In 1949, Japan Started on the Road to Prosperity by Eliminating Sales Tax! Let's Dream a Dream for Japan Again!!

Besides eliminating sales tax, Japan also pegged the yen to gold and lowered income tax rates. I've written over and over that increasing sales tax is not the answer to Japan's problems. Tax increases without cuts won't help us. We need to cut spending and cut taxes and return the yen to a stable currency.

Akihabara in 1945 and 2001

Need proof? It worked in Japan after the war to create the greatest economic recovery the world has ever seen!


Forbes Magazine writes in an article from Feb. 3, 2012: Let's Dream a Dream for Greece:

Japan’s recovery started with a dream, among politicians and business leaders. In their imagination, Japan would rise from the ashes – actual, real-life ashes – and become again a great and prosperous nation.

This clear vision quickly led to a plan of action. The situation in 1949, of hyperinflation and crushing taxes, was plainly not in accordance with the goal of a prosperous Japan, so the leaders set about fixing the problem.

They had virtually no resources to do so. The economy consisted mostly of black-market subsistence, tax revenues were negligible, and issuing debt was impossible. Since tax revenue was far less than the government’s needs, the government subsisted mostly by printing money, with the usual consequences.

One of the first things they did was to make government debt issuance illegal. It remained so until 1965. Then they refused any more economic aid.

In 1949, they pegged the yen to gold, immediately ending the hyperinflation.

Then, they eliminated the consumption tax (national sales tax).

Japanese gold coins from the 1850s

In 1950, the income tax schedule was revised. The top rate fell to 55% from 85%. But more importantly, the income at which that rate (and others) applied was raised dramatically.  This rate originally applied to income of 500,000 yen. By 1957, the 55% tax bracket applied to income of 10 million yen, twenty times higher.

In 1951, interest and dividend income were taxed at a separate, lower rate. In 1953, capital gains were exempted from taxation completely. Interest income was taxed at only 10 percent. Businesses received a truckload of favorable treatments, in the form of accelerated depreciation, deductions, and exemptions. In 1955, interest income was made tax-free.

Throughout the 1950s and 1960s, the government had a specific goal: to keep tax revenues, and the size of the government, below 20% of GDP. They reasoned that this would be best for the brisk growth of the private sector. It worked.

The Japanese people, as we know, became wealthy in those years. Wealthy people are able to pay more in taxes than poor people. Between 1950 and 1970, tax revenues of the central government increased by sixteen times, all in non-inflationary gold-linked yen.

As the country became wealthier, and GDP grew, then the services that the government could provide on a budget of 20% of GDP grew as well. Welfare and national healthcare plans were added. Dirt roads were paved. Sewage systems were built. There was no conflict between government services and the private sector. Both became prosperous together.

This story is well known to those who follow such things.

Read more here.

Thanks to Aaron Egon Moser

Japanese Prime Minister Says He Can Get Sales Tax Doubled - I Predict He Will Be Out of a Job by September 2012

This just came out on Bloomberg. The current Japanese prime minister Yoshihiko Noda says he can get a consensus and coalition on doubling the sales tax rate.

Bloomberg reports in Noda Says Deal Possible With Opposition to Double Consumption Tax:

Japanese Prime Minister Yoshihiko Noda said he thinks he can reach a deal with the opposition to double the 5 percent consumption tax in order to shore up the country’s social security system.

“I believe we can come to an understanding,” Noda told journalists from overseas media organizations today in Tokyo. “I sense that our debate is beginning to jibe.”

This guy is a goner

The combination of an aging society and a declining birthrate has put Japan in an “unprecedented situation” as the government seeks to rein in soaring welfare costs, Noda said. All political parties understand the urgency and must work together as “the question is how to secure stable financing for a sustainable social security system.”

Ha! Ha! Ha! That just shows how delusional this Noda guy is... He has to say stuff like this to the foreign press. Back at home, to the Japanese press, he'd get laughed at. 

Sadakazu Tanigaki, head of the main opposition Liberal Democratic Party, yesterday said on NHK Television that “it would be best” for Noda to seek a new mandate before submitting his tax legislation. He denied media reports that he and Noda met on Feb. 25 to discuss the situation.

Translation: The LDP doesn't want to seem responsible for raising taxes or not being able to fund social security, so they know that if they can force an election in summer, Noda will be out of office and they can keep kicking the can down the road - in the same way as we they been doing for twenty years.

