Japan launches massive stimulus package

Shinzo Abe: Bad guy done good?

The Japanese government has approved a massive emergency stimulus package, worth ¥10.3trn (£71.5bn), aimed at restoring growth in the long-stagnant economy.

The package will be used to fund infrastructure investment, disaster mitigation projects, subsidies for companies which invest heavily in research and development, and financial aid to small businesses. The government hopes to raise growth by 2 percentage points, as well as add over half a million jobs to the economy.

The prime minister, Shinzo Abe, also made clear again that he is planning to exercise far more direct control over Japanese monetary policy than is conventional. Before Abe was elected, he announced that the BoJ should embrace "unlimited easing" and cut interest rates below even the 0.1 per cent paid on deposits "to strengthen pressure to lend".

Today, Abe reiterated that pressure, telling a press conference:

We will put an end to this shrinking, and aim to build a stronger economy where earnings and incomes can grow. For that, the government must first take the initiative to create demand, and boost the entire economy.

Abe has no qualms with wild policy. Last week, he "nationalised" industrial stock in Japan, buying private infrastructure with public funds in order to force the pace of investment in the country.

It seems quite clear that Abe is prepared to use every possible channel available to him to push for a return to growth in Japan. The results have been positive so far; bond yields have stayed low, while the yen has finally dropped (which might be bad for the country's elderly, but is very good for its economy overall).

Paul Krugman argues that all of this success isn't exactly on purpose. It bears more hallmarks of Abe –  "a nationalist, a denier of World War II atrocities, a man with little obvious interest in economic policy" – doing exactly the opposite of what he's told to do based purely on his contempt for learned opinion:

It will be a bitter irony if a pretty bad guy, with all the wrong motives, ends up doing the right thing economically, while all the good guys fail because they’re too determined to be, well, good guys. But that’s what happened in the 1930s, too…

On the 22nd, the Bank of Japan will meet, and we'll see how much it listened to Abe. If it does follow his requests/demands for aggressive monetary policy, the country will solidify its reputation as one to watch in the immediate future.

Shinzo Abe. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Watch Ian Paisley Jr thank Martin McGuinness for partnership that "saved lives"

The son of Ian Paisley said he "humbly" thanked the man who was both his father's enemy, and then friend. 

Northern Irish politics started 2017 at a low point. The First Minister, the Democratic Unionist Arlene Foster, is embroiled in scandal - so much so that her deputy, Sinn Féin's Martin McGuinness, resigned. Then McGuinness confirmed speculation that he was suffering from a serious illness, and would be resigning from frontline politics altogether. 

But as Ian Paisley Jr, the son of the Democratic Unionist founder Ian Paisley and a DUP politician himself, made clear, it is still possible to rise above the fray.

Paisley Sr, a firebrand Protestant preacher, opposed the Good Friday Agreement, but subsequently worked in partnership with his old nemesis, McGuinness, who himself was a former member of the IRA. Amazingly, they got on so well they were nicknamed "The Chuckle Brothers". When Paisley Sr died, McGuinness wrote that he had "lost a friend".

Speaking after McGuinness announced his retirement, Paisley Jr wished him good health, and then continued: 

"The second thing I'm going to say is thank you. I think it's important that we actually do reflect on the fact we would not be where we are in Northern Ireland in terms of having stability, peace and the opportunity to rebuild our country, if it hadn't been for the work he did put in, especially with my father at the beginning of this long journey.

"And I'm going to acknowledge the fact perhaps if we got back to some of that foundation work of building a proper relationship and recognising what partnership actually means, then we can get out of the mess we're currently in."

Questioned on whether other unionists "dont really get it", Paisley Jr retorted that it was time to move on: "Can we please get over that. Everyone out there has got over it. We as the political leaders have to demonstrate by our actions, by our words, and by our talk that we're over that."

He said he was thanking McGuinness "humbly" in recognition of "the remarkable journey" he had been on. The partnership government had "not only saved lives, but has made lives of countless people in Northern Ireland better", he said. 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.