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Japan posts 8th straight surplus in February

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all countries that import materials for manufacturing purchase that at similar prices, the biggest cost for most producers/manufacturers are wages, having a low yen just makes the wages cheaper compared to other countries that manufacture the same goods. having the yen at 80~90/$ making manufaturing in Japan one of the most expensive in the world. 110~130/$ makes Japan more competitive against other countries. having a high yen just makes j manufacturers send more production overseas, thats less jobs, less income taxes, higher welfare costs, more money being drained from Japan

0 ( +0 / -0 )

Since Japan imports most raw materials that go into their products because they have little or none, a current account surplus during a weak yen can only suggest that Japanese manufacturers purchased most of their materials during periods with strong yen and contributed to a current account deficit, therefore there are no major trade surpluses in the long run, unless, the price elasticity of demand (PED) of J-manufacturers for raw materials is significantly different from the PED of foreign consumers for Japanese goods.

0 ( +0 / -0 )

you could consider that the yen is still high...certainly not weak...

If considering nominal exchange rates, that may be the case.

But if one looks at real effective exchange rates, the picture is different.

For example: http://commons.wikimedia.org/wiki/File:JPY_Real_Effective_Exchange_Rates_(1970-).svg

1 ( +1 / -0 )

the Japanese economy was built on an exchange rate of over 200yen/$. anybody who says that it can also be strong with a high yen at 80~90yen/$ is just plain delusional.

You can't use the same parameters and figures from the 80's to describe the current exchange rate. Since those days, the euro has been created, the german mark and french franc have disappeared, and new currencies have grown in Asia. A new formula must now be used.

The relative exchange rate puts the yen right now at a thirty year low against the dollar, or roughly the 200/1 rate you quote. Yet the economy is still not performing.

If you take a twenty year time sample and certainly if you go back to just 2006 before the last crash then you could consider that the yen is still high...certainly not weak...just slightly high at the moment compared to the last time the world was not in recession. So in fact it is other currencies that are weak. ...or is that weak news reporting from short term journos with no fact checking?

Read what I just wrote.

1 ( +3 / -2 )

If you take a twenty year time sample and certainly if you go back to just 2006 before the last crash then you could consider that the yen is still high...certainly not weak...just slightly high at the moment compared to the last time the world was not in recession. So in fact it is other currencies that are weak. ...or is that weak news reporting from short term journos with no fact checking?

0 ( +0 / -0 )

@tinawatanabe It is more like 2 billion and you should be paying more.

-3 ( +0 / -3 )

Sangetsu03, you apparently know nothing of history. Populations rise and have risen and fallen throughout history via war, famine, disease and other reasons. However, nations, cultures and people have survived. Japan has been around for centuries and will continue to exist. Countries that have been around for millennia don't just disappear in a few decades.

Back during WW2 Japan only had a population of around 70 million and for most of Japan's history the population stayed around 30 million. Look at Russia. It has 17% interest rates and the Ruble is at 68 to the dollar. Is Russia still standing? Yep.

When will Japan recover? Maybe it already has and just didn't tell anyone due to creating another wave of anti-Japanese sentiment like in the 1980s and early 90s. In my mind this is the most likely scenario, IMO MSM is mostly just propaganda for the unwashed masses.

I do agree with you that America is in decline (empires don't last forever). The most likely outcome for us is the loss of our hegemony and the creation, of a multi-polar and significantly more unstable world.

-1 ( +3 / -4 )

(remember you negative posters how you were even more adamant about the demise of Japan back then).

And how have things improved 5 years later? The population has fallen by a couple of million, the national debt has surpassed 1000 trillion yen, debt servicing costs have increased, wages remain stagnant, full-time jobs continue to be replaced by part-time jobs, prices for food continue to rise, yet inflation remains stable as the rise in prices has resulted in people tightening their belts instead of spending more. The government has been forced into buying bonds from itself, because not even Japanese institutional buyers won't buy them at the current artificially-manipulated low rates. The recent consumption tax increase cost the economy three yen for every extra one yen of revenue raised, the economy dipped into recession in the last quarter, and another tax hike is on the way. Japanese companies count on the domestic market for more than half their sales, which means that they will see their market reduced by 30% by the year 2050.

