loans (which let’s face it is hopeful as no one wants a loan when they don’t want to be more in debt (except governments, of course, but they have different rules known as ‘fuck you small people, we do what we want’ rules)). The second supposed effect is to kickstart an infrastructure construction boom which, by the miracle of trickle-down economics, puts money into normal people’s pockets thereby restarting the economy as people buy stuff, inflation increases a bit, interest rates rise and everything is right with the world. This second point may sound familiar and it is to anyone who has been to anywhere in ‘small town countryside’ japan where there are enormous highways to nowhere and cavernous 1500-seater concert halls in a town of 200 people (and another up the road) – yes, it’s basically what’s been going on for the last 20 years.
There are other tenets to Abenomics, like devaluing the currency – this was important and something I agree with as for the last few years, even though the Japanese economy (we’re talking macro scale here) has been structurally fucked (no growth, stag/deflation, aging population time bomb etc) it seems the people who run these things decided Japan was a safe haven, and compared to Europe and the US for a while I suppose it was, so the yen was at stratospherically high levels for far too long and some adjustment needed to be made. What’s interesting here is that for the 2-3 years that the yen was strong there was little mention from the currencies that benefitted, dollar, euro and yuan, whilst Japan was left to suffer in silence. As soon as Japan started to try to devalue the yen all these currencies that had benefitted suddenly started predicting the end of the economic world because if Japan aggressively devalued its currency then they would have to as well (from a position of being devalued, interesting…). So suddenly Japan is screwed if it does and [continues to be] fucked if it doesn’t – good position to be in.
In a way I feel sorry for Abe, inasmuch as I can feel sorry for any politician. Japan has been in a bad place for a couple of decades now and something needed to be done, but as with a lot of these things it looks like it’s impossible to do what really needs to be done (e.g. separate big business from the government/ministry of finance; stop the white collar closed shop corruption; wipe out the bank’s toxic debt; make business stand on their own two feet; end protectionism; transpose the ultra-efficient Japanese manufacturing processes into company structures and the workforce (i.e. promote efficiency in all areas of the company); introduce meritocracy; value people; value ideas; make decisions; act. Goodness me, got a little carried away there, maybe I should be the next PM or Chancellor…). Anyway all that needs to be done but can’t be done solely by the government, so the government has to try and find ways to encourage business to buy into this, which means getting the currency down, liquidity into the market and more people into the shops to buy stuff (and most importantly get people having babies as old people don’t buy new TVs/cars/houses very often but young people do – fat fucking chance of this, of course and as discussed elsewhere, but you can’t say it enough times).
Er, lost my thread there with that ‘what is to be done’ mini-rantlet. So…something needed to be done and Abe can only do so much. He can’t really sit on his hands and not say anything, like he did last time he was PM back in 2006/7 as the world has changed for the worse since then. So he has to try something new, though a large part of the ‘new’ seems to be to do what has been done before but on a much bigger scale. At least Abe does have the bonus, if it could be called that, of having to rebuild Tohoku after the 2011 earthquake – that will take a lot of money and time and will, eventually, lead to a lot of people buying a lot of new stuff and maybe having babies, but whether it will be enough…
Reaction to his policies has been unsurprisingly mixed. The markets have loved it and the Nikkei, up another 100 points today, is now moving upwards at a rate of knots. Most economic commentators have looked on with a mixture of awe and morbid fascination, expecting the economy to either implode or explode in the not too distant future, pointing out that for this to work interest rates and especially economic growth rates will have to be impossibly high whilst keeping inflation manageably low all to ensure that debt servicing doesn’t exceed the country’s GDP (and seeing as the debt already exceeds GDP by a considerable margin and could head towards 245% this is a real worry). However given the right circumstances, such as continued growth and construction/rebuilding work that does actually benefit people, put money in their pockets and encourage them to spend, there is a feeling of optimism in certain quarters (the Economist http://www.economist.com/news/finance-and-economics/21569435-can-fiscal-and-monetary-splurge-reboot-japans-recessionary-economy-keynes and Nobel prize-winning economist Joseph Stiglitz http://www.guardian.co.uk/business/2013/apr/08/japan-shinzo-abe-yen-economics to name but 2 big names).
So I guess we’ll have to wait and see, I’m in the optimistic camp myself, having lived here for the best part of 17 years in the midst of depression (economic not personal) and still the country seems to get through, people spend, new buildings are built and the sun still rises. It would be better if he took on board my suggestions above, I wouldn’t charge too much for him to use, and not just because I have probably nicked them off lots of other people, but I know it’s unlikely to happen as it would mean too much of a change in the fundamental psyche of Japan. However it will all be for nothing because…
Krazy Kim Junior
Just what the fuck is going on over in Krazy Kim Junior’s People Mart? No, I don’t know either but I do with they’d sort it out and stop threatening to drop a large piece of metal on my head from a great height (though to be fair to Krazy Kim it seems to the South Koreans, naturally, and the Americans that have his dander up at the moment and in a show of enormous self-restraint the Japanese generally, and Silent Shinzo especially, have decided to forego the normal inflammatory ‘can we have any of our citizens you may still be holding captive back now please, and their children’ modus operandi that holds sway in the Ministry of Foreign Affairs).
One thing you have to wonder about – there is no way, as far as I know, that your average North Korean person can see any foreign news whilst they are in KKJPM, so whilst we understand that Junior has to be seen to rattle the sabre by his people in order to a) wring concessions from the US; b) get the US, China, Japan and who knows, Malawi to the negotiating table; and c) get some food aid. What I don’t understand is, when his people aren’t going to be watching BBC World or CNN why does he actually have to go through the rigmarole of the sabre rattling in the first place? He could just ask for some food and then, when it arrives, he goes on TV and is interviewed by that vicious newsreader woman and all he has to say is “I jolly well rattled my sabre and look, a bally load of rice/mung beans/marmite has been delivered by the quaking imperialist capitalist mongrels”. Or something similar – it’s not like there will be rioting in the streets with workers holding up copies of the Guardian declaim Junior as a liar, more likely they’ll be waving flags and smiling (and trying to ignore guns pointing at them from behind).
Anyway come on Junior, dad was a nutjob but I don’t really remember him going this far before…