Several months ago I wrote a post regarding the Japanese economic experiment with Quantitative Easing. Since then, a couple other interesting developments have occurred in Japan that have me thinking.
1. Quantitative Easing continues: While I am skeptical that Abenomics will work, so far it appears to be pleasing the masses:
http://www.reuters.com/article/2013/12/16/us-japan-economy-tankan-idUSBRE9BF02N20131216
For 2013, the Japanese stock market closed up 57 percent, while the Yen depreciated against the dollar by 25%. So printing money appears to be the short term solution to Japan’s economic woes, however they are building a huge debt hole that they will eventually have to deal with. And there is more to come. According to the above article:
A Reuters poll conducted earlier this month found that almost two-thirds of Japanese firms expect the BOJ to increase its stimulus in the first six months of 2014.
I still think this policy will be seen as greatly helping Japanese industry at the expense of Japanese labor – much like the impact of American Quantitative Easing.
2. National Secrecy Bill
In an odd move, Japan rushed through a National secrecy bill to ‘restrict state secrets’ from the media:
http://www.nytimes.com/2013/11/29/world/asia/secrecy-bill-could-distance-japan-from-its-postwar-pacifism.html?_r=0
Quoting from this article:
Mr. Abe has said that tighter controls of state secrets were needed to plug holes in Japan’s protection of information and, most important, to persuade the United States to share more of its sensitive military intelligence. With China’s rise and increasing assertiveness, Mr. Abe has been leading Japan to become a more full-fledged military ally of the United States.
The tighter controls are very vague:
The current wording gives the heads of government agencies the power to declare information off limits if it touches on such sensitive national security areas as diplomacy, defense and anti-terrorism policy. Those found guilty of leaking these secrets could face up to 10 years in prison, far longer than under Japan’s current laws.
and finally:
The secrecy bill was submitted in tandem with the bill to create a National Security Council that Parliament approved this week. Political analysts say the twin measures are the first steps in a legislative agenda that could eventually see Mr. Abe try to fulfill his long-held goal of revising his nation’s antiwar Constitution to allow for a fully developed military instead of purely defensive forces — still a controversial idea in Japan.
3. Shrine Visit
Prime Minister Abe recently made a calculated visit to a controversial WW2 shrine:
http://www.economist.com/news/asia/21592659-shinzo-abe-takes-dangerous-gamble-slap-face
It’s not clear what Abe had to gain by visiting the shrine – except to increase Japanese Nationalism at the expense of its relationship with its neighbors. Given the ongoing land dispute between Japan and China that has the potential to escalate into a conflict, it seems an odd time to purposely cause a ruckus.
So maybe these 3 developments won’t amount to much – just more noise in world news. However, I am taken by the parallels to the 1930’s, where Japanese and German leadership spurred economic growth to fuel industry, at the same time encouraging nationalism fervor. Add in manipulation and government restriction of what information can be reported to the public, and it sure looks like history has the potential to repeat itself.