The demise of a nation doesn't occur overnight, just as a large ship doesn't sink in only a moment. The demise began back in 1990, the water is only up to knee level now. But soon enough it will rise over our heads.

0 ( +4 / -4 )

Go Japan!!!

2 ( +5 / -3 )

only global Japanese companies have benefitted and many SMB's are struggling. Cheap oil and a weaker yen against the dollar is not a quick fix if Japanese is not producing or selling more.

0 ( +2 / -2 )

Again a lot of verbose blah blah blah along with all the psuedo economic experts. The only thing that matters is what is happening today. Japanese are not as gloomy as every gaijin think and in fact its far far better than what the situation was five years ago (remember you negative posters how you were even more adamant about the demise of Japan back then). The positive account surplus was one of the measurements that was touted as a short lived measurement of the "sinking J economy", well it continues. How many of your countries of origin run an account surplus?

0 ( +5 / -5 )

And just how much of the surplus made it's way into the coffers of the national government? The additional tax revenue should be used to pay down the deficit, but it wont.

0 ( +1 / -1 )

anybody who says that it can also be strong with a high yen at 80~90yen/$ is just plain delusional

It depends IMO.

If the goal is to export cheap stuff then sure, a high currency isn't going to help as anywhere that makes the same stuff will be relatively more competitve price-wise.

But if the goal is to mature as an economy and produce awesome stuff that is worth paying for, a high currency won't be such a burden, and it'll actually help lower production costs through lower costs of all the imports which are brought in to have value-added on to them through local production. Are Apple selling much fewer iPhones due to the strong US dollar? (I'm not sure, but I suspect not because people just demand these products).

The Abenomics choice seems to be for the former path rather than the latter.

But the bad part is that the surplus is caused mainly by lower oil prices, which are defeating the BOJ's drive to achieve it's "price-stabiity" (inflation) goal of 2%.

I think this is going to be temporary, myself. Oil prices might possibly drop another 50% over the next year in some scenario, but oil prices won't keep going down like that every year forever. So the happy oil price effect will come out of the price numbers towards the end of the year and early next year, assuming oil prices stabilise. And lower oil prices will be an economic positive too.

This also means they will have that much less to spend on other programs.

But my friend! They'll just issue more debt and the BOJ will monetize it!

-2 ( +1 / -3 )

Out of 12 billion surplus, 7 billion dollers are used to pay for US military in Japan. With remaining 5 billion, expensive machine purchase, relocation cost, US bond purchase and salary for American English teachers. How much will be left?

-9 ( +3 / -12 )

Mixed news. It is good for only two reasons, that multinationals can take offset the tax loss of repatriating their overseas earnings due to the much weaker yen, and that Japan has brought in more foreign currency, which helps to stabilize the value of the yen. But the bad part is that the surplus is caused mainly by lower oil prices, which are defeating the BOJ's drive to achieve it's "price-stabiity" (inflation) goal of 2%. If the government doesn't meet this goal, debt-servicing costs will be higher than they had planned when they put together the budget, meaning that they will have to spend that much more of the revenue they collect to pay for these costs. This also means they will have that much less to spend on other programs.

-1 ( +2 / -3 )

well I as an exporter do more for the Japanese economy than those that want cheap imported goods or have there salaries sent home at a higher xchange rate. its simple economics really, bring in more money than your sending out. having a high yen just makes bringing more difficult. the Japanese economy was built on an exchange rate of over 200yen/$. anybody who says that it can also be strong with a high yen at 80~90yen/$ is just plain delusional

2 ( +4 / -2 )

There is export value in yen of Japanese goods, but quantity of exports is also measured by the government as well.

I recall hearing on the news frequently that export volumes haven't increased much at all, and it's only been due to yen weakness that the yen value of exports has gone up.

Maybe someone can post some charts of the two data points so that all us JT economists can be properly informed.

3 ( +4 / -1 )

Measured in what currency? The yen?

Yes.

Seriously, if you don't know the answer to this most basic question of international trade, you might want to take some time to do a little bit of side research into basic economics and trade before making posts about the export value of Japanese goods.

