Economist Sees Japan As Reliable Tortoise

[Mulboyne]

[Mulboyne]

[Buraku]

nice childrens story but its still...
all talk no action Koizumi




Malaysia, SKorea and Sinapore will take the wind from Nippons sails
Japanese politicians continue to plunder Japan's savings

the real tale
http://www.fuckedgaijin.com/forums/showthread.php?t=9684
"Sexy China Casts Shadows on a Not-Rising Sun"

[Greji]

nice childrens story but its still...
all talk no action Koizumi




Malaysia, SKorea and Sinapore will take the wind from Nippons sails
Japanese politicians continue to plunder Japan's savings

the real tale
http://www.fuckedgaijin.com/forums/showthread.php?t=9684
"Sexy China Casts Shadows on a Not-Rising Sun"

I'm sure The Economist will be happy to know they are publishing stories for children.

BTW, where did you get that picture of that Korean intercept log you keep posting?

If you can read it, and you know anything about military affairs, you should know that it is written by someone who sees nothing but roses for the a Japan Korean conflict, and there are some serious errors in what is being stated.

[aljones15]

"Malaysia, SKorea and Sinapore will take the wind from Nippons sails
Japanese politicians continue to plunder Japan's savings "

Both Malaysia and South Korea's politicians are arguablly worse than Japan. In South Korea they've been trying to set up "free economic" zones so foriegn investors can more easily bring business to Korea, this has turned out to be impossible with the Korean Government continuing to restrict these areas and of course the fact that they constitute nothing more than "forienger" districts doesn't help either korean business on one side, everyone else except china on the other. Still not sure why they can't accept foriegn shit right along side them. You're also overlooking that Japanese businessman and politicians are constantly being punished for corruption, meanwhile in Korea companies are essentially above the law if not just making it up as they go. The guy who ran KIA ran up the world's largest bankruptcy notice and didn't go to jail for it. In Malaysia 1/2 the fucking industry is on government welfare and asking the government to further restrict and tax imports so their shitty cars can survive. While I've heard many intelligent critics against Koizumi including Karel van Wolferen, there actually have been reforms in Japan that do make it less than the protectionist anti-immigrant fortress it's stereotyped as.

-
a

[Mulboyne]

I can't think of many journals, including The Economist, that have a good record predicting Japan's economic direction, up or down. It's interesting that they write "The turnaround in perceptions of Japan has been so sudden that it risks being overdone" and then proceed to write one of the more optimistic assessments of the economy.
Today's FT also has a piece on Japan where Paul Sheard, a more long-term bearish economist at Lehmans writes "We have not yet abandoned our base case that. most likely, this third major post-bubble recovery will come to an end, and the economy will enter another cyclical downturn, before it is able to emerge decisively from deflation"

nice childrens story

But, buraku, you deal in your own fair share of fairy tales only the other day you claimed:

the experts agree the economys is in the sh*t...A few months back China put on the brakes and the Nippon economy went way South

Also

just because Chinese bought a few mitsubishi VCRs and Japan gameboys doesn't mean squat

The last three quarters of growth have been underpinned not by exports but by corporate and household spending

I'm not willing yet to bet that everything's looking up for Japan because I've been here before. In investment, it is called the "wall of worry". Betting against it, though, has been a money-losing proposition. I do find it notable that Japanese corporations who were never expected to invest again in plant and equipment in Japan are doing just that.

Japan Times: Koito plans Saga plant as Kyushu car output rises

It will be the first domestic factory built by Tokyo-based Koito in about 20 years.

Japan Times: Tokyo Steel plans first mill since '95

Tokyo Steel Manufacturing Co., a major electric furnace-based steelmaker, plans to establish a steelworks in 2009, the first domestic factory set up by the company in 14 years

It's not always good news, as the Asahi noted:

The good news for regional economies is that manufacturers are investing at home once again. The not-so-good news is that they are determined to become leaner and meaner, by eliminating excesses on the factory floor. These days, human involvement is often judged the worst excess of all.

