Saturday, November 15, 2014
In Case You Were As Confused As I Was Re The Dissolution And The Delay
After a spell in the FCCJ library looking at magazines and newspapers, here are my conclusions:
1) The now certain dissolution of the Diet (Link) and the delay in the raising of the consumption tax are two different initiatives. Prime Minister Abe Shinzo has wanted a dissolution for about three weeks now. Chief Cabinet Secretary Suga, or persons thinking and feeling on his behalf like Yamamoto Kozo, has desired the delay for a bit longer.
2) Abe wants the dissolution because he reshuffled the Cabinet only two months ago and one cannot reshuffle a reshuffle. Dissolution is the only way to rid himself of the cast of clowns who jumped aboard the Abe administration bus in September.
3) Suga and/or folks like him want the delay because the second quarter GDP and retail sales figures seem to have confirmed the warnings of last fall from Honda Etsuro and Hamada Ko’ichi that April's rise in the consumption tax would severely dampen the economy's animal spirits. Big business, bloated non-profit and government establishments (a.k.a., The Establishment) were of the (seemingly mistaken) opinion the economy was strong enough to take the hit. Since fundamentally it is idiotic to run two mutually contradictory economic programs at once, in this case QQE and large fiscal outlays for growth and increases in the consumption tax for fiscal consolidation, going full out for growth seems the better idea, at least in the short term.
4) Rather than fess up to having been fooled not just once but twice, the Abe/Suga duarchy dawdled on the framing of their respective projects, this even after Shukan Bunshun blew the lid off of the duarchy's plans ten days ago (many thanks to Dan Harada for pointing out the article). Not even the Yomiuri Shimbun, the cheerleader for Team Abe, had a plausible set of explanations for a dissolution (check out paragraph 8 of the Yomiuri editorial -- sadly the English translation does not do the original justice) to publish/leak. This left the field open for practitioners of the arts of tactical mendacity (my euphemism for H. G. Frankfurt's third form of communication) to offer explanations of what Abe and Suga were up to -- which news media dutifully published despite none of it making a jot of sense.
a) Is the policy mix now going to be too rich, i.e., are we going to have inflation well in excess of the Bank of Japan's goals?
b) What will the news media and Abe's rivals inside the Liberal Democratic Party concede is an Abe win in a December 14 House of Representatives election?
c) Whatever you criticisms you may want to level at Abe and Suga, "unwilling to quickly cut their losses and move on" ain't one of them.
Oh, by the way, if you are an analyst or a journalist, and you borrow any of the above, acknowledge the source, please.
Photo image credit: MTC