Connect with us


The Issues With Japan’s Economy




The Issues With Japan’s Economy

The Issues with Japan’s Economy

It is no secret that the economy in Japan has struggled for years. 

Even though massive amounts of monetary and fiscal stimuli have been introduced into the economy, they have failed to encourage growth up to this point. 

The Bank of Japan is meeting later this week to decide whether or not they need to put more effort into stimulating their economy.

Here is what the leaders of Japan are currently facing:

  • 26.3% of the population in Japan is over the age of sixty-five.
  • The fertility rate in Japan is at 1.4%
  • 1.6% of the population are international migrants.

When you compare these statistics with the median for other countries in the world, it looks like this:

japan's economy 1

Japan has the oldest population anywhere in the world. 

When you combine this with the birth rate being low and little immigration taking place, you realize the severity of its growth issues.  

However, these issues go far beyond the surface concerns.

At the beginning of the 90’s, Japan saw a collapse of its postwar boom in growth. 

This was followed by years of deflation. 

Eventually, Japan began to experience worker shortage on top of everything else.

Japanese people tend to be unwilling to spend their money. 

This causes companies to seek outside the country to invest and make money rather than investing in their economy. 

This trend is sparked further due to the absence of deregulation.

Not only are wages motionless but growth continuously remains near the ground as well. 

On top of all of this, the country experiences recurrent recessions. 

Other issues for the economy include:

  • Investment remains below the pre-crisis level
  • They have been unable to overcome deflation ultimately

[ms_divider style=”normal” align=”left” width=”100%” margin_top=”30″ margin_bottom=”30″ border_size=”5″ border_color=”#f2f2f2″ icon=”” class=”” id=””][/ms_divider]
[ms_featurebox style=”4″ title_font_size=”18″ title_color=”#2b2b2b” icon_circle=”no” icon_size=”46″ title=”Recommended Link” icon=”” alignment=”left” icon_animation_type=”” icon_color=”” icon_background_color=”” icon_border_color=”” icon_border_width=”0″ flip_icon=”none” spinning_icon=”no” icon_image=”” icon_image_width=”0″ icon_image_height=”” link_url=”” link_target=”_blank” link_text=”Click Here To Find Out What It Said…” link_color=”#4885bf” content_color=”” content_box_background_color=”” class=”” id=””]Warren Buffett Just Told His Heirs What He Wants them To Do With His Fortune When He Dies. [/ms_featurebox]
[ms_divider style=”normal” align=”left” width=”100%” margin_top=”30″ margin_bottom=”30″ border_size=”5″ border_color=”#f2f2f2″ icon=”” class=”” id=””][/ms_divider]

And the Debt Pile Increases

Japan’s burden of debt is much worse than what is found in other countries. 

This debt is primarily due to the stimulus that is regularly introduced to try and stimulate growth within the economy. 

Prime Minister Shinzo Abe has come up with a rescue plan known as Abenomics.

However, this plan has further weakened the economy. 

It has boosted the profits to the corporate organizations, but both wages and the amount of spending that take place on a domestic level remains low.

The government thought about raising the sales tax to gain more revenue and begin to work their way out of this high debt. 

The problem is that they tried this back in 2014.

When they did, both the gross domestic product and the amount of consumer spending fell. 

This resulted in the economy going back into a recession. 

The following shows what happened to each due to the raise in the sales tax:

japan's economy 2

The decision made by the government to put off introducing any additional increases in the sales tax at this time could have potentially reduced the likelihood that Japan will fall into yet another recession. 

However, refusing to raise the sale tax came at a price. 

Investors that were hoping to see the country take on its outstanding debt were severely let down.

The Struggle to Increase Inflation

In 2013, the Bank of Japan began their asset-purchase program. 

This program did allow the balance sheet to increase GDP outside what has been accomplished by numerous other well-developed economies. 

The stock looks like the following in comparison to other countries:

japan's economy 3

Aggressive easing resulted in the following:

  • The monetary stimuli that were introduced caused the yen to weaken.
  • Exporters were able to reap the benefits of this plan until earlier this year.
  • Corporations begin to enjoy even more profits.
  • The prices for stocks began to rise

The issue is that consumer spending still has not followed suit. 

The Bank of Japan remains a long distance away from obtaining its target of two percent. 

Inflation also has refused to fall in line.