However, the same article notes:

In 2004, businesses acquired 1,305 land plots of 1,000 square meters or more for factory construction, up for the second consecutive year from a low of 844 in 2002, according to the Ministry of Economy, Trade and Industry. Makers of machine tools are also flooded with orders thanks to aggressive corporate capital outlays. Orders received in the January-June period totaled 672.8 billion yen, just shy of the record 705.3 billion yen posted in the first six months of 1990, according to the Machine Tool Manufacturers Association. In the past, many companies have relocated production overseas to use cheap labor, but some are repatriating in an effort to maintain their technological lead. Canon Inc. plans to build an 80 billion yen plant in Oita to produce ink cartridges for printers.

I don't recall anyone predicting this trend.

If this recovery does have any legs then it is indicators like these that we will look back on as the early clues. We already know what can go wrong with Japan since we've seen it or lived with it countless times. This time we also keep alert to what could go right.

[dimwit]

Buraku's sole propose seems to be to slag Japan and everything about it even when he seems to complete lack of knowledge of the subject matter. Why he bothers, I have no idea.

Generally, out here in the sticks things are improving. The big question is what will happen after September 2006 when Koizumi steps down. The worry is that the long delayed increase in comsumption tax may kick in triggering a reduction in spending.

[gkanai]

I can't think of many journals, including The Economist, that have a good record predicting Japan's economic direction, up or down. It's interesting that they write "The turnaround in perceptions of Japan has been so sudden that it risks being overdone" and then proceed to write one of the more optimistic assessments of the economy.
Today's FT also has a piece on Japan where Paul Sheard, a more long-term bearish economist at Lehmans writes "We have not yet abandoned our base case that. most likely, this third major post-bubble recovery will come to an end, and the economy will enter another cyclical downturn, before it is able to emerge decisively from deflation"

I think it's too early to call a turnaround yet as well.

For me, there's not enough hard evidence of change. That whole section on Japan hinged basically on the move from full-lifetime employment to much more contract labor. That alone can't be the engine of a turnaround.

1) bad loan debt is being erased: yes, this is real, and M&A in Japanese banking may make for more competition, or at least on paper more efficiency. That said, it will be a long time until a Japanese financial institution will have the trust and respect of the global markets. They don't deserve that respect yet. THere is still much more fat and debt to cut.

2) wages: haven't budged much as far as I can tell. Yes, more contract/part-time vs. less full-time is a critical trend, but theres both up and downsides to this.

3) domestic demand: this may be one of the last indicators to move, but I don't see demand rising enough to warrant this a "turnaround."

[Mulboyne]

1) bad loan debt is being erased: yes, this is real, and M&A in Japanese banking may make for more competition, or at least on paper more efficiency. That said, it will be a long time until a Japanese financial institution will have the trust and respect of the global markets. They don't deserve that respect yet. There is still much more fat and debt to cut

An economy can still do well without a respected financial sector. Japanese finance companies weren't particularly respected during the bubble, although they were feared. Chinese banks are not certainly not trusted today.

For all their faults, one thing that Japanese financial institutions do better than their foreign counterparts is to serve the Japanese customer. This may sound outrageous given the inefficiencies we can all see in, say, retail banking. To date, however, very few foreign finance companies have worked out how to crack selling financial services to the Japanese retail customer. AFLAC stands out as an obvious counterexample but it remains surprising how foreign companies have been unable to take much advantage of the post-bubble disarray and provide credible mainstream alternatives. Citibank is well-known but it is still only a niche operator. Their private banking business could have been a contender but they didn't know how to run it and ran afoul of the regulators. Merrill Lynch failed to set up a retail broker and foreign insurance companies keep coming and going without leaving much of a mark.

There is a similar phenomenom in retail in general. Any international retailer looking at Japanese supermarkets or specialty shops immediately thinks that setting up an operation will be like shooting fish in a barrel but Japan has been a blackhole for many international names.

2) wages: haven't budged much as far as I can tell. Yes, more contract/part-time vs. less full-time is a critical trend, but theres both up and downsides to this.

3) domestic demand: this may be one of the last indicators to move, but I don't see demand rising enough to warrant this a "turnaround."

Agreed. Conditions could continue to improve but without those indicators turning up, there are still a number of threats to the sustainability of current trends.

