(OT) Abe's Just-In-Case Election - "This Is The Only Way"

Japan's Prime Minister Abe called a snap election without a cause, other than to make sure, just in case, his party LDP and coalition partner Komei Party still has popular support to carry out so-called Abenomics.

Today (December 14, 2014) is the voting date in Japan, and Japan's media outlets have been overdrive ever since the Lower House (House of Representatives) was dissolved in telling people that:

1. The voting rate will be very low, as there is no "cause" for the election;
2. Low turnout means parties with organized votes (i.e. LDP and Komei) will win big;
3. LDP alone will surpass 300 seats.

Angry voters in the small world of social media (like Twitter) doesn't seem to translate into real-world angry voters who will vote against LDP/Komei over abysmal real-world Abenomics accomplishments (higher stock market, lower yen, lower wages, more contract workers, negative GDP growth, etc. etc.) or over Abe's peculiar idea of "Beautiful Nation Japan" by changing the Constitution and removing "fundamental human rights" references.

Here's a photo in the post by independent journalist Ryusaku Tanaka on the last evening of the campaign (December 13), showing people waving small Japanese flags to greet Prime Minister Abe, as if he were the emperor of Japan:

Mr. Abe's Party has this as the official poster for the election. It says,

"For Economic Recovery, This Is the Only Way"

So the madman Haruhiko Kuroda at Bank of Japan will keep printing increasingly worthless yen to boost the stock market even further, as Abe's ministers having handsomely benefitted from the rising Nikkei. His ministers, particularly Finance Minister Aso, would point out the Nikkei index and say, as if it should be so self-evident to anyone, "See, Abenomics is working. The stock market is rising."

For his part, Abe will restart nuclear power plants, export arms, invite Las Vegas casinos, curtail citizens' rights for the greater good for his "Beautiful Nation". If the ruling coalition wins two-third majority, he may try to amend the Constitution by national referendum. LDP already has the draft, and it makes a very scary reading unless you are Abe believer.

The only thing I have noticed different this time around, compared to the last election (Upper House), is that more net citizens look more determined to vote for the opposition, EVEN IF THEY DON'T LIKE THE OPPOSITION. Because they detest LDP/Komei more, many are willing to hold their noses and vote for the opposition candidates, whatever the party.

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40-Year-Old Minister of Economy Declares "Contaminated Water Is Under Control", and "Effect of Radioactive Materials Is Completely Blocked" at #Fukushima I NPP

dutifully parroting her boss, PM Shinzo Abe.

Thanks to the recent cabinet reshuffle by PM Shinzo Abe, Ms. Yuko Obuchi (link in Japanese) became the Minister of one of the most powerful ministries in Japan, Ministry of Economy, Trade and Industry (METI), at an extremely young age (for the Japanese politics) of 40. She is the daughter of the former LDP Prime Minister Keizo Obuchi who died in 2000. Right after his death, Ms. Obuchi "inherited" her father's constituency and was elected to the Lower House at the age of 26.

So far, she has already pledged to restart nuclear power plants in Japan by "making safety our priority." She visited Fukushima I Nuclear Power Plant on September 7, and gave us her expert assessment of the situation.

From Reuters Japan (9/7/2014):

小渕経産相、福島第１原発の汚染水問題「コントロールされている」

Minister of Economy Obuchi says contaminated water at Fukushima I Nuke Plant "is under control"

小渕優子経済産業相は７日、東京電力福島第１原発を就任後初めて視察した。視察後、記者団に対し、汚染水問題がコントロール下にあるかとの質問に対して「全体として状況はコントロールされているものと考えている」と述べた。

Minister of Economy, Trade and Industry Yuko Obuchi visited Fukushima I Nuclear Power Plant for the first time since her appointment. She spoke with the reporters after the visit, and answered the question of whether the problem of contaminated water was under control. She said, "Overall, I think the situation is controlled."

小渕経産相は「個別の事象は発生しているが、モニタリングの結果、発電所の港湾内で放射性物質の影響は完全にブロックされている」と話した。

Minister Obuchi said "individual incidents continue to happen, but looking at the result of the monitoring, the effect of radioactive materials inside the plant harbor is completely blocked."

１年前にブエノスアイレスで行われた国際オリンピック委員会（ＩＣＯ）総会での２０２０年東京五輪誘致スピーチで安倍晋三首相は、福島第１原発の汚染水問題について「アンダー・コントロール」と発言した経緯がある。今月３日に経産相に就任したばかりの小渕氏だが、最重要課題のひとつである汚染水問題で従来の政府見解を踏襲した形だ。

One year ago at the International Olympics Committee in Buenos Aires, Prime Minister Shinzo Abe made a speech for the 2020 Tokyo Olympics and said the contaminated water at Fukushima I Nuclear Power Plant was "under control." Ms. Obuchi, who became the Minister of Economy on September 3, thus follows the official view on one of the top priorities for the Abe administration.

