Abe adviser emulates Greenspan on BOJ easing

It looks like one of Japan’s key economic advisers is getting some pointers from the Alan Greenspan playbook.

Greenspan, the former head of the U.S. Federal Reserve Bank, was renowned for obfuscating and talking in an unintelligible, jargony, econo-speak that never gave the financial markets any clear understanding of what exactly the Fed planned to do on monetary policy. Much like Greenspan, Koichi Hamada, a top adviser to Prime Minister Shinzo Abe, is baffling the financial markets by talking out of both sides of his mouth.

Earlier today, Hamada, an emeritus professor of economics at Yale University, said the yen was fairly valued at current levels, a direct contradiction to his comments Monday, when he said the yen was “considerably weak.”

On Monday, Hamada said a yen rate of 105 was acceptable. Today, in an interview, he said, “120 yen per dollar is acceptable.”

Well? Which is it?

In an interview with Reuters, Hamada said he had meant the purchasing power parity-implied rate on Monday, not the spot price. Thus, on monetary policy he was open to easing, but, on the other hand, it’s really not a pressing issue. He said if the Bank of Japan did ease again on April 30, it would be okay, because it wouldn’t generate inflation. But with the Japanese economy facing a significant risk of deflation, isn’t inflation the whole point of the exercise?

Hamada appears to be dealing in an accepted Japanese cultural trait of being deliberately vague and taking seemingly contradictory positions. It’s a concept that might even teach Greenspan a thing, or two. But at this critical juncture in the Japanese economy, people have a need to understand what it is the government plans on doing.

Another Abe adviser on monetary policy, Kozo Yamamoto, told Reuters the exact opposite two weeks ago. He said the current slowdown in the economy demands that the BOJ expand its asset purchases on April 30.

Meanwhile, the man who probably knows more than anyone, Economics Minister Akira Amari, is keeping his mouth shut.



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