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Japan swings back to current account surplus

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Hope it continues

5 ( +5 / -0 )

While an account surplus is good news, I wonder how much of this is due to the government passing bills last month allowing them to issue new bonds up to 44.2 trillion yen. An artificial account surplus?

0 ( +2 / -2 )

While an account surplus is good news, I wonder how much of this is due to the government passing bills last month allowing them to issue new bonds up to 44.2 trillion yen. An artificial account surplus?

But it registered the current account surplus in February. Last month was March.

2 ( +3 / -1 )

result of huge reduction of imports....temporary tiny surplus !

0 ( +0 / -0 )

not like this is going to reverse the destruction of the pension system.. all smoke and mirrors

2 ( +3 / -1 )

Good point oginome. Touche!

0 ( +2 / -2 )

result of huge reduction of imports....temporary tiny surplus !

No, it won't be temporary. Feeling disjointed because you thought Japan would never see a current account surplus again? 2011 was a black swan year for Japan, it was the worst year since the end of WW2, and just because Japan ran a deficit doesn't mean that deficits will be registered forevermore. Japan is a mercantilist economy, these economies strive for and survive on surpluses.

-5 ( +1 / -6 )

@oginome, man i give you credit for being faithful to the Japanese economic cause, but what you really seem to be blind to is that with a $10Trillion bill that you and all other Japanese tax payers present & future, will have to be repaid to the Government eventually, this will mean much higher taxes, forget about 10% more like 25%++ to make any sort of dent. aging population falling birthrate (fewer future taxpayers). when it comes for you to retire you pension will be pathetic and when you get it probable around 70years old. just hope youve got an escape route when things get really tough, because believe me that economic tsunami is coming sooner than you think,.

5 ( +5 / -0 )

@oginome, man i give you credit for being faithful to the Japanese economic cause, but what you really seem to be blind to is that with a $10Trillion bill that you and all other Japanese tax payers present & future, will have to be repaid to the Government eventually, this will mean much higher taxes, forget about 10% more like 25%++ to make any sort of dent. aging population falling birthrate (fewer future taxpayers). when it comes for you to retire you pension will be pathetic and when you get it probable around 70years old. just hope youve got an escape route when things get really tough, because believe me that economic tsunami is coming sooner than you think,.

I stated the current account surplus won't be temporary, considering Japan ran one all the way to 2010, even with these same issues on the horizon and now again has a current account surplus and so soon after the worst year in its post WW2 history! Japan's population isn't the only which is ageing, Germany's is to, yet I don't see people harping on about imminent German economic collapse. And LOL, you've already shown how Japan's economy can be maintained by raising taxes and retirement ages. The current account surpluses will continue. Sad that for those of you with your economic implosion fantasies, your dreams never seem to come to fruition, lol.

COOKING THE BOOKS yakitori style and loving it:)

Not really. So Japan cooked the books for 30 years?

-3 ( +2 / -5 )

Japan will most likely have to live without yearly surpluses for a little while.

4 ( +4 / -0 )

Japan will most likely have to live without yearly surpluses for a little while.

Japan will get back their surpluses, and also remain the world's second largest creditor nation as America stays the world's largest debtor nation.

-2 ( +2 / -4 )

Nobody is harping on Germany because this website is JapanToday... not GermanyToday. I don't think this merits a LOL... or even a ROFL.. maybe a ROFLcopter

Japan's got serious problems in the future.. the aging population, declining birthrates, no immigration to make up this shortfall.. they can only raise taxes so much before its such a huge disincentive to work. And raising the retirement age? What do they expect, people to work until they are 75?

and now the fact that Japan has shuddered all of its nuclear power plants, where do they expect to make up the difference? They will be forced to import even more energy... and with rising energy costs all over the world, this isn't a pretty picture.

2 ( +2 / -0 )

@napoleancomplex

NO not in your wildest wet dreams. Here is why, the amount of currency surplus is at par with governmental budget deficit meaning if government were to release all it's accumulated foreign assets it will break even(although can't say what will happen to the rest of the world).

Another point is energy, Japan had already test mined methane hydrate lying on the ocean bed within the coastal Japanese shore and had proven promising. There is an estimated reserve of methane hydrate to last Japan for 100 years at present day consumption.

-3 ( +0 / -3 )

Nobody is harping on Germany because this website is JapanToday... not GermanyToday. I don't think this merits a LOL... or even a ROFL.. maybe a ROFLcopter

I was speaking in general, not just on JT website.

Japan's got serious problems in the future.. the aging population, declining birthrates, no immigration to make up this shortfall.. they can only raise taxes so much before its such a huge disincentive to work. And raising the retirement age? What do they expect, people to work until they are 75?

Japan isn't the only country to have these problems. Taxes in Japan are still lower than in Western European countries. And no, the retirement age won't be raised 15 years to 75. The retirement age right now of 60 is lower than most developed nations'. If taxes and retirement ages rise, then it will simply be that they reach the level of countries such as Germany and other European countries, not '75' and a 'huge disincentive'.

and now the fact that Japan has shuddered all of its nuclear power plants, where do they expect to make up the difference? They will be forced to import even more energy... and with rising energy costs all over the world, this isn't a pretty picture.

