The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics

The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics

Michael Krieger | Posted Tuesday Apr 7, 2015 at 11:08 am
http://libertyblitzkrieg.com/2015/04/07/the-stock-market-myth-and-how-the-japanese-middle-class-is-on-the-precipice-thanks-to-abenomics/

Data back this up. According to labor ministry figures announced April 1, the number of households living on welfare hit a record 1,618,817 in January. This figure has been on the rise for the last two decades.

On the other hand, data also show that the rich became even wealthier under Abe’s tenure.

– From the Japan Times article: Under ‘Abenomics,’ Rich Thrive but Middle Class on Precipice

Although a sizable amount of people globally are now aware of the historic theft being perpetrated on them by the various oligarchies in control of their respective nation-states, the number of people cognizant and angry about it remains far too low relative to the degree of theft. There are many reasons for this, but I believe the most powerful factor is that extremely sophisticated propaganda has convinced the majority of humanity to buy into all sorts of myths about their particular country or tribe, which keeps them complacent, passive and focused on an exaggerated external threat.

While many of these myths are targeted to specific groups or nationalities, the most powerful ones are those that target humanity on a global scale. Of these, one of the most effective has been the stock market. Pretty much everyone is taught, and buys into the idea, that rising stock markets mean rising prosperity and a strong economy. Part of this has to do with the history of the Great Depression, which is primarily associated with crashing equity markets. The idea of a rising stock market equating to a healthy economy and shared prosperity; however, is in fact a myth. A very powerful and dangerous myth at that.

This is a topic I haven’t done enough justice to, but I did write an entire post about it several years ago titled, The Stock Market: Food Stamps for the 1%. Here’s an excerpt:

I grew up around the 1%. It’s my socioeconomic class. I know the 1% intimately. There’s nothing special about the 1%. Most of them are very average and very lucky. Of course there are many, many exceptions but there are exceptions in all classes. Sure they are slightly more educated than the rest of the population, but on average are not any more intellectually curious than the 99% and are just as easily manipulated by propaganda and more importantly money.

More than any other group, the 1% has been convinced that the stock market represents some sort of leading indicator of wealth and prosperity. Nothing could be further from the truth. Sure, the stock market can function as such an indicator. It is such an indicator when the rising stock market reflects a dynamic, capitalist economy where new industries and companies are rising to the top and improving standards of living for the populace. It represents the opposite indicator when it merely reflects the ownership interests of the oligarchs in a crony-capitalist, fascist economy that is picking away at the dying carcass of what little economic freedom still remains. This is what a rising stock market actually represents today. When people look at it they should understand it is merely a measure of the oligarchs getting wealthier and more powerful and you becoming more of a debt slave. It represents their interests in multinational corporations with record profit margins because they refuse to pay their employees a living wage. A rising stock market today is actually a leading indicator of the destruction of the middle class, cultural destitution and a society in collapse.

Think about the above, written over two years ago, and ask yourself if it rings true. Stock markets can be indications of prosperity, but they can also be tools of financial planning; manipulated higher by excess liquidity, increased leverage, stock buybacks and all sorts of financial engineering. They can also be a sly way of transferring ever increasing degrees of wealth to the very top of society. We have already seen this happen in the U.S., but it appears to be happening in Japan as well.

The Japan Times reports:

The recent debate over wealth inequality has highlighted an unpleasant fact for policymakers — that the income gap between rich and poor is not shrinking, even though Prime Minister Shinzo Abe’s economic policies have been in play for two years now.

What became clear was that in a society long dominated by families of moderate means — the top 1 percent of wealthy people account for a mere 10 percent of overall incomes — Japan’s middle class is now facing an existential crisis.

According to Akio Doteuchi, a senior researcher at the NLI Research Institute, what is threatening people here is that, under the current social structure, virtually anyone in the middle class is at risk of falling into poverty.

“It’s like walking in a mine field. Many risks lie ahead of you,” Doteuchi said. “Even if you are in the middle class, if something unexpected happens, you could slip into poverty.”

But now, there is an increasing number of nonregular workers, particularly younger ones, whose financial situations are unstable. More and more single-person households are vulnerable to serious health problems.

Dear America, does this sound familiar?

Data back this up. According to labor ministry figures announced April 1, the number of households living on welfare hit a record 1,618,817 in January. This figure has been on the rise for the last two decades.

On the other hand, data also show that the rich became even wealthier under Abe’s tenure.

Their numbers and the amount of their assets surged in 2013 and are still rising mostly due to sharp gains in stocks triggered by the Bank of Japan’s aggressive monetary easing, which started in April 2013, experts said.

Households on average are believed to have a majority of their assets either in bank accounts or in cash. But the wealthy hold risk assets such as real estate, stocks and bonds — assets more likely to grow in value faster than mere savings accounts, Miyamoto said.

But at the same time, the wealthy in Japan are less dominant in terms of overall assets when compared with the rich in the U.S., partly because income levels of top corporate leaders are not as high as those in the U.S. and the tax system levies heavier income taxes on wealthy people than in many other countries, he said.

“Abenomics has boasted economic strength, telling people that higher economic growth will shrink the gap between the haves and have-nots via the trickledown effect,” Doteuchi said. “But is that really true? I think not. Solving inequality is the way to improve the economy.”

Nor is it true in the U.S., and as noted in the recent post, Another Oligarch Preaches to the Peasants – Charlie Munger Says “Prepare for Harder World”:

If QE really helps everyone, then why has income inequality exploded? The answer, of course, is that QE picked winners and losers. Naturally, the winners have been the oligarchs, and the losers have been everyone else.

In Liberty,
Michael Krieger

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