Japan, once a feared world economic powerhouse already at "two decades of little or no real economic growth," just reported that its economy contracted during the second quarter at an annual rate of 1.6 percent.
The common thread throughout the two-decade slump has been the alleged need for ever-increasing levels of Keynesian "stimulus." Apparently refusing to believe there are any other viable alternatives to what hasn't worked for 20 years, the world's press is expecting — and creating pressure for — even more "stimulus."
The most recent version of "stimulative" policies has been dubbed "Abenomics," named for Japan's current prime minister, who ramped up the country's Keynesian calamity over two years ago. Like all previous efforts, it has yet to return the Land of the Rising Sun to a sustainable growth path. The country's debt-to-GDP ratio is well over 200 percent. (In the U.S. it's currently 72.5 percent, which is bad enough, considering that it was below 40 percent just seven years ago.) Younger workers have been especially hard hit. Many of them have been unable to find regular work. The nickname "irregulars" has arisen to describe their growing numbers.
Nonetheless, the press still clearly believes that more "stimulus" is the answer.
An AFP report carried at Yahoo News also provided an excuse with which those of us in the U.S are quite familiar — supposedly bad weather (bolds are mine throughout this post):
Japan economy's contraction a blow for 'Abenomics'
Japan's economy contracted last quarter, official data showed Monday, boosting speculation the central bank will be forced to unleash more stimulus as Tokyo's "Abenomics" growth blitz stumbles.
The world's third-largest economy shrank 0.4 percent in the three months to June -- or 1.6 percent on an annualised basis -- due to weak consumer spending at home and slowing exports after two consecutive quarters of growth.
Still, the figures published by the Cabinet Office came in slightly better than market expectations for a fall of 0.5 percent, or a 1.8 percent annualised drop.
Private consumption, which accounts for about 60 percent of Japan's GDP, fell 0.8 percent from the previous three months while exports dropped 4.4 percent.
"The sharp plunge from the previous quarter's surprise growth was partly due to disappointing demand for Japanese products in the US, Chinese and other" markets, SMBC Nikko Securities said in a commentary.
"Sluggish wage growth and bad weather drove down consumption at home," it added.
... The slowdown comes more than two years after Prime Minister Shinzo Abe launched a policy blitz, dubbed Abenomics, to kickstart anaemic growth and conquer years of deflation.
The programme called for big government spending, massive Bank of Japan (BoJ) monetary easing and reforms to cut red tape in Japan's highly regulated economy -- reforms that have now stalled, however.
What was this "bad weather"? Rain — seriously, according to an Associated Press report by Elaine Kurtzenbach:
JAPAN'S ECONOMY CONTRACTS IN APRIL-JUNE QUARTER
Japan's recovery stalled in the April-June quarter, with the world's third-largest economy contracting at a 1.6 percent annual pace thanks to feeble consumer and corporate demand and slowing exports.
The dismal data reported Monday was expected, based on earlier reported figures, but it raises the likelihood the central bank may opt for fresh stimulus measures in coming months.
But heavy rains in the spring and early summer are thought to have discouraged shoppers. Demand for autos has also slumped following a tax hike for smaller cars. As China's economy has slowed, its demand for exports has also lagged.
Economy minister Akira Amari, however, acknowledged inadequate progress toward getting companies to use their surging corporate profits to raise wages and domestic investment - a priority seen as vital to a sustainable recovery.
... Amari shot down speculation that Japan was planning further stimulus to spur growth. "We have no such intention," he said.
Note that Kurtzenbach isn't wondering — as she should be, given the its debt load — whether the government's jawboning to try to get companies to raise wages is a tacit admission that it has reached the end of its rope with "stimulus" and "quantiative easing." She buys into the Keynesian notion that growing an economy is all about increasing consumption, when the truth is that increasing consumption meaningfully over the long-term requires capital investment to boost productivity and output.
Continuing:
... The Bank of Japan, whose lavish monetary easing is pumping trillions of yen (hundreds of billions of dollars) of cash into the economy through purchases of government bonds and other assets, has persisted in forecasting a rebound later in the year.
... The economy got a boost from public investment, which rose almost 11 percent from a year earlier (i.e., Keynesian stimulus, which is stimulating the growth of government and nothing else — Ed.), as spending was "front-loaded" at the beginning of the fiscal year, which starts April 1.
... "While the number of jobs is almost back to pre-recession levels, the total number of hours of work for all workers combined has been flat at 5 percent below the pre-recession level ever since 2009," Richard Katz of the Oriental Economist wrote in an analysis last week.
"Any tendency toward rising wages faces the headwinds that virtually all the growth in jobs is for lower-paid women and irregulars," he noted.
We're seeing something similar in the U.S. during its unprecedentedly weak "recovery" under Obamanomics and the Federal Reserve's "quantitative easing." Our terms for workers in similar circumstances are "temps" and "part-timers." Just like in Japan, we'll probably continue to see more of both as long as Keynesians rule the roost here. Also, as seen in Japan, the U.S. government and organizaed labor are blaming companies for not paying their workers enough, driving economically disastrous moves toward minimum-wage increases which have hurt employment prospects for entry-level workers.
Yet there's virtually never any solution offered besides more "stimulus."
Cross-posted at BizzyBlog.com.
