Here’s an important message to CounterPunch readers from
Here at CounterPunch we love Barbara Ehrenreich for many reasons: her courage, her intelligence and her untarnished optimism. Ehrenreich knows what’s important in life; she knows how hard most Americans have to work just to get by, and she knows what it’s going to take to forge radical change in this country. We’re proud to fight along side her in this long struggle. We hope you agree with Barbara that CounterPunch plays a unique role on the Left. Our future is in your hands. Please donate.
Yes, these are dire political times. Many who optimistically hoped for real change have spent nearly five years under the cold downpour of political reality. Here at CounterPunch we’ve always aimed to tell it like it is, without illusions or despair. That’s why so many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of the writing you find here in the original articles we offer every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come.
Unlike other outfits, we don’t hit you up for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it.
CounterPunch’s website is supported almost entirely by subscribers to the print edition of our magazine. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners. We don’t clog our site with deceptive corporate ads.
The continued existence of CounterPunch depends solely on the support and dedication of our readers. We know there are a lot of you. We get thousands of emails from you every day. Our website receives millions of hits and nearly 100,000 readers each day. And we don’t charge you a dime.
Please, use our brand new secure shopping cart to make a tax-deductible donation to CounterPunch today or purchase a subscription our monthly magazine and a gift sub for someone or one of our explosive books, including the ground-breaking Killing Trayvons. Show a little affection for subversion: consider an automated monthly donation. (We accept checks, credit cards, PayPal and cold-hard cash….)
To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683
Thank you for your support,
Jeffrey, Joshua, Becky, Deva, and Nathaniel
CounterPunch PO Box 228, Petrolia, CA 95558
Abenomics “Strategic Special Zones”
“Japan appears to be turning an economic corner.” US Treasury Secretary Jack Lew
Japan hasn’t turned the corner. Japan is merely doing what it’s been doing for the better part of the last 15 years, fumbling around with interest rates, fiscal stimulus, and goofy monetary policies in order to siphon more wealth from the working class, juice stock prices, boost corporate profits and keep its politically-connected zombie companies from declaring bankruptcy. Abenomics is just the latest permutation of this ongoing trend, just old wine in new bottles. People used to call this phenom by its real name, political economy, but not any more. The media thinks the name sounds too “Marxist” so they’ve abandoned it altogether. But this is political economy writ large. The policies are not implemented to generate growth, increase productivity or to create a vital, prosperous economy. They’re put in place to meet the narrow objectives of the people who control the system, the bigshot money guys who make dough on asset inflation, currency manipulation, and offshoring. That’s what Abenomics is all about. It’s another big looting operation disguised as stimulus.
So don’t be duped by Krugman and the rest of the liberal punditocracy. Abenomics is just class warfare wrapped up in glitzy public relations ribbon. There’s nothing here for working stiffs, nothing at all. And that should concern people in the US, because we’re headed in the same direction. For example, did you know that Japan has kept interest rates at zero for 15 years. 15 freaking years of emergency low rates! Can you believe it? Zirp (zero interest rate policy) is supposed to be a temporary fix to reduce the burden of debt during a deleveraging supercycle. When policymakers keep zirp in place for 5, 10, 15 years, it’s a sign that they haven’t got the foggiest idea how to get the economy up-and-running again, so they keep the price of money permanently cheap hoping to spark a credit expansion. But it doesn’t work because no one is borrowing because they know we’re in a bloody Depression. So it doesn’t matter how cheap money is. When you’re broke you’re broke. Broke means you need a job and an income, not a low interest loan from some shyster banker.
Zirp just makes matters worse because it acts like a tax on savers and retirees living on fixed income and Social Security. These people are cheated out of the meager gains on their savings (or price of living adjustment) by a policy that gives them zip. So, they have less disposable income which hurts consumption and weakens demand. A lot of these folks have to go back to work to make ends meet, like the hunched over 80 year old at the local hardware store who’s back on the job making $7.50 an hour selling light bulbs and pick handles because his dwindling nest egg won’t get him through the golden years. And it’s all so the insolvent banks and underwater corporations can borrow money at zero to roll over their monstrous pile of debt without keeling over. That’s the real purpose of zirp, to prop up politically-connected zombie companies that suck the life out of the real economy.
