The US attack on Europe misses the point entirely

The other day I was asked whether I was happy that the US President was finally saying things that I have been noting for years. The reference to Trump was, on interrogation, based on the US government analysis of Europe that appeared in the so-called – National Security Strategy of the United States of America – November 2025 (hereafter NSS) – which was released to the public on December 4, 2025. When I finally got around to reading the document, it was clear that the person who put that proposition to me didn’t understood Trump’s position and certainly didn’t understand my position. While the Trump Administration is critical of the European Union, as I am, the respective bases for those criticisms couldn’t be farther apart.

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Australian labour market – considerably weaker in November (not even close to full employment)

I should remind myself not to listen to the media (even the public broadcaster) when the Australian Bureau of Statistics (ABS) releases the latest labour force data – Labour Force, Australia – for November 2025 – as it did today (December 11, 2025). The commentary immediately after that data release today was the exemplification of mainstream massaging of the truth. The ABC had some bank economist on telling the nation that the data showed that Australia was operating above capacity (over full employment) and interest rates would have to rise further to discipline inflation. He didn’t mention that his corporation would benefit from such rate rises via increased profits. He also failed to tell the listeners that while unemployment remained stable at 4.3 per cent (only because participation fell in the face of falling employment), underemployment rose further to 6.2 per cent (up 0.4 points), and the broad labour underutilisation rate rose to 10.5 per cent – think about that – 10.5 per cent of available and willing labour in Australia and this so-called expert thinks that is full employment requires unemployment to rise at least a further 0.2 points. Meaning is lost and neoliberal ideology and corporate-speak replaces it. Disgusting. The interviewer was also terrible and should be sacked for his mistakes and failure to hold the ‘expert’ to account. Such is the national broadcaster in Australia these days. The reality is that it is nonsensical to argue that Australia being close to full employment. Without the fall in the participation rate, the official unemployment rate would have been 4.63 per cent rather than its current official value of 4.3 per cent. The labour market is considerably weaker in November and there is substantial scope for more job creation given the slack that is present.

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A lower yen is not inflationary once the adjustments are absorbed

Last Friday (December 5, 2025), I filmed an extended discussion with my Kyoto University colleague, Professor Fujii about a range of issues concerning the Japanese and Global economy. Once it is edited, the video will be available on YouTube. Fujii-sensei is advising the new Japanese Prime Minister and is the author of the ‘Responsible proactive fiscal policy’ slogan that is summarising the shift within the Japanese government from the Ishiba Cabinet and their austerity mindset to the new Takaichi Cabinet and its desire to introduce renewed fiscal expansion. Among the topics discussed: (a) my conjecture that Japan is caught in a vicious cycle of secular stagnation and requires a large fiscal shock to alter the deflationary mindset that has crippled the economy over several decades; (b) the need for tariffs to protect Japanese industry to advance food security (in the face of major rice shortages during the last year or two); (c) whether Japan should participate in Plaza Accord 2.0 (aka Mar-a-Lago Accord) that Trump is demanding China accept; and (d) policy structures that are necessary to reallocate labour from areas of excess (gig economy) to sectors where shortages and bottlenecks are present (for example, Construction), The latter will be essential if the proposed fiscal expansion is to stimulate production rather than prices. For the purposes of this blog post though, we also discussed the validity of fiscal expansion within the context of the yen. Mainstream economists keep arguing that the expansion is not viable given the depreciation of the yen, which they claim has been inflationary. It is a standard argument and I mentioned it in this recent blog post – Panel of Japanese economists mired in erroneous mainstream constructions and logic (November 27, 2025). I consider that issue more today.

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British Labour’s obsession with fiscal rules is untenable and ignores the reality of the situation

I have been a consistent critic of the way in which the British Labour Party, both in opposition and in government, is obsessed with rigid fiscal rules, thinking it is the only way that it can demonstrate fiscal credibility (whatever that is in their minds). The result is that they get cornered into situations that either lead them to make poor decisions which lose them votes and give the likes of Nigel Farage more fuel for his crusade or they are forced to admit they cannot achieve the (unachievable) fiscal rules. Either way it is a clusterf*)@. In the last week or so, we have witnessed the ludicrous situation of the British Office of Budget Responsibility failing to protect its own file systems and leaking information before the Chancellor presented her official fiscal statement. The leaked information just happened to contradict the messaging of the Chancellor which was a bit inconvenient. But the important issue that all this raises is not whether OBR can run a secure WordPress site (evidently it cannot), but that the information it generates is so inaccurate and systematically biased that it cannot realistically be used as the basis for assessing fiscal policy. Which means that the obsession with the fiscal rules leads to policy changes that damage things that matter – such as employment and services – but those policy changes are based on information (OBR forecasts) that subsequent revelations tell us would not justify those policy shifts. As I said – clusterf8x@.