Japanese exports are up under Abe and are on a general path to make a full recovery and surpass the pre-Lehman Shock days in the next year or two.

Just sayin...

0 ( +7 / -7 )

Real exports have risen by about 10% since Abe took office. More Japanese domestic products ARE being exported abroad. It's a simple fact.

Measured in what currency? The yen? If so, then Japanese exports have actually fallen if measured in dollars/euros.

-1 ( +5 / -6 )

None of the better current account figures were due to an increase in Japanese domestic-made products being exported abroad. They were solely due to a fall in the price of imported fossil fuels and an increase in returns for financial investments made abroad due to a weakened Yen.

Real exports have risen by about 10% since Abe took office. More Japanese domestic products ARE being exported abroad. It's a simple fact.

3 ( +6 / -3 )

@wtfjapan.

Not only have you misunderstood the information given in the article - the increase in the current account surplus has not helped the domestic economy at all because none of it is due to increased production and thus increased jobs - you have missed the most pressing point of my - the current account surplus is exclusively due to investment in services and businesses abroad, which inevitably will decline quite rapidly as the dankai generation supplement their declining pensions with their savings - you have really have misunderstood the real malaise of the Japanese economy since the 1990s.

The value of the Yen, as most economists now agree, has little very bearing on the welfare of the domestic Japanese economy, the 'Japanese Curve' of old, because most Japanese manufacturing is now taking place outside of Japan. It was always a whine of the LDP, set in the 1970's mindset and a few cognitively challenged posters on here that a strong yen was the cause of Japan's economic ills.

The real cause of Japan's economic ills, even Abe agrees, is Japanese economic over-dependence on manufacturing, the lack of true service/IT economies that can operate on the world stage, Japanese consumer under-consumption, a shrinking workforce which is unproductivity by world standards of a developed economy.

-3 ( +3 / -6 )

Both are very temporary because inevitably fossil fuel prices will rise and more troublesome the dankai and that is why the nuclear reators will be switch back on to cushion the hit from higher oil prices in the future, make no mistake a lower yen will help Japan a lot more than a higher one ever will. just look back a few yrs when it was at 80yen/$ and the reactors where still on the economy was hurting bad, with a low yen and the reactors reducing the oil imports the economy will fair much better than the opposite. oh and dont expect the Yen to go below 100yen/$ anytime soon

1 ( +4 / -3 )

I think most of the non-oil producing countries benefitted greatly from this low oil price. For countries with absolutely no oil production, they all seem to be enjoying current account surplus. Saudies have saved Japan.

4 ( +6 / -2 )

As per BOJ the GDP contracted 2,1% in February compared to previous month. At the bottom line it means less production in Japan but more dependency from investment abroad.

-3 ( +4 / -7 )

wtfjapan

and those high yen lovers will still complain, low yen is bring some production back to Japan meaning more jobs more income taxes. not the other way around. Japan was built on exports not cheap foreign imports.

You have completely misunderstood the information.

None of the better current account figures were due to an increase in Japanese domestic-made products being exported abroad. They were solely due to a fall in the price of imported fossil fuels and an increase in returns for financial investments made abroad due to a weakened Yen.

Both are very temporary because inevitably fossil fuel prices will rise and more troublesome the dankai generation are now net spenders, rather than savers, and they are spending, rather than maintaining, those investments. The only thing that is stopping the Yen becoming the Zimbabwe dollar of Asia are those current account surpluses, but you can bet your bottom Yen that the dankai generation, all now on a fixed income pensions which are quickly losing their real value, as well as death duties, will erode those foreign investments and thus erode the current account surplus.

This is neither good news or bad news.

0 ( +8 / -8 )

Low yen and low wages in regional Japan mean a lot more jobs as the previous poster said.

Watch for this current account surplus to widen once nuclear power plants start coming back on stream.

1 ( +6 / -5 )

and those high yen lovers will still complain, low yen is bring some production back to Japan meaning more jobs more income taxes. not the other way around. Japan was built on exports not cheap foreign imports.

2 ( +9 / -7 )

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