Slices of Japanese business, politics and life
Historic is usually a word that makes my skin crawl when I see it in the news. Journalists are prone to overuse it, so when I saw it in our election stories I had to stop myself deleting it — because this election truly is historic.
The Liberal Democratic Party had never lost an election since its founding in 1955. Even when it lost power for a few months in 1993/94, it was because of LDP lawmakers defecting rather than an election loss.
It’s clear that the last two elections were votes for a change to the old system where the ruling LDP, big business and bureaucrats ruled the place. Remember the 2005 LDP landslide was led by Junichiro Koizumi running on the destruction of his own party’s pork-barrel history.
from Photographers' Blog:
Reuters Boston Photographer Brian Snyder spent a very long and claustrophobic day in the tiny dark hotel suite where a homeless nurse, Tarya Seagraves-Quee, and three of her four children have been living in Massachusetts for nearly two months.
A record number of families are now being put up in motels due to high unemployment and the rising number of homes going into foreclosure, costing taxpayers $2 million per month but providing a lifeline for desperate families.
from Summit Notebook:
Nomura's takeover of Lehman Brothers' European and Asia businesses is yielding results, and concerns the Japanese bank will struggle to marry cultures is misplaced, according to the man who drove the deal.
As his first stop during a trip to attend July 8-10 summit of G8 leaders in Italy, Aso went to the Vatican, gave the pope a Sony digital video camera and discussed the global economic crisis with him.
The global financial crisis has been a catalyst for many to look back at history and see what, if anything, was learned from Japan’s so-called “Lost decade” in the 1990s, as well as the Great Depression, to which the turmoil is most often compared.
But few have gone as far back as Tadashi Kikugawa, a former hot-shot trader of Japanese government bonds, who was a key market source of mine over the years.
After working at brokerages including Goldman Sachs and Morgan Stanley, he left the high-octane financial world in May last year to run a small, private museum for ancient Egyptian art in Tokyo’s Shibuya district.
Japan, slightly sidelined by the U.S.-UK "special" relationship and the Franco-German alliance at the G20 summit, is keen to stress the country can offer lessons to be learned from the country's banking crisis in the 1990s.
Here's a re-cap of what happened. In 1992, then-PM Miyazawa warned of a financial crisis unless banks were recapitalised using public funds now. Yet no action was taken. Between 1995 and 1997, staggering 5 financial institutions failed, forcing the government to inject public funds into 21 banks in 1998. Then two major banks were nationalised, then the government injected additional capital into 32 banks.
People say there’s no such thing as a free lunch. But in theory, a government can have one, some economists and Japanese politicians say, if it wishes to save the economy from deflation and recession. It should just print money and then spend it.
In the past few weeks, some members of Japan’s ruling coalition as well as economists have proposed such a move as the spectre of deflation looms in Japan, now amid what is likely to be its longest economic contraction in modern times.
For a company to be losing a lot of money is hardly surprising these days, but I was shocked last week when Hitachi said it would lose 700 billion yen this year, the biggest loss ever by a Japanese manufacturer.
Investors were also shocked, sending shares down 17 pecent the next trading day, wiping out $1.9 billion in market value.
Japan’s last boom may have lasted six years but it was like a heat haze, Japanese Economics Minister Kaoru Yosano says, underlining complaints from many Japanese that they have missed out on the export-led growth spurt.
The global financial crisis has sent Japan into a deep recession yet many did not really enjoy the preceeding boom — officially Japan’s longest period of expansion since World War Two.
Japanese interest rates have already dropped to just 0.1 percent, leaving the Bank of Japan with few traditional weapons to fight its corner of the global financial crisis as it meets on Wednesday and Thursday this week to review monetary policy.
It could, of course, return to zero interest rates, but Japanese policymakers are not convinced that this worked last time they tried it and, with rates already so low, how much difference would moving to zero make?