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Japan's current account surplus smallest in 15 years

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© 2012 AFP

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Is this the canary keeling over in the coalmine for japan???

-3 ( +1 / -4 )

the Bank of Japan better do something (more so than before) to stop the rise of the yen.. that being said, versus the USD, the yen has been appreciating since July 2007.. around 118 at that time, to around 76 today.

0 ( +2 / -2 )

Where are all these thermal plants.

-2 ( +1 / -3 )

This is just the beginning. Expect things only to get worse, because there are no signs of improvement on the horizon and the government has no clue what to do about it.

We all know Japan is on a slippery slope. Nothing will improve whilst the country is run by incompetent morons who still believe that Japan is superior or somehow special... Wake up you arrogant baboons and stop living in the past, you are destroying the country because of your stubbornness and lack of common sense and your rigid belief in the 'old ways' of doing things...

8 ( +10 / -2 )

The currency manipulators have set out to destroy Japan. This is the sad truth. Japan current politicians cannot get tough and stand up to them. Notice once DPJ takes power the yen is driven up in endaka value. This is due to weak international influence in DPJ. Only the LDP can save Japan by weakening the yen.

-13 ( +2 / -15 )

Good| Bad napoleancomplexFeb. 08, 2012 - 11:59AM JST the Bank of Japan better do something (more so than before) to stop the rise of the yen.. that being said, versus the USD, the yen has been appreciating since July 2007.. around 118 at that time, to around 76 today

Did you read properly..... a surplus of 303.5 billion yen,

Most of Europe or the USA would cream themselves for such a statistic. The figure also excludes the financial surplus that Japan Inc has through overseas investment and production.

This article is classic Nipponjin propaganda of the glass not even being there to be half empty or half full. Rather than venturing into the realms of currency manipulation, the Japanese government should be

Making the first changes, both economic and legislatively, to change Japan from being an export driven economy to a service and consumer society.

Cutting back on public expenditure so that the government doesn't need to issue JGBs to finance spending and thus Japan in the future will not have to depend on borrowing money on the international arena - which is the only fiscal justification for Japan continuously running surpluses.

Change the tax base so that the Dankai generation, who have all the private wealth in this country, are forced to either spend it or lose it through taxation. This will stimulate both the domestic economy and encourage them to pass their wealth on to their impoverished kin, who would gladly splurge some of it on raising their own standard of living; it might even encourage a lot more of the 20-40 generation to either get married and have more than the 1.2 children.
3 ( +6 / -3 )

Dog, thank you for your comment. It was interesting to read and understand your point of view. I think it is important that we are able to discuss issues such as these at such a place so that we may reach an agreement on my point of view.

Making the first changes, both economic and legislatively, to change Japan from being an export driven economy to a service and consumer society.

This has failed in both the US and Eurozone. Japan policy makers have been clear that this path will be resisted.

Cutting back on public expenditure so that the government doesn't need to issue JGBs to finance spending and thus Japan in the future will not have to depend on borrowing money on the international arena - which is the only fiscal justification for Japan continuously running surpluses.

The borrowing is domestic, so there is no problem here. We should be issuing more bonds.

Change the tax base so that the Dankai generation...

taxes should never be raised on anyone, ever, under any circumstances. We need to cut taxes on the job creators so they are free to use their hard earned capital to create more jobs.

-9 ( +2 / -11 )

j4p4nFTWFeb. 08, 2012 - 12:49PM JST This has failed in both the US and Eurozone. Japan policy makers have been clear that this path will be resisted.

The main reason it has failed is because the major economies of Asia are controlling their economies according to neo-mercantilist polices. I give China the benefit of the doubt and that it is making efforts to convert its economy away from that (but is not changing it towards a free market economy) but Japan is and always has been a one trick pony of 'export export export

j4p4nFTWFeb. 08, 2012 - 12:49PM JST The borrowing is domestic, so there is no problem here. We should be issuing more bonds.

