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

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.

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.

Japanese Internal Affairs and Communication Ministry

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)

 

Fiscal Union Is Implied if Not Required by a Monetary Union

In 1991 during a visit to Brussels for a discussion of the EU '92 event with some of the bureaucrats engaged in planning there, my old economics professor predicted that no matter what they said, a monetary union implies a fiscal union, greater than the targets and harmonisation which they would admit, men being the creatures that they are.

It makes sense when one understands monetary policy and its theory, and the implications it has in restricting the freedom to save or spend as one may wish to pursue as a fact of fiscal policy.

Here is a story below in which France and Germany discuss their moves to bring more uniformity to their fiscal policies. Quite frankly I am surprised that it has taken this long for it to happen. With the financial crisis tearing down the facades, the extend and pretend policies of the EU have collapsed, and the cheating behind their targets have been exposed for the farce that they are.

And by extension, if one's monetary and fiscal policies are no longer their own, but shared with another and intimately bound by a common currency, then a greater political union and independent governance is a moot point.

This is what my old professor predicted in 1991. And on the train ride back to Paris he said, "Watch what happens if there is a move to establish a single world currency that is a sovereign instrument, and not merely a reference to a basket of currencies and commodities. And then he quoted the famous observation from Mayer Rothschild: "Give me control of a nation's money and I care not who makes the laws."

It has been many years since we have spoken. He was tottering towards his retirement then, and I suspect that he is smiling at all these developments from some better and kinder vantage now, as I know he would be even if it was a profane preference. It was always his first joy to probe the subtle mysteries of money, and how they related to the political follies of men. It was he who first infused me with an interest in the study of money, an aspect of macroeconomics which bordered on his obsession. And it opened a new world to me, and an endless fascination with what is difficult, but so wonderfully, and often subtlety vast.

"Much have I travell’d in the realms of gold,
And many goodly states and kingdoms seen;
Round many western islands have I been
Which bards in fealty to Apollo hold.
Oft of one wide expanse had I been told
That deep-brow’d Homer ruled as his demesne;
Yet did I never breathe its pure serene
Till I heard Chapman speak out loud and bold:
Then felt I like some watcher of the skies
When a new planet swims into his ken;
Or like stout Cortez when with eagle eyes
He star'd at the Pacific--and all his men
Look'd at each other with a wild surmise--
Silent, upon a peak in Darien."

John Keats, On First Looking Into Chapman's Homer

LesEchos.fr
France
et Allemagne s'attaquent à l'harmonisation de leur fiscalité

La bonne gouvernance européenne implique, notamment, l'harmonisation des politiques fiscales. Paris et Berlin en font leur credo, qui ont fait un pas ce mercredi vers une convergence de leurs systèmes fiscaux, à l'occasion de l'invitation au Conseil des ministres français du ministre allemand de l'Economie et des Finances Wolfgang Schäuble.

L'objectif est que « nos deux gouvernements soient ensemble en mesure de prendre des décisions pour aller vers la nécessaire convergence fiscale, tant dans le domaine de la fiscalité des entreprises que dans celui de la fiscalité des particuliers », a annoncé l'Elysée dans un communiqué. « La convergence entre nos systèmes fiscaux est un élément essentiel de notre intégration économique et de l'approfondissement du marché intérieur en Europe », a estimé Nicolas Sarkozy. La première étape de cette convergence devrait passer par un état des lieux des deux systèmes. La Cour des comptes s'en chargerait, côté français, un organisme équivalent s'y attelant outre-Rhin.

Le plan de rigueur allemand est soumis à des risques d'exécution

Le rapprochement franco-allemand en matière de fiscalité ressemble fort, côté français, à une volonté d'aligner le système fiscal sur le modèle allemand. Le poids des prélèvements obligatoires sur l'économie est globalement inférieur chez les deux plus proches partenaires de l'UE (42,8% du PIB en France et de 39,5% en Allemagne en 2008, selon les données énoncées par Nicolas Sarkozy ce mercredi), et leur répartition y est sensiblement différente (moins d'impôt direct, mais TVA plus forte
outre-Rhin)...