Stuff.co.nz: Japan's output gap may be bigger than it seems

Signs that consumer prices will soon end an eight-year slide have prompted a number of Bank of Japan officials to openly discuss a policy shift next year, but many economists warn against pulling the trigger prematurely. They say Japan needs a much longer streak of hearty growth to make up for a decade of economic malaise that has distorted the output gap - the difference between the economy's growth and its long-term potential - and stamp out deflation..."If you're sitting there at the BOJ believing trend growth is 1 per cent and you're expecting output growth of 2 to 3 per cent over the next few quarters, presumably you're thinking that you might as well raise interest rates," said Richard Jerram, chief economist at Macquarie Securities Japan. "But if you do, you're going to damage the exit from deflation."...more...

The FT has a supplement today devoted to Japan which gives a generally positive take on developments. Interestingly, Jeff Kingston is one of the contributors and he was also cited as a source for the Economist Focus piece. He wrote "Japan's Quiet Transformation: Social Change and Civil Society in the Twenty-First Century" (mentioned by Captain Japan in this thread) which is fast becoming something of a bible for optimists just as Alex Kerr's "Dogs and Demons" is an essential text for pessimists.

One factor behind this positive press is the rude health of the investment banking industry which is having a very good year. It is interesting to see Paul Sheard of Lehmans commenting in the press. Privately, I wouldn't be surprised if Sheard believes that Japan is going to hell in a handbasket. He can't say that too explicitly in public, however, because it wouldn't be good for business. Foreign investors have been consistent buyers of Japanese stocks for months now and they tend to buy them through people who think that is a good move rather than someone who thinks they are raving idiots. So all Sheard gets to say, as mentioned above, is "We have not yet abandoned our base case that. most likely, this third major post-bubble recovery will come to an end, and the economy will enter another cyclical downturn, before it is able to emerge decisively from deflation." Or to translate, "Run, you fools!" If negative commentators tone down their views then the public debate tips towards the positive. This mechanism works in reverse as well when investors are selling. Happy investment bankers are not, however, a reliable indicator of economic growth. There have been boom years before which haven't turned into anything lasting. 2005 does look like being a key year one way or another.

A small aside:

The FT supplement contains the obligatory piece on the influence of "Shibuya girls", stating:

companies...ignore Shibuya girl at their peril. That is because what Shibuya girl likes has an uncanny habit of catching on nationally, not only among teenagers, but also with more sober, older generations. Shibuya girl is Japan's trendsetter for fashion, movies, technology - even biscuits.

I read this a lot but I don't read about too many hard examples of hit products that have spread from teenage girls to the rest of the nation outside of mobile phones and purikura. And it's debatable whether purikura really caught on widely. It's undeniable that teenage girls spend a lot of money - the article quotes one analyst who suggests that girls as young as 11 have disposable income of 30,000 yen a month - but I wonder just how much they really are trendsetters, rather than just a large market in their own right, if all they seem to have influenced is the features on a mobile phone.

[gkanai]

The FT supplement contains the obligatory piece on the influence of "Shibuya girls", stating:

companies...ignore Shibuya girl at their peril. That is because what Shibuya girl likes has an uncanny habit of catching on nationally, not only among teenagers, but also with more sober, older generations. Shibuya girl is Japan's trendsetter for fashion, movies, technology - even biscuits.

SNIP

It's undeniable that teenage girls spend a lot of money - the article quotes one analyst who suggests that girls as young as 11 have disposable income of 30,000 yen a month

SNIP

How do these high school girls have $300/mo.?

[Taro Toporific]

The FT supplement contains the obligatory piece on the influence of "Shibuya girls", stating:
It's undeniable that teenage girls spend a lot of money - the article quotes one analyst who suggests that girls as young as 11 have disposable income of 30,000 yen a month

How do these high school girls have $300/mo.?

Just ask 'em.
The average good girl will say she takes a bath with father whenever she needs a boost in her allowance.
(If she can't get a big allowance from her parents, there's always "dating" as you were alluding to.)

[Greji]

How do these high school girls have $300/mo.?

There are many DOM's running around with a pocket full of yen to give them, and that will continue as long as I, I mean, they don't get caught by the new laws.

