Toshio Masuda

Toshio Matsuda, Commentator & Intl Economist

Straight from the Shoulder No.732

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"Straight from the shoulder " by Toshio Masuda June 01, 2012
( Free of charge to the people I met)

Straight from shoulder By TOSHIO MASUDA
International Econo-Political Advisor June 01, 2012
(English translation for foreign think tank)

President Hollande (France) Conforming to “Japan’s Lost 20 Years”
(This is for Japanese political and public opinion leaders.)

The State of Today’s Advanced Countries

The economies of advanced countries will not grow any more in the future but will remain stagnant or will be in lower in growth.
Economic growth in developing countries like China, India, Brazil and others that had enjoyed continued high growth rates has currently hit its ceiling and their growth rates are now on the decrease. This means that “the history of mankind’s continued economic growth has come to an end”; we now have reached the age of low or negative growth.
The governments of advanced countries or democratic countries have fallen to pandering to public opinion and populist intentions. They have no choice but to strive to become high-welfare states. The result of that fate is that all countries will become states that are to be constantly in excessive debt.

The Causes of Europe’s Debt Crisis

The first cause for the debt problems suffered by the countries around the Southern European, among the countries that compose the Euro Currency zone is each government’s intent toward welfare.
The second cause is the fact that Germany and France have continued competing in the same market for more than 10 years using the same currency (the Euro) against other European countries with notably different manufacturing and competitive capacities.
Countries other than Germany and France will face economic collapse in near future if they do not financially integrate into the EU by abandoning their economic sovereignty. It is clear that if the budgetary discipline advocated by German Chancellor Merkel is forced upon those Southern European countries that are suffering from high unemployment rates and negative growth (economic downturn), the economies of those countries will become even further impoverished, and that will cause them to fall further into a viscous circle of the spiral of economic deterioration. Fiscal action is essential to stimulate growth and employment, as advocated by President Hollande. However, fiscal action is a gamble for the survival of the European economy where there is excessive debt, high unemployment rates, and continuing economic downturns. , If the budgetary discipline suggested by Chancellor Merkel is to lead them into the economical collapse, the only available to those European countries amounts to nothing more than a gamble for President Hollande.

Greece’s Fate is Europe’s Fate

70% of the second bailout package for Greece from the EU (European Community) will be executed within the year. For that reason, at any cost, the new Greek administration after the June 17 election, whether they can or cannot, they will officially accept that budgetary discipline in order remain with the Euro to get the package cashed for the year and seek the treasury assistance advocated by President Hollande (in addition to the existing financial assistance). However, because Greece utterly is incapable of executing such severe conditions for fiscal discipline next year, the danger of their defaulting on government bonds is becoming more menacing. Patience of EU will run out in the coming year, and the EU and IMF (International Monetary Fund) may not be able to financially support Greece any longer. The result will be Greece’s leaving the Euro zone; they will be pushed into adopting the use of a new Drachma currency. However, Greece’s exit from the Euro zone may not destabilize world markets. The reason why is that by next year, Greece, the EU and world markets will have completed their preparations for Greece’s leaving the Euro behind and switching to a new Drachma. Greece will also become a model case for the other countries in the Southern European region if they want to keep their treasury sovereignties.

“Japan’s Lost 20 Years” Were Actually “20 Years That Were Not Lost”

Immediately after the Lehman Brothers shock on September 15, 2008, Ben Bernanke of the FRB (Federal Reserve Board) in the United States called the era “Japan’s lost 20 years,” a time when Japan implemented repeated fiscal spending (criticized as being wasteful public investments) after the collapse of the bubble of the Japanese market during the 1990’s. However, he called Japan’s entering into a long-term deflationary period with low growth the “Japanese model,” warning others of caution.
The Governor of the Bank of Japan(BOJ), Mr. Shirakawa, has said in recent speeches “I do not consider Japan’s model as a mistake.” Furthermore, he said “Quantity monetary easing is only buying time” touching on the limit of monetary policy. Had Japan discontinued that so-called wasteful government spending in the 1990s, without doubt, the Japanese economy would have slipped into a deep depression. Japan could only continue offering money at zero interest and implement wasteful public investment in order to maintain low growth keeping lower unemployment rates, and maturing society where the number of elderly citizens is rapidly increasing. In time, the soon-to-be maturing societies in the United States and other countries in the European Community indeed will need to follow Japan’s example of it’s so-called “lost 20 years.” Nevertheless, FRB Chairman Bernanke seems to have learned something different. Despite the period of growth that has already ended, he has repeatedly implemented monetary easing “to buy time” as Mr. Shirakawa the governor of BOJ has been pointing out. We should be proud of Governor Shirakawa’s expert insight. It is far superior to that of the Chairman of the FRB.
Indeed, today, the EU and the United States have found their economies to be in exactly the same kind of situation that Japan’s economy suffered during the collapse of its economic bubble in the 1990s. The FRB and the ECB invariably will continue to put off the debt crisis with monetary easing.
Conversely to Chairman Bernanke and Chancellor Merkel, President Hollande is striving to implement that “wasteful fiscal action so as not to fall into a depression” by conforming to those “20 years that Japan did not lose.”
If advanced countries implement such wasteful fiscal action although there is no apparent demand in the actual economy, extra money will flow into the pockets of businesses and citizens, and companies will implement wasteful equipment investments while the citizens will run toward wasteful consumption, if with some restrictions from using extra money for risky financial market. For those reasons, the economy will certainly get better. The result will be an improved financial balance sheet.
Money made available for monetary easing in order to stimulate markets only idly moves back and forth between the central banks and the markets. Only a few savvy financial professionals will be making breathtaking profits, while neither companies nor the citizens will be the recipients of any benefits. Before long, their financial situations will worsen further. It is essential to forget about Treasury Balance Sheet before it will be being improved from the paper you don’t like to see. When it is necessary for wasteful government spending, Prime Minister Noda says “I place my political life on Consumption Tax Increase”. He is like believer of favored disciple of Shouko Asahara who had no trouble in committing murder.
The European debt crisis cannot be resolved through a compromise or by finding a happy medium between Chancellor Merkel’s budgetary discipline and President Hollande’s government spending! The European debt crisis can only be resolved by wasteful public investments through comprehensive fiscal action without the fear of a growing budget deficit! When growth has stopped, all that is left is to force “waste” in order to expect growth.
“Waste is always a virtue” in a capitalist economy.


Japan’s philosophy is always against Waste.
But because of huge disasters of March 3, 2011, the government has been back to Lost 20 years Policy by increasing Necessary public investments day by day, month by month against 200% per GDP debts!
Nobody disagrees to Japan as No.1!
Everlasting highest value of Japanese Yen is the proof!

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