Raw Japan

Hey look, we shrank the budget

Japan’s ruling Democratic Party has long vowed to wrest power from the country’s bureaucrats. Now it’s taking its battles with them over spending onto live internet TV.

Three government backed budget-cutting panels operating from temporary premises in a Tokyo gym, have called in a series of bureaucrats to answer for projects deemed unnecessary or too expensive. The live internet broadcast of the resulting stand-offs can make for compelling viewing.

It’s also pleased voters concerned about Japan’s national debt, which is set to approach 200 percent of GDP next year. The website almost crashed on the first day of the hearings, when thousands of people tried to watch the broadcast at once, the Yomiuri newspaper said. 

For those who don’t follow it live, edited highlights appear nightly on news programmes, often focusing on Democratic lawmaker Renho, a stylish former TV presenter, as she grills squirming bureaucrats.

In a media poll this week, 76 percent of respondents said they thought Prime Minister Yukio Hatoyama was doing a good job with cost-cutting.

“What a wonderful broadcast,” said one poster on a news website. “The bureaucrats’ excuses are disgraceful.”

Oops, that was a secret?

It seems to have been an honest mistake for a new minister and Japan’s new government.

“I didn’t know about that (the release time). I’m sorry. Don’t make much of a fuss” Japanese Trade Minister Masayuki Naoshima told a TV reporter on Monday, right after he accidentally revealed the GDP figures ahead of their official release.

The minister looked sincerely surprised when informed of the official release time, but the light tone of his comments suggested that he did not fully understand the gravity of the error. 

He later offered a more formal apology, and Chief Cabinet Secretary Hirofumi Hirano reprimanded Naoshima for his leak of the market-sensitive data, which showed Japan’s economy grew much more than expected in the third quarter.

Still, I was surprised to see Prime Minister Yukio Hatoyama smiling when asked about Naoshima’s mistake.

“I can understand his wanting to spread the good news to the public,” Hatoyama told reporters.  “But the rule should be maintained. If you say he was careless, he surely was, and in that sense, it was regrettable.”

Naoshima made the blunder in a speech to the oil industry, but the small crowd of domestic reporters covering his event did not report it, and in that sense, the new minister was lucky.

from MacroScope:

How to count a recovery

If it takes two successive quarters of falling GDP to enter a recession, how can a country emerge from recession with only one quarter of growth?  In the past week or so, journalists have declared the recession over in France, Germany and now Japan.  Of course, most reports rightly ask how long this will last and stress that a genuine recovery is far from certain.

Some people regard the two quarters definition of a recession as arbitrary and a bit silly, something supposedly cooked up by one of Lyndon Johnson's economic advisers  to avoid acknowledging a downturn until after the next election.

But it does serve a serious purpose: At least it reduces the risk that we'll be misled by a statistical blip in one quarter's data which might be revised away in the next release.

Regardless of its murky origins, economists and lay people around the world use the two quarters recession rule. So why not be consistent?  Why not wait another quarter before we declare the French, German and Japanese recessions over?

Spring blossoms or just a break from winter?

It’s official: Japan’s economy shrivelled at a record pace in the first quarter.

Needless to say the 4.0 percent contraction in GDP (an annual rate of 15.2 percent, if you speak American) from January to March was not pretty — especially when you see that the pain has spread from Japan’s big autos and tech factories to the broader economy.

Much has been written about Japan’s heavy dependence on exports from its powerful manufacturers and how the slide in orders from the United States and Europe has forced factories to curb output, lay off staff and slash capital investment.

But that GDP figure is looking backwards to a time we know was bleak for the economy.

Just as the West is looking for signs of “green shoots” of new growth to see if the worst is over, so Japan is looking to see if its economy is now starting to sprout cherry blossoms — the traditional sign of spring in this part of the world.

The good news is that companies are starting to see a tentative pick-up in sales.

A senior executive of Konica Minolta, which makes key parts for LCD TVs as well as its brand name photocopiers, says his firm hit bottom in January and has seen some recovery since then. But he adds it is not really clear yet whether this is sustainable.

Whither the yen — a withering yen?

The yen’s fall against the dollar the past few weeks has been remarkably fast, and calculated from where it is now around 97.70 yen, the dollar has jumped nearly 9 percent this month, on track for its biggest such gain since August 1995.

The yen surged last year as the worsening financial crisis forced investors to unwind risky carry trades – meaning they had to buy lots of yen – under the belief that Japan’s economy and banks were holding up through the storm.

Only last month, the yen hit an over-13-year high of 87.10 per dollar. So why has the Japanese currency fallen so fast?

Analysts tell me one reason is some traders and investors who thought it would continue to rise, perhaps as far as 80 or even 70 yen, got out of such bets.

One catalyst was data showing the sharpest economic contraction in 35 years in the last quarter.

The bleak data seems to have further soured overseas investors’ views on Japanese stocks. Foreigners have been been net sellers for 12 straight weeks to the tune of 2.97 trillion yen, around $30.4 billion.