> >>

[Captain Japan]

The FT supplement contains the obligatory piece on the influence of "Shibuya girls", stating:

companies...ignore Shibuya girl at their peril. That is because what Shibuya girl likes has an uncanny habit of catching on nationally, not only among teenagers, but also with more sober, older generations. Shibuya girl is Japan's trendsetter for fashion, movies, technology - even biscuits.

I read this today as well. The lead for the story goes into great detail about about kogaru (their dark skin, dyed hair, etc.). There's a picture as well from Getty Images. I thought it was a bit odd and showed it to a secretary at the office and she said something like "mukashi." I think that the FT needs to get down to Shibuya a little more often - those girls have been gone for a while.

[Captain Japan]

The FT supplement contains the obligatory piece on the influence of "Shibuya girls", stating:
It's undeniable that teenage girls spend a lot of money - the article quotes one analyst who suggests that girls as young as 11 have disposable income of 30,000 yen a month

How do these high school girls have $300/mo.?

There are a lot of money issues I never understand about Japan. Here's two I've thought about this week:
1. How does a salaryman manage to give his hostess an apartment? I've heard about this from quite a few different people lately. No matter how high up he is at the company and how many books he cooks an apartment is an apartment. It doesn't make sense.

2. How do women get together 1 to 2 million yen to pay for a private detective to do a wakaresaseya? I just visited a bar that provides such services. A Bar with All the Answers

[Mulboyne]

[Mulboyne]

[Greji]

[Mulboyne]

[Mulboyne]

A few more negative comments popping up now - chiefly about the stock market:

Bloomberg: Nikko Says Japan's Rally to End

Dec. 7 -- Record buying by overseas investors has driven Japanese stocks to their highest since 2000. For Patrick Mohr, director of equity research at Nikko Citigroup Ltd., the rally has run its course. He predicts the Topix index will decline more than 6 percent to 1500 by the end of next year as earnings growth fails to meet investors' expectations. "I've never seen overseas investors be so bullish on Japan in my 15 years of following the market," Mohr, 38, said in an interview in Tokyo. "That tells me that expectations are way too high and it's bound to disappoint"...more...

Toyota Chairman Okuda has also been reiterating a theme he brought up in India:

The Hindu: Japanese cos. slack on quality

India and Thailand will soon overtake Japan if Japanese companies do not pay attention to quality, Okuda Hiroshi, Chairman, Toyota Motor Corporation, said..."The economies of India and Thailand are growing fast because of the focus on quality in manufacturing in these countries...Despite appeals at the highest level to pay greater attention to quality, Japanese companies are not showing much interest in winning the Deming Prize while the quality movement is spreading fast in India and many companies are winning the coveted Deming Prize,'' the Chairman said...more...

[Mulboyne]

Bloomberg: U.S.'s Rival in 2006 Isn't China, But Japan
...Judging by the administration's comments, 2006 is the year of China. It's a year in which the U.S. will step up calls for a stronger yuan, fairer trade and improved human rights in Asia's No. 2 economy. In other words, remind officials in Beijing who's the boss. The focus may seem understandable considering the future; China's economy may well surpass that of the U.S. in a few decades. Yet the Bush administration's focus on China ignores the U.S.'s real competitor in 2006: Japan...If the implications of a revived Japan are being chewed over in Washington it's hardly obvious.
...Here are four reasons why Japan's recovery should be a far bigger blip on the U.S.'s radar screen in 2006.
...One, more competition for global capital. At a time when stock markets are playing unprecedented roles in economies, attracting foreign capital has never been more important.
...Two, demand for U.S. Treasuries. Japanese hold roughly $690 billion, making them the biggest investors in U.S. public debt by far. The question is whether the recovery encourages normally conservative Japanese investors -- that includes the central bank -- to take greater risks abroad.
...Three, Japanese inflation. It's a classic be-careful-what- you-wish-for situation: Japan wants inflation, but what happens when it gets it?...Volatile global debt markets may make it harder for U.S. companies to tap capital markets. They may also affect global growth prospects and undermine stock markets such as the Dow.
...Four, geopolitical tensions in Asia. Japan's return to economic health is emboldening politicians who have no intention of deferring to China. Many watched uneasily in recent years as China became the Asian growth engine Japan was once. Now, officials in Tokyo are anxious to flex their muscles, a phenomenon that may revive old animosities in Asia...more...

