Jean-Christophe Helary wrote:

> Did Abe have an important election 6 months after his
getting in power
> 6 years ago ?

RK:

Yes, he did and he lost it. He came to power at the end of 2006 and faced an Upper House election in July 2007 (the UH election is held every three years). That is one of the reasons he ended up having to resign. One of the big reasons that the LDP did so poorly in 2007 was that Abe ignored the economy. With headline GDP numbers seeming to be OK, he ignored the fact that the benefits were not being transferred to ordinary people, e.g.
real wages kept falling.

JCH:

>Abe and his friends know very well that they can't do
much for the
>economy...
>

RK:

What makes you believe that they "know very well that they can't do much for the economy"? People often believe their own hype. Abe, who knows little to nothing about economics himself, has surrounded himself with economists who have told him that "inflation targeting" is the magic wand to revive inflation, lower the yen, and increase demand. Koichi Hamada has promised results on the inflation front within months if the BOJ does enough. (When it doesn't happen, they will claim the BOJ didn't do enough.) The initial market reaction in the yen and stock markets and public opinion polls has reinforced Abe's faith in the economic and political results of their nostrums. The fiscal side is far more contradictory and needs to be watched closely.

Richard Katz
The Oriental Economist Report