The effect of radioactive materials is blocked, not radioactive materials themselves. Whatever that means.

The approval rating of the Abe administration jumped as much as 10 points after the cabinet reshuttle. Ostensible reasons include a number of female ministers, including Ms. Obuchi, as if it is a good thing.

Taro Yamamoto, who won the seat in the Upper House on his appeal to anti-nuclear, anti-contamination voters, has an astute observation (link in Japanese) about the Abe administration doing something to boost popularlity and the possibility of Abe dissolving the Lower House and calling a snap election in fall. Yamamoto thinks that may be the only way that the Abe administration can gloss over the failure of "Abenomics" and survive. He says LDP and Komei may be the only parties with enough organization and money to prepare for an election with very short notice.

I think he may be right. I for one just cannot imagine Ms. Obuchi controlling (or pretending to control) the bureaucrats in the most powerful ministry, or overseeing (and pretending to control) TEPCO in the decommissioning of Fukushima I Nuclear Power Plant. I think she (and other female ministers) are for show, to boost the popularity of the Abe administration in preparation for a snap election soon.

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(OT) Obamanomics = "Godzilla of Incompetence"

Cartoon by Michael Ramirez at International Business Daily:

I suspect that it will be the same for "Abenomics", except the reason (aka excuse) is not going to be the weather but the "pacifist Constitution" that restricts the prime minister from freely selling arms and sending the Self Defense Force to places where the US troops are (i.e. practically everywhere on the planet Earth).

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(OT) Head and Shoulders Topping Pattern in Japan's Nikkei Weekly Chart?

Uh oh... Is about the only "success" story of so-called "Abenomics", Nikkei Stock Index, in danger of collapsing?

If this "head and shoulders" topping pattern (10 months in the making) plays out, the target seems somewhere below 11,500. There is not much of a support until 10,200 or so.

I'm sure Bank of Japan's Governor Haruhiko "wages are rising even as they are falling for 22 months" Kuroda will do whatever it takes to prop up the market.

Or in this new normal world, the topping pattern is actually bullish, signaling the central bank's intervention and sending the stock market even higher.

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International Nuclear Cooperation: Japan's Monju Reactor to Help France's Astrid, UK's Sellafield to Help Japan's TEPCO

As Japan's Prime Minister Abe tours Europe, he is securing the cooperation from Europe's largest nuclear nations that he hopes (I think) will enhance the status of Japan as a major nuclear nation and secure the nuclear future for Japan.

With France, Mr. Abe is offering Japan's Monju fast breeder reactor to conduct tests for the Astrid.

What's the Astrid? From the wiki entry for Generation IV reactors:

The European Sustainable Nuclear Industrial Initiative is funding three Generation IV reactor systems, one of which is a sodium-cooled fast reactor, called ASTRID, Advanced Sodium Technical Reactor for Industrial Demonstration, Areva, CEA and EDF are leading the design with British collaboration.[13][14] Astrid will be rated about 600 MWe and is expected to be built in France, with construction slated to begin in 2017 near to the Phénix reactor.[9]

Mr. Abe is eager to justify Japan's fuel cycle policy, and he wants to make nuclear technology and military weaponry as two of the major exports from Japan for which his government wants to become the top salesman.

From Nikkei Asia (4/30/2014; emphasis is mine):

Japan, France to work together on next-generation reactors

TOKYO -- The Japanese and French governments are working toward an agreement to cooperate in the development of fast reactors, a technology designed to reduce nuclear waste.

Prime Minister Shinzo Abe and President Francois Hollande will likely affirm the partnership in Paris on May 5. The agreement would build on an earlier comprehensive partnership formed last June in the field of nuclear energy.

Fast neutron reactors convert spent fuel, which remains radioactive for tens of thousands of years, into materials that emit radiation for just a few hundred years, thus helping to reduce overall nuclear waste.

When put into practical operation, such a reactor would generate electricity and cut down on nuclear waste at the same time.

France is developing the Astrid (Advanced Sodium Technological Reactor for Industrial Demonstration), which it plans to start operating around 2025, but it lacks sufficient reactors to conduct tests. Japan will offer up its Monju prototype fast breeder reactor, which has been idle due to safety concerns, for the tests.

 

Good luck France. Workers, engineers, and scientists at Monju say they are not comfortable working there, unsure about safety.

Then, TEPCO has announced that they will closely collaborate with the UK's Sellafield Ltd. whose expertise in decommissioning a troubled reactor could benefit TEPCO in decommissioning Fukushima I Nuclear Power Plant.