[Buraku]

[Mulboyne]

China's 9 percent growth -- compared with about 1 percent in Japan -- should be worry enough for officials in Tokyo. <snip>

You are quoting Pesek's column (linked in this thread) from over a year ago. As his new column (see the earlier post in this thread) indicates, he's changed his mind.

Reliable Tortoise'
other other words - wait 700 years and your investments MIGHT grow by 7% - the Economists says in a polite manner that 'Japan is fucked'

Investors are sitting on gains of 40% from the stock market because people changed their mind in 2005 and decided that Japan wasn't fucked. The Economist is a perfect example of that U-turn so they certainly aren't saying what you believe they are saying.

China has overtaken Japan as the world's third largest exporter, the World Trade Organisation said China on the other hand has become a force to be reckoned with, economically and even more surprisingly, politically. <snip>...might be the end goal for the Japanese government.

That segment is the June article from AsianInfo which suggests that Japanese politicians might be raising tensions with Korea and China to divert attention from the economy. Since the economy has been the standout good news this year, that is also a dated view.

[Mulboyne]

If the implications of a revived Japan are being chewed over in Washington it's hardly obvious.

Mainichi: U.S. wants Japan to reconsider Asian policies
The United States has asked Japan to reconsider its policies on Asia because of concerns about deteriorating Sino-Japanese relationships after Prime Minister Junichiro Koizumi's visits to Yasukuni Shrine, diplomatic sources have said...Bush and other top U.S. politicians are apparently afraid that Japan will become isolated in Asia...Japan's isolation in Asia could subsequently affect the U.S. national interest in the region...In an interview with the Mainichi on Dec. 28, Michael Green, former senior director for Asian Affairs at the National Security Council, said that China was employing the history issues with Japan in an attempt to isolate Tokyo. Green said, however, Japan was not properly handling its diplomacy with China. Green suggested that Bush intended to help Japan reconsider its policies on China...more...

[Mulboyne]

Economist: Picking itself up

IF THE latest figures are to be believed, then last year, Japan (yes, Japan) grew faster, at 2.8%, than any G7 economy except America. And as of the final quarter of the year, it was growing faster than America as well, clocking up a 4.2% growth rate, year-on-year. Japan's GDP figures are notoriously prone to revision, so some of the shine may yet come off last year's performance. What is not in doubt, though, is that Japan's recovery is solid and increasingly broad-based. In the recovery's early stages, rapid export growth played a crucial part in boosting industrial production and so company profits. After a soft patch early last year, export growth has accelerated again, with demand from China particularly strong. But what is striking now is the recovery in domestic demand. Companies with growing order books are spending on capital goods: fixed-capital investment grew at an annualised 7.2% in the last quarter of the year, while the outlook for machinery orders looks buoyant. Companies need to hire more workers. So the availability of jobs continues to grow. For the first time in over a decade, for instance, Japan has as many jobs on offer as there are applicants. Demand for workers is pushing up wages, and that is now clearly being felt in the shops. In the last quarter of 2005, personal consumption jumped sharply, growing at an annualised 3.2%. Department stores in and around Tokyo report brisk winter sales, and the first retail growth in nine years looks set to continue. Confidence is returning to the housing market, too. New housing starts are holding up in the face of heavy winter snows, as well as a confidence-sapping scandal involving faked earthquake-resistance data for condominiums. And after a period when the housing recovery was confined chiefly to the Tokyo area, it has now spread to other parts, notably around Osaka and Nagoya. Thanks partly to the demand for mortgages, bank lending is starting to pick up again for the first time in years. With Japan pulling out of deflation, the Bank of Japan is likely to begin winding down its policy of super-loose money as soon as March or, more likely, April.