The LDP has it right too. Noda hasn't even been prime minister for a year yet his popularity ratings are already weak enough that he could never stand a chance of winning any kind of election at all. Twenty seven percent approval rating is disastrous. Especially if you stand on an election platform of raising people's taxes!

Why don't they take a page out of Ron Paul's playbook? Cut spending first before even talking about raising taxes and maybe you'll get public sympathy.

Forty percent of voters oppose Noda’s tax plan, compared with 46 percent who support it, according to an Asahi newspaper poll published Feb. 14. Noda’s approval rating fell to 27 percent from 29 percent the previous month. The paper provided no margin of error for its survey of 1,741 people on Feb. 11-12.

Former DPJ leader Ichiro Ozawa, who is on trial for violating campaign financing laws, today on TV Tokyo reiterated his opposition to Noda’s tax plan. Nine lawmakers left the ruling party after it approved the proposal to raise the consumption tax to 8 percent in April 2014 and 10 percent in October 2015.

Really, what's the point of this nonsense article? There won't be any sales tax increase under this prime minister. He will be out of office if he really tries to do so. The crisis amongst the public and the political circles hasn't come to a boiling point (because people don't understand how exponential growth of our debts and interest rates on those debts are going to affect us). And, until this really hits home, people will not tolerate a sales tax increase.

We're way past that anyway. Even with a tax increase, if it is not coupled with a massive decrease in government spending, it will not matter because our debts will continue to accumulate along with the interest on those debts. Past history has shown that tax increases will not help as the government will deficit spend any increase in revenues it gets. When Noboru Takeshita was prime minister and instituted sales tax in 1988, he claimed that it would end our debt problem. It didn't. It couldn't without a cut in spending. After years of borrowing, we are already well past double the GDP in debt. We need to begin paying down that debt before any talk of a sales tax increase will even matter. That means we must massively cut spending right now. 

This is basic mathematics, folks. 

We need to cut spending, including interest on our debt - as well as paying down that debt to under what is received in revenue - as well as having tax increases to fix the problem we are in. I am against any and all tax increases especially if they aren't coupled with massive cuts in spending - and that's not cuts in future proposed spending, that's cuts in today's current budget.

It's simple. If you get five, you cannot spend seven. Once you owe fourteen, even if you start getting six, you still cannot spend seven. You will have to lower your spending to under all income in order to start paying back past debt and interest or you will never get out of the hole. 

Where to cut? Well. I'm sure we can start with cutting government waste and ridiculous spending on prevention of victimless crimes like prostitution, gambling, drugs, and ridiculous police raids on establishments that have waitresses sitting at tables with customers or arresting owners because people are drinking and dancing at restaurants on Saturday nights!   

Anyway, Noda will be gone by September because he doesn't understand these basic concepts and can't do simple first grade math... 

The best thing that could happen is a massive across the board cut in government services, but, in a country that changes prime ministers every year and has elections every summer, that isn't going to happen as politicians won't cut services because they want to give away our money so that people vote for them.

Our current system is ruined and there is no way to fix it. We are sliding down a steep slope into insolvency. 

The good news is that we won't have a sales tax increase this year. The bad news is that none of these other Japanese politicians are able to grasp first grade mathematics either.... Nor will our next prime minister.

Japanese Gov't Plans to Double Sales Tax - Will it Matter? To You & Me, Yes! To the National Debt? No!

Once again the clamoring for a raise in sales tax is in the Japanese news recently. It conveniently coincides with the news about the emperor of Japan having to enter the hospital for heart surgery.


Actually, before you jump to conclusions, I think this guy is OK. He's never invaded China or Asia, or even Ezo, so, as Japanese emperors go, he seems like a cool dude. 

Of course, in matter of national importance, in Japan, the medical condition of a "well known and loved man" who is nearly 80-years-old will be the top page news in all publications; the doubling of our sales tax that affects everyone slides in second.


I suppose though, that might be a tad bit better than the USA, a country with very poor press freedom that ranks 47th in that category along side beacons of liberty nations such as Argentina, Taiwan and Romania whereby regular important news is completely dropped down the memory hole like a day's work by one Winston Smith.


Seems to me that something very important happened to the American body-politic about the time Whitney Houston died... I believe it had to do with a scandalous and corrupt voting process in a country that has fought and spilled blood to bring democracy to many middle eastern nations... Nevertheless, the main stream media ignored this corruption and, instead, chose to focus all its attention on poor Whitney and how much we all loved her, owned all her albums, and how everyone's life was changed forever by her seven #1 hit songs between 1985 ~ 1987.


