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  • fuckedgaijin ‹ General ‹ F*cked News

The Year of the Economic Chicken

Odd news from Japan and all things Japanese around the world.
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The Year of the Economic Chicken

Postby Captain Japan » Wed Dec 29, 2004 4:58 pm

INTERVIEW/ Paul Sheard: `Chickens will come home to roost next year'
Dr. Paul Sheard, managing director and chief economist for Asia at Lehman Brothers Japan Inc., says the Japanese economy is nearing the end of its cyclical recovery, but the government appears to be unwilling to intervene. In an interview with Asahi Shimbun senior staff writer Manabu Hara, Sheard said his primary concern is the weakening U.S. dollar. As for Japan's economy, he says the chickens will come home to roost next year.

I thought this part was interesting...
Q: Many Japanese would oppose your idea of expansionary fiscal policy because government debt is now equal to 160 percent of GDP.

A: I disagree with the whole public debate about government debt. The deterioration of the fiscal situation is the product of deflation driven by the prolonged bubble burst, which caused tax revenue to collapse. Government expenditure, which many see as the main cause of rising public debt, is actually a secondary factor.

Also, unlike the popular myth that public works expenditure is mainly responsible for the rise of government bond issuance, social welfare expenditure is the most important factor in this regard. The biggest problem to be addressed is not the fiscal deficit, but deflation. Getting out of deflation to generate adequate tax revenue would help solve the fiscal problem. Japan still has room to issue government bonds.

One has to notice that Japan runs a huge current account surplus, which is equal to 3.5 percent of GDP. What this means is that the public deficit can be entirely financed by the private sector's surplus. Bond yields in Japan are very low. What is clear is that the market is not sending a strong signal to the government that the debt problem is a key issue to be fixed.

Furthermore, one should look at debt in terms of net, rather than gross basis which is what frequently hits the headlines of newspapers. Net debt is the amount which can be obtained by deducting public financial assets from public debt. For instance, part of the reason why public debt is so huge is because the government engages in grand-scale foreign exchange market intervention in order to sustain the value of the yen while issuing financial bills to buy the dollar.

As a result, Japan now has U.S. Treasury notes worth $870 billion, which should be counted as an asset. Japan's net debt now is about 65 percent of GDP. It is still high, but much less serious than the number based on a gross basis.

Government bond issuance is certainly a problem from a narrow fiscal perspective, but not a serious problem from a broader perspective.

I don't quite understand that. Those dollars were bought with yen. Where did the yen come from? As well, other public financial assets can't readily be sold for cash, like bridges and roads.
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Postby Mulboyne » Wed Dec 29, 2004 5:28 pm

Sheard is not a startling original economist. He's adopted wholesale the case made by the guys written about in this FG thread.
Captain Japan wrote:I don't quite understand that. Those dollars were bought with yen. Where did the yen come from?
Sheard's point is that the yen raised to buy Treasury notes is counted as debt but the notes are not counted as an asset. A comparable situation would be taking out a loan to buy a house but not counting the house as an asset.
I don't know enough about Japan's national accounting to say whether Sheard's example is correct or not.
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Postby Buraku » Wed Dec 29, 2004 10:15 pm

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Postby tatsujin » Wed Dec 29, 2004 10:56 pm

Excellent post Buraku, really gave me an insight into the Japanese economy.

Just tell me there not going to fuck the whole country up before I move over there and I'll be happy!
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Postby Buraku » Thu Dec 30, 2004 12:53 am

tatsujin wrote:Excellent post Buraku, really gave me an insight into the Japanese economy.

Just tell me there not going to fuck the whole country up before I move over there and I'll be happy!


