Mar 15, 2014
Abenomics in 14 Words
Posted on Oct 19, 2013
By Mike Whitney, CounterPunch
This piece first appeared at CounterPunch.
Ferrari sales are going gangbusters in Japan, but beer sales have started to fizzle. That’s all you really need to know about Abenomics—the economic policies of Shinzo Abe, the current Prime Minister of Japan.
According to Bloomberg: “Ferrari said sales in Japan will rise by 30 percent this year….(Sales have already) increased 28 percent in the first six months. Lamborghini sales are also soaring. According to “Lamborghini SpA Chief Executive Officer Stephan Winkelmann…. the automaker is very happy with Japan. “It’s coming back big time,”….Deliveries of Lamborghini in Japan increased 13 percent to 142 units in the first nine months, according to Japan Automobile Importers Association.” (“Ferrari Says Sales in Japan to Rise 30% as Abe Revives Spending“, Bloomberg)
In contrast, Beer shipments dropped by nearly 3 percent “in August to their lowest level for the month since comparable data became available in 1992, figures from major brewers show….Asahi Breweries Ltd. and Kirin Brewery Co. logged declines, chiefly due to weak beer sales.” (”Beer, near-beer shipments fall 2.8%“, Japan Times)
How do you like that?
In the US, the Federal Reserve has provided “unlimited” low cost funding for the big Wall Street banks while pumping up financial markets by more than $3 trillion. So, naturally, conditions have improved dramatically for wealthy speculators. As for the other 99 percent? Not so much. They’re still struggling with high unemployment, droopy wages, falling incomes, sizable household debt, dwindling disposable income, and a stimulus-starved economy that’s still sputtering along at half speed. Other than that, things are just groovy.
Five years into the so called “recovery” and the Feds funds rate is still locked at zero, which means that economy is still so weak that the Fed can’t raise rates by even 1 measly percentage point without fear that the whole house of cards will come crashing to earth. By every standard of measurement, QE has been a failure. It has, however, turbo-charged stock prices, pushed bank and corporate profits to record highs, greatly exacerbated inequality, and made some very rich people richer still. In other words, the policy is working just fine, thank you very much.
In Japan, the results are basically the same though you wouldn’t know it by reading the papers. The media characterizes Abenomics as a smashing success which has raised GDP, boosted exports, sent stock prices skyrocketing and slashed the value of the yen. It’s true, too, to some extent. Like Bernanke’s QE, Abenomics has made some very rich people even richer. Unfortunately, the view from below is quite a bit different. Retirees, savers and working people have seen conditions steadily deteriorate due to stagnant or falling wages, higher inflation, zero interest gains on their investments, and higher taxes. You read that right, Abe actually raised the sales tax to 8 percent, putting the economy at risk of another slump just to placate the IMF and to reward his right-wing corporate base. Japan’s top earners wanted proof that Abe was committed to shifting more of the nation’s prodigious debtload onto the shoulders of working people, which cheerily he did by jacking up the sales tax. Here’s the story from Bloomberg:
What does it tell you when the country’s top policymaker is willing to raise taxes even though he knows the cost of living is already going up, wages are still going down, and the economy is set to contract (by 4.5 percent) as soon as the tax goes into effect? Does that sound like a leader who is genuinely interested in growing the economy and ending deflation? Or does it sound like another chiseling phony using his office to skim bigger profits for his parasite banker friends?
Wages are going down in Japan. DOWN. How do you build a recovery on crappy wages that are progressively getting crappier? You can’t, which is why Abenomics is all smoke and mirrors. Take a look at this:
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