The Windscale accident was an INES Level 5 accident.

From TEPCO's presentation in English (5/2/2014):

Overview

Tokyo Electric Power Company (TEPCO) considers it would be beneficial to share expertise with overseas operators which have similar decommissioning experience, to decommission Fukushima Daiichi Nuclear Power Station.

TEPCO has agreed with Sellafield Ltd. on exchanging information relating to the management and technology of decommissioning, towards a safer and stable decontamination and decommissioning at Fukushima Daiichi Nuclear Power Station. Sellafield Ltd. is a company in UK which has engaged in the decommissioning of a reactor and radioactive waste facilities. On ahead of the formal information exchanging agreement, the two companies signed a cooperation statement, which clarifies the objectives and significance of the agreement.

Content of the Statement (Objectives and significance of the information exchanging agreement)

Overview of the objectives

• Sharing expertise, experience and technology in radioactive waste management, clean up and decommissioning:

• Visits in both directions (Fukushima Daiichi NPS, Sellafield) by representatives from both organisations, sharing of information / reports and similar exercises

• Contributing to achieving the goals for both sites by learning from the similar challenges

• Continuously assessing the effectiveness of cooperation

Overview of the significance

• Proper visibility of the suppliers’ contribution

• Strengthening of the links between our businesses and wider, civil society

• Positive support of the UK Nuclear Decommissioning Authority (NDA) etc.

About technologies/knowledge of Sellafield Ltd.

• Sellafield is working with the decommissioning of the Windscale nuclear reactor, which suffered radiation leak (INES-5).

• It deals with the decommissioning and risk-reducing measurements fo the other facilities with high risk of radiation leakage

• It has an experience of dealing contaminated water leak to the ground

It is clear from the comment by Mr. Naohiro Masuda, Chief Decommissioning Officer of a new TEPCO company called Fukushima Daiichi D&D Engineering Company, that this deal was brokered by the Japanese government and the UK government, regardless of whether TEPCO wanted it or not.

Mr. Masuda was the plant manager of Fukushima II (Daini) Nuclear Power Plant, which came very close to core melt after the loss of power after the earthquake on March 11, 2011. What the workers did under his leadership and why the core melt did not happen at Fukushima II would be worth recalling.

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As "Abenomics" Has So Far Failed to Produce Positive Results for Main Street, Japan's Prime Minister May Be Preparing for Constitutional Change

Abe must know that the hodge-podge economic program he has named "Abenomics" isn't really any program and that it won't work. Japanese consumer sentiment index for July dropped 0.7 to 43.6, following the spike in the consumer price index which turned positive in June but was not accompanied by any rise in wages.

Abe's Plan B is probably "wag the dog", and he seems to be getting ready on two fronts.

First, Yomiuri Shinbun reports that he has made one of the personal advisors of Boy-wonder (aka Toru Hashimoto, mayor of Osaka City) a Special Advisor to the Cabinet, ostensibly to advise the administration on economic growth strategies. Boy-wonder is ecstatic that Mr. Taichi Sakaiya will act as a strong, direct pipe between the Abe administration and his failing party (Japan Restoration Party). Abe needs Japan Restoration Party's vote to change the Constitution.

Second, as Kyodo News reports, he is bringing an active, high-ranking officer of Air Self Defense Force into the Cabinet Secretariat to be in charge of national security and crisis management (i.e. collecting intel on China and North Korea). Major General Jun Nagashima is 52 years old, and the first high-ranking officer of Japan's Self Defense Force to be advising the Cabinet.

As to his so-called "Abenomics", even the International Monetary Fund has some doubts, which was totally ignored by the Japanese media who reported on their latest IMF assessment of Japan. Only Bloomberg Japan reported it, but that news outlet has a rather small audience in Japan. Here's what IMF thinks of Abe's plan to hike sales tax and "Abenomics", according to Bloomberg (English) (8/5/2013; emphasis is mine):

Japan’s plan to double a sales tax by 2015 to improve its finances has triggered some concern within the International Monetary Fund’s board.

While IMF directors “generally” supported the plan, “a few” expressed concern over a possible hit to growth, the fund said today in a statement summarizing the view of its executive board. The term “a few” is used by the IMF to mean between two and four. It urged the country to gradually increase the levy to “at least 15 percent” to bring down its public debt over the medium term, according the IMF’s staff report of its annual review of Japan.

...“An incomplete version of Abenomics would be unlikely to sustain the current strong growth,” Jerry Schiff, IMF mission chief for Japan, said during a conference call today. “In such a case, over-reliance on fiscal and monetary stimulus could also generate important costs for the rest of the world.”