But I digress... 


Google News reports on how Japan's current prime minister and cabinet (soon to be ex-prime minister and cabinet) are so mathematically challenged that they are actually dumb enough to propose a sales tax increase:

TOKYO — Japan's cabinet on Friday approved a plan to double sales taxes as part of the government's move to rein in public debt as the rapidly ageing nation faces rising social welfare costs.

If agreed by parliament, the package of reforms will see consumption tax rise to 8.0 percent in April 2014 and to 10 percent in October 2015 from the current 5.0 percent.

Finance Minister Jun Azumi told reporters that the government planned to submit related bills to parliament in March.

But the legislation is expected to face a rocky road as opposition parties, as well as some lawmakers in the ruling Democratic Party of Japan, are against it.

The opposition bloc controls the upper house of parliament.

Prime Minister Yoshihiko Noda has warned the future of the world's third-largest economy depends on reversing the rising public debt, arguing Japan has "no time to spare" in reducing its fiscal burden.

In an online message after the decision Friday, Noda noted Japan's social security costs would increase by one trillion yen ($12.6 billion) every year as the population gets older.

"If you pile up one trillion yen in 10,000-yen bills, it reaches the height of 10,000 metres, which is taller than Mount Everest," he said.


Laughable, really. This is the intelligence level of these people. That someone has pointed out that the bills of the national debt, if stacked up, will be "taller than Mount Everest"??? That is their motivation to action? Bwa! Ha! Ha! That's just hilarious, folks. 

Left: OK. Right Dame desu.

Have a laugh on that one. Wow! Mount Everest!? What!? Can't have that! What about our samurai spirit? This is Japan! We are Nipponjin! We can't have our debt looking like a foreign mountain! It's got to look like Mount Fuji or nothing at all!


In Japan, we have our own rock stars, and we have our own dolts and political calamities. The current group of mathematically challenged fools want to raise the sales tax to 8% and then to 10% within the next 3 years? Seriously, folks. It doesn't get better than this. 


See? I told you. The fools who ostensibly "run" this country are unable to complete simple 1st grade mathematics. They are incapable of recognizing a basic rule of fundamental first grade math.


Let me explain two very simple ideas: 


1) First: A Fundamental Rule of Math. Let me make this easy so that even a politician can understand: Say, you have five marbles in a can. Can you take out six marbles from that can? No. You cannot. Why? Because there are only five marbles. 


Meaning: The government can raise sales taxes for ever and ever but, if they don't cut spending to less than revenue, they will never get out of the hole. Spending must be kept in line with revenue. It's the same for you and me: If you have debt, then your spending must take into account interest payments on that debt. Your total spending must be under your total revenue.


2) Since most people's incomes do not rise with expenses, then an increase in taxes will cause a decrease in spending. Meaning, I have a dollar. If I use that dollar to buy food, I buy a dollar's worth of food. If you tax me 20% then I can only spend 80 some cents on food as I have to pay tax. The increase in tax will correspond with an equal decrease in spending. 


People have short memories so they don't remember that when the 3% sales tax was started, the government then said that it would fix our debt problem. They said the same thing when it was raised to 5%.


But, alas, the sales tax increases didn't help. Why because spending kept speeding along. 


My good friend, Marc Sheffner who runs the Accurate Maps blog has an interesting post on Japan's current debt crunch. Marc shows us that Japan's debt has now surpassed 500% of GDP. He writes:


"If you're holding a hot beverage, you might want to sit down before looking at this. You might need a stiff beverage afterwards. (See bottom of the post for US/UK total debt horror story, but after seeing the Japan one, hey! That's nothing!)"

Thanks Marc! 


But once again, though, I think Marc over-reacts. I'm thinking of running for Japanese political office. I can be just as mathematically challenged as these clowns we have in office now. In fact, I can do better! 


Here's my platform and my message:

Citizens of Japan! Worry not! It’s all under control. Just as soon as you elect me to prime minister I will fix the budget by the tried and true methods of the great Japanese prime ministers who have come before me! I promise to pay everyone and all Japanese government obligations! To do so, I plan on raising our sales tax to 10% in 2015… Then 20% in 2016... Then 25% in 2018… Then 40% in 2020… Then 60% in 2025… Then 80% in 2027… 90% in 2030… Then 100% in 2032… Then 115% in 2035… Then 125% in 2037… Then 135% in 2040. Then 146% in 2042…Then 160% in 2045... Then 185% in 2047… 220% in 2050… 245% in 2052... 270% in 2055....And so on…. Well, you get the picture. Everything’s under control. Vote for me and the New Party Party! Don’t worry!…. Kampai!