The issue gets even worse when you look at the fact the yen strengthens again this year. 

The yen is considered as a haven when the world is full of so much uncertainty globally.

How to Fix the Problem

The Bank of Japan continuously says that it will do whatever is needed to reach its target. 

Bold and progressive measures have even been promised by Abe for the fall. 

However, with stimulus continuously failing to encourage growth, policy makers and economists alike are reporting that more intense measures are going to be needed. 

Here are some solutions to the problems faced by Japan and the obstacles standing in their way.

Solution Issue
One solution is to expand the current workforce.  This could be done by including the promotion and hiring of women employees.  Older employees could also be allowed to continue working for a longer period. Traditions in the cultural workforce and the inflexible seniority systems that exist within companies make this difficult to achieve.
Promote immigration to offset the effects of the abundantly aging population. Policymakers and the general population are against immigration.
Produce larger amounts of revenue to lower the debt. Consumers and companies are against increasing the amount of taxes they have to pay and increasingly put pressure on the government so they will not increase these costs.
Establish changes within the industrial and labor markets to provide work practices that are more flexible and eventually raise wages. Resistance is coming from some places.  Resistance includes unions, industries, some employees, and the political will to do this seems to be missing.


Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


STUDY: Number of Billionaires Doubles in Last Decade




Number of Billionaires Doubles in Last Decade
Image via Shutterstock

The number of billionaires has doubled in the past decade and the world’s wealthiest 2,153 people controlled more money than the poorest 4.6 billion combined last year, the charity Oxfam said Monday.

Meanwhile, unpaid or underpaid work by women and girls adds three times more to the world’s economy each year at least $10.8 trillion than the technology industry, the Nairobi-based charity said in its “Time to Care” report.

Women around the world work 12.5 billion hours combined each day without any pay or recognition, while the world’s 22 richest men have more wealth than all the women in Africa.

“It is important for us to underscore that the hidden engine of the economy that we see is really the unpaid care work of women. And that needs to change,” Amitabh Behar, CEO of Oxfam India, told Reuters.

“Our broken economies are lining the pockets of billionaires and big business at the expense of ordinary men and women. No wonder people are starting to question whether billionaires should even exist,” Behar said ahead of the annual World Economic Forum in Davos, where he will represent Oxfam beginning Tuesday.

“Women and girls are among those who benefit least from today’s economic system,” he added.

There will be at least 119 billionaires worth about $500 billion attending Davos this year, according to Bloomberg, with the highest contingents coming from the US, India and Russia.

“The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men,” the Oxfam report said.

“Their wealth is already extreme, and our broken economy concentrates more and more wealth into these few hands,” it said.

To highlight the inequality, Behar cited the case of a woman called Buchu Devi in India who spends up to 17 hours a day walking almost two miles to fetch water, cooking, preparing her kids for school and working in a poorly paid job.

“And on the one hand you see the billionaires who are all assembling at Davos with their personal planes, personal jets, super rich lifestyles,” he said.

“This Buchu Devi is not one person. I in India encounter these women on a daily basis, and this is the story across the world. We need to change this, and certainly end this billionaire boom.”

Behar said that to remedy the problem, governments should make sure above all that the rich pay their taxes, which should be used to pay for amenities such as clean water, health care and better schools.

“If you just look around the world, more than 30 countries are seeing protests. People are on the street and what are they saying? That they are not to accept this inequality, they are not going to live with these kind of conditions,” he said.

Source: New York Post
Vanguard News

(c) 2020 2019 Vanguard Media Limited, Nigeria Provided by SyndiGate Media Inc. (

Continue Reading


Pump Prices to Edge up After Attack on Iranian General, but Long-Term Effect Unclear

Editorial Staff



By Jeff Ostrowski, The Palm Beach Post, Fla.

Motorists soon will see the effects of President Donald Trump’s decision to kill a prominent Iranian general. Whether pump prices rise a little or a lot depends on how quickly international tensions intensify.

Florida gas prices climbed an average of 7 cents a gallon in the past three days and could increase an additional 5 cents, AAA – The Auto Club Group said Monday.

The 7-cent increase was coming even before the U.S. air strike Thursday that killed Iranian Maj. Gen. Qassem Soleimani. That hike was a result of a rise in the price of crude oil in December.

