Abe says it will be impossible to reach primary budget balance by FY2020

October election coming

With the German election results and the snap election call from Abe, you would expect a bit more volatility in the yen. It’s generally lower but EUR/USD is down just 66 pips and USD/JPY is up 24 pips.

The election will likely take place on Oct 22, according to a Bloomberg report.

He’s going to campaign on maintaining the planned rise in the consumption tax but instead of balancing the budget, he will unveil an $18 billion stimulus pacage to be focused on preschool and higher education. The consumption tax is slated to rise to 10% in Oct 2019 from 8% now.

«To increase investment in future generations, I decided today to change
the way we had promised to use the sales tax,» Abe said. «I am changing
a pledge that was made to the public, and one that affects people’s
livelihoods, so I must swiftly seek the will of the people.

Japan is the canary in the debt coal mine. So far the market just doesn’t care that it’s debt is completely unsustainable — you can always print more of your own currency.

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