Tag Archives: g20

Noda Makes Consumption Tax Hike Pledge At G-20 Summit

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The world’s poster child for losing decades looks to stay a step ahead:

(Nikkei)–Prime Minister Yoshihiko Noda vowed Thursday to gradually raise the nation’s consumption tax to 10% by mid the 2010s during a summit meeting of the Group of 20 leading economies in Cannes, France.

The announcement at the summit has effectively made the tax hike an international pledge, and is expected to be included in an action program due out Friday.

Noda stressed the importance of rebuilding debt-ridden Japanese finances and told G-20 leaders that fiscal consolidation is a must “for Japan to be put back on a sound economic growth path, regardless of the debt crisis in the euro zone.”

He also spoke to reporters that a Diet dissolution should be carried out before implementing the tax hike. “If we go to the people in a general election (to seek a mandate on the consumption tax hike), we should do so after passing related bills but before implementing them,” he said.

As to Japan’s participation in the Trans-Pacific Partnership free trade pact, Noda told reporters he will accelerate efforts to iron out differences within the Democratic Party of Japan, which he leads. “We have to close ranks and shouldn’t be split,” he said.

Noda showed his flexibility in making concessions to a controversial redemption period of reconstruction bonds aimed at funding rebuilding efforts of the March 11 disaster, in hopes of enlisting support from the Liberal Democratic Party and New Komeito, the main opposition parties.

“Our policy chief said that we envisage a 15-year period (for the redemption of reconstruction bonds), but there’s room for concessions,” he said.

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risk off Friday

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Looks like a big ‘risk off’ day coming up.

The authorities are embodying uncertainty at a time when it’s ‘their move’

Where things go is not about market forces, but about what politicians and their appointees do next.

The competence of the G20 is looking much like that of the FOMC, and it’s not a pretty sight.

We can do nothing but ‘wait and see.’

For example, will they or won’t the fund the euro members?
The mixed message is both no, and they will do what it takes to ensure solvency.
And taxpayers don’t want to pay for it, whatever that means.

And the same time the US authorities are being exposed as, to be kind, being on the sidelines.

President Obama has both nothing of substance to add to the debate, either in the euro zone or domestically.

The Fed itself said QE does nothing but modestly lower rates (Bernanke speech, Carpenter paper) which hopefully boosts asset prices which hopefully adds to aggregate demand. Hasn’t worked in Japan, (even with the net exports we also aspire to) but hopefully here. And skeptical markets that fear the Fed is engaged in ‘irresponsible money printing’ are coming around to the reality.

The sustainability commission has reported and recommended ways to reduce the deficit and ensure unemployment rises and our standard of living falls.

The theme continues- by fearing we are the next Greece, we are turning ourselves into the next Japan. Including burdening ourselves with an export driven economy.

So on an otherwise quiet post holiday Friday I look for a risk off rush to the sidelines, and a continuation of illiquidity in general.

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Claims/G20

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Factory orders rise in February

by Emily Kaiser

Apr 2 (Reuters) —The IMF was told its war chest will be boosted by $500 billion and it will receive another $250 billion in special drawing rights, the agency’s synthetic currency.

Multilateral development banks including the World Bank will be enabled to lend at least $100 billion more.

Thanks, IMF funding functions very much much like deficit spending.

Hearing talk of flat q2 GDP.

The great Mike Masters inventory liquidation that triggered the sudden negative growth ended late December.

The rising deficit spending and the new quarter seems to be bringing new buyers into equities and the rest of the credit structure.

The Obamaboom seems in progress- strong financial markets, rising energy costs, and painfully high unemployment.

Hardly the outcome they are shooting for.

Karim writes:

  • Initial claims up 12k to new high for the cycle (4wk avg moves from 650k to 657k)
  • Rise in continuing claims continues to astound-up another 161k this week to another all-time high-cumulative rise in past 4 weeks is 654k
  • May signify upside risk to consensus on unemployment rate tomorrow (consensus at 8.5% vs prior 8.1%)

Some early snippets out of G20:

  • Greater funding for IMF to be targeted at EM countries and trade finance has EM risk on fire in past 24hrs
  • Agreement that OECD will publish list of ‘tax havens’ and that Swiss will be on the black list has Chf quite a bit weaker
  • Russia proposal that IMF or G20 conduct a study on creating a new intl reserve currency generating headlines and some USD weakness; but IMF and OECE both state they see no change in USD status (1 interpretation that Russia went into meeting long Eur/Usd)

New orders received by U.S. factories rose in February, government data showed on Thursday, breaking a six-month streak of declines and bolstering hopes the economy may be beginning to crawl out of the depths of a recession.

The Commerce Department said factory orders rose 1.8 percent in February after a revised 3.5 percent drop in January, initially reported as a 1.9 percent decline.

Economists polled by Reuters had expected a February increase of 1.5 percent.

Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence, jumped 7.1 percent after a steep 12.3 percent drop in January.

Orders for durable goods rose 3.5 percent, revised from the previously published 3.4 percent increase, while orders for nondurable goods edged up 0.3 percent.

Inventories decreased 1.2 percent, down for a sixth consecutive month. That was the longest streak since March 2003-January 2004.


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