sarcasm? you don't know ricter... which must be odd for geppetto. That was the ricter riddle with the embedded leftist lie trick. I have to call him out on that trick a few times a month.
This article is, unfortunately, rather silly. Like many such commentators, the author isn't allowing facts to get in the way of his ideology. I am sorry, but the idea that the latest -6.8% GDP print suggests failure and is somehow very meaningful, whereas the previous quarter's 6.1% is an aberration, is, how do I put it charitably, ...strange. In fact, there is ample empirical evidence that Abenomics, thus far, is a rather unmitigated success. The Japanese economy is growing and is expected to continue to grow 1 - 2% faster (based on a broad set of measures, e.g. surveys, as well as hard data) than any time since the late 90s. Moreover, this is happening in an environment where other large economies globally are rather subdued. Pay growth is positive in Japan for the first time since 2005-07 (based on aggregate figures that include bonus payments). Unemployment has been on a steady downward trend and is now at around 3.5%. Curious that the author neglects to mention any of this, preferring instead to pluck the most recent negative releases, which are known to have been heavily affected by the tax hike. Not a single moving average in sight, which is a little suspect when discussing economic data, but of course that would spoil the drama. Obviously, I am not suggesting that Abe's policies will succeed in the end, as there is a lot of uncertainty and risk. Moreover, I don't want to discuss the merits of what author defines as "Keynesian policies" (it's very unclear what he means as he lumps everything together). It's just sad to read such painfully poor quality "analysis".
International Business France Acknowledges Economic Malaise, Blaming Austerity By LIZ ALDERMANAUG. 20, 2014 As Europe faces the prospect of its third recession in five years, France is quickly emerging as one of the weakest links among the 18 nations that share the euro. After months of insisting that a recovery from Europe’s long debt crisis was at hand, President François Hollande on Wednesday delivered a far bleaker message. He indicated that the austerity policies France had been compelled to adopt to meet the eurozone’s budget deficit targets were making growth impossible. Paris officials say that France — the eurozone’s second-largest economy after Germany — will no longer try to meet this year’s deficit-reduction targets, to avoid making economic matters worse. Even in abandoning those targets, they indicated that France was unlikely to recover soon from its long period of stagnation or quickly reduce its unemployment rate, which exceeds 10 percent. “The diagnosis is clear,” Mr. Hollande said in an interview published Wednesday in the French daily Le Monde. “Due to the austerity policies of the last several years, there is a problem of demand throughout Europe, and a growth rate that is not reducing employment.” It was the most public rejection by France of the austerity medicine that Germany has long prescribed for the eurozone — which even the German chancellor, Angela Merkel, recently acknowledged might be impeding the currency bloc’s recovery. Mr. Hollande summoned his cabinet to the Élysée Palace on Wednesday and announced fresh stimulus measures — the latest in a string unveiled since January. They included proposals for tax cuts on low-income households and plans to reinvigorate France’s moribund housing construction market, where activity recently plunged to a 15-year low. “We need to go faster and further,” Mr. Hollande said in the Le Monde interview. “I want to accelerate reforms to boost growth as fast as possible.” He spoke in the face of signs that the broader eurozone economy is stumbling anew, in contrast to the strong recovery in the United States. Global monetary policy officials gathering this week at the United States Federal Reserve’s annual conference in Jackson Hole, Wyo., are expected to examine the divergent paths of the United States and Europe, and the implications for the global economy. Less than a year after its second recession since the 2008 financial crisis, Europe’s currency bloc did not grow in April through June, the European Union’s statistical agency reported last week. France registered zero growth for the second straight quarter, after weak growth or even contraction for most of 2013. France was not the only euro economy to stumble. Italy, where Prime Minister Matteo Renzi has also backed off austerity pledges to spur growth, slid back into a recession in the second quarter. Even in Germany, which had been leading what only a few months ago seemed to be the eurozone’s incipient recovery, the economy contracted 0.2 percent in the second quarter after a solid year of expansion. Economists have been debating whether the robust growth in the years before 2008 will ever return — or whether a new dynamic, known as “secular stagnation,” has taken hold, hindering robust recoveries in growth and unemployment. “It is too soon to tell whether secular stagnation is going to materialize,” Nicholas Crafts, a professor of economics and economic history at the University of Warwick, wrote in a recent paper published by Centre for Economic Policy Research in London. “But it does seem clear that Europeans should be much more afraid than Americans. The depressing effects of slower growth of productive potential will probably be felt more keenly in Europe.” Like many eurozone countries, France was compelled to embrace some austerity to reduce its debt and deficit levels after the financial crisis, when global credit markets were imposing steep borrowing costs on countries that seemed to be living beyond their means. Last year, Mr. Hollande announced a series of tax increases and 50 billion euros, or $66 billion, in spending cuts through 2017, which crimped the economy. And in aiming toward the 3 percent budget deficit target required for eurozone member countries, he also pledged to cut France’s deficit to 3.8 percent this year, from 4.3 percent in 2013. France’s borrowing costs have plunged to record lows since the crisis. But French businesses and industrial activity have struggled to recover to precrisis levels, making it harder for the government to find the tax revenue needed to reduce the deficit. Hoping to offset the slowdown, Mr. Hollande announced in January new tax breaks for business to encourage hiring. But last week, the French economy minister, Michel Sapin, warned that the economy had become so feeble that the government would no longer try to meet the deficit target. He said France would grow only 0.5 percent this year, half the rate originally expected, and would struggle to expand at a 1 percent growth rate next year. Other embattled economies, including Greece and Spain, have suffered as they slashed spending and raised taxes in a downturn to meet the European Union’s fiscal targets. Mr. Hollande’s move on Wednesday was in sharp contrast to his stance just a few months ago, when he insisted that an economic recovery was underway. Buffeted by record-low poll ratings, his Socialist party also suffered stinging defeats in June elections for the European Parliament. Voters disillusioned with his handling of the economy turned instead to the far-right National Front and to the conservative party of former president Nicolas Sarkozy, the Union pour un Mouvement Populaire, which has been beset by several scandals. On Wednesday, Alain Juppé, a former prime minister with high popularity ratings, announced he would run to lead the conservative party. That may hand Mr. Hollande a stiff new challenge when he faces a backlash among more liberal members of his Socialist party, who are loath to push any new austerity measures that may upset voters. On Wednesday, Mr. Hollande called on European Union leaders to make growth their priority, saying that the focus on raising taxes and slashing spending amid downturns had proved a disaster for the European recovery. But some saw his move as little more than a public relations ploy. “Even though they’re taking so many painful measures, they have to explain to the French why the economy is not doing well and in fact is doing worse,” said Famke Krumbmüller, a Europe analyst at the Eurasia Group in London. As a result, Ms. Krumbmüller said, Mr. Hollande appeared to be trying to shift blame to Europe, rather than trying to tackle more difficult overhauls in areas like France’s notoriously rigid labor market, which employers say constrains hiring and investment. “The message is, we’ve done our job, now Europe needs to do its job, which is favoring growth,” Ms. Krumbmüller said. “The interpretation is that is we’ve done everything we can do in the current political circumstances, and we won’t go further.”
