Japan PM Shinzo Abe calls snap election in December

[nitpicker]

Source: BBC

18 November 2014 Last updated at 05:57 ET

Japan's Prime Minister Shinzo Abe has called an early election, two years ahead of schedule.

At a news briefing, he said he would dissolve parliament later this week and was also delaying a planned but unpopular increase in sales tax.

Mr Abe was elected two years ago with an ambitious plan to revive the economy, but has struggled to do so.

His popularity has fallen but he is expected to win the election, which will take place in mid-December.

"I will dissolve the lower house on 21 (November) ," Mr Abe said.

Mr Abe's party, the Liberal Democrats already has a majority in the lower house, but analysts said Mr Abe hoped to consolidate power over an opposition party which is in disarray.

(snip)

Read more: http://www.bbc.com/news/world-asia-30092633

[GliderGuider]

1. Here's the reason

Japan Is Dying And We Still Don’t Get It?!

What is it with us? Don’t we WANT to understand? Japan announced on Monday that its economy is in hopeless trouble and back in recession (as if it was ever out). And what do we see? ‘Experts’ and reporters clamoring for more stimulus. But if Japan has shown us anything over the past years, and you’re free to pick any number between 2 and 20 years, it’s that the QE-based kind of stimulus doesn’t work. Not for the real economy, that is.

The land of the setting sun has during that time thrown so much stimulus into its financial system that Krugman-esque calls for even more of the same look even more ludicrous today than they did all along. Abenomics is a depressing failure, just as we knew it would be since it started almost two years ago. It’s not complicated, and it never was.

Japan’s stimulus has achieved the following: banks get to pretend they’re healthy and stocks rise to heights that are fundamentally disconnected from underlying real values. On the flipside of that, citizens are being increasingly squeezed and ‘decide’ not to spend (not much of a decision if you have nothing to spend). Since Japan’s ‘consumer’ spending makes up about 60% of GDP, things can only possibly get worse as time passes. If ‘consumers’ don’t spend, deflation is the inevitable result – and that has nothing to do with the much discussed sales tax, it’s been going on for decades -.

Therefore, the sole thing QE stimulus has achieved is a wealth transfer from poorer to rich. And that’s not only the case in Japan. Mario Draghi yesterday hinted – again – at all the stuff he could start buying next year, including sovereign bonds, even though that would violate EU law. And whether or not Germany will let him in the end, the fact that he keeps the option alive even if only in theory, tells us plenty about the mindset at the ECB.

[starroute]

3. That's one point of view -- but you can't call it "the reason"

Krugman has been arguing that Abe's increase in the VAT last spring was what threw the Japanese economy back into recession. He also argues that quantitative easing isn't the ideal solution but that it's the only one available when governments bent on austerity refused to increase spending.

I don't pretend to know who's right -- but I do know that what you quoted isn't an impartial analysis.

[GliderGuider]

4. I agree, it's a polemic. But Krugman is hardly the sharpest pencil in the box either.

[DeSwiss]

2. Honest Abe.

- I'm sure he wants to strike now while his iron's glowing hot (from all the radiation) and before the next round of resignations.

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