Schiff said the IMF supports the plan to increase the consumption tax.

(Full article at the link)

If IMF actually thinks it is even remotely possible to bring Japan's fiscal health back, with the government debt more than double the GDP, it is delusional.

Japan should remember what IMF recommendations have done to Greece, Spain, Portugal, and most recently Cyprus.

Then again, Japan probably thinks this time is different, because Japan is not Greece (or Spain, or anyone else).

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"Abenomics" at Work: McDonald Japan to Sell 1,000 Yen ($10) Quarter Pounder Burgers for a Limited Time

I said I would be the world number one.

Everybody laughed and said it was impossible.

That's OK. That's even better.

Surprise will be bigger.

Bite.

Japanese bubble is already here. What will be next? Tiramisu with gold flakes, again?

For those Japanese who were born after the last bubble burst (1990), here's your chance for a taste of bubble. Get it before it bursts, again.

The man in the commercial is Keisuke Honda, a 27-year-old midfielder who plays in the Russian Premier League.

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Idio(syncra)tic Japanese Stock Market: Return of PKO (Price Keeping Operation) to Support Abe/Kuroda Agendas

Both "growth strategies" of Prime Minister Shinzo Abe and "QE from different time-space dimension" of Bank of Japan Governor Haruhiko Kuroda hinge on the Nikkei stock index to keep rising, signaling the "wealth effect" to the populace most of whom are yet to see any tangible benefit of either Abe's or Kuroda's strategies.

So, as part of "doing whatever it takes" (which even Bank of International Settlement says is so passe), PKO, or price-keeping operation, on the Nikkei index seems to have returned.

Economic journalist Takehiko Nishino wrote in Nikkei Shinbun on 6/26/2013 the following (my summary of original Japanese):

The Nikkei Index on June 21, 2013 started at -311 yen following the rout in the US stock market, with Dow Jones Industrial plunging 353 points. However, in the afternoon market, Nikkei, led by strong, intermittent buys in the futures market, reversed to positive, and ended the day up 215 yen. As it was happening, traders were puzzled by the scale and speed of the index recovery.

Rumor had it at first that those speculative buys in the futures market were from foreign investment banks, but it turned out that foreign investment banks like ABN Amro, Newedge Group, Barklays, UBS, Morgan Stanley were net sellers of the futures.

So who did the buying? Japanese investment banks, particularly Nomura Securities. The buying and selling of the futures were totally out of proportion. So what was it?

Mr. Nishino thinks it was the good old "PKO", price-keeping operation, resurrected. PKO was done in the 2000s when the Japanese stock market was going nowhere, to inject some fizz in the market and support the market. It worked like this:

Japanese investment banks and institutional investors routed their orders through foreign investment banks or through their overseas offices to make the orders look like they were from foreign investors.

After it was revealed they were not foreign investors, they were euphemistically called "foreign investors with dark eyes" (i.e. Japanese). Also, the national government directed public fund (public pensions, postal savings) to invest in the stock market to support the market. [That was one of the worst-kept secret among traders.]

[One of the PKO was done by then-Prime Minister Taro Aso, current vice prime minister and minister of finance, in October 2008 when Nikkei tanked to post-bubble low of 6994 yen. Aso directed the Japanese investment banks and public pensions to prop up the market at all cost (literally), and Nikkei ended the year at 8859.]

So, why did this PKO suddenly reappear on June 21, 2013, with Japanese investment banks buying up massive amount of Nikkei futures?

Mr. Nishino thinks there are two factors. Japanese investment banks themselves didn't want Nikkei to tank at this point, for their own sake. They want the "Abenomics" market that keeps going up no matter what. And Prime Minister Abe himself didn't want Nikkei to tank, right before the Tokyo Metropolitan Assembly election, a precursor to the Upper House election in July. So far, the rising stock market is about the only "positive" results of so-called "Abenomics", and if the stock market tanks it will be considered failure of Abe's overall policies.

So what to do? Buy Nikkei futures at all cost.

And today, Nikkei ended at 13,213, up 379 from yesterday's close. With PKO's help, I'm positive it will regain 50-day moving average (13,788) sometime next week (if not Friday).　BIS be damned. For most Japanese from Prime Minister on down, the stock market is a true reflection of the economy on Main Street.

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Japan's PM Abe Speaks about His "Abenomics Growth Strategy", Stock Market Tanks (and Tanks, and Tanks, and...Tanks)

(UPDATE 4) Nikkei ended the day with －518.89, to 13,014.87. Intraday swing of nearly 700.

(UPDATE 3) Nikkei now 393, with 20 minutes more to trade.

(UPDATE 2) Nikkei now down 369.

