Comments on: Japan as the crisis next time Sat, 03 Jan 2015 16:42:55 +0000 hourly 1 By: HughAkston2 Tue, 18 Mar 2014 12:02:17 +0000 Japan has invested huge sums into infrastructure over the last THREE DECADES – roads and bridges to nowhere. It started the world down the path of zero interest rates in 1999. FIFTEEN years later, Abenomics is supposed to correct the problem, and the author was an “early enthusiast”, which makes me strongly doubt the author’s wisdom and perspective on the problem. What have these thirty years of deficit spending and ZIRP accomplished? Japan is now the most indebted country in the world, and nearing the point where demographics and debt load will lead to rising interest rates, at which point the entire house of cards will collapse. Abenomics is simply the latest, and hopefully last, desperate attempt to delay the inevitable collapse.

By: h5mind Mon, 17 Mar 2014 15:06:14 +0000 One of my biggest concerns for Japan’s future is the triple melt-down at Fukushima, an event about which little is said and less is done. Imagine the impact of turning a large portion of the country into a contaminated ‘Exclusion Zone’ zone, like that surrounding the destroyed plant in Chernobyl. Unlike the Ukraine, Japan has yet to do anything to effectively contain, or even slow, the spread of radioactive contamination. Manipulating data and willfully lying to the public as cancer cases skyrocket is obviously not a long-term solution. In other words, the good people of Japan have bigger concerns than higher taxes or a growing bond bubble.

By: yellowjap Mon, 17 Mar 2014 10:09:40 +0000 Yes! Please try. I make good trade, again. Short is nothing comparing to earthquakes. We don’t afraid short, but we do afraid long. We have around 1750 local government body like Detroit floating only by LDP politics. Yes, they are Liberal Democratic. We have NO Republicans nor conservatives. So, all companies are running on union base.
Technically Japan is socialist or cooperative productive communist country. So, every workers holding assets and some cash to play. And Japanese worker don’t allow any workers waiting order for too long. They are expected to find work and do voluntary. I joined worker class for few years after decades of consulting and business runner.
It was quite interesting experience for me learning how the system working from inside. From cultural basic knowledge I can understand but from free market view points, they are aliens. Money does not drive, but most system depend on emotional attachment to work, pride on work competition and love for creation as product of people.
In easy word for Americans, they are running all system including high technology and finance in method of farmer’s community competing, say pumpkin or water melon. They have no mentality for profit at all. Democrat GHQ designed this society. It is really interesting. And I start analyse why same methods does not work in other places.
I give you clue easy to study for you. 1st oversea case was Dutsun factory as Nissan in Ayutaya, Thailand. 2nd good case is Honda in Ohio. I do believe Japanese are focusing on creation of middle class community. And R128, Detroit and Wall st. can’t take loss of assets value.
I do believe nobody jump in except Italy to a location like Detroit. (Look at Ital-Thai project. They smell support funds from government since WW2, nature don’t change.) Automobile is quite a commodity products so production should be local in at least in every state because demand is different by environment and density of traffic.
LDP is quite famous not doing anything right for companies and industries in Japan. So, try your good luck. Japanese Banks and security companies have too much money from people, nobody to rent, and afraid to take risk. So, they will increase volume, not price of asset value to cover long time sponsors’ loss.
For example, instead of higher real estate, they expand city on ocean like Ariake and retail sales for condo is going on along coast. Same time, they expel many government facilities and jobs to middle of no where like Tsukuba, and Saitama.
Baby boomer and flower children will keep losing their benefit. And younger generation start receiving benefit. We start having 85%+ job rate for high school graduate (which is known to be stupid because of easier education policy by teachers’ union for another 10- years) this is first wave of new middle class replacing baby boomers.
This is re-distribution period of youth and companies both domestic and global. Thanks for pushing us on TPP. Finally, a rice farmers’ JV went Vietnam. This will be good start for cutting farmers’ benefit and move into oversea production, not only buying. Farmers given land by GHQ and doctors given demands by GHQ as social securities are 2 last biggest union support bodies making LDP to decide wrong preventing competitions and lost any strength.
Anyway, Japanese Banks have no choice than making money on short covering JGB to generate cash flow for base strategy. Because all local governments body bond will fail otherwise. In US market company junk bonds are junk bonds. In Japan, municipal junk bonds are junk bonds which went bad by corrupted managements. So, your stock index is quite dangerous to short. In Japan, interest rate are quite dangerous to long, as they are united to print, anytime. They rather drop from BIS and isolate because nobody in Japan will win. Instead, bankers will be sentenced in jail, and the bank will lose license.