At the current trend I'd give it Five years ( a resonable prediction in-line with many economists views ) , after that its too late for Japan


By that stage other Asians nations like China will have made huge profits in maufacturing and electronic production this will put an end to all those useless firms proped up by LDP loans, other folks like the Chinese will dominate sectors and leave little profit for Japan. The EU will have got things right on immigration, how much it wants to expand, and if Turkey is in the Euro zone, Europe is already an economic superpower and the Euro is a strong alternative to the dollar. After four years Bush will no longer be in office, the guy is an idiot when it comes to economics so no matter what the state of American finance a change be it another GOP-Republican or Democrat is almost certain to be better than Bush. Some in the US have shouted at Japan, others like the EU and IMF are also unhappy with Japan corruption, the WTO has already warned Koizumi on bad loans but Bush has been soft, why because Koizumi is playing the Iraq game and Koizumi is getting his idiot LDP men to buy up the USA's bonds thereby funding US debts...when the Bush-Admin steps down this Enron scandal, unemployment fiasco, Yen-intervention and Dollar corruption won't continue...Koizumi will be left in the land of the sinking Sun, and he has sinking birth rates, corruption and a crummy pension system to dwell on

However the Japanese have a choice :!: , reform the pension system and make those Yakuza firms pay up, also try not electing right wingers like Governor blinky and LDP clowns...
...yet economists say that Japan will continue with its island mentality

5 years they say, the Japan will be facing a dead pension system, lost cash in highway construction, Quadrillions in debts, more homeless, and deficits of over 200% of the Japanese GDP, it will be a bankrupt nation
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Postby Mulboyne » Thu Dec 30, 2004 6:54 am

Buraku wrote:If you listen to Japan-idiots from Japanese fims or listen 2 Japnofile bullsh%t you're likely to lose cash

If you are assuming that Sheard is a Japanophile then you are wrong. He is so far from being that he has been accused of Japanophobia. You would find a lot in his ideas to agree with. The implications of his economic views are that Japan needs serious shock therapy but he's decided that not all shocking newspaper headlines are necessarily true or relevant to his argument.
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Postby DJEB » Thu Dec 30, 2004 1:20 pm

Buraku wrote:
tatsujin wrote:Just tell me there not going to fuck the whole country up before I move over there and I'll be happy!


At the current trend I'd give it Five years ( a resonable prediction in-line with many economists views ) , after that its too late for Japan


There are other, bigger things to think about when considering where you will live in five years, I believe. I hope I'm wrong.
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Postby tatsujin » Fri Dec 31, 2004 11:01 pm

Wow, you guys really are the harbingers of good news aren't you!

Its hard to imagine a country grinding itself so ridiculously into the ground, but the facts seem to suggest thats going to be the outcome.

I assume at least they can overcome the lack of natural resource though...

Any GOOD news about the future of Japan anyone :)

If I don't get a chance, I'd like to wish you all a most prosperous and alcohol drenched New Year!

Akemashite Omedetou Gozaimasu!
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Postby Buraku » Sat Feb 04, 2006 1:54 am

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=aE9fS1FUYK6E
Durex Offers Japan a Population Wake-Up Call

http://www.asahi.com/english/Herald-asahi/TKY200601140147.html
Politics is destroying the Japanese peace and everyday life, which the people took pains to build over the years. The people are losing hope and society is starting to fall apart, like in the fantasy, "The Neverending Story," written by the German writer Michael Ende.
Under the Koizumi administration, the gap between rich and poor has grown wider than ever. Currently, one in every five households has an annual income of 2 million yen or less. One in every five households also has no savings. A major factor behind this is deregulation of the workplace brought about by the revised workers dispatch business law implemented by the Koizumi administration.
As a result, many people came to work on an irregular basis as part-timers or dispatch or contract workers rather than full-time employees. Currently, these people account for one third of all workers. In particular, more than half of female employees work on an irregular basis. Many of them are working under extremely poor conditions.
The average annual income of young "freeters" is between 1 million yen and 2 million yen. With such low wages, they cannot even support themselves or much less expect to get married and start a family. Birthrates continue to decline and now the average number of children a woman gives birth to in her lifetime stands at 1.29. The widening gap in income is giving rise to gaps in children's education, levels of health care and even in young people's hopes for the future.

building concrete for the sake of building, one ghost town linked to another sinking area http://www.ne.jp/asahi/saiga/yuji/gallary/gunsu/thumbnail.html
http://home.f01.itscom.net/spiral/t_rando/t_rando1.html
http://static.flickr.com/30/50380898_084f96e3a1_m.jpg
http://www.jp-hit.com/picture/image2/g0089.html

http://home.f01.itscom.net/spiral/matsu/matsu01.html
http://www.fusedspace.org/webwall/uploaded/1086041527_big.jpg
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