A fascinating Hiroko Tabuchi piece looks at Shinzo Abe’s previous stint as prime minister of Japan and argues that he’s determined this time to not get too bogged down in nationalistic foreign policy and focus instead on economic problems. So far it’s hard to avoid noticing that the election of a prime minister who’s promised monetary easing has sent Japan’s Nikkei index soaring.
And that’s all before he’s actually done anything. The key question at this point, really, is whether he’ll really drive forward and implement the kind of unlimited QE and aggressive inflation or nominal growth targeting that he hinted at during the campaign. The Japanese political system isn’t something we get a ton of clear reporting on here in the US, but intra-party factionalism or bureaucratic inertia often seem to stifle initiatives that are supported by top leaders (Americans, of course, will be aware that presidential initiatives are often killed in congress). But if he can get it done, Abe-nomics will not only be a boon to Japan they’ll be a boon to the whole wide world. In part that’s simply because the Japanese economy is still big enough that its health has an impact on the global situation. But even more importly it’s because success in pursuing monetary stimulus in Japan would help embolden authorities in the United States and the UK.