What are the dark spots in this picture? Taking a mildly contrarian stance, Richard Jerram, Japan economist at Macquarie Research, finds a couple. One is fairly soft import growth for such a purportedly robust recovery. This in part reflects the extent to which the recovery is taking place not chiefly in the manufacturing sector, but rather in services, where import demand is relatively low. A second, more worrying, blot, is that for all that the labour market has tightened over the past year, employment growth, at an annualised 0.5%, is still too sluggish. This, says Mr Jerram, could point to a skills mismatch in the economy, where people are insufficiently suited for the kind of jobs being offered; if he is right, then the situation is not likely to improve anytime soon. The employment picture also has a strongly regional element to it. In Tokyo, one-and-a-half jobs are being offered for every applicant: but in Hokkaido and Kyushu, Japan's northernmost and southernmost big islands, there are still too few on offer. To that extent, the fruits of the recovery are sure to be shared unevenly.

[Greji]

Economist: Picking itself up

IF THE latest figures are to be believed, then last year, Japan (yes, Japan) grew faster, at 2.8%, than any G7 economy except America. And as of the final quarter of the year, it was growing faster than America as well, clocking up a 4.2% growth rate, year-on-year.

Damn! Buraku, how does this fit into your plan for the big picture?

[Mulboyne]

Toyota Chairman Okuda has also been reiterating a theme he brought up in India:
The Hindu: Japanese cos. slack on quality

He knew what he was talking about. Toyota is one of the companies in this IHT article on recent quality problems (which Buraku also posted on here)

Quality problems wound Japanese pride

Twice last month, Toshihiro Nikai, trade minister of Japan, wrote to Sony, the electronics company, ordering it to report on quality-control improvements after back-to-back recalls of faulty laptop batteries. Such orders are unusual enough, but this was also the first time one had ever been issued to Sony, long a leader in manufacturing excellence. Sony promised to comply, and it dutifully sent employees to receive the letters by hand. "This is very rare," said Atsuo Hirai, assistant chief at the Trade Ministry's information product safety section. Rarer still was that the Transport Ministry issued similar orders a few weeks earlier to Toyota, another paragon of Japanese quality marred by recent recalls. Quality problems at Toyota and Sony, Japan's two proudest corporate names, have created a national stir...more...

[Mulboyne]

I think it's too early to call a turnaround yet as well...

...2) wages: haven't budged much as far as I can tell. Yes, more contract/part-time vs. less full-time is a critical trend, but theres both up and downsides to this.

3) domestic demand: this may be one of the last indicators to move, but I don't see demand rising enough to warrant this a "turnaround."

Bloomberg: Japan's Wages Unexpectedly Drop Most in 16 Months

Japan's wages fell at the fastest pace in 16 months in December as companies paid lower winter bonuses, signaling consumer spending may remain too sluggish for the central bank to raise interest rates. Monthly wages, including overtime and bonuses, unexpectedly fell 0.6 percent from a year earlier, the labor ministry said today in Tokyo. Workers brought home an extra 5,500 yen in total pay in 2006, about enough to buy a case of beer...

... "Nothing determines the future of prices and consumption more than wages," said Takuji Aida, chief economist at Barclays Capital in Tokyo. "Poor wage data is a negative factor for a February rate hike." The median estimate of six economists surveyed by Bloomberg News was for wages to climb 0.5 percent. None predicted a drop. Unemployment hovering near an eight-year low and the biggest labor shortage in 14 years have yet to reverse a decade-long slide in wages that, according to Aida, stifled consumer spending and plunged the economy into deflation...more...

[Buraku]

Damn! Buraku, how does this fit into your plan for the big picture?

Chicoms are just across the water, they may be the next superpower and their economy grows every year somewhere between 8%-12%.
If just a handful of Shanghai'ers and Beijingers buy up a few nintendos, toyotas or pokemons - it will create the illusion of new life in the J-economy.

However watch out whenever Beijing decide to put on the brakes and control their economy, because every time the Chinese even mention 'economic changes' you see the Tokyo stocks plummet.

[Doctor Stop]

"Reliable Tortoise", my a$$. The Japanese economy has been canned:

[Captain Japan]

Japan ups interest rates to 0.5%
BBC

Japan's central bank has raised interest rates to 0.5% following signs of steady growth in the economy.

It said the decision - only its second interest rate rise in more than six years - had been made because Japan's recovery was likely to continue.

Worries about the US and other overseas economies had also diminished, it said.

In July last year, the bank raised the rate to 0.25% following six years of zero interest rates designed to help the economy recover....more...

The yen/dollar rate didn't budge much following the news. So was this change already factored in?