Despite shortfalls, Japan’s election is Abe’s to lose

Shinzo Abe is unlikely to face much of a challenge in the country’s upcoming general election with the once powerful Democratic Party (DPJ) now too divided and demoralised to put up much of a challenge.

Abe’s own party, the Liberal Democrats (LDP), rose to power in December 2012 after a shambolic three-year spell in power for DPJ. The latter’s huge victory in 2009 – ending half a century of almost unbroken rule by the LDP – was based on policies that were abandoned within a couple of years, such as not raising consumption tax, or handing out child benefits of Y26,000 ($218) a month. The party, however, blamed the chaos caused by the disasters of March 2011 for their political shortfalls.

Shinzo Abe’s LDP government came to power on the promise of implementing new economic reforms, generally referred to as Abenomics. However, things did not quite go according to plan. The LDP should really be in more trouble than it is. This week the government confirmed that the world’s third-largest economy tipped into recession in the six months to September, despite unprecedented monetary easing from the Bank of Japan and trillions of yen of extra fiscal spending to offset the impact of April’s 3% rise in taxes.

Even now, after another huge shot of stimulus from the BoJ at the end of October, the recovery looks tepid. The latest monthly survey of economy watchers – taxi-drivers, barbers, hoteliers and the like – found that spirits had sunk to their lowest levels since the prime minister reappeared on the scene two years ago.

Polls suggest the divided and demoralised DPJ will be routed again this time, gaining no more than a handful of the 177 single-member seats – just 60% of the total – it is contesting, or the 180 seats determined by proportional representation.

We shall know early next week !

I believe Abenomics and Abe are here to stay ,

Japan recession worse than initially thought

Japan recession worse than initially thought

Japan’s economic recession was worse than initially believed, according to a revised estimate calculated by the country’s Cabinet Office.

Initial estimates read that gross domestic product had dropped at an annualised rate of 1.6% between July and September, as a by-result of big cuts in companies’ inventories and falls in private investment.

Newly-revised estimates show that GDP actually slipped 1.9% with a contraction in spending by business twice as severe as first thought.

The news is sure to come as a big blow to Prime Minister Shinzo Abe who returned to power in December 2012 under the promise of overturning more than a decade of deflation. Abe only called a snap-election last month in the hope of resetting the clock on a four-year electoral cycle, arguing that his mix of policies – known as Abenomics – is “the only way” for Japan to return to steady growth.

However, analysts said that confirmation of another technical recession for Japan – its fourth since the Lehman crisis – is unlikely to affect the outcome of the poll on December 14th, the announcement of which caught the DPJ and other parties on the hop.

Estimates by the nation’s biggest newspapers suggest that the ruling Liberal Democratic party will retain its strong grip in power, potentially extending the two-thirds majority in Japan’s lower house of parliament it enjoys with its coalition partner, Komeito.

Wolves don’t loose sleep over the opinions of sheep

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Anything’s possible if you’ve got enough nerve. … by J. K. Rowling

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“What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is what we do.”

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I have the simplest tastes. I am always satisfied with the best. Oscar Wilde

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Abe calls for snap election – Markets unchanged

Japan’s Prime Minister calls for snap election

After days of persistent speculation, Japan’s Prime Minister, Shinzo Abe, has confirmed that he will be calling snap parliamentary elections for next month in an effort to push back a scheduled tax increase.

Rumours had been building in recent days that Abe was preparing to dissolve parliament as he sought a new mandate to delay a second increase in consumption taxes, due next October.

The country, which only recently slipped into a recession, will have the lower house of its parliament dissolved on Friday in preparation for the snap elections. Abe also announced that the controversial sales tax hike will be delayed by at least 18 months, a decision he referred to as “grave”.

Japan’s GDP shrank by an annualised 1.6% in the three months till September – a result much worse than the 2.2% expansion expected by economists.

On a quarterly basis, Japan’s GDP declined by 0.4% as business investment slipped. Economies are commonly described as being in a technical recession after two straight quarterly contractions.

Japan, the third largest economy, has more government debt that any other nation, a top concern for supporters of the tax rise. Critics say Tokyo must find ways to generate solid growth before turning to fiscal matters.

The election is unlikely to radically change the balance of political power in Japan, where ruling LDP enjoys a support rate of around 37%. Nearest challenger, DPJ, on the hand, enjoys a support rate of only 8%. Analysts said the turnout will probably be low, and opposition parties seem in no state to mount a serious challenge over the 26 calendar days until the election – which resets the clock on Japan’s four-year cycle – on 14 December.

Photographer: Ma Ping/Pool via Bloomberg

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