Excellent, Richard. You have done my homework for me. If I may ask: Will coercive wage hike-by-jawboning measures work? Since even big, cash-rich companies don't believe they can justify big wage hikes in the long term, aren't they just effectively bowing to pressure to fork out some of the cash they have hoarded to weather an uncertain future? Even if the big boys can do this to avoid be targeted for ijime by the bureaucrats, many small- and midsize companies face certain death if they raise their wages too high. The central problem is that nobody, not the LDP, not METI, not the MOF, not the Keidanran, not the Shokokai, believes in Japan's future. In this milieu, trying to jawbone up wages is almost suicidal, I think. Personally, I would prefer to see a new focus on making consumer goods cheaper, which makes a stagnant wage go much further. The mantra of eternal growth does not apply to Japan's demographic situation, I think. Japan's economy needs to learn how to enjoy getting smaller. In this, they could become an OECD leader.
I know of no such pressure. Have you read anywhere about such pressure? If so, let me know. Thanks for recommending me to your network. I wonder whether you would consider suggesting to them that they upgrade to a paid sub. It would help support the work.
Thank you for your prompt response. No, I am not aware of any such international coordination, cooperation, or coercion. However, I would not be surprised if it is happening behind the scenes. I'll be on the lookout for any such signs.
Yes, of course I would be willing to follow up on your suggestion to recommend a paid subscription to Japan Economy Watch. I will post something soon (I'm about to board a plane).
By the way, my sense is that overall real wage growth won't be enough to move the needle all that much. In all my years of studying, working, and living in Japan, anything beyond incremental change is rare. More decisive action should be taken strategically to jump-start the Japanese economy and make other long overdue changes in society. That said, it's still a great country to live in as a foreigner.
No the BOJ risks being a partner in inflating an equity bubble leading to another round of deflation as it the bubble is burst.Just have to see if the NIKKEI rally has feet of steel or clay and time to raise the cost of capital
I think the elite in Japan, including the BOJ, welcome the stock market rally and do not see it as a bubble. Moreover, not all stock market crashes lead to deep recessions. E.g. the dot.com bust in the USA. It all depends on how much debt buildup there is and how real capital stock, particularly property, has been overbuilt, as in Japan in the 1980s and China today.
Thanks for commenting. I wonder if you would consider upgrading to a paid sub. It would support the work involved in producing this.
certainly good points but I would argue and did so in real time that the GFC of 200-2008 was the result of the FED getting out ahead of the dotcom crash and keeping rates artificially low for far too long in response causing a real estate market and its derivatives cousin to inflate beyond any rational outcome.While excess capacity can certainly cause contractions the Japanese being an example and China now a present case the Japanese had massive savings to rely on going into deflation.And yes they had genuine deflation resulting in a real yield of plus one percent even as QE proceeded.The present NIKKEI rally needs to be tested whether it is good for the elites or not----you only know a bubble after it pops
Excellent, Richard. You have done my homework for me. If I may ask: Will coercive wage hike-by-jawboning measures work? Since even big, cash-rich companies don't believe they can justify big wage hikes in the long term, aren't they just effectively bowing to pressure to fork out some of the cash they have hoarded to weather an uncertain future? Even if the big boys can do this to avoid be targeted for ijime by the bureaucrats, many small- and midsize companies face certain death if they raise their wages too high. The central problem is that nobody, not the LDP, not METI, not the MOF, not the Keidanran, not the Shokokai, believes in Japan's future. In this milieu, trying to jawbone up wages is almost suicidal, I think. Personally, I would prefer to see a new focus on making consumer goods cheaper, which makes a stagnant wage go much further. The mantra of eternal growth does not apply to Japan's demographic situation, I think. Japan's economy needs to learn how to enjoy getting smaller. In this, they could become an OECD leader.
To what extent may the BOJ have succumbed to pressure from other central banks in major markets around the world to change policy?
I know of no such pressure. Have you read anywhere about such pressure? If so, let me know. Thanks for recommending me to your network. I wonder whether you would consider suggesting to them that they upgrade to a paid sub. It would help support the work.
Thank you for your prompt response. No, I am not aware of any such international coordination, cooperation, or coercion. However, I would not be surprised if it is happening behind the scenes. I'll be on the lookout for any such signs.
Yes, of course I would be willing to follow up on your suggestion to recommend a paid subscription to Japan Economy Watch. I will post something soon (I'm about to board a plane).
By the way, my sense is that overall real wage growth won't be enough to move the needle all that much. In all my years of studying, working, and living in Japan, anything beyond incremental change is rare. More decisive action should be taken strategically to jump-start the Japanese economy and make other long overdue changes in society. That said, it's still a great country to live in as a foreigner.
No the BOJ risks being a partner in inflating an equity bubble leading to another round of deflation as it the bubble is burst.Just have to see if the NIKKEI rally has feet of steel or clay and time to raise the cost of capital
I think the elite in Japan, including the BOJ, welcome the stock market rally and do not see it as a bubble. Moreover, not all stock market crashes lead to deep recessions. E.g. the dot.com bust in the USA. It all depends on how much debt buildup there is and how real capital stock, particularly property, has been overbuilt, as in Japan in the 1980s and China today.
Thanks for commenting. I wonder if you would consider upgrading to a paid sub. It would support the work involved in producing this.
certainly good points but I would argue and did so in real time that the GFC of 200-2008 was the result of the FED getting out ahead of the dotcom crash and keeping rates artificially low for far too long in response causing a real estate market and its derivatives cousin to inflate beyond any rational outcome.While excess capacity can certainly cause contractions the Japanese being an example and China now a present case the Japanese had massive savings to rely on going into deflation.And yes they had genuine deflation resulting in a real yield of plus one percent even as QE proceeded.The present NIKKEI rally needs to be tested whether it is good for the elites or not----you only know a bubble after it pops
Here's my take of the 2008-09 financial crash and recession. https://richardkatz.substack.com/p/alan-greenspan-the-blind-oracle and https://richardkatz.substack.com/p/2008-09-financial-crisis-us-is-not
ok thanks