Recession Redux!

[Captain Japan]

Yen Falls After Report Shows Japanese Economy Enters Recession
Bloomberg

Feb. 16 (Bloomberg) -- The yen weakened against the dollar after a government report showed Japan's economy shrank in the final quarter of 2004, throwing the country into recession.

The economy contracted 0.1 percent from the third quarter, the government said. It compared with expected growth of 0.1 percent, according to the median forecast in a Bloomberg survey. Diminished expectations for economic expansion may undermine the yen by sapping demand for Japan's shares.

The yen fell as far as 104.65 per dollar after the data. It traded at 104.59 at 9 a.m. in Tokyo from 104.41 late yesterday in New York, according to EBS, an electronic currency-dealing system. The currency fell as far as 136.25 per euro, from 136.01....the rest...

[FG Lurker]

Bank of Japan Will Keep Interest Rates at Zero, Survey Shows
Bloomberg, February 16, 2005

Feb. 16 (Bloomberg) -- The Bank of Japan will probably keep interest rates at almost zero this week as economic growth stagnates and the nation extends a six-year bout of deflation, economists said.

Governor Toshihiko Fukui and the bank's other policy makers will also continue to pump cash into the world's second-largest economy, said all 14 economists surveyed by Bloomberg News. The bank is scheduled to announce the results of its meeting tomorrow, probably around noon.

The bank will maintain its almost four-year-old policy to encourage companies and consumers to increase spending and foster economic growth. The government today will probably say the economy grew 0.1 percent last quarter, matching the pace of the previous three months, according to a Bloomberg News survey of 41 economists.

(Full Story)

[FG Lurker]

Japan slips into fourth recession in a decade
GlobeAndMail.com, February 17, 2005

TOKYO -- Japan's economy shrank for a third consecutive quarter to end 2004, as weakened export growth and personal consumption knocked the country into its fourth recession in less than a decade.

[...]

The common definition of recession -- two consecutive quarters of contraction -- was only met because July-September figures were revised yesterday to show a 0.3-per-cent fall instead of an initial reading of 0.1-per-cent growth. The economy contracted 0.2 per cent in the April-June period.

Economists expect GDP for January-March to rebound as consumption picks up with better income and job conditions. They also cited a recent boost in machinery orders as a positive sign of future corporate investment.

Prime Minister Junichiro Koizumi maintained the government's view that the recovery remained intact in the bigger scheme of things, a view shared by Economics Minister Heizo Takenaka.

"Basically, the economic recovery is continuing. It's just that consolidation is being protracted," Mr. Koizumi told reporters.

(Full Story)

Hopefully not as bad as the "R" word makes it seem then...

[FG Lurker]

Yen Trades Near 1-Week Low; Bank of Japan Leaves Rate Near Zero
Bloomberg, February 17, 2005

Feb. 17 (Bloomberg) -- The yen traded near its lowest in a week against the dollar after the Bank of Japan left its benchmark interest rate at almost zero and maintained the level of cash it pumps into the world's second-largest economy.

Japan's currency dropped 1 yen against the dollar yesterday after a government report showed the Japanese economy shrank in the fourth quarter, tipping it into the fourth recession since 1991. By contrast, Federal Reserve Chairman Alan Greenspan told a Congressional committee yesterday that the U.S. economy has ``firmed'' and the Fed's target rate is ``fairly low.''

``We don't see too much support for the Japanese economy,'' said Ashley Davies, a currency strategist in Singapore at UBS AG. ``The Japanese cyclical upturn is probably on its last legs. We don't expect any support for the yen.''

(Full Story)

Well, this quote makes it look a lot worse than the Globe and Mail article above.

[FG Lurker]

Vigilance on deflation is urged in Japan
International Herald Tribune, March 3, 2005

Central bank chief asks citizens to bear with low rates on deposits

The governor of the Bank of Japan, Toshihiko Fukui, said Wednesday that the Japanese economy had not strengthened enough yet to withstand possible shocks.

"The economy has become increasingly resilient to shocks," Fukui said in Parliament, without identifying what the threats might be. "But it's not completely resistant to them because it suffers from deflation."