Did you know that–according to a recent survey in Japan– “76 percent of voters do not feel there has been an economic recovery since Prime Minister Shinzo Abe took office last December?” (“Those not feeling the recovery at 76% and climbing”, Japan Times)
“76 percent!” Try to find that little nugget in the western media, eh?
So all the claptrap you’ve been reading about Abenomics is pure BS. The man-on-the-street doesn’t see any improvement at all. None. It’s a joke, just like Bernankenomics (QE) or any of the other whiz-bang monetary theories. They’re all a fraud. QE is politics not economics. It’s a wealth-shifting scam, just like Abenomics.
Now get a load of this from economist Carola Binder who researched the Bank of Japan’s Opinion Survey on the General Public’s Views and Behavior. Here’s one of the questions in the survey:
“What do you think of your household circumstances compared with one year ago?” … Of the households who reported worse circumstances, 73% said a reason was that their income decreased and 42% said a reason was that their income was not likely to increase in the future.”…”The 4.9% of households who thought their circumstances improved were also asked why. About 22% responded that their interest income and dividend payments increased and 26% said it was because the value of their assets increased.” (“What Does Abenomics Feel Like?”, Quantitative Ease by Carola Binder)
So, yeah, if you own stocks in Japan, the world is a wonderful place because QE sends equities into the stratosphere. Everyone knows that, after all, the S&P 500 is up by more than 160 percent in the last four years on the back of crappy earnings, high unemployment, flagging consumption, weak demand, and shriveling GDP. But, hey, at least the punch bowl is still brimming, right?
The problem is, the average guy doesn’t own stocks in Japan, so he’s got to dip deeper into his savings just to scrimp by, which is exactly what the Japan Times pointed out in a recent article. Here’s a blurb from the piece:
“The share of Japanese households with no financial assets rose to a record high as falling incomes forced people to dig into their savings, highlighting the potential for widening disparities under “Abenomics.” (“Savings tapped as pay falls: ‘Abenomics’ on notice”, Japan Times)
The article continues with this damning admission: “Japan’s salaries extended the longest slide since 2010 in September, with regular wages excluding overtime and bonuses falling 0.3 percent from a year earlier, a 16th straight drop.”
So the investor class is making out like bandits, but working people are taking it in the shorts. Great program you got there, Shinzo.
There are a couple other points worth noting in the BoJ’s survey, particularly, that “44.8% of respondents plan to decrease their spending over the next year. (And, that) Over 80% of survey respondents are slightly or quite worried about working conditions such as pay, job position, and benefits.”
So, we’re all in the same boat, right? What people worry about is their losing their jobs, their health care, and their retirement. Abenomics hasn’t eased those concerns at all, in fact, it’s made things worse, mainly because Abe is determined to lower living standards, undermine personal security, and squeeze every dime he can out of the middle class in his endless effort to pay-down the debts that were run up by Japan’s mismanaged, unprofitable zombie companies.
Under Abe, wages are falling, inflation is rising, credit growth is weak, and fiscal stimulus is running out. Let me explain that last part: You see, in order to fool the people into believing that his monetary policy was working, Abe decided to frontload his program with $100 billion in fiscal stimulus to turbo-charge activity. (which it did.) Unfortunately, the so called “first arrow” (fiscal stimulus) is now starting to sputter. Take a look at this from Monday’s Wall Street Journal:
“Economists polled by The Wall Street Journal say Japan’s economy likely posted annualized growth in gross domestic product…of 1.7% in third quarter…. a sharp deceleration from the 3.8% and 4.1% rates of the prior two periods, when Japan outgrew the other Group of Seven advanced economies.” (“Abenomics Faces Emerging Pressures”, Wall Street Journal)
You mean after all the hype and PR gobbledygook about the great monetary experiment dubbed Abenomics, the economy is growing at a pathetic 1.7%?!? What’s Krugman going to say now?