(UPDATE) New York Times' Hiroko Tabuchi was tweeting that the advance copy of Abe's speech was made available to the media both domestic and foreign (but not New York Times, apparently). How much dumber can they get? A whole lot, I'm afraid.

==========================

Nikkei was as high as 13,771, but as Prime Minister Abe spoke in the afternoon on June 5 detailing his "growth strategy", the index tanked, and it tanked fast and furious.

Nikkei is now 13,314, erasing about 460 points from the high and looks like it is digging down deeper. The red arrow is when the content of the speech started to get reported by the Japanese media (slightly before 1PM).

Whatever he said, the market didn't like that.

Of course, Nikkei blames it on higher yen first, and the hedge funds second, who, according to Nikkei, didn't think much at all of Abe's "strategy", dismissing it as "nothing new".

Well that's what Mizuho Securities' chief economist said the other day.

It's a price to pay when you let in foreign (macro) investors, who actually listen to what politicians and policy makers say and invest accordingly, to the once-boring and half-dead stock market.

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"Abenomics" Growth Strategy: "Government United as One" to Push for Nuclear Reactors Restart, By All Means Necessary

Reading the reference documents for Prime Minister Abe's "Competitiveness Committee" make your head spin, and make you think it is still 1960s Japan for them, right before the Tokyo Olympic (1964), with words like "striving to be the world number one", "international competition", "global leader".

And sure enough, at the core of this "international" growth strategy is nuclear power generation, just like in the 1960s.

Asahi Shinbun reports it has obtained the draft of the "Growth Strategy" of the Abe administration to be finalized and formally announced by mid June. The wording, from little what's reported in the article, confirms my suspicion that the Abe administration and LDP, whose members are second- and third-generation politicians and/or academics who have precious little experience in working in the "real" economy, are stuck in 1960s.

(Real economy? Isn't that another name for the stock market?)

From Asahi Shinbun (5/31/2013; part):

安倍政権が６月にまとめる成長戦略の素案に「原発の活用」を盛り込み、原発再稼働に向けて「政府一丸となって最大限取り組む」と約束することがわかった。東京電力福島第一原発事故を受けて脱原発を求める声は根強いが、安倍政権の経済政策「アベノミクス」で目指す経済成長には原発が欠かせないという姿勢を鮮明にする。

It has been revealed that the draft of the growth strategy to be finalized by the Abe administration in June will contain "utilization of nuclear power plants" and a promise that "the government united as one will make utmost effort" to restart the nuclear power plants. After the Fukushima I Nuclear Power Plant accident, there is still a persistent view that Japan should move away from nuclear power. But the administration is going to make its stance clear that nuclear power is indispensable for the economic growth under "Abenomics", the economic policy under the Abe administration.

　素案は、成長戦略をまとめる産業競争力会議で５日に示され、１２日までに正式に決めたうえで、１４日にも政府方針として閣議決定する。成長戦略に「原発の活用」が入れば、中長期にわたって原発に頼る経済・社会を続けることになる。

The draft will be presented at the June 5 meeting of the Competitiveness Committee, which is in charge of compiling the growth strategy for Japan. The draft will be officially decided upon by June 12, and a formal cabinet decision will be made on June 14 to make this growth strategy as official government policy. If "utilization of nuclear power plant" is to be part of the growth strategy, that will mean Japanese economy and society will continue to depend on nuclear power in the medium to long term.

　朝日新聞は「成長戦略（素案）」を入手した。エネルギー政策では、成長を担う企業が活動しやすくするため、原発事故後の電力不足を解消したり、火力発電につかう燃料費がかさんで値上がりする電気料金を抑えたりする必要があると指摘している。

Asahin Shinbun has obtained the draft copy of the "Growth Strategy". In the section for energy policy, the strategy calls for measures to meet the electricity demand after a nuclear accident and to suppress the utility cost from rising because of the increasing fuel cost for thermal power generation so that growth companies can operate easily [without disruption].

　そのために必要な政策として「電力システム改革の断行」「高効率の火力発電の導入」などとともに「原子力発電の活用」を盛り込んだ。具体的には、原子力規制委員会が安全と判断した原発は「判断を尊重し、再稼働を進める」としたうえで、地元の理解や協力を得るために「政府一丸となって取り組む」と明記し、原発再稼働を積極的に進める方針を打ち出す。

The measures will include "resolutely carrying out electrical power system reform", "introducing high-efficiency thermal power generation", and "utilizing nuclear power". Specifically, those nuclear power plants deemed safe by the Nuclear Regulatory Authority "will be restarted, as the government honors the decision [by the NRA]", and "the government united as one do whatever necessary" to obtain the understanding and cooperation from the local communities [where the nuclear power plants are located]. The government will make it clear that its policy is to actively promote the restart of nuclear power plants.