I was amused by Mr. Pento's redefining of "Keynesian Economics". Since his definition has nothing to do with Keynes, he might have just stuck with "Abenomics" and left Keynes alone.
Yes, resounding success. The fact that Abenomics is simply "print more than ever" and is still going approximately 20 years after Japan entered the Lost Decade(s)...I tell ya, they're doing something right.
Well, first, at least on the face of it, Abenomics is supposed to be quite a bit more than "more of the same". Whether it actually turns out to be that way remains to be seen. One thing for sure, it's too early to conclude anything as the author so eagerly does. Secondly, if you've read about the history of Japan's lost decades, you would realize that the point is precisely that, previously, they were doing something very wrong.
I wouldn't call that "Keynesian". If you must put a name on it, I'd pick that of the man who also invented this political econtainment industry, Krugman. Still, you wonder how the Yen can even be considered money any more. . .
LOL! Japanese Household Spending Slumps 5.9%; Cries for More Monetary Stimulus Consumer spending in Japan slumped in June because of a tax hike pushed through by Prime Minister Shinzo Abe. Economists claimed it would be temporary and spending would quickly recover thanks to inflation. Let's take a look at what actually happened. Japanese Household Spending Slumps 5.9% Yahoo!Finance reports Japan Household Spending Slumps, Output Flat as Tax Pain Persists Japanese household spending fell much more than expected and factory output remained weak in July after plunging in June, government data showed, suggesting that soft exports and a sales tax hike in April may drag on the economy longer than expected. Household spending fell 5.9 percent in July from a year earlier, nearly double the drop forecast in a Reuters poll, as the higher levy and bad weather kept consumers at home instead of going out shopping. Weak exports left companies with a huge pile of inventories, forcing them to continue cutting back on factory output, separate data showed. Industrial output rose 0.2 percent in July, much less than a 1.0 percent increase projected in a Reuters poll, data by the Ministry of Economy, Industry and Trade showed. That was a tepid rebound from a 3.4 percent fall in June, the fastest drop since the March 2011 earthquake. Japan's economy shrank at an annualized 6.8 percent in the second quarter from the previous three months, more than erasing the 6.1 percent first-quarter surge in the run-up to the sales tax hike. Analysts generally expect Abe to approve another tax hike in December, but that decision promises to be politically divisive, coming just as the government hammers out details of a promised corporate tax cut. Amusing Details The Financial Times has some amusing details in Japanese Economy Flounders After Sales Tax Rise Consumer prices rose 3.4 per cent in July compared with a year earlier, including the added tax. Stripping out the tax effect as well as the impact of volatile fresh-food prices – the formula favoured by the Bank of Japan – showed underlying inflation was 1.3 per cent, a level unchanged from June. The BoJ is facing a dilemma. The dramatic monetary expansion it embarked on in April last year has succeeded in reversing persistent consumer-price deflation, a goal the central bank had pursued fruitlessly for years. But inflation is now both too high and too low: too high because wages have not kept pace with price rises, making the average worker worse off; but also too low, because the BoJ believes even larger price rises are needed to keep Japan out of deflation for good. The bank has set a target for core inflation of 2 per cent but most private-sector economists believe that, unless demand in the economy picks up suddenly, more monetary stimulus will be needed to reach it. Yet simply printing more money could further widen the price-wage gap, in the short term if not the longer. “It is important to recognise that the VAT hike has had a material impact on real income levels, suggesting that spending is now being held back mostly by a decline in real purchasing power,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse. Inflation "Too High and Too Low" Got that? Spending was supposed to pick up due to inflation. Instead it went south because of a decline in purchasing power, exactly the opposite of what Keynesian theory suggests. The standard, Keynesian answer ... "more stimulus is needed" to raise prices to even more unaffordable levels. Oh yeah! That will get everyone spending money they do not have to buy things they do not need. And to top it off, Abe wants still more consumer tax hikes to rein in debt. Keynesian Success To be fair, I expect that someday Abe will succeed beyond his wildest dreams if he stays in office long enough. Want to know what success looks like? Here's a recent example that depicts the ultimate in Keynesian Inflation Success. I rather doubt it gets that far, but with politicians hell-bent on "success", one never knows. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com