The rising energy costs are a problem for every country. Japan can re-invest in alternate energy sources. Again, using the Germany example, since it is now the economy that the world now salivates over, they've also decided to completely phase out nuclear energy over the next decade. I don't see people running terrified thinking that Germany's current account surplus will disappear.

-7 ( +0 / -7 )

Japan's got serious problems in the future.. the aging population, declining birthrates, no immigration to make up this shortfall.

Indeed, the aging population is a very serious issue that Japan definitely has to deal with. It is not YET a major problem, but it is going to be in the following years. There are two solutions: either to allow an influx of immigrants or to provide benefits to young couples in order to have more children. Personally, I support the second choice.

Anyway, I have faith in Japan and its economy. Despite the long recession following the bubble economy, Japan managed to survive and now it has to focus on long term growth. We don't need more bubbles.

0 ( +1 / -1 )

Japan is the world’s largest creditor nation with over 3 trillion dollars in net international investment position -- by far the largest on the planet.

Japan’s public sector debt is like the flipside of a coin – it simply reflects the vast surplus from its private sector. Japan’s private sector has a surplus equivalent to 9% of GDP last year; and guess what’s the public sector deficit rate? You guessed it, 9%. These surpluses are deposited in J-banks and eventually find its way into Japanese government bonds. I mean how else can J banks make money? Loan demand is anemic and there are hundreds of trillions of Yen of excess deposits sitting on their books with nowhere to go – Japan’s private sector is extraordinarily strong and awash in money.

1 ( +2 / -1 )

If only those J-bonds had some semblance of a decent return... i guess it really doesn't matter since the "in-house" investors, i.e Japanese Pension Funds and institutions don't demand a higher rate.. a 30 year bond is yielding less than 2% right now!

0 ( +0 / -0 )

44 trillion yen in bonds was issued and so this surplus is nothing but artificial and miniscuel at that and we will have to pay these bonds back eventually and how ... By raising taxes ofcourse. Japanese govt has an enormous deficit allready without this extra 44 trillion....oh my god! People like oho one are optimistic which is nice but you have to be realistic. China is cheaper - Korea Thai and PI India too... Japan is stagnating through there false hopes and huge pride....

3 ( +4 / -1 )

44 trillion yen in bonds was issued and so this surplus is nothing but artificial and miniscuel at that and we will have to pay these bonds back eventually and how ... By raising taxes ofcourse. Japanese govt has an enormous deficit allready without this extra 44 trillion....oh my god! People like oho one are optimistic which is nice but you have to be realistic. China is cheaper - Korea Thai and PI India too... Japan is stagnating through there false hopes and huge pride....

Oh dear, did you not read the article? The current account surplus was registered in FEBRUARY, before the 44 trillion in bonds was issued. This was already covered in the comments section.

-7 ( +0 / -7 )

oginome: No just comparing Japan to an economy which actually is in dire shape.

Wait, were you the guy othe iPad 3 thread who was so threatened he wrote dozens of potss saying the iPad is really a Japanese product?

2 ( +2 / -0 )

Japanese exports have been inching higher on the back of a recovery in the United States, a positive sign for an economy heavily dependent on overseas demand for growth

I think this is the key takeaway from this article..

0 ( +0 / -0 )

@Napoleancomplex:

You are taking about the nominal yield (i.e. not adjusted for inflation). With deflation, the real yield for 10 year JGB is the second highest in G7 (behind Italy).

So with zero interest rate and a vast depositor base, investing in JGBs is basically free money for J banks – in fact, they made over a trillion yen in JGB last year.

Also, the JGB “doom and gloom” school’s reasoning is so comically circular: the conclusion is given and any evidence (pertinent or not) points to their favored conclusion -- JGB will collapse.

So JGB will collapse because:

• Trade surplus • Trade deficit • GDP grew • GDP contracted • typhoon • earthquake/tsunami • summer heat • Yu Darvish pitched a bad game…..

Basically, anything will automatically lead to the JGB collapse, logic be dammed.

1 ( +2 / -1 )

@goal

Yeah, I was pulling that number from Bloomberg, on face value..

I would argue though that on the whole, being in a deflationary situation is not the ideal place to be in

1 ( +1 / -0 )

Technically Japan is not even in deflation – it’s in what's called “disinflation” because statically a CPI of 0.3% (Japan's inflation rate last year) is the same as -0.3%.

1 ( +2 / -1 )

profits man... if they can find it somewhere cheaper and of similar quality then thats where the business comes from, be it Japan, Korea, Thailand, India.. etc etc.

0 ( +0 / -0 )

profits man... if they can find it somewhere cheaper and of similar quality then thats where the business comes from, be it Japan, Korea, Thailand, India.. etc etc.