MY PARTY THEME SONG:

MY PARTY PLATFORM POSTER:

Remember these good old days? Well, neither do I. 

(But, ♫ Yo-ho, yo-ho, it's a ladies life for me!♫ )

Will Amazon in USA Crash? How about Amazon in Japan?

UPDATE BELOW!

Recently I have been hearing lots of news from industry insiders that say that Amazon in Japan is on shaky ground and that their share prices in Japan are way over valued when compared to their profit / loss spreadsheet.

Well, I'm not exactly sure about that (not nearly as sure about Amazon as how sure I am that Yahoo Japan is royally messed up) but I do know that Amazon in the USA is not all smooth sailing. One big reason Amazon in the states is in bad shape is because they operate on such a very thin profit margin. This thin margin does not allow for too many mistakes. That's all well and good but there's another huge problem for them and that is sales tax.


In the United States, sales tax is decided by states. Until recently, Amazon has skated around the sales tax problem but, as government budgets get tighter and tighter many states are clamping down on Amazon.


Until recently, if hit with the threat of a tax bill, Amazon would just pull up its roots and close all the businesses operating from that particular state, but now, more and more states are putting the foot to the pedal and demanding payment. How much longer can Amazon keep running away?


Mish Shedlock recently ran a story about this very subject:

Amazon May Cut Ties to California Over Tax Issues; Texas Distribution Site Closed Over Similar Issues Last Month; Litigation Issues Move to Forefront

Cash strapped states are furious with Amazon.Com over sales tax collections. Several states passed laws or have sent Amazon bills. Amazon's response in every case so far is to leave the state.

Online retail giant Amazon.com will close its suburban Dallas distribution center amid a dispute with the state over millions in uncollected state sales taxes, The Associated Press reported Thursday.

The AP obtained an e-mail Thursday sent to Amazon employees by Dave Clark, the company's vice president of operations.

Clark wrote that the center in Irving will close April 12 because of the state's "unfavorable regulatory climate."

Last year the Texas comptroller's office sent Amazon a demand for $269 million in uncollected sales taxes, plus penalties and interest, from 2005 through 2009.

The problem with these Sales Taxes though, is not as simple as it seems on the surface. A lot of this problem is not because of locations of Amazon offices or distribution centers; a lot has to do with locations of Amazon affliliates.  For example, even if Amazon doesn't have a distribution center or offices in, say, California, if an affiliate recommends a book on a blog like this with an Amazon link to buy that book, and that affiliate is located in California, then you can see where the problem begins. The state of California considers that a sale transacted in California.

That's where the trouble starts.

Amazon has had the same problems with North Carolina, Hawaii and Rhode Island. With state governments finding it harder and harder to fill their coiffures and pay their bills, it's only a matter or time before more and more states demand that Amazon start paying the bills. 

Paying those bills will probably kill Amazon as many of them will be past due for delinquent sales tax revenues and the amounts are in the hundreds of millions of dollars. 

The Market Ticker reports in "The Upcoming Crash of Apple and Amazon":

Amazon will also blow up; it shares Netflix's former screwball P/E (currently 101.)

And when both go, and they will, the Nasdaq will collapse since these two stocks are an outrageously disproportionate piece of the index.

Why do I put this forward?

Let's deal with Amazon first, since it's the simpler case.  Amazon's primary "lever" is the ability to play around the edge of the sales tax system.  This gives it an instant 6% (on average) price advantage over everyone else, more than enough to offset the shipping costs (which you pay in any event; whether shipped directly to you or to a retail store, you still pay for it in the product price somehow.)

But that sales tax loophole is going to close.  Over the next few years states will find a way, as the revenue shaft is getting out of hand for them. 

Now here's the problem: Amazon has a 2.58% (ttm) profit margin and a 3.14% operating margin.  This is less than the benefit they get from evading the state sales tax system.

In short, this is a firm that only exists because of its ability to evade that tax structure.  When, not if, that ends the company is a literal zero.

