2024-02-24 10:48:00
From economic analyst Kohei Morinaga’s Instagram (@kohei_morinaga)
On the 24th, economic analyst Kohei Morinaga appeared on ABC TV’s “Tell Me! News Live: Justice no Mikata” and sounded the alarm regarding the signs of a possible downturn in the Japanese economy as the Nikkei Stock Average reached a new all-time high.
Mr. Morinaga lists three reasons for the large rise in stock prices. One is that due to rising prices and accompanying wage increases, “foreign investors are beginning to believe that Japan may be able to break free of its deflationary economy, so they are buying back Japanese stocks.” Another positive result is that “China’s economy is in shambles right now. Even in Asia, there is a sense that there is no China,” and that money is flowing in.” This is also producing positive results. The biggest reason is that “Above all else, the yen is weak. Thanks to this, Toyota and other export companies are making huge profits.”
On the other hand, many Japanese people, including those on the program, are not feeling the economic boom. Mr. Morinaga said, “Real wages have been negative for 21 consecutive months, and because income has decreased, consumption expenditure has also been negative for 10 consecutive months.Furthermore, GDP has been surpassed by Germany and now ranks fourth,” adding that figures other than stock prices are The situation is full of cold.
Many of the companies that are used as indicators for the Nikkei Average are major export companies that profit from the weaker yen. However, due to the weak yen, many small and medium-sized enterprises, which account for regarding 70% of Japan’s businesses, are facing difficult business conditions due to increased fuel, electricity, and material costs. As a result, the gap between large and small companies is widening further. Mr. Morinaga points out that the danger in this situation is that “a terrible thing is happening, where employees from small and medium-sized enterprises are transferred to large companies, resulting in bankruptcies due to a lack of labor.”
However, it is also true that Japan’s economy is slowly starting to see some light, led by large companies that are doing well. Under these circumstances, the Bank of Japan viewed high prices as a problem and began taking steps to correct the depreciation of the yen. Since it is certain that the US will lower interest rates this year, the aim is to review the current negative interest rates and encourage yen buying.
However, Morinaga believes that “there is a high possibility that this will be a foolish move by the Bank of Japan.”
“In the case of negative interest rates, private banks may be charged interest if they deposit money with the Bank of Japan, so they consider lending to companies and earning interest.If that flow stops, they will be reluctant to lend to companies. “If this happens, investment will cool down, which might lead to a dire situation.”
So why would the Bank of Japan choose such a choice?
Mr. Morinaga said, “Both the government and the Bank of Japan have suffered from the trauma of the bubble.When the economy improves even a little, there is a tendency to try to collapse it.However, during the bubble, stocks rose in an incomprehensible way, but now stock prices are at a fair price. In fact, stock prices in Western countries have increased several times over the past 30 years.
It was Junta Nakama of WEST. who asked the question that made Mr. Morinaga say, “Oh?” When asked, “For example, what would happen if we raised corporate taxes?” he immediately replied, “That’s actually a very good policy.” “If companies are also taken as taxes, there will be an incentive to use the money for personnel expenses, so wages can be expected to increase. “I’ll end up saying to my family, “I’m going to lose (the election),” he said with a wry smile. My friends looked astonished and said, “What the heck?”
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