Friday, November 1, 2013

"Japan appears to be turning an economic corner." US Treasury Secretary Jack Lew

Paul Krugman says "the effects" of Abenomics " have been entirely positive!": "Since taking office, Prime Minister Shinzo Abe has... persuaded investors that deflation is over and inflation lies ahead, which reduces the attractiveness of Japanese bonds. And the effects on the Japanese economy have been entirely positive! Interest rates are still low, because people expect the Bank of Japan (the equivalent of our Federal Reserve) to keep them low; the yen has fallen, which is a good thing, because it make Japanese exports more competitive. And Japanese economic growth has actually accelerated."

1---(What to expect in US in near future) Japan: Wage slide continues for 16 strait months, Bloomberg

Salaries extended their longest slide since 2010, even as Prime Minister Shinzo Abe urges companies to raise wages as part of his bid to reflate the world’s third-largest economy, government data showed Thursday.
Regular wages excluding overtime and bonuses fell 0.3 percent in September from a year earlier, marking a 16th straight month of decline, according to labor ministry data. Total cash earnings rose 0.1 percent....

Wages are falling behind price gains. Consumer prices excluding fresh food rose 0.7 percent last month from a year earlier, a fourth straight increase.

2---How to make big bucks  destroying the planet and killing its people: Company that owns Fukushima nuclear power plant books fat profits on gov bailouts, Testosterone Pit

So where did that big fat profit of ¥616.2 billion come from? Turns out, “ordinary income” was only ¥141.6 billion, up from a loss last year. Those were the rate increases. The difference? “Extraordinary Income.”
A lot of it! So TEPCO sold some fixed assets for a gain of ¥74.2 billion, fine. But then there was an interesting, and huge entry:  ¥666.2 billion ($6.7 billion). It was the amount of taxpayer bailout money TEPCO had received during the first half. Booked as income!...

Earlier this year, it was leaked that TEPCO had paid ¥1.8 billion ($189 million) in annual membership fees to a nuclear lobbying group in 2011, weeks after the melt-downs. The Federation of Electric Power Companies of Japan, which lobbies for Japan’s ten mega-utilities, keeps its budget secret. This was the first time the fees seeped out, offering an idea of its annual lobbying budget – whose magnitude explains in part the overwhelming power the nuclear industry has over its regulators and governments.
That power is now being exerted on the Abe administration and the legislature – not only to slough off the costs of dealing with Fukushima but also to restart the 50 surviving reactors, against strong local and national opposition.

3--IMF pushes for slave labor, er, free trade zones in Japan, Japan Times

The IMF said that implementing structural reforms such as deregulating the labor market is indispensable for Japan to achieve sustained growth because stimulus measures have only a temporary effect.
The Cabinet hopes to pass bills related to special economic zones and business competitiveness, but Abe has given up on comprehensive easing of the rules for laying off workers amid criticism it would create an unfair labor environment.

(“Abe sees the strategic special zones as the heart of regulatory reforms,” Tatsuo Hatta, 70, said in Tokyo Saturday, adding the prime minister is aware that the public is “fed up” over the sway that vested interests have had over policy.)

4---Abe invokes role model Thatcher: "there is no alternative” to neoliberalism, Japan Times

Prime Minister Shinzo Abe evokes the late Margaret Thatcher as he repeats “there is no alternative” to his platform of economic change. One of the byproducts: prospects for a Thatcher-type division of wealth....

Abenomics, at least in its initial stage, is rewarding those who have assets, and the gap between the haves and the have-nots is widening,” said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute, a think tank owned by Sumitomo Corp., Japan’s fourth-biggest trading house. “The fate of Abenomics, which aims to end deflation, will be determined by whether wages go up.”...

Abe cited Thatcher in a speech in London in June, saying of his economic growth strategy: “There is no alternative,” a phrase the former U.K. prime minister used for her policies of monetarism, financial deregulation and restructuring of state industries in Britain in the 1980s.
Within seven years, Thatcherism had driven unemployment to a record of more than 3 million people and widened the gap between rich and poor...

