Thread: Japan's Economy... Ouch!

Originally Posted by tsptalk

companies and households slashed spending following a tax hike.

How dare they, ungrateful people. Coming to a country near you!

there is no inflation. massive debt load does not matter as long as you can swing the interest service on the principal. taxes do not have any effect on consumption or capital investment. an unemployed and aging population does not affect gdp or growth. it's only 10%. rice and mud huts are cool, rustic. so are rocks and sticks.

click your ruby heels dorothy. click your heels.

Originally Posted by burrocrat

there is no inflation. massive debt load does not matter as long as you can swing the interest service on the principal. taxes do not have any effect on consumption or capital investment. an unemployed and aging population does not affect gdp or growth. it's only 10%. rice and mud huts are cool, rustic. so are rocks and sticks.

click your ruby heels dorothy. click your heels.

Don't forget about how much that "interest service" will go up when they start raising rates... only going to 0.5% will double that service cost. Can our GDP handle it? Doubt it.

Oh, and don't forget the 2% GDP "tax" that Cameron proposes on all NATO nations... woohoo, more spending

I didn't see in the article any reference to the economy's performance prior to the tax hike (tax hike occurred April 1st, and Japanese consumption tax is levied on everything - houses, groceries, medical services, etc.). I know that many households scurried to make "big" purchases prior to April 1st. Cars, electronics, new homes, vacations, what not. So, naturally one would expect a decline in consumerism after April 1st.

An interesting side note - prior to the tax hike, all items for sale had to be advertised by law with the consumption tax (then 5%) included. So, if a bakery was selling bread for ￥99 a piece, that's the price you'd pay at the register. After April 1st, the law changed so that prices can now be advertised without the tax included. So now at this particular bakery I mention, bread costs ￥111 a piece. AND when you pay, they tack on 8% at the register. So now my ￥99 bread is going to cost ￥120. That's quite a markup for a tax that only increased 3%. Needless to say, I eat mostly rice.

Originally Posted by Sensei

I didn't see in the article any reference to the economy's performance prior to the tax hike (tax hike occurred April 1st, and Japanese consumption tax is levied on everything - houses, groceries, medical services, etc.). I know that many households scurried to make "big" purchases prior to April 1st. Cars, electronics, new homes, vacations, what not. So, naturally one would expect a decline in consumerism after April 1st.

An interesting side note - prior to the tax hike, all items for sale had to be advertised by law with the consumption tax (then 5%) included. So, if a bakery was selling bread for ￥99 a piece, that's the price you'd pay at the register. After April 1st, the law changed so that prices can now be advertised without the tax included. So now at this particular bakery I mention, bread costs ￥111 a piece. AND when you pay, they tack on 8% at the register. So now my ￥99 bread is going to cost ￥120. That's quite a markup for a tax that only increased 3%. Needless to say, I eat mostly rice.

Sounds like a VAT, bad news.

Japan has big problems long term demographically. Time to start issuing work Visas to foreigners because there aren't enough young to foot the bill.