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from Breakingviews:

The lessons for China from Japan’s lost decade

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is China condemned to suffer a Japanese “lost decade”? Its economy today has three big similarities with Japan in the late 1980s: High and rising debt, diminishing export competitiveness and an ageing society. China can avoid slipping into Japan’s deflationary hole, but only if it learns from Tokyo’s failure to cleanse its banking system.

The most striking similarity between Japan in the late 1980s and China today is the level of debt. In 1989, total private credit in Japan was about 200 percent of GDP. It is around the same proportion of the economy in China now.

Another important parallel that doesn’t get as much attention is a rising currency - and diminishing export competitiveness. This is as big an issue for China today as it was for Japan a quarter century ago.

from Photographers' Blog:

The quiet of a nuclear beach

Iwaki, Japan

By Issei Kato

“I have to arrive at the beach before it starts raining.” This is what I was thinking as I drove up to the Fukushima coast, less than 35 km (21 miles) from the crippled nuclear plant. Because the weather forecast said it was going to rain in the region, I had packed a waterproof kit for my camera and beach gear so I could be ready to photograph the beach.

Iwaki city, located just 40 km (24 miles) south of the plant, had declared nearby Yotsukura beach open to the public this summer, the first time since a massive earthquake and tsunami triggered a nuclear crisis at Tokyo Electric Power’s Fukushima Daiichi nuclear plant. But, during the period between July 15 and August 18, when the beach was open to the public, the operator of the plant admitted that contaminated water was leaking out to the ocean. Government officials said 300 tonnes of radioactive water was probably flowing out to the sea every day.

from MacroScope:

Does less QE from the Fed necessarily mean a stronger dollar?

Based on the latest U.S. Treasury flows data, it may be time to ditch the textbook theory that says less monetary stimulus means a stronger currency - at least for now.

The problem may just be that the theory doesn't fully account for the situation when your largest creditors - and they are very large - are trying to beat you to the market.

from Breakingviews:

Why Japan’s corporate tax rate should remain high

By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Japan’s prime minister should stop fretting about the country’s high corporate tax rate. Easing the burden on companies in an attempt to stimulate investment might seem appealing, but could prove both unnecessary and fiscally reckless. A temporary investment tax credit would be a better alternative.

from MacroScope:

Japan’s ‘quadrillion’ feat

The age of the quadrillion is finally here.

After years of being stuck in millions, billions, trillions and other terms that usually come up short of twelve zeros, Japan has broken out, with its debt crossing the magical 15 zero barrier.

Japan's public debt exceeded 1 quadrillion yen -- or 1,000 trillion yen ($10.39 trillion) -- for the first time in June, Finance Ministry data showed last week.

from Breakingviews:

Japan Index: A second setback for Abe’s experiment

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The Breakingviews Abenomics Index has fallen for a second successive month, hitting its lowest level this year in June. Japan’s jittery bond markets and sliding inflation expectations were the culprits. But other indicators still suggest the end of deflation is near.

from Breakingviews:

Sony brush-off won’t end Dan Loeb campaign

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The tussle over Sony may be the most courteous shareholder battle ever. Back in May, hedge fund manager Dan Loeb respectfully suggested the company spin off a stake in its entertainment arm. Now the Japanese group’s board has politely rejected the idea. But the activist appears to be digging in for the long haul.

from Breakingviews:

Gift coupons could sweeten Japan’s sales tax pill

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Shinzo Abe mustn’t be coy about raising Japan’s sales tax. A plan to double the country’s consumption levy is crucial to convincing bondholders that public debt won’t spiral out of control. If the prime minister is worried demand will take a hit, shopping vouchers could limit the damage.

from Ian Bremmer:

The countries not letting a crisis go to waste

In 2008, before the financial crisis had even reached its nadir, Rahm Emanuel famously said: “You never want a serious crisis to go to waste.” Emanuel’s quote became the conventional wisdom for crisis management, even if the idea is age-old: John F. Kennedy Jr. famously pointed out that the Chinese word for “crisis” is composed of two characters, one for “danger” and one for “opportunity. 

Nearly five years after the global economic meltdown, we can now look at the world’s major powers and assess how well they’ve responded to their various crises. Three categories emerge. Who took advantage of crisis? Who never really had a true crisis? And who is letting crisis go to waste?

from Breakingviews:

New-age trade clubs: A guide for the perplexed

By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Global trade is going private. After a frustrating 12-year-long wait for the World Trade Organization to hammer out an accord acceptable to its 159 members, businesses and governments are now hedging their bets. Enter the Trans-Pacific Partnership, or TPP, which received a boost this week with Japan joining the negotiations.

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