Japan has fallen victim to the Keynesian scam

Why does the author of your article not mention that the very same statistic registered the highest ever reading of 7.2% in March 2014? Or the fact that, during the years immediately before the tax hike, the average increase in household spending stayed meaningfully positive for the first time since the 2006 bull mkt? Or neglect to mention that the latest 5.9% drop is in real terms which double-counts the effect of the VAT hike?

Ideological bias isn't really a good thing for someone who purports to be an economist. Would you like me to post what I think is a reasonably balanced write up?
 
I wonder what the authors of the articles you have linked would say about this:
http://online.wsj.com/articles/japan-wages-make-biggest-jump-in-17-years-1409624572

"TOKYO—Japanese wages rose at their fastest pace in over 17 years in July, tempering concerns about the strength of the nation's economic recovery.

Data released by the Ministry of Health, Labor and Welfare Tuesday showed that total average monthly wages for regular employees jumped 2.6% on year during that month to ¥369,846 ($3,544) on the back of a rise in bonuses in the manufacturing and construction sectors. That was the biggest jump on month since January 1997, and the fifth straight month of increase..."
 
Martinghoul said:
Would you like me to post what I think is a reasonably balanced write up?
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Oh, I'm quite sure I could guess to what you, Champion of the Federal Reserve and Defender of all that is QE, would consider reasonably balanced!
 
Tsing Tao said:
Oh, I'm quite sure I could guess to what you, Champion of the Federal Reserve and Defender of all that is QE, would consider reasonably balanced!
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Ah, you've already reached a verdict, before even taking a look? All rightie then...
 
Martinghoul said:
In fact, there is ample empirical evidence that Abenomics, thus far, is a rather unmitigated success.
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20140907_abe_0.jpg
 
Martinghoul said:
In fact, there is ample empirical evidence that Abenomics, thus far, is a rather unmitigated success.
More...

If the US equity market's reaction to the worst jobs data of 2014 is anything to go on; Japanese stocks should be a double overnight given the catastrophe that just printed. While the initial prints for the post-tax-hike period were bad enough (record worst levels in most cases), the revsions are even worse. Drum roll please: 1) Trade balance miss, worst in 4 months; 2) GDP -7.1% miss, revised down, worst since Q1 2009; 3) Business Spending/Capex -5.1% miss, revised down, worst since Q2 2009; and 4) Consumer Spending -5.3% miss, revised down, worst on record. But apart from that, as the Japanese leaders noted last week, "the recovery is heading in the right direction."





Charts: Bloomberg

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A gentle reminder why Abenomics will never work... (or the terrible missing J-Curve via Patrick Barron of the Ludwig von Mises Institute of Canada):

Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.
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And as Goldman noted, why the "money illusion" is failing...

In making an assessment of the economy, however, we sound a note of caution about overplaying the positive effects of a small increase in nominal wages in an inflationary climate. We believe the outlook for consumption should focus on the more negative effects of declining real wages. In addition, once people wake up to the illusion of money, its impact will also fade.
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