Japan: "We'd never buy foreign bonds (we might buy foreign bonds)"

Abe puts the squeeze on the BoJ.

Even Japan has limits to what it will do in a currency war. The country's finance minister, Taro Aso, has confirmed that the nation has no plans to buy foreign bonds through the Bank of Japan.

The denial is a slight walking-back of the words of the Prime Minister Shinzo Abe last night, who noted — without saying what he actually thought on the subject — that "there are views calling for foreign-bond purchases".

Abe had been discussing the recently revised inflation mandate for the Bank of Japan in parliament when opposition MPs asked him what the bank is actually planning to do to back up its target. Without confirming any particular policy route, Abe named a number of potential unconventional measures, saying that "I hope the BoJ will take effective policy steps that would contribute to overcoming deflation."

The BoJ has every motivation to fight deflation; in the same debate, Abe threatened it with a change in law, saying:

It would be necessary to proceed with revising the BOJ law if the central bank cannot produce results under its own mandate.

While Abe has, for the most part, been content to let the Bank pick its own methods so long as it results in reflation, Aso's comments this morning imply there are limits. Bloomberg's Mayumi Otsuma puts the talking-back in context:

Economy Minister Akira Amari told reporters today that Abe’s comments referred to buying foreign bonds as a general policy idea that is available to any country.

It seems likely that the skittishness of the Japanese cabinet is related to the G20's stand on currency manipulation, which was finally clarified after last week's mild confusion. The group is definitely (maybe) against currency manipulation. And while much of what Japan is doing is clearly aimed at affecting the Yen in international markets, it's also capable of being viewed as simple unconventional monetary policy aimed at having a domestic effect. Buying foreign bonds would render that charade a lot harder to pull off, and could lead to some awkward conversations in Moscow this weekend.

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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Leader: Trump and an age of disorder

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions.

The US presidency has not always been held by men of distinction and honour, but Donald Trump is by some distance its least qualified occupant. The leader of the world’s sole superpower has no record of political or military service and is ignorant of foreign affairs. Throughout his campaign, he repeatedly showed himself to be a racist, a misogynist, a braggart and a narcissist.

The naive hope that Mr Trump’s victory would herald a great moderation was dispelled by his conduct during the transition. He compared his country’s intelligence services to those of Nazi Germany and repeatedly denied Russian interference in the election. He derided Nato as “obsolete” and predicted the demise of the European Union. He reaffirmed his commitment to dismantling Obamacare and to overturning Roe v Wade. He doled out jobs to white nationalists, protectionists and family members. He denounced US citizens for demonstrating against him. Asked whether he regretted any part of his vulgar campaign, he replied: “No, I won.”

Of all his predilections, Mr Trump’s affection for Vladimir Putin is perhaps the most troubling. When the 2012 Republican presidential nominee, Mitt Romney, warned that Russia was the “number one geopolitical foe” of the US, he was mocked by Barack Obama. Yet his remark proved prescient. Rather than regarding Mr Putin as a foe, however, Mr Trump fetes him as a friend. The Russian president aims to use the US president’s goodwill to secure the removal of American sanctions, recognition of Russia’s annexation of Crimea and respect for the murderous reign of the Syrian president, Bashar al-Assad. He has a worryingly high chance of success.

Whether or not Mr Trump has personal motives for his fealty (as a lurid security dossier alleges), he and Mr Putin share a political outlook. Both men desire a world in which “strongmen” are free to abuse their citizens’ human rights without fear of external rebuke. Mr Trump’s refusal to commit to Nato’s principle of collective defence provides Mr Putin with every incentive to pursue his expansionist desires. The historic achievement of peace and stability in eastern Europe is in danger.

As he seeks reconciliation with Russia, Mr Trump is simultaneously pursuing conflict with China. He broke with precedent by speaking on the telephone with the Taiwanese president, Tsai Ing-wen, and used Twitter to berate the Chinese government. Rex Tillerson, Mr Trump’s secretary of state nominee, has threatened an American blockade of the South China Sea islands.

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions. The US constitution, with its separation of powers, was designed to restrain autocrats such as the new president. Yet, in addition to the White House, the Republicans also control Congress and two-thirds of governorships and state houses. Mr Trump’s first Supreme Court appointment will ensure a conservative judicial majority. The decline of established print titles and the growth of “fake news” weaken another source of accountability.

In these circumstances, there is a heightened responsibility on the US’s allies to challenge, rather than to indulge, Mr Trump. Angela Merkel’s warning that co-operation was conditional on his respect for liberal and democratic values was a model of the former. Michael Gove’s obsequious interview with Mr Trump was a dismal example of the latter.

Theresa May has rightly rebuked the president for his treatment of women and has toughened Britain’s stance against Russian revanchism. Yet, although the UK must maintain working relations with the US, she should not allow the prospect of a future trade deal to skew her attitude towards Mr Trump. Any agreement is years away and the president’s protectionist proclivities could yet thwart British hopes of a beneficial outcome.

The diplomatic and political conventions embodied by the “special relationship” have endured for more than seven decades. However, Mr Trump’s election may necessitate their demise. It was the belief that the UK must stand “shoulder to shoulder” with the US that led Tony Blair into the ruinous Iraq War. In this new age of disorder, Western leaders must avoid being willing accomplices to Mr Trump’s agenda. Intense scepticism, rather than sycophancy, should define their response.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era