Thursday, April 09, 2009

DOJ Has “New” Economic Package—Does the DPJ Read My Blog or What?

I complained before that the DPJ was essentially ceding the ground to the LDP on the economy. Maybe they’re reading my blog because, yesterday, the DPJ came up with a two-year plan with 21 trillion yen in freshwater—that is, additional fiscal expenditures.

Okay, it’s still mostly taken from the DPJ manifesto 2.0, but I do like the idea that 14.1 trillion goes to households as cash. I’ve become increasingly convinced that constructing stuff that has no assurance of raising productivity while waiting for global consumption patterns to recoalesce and reach a new equilibrium is a huge risk. Never give people gifts that they can’t eat or give away—unless you really, really love them. It’s the same thing.

I don’t think the media is going to really pick up on it though. And I’ll be pleasantly surprised to see the DPJ really get behind it, though I would bet against it. I’m half convinced that Ozawa is totally indifferent to it all. That’s another reason that the DPJ won’t look good going into the Lower House election with Ozawa.

Incidentally, by that same definition, little if any of the new money that IMF has available for lending to illiquid emerging market economy governments is freshwater. Which reminds me that the Japanese media overemphasize the value of freshwater and seriously misunderestimate the value (and forgets the cost) of the official lending facilities. Frankly, I think that they are stupid.

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