That sounds really bad for Amazon in the USA. Now, the question for those of us in Japan who love Amazon.jp; will Amazon Japan survive? Well, Amazon Japan has a different set of problems than Amazon in the USA does. In the USA, sales tax is decided by different states. In Japan, sales tax is uniform nationwide and charged by the central government.

Amazon Japan has problems with the many competitors in Japan. At this time, some items on Amazon are cheaper than competitors and others are not. In my opinion, Amazon's best advantage is free shipping.

But with sales declining across the board and talk of a doubling in sales tax in Japan in the very near future, Amazon Japan's future looks to be an interesting ride.

UPDATE! A Japanese user sends in a very interesting piece on Amazon Japan avoiding paying sales tax:


「僕がAmazonを使わなくなった理由」"Why I just can't use Amazon anymore"　http://site-ichijo.net/blog/archives/date/2010/1011-231855.php


The article is in Japanese but you can get a simple Google translation here: http://translate.google.com/?hl=en&tab=mT

Man Dies Smoking "Legal Herb"? Japan's Newest Drug Craze and More Unnecessary Drug Laws

Interestingly enough, just after I finished my series on drug rehabilitation in Japan, the news is out that a young man was smoking 脱法ハーブ (Dappo herb) "legal herb" and died in his apartment in Nagoya. It also seems that there is some confusion as to whether or not this Dappo Herb is legal or not. Shop owners have been circumventing the law by selling the herbs as "incense." It seems that if the shop owners tell the customers that they should smoke the herb, then that would be breaking the law.


This is confusing as, with, say Marijuana, Japanese law is specific; smoking marijuana is not illegal in Japan. Possession of marijuana is illegal. Possession precedes use. Makes sense. So, then why isn't possession of these laced herbs not illegal? It is just more on the madness of these laws... But more on that later.

This news has come to the forefront last night and today as, day before yesterday, a young man in Nagoya was alleged to have been smoking the Dappo Herb and then he died. It is not yet sure the reasons for his death but police suspect it has something to do with an overdose concerning Dappo Herb.


Here is a news story about the incident:

Quick explanation & translation:  

The video talks about a 24-year-old guy named Miura, a restaurant employee, who was smoking this Dappo Herb with a friend and died on February 6th, 2012. The friend told police that they were smoking when Miura grew silent. Soon after, his friend checked him and Miura's body was cold. The police said they found the Dappo Herb in Muira's pocket along with a pipe. Many shops are selling Dappo Herb as "legal herbs" but this is not true. The police say they will start enforcing the law in a more vigorous manner.

The rise in popularity of Dappo Herb has gone from two shops selling it in Tokyo in 2009 to at least 89 this year. 

Japan Times reports:

The Tokyo Metropolitan Government identified two shops selling such products in fiscal 2009. As of last Friday, 89 such shops were in existence, many of them in Shinjuku and Shibuya, areas popular with young people.

"Even if (herbs) do not include chemicals designated (as illegal) by law, you can't say they are safe. (Inhaling them) is like conducting a human experiment with your own body," said Masahiko Funada, who heads a team researching addictive drugs at the National Center of Neurology and Psychiatry in Tokyo.

The Health, Labor and Welfare Ministry has been locked in a race with dealers as it keeps adding new stimulants to its list of illegal drugs while dealers keep marketing new products, including new chemicals they say are not covered by drug regulations. 

Well, that's the news; and now the commentary: 

That last paragraph of this quote from the Japan Times should demonstrate to anyone the futility of these sorts of laws prohibiting victimless crimes. There will always be new chemicals coming up that are outside the law. Will we keep expanding the laws forever and ever? We need less government in our lives, not more. It doesn't matter whether it is gambling, prostitution, or drug use, victimless crimes should be decriminalized. 


It is true that this guy died in Nagoya but there is no proof that Dappo Herb caused his death. If he is stupid enough to be smoking some sort of chemical concoction that he doesn't even know what it is, then let him. There is no way to outlaw stupidity.

The government has no business passing laws on what people wish to put into their bodies. If people are stupid enough to want to huff airplane fuel, drive without a seat belt, drink until they kill themselves, or eat junk food all the time, will we pass laws making that illegal too? (Look at the idiocy in England whereby teapots must be labeled, "Sugar leads to diabetics." (sic))

This comes down to private property rights. The poor guy who died, as with you or me, are the owners of our own bodies. There is no one who has the right to tell us what we can and cannot consume. Guidelines are welcomed, but these draconian laws are a waste of taxpayers money.

