Wednesday, June 26, 2013

Podcast: All about Abenomics

Yesterday I did a very fun interview with Cardiff Garcia and Izabella Kaminska of the Financial Times, for the FT's Alphachat podcast.

The main themes were:

1. Abe, and BOJ governor Kuroda, really did surprise me with their bold monetary policy steps. But that doesn't mean the monetary stimulus of Abenomics is necessarily going to work, because A) no one really knows how or if QE really works to raise inflation, and B) there are still doubts about the willingness of the powerful and conservative Japanese Ministry of Finance to allow higher inflation in the future.

2. The BOJ is wary of capital flight, which would raise government borrowing costs. Japanese investors and policymakers may not understand or recognize the difference between interest rate rises from a recovering economy and interest rate rises from capital flight. This may make the BOJ reluctant to follow through on its promises of doing "whatever it takes" to cause inflation.

3. Structural change might help the Japanese economy a lot, but it would involve wrenching social change that nearly everyone in Japan is dreading (though many believe the changes are inevitable). So don't expect too much out of the "third arrow" of Abenomics.

Listen to the whole thing here!


  1. Any non-FT subscriber links?

    1. Weird...I am not a subscriber but I can listen to it just fine...

    2. Anonymous10:22 PM

      You can access FTAlphaville stuff without being a subscriber, but you must be registered on the site, which is easy to do and worth the FTAlphaville content.

    3. Right you are - thanks! Noah, good discussion. The capital flight angle was not one I had given much thought to (I'm also a Japan n00b so I appreciated that you went over some of the "basics" that many discussions seem to take as a given).

  2. David Keohane FT3:41 AM

    I may be wrong but think that the FT's podcast page is totally open:

  3. Anonymous2:14 AM

    Direct Link to the podcast for those who don't want to register.

  4. Anonymous4:20 PM

    Japan already has had 20 years of capital flight. What a terrible post. At least for now, Abe has been successfull. The global rise in interest rates was capital flight back to Japan.