The Real Test Lies Ahead for Japan

Japanese stocks are up 0.5 percent as Prime Minister Shinzo Abe’s coalition won control of the upper house of the Parliament.

This means an end — at least for the time being — to decades of divided leadership. It also means no elections for the next three years. Will there be sufficient stomach for Abe’s own party members to enact painful reforms?

The easy monetary policy is the easy part…now comes tougher stuff that includes: 1) tax breaks for investments; 2) reforming social security, including a lid on pension and health insurance, and; 3) a proposed hike in the consumption tax from 5 to 8 percent.

Meanwhile, could a comeback be in store for nuclear? Greg Valliere noted this morning that Shinzo Abe’s big win in the Japanese elections may mark the long-awaited restart of nuclear power after the Fukushima horror two years ago prompted the country to slap a moratorium on the power source.


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