The actual sentence in the draft that Asahi Shinbun quotes in the article:

原子力発電の活用
Utilization of nuclear power generation

「原子力規制委員会により安全と認められた場合には、その判断を尊重し原子力発電の再稼働を進める。その際、立地自治体等関係者の理解と協力を得るため、政府一丸となって最大限取り組む」

"If the Nuclear Regulatory Authority decides it is safe, the government will honor the decision and proceed to restart the nuclear power generation. In doing so, the government united as one will make utmost effort to win understanding and cooperation from the interested parties in the local municipalities where nuclear power plants are located.

The "interested parties" simply mean politicians and bureaucrats in the local municipalities.

There is another thing in the so-called "growth strategy" that I find it personally scary:

海底資源「メタンハイドレート」の商業化

Commercialization of methane hydrate

Of all nations, I want Japan to stay out of the risky venture like this.

But that aside, Japan's long-time obsession with "international" this and that is very funny to me, considering how little they actually care about the "international" community, as evidenced by the recent faux pas by Governor of Tokyo and Mayor of Osaka City.

Those foreign "macro" investors (those who invest based on the government and central bank policies of a nation) who have been pouring money into Tokyo Stock Exchange seem to have thoroughly confused these boys and girls of the Abe administration, who have taken the soaring Japanese stock market (until very recently) is the strongest endorsement from the world that so-called "Abenomics" is working.

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Mizuho's Chief Economist Yasunari Ueno Says Abenomics Is Nothing New, "I'm Not Suffering from Amnesia..."

UK's Financial Times interviewed Yasunari Ueno, highly regarded and widely followed Chief Economist of Mizuho Securities on so-called "Abenomics".

Ueno says it's nothing new, and the risk is high that Bank of Japan cannot manage the inflation in now a very weak, fragile Japanese bond market thanks to BOJ's intervention.

A refreshing departure from the gibberish nonsense that I've been hearing and reading in Japan about "Abenomics".

FT: Why aren't you thrilled with "Abenomics"? Why are you skeptical?

Ueno: I'm not suffering from amnesia. Abenomics is kind of revival of Japanese government's economic policies. We already saw a massive expenditure from fiscal side in 1990s. As for quantitative easing by the central bank, we saw one example between 2001 and 2006. As for the so-called "growth strategy", every Japanese cabinet has made such documents, but without any strong initiatives.

FT: If Abenomics won't work, there are risks associated with it, in the unfolding of the policies. Contrary to Mr. Kuroda's intention, yield curves across the government bonds are rising. What's going on here?

Ueno: It is a malfunction of Japan's bond market. BOJ declared massive buying of JGBs (Japanese government bonds), and the market sentiment is too much dependent on BOJ's operations and actions and some voices from BOJ officials. So the market is not in good shape, very fragile, scant liquidity, high volatility. That means weak power on "buying on dips". So Japan's bond yield is going to be a little higher.

The priority there is first "higher stocks", then "weaker yen". The bottom is the level of long-term yields. So, if the higher long-term yields destroy higher stock price, then BOJ or the government is going to extinguish the fire in the bond market. However, now the stock market is firm, so no big reaction to the higher, long-term yields.

FT: Higher bond yields mean investors are positioning for inflation. But Japan has a deflation problem, doesn't it?

Ueno: Yes, in March we saw -0.5% for core CPI YoY basis. In April it will be 0.2 to 0.3%, in May it will be around flat [unchanged]. In June we are going to see 0.2 to 0.3% positive core CPI number. It will be a little shock to the JGB market. When we see the energy market movement, I confidently forecast the positive change for CPI core. However, this is kind of a supply side shock, not pulled up by demand side, stronger internal demand.

BOJ is targeting 2% within about 2 years, however it is totally impossible in this economic reality.

And if we see a higher consumption indices, then we need higher pay rise. About 5 to 6% strong wage hike is needed, however this year we are going to see about 1.8 or 1.9%. So there is a huge gap between them.

Goooood luck Japan........

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#Idiosyncratic Japan: Business Is Good at Tokyo's "Soaplands", and They Call the Boom "Awa (Soap Bubble) nomics"

Ahhhhh this can't be happening......

As Boy-wonder speaks of Japanese sex industry as solution to Marines in Okinawa and doubles down on his "opinion" that comfort women were necessary and they were no sex slaves and everyone did it, The Economist magazine puts wrinkled Abe as a superman of some sort flying over Tokyo accompanied by two Japanese fighter jets, and puts out an article titled "Japan and Abenomics: Once more with feeling" with the opening paragraph talking about price hike at "soapland" outfits in Tokyo that offer sexual massage.

