Japan: tuneless - FT.com "Pulling out all the stops" refers not to opening a dam to let the waters gush, but rather to the opening of the valves on a pipe organ. Prime Minister Shinzo Abe, in his bid to revitalise Japan's economy, has delivered much fanfare, and sloshing liquidity. On Monday, third-quarter GDP figures suggested Mr Abe is still not making economic music. Output fell well short of forecasts for 0.5 per cent GDP growth quarter on quarter, instead shrinking by 0.4 per cent. The market was quick to react, with Tokyo's Topix index shedding two-fifths of the gains it had made since October's day of shock and awe, when the Bank of Japan increased the scale of quantitative easing. But the yen strengthened only half a per cent. It remains 3 per cent weaker than at the end of October. This reaction seems mild. Japan is in the midst of extreme and experimental policy upheaval, which so far is not having the desired effect. The potential for the GDP miss to derail reform is real. Last week, a weak GDP figure was linked to expectations of a snap election, with suggestions that Mr Abe may postpone the next round of consumer tax increases as a vote-buying strategy. This now looks more likely. All this makes for more uncertainty. And yet market volatility remains surprisingly benign, at half the level reached in mid-October - before the latest round of QE was announced. It is also well below the level reached at the time of Japan's election last year. Mr Abe's failure to reflate the economy makes another element of his strategy - structural reform - much harder to implement. As is becoming evident, Mr Abe can pull stops as much as he likes, but without the sound reaching the real actors in the economy - corporations and consumers - the tune has little impact. Given the chance, Mr Abe will keep playing, and he should. And as the market knows, bad news for the economy is not always bad news for asset prices. On the contrary.