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Age of Abe
Japan Falls Back into Recession

Japan has fallen back into recession for the second time in PM Shinzo Abe’s tenure, a piece of economic news that should worry Washington as well as Tokyo. Agence France-Press reports:

The Cabinet Office said Monday that gross domestic product (GDP) shrank 0.2 percent in the July-September period, or an annualised contraction of 0.8 percent, marking the second straight quarterly decline — considered a technical recession.

It was also below the 0.1 percent forecast in a Bloomberg News survey […]

The data offer a mixed snapshot of the economy, with improving consumption countered by weakening corporate investment caused by uncertainty over the global outlook, particularly China, experts said.

Reading economic data is a tricky business, and we wouldn’t want to make any confident prediction about the future course of the Japanese economy, or the fate of Abe’s economic reforms, known as Abenomics. The death of Abenomics has been prematurely announced before, as have reports of its vindication. But whatever this latest news does or doesn’t tell us about Abenomics’ future, a technical recession in Japan, even if it should prove temporary, is unwelcome news for the U.S. Washington has a vested interest in seeing Japan prosperous and strong enough to act as an effective counterweight to China. And what worries us is that the boost Japan may very well have little to do with Abe: If China recovers, Japan may too; if not, the future looks bleaker.

Still, for all Abenomics’ troubles, there is also some good news coming out of Japan, as the prime minister’s militarization efforts continue to bear fruit. The latest: Tokyo and Manila have agreed on an aid program to help bolster the Philippines’ military. Although the details have yet to be hammered out, early reports suggest Japan may donate old aircraft to the Philippines for use in the South China Sea. The equipment is unlikely seriously to threaten China, but increasing ties between powers opposed to Chinese expansionism are a good thing.

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  • Jacksonian_Libertarian

    Japan has been trapped in a deflationary depression for 26 years and counting. The only way to get out of a deflation is with inflation, this means printing such a large amount of new money that it digs not only the Government out of debt but reduces the private sector debt to where people start borrowing again for purchases and to take advantage of profitable opportunities. Since Abe has NOT been doing this, he of course has been unsuccessful in getting the Japanese economy moving.

    The US has also been trapped in a deflationary economy for 7 years now, and the printing (Quantitative Easing) has been running about $1 Trillion per year, but has been insufficient to generate any inflation. Some will say that the inflating food prices disputes this, but all of that inflation can be blamed on the “Alcohol in Fuel Boondoggle”. Which raised America’s most important food crop “Corn” from $2 a bushel to $6 a bushel (a 3 fold increase), and thereby raised the price of all corn fed meat (Beef, Lamb, Pork, Chicken, Turkey, etc…), thousands of grocery items, and fuel (which is a component of everything). We know this to be true because interest rates which are extremely sensitive to inflation have remained unchanged at historical lows.

    It should be mentioned that Japan has had numerous spending programs along the lines of America’s $1 Trillion TARP program, in an effort to pump prime the economy, they have all failed badly accomplishing nothing. But because of the amount of graft available in these boondoggles, it’s the First Choice for Politicians looking to pretend they are doing something. The Bankers certainly don’t care, Bankers LOVE deflation, it make their portfolio of loans more valuable invisibly. As the currency they are valued in increases in value, so does the interest payments they receive to service the loans.

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