Aberdeen | Frankfurt, 17.12.2014.
Sehr geehrte Damen und Herren, Luke Bartholomew, Investment Manager Global Macro bei Aberdeen Asset Management, nimmt Stellung zum weiteren Kurs der Abenomics nach der Bestätigung des Japanischen Premiers im Amt:
„Abe glaubt, dass er sowohl die Theorie als auch die Historie auf seiner Seite hat: Eine mit der Steuerpolitik abgestimmte, aggressiv lockere Geldpolitik kann tatsächlich die Inflationserwartungen verändern und das Wachstum anschieben. Aber dies benötigt politischen Willen, unermüdliche Kommunikation und das Verständnis, dass ‚verantwortlich‘ zu handeln manchmal eigentlich grob ‚unverantwortlich‘ ist, wenn es um die Beförderung von Wachstum geht. Wir sollten damit rechnen, dass Abe weiterhin dem Wachstum den Vorrang geben wird und die Bank of Japan beim geringsten Anzeichen einer nachlassenden Erholung ihre Geldpolitik erneut lockert.“
Lesen Sie den gesamten Beitrag von Luke Bartholomew weiter unten. Für Rückfragen stehen wir Ihnen jederzeit gern zur Verfügung.
Mit freundlichen Grüßen
Dr. Andreas Jaensch
aberdeen@newmark.de
+49 69 944180 15
Shinzo Abe: responsibly irresonsible
The Japanese proverb Nanakorobi yaoki roughly translates as fall over seven times and stand up eight. It encourages perseverance and may be some comfort for Prime Minister Shinzo Abe.
It has been a busy few weeks for Japan watchers. A bout of fresh quantitative easing surprised markets and was followed by the country falling into yet another technical recession. Abe then called and won an election to give him the mandate to delay a planned sales tax rise. Growth has been prioritised over fiscal sustainability. With a renewed mandate for his economic programme, it is good to take a step back and consider the theoretical and historical context of Abenomics as a means of trying to assess where Japan goes from here.
Central banks tend to stimulate demand by raising inflation expectations when interest rates are at rock bottom. Paul Krugman called this a “credible promise to be irresponsible”. The problem is that if this technique works it gives central banks something that they don’t want. They want to convince people now that inflation will be above target at a point in the future. But when that time comes the central bank won’t want inflation to be above target. Investors, households and businesses know this and so don’t believe the central bank in the first place.
As tricky as this elaborate bluff sounds, Japan did manage to achieve it in response to the Great Depression.
While the US and much of Europe enjoyed a boom in the 1920s, Japan endured a difficult decade growing at less than 1% per annum between 1921 and 1929. Its economy suffered regular shocks (not least an earthquake which flattened Tokyo), and financial panics. The country’s return to the gold standard in 1930 was timed terribly, coinciding with as the Great Depression deepened and spread, and the yen was left significantly overvalued. An ensuing debacle in Japan’s management of the gold standard resulted in the government resigning in 1931, bringing the Seiyukai party into government, and Korekiyo Takahashi in as finance minister. He immediately suspended the export of gold and moved to push down the exchange rate to help boost inflation expectations. He then embarked on a number of policies to eschew expectations of deflation and boost growth. In March 1932 he suggested the Bank of Japan (BoJ) directly purchase all new government bonds, while in June government spending was increased on rural aid and military activities in Manchuria. In response to huge fiscal and monetary easing,1 inflation was 7% in 1932 and 12% in 1933 while gross domestic product was up 7% and 8% in the same period, which represented an earlier recovery than its peers.
Takahashi’s actions were revolutionary at the time. His central bank peers around the world all thought countries’ primary goal should be balanced budgets and avoid abandoning their exchange rates. His policies would therefore have been seen as the height of irresponsibility at the time. They were clearly incredibly successful though and testament to the power of monetary and fiscal policy to shift expectations even in a deep slump. The historical parallels between Japan then and today are clear. Aggressive monetary easing coordinated with fiscal policy really can shift people’s expectations of what inflation might do and boost growth. This is why Abe’s bold strategy of Abenomics has credence. Abe believes he has theory and history on his side: aggressive monetary easing coordinated with fiscal policy really can shift inflation expectations and boost growth. But this requires political will, relentless messaging and the understanding that sometimes being “responsible” is actually grossly “irresponsible” when it comes to promoting growth. We should expect Abe to continue to prioritise growth and the BoJ to ease at any sign that the recovery is slowing. But he’ll have to pick himself up a few times along the way.
Luke Bartholomew, Investment Manager, Global Macro