Some will say that decriminalizing, say, heroin or cocaine will cause a boom in its use. That's total nonsense. Five years after decriminalizing many of these drugs, Portugal enjoyed seeing their use cut in half as reported by Forbes magazine. But you don't need to read Forbes to realize that decriminalizing drugs would not lead to a boom in their use... If heroin were decriminalized tomorrow, would you go out and start doing it; your friends or family? I didn't think so.

Like I said, we need less government in our lives, not more. The expansion of laws and these sorts of actions only serve to increase the size of government and the tax burden on the average Japanese citizen. The politicians want to increase our sales tax to 10% - even, some say, 25%! but what they fail to realize is that they can raise the taxes forever and it won't matter.

It won't matter because, no matter how mathematically challenged the Japanese government is, you cannot forever continue to spend more than you take in. That should be the lesson learned over these last 20 years, going on 30, but it's not. 

We need to shrink the size of government and government duties and with it, our tax burden. A great place to start is the ridiculous policing of victimless crimes. 

A quick and easy way to do that would be to decriminalize victimless crimes like prostitution, gambling and smoking of recreational drugs. We've regulated and decriminalized one of the most dangerous, addictive and deadly drugs known to man; alcohol, and that seems to be working out okay.

Cutting down on the number of laws on the books will only serve to cut costs. We should decrease, not increase the number of laws governing the public.

Japan's Crisis Has Arrived? Japan Has First Trade Deficit in 32 Years!

The floodgates are creaking. If Japan needs foreign loans to float the government debt, the country is sunk. The other option is to destroy the value of the yen.

Will the Japanese public stand hyperinflation? If interest rates go to just 3% they would consume ALL of Japan's tax revenue. Even doubling the Sales Tax won't help.


Mish Shedlock reports in Japan Faces Moment of Truth:

Japan is in deep serious trouble the moment it enters a sustainable period of negative or neutral current account balances. If Japan becomes dependent on foreigners to finance rollovers on its debt either the Yen sinks or interest rates rise. Interest rates at a mere 3% would currently consume all of Japan's tax revenue.

Bloomberg reported; “Japan’s government said it will probably miss its goal of balancing the budget by 2020 even with its proposed doubling of the sales tax, underscoring the scale of the nation’s fiscal challenges.

The primary budget deficit, which excludes the cost of servicing debt, will be the equivalent of 3.1 percent of gross domestic product for the year through March 2021, the Cabinet Office said in Tokyo today. Hours after the release, Prime Minister Yoshihiko Noda reiterated his call for opposition lawmakers to engage in talks on boosting the sales levy.

‘To balance the budget, the rate needs to rise further.’”

What did I tell you the last time I wrote against an increase in Sales Tax? No matter how much the taxes go up, the government will always spend what it takes and, no matter how much it is raised, it will never be enough. History shows us that! When the first Sales Tax came in at 3% in the early 1980s they said that was going to fix the budget problems. Guess what? Surprise! It didn't.


Why didn't it? Because they spent the money!

The article above really goes into how stupid and into the outer limits of insanity the current government of Japan is by stating that there are some who think Japan should have a 25% Sales Tax.

Like I predicted, this prime minister, Noda something or other (no need to remember his name, he is a goner) will be gone this summer. Bank on it.

Instead of raising taxes, how about cutting spending?

He Wants to Double Our Sales Taxes!? Japanese Prime Minister Noda Has Got To Go!

That's it. He did it. Japanese prime minister Yoshihiko Noda has got to go. He's finished his political career by stating that Japan must fix her debt problem by doubling the Sales Tax by 2015. He's finished his political future by saying that. 


And he did it on a nationally televised TV program. What a twit! 

According to a survey: (whose results I don't believe for a second) 57% of the public oppose raising Sales Tax (trust that there's no one in their right mind would would support a doubling of their taxes - so the real numbers are much higher) and Noda's cabinet's support has dropped to 29%.


Since Noda became prime minister, he had been staying under the radar pretty much since the last guy, can't even remember his name now, you remember? The guy who was prime minister during the earthquake and after the Fukushima disaster?... His wife hated him and everything?...

Ohmura Kon!... Usually can't remember this guy's name either...

Oh, no. Now, I've done it to myself. I can't remember. The Japanese prime ministers keep changing every two weeks so I can't remember their names. What was it? Wait a second. I'll ask my wife...


... a moment later...


