Abenomics and asked what I thought of it. I replied by forwarding a video posted on After the West that covers one of the major problems with Abenomics. Abenomics is essentially a three pronged approach towards jump starting Japans stagnant economy.
The first prong, massive government investment, is nothing new for the Japanese. Every Prime Minister of Japan since the early to mid 1990s as tried government investment to little effect. There is little reason to think that Abe's economic stimulus is faring any better.
The second prong, economic deregulation, is the only one that will actually benefit the Japanese economy in the long term. While we, at least publicly, worry about the growing incestuous relationship between governments and corporations; corporate cronyism is a matter of course for the Japanese. Though deregulation doesn't directly address corporate cronyism, it helps remove barriers that corporations use to keep more efficient companies from taking market share. If Japan wishes to compete in an increasingly competitive world freer markets are a must.
The last prong of Abenomis is probably most responsible for the 'boom' that Japan is currently experiencing, however, it is the one most likely to wreck utter destruction on the Japanese in the long term. The government of Abe is flushing the Japanese economy with crash in efforts to raise the inflation rate, and more importantly, decrease the value of the Japanese Yen.
Japan is very tied into the global economy. They export over $ 788 billion worth of goods and import over $ 808 billion of goods, giving it a TAPG ratio of 98%. Japan's trade deficit is a rather recent development and even during the height of the lost decade Japan maintained positive trade balances. But Japan is utterly dependent on outside sources for energy, over 20% of their imports is energy related, and doesn't possess a lot of internal recourse like the United States. Japan has to purchase foreign energy sources and the rise of energy prices, coupled with the shuttering of nuclear power plants, only exacerbates their situation. In an environment with a weakening Dollar and Euro, they see currency depreciation as one of the only ways to compete currently.
At the moment Abenomics appears to be working but a drug addict suffering from withdrawal will also appear to benefit from a little bit of the drug they were addicted too to help ease the symptoms. It's a terribly short term solution for a very long term problem; the kind of solution that politicians love. Ultimately Abenomics will only hasten the inevitable default that will absolutely happen to the Japanese. My advice to the Japanese is to enjoy the ride before the roller coaster comes of the rails. Japan is beyond saving at this point. Saikō no kōun