But that had nothing to do what I was saying. I stated that the iCrap was composed mainly of Japanese components and materials, not what would happen in the future,

http://english.chosun.com/site/data/html_dir/2011/03/21/2011032101119.html

But a peek inside cutting-edge products like the iPhone tells a different story. Japanese manufacturers still account for 66 percent of the market for core components and materials like glass, metals and films that go into cutting-edge electronics

-8 ( +0 / -8 )

@ oginome: Thanks for your kind words. I’m no economist (I’m actually a law student), but I am a contrarian by nature and enjoy thinking critically.

BTW, this diagram nicely illustrates Japan’s dominant (upstream) position in the manufacturing of semiconductors:

http://images.businessweek.com/mz/11/13/1113_mz_18econsupplychain.pdf

-1 ( +1 / -2 )

While it is good to think positive it is not realistic to believe that Japan has any surplus what so ever.. Japan holds debt so high that there is no doubt that the day is fast approaching when the J bonds will become junk bond, worth far less than the value when purchased..Interest earnings and pension funds??? Ya right,try 25 percent tax rates and low value basic subsistence payments.The Japanese people will not be able to increase production levels without growing it's population substantially and that's just not going to happen, Japans debt is over 200 percent of GDP and growing.Also, the population is both aging and decreasing..Few will immigrate to japan because tax rates are very high and will be increasing and there is also the fear of all the radioactive contamination that has occurred and will be around for decades,weather real or perceived this fear will have affect. And for those keeping their fingers crossed and hoping the US economy will prop up Japan via importing Japanese goods??? Good luck with that! The dollar has decreased greatly in value and this is the sole reason exports from Japan to the US have strengthened..However as the US economy slowly strengthens the dollar value will rise and Japan production will not be as attractive to US consumers.. Japan is a fading global economic powerhouse..Get prepared now because hard times are on the horizon for Japan

0 ( +0 / -0 )

Japan will not compete in the export market as there Yen increases against the dollar..And though an incresing Dollar value against the yen can make Japans exports attractive it also allows for cheaper products from South Korea,China,Micronesia,and other countries...Keep an I on US interest in India ,Brazil ,South Korea,Canadian and Mexican trade along with trade agreements and partnerships...There are better places for US investments to be applied than in Japan..The world economic power is shifting raidly and you can bet that the US will do what it can to trade with Japan but the US and US consumer will always go wherever they get the biggest bang for the buck spent..China and South Korea India and Brazil are going to be our largest trade partners in the future.

0 ( +0 / -0 )

Japan needs to grow up and stop trade sanctions on automobiles ,rice and other goods.. join the TPP without asking for trade barriers such as import tariffs and quota restrictions...The world explosion in free trade will leave Japan struggling to compete because of selfish national protectionism policies...If you cannot except fair competition of foreign goods sold into your markets then you should not be allowed free trade of your products with countries that agre to free trade without restriction.

0 ( +0 / -0 )

@steve counldnt agree with you more, unfortunatley I think oginome is stuck here so tries to kid himself that everything is rosie & fine. LOL

0 ( +0 / -0 )

@1standgoal if Japan is so dominant in semiconductors, then why are they going bankrupt or losing money, Ill tell you its Samsung there manufacturing volume is now massive, dwarfs any of the Japanese makers, true that the Japanese semicondictors might have a slightly higher performance but its all about price which Samsung make very cheap which is why they have nearly 50% market share.

2 ( +2 / -0 )

The fact that Japan had a trade surplus in February is old news, I read about last month, so I am not sure why it is being reported again. Here is the actual trade balance figures from the Japanese ministry of finance for the first 20 days of March... http://www.customs.go.jp/toukei/shinbun/trade-st_e/2012/201203be.xml as the data shows, once again Japan is in a trade deficit and I doubt the final 10 days are going to make a significant change in the deficit.

Currently the BOJ is under immense pressure to conduct further easing (print yen), and have already set a target of 1% inflation for the current year. When the trade balance numbers for March are released and the BOJ has time to realize they are nowhere close to realizing a 1% rate, complied with the government pressure for more dovish action, expect major monetary easing and the yen to significantly weaken.

Japan is stuck between a rock and a hard place and the glue that keeps Japan's financial system together all hinges on the yields of JGB. Should they spike, Japan will be in a world of pain as interest payments on their debt become an ever larger percentage of tax revenues. To prevent this, Japan will almost certainty monetize their debt by printing an ungodly amount of money in an effort to keep yields on JGB down. This will destroy the value of the yen and possibly lead to hyperinflation. The catch-22 in all of this is that if Japan truly gets out of their deflationary rut and achieves a 1% inflation rate, JGB will HAVE to rise to produce a "real" rate of return (since currently they are at about 1%) and kicking off the chain of events that was just described. The other options are just as dismal -- keep the status quo and the yen will strengthen even more and watch Japanese companies drop like flies or a downright default which will is the least likely scenario given that their debt is almost exclusively internal.

0 ( +0 / -0 )

Retiring (and getting a nation pension) at 75 is one extreme, but certainly there is nothing wrong with raising the age in this country to 65 / 67...

0 ( +0 / -0 )

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