Japan from the inside out


Posted by ampontan on Saturday, October 29, 2011

We must hang together, gentlemen…else, we shall most assuredly hang separately.
– Benjamin Franklin

WATCH how this works.

The EU came up with…a new plan!…this week to bail out its profligates and keep the fiction alive for a while longer. Here it is in brief:

Europe is happy because the European private banks, the creditors of the European governments, have agreed to eat 50% of Greece’s sovereign debt and to be recapitalized by public money handed to them by the European Financial Stability Facility rescue fund.

In other words, the banksters are in danger of losing their shirts, trousers, and underwear by placing bets on a government and a polity that conspires to feed on public money but is unable to survive on its own. That will require the people of countries who can survive on their own to feed them with their own public money, and with no guarantee that the Welfare Queens of Europe will ever get off the dole.

But the Europeans are so desperate — they haven’t got enough to cover their bets for Italy, Spain, and Portugal — they have to fly to East Asia to bang their tin cups on the pavements here:

The move comes as European officials have turned to China and Japan for possible funding of the eurozone’s bail-out fund. In Tokyo, Japan’s prime minister, Yoshihiko Noda, told the Financial Times he would like to see “even greater efforts” in Europe to “ease crisis worries by creating a stronger and more detailed approach”.

The world’s third-largest economy remained concerned about possible contagion. “This fire is not on the other side of the river,” Mr Noda said. “Currently, the most important thing is to ensure it does not spread to Asia or the global economy.”


Klaus Regling, the head of the European financial stability fund, travelled to Beijing on Friday in the hope of persuading China to step up support for the beefed-up fund and is expected to also visit Japan.

Japan currently holds just over 20 per cent of the €10bn in bonds issued by the EFSF, and Mr Noda, who was finance minister until becoming premier last month, signalled that Tokyo would continue to back the expanded fund.

Note in passing that the Financial Times refers to the former Media Spokesman for the Japanese Finance Ministry as a “Finance Minister”.

But the lads at the Finance Ministry seem to have forgotten that actions have reactions:

The European Central Bank is following the lead of the Federal Reserve and creating new money to bail out debt. The cost will be paid in inflation and flight from the euro and the dollar. As an indication of the future, despite the positive spin on the news and the rise in US stocks, on October 27 the Japanese yen rose to a new high against the US dollar.

The appreciation of the yen is causing such severe problems in Japan’s business sector that companies are accelerating their moves to shift production overseas.

The fire might now be on the Japanese side of the river too, but that doesn’t mean the Japanese government has to pour gasoline on it while pretending to put it out.

Mr. Noda’s replacement as Finance Ministry spokesman, ex-TV talking head Azumi Jun, whined to the media:

Azumi said today that the yen’s climb to a new postwar high was “extremely unfortunate.” Azumi told reporters in Tokyo he will take “decisive” action in the market if needed, and said the yen’s moves are “clearly speculative and don’t reflect economic fundamentals at all.”

Well, that didn’t work. Plan B?

Prime Minister Yoshihiko Noda’s cabinet last week approved a 12.1 trillion yen spending plan to rebuild after the March disaster. The package includes 2 trillion yen to help companies cope with the higher yen, with subsidies planned for building plants in Japan and hiring workers.

So, Japan’s government supports the use of public funds to recapitalize European banksters AND to bribe Japanese businesses from moving abroad to counter a situation that results in part from using public funds to recapitalize European banksters.

That cash has got to come from somewhere. Guess where. From Kyodo:

At the Group of 20 summit in early November, Prime Minister Yoshihiko Noda will pledge to hike the consumption tax to 10 percent from the current 5 percent in stages by around 2015, government sources said Thursday.

The pledge will be included in a document to be adopted by the G-20 leaders at the end of the summit in the French resort of Cannes on Nov. 3 and 4, the sources said.

With the eurozone sovereign debt crisis rocking the world economy, Noda will make an international pledge to raise Japan’s sales tax to underline Tokyo’s determination to achieve fiscal discipline.

Evidently fiscal discipline does not include serious cuts in government spending. It will include raising the retirement age, however. It’s OK to give public money to failed European governments, but Japanese retirees will have to wait a few extra years to get their share of the money they paid into the system.

Meanwhile, the Bank of Japan is indulging in another round of monetary easing, i.e., printing money, while keeping interest rates at close to zero. It won’t be news that they’ll continue to be puzzled why new private sector lending doesn’t expand. The whizzes haven’t figured out that banks might be hesitant to lend money they’re not going to get much of a return for.

This is yet another illustration in the picture encyclopedia presenting the global disconnect between “democratic” governments and the people they “govern” — increasingly, without the consent of the governed.

Did I slip and mention democracy there? How silly of me.

It seems as if the rest of us could well be hung together for a crime none of us committed. Does somebody out there think there’s going to be — what’s the phrase they like to use — “a soft landing”?


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One Response to “Rope-a-dopes”

  1. toadold said

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