Fukui added that the bank would maintain its policy of holding borrowing costs at zero and pumping cash into the economy until growth was sustainable. Japan last year slipped into its fourth recession since 1991, according to gross domestic product figures released on Feb. 16.

(Full Story)

[Buraku]

I think the Japan-papers might have whitewashed this one, I have looked around and none of them have mentioned the rise of internals debts, shrink in GDP, pension problem and the fall back into another Recession

maybe the media want to keep the population in the dark, or is the fact that the Japanese economy looks doomed just a sure fact, and it no-longer makes news items

[Mulboyne]

I think the Japan-papers might have whitewashed this one, I have looked around and none of them have mentioned the rise of internals debts, shrink in GDP, pension problem and the fall back into another Recession

I'm not sure you are right there. As soon as the GDP numbers were released, it made headlines in the Japanese press and questions were asked in the Diet. But no-one is going for the jugular because many economists who predicted the slowdown have long been predicting a subsequent upturn. Economic releases so far support that view (better than expected industrial production and household spending) so, until we get more data through, the press hasn't got anything new to say.
The pension problem doesn't get very good treatment in the Japanese press but the same is true of the US, UK and Italy where the media seem to believe the issues are "too complex".

[Captain Japan]

I'm not sure you are right there. As soon as the GDP numbers were released, it made headlines in the Japanese press and questions were asked in the Diet. But no-one is going for the jugular because many economists who predicted the slowdown have long been predicting a subsequent upturn. Economic releases so far support that view (better than expected industrial production and household spending) so, until we get more data through, the press hasn't got anything new to say.

The part that struck me (and continues to strike me) is just how quick perceptions change. Up until that last GDP report came out there wasn't even a hint of recession talk, not one. The "r" word was always recovery, as in Japan's 3rd "recovery" since the bubble burst, blah, blah, will it be real this time, blah, blah, blah. But since Monday (and the release of the latest) economic data everyone is back talking about "recovery" again. I don't think anyone truly knows what's going on.

On google news it was funny. Last Monday you could find stories talking about recovery and recession (dating from the week before) stacked one right atop another.

[Captain Japan]

I don't think anyone truly knows what's going on.

I stand by the above statement...
Japanese Economy Grew at 0.5% Annual Pace in 4th Qtr
Bloomberg

March 14 (Bloomberg) -- Japan said the economy grew at a 0.5 percent annual pace in the fourth quarter as manufacturers built up stockpiles, reversing a previous estimate of a contraction.

The report by the Cabinet Office in Tokyo today compares with a previous estimate of a 0.5 percent pace of decline and the median 0.6 percent drop forecast by 12 economists surveyed by Bloomberg News. Quarter-on-quarter, the economy grew 0.1 percent, compared with the previous estimate of a 0.1 percent contraction....more...

[Pencilslave]

I plead a massive amount of ignorance. What caused Japan's economic bubble to burst in the first place after 30 years of prosperity?(I think the bubble burst in 1992 correct me if I'm wrong.)

[cstaylor]

I plead a massive amount of ignorance. What caused Japan's economic bubble to burst in the first place after 30 years of prosperity?(I think the bubble burst in 1992 correct me if I'm wrong.)

You can only be a financial underdog for so long, unless you aggressively control your currency like the Chinese.

[Taro Toporific]

Japan slips into fourth recession in a decade
GlobeAndMail.com, February 17, 2005

First Botswana, Now Japan Lags Burkina Faso --William Pesek Jr.
March 18 (Bloomberg) -- Japan has a unique talent for killing economic recoveries just as they get going. It's a dubious skill, and one that's rearing its head once again.
The latest growth-killing tweak came last week, when Japan's ruling party scrapped plans to make acquisitions easier for overseas companies. The reason: It wants to give companies more time to adopt takeover defenses. In that case, why even consider the changes?....more....

[FG Lurker]

Japan's Prices Have Biggest Drop in More Than a Year
Bloomberg.com, March 25, 2005

March 25 (Bloomberg) -- Japanese consumer prices had their biggest drop in more than a year in February, extending almost seven years of deflation and reducing the chances the central bank will end its zero interest-rate policy.