By: matthewslyman Mon, 17 Mar 2014 05:29:32 +0000 Some of your arguments or contingency-invoking conditions are effectively counted here twice! For example, the shortage of construction workers and bottlenecks in materials such as cement would be substantially alleviated if the Japanese private economy was to substantially contract as you are suggesting it will. In this scenario, if Mr. Shinzo Abe plays his political cards right and enlists proper support early enough from universities and research groups in identifying appropriate projects; he will be able to use a monetary expansion to fund an expansion in public infrastructure works which would boost the Japanese economy. (Perhaps though, it is more likely in the recession scenario, that he would simply use monetary expansion to fund sham “public infrastructure” works in politically supportive areas or in marginal constituencies. Japan is not alone in this behavior: the USA’s infamous “bridges to nowhere” are case-in-point that political patronage knows no boundaries, it is not exclusive to Japan, Africa, Eastern Europe or other politically underdeveloped parts of the world! I wish that other nations than China and Germany would play a long economic game with proper Keynesian anti-cyclical medicine, instead of just engaging in “monetary expansion” and “quantitative easing”, leaning on banks to lend and hoping for the best!)

I believe your overall thesis that there is substantial risk in many foreign markets (characterized perhaps more particularly by the structural non-payment of taxes, and the pervasive infiltration of corruption, cronyism & political patronage, and mafia gangsterism into the system); but for the reason given above, I think your thesis might be unfairly biased against Japan. The market and the risk are both global.

By: JSCD Sun, 16 Mar 2014 01:42:34 +0000 I completely agree that the next financial crisis will originate in Japan. Sometimes, one can get the best indication of how things stand on the ground by walking the streets of a city.

I live in Tokyo and walking around the city, I am struck almost on a daily basis by the huge construction boom in residential properties which I started noticing about a year ago. While old homes in Japan often have to be replaced every 30-40 years in Japan, this construction boom seems quite different. In many of these cases older residents living in large homes sold them to developers, who demolished these and then constructed two or three smaller homes on the same piece of land. This scenario has been repeated thousands of times all around Japan, in order for real estate companies and buyers to beat the tax increase scheduled to go into effect on April 1.

In effect, the planned tax increase has acted as a catalyst to accelerate and pull forward this construction for new homes, that would otherwise have taken place over the next 3-5 years. This has created a spike in construction jobs, demand for construction supplies, as well as, all the things people need when they move to new homes (appliances, electronics and furniture, etc.).

We are now at the tail end of this boom, since the higher tax will kick starting in a couple of weeks. I am quite scared and very concerned that the pulling forward of demand will actually result inmuch slower growth for the Japanese economy over the next several years.

By: NoFixedID Sat, 15 Mar 2014 08:34:16 +0000 It is extraordinary that this article makes no mention of the Fukushima disaster, which remains out of control and has the potential to finish Japan as a nation. Former PM Naoto Kan acknowledged that events in March 2011 could have forced the evacuation of Tokyo. This may still occur if one or more of the spent fuel pools collapses or if the escalating contamination of groundwater forces the evacuation of the plant. Given the dilapidated state of the buildings, the lack of technologies to unload the spent fuel pools, the high probability of another major earthquake and the Japanese government’s abject failure to address the crisis, the plant seems destined to collapse – taking Japan, and the global economy, with it.

By: 2Borknot2B Sat, 15 Mar 2014 01:07:23 +0000 Bond buying to “pump up” stalk markets only appears to be a effective strategy at this time, but like all illusions they are eventually dispelled. L.

By: veethevee Fri, 14 Mar 2014 16:09:10 +0000 He thought He is American but he is not. What an dumbass.