“Abenomics could open up disparities in Japan,” said Seki Obata, an associate professor at Japan’s top-ranking Keio Business School in Yokohama. “Boosting stock and real estate prices could widen the imbalance.”
Deepening disparities would mar a society that’s prided itself on homogeneity. Abe in June highlighted the observations a century and a half ago of Townsend Harris, citing the diary of the first U.S. ambassador to Japan: “They are all fat, well clad, and happy looking, but there is an equal absence of any appearance of wealth or of poverty — a state of things that may perhaps constitute the real happiness of a people.”
Around a quarter of households with more than one person don’t hold financial assets, according to a Bank of Japan survey conducted last year....

Real disposable income for a typical family of four — a company employee with annual earnings of ¥5 million, a full-time housewife and two children, will drop to ¥4.03 million in 2016, about 4 percent lower than now, according to Shungo Koreeda, a researcher at Daiwa Institute of Research Ltd. The calculation takes into account the plan to increase the sales tax to 8 percent in April from 5 percent, followed by a further increase to 10 percent in 2015....

Consumer prices excluding fresh food, but not energy, rose 0.8 percent in August from a year earlier, the fastest pace since November 2008. Core prices are forecast to rise 2.78 percent in the fiscal year starting next April, according to the median estimate of 41 economists surveyed by the Japan Center for Economic Research. The leap in the projections stems from the sales tax increase.
“The sales tax will probably have a severe impact on low-income families with a lot of children and pensioners who don’t own a house or assets,” said Koreeda at Daiwa Institute. “It will be necessary to provide support for those people.”...

 Regular wages excluding overtime and bonuses fell 0.6 percent in August from a year earlier, extending the longest slide since 2010 to 15 months...

Profits from stock investment are sort of making up for the decline in my bonus,” Kawamura said. “About 80 or 90 percent of my money is in bank savings, but I want to increase my investment in stocks.”

5---Abe's "special zones": to exploit labor, avoid regulation, and end taxes. (Think: New Orleans after Katrina) Japan Times

Special zones aimed at spurring corporate investment through deregulation and tax incentives are to be created in Tokyo as well as Osaka and central Aichi Prefecture.
Other deregulation steps to debut in such zones will let private firms operate public schools, let experts without teaching licenses teach classes, expand the scope of treatment that can be administered by non-Japanese doctors and nurses, facilitate the use of foreign drugs and increase the number of hospital beds.

Abe said at a meeting of the council that the government “managed to sort out reforms necessary to create international cities that can compete with other cities in the world.”
The government will submit to the Diet a set of bills to launch the zones in early November and decide on their exact locations by early next year.
The government panel, however, did not approve a plan to relax the rules for firing workers, as sought by business circles, and decided to extend contract lengths for part-time and contract workers nationwide to increase their job security.
To help clarify employment rules for firms doing business in the special zones, the government will establish guidelines and consulting centers on labor issues.

6---Those not feeling the recovery at 76% and climbing, Japan Times

The proportion of voters who do not feel there has been an economic recovery since Prime Minister Shinzo Abe took office last December now stands at 76.4 percent, up from 68.6 percent in April, a Jiji Press survey showed Friday

7---Blackstone First To Bring Single-Family Rental Securitization to Wall Street (shades of subprime MBS), costar

8---US Infrastructure Spending Plunges, naked capitalism

I’m normally not big on “one chart says it all” posts, but this one is so striking I made an exception. Hat tip FT Alphaville:
Screen shot 2013-11-01 at 4.45.59 AM
The source is BCA Research, which included state and local government spending in the total, since they are responsible for 75% of non-defense infrastructure spending....
The US is already well on the way to being a third world country, and the chart at the top gives you a preview of how your experience of public amenities will decay as a result of post-crisis budget starvation. Brace yourself.
9---Euroexit for Italy?, Pritchard, Telegraph

10--The Myth of Financial Reform, Time

11--Obama "starves the beast" and no one notices, unless you can't find a job, that is, On The Money

The Treasury today released the data for the fiscal year 2013 budget deficit, which amounted to $680 billion, or 4.1 percent of GDP, down about $400 billion from last year's deficit, which was 6.8 percent of GDP. The 2.7 percentage point drop came from 1.5 ppts higher tax receipts and 1.2 ppts lower outlays (both relative to GDP).
That's the largest one year decline in the budget deficit since 1969. The deficit is down 6 percentage points of GDP since 2009 -- the largest four-year decline since 1950. We're engaged in a level of budget austerity that would make a European policy maker proud.

