Abenomics is based on Hope and little else

21 Dec

Abenomics is based on Hope and little else

With the election hype now passed the country can get back into the business at hand. With the new LDP government staring at 20 years of deflation, a stagnating economy, already outrageous prices at the consumer level coupled with more financial printing from Tokyo and a vague promise of inflation does make magic happen. In fact it can be argued that it was the LDP who are responsible for causing the eye popping debt levels in Japan. So we are staring at what is essentially “more of the same”.

Promises of short term cash infusions of approx 2-3 years into already hurting rural communities brought the LDP back into power. This is due to the manner in which political power is determined thus putting the highly educated 30-40 year old urban dwellers in the back seat while the older rural residents get the prime spot at the table. Improving schools and hospitals against earthquake and tsunami is the rallying cry now. Yet here in central Japan the downtown elementary school is closed due to a lack of students. The sales pitch is a lot of hot air. Yes hospitals need to be earthquake resistant but I was under the impression that they were built to withstand earthquakes in the first place. Is the government saying they aren’t and thus must be “improved” ? Only another 10 trillion yen this time and all will be right with the world. From where I sit, something stinks.

Free Trade is dead too. A major LDP insider appeared on NHK tv the other night and said as much into the camera. Japan cannot sign an agreement that threatens to disturb its inefficient and antiquated distribution system nor threaten its pricing policies which keeps the domestic agriculture in business.

The yen will be weakened, yet this has been part of the overall policy of the government for years without success. Are we to believe that because Abe makes a speech and a campaign promise that it is going to happen ? I guess I am from Missouri on this position. Show me Mr Abe, where is the beef ? Yes the yen has moved into the 84-85 range in exchange to the dollar but my understanding is that the goal is about 106-08. Yet Japan must import all its energy and with a weakened yen how will they manage their import energy costs ?

The answer I see will be that the LDP will announce that the nuclear reactors will be turned back on. This will accomplish a few things, reducing costs, providing Japanese energy jobs and offering additional atomic pork to rural communities to provide needed energy to the mega cities.

The clock is ticking on the new PM and his version of the same old medicine just doesn’t add up as I see it. Perhaps having former PM Mr Aso in charge of finance will help to mitigate the oncoming financial disaster we all see coming. Lets hope so, the LDP is going to need all the help they can get. 20 years of financial hell doesn’t go away because the new PM says so.

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One Response to “Abenomics is based on Hope and little else”

  1. valeriosoldani February 3, 2013 at 4:28 pm #

    Looking at Japan’s “new deal” of Mr.Abe from Europe, we should think about the immediate consequences of these measures on our currency and economy. If possible, we should think about a “third way” for the economic recovery, quitting the actual leading austerity policies. If Abenomics wouldn’t work here or persuade our leaders, Merkenomics could put us down and push recovery far away. It’s time for a new, daring Euronomics stimulus package, hopefully cooperating with other economical global top players. I tried to provide an overview at http://wp.me/p2CSSk-12

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