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Australian national accounts – government spending saves nation from zero growth

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2025 – today (December 3, 2025), which shows that the Australian economy slowed to 0.4 per cent (from 0.6 per cent) in the September-quarter 2025. At the current annual growth rate, unemployment is predicted to rise further, given current labour force and productivity growth (see below). Household consumption expenditure growth weakened while public and private investment was stronger. The 0.4 point overall government contribution was the difference between zero growth and the positive result recorded.

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Talk of a Plaza Accord 2.0 should heed the lessons of Plaza Accord 1.0

Pressure is building from the US for a Plaza Accord 2.0 as part of the US President’s attempts to ‘improve’ the US trade situation. I use the term ‘improve’ cautiously because the US President seems think that making it more difficult and expensive for US consumers and businesses to access imports from abroad is a benefit to the same. While Japan is being discussed in this frame, the real US target is China. However, it is unlikely that the US will be able to bully China into agreeing to a similar deal that the US effectively forced on to Japan and other nations under the Plaza Accord 1.0 in 1985. Further, the Plaza Accord 1.0 was extremely disruptive – some say it caused the asset price bubble in Japan, which led to the secular stagnation, after the bubble burst. And, there is little evidence that it led to any significant long-term benefits for the US anyway.

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Panel of Japanese economists mired in erroneous mainstream constructions and logic

Last Friday, I met a journalist in Tokyo and we discussed among other things, the results of the latest Nikkei/JCER ‘Economics Panel’, which was conducted between November 13 and November 18, 2025. The panel involves “questionnaires” being “sent to approximately 50 economists to gather their evaluations of various economic policies. The aim is to promote deeper and more active discussions on economic policy by clearly conveying the consensus and differences of opinion among experts, along with presenting individual comments from each economist.” The results are quite striking and demonstrate that the Japanese academic economics profession is mired in destructive Groupthink that means the profession is failing to contribute in any effective and functional way to advancing the well-being of the Japanese population or providing insights into how the nation can meet its considerable and immediate challenges.

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Kyoto Report 2025 – 9

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions. Sadly, this is my last Kyoto Report for 2025. My time here has once again come to an end after 9 weeks and I am heading back home. I will return to my work here next September if all is well.

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Corporate welfare is rife in Japan’s banking sector

I am travelling a lot today so I am typing this up in between segments. I met a journalist in Tokyo on Friday and we discussed various matters relating to the current policy debate in Japan. In addition, we discussed the latest situation for the Japanese banking sector and the fact that they are recording record levels of net profits almost across the board, but particularly for the three mega banks, and it might surprise readers when they learn the source of those profits. It is actually quite scandalous but demonstrates the bind that the Bank of Japan now finds itself in – of its own doing, while being cheered on by mainstream economists, several of which are probably receiving lucrative consulting income from the very same banks.

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Japan GDP growth contracts as politicians fight it out over size of fiscal stimulus

I am travelling today to Tokyo and have little time to write here. But with the latest national accounts data coming out on Monday (November 17, 2025), the discussions within the government are about the size of the fiscal stimulus that will be initiated in the next fiscal round. This The Japan Times article (November 18, 2025) – Extra-big extra budget pushed by some Japanese lawmakers – provides some information. The new Prime Minister is proposing to limit the fiscal shift to an extra 17 trillion yen (about $US110 billion) but a small group within the ruling LDP want the package to be around 25 trillion yen. I think the stimulus should be around 50 trillion yen and there are economists in the financial markets who agree with me. More on that another day. But the current debate is being conducted within the context of the latest – National Accounts – for the September-quarter 2025, issued by the Cabinet Office (November 17, 2025). The economy grew by 1.1 per cent over the last 12 months (down from 2 per cent in the June-quarter). In the September-quarter, GDP shrank by 0.4 per cent, the first negative quarter since the March-quarter 2024. The need for stimulus is clear. The debate is over how much.

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