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business

Japanese gov't kept activist investor in limbo over key Toshiba vote, sources say

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By Takashi Umekawa and Makiko Yamazaki

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Unfortunately, this kind of thing is hard to avoid.

If countries want to keep CCP related people out of key industries, they have to treat everyone else the same way or be branded "racist" by people don't know the meaning of the word.

0 ( +3 / -3 )

Under Prime Minister Shinzo Abe's policies, Japan has moved toward improving governance and boosting shareholder returns.

And how's that going? There are still too many "executive officers” and “advisers” with no legally defined fiduciary responsibilities, and too many cross shareholdings. As for shareholder returns, if you go to the websites of a typical listed company and read their “basic policy on shareholder returns”, you’ll find that most of the ambiguously expressed message is about keeping internal reserves (i.e. a justification for why they DON'T give generous shareholder returns).

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Singapore-based Effissimo

Singapore is a tax haven for many overseas companies.

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And how's that going?

I invested in a Nikkei 225 index fund several years back, when the governance measures were coming in, and it's returned 50% so far, so I'd say it's going pretty well.

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Japan is probably the most "Communist" country in the world. On par with the current CCP, which it is not a surprise when many Japanese bureaucrats are either in Chinese pockets or allied with the CCP in many forms. Those ideas can be seen in Thomas Piketty’s book "Capital in the Twenty-First Century". The key figure for this Japanese "Communist" system is the entrenched bureaucracy.

Both Koizumi and Abe kinda failed at their plan of liberalizing Japan from this "Communistic" system. When Koizumi privatized the Japan Post, the bureaucracy saw him as a threat, so they eliminated him and Koizumi Children. Shinzo Abe has been more successful than Koizumi because he consolidated the bureaucracy under his Cabinet. At the same time, he has to face the regional bureaucrats slowing him down all the ways.

Toshiba is probably the greatest success of foreign, activist shareholders in Japan. Shinzo Abe wants to help the activist shareholders but it appears the bureaucrat factions in Japan are still powerful. He might need the helps from the good ole USA itself, like how Obama spectacularly destroyed the bureaucrat overseas operations through sanctioning the Yakuzas. Obama's sanctions against Yakuza are responsible for the rising decline of Yakuzas across Japan.

And how's that going? There are still too many "executive officers” and “advisers” with no legally defined fiduciary responsibilities, and too many cross shareholdings. As for shareholder returns, if you go to the websites of a typical listed company and read their “basic policy on shareholder returns”, you’ll find that most of the ambiguously expressed message is about keeping internal reserves (i.e. a justification for why they DON'T give generous shareholder returns).

-GBR48 from Japan Times basically answered my whole point for a long time.

Let's have a listen!

None of these concepts can survive within political systems. And governments do not reform themselves. They consider themselves to be perfect, particularly if they have just won an election, sanctifying their perfect nature.

The reforms that the article speaks of were expected to come with Abenomics, but after gathering the booty into their coffers, Japan Inc. didn't like the idea of reform and politely declined. And very little of the 'trickle down effect', dribbled down to the ordinary people.

It is unfair to blame the stats on the sales tax rise. Hyped by the media, world+dog went out and bought everything they were going to buy for the next six months before the rise, and then didn't need to buy anything bar essentials after it. Hence, sales were cannibalised from the post-rise period creating a bump, with a trough after it. This heavily magnifies the difference in figures.

There were other options to a rise in sales tax (although it is far too low for a first world economy, and far lower than most others). But no government is going to stop sluicing cash from public funds into private pockets, directly or indirectly. All governments have done this, but the 'one party state' stability of the Japanese government, post-war, has made them experts at it. That is why the Japanese state has a huge credit card debt, and why Japan Inc. has sacks of cash. If you are staring at a big hole in the ground and a big pile of soil, it isn't difficult to work out what happened.

Abe's big idea was for the BoJ to paper over the cracks in the economy, which it has done. He also fabricated a fiscal demon - deflation - to go with the political one - Kim Jong-un.

Deflation is only a bad thing if you are lazy and want to get rich sitting on your rear by your swimming pool. It doesn't affect the ability of a well-run company to turn an honest profit, and is nothing more than an indicator. One of the things it indicated was that Japan Inc. needed reform, but Japan Inc. has only reformed twice since the start of the Edo period (in 1852 and 1945). Both came courtesy of the US government. It didn't enjoy either and it doesn't want to do it again.

To compete, the obvious requirements are to loosen up the labour market from the current, frigid model, flip to promotion according to ability (not age), embrace new concepts via start-ups and the disruptive/sharing economy, and pay fewer staff more.

But none of these are seen as 'problems' by those in charge, who can rely on 57 varieties of Communist-level state support when the balance sheet goes red. Even if they no longer turn a profit, there will always be a bail-out to be had. With so little risk, why rock the boat by adopting nasty foreign behaviour?

The rise in nationalism, putting globalisation to the sword, and the consequent collapse in global growth, intensified by Covid-19, will see Japan Inc.'s declining position relative to the RotW PLC actually improve, as the state moves to prevent damage in the way it always has. Unreformed, Japan Inc. cannot compete on global terms, but it also cannot decline quite as dramatically as the rest of the world will.

I suspect this will be an opportunity for Japan Inc. to retrench and to celebrate its inflexibility as a benefit rather than a curse.

Post-Abe, the LDP is unlikely to swing further towards economic (or any other) reform. It is more likely to take the opportunity to quietly drop Abe's less popular policies - pro-tourism, pro-China, pro-global and pro-reform. Don't expect a Japanese Trump, but do expect a reversion to an earlier model. Something a bit more Showa era. Everyone loves a bit of retro. Young and female Japanese might not enjoy it quite so much, but in a nationalist world, you either do what you are told and fit in, or suffer the consequences.

Magic Monetary Theory may be invoked, or the public debt figure can simply be allowed to rise, to fund this. [Foreign] criticism of this can simply be ignored, as the Japanese financial position is mystically 'different' and foreign economists just don't understand.

The sales tax might even be reduced to reboot the economy when the virus passes. Under Abe, Japan dipped its toe in the globalised water, more than ever before. Too much risk. Too much loss of control. Too much consequential damage. Too many tourists. The desire to return to a simpler, 'more Japanese' way will score more votes.

Is this good for Japan? Not financially, but figures can be massaged or ignored. Not in the long term, but politics is all about the short term. Japanese culture will not evolve, as all healthy cultures do, but traditional societies operate under different rules, and can freeze their cultures in a past age, regardless of the damage it does (particularly to women).

Ideally, Japan and its financial power would have become an important link in a global push to mediate against climate change. Whilst the response to the virus is actually doing that by accident, much of it will not stick when the virus passes. The new world order, based on nationalism, will have no 'global' anything, so there will be no 'global psuh' for Japan to be part. As climate change hammers the country, it will just be more of the disasters that Japan has become used to.

What a country needs, what a country wants, and what a country gets are three entirely different things.

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