Well, Donald Trump and Japanese PM Shinzo Abe held a joint news conference a couple of hours ago and you know, it was the same old story.
Everyone played nice and a lot of generic sounding messaging was conveyed to the press.
Oh, and as usual, Trump said some sh*t that didn’t make any sense:
The currencies of the U.S., China and Japan will soon be on a level playing field. That’s the only way it’s fair. That’s the only way you can fairly compete in trade and other things. We will be on that field and we will all be working very hard to do great for our country but it has to be fair and we will make it fair.
Got that? No? Me neither.
“It was a long talk,” Trump added. “We discussed a lot of subjects.”
Going forward it appears Trump will dispatch Mike Pence to hash out the actual details of economic relations between the US and Japan, while “currency questions to be discussed by the finance minister and treasury secretary,” Bloomberg quotes Abe as saying.
For all intents and purposes Friday’s “big event” was a non-event. “Certainly the presser is important, but there wasn’t anything really to move the markets,” one trader said.
Far more amusing than anything we heard from Trump and Abe is the following commentary from Bloomberg’s Cameron Crise who notes that when it comes to “making sh*t great again,” maybe Abe isn’t the guy to ask.
Shinzo Abe and Donald Trump have a lot in common — they both swept into power on a promise of radical economic change. But if Japan is any example, shifting U.S. growth into a permanently higher gear may be easier said than done.
- Back in 2012, when Trump was still firing contestants on TV, Abe came to power on a promise to revitalize Japan’s economy after years of decay.
- Abenomics included fiscal stimulus, structural reform, deregulation, and changes to the tax system — a cut in the corporate rate and an increase in the VAT. Sound familiar?
- Perhaps the most notable aspect of Abe’s program was the appointment of Haruhiko Kuroda to head the BOJ, which then embarked on a program of radical monetary easing that continues today. That arrow is one that Trump will not have in his quiver, unless Janet Yellen is replaced with a stooge.
- Abe’s strategy has had a big impact on prices, largely by eviscerating the value of the yen. In the 10 years ending in 2007, Japan’s nominal GDP growth averaged -0.1 percent per year and CPI -0.2 percent. During the Abenomics years, those figures jumped to 2.2 percent and 1.0 percent respectively. However, the latter figure is still well short of the BOJ’s 2 percent inflation target, and in the last two years inflation slowed to just 0.2 percent per annum.
- The Abenomics impact on real growth has been much more muted; in the 10 years ending in 2007 average real growth was 1.0 percent, which has risen to 1.3 percent during his economic plan.
- It’s ironic that Abe has come to Washington bearing a package designed to help Trump revitalize the U.S. economy when he hasn’t yet achieved his own domestic goals. Some skepticism is probably warranted; it’s not exactly a vote- winner for Abe to be seen spending money to boost American growth when Japan is still muddling along.
- Optimism for Trump’s economic plan is high. However, the Abenomics experience suggests that the best the president can hope for is to make America OK again.