Welcome to "Awanomics". ("Awa" is bubble, as in soap bubble used in the soapland massage.)

From The Economist (5/18/2013):

Japan and Abenomics: Once more with feeling

The Shinzo Abe shaking up Japan’s economy seems a different man from the one whose previous premiership was marked by nationalistic posturing. He isn’t

IN “SOAPLAND”—Sopurando, a Tokyo red-light district—the price of a basic half-hour “massage” has recently gone up for the first time since 1990. Demand for the top-end, “highly technical” massage service, costing ¥60,000 ($600) a go, has also been soaring, according to Akira Ikoma, editor of My Journey, which covers the sex industry. He says it is all thanks to the surging stockmarket.

In Sopurando they are cheekily calling this reinvigoration “awanomics”, from awa, meaning bubble or lather. Elsewhere in Japan they call it Abenomics in honour of Shinzo Abe, elected prime minister in December 2012. Japan, Mr Abe declared as he took office, was back, and he lost not a moment in proving it. Having quickly assembled his cabinet, in January he announced a ¥10.3 trillion fiscal stimulus.

(Full article at the link)

The article even has a Japanese Self Defense Force ship with the rising-sun flag of the imperial navy (which is still used as the naval ensign of the SDF). It had been used before the Meiji government adopted it as military flag, but it is widely regarded in Asia in particular as the symbol of Japanese aggression (which Boy-wonder's sidekick and Governor of Osaka Prefecture wants it precisely defined).

The somewhat light-hearted, Keynesian article still ends somewhat ominously:

The emperor’s new constitution

Some amendments to the 1947 constitution, such as one acknowledging Japan’s clear right to a standing army, navy and air force, are now broadly popular. But it is becoming clear that Mr Abe and the traditionalists, pining for an imperial era from which most of the country has moved on, aim to go further than that. They want, among other things: the emperor to be restored as head of state; collective duties emphasised over individual rights; and veneration for the family unit. As a precursor to such changes, the LDP plans to make it easier to amend a constitution which so far has never been altered. The current process requires a two-thirds majority in each house, plus a national referendum.

At best, all this could prove a distraction at a time when some structural-reform initiatives already appear to be running into the sands. At worst, it could endanger all reform by eroding the government’s popularity, at the same time increasing tensions with Japan’s neighbours. Far from having banished the ghosts of his past, as some of his advisers claim, the prime minister is in danger of summoning them up again.

The section title is a pun on Hans Christian Andersen's "The Emperor's New Clothes", I believe. Not good at all...

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Reuters: There Is No Plan B for Japan, as Abe Bets the Whole Country on His Economic Programs Dubbed "Abenomics"

Japan’s Prime Minister Shinzo Abe in the cockpit of T-4 training jet at the Japan Air Self-Defense Force base in Higashimatsushima, Miyagi prefecture, May 12, 2013. REUTERS/Kyodo


Tank commander was clearly not enough. What's next? A battleship captain?

Good luck, Japan. You'll need it. Even that won't help you much with the leader like this.

From Reuters Opinion page, by Anatole Kaletsky (5/17/2013; emphasis is mine):

The 3.5 percent gross domestic product growth announced by Tokyo Wednesday suggests that Japan may be the fastest-growing economy in the G7. Since the Tokyo stock market hit bottom exactly six months ago, the Nikkei share index has soared almost 80 percent. Meanwhile, the yen has experienced its biggest six-month move against the dollar. All these events appear linked to the election of Shinzo Abe and the regime he has installed at the Bank of Japan.

Even after 20 years of stagnation, Japan remains the world’s third-largest economy, with a 2012 GDP of $6 trillion, equal to France, Italy and Spain combined. Financiers, business leaders and economists everywhere are starting to ask the obvious question: Is Japan finally taking the truly radical action required to fix its economy and end its “lost decades”?

This, however, is the wrong question. It confounds two very different issues – which need to be carefully distinguished to understand what’s happening in Japan.

The first question is whether Japan is truly committed to actions far more radical than anything attempted in the past 20 years. The second question is whether these actions, if pursued with determination and persistence, will fix Japan’s economy.

The first question was answered with a clear “yes” in March, when Abe appointed Haruhiko Kuroda as the governor of the Bank of Japan. Kuroda is an independent thinker, light-years from the consensus-seeking bureaucrats who have dominated Japanese policymaking for 20 years.

Kuroda demonstrated this immediately, in his first meeting of the BoJ council. He announced a monetary stimulus of staggering proportions – roughly three times larger, relative to the size of the Japanese economy, than the Federal Reserve’s quantitative easing in the United States.

