Tuesday, December 8, 2009

Japan Launches Another Round of Stimulus in 2 Decade Long Fight

As denial after denial has been put out the past 2 years that the US is anything like Japan - even as we have done everything they have but bigger, faster and more comprehensive -  I find it ironic that Japan just announced another $81 billion stimulus the same day "jobs stimulus plan" will be announced in the US.  With the US economy roughly 3.5x the size of Japan's the stimulus would be just under $300B if a parallel measure was announced domestically. 

Somehow I see the same discussion in the US circa 2019.

  1. [Sep 21, 2009: NYT - Japan Struggles to Balance Growth and Job Stability]
  2. [Oct 28, 2008: Pooring of Japan Too?]
  3. [Jul 29, 2009: Japan's Herbivore Men - Young American Men's Future?]
  4. [Nov 17, 2008: Poverty, Pension Fears Drive Japan's Elderly Citizens to Crime]
  5. [Feb 26, 2009: NYT - When Consumers Cut Back - An Object Lesson from Japan]
  6. [Feb 8, 2009: NYT - Japan's Big Works Stimulus is a Lesson

In this snippet from BBC News I pulled this:
  • The package includes measures to bolster employment, extend incentives for energy efficient products, and provide loan guarantees to help small and medium-sized businesses
I was wondering if they were talking about the US plan Mr. Obama will be touting....or Japan?
  • President Barack Obama will today propose upgrading infrastructure, promoting home-energy efficiency and helping small businesses as ways to spur job growth, an administration official said.  (Don't forget the backdoor bailouts for state and city budgets)

Via Bloomberg:
  • The Japanese government unveiled a 7.2 trillion yen ($81 billion) economic stimulus package amid signs the recovery and Prime Minister Yukio Hatoyama’s popularity are waning.  Hatoyama’s first stimulus plan includes 3.5 trillion yen to help regions, 600 billion yen for employment and 800 billion yen on environmental initiatives, (wait... employment and green tech? where have I heard that before? oh, I will hear it on TV in about 4 hours here in D.C.  The only thing Japan is missing is infrastructure but that is because they have spent 2 decades building things no one needs just to keep people employed - see Feb 8, 2009 story above) the Cabinet said today in a statement in Tokyo.
  • Today’s package includes 3 trillion yen in tax grants to local governments to make up for a revenue shortfall. The government will pay for the tax breaks by selling deficit- covering bonds. (ring a bell?)
  • Some 1.2 trillion yen will be used to expand emergency credit for small and midsized businesses, provide safety-net loans and reduce interest rates on lending.  (these all should sound very familiar)
  • The package extends a program initiated by the previous administration giving consumers incentives to purchase eco- friendly cars and home appliances. It also introduced incentives to install energy-saving equipment in homes.  (ding ding)
  • Analysts said today’s measures may provide at least a temporary boost for the world’s second-largest economy, which emerged from its worst postwar recession in the second quarter.  The package “will be effective in easing strains on an economy struggling with deflation and a lack of demand, but it won’t boost growth potential in the medium to long term.”
  • Japan has compiled four stimulus plans since September 2008 totaling more than 29 trillion yen ($326 billion).

As I like to do whenever we talk about Japan let me grab this snippet from the October 28, 2008 piece above... now close your eyes and remove the word Japan and tell me how this is any different than America.  like 2 old boxers wildly throwing desperate punches to regain old glory...

The 29-year-old laborer is one of a burgeoning class in Japan -- the working poor. The number of Japanese earning less than $19,610 a year surged 40 percent from 2002 to 2006, the latest data available, the government says. They now number more than 10 million.

The growth of the working poor -- not seen in such numbers since Japan surged to wealth in the 1980s -- has been a shock to a country that once prided itself on being a bastion of economic equality.

"It is unprecedented to see such a widening income gap in Japan," said Yoshio Sasajima, economist at Meiji Gakuin University in Tokyo. "Our society is definitely becoming a class society."

In the 2000s, that was followed by a round of free market reforms that widened the disparity between haves and have-nots.

A key to the growth of the working poor has been the explosion in temporary employment agencies, which allow corporations to take on labor without having to pay benefits -- and then unload workers at will.

The spike in the number of the working poor is already taking a toll on Japanese society. More people are putting off marriage because of tight finances, exacerbating a declining fertility rate. Part-time workers unable to afford rent sleep in 24-hour Internet cafes to escape the streets. Some have stopped going to the doctor because they can't afford it.

Well I for one, am glad nothing like this is happening in the US and we are "nothing like Japan"... after all, we've only lost a decade.
[Oct 27, 2008: Japan's Lost Quarter Century]

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