No good. She doesn't remember either. I know! I'll look it up! Kan! That's it! Naoto Kan! What a loser.


Now, we have a guy named Yoshihiko Noda and I'l bet you a donut most of you don't know what he looks like.

Japanese prime minister Yoshihiko Noda. Remember the face, he'll be gone by Autumn.

Anyway. Pardon me. Excuse the silly levity. I think it is needed at this time. Why? Because this idiot Noda has gone on a TV show on TV Tokyo channel 7 and actually stated in public that he wants to double our Sales Taxes! No kidding.


For even thinking that, he's got to go.

Bloomberg Businessweek reports:

Prime Minister Yoshihiko Noda said containing Japan’s public debt load, the world’s largest, is critical after Standard & Poor’s downgraded credit ratings on France, Austria and seven other European nations.

Europe’s fiscal situation “isn’t a house burning on the other side of the river,” Noda said on TV Tokyo Holdings Corp.’s program on Jan. 14. “We must have a great sense of crisis.”

Noda reshuffled his cabinet last week, aiming to win support for doubling Japan’s 5 percent national sales tax by 2015 to trim the soaring debt. S&P said in November Noda’s administration hadn’t made progress in tackling the public debt burden, an indication the credit-rating company may be preparing to lower the nation’s sovereign grade.

Japan’s government, which has enjoyed borrowing costs that are around 1 percent, wouldn’t be able to manage its finances if bond yields surged to 3 percent, Noda said last week. The country risks seeing a spike in government bond yields unless it controls a debt load set to approach 230 percent of gross domestic product in 2013, the Organization for Economic Cooperation and Development said on Nov. 28.

Seriously, guys like Noda are just plain dumb. 


Why, oh why, don't any of these Japanese politicians ever come up with a new idea for fixing the debt problem? Here's a novel solution: How about CUTTING GOVERNMENT SPENDING!!!

These political wonks understand nothing about economics. May I recommend the classic book on economics, the one that, if you read it, you'll understand more about economics than 97% of all these politicians and so-called "university trained economists" and that book is Henry Hazlitt's Economics in One Lesson?


Here's the deal, Noda, since you are too busy to bother to learn anything about how the economy works, let me explain it to you: As I said, the government cannot  continually keep taking money from the productive part of society and giving it to the nonproductive part of society. If you take money from Peter to give to Paul - or, in this case, from Taro to give to Takayuki - that distorts the market and allocates money into parts of the economy that wouldn't work if it weren't for these misallocations. 


One day, someone has to pay for taking the money from Taro to give to Takayuki - like today, that's why we're in the financial mess we're in. If you increase taxes, the slow economy will get slower, and people's spending will drop in direct relation to the increase in taxes. It's a proven fact: If you raise taxes by 5% the corresponding decreasing in public spending will be 5%. Why? Because people have a certain set budget to spend on household goods. Just because you raise taxes by 5% doesn't mean mom is going to be able to pay an extra 5% for groceries. No! The amount of groceries she buys will go down by 5% in order to cover the extra taxes. It's very simple math.


Asahi News reports:

According to calculations made by Dai-ichi Life Research Institute Inc., the scheduled hike of the consumption tax rate to 8 percent in April 2014 will mean that a family of four with an annual income between 3.5 million and 4 million yen will pay an additional 72,270 yen in consumption tax, while one with an annual income between 5 million and 5.5 million yen will pay an additional 81,408 yen.

If the sales tax rate is raised to 10 percent, the additional burden, depending on annual income, will increase from between 40,000 and 100,000 yen.

Amazingly, these simple third grade mathematics seems to be incomprehensible and comes as a complete surprise to all Japanese politicians and politicians the world over whenever and wherever taxes are raised.


Also, Mish Shedlock tell us an increase in taxes will cause the yen to skyrocket in value and destroy the export economy of Japan. Japan's debt is already nearing 230% of GDP.


If Japan starts printing money, that will cause massive inflation.


The only choice is to cut government spending.


Since, Noda is incapable of that, I suggest that Japan will continue to kick the can down the road (until it can't anymore) and that Noda will be forced to resign this year. May I finally make a New Year's prediction?


Current Japanese prime minister Yoshihiko Noda won't last until the end of 2012. Good riddance.


Cutting government spending and taking the pain now is Japan's only hope. The sooner we do it, the better off the country will be. 


Any politician the world over who thinks doubling taxes is the answer to our problems will be out of a job... As s/he should be.