But that still leaves the second question: Will Japan’s unprecedented macroeconomic expansion succeed in delivering the hoped-for economic growth? The answer is “maybe.”

Most bottom-up analysts, economists and investment analysts, who study companies and industrial sectors in detail, put the probability of success at well below 50 percent. Japan, after all, has profound structural problems: a shrinking population, misallocation of investment, enormous public debt, protectionist lobbies in service industries and agriculture, inflexible labor practices, unimaginative management – the list could go on. None of these can be fixed by monetary policy.

Why, then have stock market investors turned so bullish? Because top-down investors, who seek to profit from macroeconomic trends, have ignored the skepticism of bottom-up investors. To see why they have done this – and why they may be right – let us return to my two questions.

Bottom-up analysts, who think mostly about structural issues, quite reasonably argue that macroeconomic policies, however bold, will not help Sony invent the next iPhone. They will not turn frugal pensioners into spendthrifts or stop Japanese companies from hoarding profits instead of distributing excess cash to shareholders through higher dividends or to workers through higher wages.

Macro-investors, on the other hand, see unprecedented fiscal and monetary expansion as a good enough reason to buy Japanese equities and sell the yen. But if bullish macro-investors keep acting on Japan with enough conviction, they could change Japanese economic reality and win their intellectual contest with skeptical bottom-up analysts.

(In other words, exactly the same forces that have been driving the US stock market up so much that even the financial cheerleaders at CNBC are voicing concerns that the market does not reflect the main street at all. But then who cares about the main street, other than people on the main street? Now, onward with the article's conclusion part...)

Finally, the macroeconomic stimulus of the past few months is only the beginning, not the end, of the Abe program. Abenomics has been described as a quiver with three arrows – fiscal stimulus, monetary expansion and structural reform. The third arrow will be fired only if Abe wins the Upper House election in July.

After that election, Abe is almost certain to make structural reforms in areas such as international competition, female labor participation, employment deregulation, lower energy prices and corporate taxation. These reforms will likely meet with opposition from powerful political lobbies. But some, at least, are almost certain to go ahead.

The reason is that Japan will have no choice. The fiscal and monetary expansion started in the first few months of Abenomics has been so extreme that there is no turning back. Unless Japan can achieve much faster economic growth, Abe’s radical experiment with macroeconomic stimulus will create a debt and monetary overhang so huge that it will bankrupt the financial system and possibly trigger hyper-inflation.

In short, Abe has bet his country on the success of his economic program. He will now be forced to do whatever it takes to achieve strong growth, both through macroeconomic stimulus and structural reform.

The financial arithmetic of Abenomics means that tolerable stagnation is no longer an option for Japan.

The Abe administration seems to think the economy will grow if female labor participation goes up. They look at the statistics in other countries, and see the statistical significance (I don't think so, but they do) as the causality. How are they going to lower energy prices with the falling yen? Who knows? Nobody cares, particularly not those "macro" investors - i.e. Goldman Sachs and J.P.Morgan Chase. "Macro" means nothing but government policies these days, and no one is more proficient in "macro" investment than these two.

There is no "Plan-B", as Abe bet the whole country on the success of his pet project that he says he polished over those years after he resigned from the premiership till his party's win in 2012 December election.

For the likes of Abe, if his pet project ends in an unmitigated disaster that finally sinks the country (and a good chunk of the world economy with it - after all, Japan is still the third largest economy), that will be probably OK as long as his name will be associated with the disaster, making history.

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Triump Japan Introduces "Branomics" Bra, Guaranteed to Increase the Seeming Volume by 2%

No, April Fool's Day was on April 1.

I thought it was a joke or fake news until I saw the bra maker's spokeswoman who looks bored to death explaining how wonderful the new bra is, how it matches the new era of (seeming) prosperity under Prime Minister Abe.

At the height of the real estate bubble in Japan in the 1980s, I don't think I saw anything like this.

News clip from NTD TV:

I thought ANA's maid cafe video was bad enough.

Three miniature arrows under the girls' golden bras have tiny tags that say "intelligence", "prosperity", and the third one which is covered by "triump" tag and I can't read; they are to signify the three core policies of so-called "Abenomics".

"2%" of course refers to the avowed target of inflation that Abe and Kuroda want to unleash on the Japanese public and which is sold as "price stabilization". Just as these girls look to be in need of more than 2% boost, Japanese consumers have already been hit with price increases far greater than 2% on certain items (McDonald hamburger, for one, toilet paper for another).

But as Tyler at Zero Hedge (who has this video) says,

The analogy of an exogenous force maintaining a natural force at an unsustainable size is just too easy - as, just as in the real-life, at some point that 'supportive bra' of monetary policy has be removed.

So what's next? Is there any plan for men's underwear?

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