Core prices, which exclude fresh food, fell 0.4 percent from a year earlier, the government's statistics bureau said today in Tokyo. The decline was the biggest since June 2003. The median forecast in a Bloomberg News survey of 32 economists was for a 0.3 percent decline, matching the pace in January.

(Full Story)

[Mulboyne]

I plead a massive amount of ignorance. What caused Japan's economic bubble to burst in the first place after 30 years of prosperity?(I think the bubble burst in 1992 correct me if I'm wrong.)

The stock market peaked in December 1989. The immediate cause of the decline was the decision by the Bank of Japan to raise interest rates on December 25th. They were attempting to shut the door on rampant speculation in real estate and the stock market. As asset prices fell, many highly-geared speculators racked up losses and became unable to service their loans. The virtuous circle which had produced the bubble went into reverse gear. Companies had already overextended on capital spending and so began to spend less. With lower corporate investment, weaker consumption, falling house prices etc the real economy began to contract and Japan fell into recession.

[FG Lurker]

Japan deflation persists - except for beef bowls
stuff.co.nz, March 26, 2005

Japan is experiencing six years of falling prices, but not everything is cheaper for Tokyo's average "salaryman" hungry for a low-cost, filling and speedy meal.

The country's ban on imports of United States beef due to mad cow disease has sharply pushed up prices of beef bowls - a popular dish of stewed, marinated beef on rice - in the capital.

The cost of a beef bowl in Tokyo jumped 32.9 per cent in the current fiscal year ending this month, the steepest rise by far in the service prices category of the consumer price index, government data showed on Friday.

[...]

US beef had been the dish's staple meat but the ban, in place since December 2003 after America's first discovery of mad cow disease, has prompted beef-bowl chains to seek alternative dishes or use beef from countries such as China and Australia.

Matsuya Foods Co Ltd revived the dish last year using Chinese beef and had to charge some 100 yen more than when the beef bowl was cooked with US meat.

(Full Story)

Now that is seriously fucked. How does Japan figure that Chinese beef is safer than US beef!?

[FG Lurker]

Japan may get its holy grail: home-spun growth
Reuters.co.uk, May 17, 2005

Home-spun growth. It's been Japan's economic holy grail for decades and analysts think maybe, just maybe, the country may finally have it.

Japan's gross domestic product grew a real 1.3 percent in the first three months of this year, or an annualised rate of 5.3 percent, boosted entirely by domestic components, government data showed on Tuesday.

[...]

"I think this is the real deal," said John Richards, head of research at Barclays Capital Japan.

"It marks a shift towards a pattern of growth that's not dependent on exports exclusively or public works exclusively," he said, adding that restructuring over the years was now helping corporate earnings, feeding into capex and household spending.

(Full Story)

Dunno where this growth is coming from... Last year was great in the company where I work, but this year sales are way down... Guess some places had/have it the other way around.

Would be great if things started to pick up though.

[Captain Japan]

Two views....
Japan unemployment's six year low
BBC

Japanese unemployment has fallen to its lowest level in more than six years, increasing hopes that the nation's economic recovery is gathering speed.

The latest official figures show that Japan's jobless rate fell to 4.4% in April, down from March's 4.5%, and the lowest figure since October 1998.

A separate official survey showed that Japanese industrial production was increasing, driven by domestic demand.

Yet the jobless figures were mixed, as unemployment rose amongst the young.

The jobless rate increased by 5.6% for people between 25 and 34 compared with 5.2% in April 2004...more...

Salarymen slaves stiffed by 'merit' pay system
Mainichi

Wanted, graduate of a prestigious university for full-time, unfulfilling grunt work at a major corporation. Hours from 8 a.m. to 11 p.m., 100 hours or more overtime per month, work on weekends as needed. Annual salary: 3 million yen.

It's not likely that employers will put out a want ad like this, but these are, in fact, the working conditions for most salaried workers on the lower rungs of the Japanese corporate ladder, according to Spa! (5/31).

