We've talk about this here before, primarily focusing the the so-called three arrow of Abenomics and how it was misguided, misordered and worst of all, most likely untenable.

- FirstPoint Japan Editor

By Nathan Lewis, Contributor
Forbes Magazine

The administration of Shinzo Abe in Japan just approved a rise in the consumption tax (national sales tax) to 8% in April 2014, from 5%. This opens the door for another rise to 10% in 2015. At the same time, the Abe administration plans to spend ¥5 trillion on “stimulus” to offset the negative economic effects of the tax.

I’ve described a typical path of decline as a combination of “stimulus” and “austerity.” The “stimulus” mostly means spending money, or some kind of “easy money” policy. The “austerity” is some kind of tax hike. Put together, they add up to higher taxes, a moribund economy, more demands on the government as the private sector stumbles, more reliance by the government on distributing money as a way of bolstering political support, worsening finances, more waste, and a depreciating currency.
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This is completely contrary to the Magic Formula of Low Taxes, Stable Money — the formula that Japan itself used to grow wealthy during the 1950s and 1960s, and indeed in the 1870-1914 period as well.
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Most of the focus on “Abe-nomics” has been on the very aggressive monetary expansion being conducted by the Bank of Japan. To some degree this is warranted: the average yen exchange value over the past twenty years is about 120/dollar. However, once that point is reached … what then? I suspect that, soon, it will degenerate into not much more than a way of financing the flood of JGBs that still pours forth.

I think most people understand now that the “stimulus” spending isn’t really about Keynesian notions anymore. Rather, it has devolved into the simple purchasing of political support. Perhaps it was never really more than that, but any other justifications have worn too thin to be credible.
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The spending was deemed necessary to preserve political support. When even that didn’t work, they spent more on the military to suppress revolt and revolution. As the private sector economy crumbled under ever-higher taxes, and successive currency devaluations, the king was not so popular anymore. His ministers feared that cutting off payments to nobles and other cronies might erode their base so much that the dynasty could crumble.
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How much is ¥5 trillion in “stimulus”? It is more than half the total annual revenue of the corporate income tax, including prefectural and local taxes (about ¥9 trillion), or the projected amount of revenue expected to be generated by the increase in consumption taxes (about ¥6 trillion) — which won’t actually appear in any case.

What if, instead of “stimulating” the economy by throwing money down a hole to appease cronies, you reduced tax rates instead? It might be popular. But, they never think of that.

Nothing good is happening in Japan. Not much is likely to happen, until sometime after the present dingdongs reduce the economy to smoldering ruin.

If you've been attention lately you may have noticed that we've been in the process of completely rebooting FirstPoint Japan.

We expect the full reboot to be completed by October 1st.

Now, many have asked, "Why are you rebooting FirstPoint Japan and in what direction are you taking it?"

The answer is this: FirstPoint Japan is being taken back to its original direction which was and is to serve as the first and only English-language portal that helps you Accelerate Your Japanese Business With Expert Advice™. 

Ultimately, FirstPoint Japan™ is to be the place Where Japanese Business Begins™.

Specifically this means several things:
1. We will focus only on business related themes. Very rarely will consumer themes (e.g., what's the "hottest bar" or "best night spot") or "hey, isn't Japan weird?" themes be discussed unless such information is very relevant and would be of interest to our readers whereby they could better understand the Japan marketplace or cultural expectations.

2. The core readership for FirstPoint Japan is primarily Gaishikei (foreign firms) either entering the Japanese market, building out existing operations, accelerating growth, maintaining themselves in a sustaining phase or rebooting.

3. An additional target readership is (primarily) Japanese-language bilinguals (i.e., people of any nationality or ethnicity who are bilingual with one of their business level languages being Japanese) who are working for or would like to work for a gaishikei firm in Japan.

4. Given that Japanese firms are moving overseas and investing again in such operations again, another target readership is foreign individuals (non-Japanese or overseas Japanese) who are interested in working for a Japanese firm in a local market. For instance, such as a local person working for or interested in working for a Japanese firm like Honda in Vietnam.