More from the WSJ:
“The implications of a possible Japanese slowdown go beyond Tokyo, as policy makers around the world have been hoping that a resurgent Japan could, for the first time in a generation, provide a lift for the global economy. As Mr. Abe himself said earlier this year in unveiling his growth strategy: “Now is the time for Japan to be an engine for world economic recovery.” …
Much of the problem lies in emerging markets…..”Conditions are harsher than what we had anticipated…due to the negative impact from the slowdown in emerging markets,” Masaru Kato, chief financial officer of Sony Corp., told reporters last month, explaining why the electronics giant reported weak quarterly results and slashed its earnings forecast.” (WSJ)
Oh please, spare me the excuses. The weaker yen has done nothing to strengthen the Japanese economy. Sure, exports increased by a fair amount, but working people got absolutely hammered by higher import costs, like gas which is presently tipping $6 per gallon. Also, according to the WSJ: “Japan posted a trade deficit in September for a 15th straight month, the longest stretch on record, pointing to an apparent structural change in the economy and uncertainties about global growth.”
The reason the trade deficits are so large (and persistent) is because Abe’s “weak yen” policy is a big loser. While it helps to grab more foreign demand, it also pushes fossil fuel costs into the stratosphere which weakens domestic consumption and reduces growth. Policymakers should have figured out what they were doing before they implemented the policy.
Here’s more from the WSJ:
“Another early growth generator from Abenomics—a jump in consumer spending—is also wearing off. … Consumption likely posted its weakest growth in four quarters, just 0.4% in the July-September period, according to government figures.”
Consumer spending is all but certain to accelerate and lift growth over the next six months—but that spending is widely seen as artificially and temporarily inflated as consumers rush to make purchases in advance of an April sales-tax increase enacted to contain the country’s debt.” (WSJ)
True, personal consumption will probably pick up for a few months, just like it did when Bush launched “Cash for Clunkers” and the “Firsttime Homebuyer” tax credit. But these programs just push demand forward leaving a big hole in consumer spending immediately afterwards. Here’s how Wolf Richter sums it up over at the Testosterone Pit:
“The consumption tax hikes from 5% to 8% scheduled to take effect in April 2014 … are already influencing behavior as we have seen big-ticket items, such as homes, starting to fly off the shelf, so to speak, before the tax hike makes them more expensive. And so to dodge that increase, 14% of the respondents are planning to buy appliances, 13.8% might buy a car, and 13.3% would blow some money on domestic travel. If they do that, it will frontload consumer spending and create … a mini-bubble that will deflate when the tax hike takes effect. That’s what happened when the consumption tax was hiked in 1997 from 3% to 5%, and Japan fell into a recession afterwards. But it looked good beforehand!” (Testosterone Pit)
In other words, the tax increase will bump up spending for a few months and then fizzle out. Abe knows this, but he pushed for the tax hike anyway to send a message to his slacker rich friends that he would continue to prosecute the class war even if it put the economy at risk. It’s a question of priorities; and class tops everything else. That’s why Abe invoked the words of labor-hater “Maggie” Thatcher when he announced his program for economic change saying, “There is no alternative”.
It’s a question of where one’s loyalties lie. In Abe’s case, there is no doubt.
One last thing from the Japan Times:
“Special zones aimed at spurring corporate investment through deregulation and tax incentives are to be created in Tokyo as well as Osaka and central Aichi Prefecture….Other deregulation steps to debut in such zones will let private firms operate public schools, let experts without teaching licenses teach classes, expand the scope of treatment that can be administered by non-Japanese doctors and nurses, facilitate the use of foreign drugs and increase the number of hospital beds.” (Japan Times)
Oh good, more deregulation. Just what we needed.
We used to have a name for these deregulated, anything-goes “strategic special zones” in the US. We used to call them plantations. Maybe Abe would like to switch the moniker so it better embraces his real objective? What do you think?
Maybe we should run it by Krugman first and see if he approves.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at email@example.com.