politics

Azumi says no decision yet on buying S Korean debt

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By Stanley White

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Can't wait to hear the SK reaction.

2 ( +3 / -1 )

But they will.

0 ( +2 / -2 )

ProbieAug. 24, 2012 - 02:25PM JST

Can't wait to hear the SK reaction.

They must be quaking in their boots that they can't exchange some of their debt and currency for the soon to be, circa 2015, monopoly money formely known as the Japanese Yen.

Another warped mind think of 'the 'world needs Japan, more than Japan needs the world'.

The Korean economy is doing fine, thank you Mr. Azumu, and the japanese economy is doing?

-14 ( +3 / -17 )

Prime Minister Yoshihiko Noda, under fire for what the opposition says is an insufficiently tough stance on territorial >disputes, plans to hold a news conference on Friday to address the issue, Japanese media said.

There are Japanese politicians who are tough on territorial disputes? I know of no politicians who take a strong stance on any disputes or incursions into Japanese territory.... Well, the ambassador to China was recalled for making conciliatory comments to China. I am sure China got scared.

Ishihara is probably the only tough politician, but he is only a mayor. He is a little too right wing and gaijin phobic for me, but after his position on buying the disputed islands from the Japanese family and for moving the Tsukigi fish market, he seems to be the only politician that uses logic and has, uhm, guts.

0 ( +1 / -1 )

If Korea (or China) wants to act unfriendly or participate in these escapades for public support. Japan should stop or slow down economic support. It is similar to the U.S. giving billions to a badly behaving Pakistan.

Why pay for bad behavior?

8 ( +10 / -2 )

Huh? I would imagine that they would not buy it because of the island dispute. Politics, a strange animal.

1 ( +1 / -0 )

“ Things have reached the point where the Japanese people may not be able to accept the argument that political relations and economic relations are separate. ”

I love it how he is polite about it. It is high time that the grandstander Lee learns that biting the hand that feeds you is not a good idea.

0 ( +1 / -1 )

viking:

" If Korea (or China) wants to act unfriendly or participate in these escapades for public support. Japan should stop or slow down economic support. "

Agreed

" It is similar to the U.S. giving billions to a badly behaving Pakistan. "

Alas, the current fool in the White house is continuing to do exactly that, and I am not holding my breath that the next fool with be different.

0 ( +0 / -0 )

Let's wait!!!

0 ( +0 / -0 )

This actually helps South Korea because it will reduce the Yen Won exchange rate in Korea's export economy's favor. Korea also have like the 11th largest reserves in case of a Euro crash. This was more of a gesture of cooperation between Korea and Japan rather than anything of actual economic significance.

-2 ( +0 / -2 )

Lee has gone through the point of 'no return', Japan better dont expect he will apologise for his actions and insults! He just despise Japan from his bones and guts! That just potray Japan is very isolated in asia!

-8 ( +0 / -8 )

Actually, news from South Korea said that Japan is making fuss of the recent tirade of SK pres Lee. They said there it was a routine drumming up the nationalism of SK people and not really targeting Japan. They are wondering why Japan suddenly cared when much worse black propaganda and lies and deceptions has been made year in and year out...

Answer? You made the Japanese obaasan angry my friend. You touch the only thing the Japanese will never dare speak ill of. I will step on his head until the emperor apologize to the SK people said great President Lee. And maybe so, but the emperor has nothing to do with the war 75 years ago.

Exports from SK is being halted, tours has been cancelled, business is down and now they are wondering. Of course SK economy is robust as claimed so there is no effect in any way. Just ask the Chinese why they seem so very quiet after the grandstanding they made with the fishing boat incident and halting exports to Japan...they learned their lesson.

0 ( +4 / -4 )

mikihouseAug. 24, 2012 - 06:43PM JST

Exports from SK is being halted, tours has been cancelled, business is down and now they are wondering. Of course SK economy is robust as claimed so there is no effect in any way. Just ask the Chinese why they seem so very quiet after the grandstanding they made with the fishing boat incident and halting exports to Japan...they learned their lesson.

I don't know which parallel universe you live in but any trade war between Japan and Korea is to the total detriment of the Japanese Japan runs a 10 billion dollar trade surplus with South Korea

If Korea were to cut that off and get the parts from Singapore or Taiwan, it would be another nail in the coffin of Japan Tech Inc. Actually the Koreans have started talking about that as a way of punishing Japan.

As for your ridiculous comment about China. Well, as Noriko Hama pointed out, it's the Chinese market that has kept Japan's auto and tech industry going since the beginning of this century.

Japan is the one in the economic precarious situation with all this nationalistic posturing.