5. The hottest topics previously as well as now include market entry and company build-outs. This centers much attention on issues such as hiring and the use of third party agency recruiters. Previously we maintained a large reviews database of "good eggs", "neutrals" and "bad eggs" recruiting agencies.

However, since the industry is so opaque and "rough and tumble" (to put it mildly) we found ourselves spending an inordinate amount of time maintaining reviews that, for the most part, were just "bad egg" recruiting firms which was just a waste of everyone's time.

We are now reversing the model. 

This means that now everything is considered and deemed suspect unless it is on FirstPoint Japan. We will be talking to, reviewing and placing on our site recruiting firms and other vendors with whom there is some level of trust, ethics and professionalism.


By the same token, any vendor that isn't on this site you can approach at your own risk since we'll consider them "radioactive". 


The list will start out small, it may even remain small, but rest assured we do the best we can to vet the lists and collect feedback on the firms listed.

6. The vendor directory will include recruiting firms, training and coaching firms, paralegals and lawyers (incorporation paperwork, IP issues, visa issues and so on), accountants and CPA's, HR consultants, translators, interpreters and so on.

We have a lot planned so we hope that you'll check back in frequently or if you'd like get the FirstPoint Japan Newsletter delivered straight to your inbox click on the button below.

Sincerely yours,

Publisher
FirstPoint Japan

By HIROKO TABUCHI
Published: May 22, 2013

TOKYO — The Bank of Japan stood pat on monetary policy Wednesday amid market jitters over volatility in bond markets, which has threatened to undermine the country’s battle to end deflation and stimulate growth in the giant economy.

In a unanimous vote, the bank’s board stuck to its strategy of expanding the monetary base at an annual pace of 60 trillion yen to 70 trillion yen, or $585 billion to $682 billion, through purchases of government bonds, commercial debt and other assets. Those moves pump money into the economy.

After the central bank’s meeting last month, it unleashed what analysts have dubbed a “shock-and-awe” monetary policy, a sea change for a bank that had come to be known in recent years for its caution and conservatism.

Under its new governor, Haruhiko Kuroda, the Bank of Japan has gone all-out to fight deflation. Declaring he would do “whatever it takes” to combat falling prices, Mr. Kuroda last month announced that the bank would seek to double Japan’s monetary base, as well as the bank’s holdings of Japanese government bonds, by the end of 2014. The aim of such a policy is to keep interest rates low, prompting consumers to spend and businesses to invest in growth and jobs.

In recent days, however, worries have grown about rising interest rates in the government bond market, which could threaten Japan’s monetary policy. Japan is vulnerable to rising borrowing costs because of its high public debt, which is twice the size of its economy. Bonds are also the main financial asset held by banks, pension funds and insurance companies, making a surge in debt yields perilous. The biggest concern for the central bank is volatility in the bond market, where yields are still above levels marked before its meeting last month, Cameron Umetsu, a strategist at UBS, said in a note published ahead of the decision Wednesday.

“This can be viewed as one of the ‘unintended effects,’ which, if sustained, could dilute the effectiveness of the new quantitative and qualitative easing framework,” he said.

The scale of Japan’s quantitative easing is striking. Assuming that the Japanese economy grows by 2 percent a year, the Bank of Japan would expand its assets to just under 60 percent of the country’s gross domestic product, according to estimates from CLSA Asia-Pacific Markets. The U.S. Federal Reserve’s assets, which now total about 20 percent of the American economy, and the European Central Bank’s assets, which come to about 28 percent of the euro zone’s G.D.P., pale in comparison.

Japan stands out in another important way. Under Prime Minister Shinzo Abe, who took office in December and has been the main champion of the bank’s new audacity, Japan is coupling its monetary push with heavy government spending, contrary to calls for austerity in the United States and Europe.

Success Stories Japan is reporting that Japan's government will require all Japanese citizens and permanent residents of Japan to file a new overseas asset report with their 2013 tax filing in early 2014.

If you or someone you know is a citizen or permanent resident of Japan and has more than 50 million yen in total assets outside Japan (whether cash, property, stocks, bonds, or other interests), you will be required to complete this new form.