This category focuses largely on matters pertaining to Japan

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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Kyoto Report 2025 – 8

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.

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Kyoto Report 2025 – 7

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.

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Kyoto Report 2025 – 6

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.

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Japan – errant fiscal rule is sure to backfire

The Prime Minister’s Office of Japan has now released the transcript of the – Policy Speech by Prime Minister TAKAICHI Sanae to the 219th Session of the Diet (October 24, 2025). This was her first major speech after taking on the office of Prime Minister and allows us to see some detail beyond the rather general statements she had made previously about being supportive of fiscal expansion. The detail does not build much confidence.

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Japan challenges – is there really a labour shortage? – Part 6

This blog post continues my exploration of the available productive resources in Japan which would allow a nominal fiscal expansion to be accommodated without adding to the inflationary pressures. People consistently point to the low official unemployment rate as a proxy for a shortage of labour in Japan. It is good that the official unemployment is consistently low and that is a good thing. But the official rate might not be a very good indicator of the degree of labour market slack, especially as Japan has endured many years of low economic growth and falling real wages. A focus on underemployment probably provides a better guide to the availability of idle labour resources. That is what I consider in today’s instalment.

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