Abe economics

Shinzo Abe in the United States, declared: "The Japanese came back. Japan is not really back, "is never second-rate country", only time can answer. But Abe Economics (Abenomics) impact to the market, it is immediate. Abe's U.S. trip a week after, I landed on the U.S. road show, a fund manager familiar with the author, continuous Several mentioned that: "Today, the most concern is Japan, China has become the second overall. This situation in the past 10 years there has never been hard to imagine six months ago.

   Abe economics three tricks. Stare inflation rate this unconventional monetary policy, driving down the yen to stimulate exports, while manufacturing inflation is expected to change the situation of companies sitting on cash are reluctant to invest. Abe "Mr. Yen" Kuroda onto the throne of the central bank governor, become independent status has been achieved by the Bank of Japan in 1998, the first from the financial system, the bureaucrats in charge of BOJ helm. Kuroda has always been known for outspoken and divergent thinking, has consistently criticized the Bank of Japan's cautious. Kuroda won the support of the Prime Minister and the Government will definitely include the implementation of the time of conventional monetary policy ahead of this year, expanded the range of risk asset purchase, the normalization of the weak yen policy to develop in depth.

   Abe economics initiatives in the huge public expenditure. His ten trillion yen spending plan, also rare in the experience of the Japanese government rely on to survive on debt. In the case of deflation, an aging population and shrinking domestic demand, the delay can only sit still. Abe made a surprising reverse thinking, desperate to spend money, hoping to break the growth, employment, consumer backspin vicious cycle.

   Unconventional monetary policy, fiscal policy, strange, strange men, to attract the eye, have short-term impact on the market, Abe economics success depends on the third string to his bow - structural reform. Abe's high popularity in the summer in the House of Lords in the general election, the Liberal Democratic Party to regain the majority of seats in winning percentage is not small. Once control of the upper and lower houses, Abe to amend the law, and to promote reform will have to rely on.

   Advantage of the natural with the public opinion and the proposed meeting is a good thing, but when Koizumi was to hold the ultra-high public opinion, final was anticlimactic reform, the reason, the interests of the dislocation, institutional inertia also. The reason why Japan can not get out of the shadow of recession for more than twenty years, because structural reforms hesitant.

   Abe the economics will face four exams. The first game of the exam, unconventional monetary policy can really bring inflation expectations. The second game of the exam, if true inflation, consumption, investment and employment, the possibility of increasing. The third game of the exam, If the inflation, the yen will not disorderly decline in government debt issuance costs will not rise. The fourth game of the exam, so crazy government spending and debt, the Japanese government bond market will collapse. Every exam are heavy bodies, and each exam inclusive of Murder.

   Abe economics success lies in the ability to create employment opportunities through inflation expectations and institutional breakthrough to change the behavior of corporate investment and consumer confidence. After walking a wire the crazy economics revert to conventional economics. Abe economics, words easier said than done.