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The big point that you're missing is that this is only the first step. No one is suggesting that currency devaluation by itself will solve the problem. The idea

The big point that you're missing is that this is only the first step. No one is suggesting that currency devaluation by itself will solve the problem. The idea is to gain the legitimacy and political will in the short term, so as to enact fundamental structural reforms.

ekianjo 13y ago
What political reforms? Abe is all about "stimulus" and further spending and diving into an ocean of debt. He was already prime minister a couple of years ago so we know very well what kind of policies he is supporting. He's just destroying the country further: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do something else with it. This, in return, will reduce the amount of money that can be lended to the private sector and therefore will drive the economy down further, too. Consumption will be negatively impacted by raising prices, leading to further recession for everything produced and imported to Japan. I don't see how this is even a "short term gain" for anyone expect for the next 2 quarters of Toyota and such companies (because the costs of making stuff catch back to them).
- w1ntermute 13y ago
  You haven't been following the news recently, have you? Here: http://www.economist.com/news/briefing/21578052-shinzo-abe-shaking-up-japans-economy-seems-different-man-one-whose-previous http://www.economist.com/news/briefing/21578052-shinzo-abe-s... Jump to the section "All change," if you're impatient.
  - ekianjo 13y ago
    So what? How is this going to change the outlook of the Economy in Japan, and why is there no word about the massive Debt problem in Japan ? And let's not forget : "Energy has its own particular urgency following the nuclear accident in March 2011 at Fukushima Dai-ichi plant, leading to the closure, if only for now, of nearly all Japan’s nuclear power stations. The government wants to encourage competition in supply and investment in renewable energy as well as in a national infrastructure for imports of natural gas." Import of natural gas + weak yen -> will not result in savings, oh no. This is going to cost more for everyone.
    - w1ntermute 13y ago
      If you still do not understand after reading that article (and in 7 minutes flat, apparently), then I do not know what to tell you. It laid things out pretty clearly.
- Aloisius 13y ago
  I'm not sure how this: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do something else with it. leads you to believe this: This, in return, will reduce the amount of money that can be lended to the private sector and therefore will drive the economy down further, too. If savers were sticking all their money in government bonds and cash, what more could they possibly do to reduce the amount lended to the private sector? Their money is effectively gone from circulation already. Besides, the Japanese stock market is up 70% (!) in the last 6 months. In what universe if you're Japanese do you dump your money in foreign currency in an environment like that? Heck, I'm thinking of buying a few Japanese stocks, especially in export driven businesses.

ekianjo 13y ago

What political reforms? Abe is all about "stimulus" and further spending and diving into an ocean of debt. He was already prime minister a couple of years ago so we know very well what kind of policies he is supporting. He's just destroying the country further: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do something else with it. This, in return, will reduce the amount of money that can be lended to the private sector and therefore will drive the economy down further, too. Consumption will be negatively impacted by raising prices, leading to further recession for everything produced and imported to Japan. I don't see how this is even a "short term gain" for anyone expect for the next 2 quarters of Toyota and such companies (because the costs of making stuff catch back to them).

w1ntermute 13y ago
You haven't been following the news recently, have you? Here: http://www.economist.com/news/briefing/21578052-shinzo-abe-shaking-up-japans-economy-seems-different-man-one-whose-previous http://www.economist.com/news/briefing/21578052-shinzo-abe-s... Jump to the section "All change," if you're impatient.
- ekianjo 13y ago
  So what? How is this going to change the outlook of the Economy in Japan, and why is there no word about the massive Debt problem in Japan ? And let's not forget : "Energy has its own particular urgency following the nuclear accident in March 2011 at Fukushima Dai-ichi plant, leading to the closure, if only for now, of nearly all Japan’s nuclear power stations. The government wants to encourage competition in supply and investment in renewable energy as well as in a national infrastructure for imports of natural gas." Import of natural gas + weak yen -> will not result in savings, oh no. This is going to cost more for everyone.
  - w1ntermute 13y ago
    If you still do not understand after reading that article (and in 7 minutes flat, apparently), then I do not know what to tell you. It laid things out pretty clearly.
Aloisius 13y ago
I'm not sure how this: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do something else with it. leads you to believe this: This, in return, will reduce the amount of money that can be lended to the private sector and therefore will drive the economy down further, too. If savers were sticking all their money in government bonds and cash, what more could they possibly do to reduce the amount lended to the private sector? Their money is effectively gone from circulation already. Besides, the Japanese stock market is up 70% (!) in the last 6 months. In what universe if you're Japanese do you dump your money in foreign currency in an environment like that? Heck, I'm thinking of buying a few Japanese stocks, especially in export driven businesses.