The problem is that the tax base, at present rates, from now is on a continuous decline with the declining working population and the Dankai generation want to spend some of that money that they have squirrelled away in the Japanese post office. Eventually, on present government expenditure, the Japanese government will be forced to turn to the international money markets to finance its expenditure and they way will be asking for more than a measly 1.5% interest rate on 5 year bonds

2 ( +4 / -2 )

Japan should take comfort in the word 'surplus' however small it might be !

-3 ( +0 / -3 )

To tokyokawasaki, Wake up you arrogant baboons and stop living in the past, you are destroying the country.

Not be so hard with mr. No-da & Company. He can not be compared with monkey, he is much worse than a baboon, it can be compared to Sherk or prince of darkness !

-2 ( +1 / -3 )

the Japanese government will be forced to turn to the international money markets to finance its expenditure and they way will be asking for more than a measly 1.5% interest rate on 5 year bonds

And thus all the debt will remain domestic, and therefor not an issue.

-6 ( +0 / -6 )

j4p4nFTWFeb. 08, 2012 - 03:31PM JST And thus all the debt will remain domestic, and therefor not an issue.

You lost me there. If you don't have enough money to pay your mortgage and none of your relatives have the money to loan you. Then you have to go elsewhere to find finance or default on the mortgage payments and taking the consequences.

Japan's servicing of her national debt, which is 230% of GNP, is a bit like a mortgage. Japan has to keep up payments or default and take all the domestic consequences of such a default.. At present Japan services the interest on her national debt by issuing government bonds which 80% are automatically brought by the Japanese post office bank. However in 3-5 years the Japanese post office, because of the declining domestic savings rate and the Dankai generation are spending some of that money they saved for retirement., will not have the money to buy those government bonds

To keep up payments, when there's no money left in the post office kitty, Japan will have to go to the international financial markets to sell its government bonds and they will ask for at least 5% on 5 year bonds. The 4 1/2 % differance between what the Japanese government pays now on 5 year bonds and what it will conservatively asked asked to pay by international financiers will, with the size of Japan's debt, eventually lead to hyperinflation in Japan or a complete default on repayment of domestically issued bonds.

It happened before in Japan, in 1932.

3 ( +5 / -2 )

As long as the yen keeps its current exchange rate i don't see any hope for Japanese exports. The Chinese are not stupid keeping Yuan in ridiculously low value. We can all imagine the damage in the Chinese economy having yuan in its real value...

1 ( +1 / -0 )

Dog, basically it is impossible arguing with j4p4nFTW. Basically fatuous.

0 ( +0 / -0 )

The Yen has appriciated a hell of a lot against the Pound, in 2007 it was around 300 Yen - £1 today its 118-120 Yen - £1

0 ( +0 / -0 )

Dog

Making the first changes, both economic and legislatively, to change Japan from being an export driven economy to a service and consumer society.

Like someone else said, it's a very short-term vision and it's revealed as a bad idea in both the US and Europe. A "service and consumer" society means that you develop an ever-increasing trade deficit and become reliant on other countries for your standard of living. In the end, it leads to so much debt being accumulated in the system that it comes crashing down, because increasing (private) debt is the way through which trade deficits are supported in the long run. Maybe some, namely the richest, can do well in such a context as they can protect their wealth by investing overseas, but the vast majority gets screwed.

In Europe, Greece went the service economy (and tourism) route, Germany protected its good-producing industry. Which do you want Japan to be like?

As to what the Japanese government should do, it is to weaken the Yen. Not to the point of where it was in 2007, but at least to 90 Yen per dollar. They should do this like Switzerland did against the Euro, declare that you will print unlimited amounts of Yen if its value goes above a certain level.

The way I see it, the exchange rate is the mechanism through which the market tends to even out trade deficits and surpluses. If a country has a large trade deficit, its currency tends to devalue, if it has a large trade surplus, it tends to appreciate. The equilibrium exchange rate is one that tends to keep countries in balance with regards to trade, with neither large deficit or surplus. So Japan, with a large trade surplus, had to see the Yen gain in value. However, trade accounts are much slower to move than exchange rates.