12---Barney Frank get's one right, Gov backing for derivatives?!? You've got to be kidding, Huff Post

The U.S. House of Representatives voted on Wednesday to scale back a much-debated provision of the Dodd-Frank Wall Street reform law, handing bank lobbyists a token victory in their fight against the tougher rules.

Big banks and their allies in Congress have been pushing to undo part of the law that calls for walling off risky derivatives trading by investment banks from government backstops such as deposit insurance. They say the rule is unnecessary and would be expensive for banks.

A total of 70 Democrats joined Republican lawmakers in a vote to scrap the so-called push-out provision for most types of derivative trades, defying the will of the White House, which had called for the rule to remain in place...

backers of the pushout idea say it would keep banks from making wild trades while counting on federal support, such as the Fed's discount window, if their trades go wrong.

"This bill would allow Wall Street's too big to fail banks to use insured deposits for their derivatives trading and gambling. That is indefensible," said Dennis Kelleher at Better Markets, a financial reform lobby group.
Following the law's directions, regulators wrote a rule forcing banks to either split swaps trading off into separate arms or else forgo federal support.

13---Edward Snowden for president, RT

14---As food stamp cuts set to begin--Budget conference committee meets to slash social spending, wsws

The food stamp cuts, which are scheduled to take effect today and which would amount to over $300 per year for a family of three, will be the first-ever nationwide reduction in benefits under the US government’s Supplemental Nutrition Assistance Program (SNAP)....

The sequester cuts, put in place as part of the 2012 “fiscal cliff” crisis, are scheduled to cut government spending by $1.3 trillion over ten years. The first round of cuts, which began in March, cut spending by $85 billion, while the second round, scheduled to begin next year, would cut $109 billion.
In additional to sweeping cuts to social spending, next year’s cuts will reduce defense spending by an additional $20 billion. “There are significant numbers of Republicans in the Senate and the House who recognize that the cuts to defense are too much, too fast and that it’s irresponsible, so they’re going to have to weigh that,” Democratic Representative Chris Van Hollen, a member of the conference committee, told CNN.....

The Democratic-controlled Senate is proposing $4 billion in cuts to the food stamp program over the next decade. The Republican-controlled House of Representatives has passed a bill that would cut $40 billion from SNAP and would also force adults between 18 and 50 to either work or attend work training in order to reapply for benefits, as well as instituting drug-testing for recipients.
In addition to the cuts in food stamps, on January 1, the federal program that provides extended unemployment benefits for the long-term jobless is slated to expire, throwing millions more into poverty.

In addition to the these cuts, both the Republicans and the White House have repeatedly made clear over the past month that they are still looking to make a deal in the longer term for a “grand bargain” that would lower corporate taxes and slash hundreds of millions of dollars from Social Security and Medicare

15---NYT's executive editor Bill Keller reveals his role as state propagandist, wsws

In November of 2010, at the height of the damning revelations published by WikiLeaks on US actions in Iraq, Afghanistan and other countries, Keller published a piece declaring his unconditional support for the “war on terror” and stressing that in considering whether to disclose state secrets, the Times engages in “extensive and serious discussions with the government.”
 
He wrote: “We agree wholeheartedly that transparency is not an absolute good. Freedom of the press includes freedom not to publish, and that is a freedom we exercise with some regularity.”
 
As Keller made clear, he considers that his role and that of the Times is to serve the interests of the state and the ruling class, and not the right of the people to know. Rather than a Fourth Estate that assumes an adversarial relationship to entrenched power and defends the democratic rights of the people against the encroachments of the state, Keller practices a brand of “journalism” that would have no problem functioning under a military or fascist dictatorship.
Somehow, according to Keller, support for the “war on terror,” which, as he is well aware, is a catch-all pretext for military aggression abroad and attacks on democratic rights at home, does not constitute a “political” bias. Nor does an embrace of “national security”—a euphemism for the foreign and domestic agenda of American imperialism.
 
In his introduction to the exchange with Greenwald, Keller lets slip his real attitude toward Greenwald and other journalists who are not, as he is, wedded to the state, and toward the emergence of the Internet as an alternative source of information to the establishment media. He refers to the “disruptive power” of the Internet.
This reflects a long-standing theme of Keller, who has for years warned the powers-that-be about the danger the Internet poses to keeping the public in the dark about the activities of the government....
 
accomplices in crimes against humanity and co-conspirators in the preparations for police state rule



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