Economist Sees Japan As Reliable Tortoise

[Doctor Stop]

[floatr][/floatr]ECONOMY: Japan not out of deflation, report says

THE ASAHI SHIMBUN

The government failed to make good on its promise to declare the end of deflation by March as its economic report released on Thursday maintained its assessment on prices.

The monthly economic report for March said, "Consumer prices have been flat," the same expression it used in previous months.

Hiroko Ota, minister in charge of economic and fiscal policy, said Thursday an increase in worker wages will hold the key to stamp out deflation. The unit labor cost, which reflects worker wages, is one of the four economic indicators that the government uses to determine the end of deflation...

http://www.asahi.com/english/Herald-asahi/TKY200703160138.html

[Captain Japan]

Why Japan Hasn't Joined the Global Celebration
WSJ

TOKYO -- Japan's economy and corporations are enjoying the most stable period of growth they have had for decades. So why is Tokyo's stock market performing so poorly compared with others?

Since the beginning of this year, the Nikkei Stock Average of 225 companies -- which rose 0.14% or 25.07 points to 17705.12 yesterday -- is up less than 3%, compared with nearly 9% for the Dow Jones Industrial Average. Most other stock markets also are doing better than Tokyo. The DAX index in Germany is up 17%. The Shanghai Composite Index has shot up 56%.

Tokyo's plodding performance is puzzling because the factors that hammered the world's second-largest equity market during Japan's years of downturn -- which started in the early 1990s and carried on until 2002 -- have all but disappeared.

General land prices had fallen for 15 years, eroding wealth for corporations and homeowners, but those prices rose last year. The economy has had annual growth of between 1.9% and 2.4% in the past four fiscal years and is expected to post similar gains this year and next -- slightly stronger than growth in the euro zone. Corporate profits, the indicator most directly linked to corporations' stock prices, likely grew for the sixth straight year in the 12 months that ended March 31....more...

[Mulboyne]

Telegraph: Goldman Sachs tiptoeing into the bear camp

Goldman Sachs has abandoned its ultra-bullish view of the world economy, warning of a likely recession in Japan and mounting risks that US property slump could spread to parts of Europe. In a new report, "The Global Economy Hits a Crunch", the US investment bank said it was no longer sure that Asia and Europe would be able to pick up the growth baton as America stumbled. It fears that turmoil is spreading beyond the debt markets to the factory floor. "Much has changed since mid-July, when we wrote that 'the global economy continues to enjoy one of the strongest sustained expansion in modern history'. The mood in financial markets is clearly darker, and the economic data in the developed world is showing signs of wear," it said.

"Japan's recovery is tottering, with the chance of an outright recession having risen to nearly two in three," said the report, authored by chief economist Jim O'Neill...Output had already contracted an annual rate of 1.2pc in the second quarter before the credit crisis hit. There has since been a surge in the yen as speculators unwind carry trade positions, leaving Japan's margin-trading housewives and grannies nursing big losses. Wages have fallen for the last eight months in a row. They are now down 1.9pc from a year ago, threatening to pull the country back into deflation. Goldman Sachs feared it was now "inevitable" that consumers would batten down the hatches for a while...more...