An exchange rate can vary wildly in one day, but the resulting adjustment in the economy, due to delays in acceptance of the new exchange rate as a norm, the formation of new business plans and the building of new plants, can last a few years. At this exchange rate, with the speed at which the Japanese trade surplus is melting, I am thinking that it will turn into a deficit next years and an even bigger one the next, if the exchange rate doesn't vary. Many Japanese companies are holding on to their domestic production, hoping for a change in conditions, but soon they will be forced to relent and move production overseas. The change in the exchange rate has been so delayed that when it adjusted, it went way past the equilibrium point, and the Japanese economy is adjusting to this exchange rate that will lead to Japan becoming a net importer. It's like an elastic, if you stretch it too far and let go all at once, it will go far in the opposite direction.

The economy risks acting like a yo-yo for a few years as the market, through trial and error (which is how it works) finds the "correct" level (though it may never stop if new disturbances appear, internal or external to the market). The way I see it, if the government were to take action against the rise of the Yen, it would merely speed the process of reaching that equilibrium.

0 ( +1 / -1 )

You lost me there

Dog.

The reason why Japan Post as well as the financial institutions are still buying up bonds at a mere less than 1% is because the money (savings) are just sitting there with nowhere else to go. In other words, the banks aren't lending so the domestic consumption is suffering. The domestic consumption is suffering so the banks aren't lending. To put it more simply, the Dankai generation as well as those who are older aren't spending to the level they can because of the uncertain economic future. It's a deflationary spiral.

Japan issuing 1% yen denominated debt with 95% domestic ownership is simply a net sum zero game on Japan's balance sheet with very little possibility of default. An extreme solution would be to just print more yen to pay off the oustanding debt. Might cause a inflationary reaction but that's essentially what Japan needs right now.

2 ( +3 / -1 )

Like someone else said, it's a very short-term vision and it's revealed as a bad idea in both the US and Europe.

kchoze -- nonsense. Please explain how the U.S. economy, the largest in the world, and the one Japan, China, and all the other export-led economies count on for growth, and one with less than one-half the debt to GDP ratio Japan has, has failed, and Japan has succeeded? Respectfully you ought to be careful what you wish for, because if the U.S. economy does not continue to grow long-term, Japan is doomed. Since it cannot rely on domestic demand for growth. And please provide actual facts, not just your opinion.

-1 ( +1 / -2 )

Japan issuing 1% yen denominated debt with 95% domestic ownership is simply a net sum zero game on Japan's balance sheet with very little possibility of default. An extreme solution would be to just print more yen to pay off the oustanding debt. Might cause a inflationary reaction but that's essentially what Japan needs right now.

well said, nigel

0 ( +0 / -0 )

kchoze -- as part of your explanation, please clarify for us obvious non-economists like Dog and myself (even though I have degrees in business/economics from two prestigious universities) two things. First, how can it be a "zero-sum game", as you claim, when the debt is rising every year, which, as Dog poins out, means the share of the Japanese federal budget needed to service it every year is increasing, thus taking funds from needed social services? Second, how can it possibly be a good thing for the long-term prospects of Japan, when, as you admit, folks are too scared to spend "becuase of the uncertain economic future"? Even the population agrees Japan is in trouble, so they are not spending, which would help the economy grow, not just pay back old debts.

-2 ( +0 / -2 )

The supposed imminent JGB crisis is a red herring. Japan’s government debt to GDP ratio is high on paper because its corporate and private sectors are in huge surplus – big companies and households are both sitting on record amounts of cash. So somebody has to borrow to start the credit creation processes necessary for economic growth, and it might as well be the J government.

Furthermore, J banks are sitting on trillions of dollars worth of excess deposits with nowhere to go, so they park it in JGB and earn a nice yield (in real terms).

-1 ( +0 / -1 )

the eurozone debt crisis has slowed the global economy and sent traders scurrying to the safety of the yen

the yen isn't safe, traders don't "scurry," and traders/speculators don't move prices. They only anticipate future moves and hasten their arrival.

0 ( +0 / -0 )

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