News of the targeted killing of Soleimani sent crude oil surging nearly $2 per barrel on Friday. An increase of that magnitude typically translates to a 5-cent hike at the pump, AAA said.

The U.S. benchmark for crude oil traded Monday just above $63 per barrel, the highest level since May 2019. The price of oil makes up about half the price of a gallon of gas.

“What happens in the Middle East can have a direct impact on Americans’ daily lives by influencing what they pay at the pump,” said AAA spokesman Mark Jenkins. “Crude prices rise when there’s a threat of war, because of concerns over how the conflict could hamper supply and demand.”

Oil analyst Tom Kloza of energy firm OPIS agreed that pump prices in Florida likely will rise about 5 cents a gallon in the coming days.

“Then I have a hunch that things are going to calm down,” Kloza said Monday. “I don’t think we’re looking at $3 gas.”

The national average pump price Sunday was $2.585, while the Florida average was $2.526, AAA said.

Kloza expects only modest increases in part because of the timing of the attack. January is always a slow month for gas consumption in the United States.

There’s also the reality that sanctions leave Iran unable to export oil. Complicating the calculus is Iraq’s response to the U.S. attack. The drone strike on Soleimani took place in Baghdad, and some Iraqi politicians considered the assault an affront to Iraqi sovereignty.

While there’s no Iranian oil supply to be disrupted by a war, Iraq is an important producer.

Trump keenly watches oil prices and realizes that a price spike might erode his support in this year’s presidential election, Kloza said.

At the same time, Kloza added, “This president has proven to be unpredictable.”

Trump’s response has been typically uneven. Delivering an official statement at the Mar-a-Lago Club in Palm Beach, Trump’s tone was measured. He said the targeted killing was designed to pre-empt Soleimani’s planned attacks on American diplomats and soldiers.

“We took action last night to stop a war,” Trump said Friday. “We did not take action to start a war.”

However, over the weekend, Trump took to Twitter to threaten attacks on Iranian cultural sites.

“The United States just spent Two Trillion Dollars on Military Equipment,” Trump wrote Sunday on Twitter. “We are the biggest and by far the BEST in the World! If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way…and without hesitation!”

##IFRAME_1##Iran has vowed vengeance, but military experts say the nation isn’t powerful enough to wage a direct war against the U.S.

“It’s still far too early to know how much of an impact this conflict will have overall on prices at the pump,” AAA’s Jenkins said.

Continue Reading


Stocks Rally Despite Impeachment News

Editorial Staff



Stocks rose on Thursday as investors looked past the news of President Donald Trump’s impeachment as well as mixed U.S. economic data.

The Dow Jones Industrials advanced 53.85 points to begin trading at 28.293.13

The S&P 500 recovered 4.93 points to 3,196.07

The NASDAQ added 19.39 points to Wednesday’s all-time record, at 8,847.12.

The S&P 500 is up nearly 7% since House Speaker Nancy Pelosi launched a formal impeachment inquiry in September.

Cisco Systems was the best-performing Dow component, rising 1.6%. The consumer staples and real estate sectors led the S&P 500 higher, gaining 0.4% each. Micron Technology shares also contributed to Thursday’s move higher. Conagra shares surged more than 14% and were on pace for their biggest one-day gain since Oct. 16, 1989.

Micron shares climbed 3.5% on the back of strong quarterly results. The chipmaker posted earnings per share and revenue that topped analyst expectations.

On the economic data front, weekly jobless claims fell to 234,000 from 252,000 the week before. However, economists expected claims to fall to 225,000.

Meanwhile, the Philadelphia Federal Reserve’s business conditions index fell to 0.3 in December from 10.4 in the previous month. Economists expected the index to slip to 8.

The Democrat-led House of Representatives voted Wednesday to impeach Trump for abuse of power and obstruction of Congress. Trump became only the third president to be charged with high crimes and misdemeanors and will now face a trial in the Republican-controlled Senate.

Prices for the 10-Year U.S. Treasury were lower, raising yields to 1.94% from Wednesday’s 1.93%. Treasury prices and yields move in opposite directions.

Oil prices gained seven cents to $61.00 U.S. a barrel.

Gold prices moved forward $1.80 at $1,480.50 U.S. an ounce. Copyright © 2019 Media Corp. All rights reserved.

Continue Reading


Copyright © 2019 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.