Reagan Lives! That’s Bad News for Japanese. – Bloomberg 07-25-13

Salient to Investors:

William Pesek writes:

Abe’s economic plans draws heavily on Reaganomics: welfare-spending cuts, debt-swelling tax reductions for the wealthy and corporations, deregulation, a lowering of trade barriers, and reforms that make it easier to fire workers. As in the US, these reforms could hollow out the middle class and create the wealth inequality that Japan has long tried to avoid.

Richard Katz at Oriental Economist Report said raising the consumption tax while cutting corporate taxes will further shift things in the wrong direction and does not make sense in a country where consumer spending is chronically weak due to weak consumer income.”

Nicholas Smith at CLSA Asia-Pacific Markets said 73 percent of companies in Japan pay no tax, comprising companies that are unprofitable and companies that are economical with the truth.

The WEF ranks Japan 134 out of 144 in terms of ease of hiring and firing, but Japan lacks a public safety net to catch the workers who could soon be unemployed.

The OECD ranks Japan 5th in the number of working-age persons living on less than half the average national income.

Abe’s move to get the BoJ to double the monetary base excites hedge-fund managers but punishes savers who must live on a fixed income.

Jeff Kingston at Temple University said Japan’s entrepreneurial animal spirits are dormant.

Many of Abe’s policies are exactly what Japan needs, including joining the US-led Trans-Pacific Partnership, deregulating sectors from energy to medical services to education to agriculture.

Read the full article at  http://www.bloomberg.com/news/2013-07-25/reagan-lives-that-s-bad-news-for-japanese-.html

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