In December 2002, in the middle of a severe, deflationary recession Spa! covered a story on overworked salarymen. Now, some two and a half years later, the Nikkei stock index has gone up, and major corporations are posting the biggest gains ever, but for the lowly salaryman on the wrong end of the totem pole, the much-vaunted economic recovery seems to be nothing more than a mirage. If anything, things are getting worse, not better....more...

[Mulboyne]

Salarymen slaves stiffed by 'merit' pay system

Another take:

Bloomberg: Japan April Salaries Rise for First Time Since 2000
Japan's monthly salaries rose for the first time in more than four years in April as companies passed growing profits on to workers. The average base salary for workers rose 0.3 percent to 255,607 yen ($2,360), the first increase since November 2000, the Ministry of Health, Labor and Welfare said in a report today in Tokyo. Wages, which include bonuses, overtime pay and commuting costs, rose 0.6 percent to 281,935 yen. Rising wages are stoking a rebound in household spending, fueling sales at companies including Toyota Motor Corp. and bolstering a recovery from last year's recession. Consumer spending accounted for more than half of the first quarter's 5.3 percent annual pace of growth, which was twice as fast as economists expected.
"Companies that have been trying to keep the lid on wages are now finally passing their profits to their employees," said Naoki Iizuka, chief economist at Dai-Ichi Life Research Institute in Tokyo. "We'll continue to see improvements in wages and employment gather momentum."

[FG Lurker]

Japan cuts its growth estimates
business.scotsman.com, June 14, 2005

JAPAN yesterday cut back estimates of its economic growth in the first three months of this year, saying sluggish overseas demand led to slower exports growth and stagnating inventories.

Official figures showed the world's second largest economy grew 1.2 per cent in the quarter to the end of March compared with the previous quarter, down from an earlier estimate of 1.3 per cent. Despite the revision, the GDP growth rate was the highest in a year. On an annualised basis, the economy grew 4.9 per cent in the quarter, down from an initial estimate of 5.3 per cent, the Japanese Cabinet Office said. Analysts had expected an annualised growth rate of about 5.6 per cent.

(Full Story)

[Maths Dude]

Aussie beef had a chance to really get into the J market, but we didnt have the capacity, so we kinda missed out. Guess you cant predict when or where BSE will pop up.

[Mulboyne]

Japan cuts its growth estimates
business.scotsman.com, June 14, 2005

JAPAN yesterday cut back estimates of its economic growth in the first three months of this year, saying sluggish overseas demand led to slower exports growth and stagnating inventories.

That opening sentence explains why the markets regard this as a "good" downward revision. If overseas demand was sluggish, then you would expect inventories to build up, not stagnate. Since they didn't, companies can be given credit for anticipating slower demand. Things could deteriorate further, of course, but if inventories had piled up in this quarter, future growth numbers would have been revised down to accomodate the necessary adjustment. Doubletalk it may be but it is nuances like this that move the credit markets.

[Taro Toporific]

Way back in March, I had put this Bloomberg editorial about "Japan Lags Burkina Faso" in my clipping file. Now I guess it's time to dust it off and post it again...Just like Lucy does to Charlie Brown----so goes the JPN "recovery." :P

First Botswana, Now Japan Lags Burkina Faso: William Pesek Jr.
March 18 (Bloomberg) -- Japan has a unique talent for killing economic recoveries just as they get going. It's a dubious skill, and one that's rearing its head once again...more...

[Buraku]

I plead a massive amount of ignorance. What caused Japan's economic bubble to burst in the first place after 30 years of prosperity?(I think the bubble burst in 1992 correct me if I'm wrong.)

the LDP did it


Japan's 10-year government bonds posted their first weekly decline in more than a month as analysts said a rally went too far and traders increased bets the economy is strong enough to withstand higher interest rates.
http://www.bloomberg.com/apps/news?pid=20601101&sid=amj_t.DoSgts&refer=japan
Ten-year yields extended a rebound from a six-month low as a report this week showed corporate investment rose more than expected by economists and a report next week is predicted to show the economy grew more than forecast in the second quarter. Bank of Japan Governor Toshihiko Fukui said weaker-than-expected gains in consumer prices in July had not changed the bank's view that consumer prices will keep rising.