-6 ( +4 / -10 )

Japan should stop the currency swap arrangement with SK and stop to buy SK bonds. SK has a big economy now and would not worry about it.

1 ( +1 / -0 )

Why should we help a country that hates us. Instead of buying debt from other countries we should be sorting our own debt out!

-1 ( +1 / -2 )

KariHarukaAug. 24, 2012 - 08:07PM JST

Why should we help a country that hates us. Instead of buying debt from other countries we should be sorting our own debt out!

Duuhhhh,

It's only by buying other countries currencies that you can stop the Yen going to Y65 to the US dollar.

You choose, their currency or your industry.

-6 ( +1 / -7 )

The amount of actual swap done by both countries so far: = $0.00 The amount of actual Korean bond held by Japan = 0.06% The amount of Japanese private stock ownership in Korea = 2.5%

How scared is S.Korea about Japan's threats? A big fat YAWN.

This must be a big shock to Japan, but Japan is no longer a big influencing country for Korea (even Asia for that matter), and Korea doesn't care what Japan does, as Japan practically de-invested itself from Korea when Japan pulled all their money out of Korea in 1997, and never really got back in after that.

-4 ( +1 / -5 )

Why should we help a country that hates us. Instead of buying debt from other countries we should be sorting our own debt out!

Buying sovereign bonds are now "helping"? Don't buy, please, I beg you.

-4 ( +1 / -5 )

"South Korean government debt"

They must be spending too much on the upkeep of U.S. military bases, lol.

0 ( +0 / -0 )

chucky3176Aug. 24, 2012 - 09:07PM JST

The amount of actual swap done by both countries so far: = $0.00 The amount of actual Korean bond held by Japan = 0.06% The amount of Japanese private stock ownership in Korea = 2.5%

How scared is S.Korea about Japan's threats? A big fat YAWN.

This must be a big shock to Japan, but Japan is no longer a big influencing country for Korea (even Asia for that matter), and Korea doesn't care what Japan does, as Japan practically de-invested itself from Korea when Japan pulled all their money out of Korea in 1997, and never really got back in after that.

Don't forget the Japanese rescued the Korean economy in 2008!!!!

-6 ( +0 / -6 )

Wait!

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Wow Chucky. Repeating the same thing as if your post was never contested.

It's not the % of Japanese holdings at this time that is the issue. It's the intention of not purchasing additional KRW denominated(stable currency, per chucky) debt in the future.

We went over the swap already. What you fail to understand chucky is it's not the actual "use" (drawing out or lack of it) of it from the swap that stabilizes the your KRW. What's keeping KRW from falling despite numerous gloomy economic outlook is that among the investors, companies, and individuals within Korea and abroad who deals with Korea are assured that there will be adequate foreign funds for now and the future financial transactions because they know countries like Japan and China are behind it. In essence, it's basically a psychological form of FDIC.

-1 ( +2 / -3 )

I don't know which parallel universe you live in but any trade war between Japan and Korea is to the total detriment of the Japanese Japan runs a 10 billion dollar trade surplus with South Korea If Korea were to cut that off and get the parts from Singapore or Taiwan, it would be another nail in the coffin of Japan Tech Inc. Actually the Koreans have started talking about that as a way of punishing Japan.

Great post Dog.

Japan is not a trade dependent nation. Based on 2010 statistics, roughly 27% of the total GDP were of trade (import/exports). On the other hand, Korea is 88%. The exports are of course, even lower for Japan for it consists only 14% for Japan while Korea is at 46%.

http://www.iti.or.jp/stat/2-011.pdf

http://www.iti.or.jp/stat/2-008.pdf

We know that Yen is high. Therefore, the products that are exported by Japan costs a lot.

And yet Japan has a massive surplus with Korea. In fact, Korean imports from Japan consists 15% of the total.

Therefore, how does "If Korea were to cut that off and get the parts from Singapore or Taiwan, it would be another nail in the coffin of Japan Tech Inc. "?

Perhaps it's advisable to look up the kind of things that are imported by Korea from Japan.

"But the success of South Korea’s chaebol, or big conglomerates, disguises a more complex picture. Those same chaebol are dependent on parts from Japan’s specialist engineering companies. In 2010, South Korea ran a titanic $36bn trade deficit with its old colonial overlord. This is a big strategic worry for Korea, which, facing the rise of China, dearly wishes it had the high-quality small and medium-sized manufacturers that serve both Japan and Germany so well.......

.....Small businesses complain that they will never gain the strength of their peers in Japan and Germany because the chaebol buy them out to strip their staff and assets once they become successful. Robust financing is also difficult to secure, they add. Compounding the problem, the education system is not receiving the overhaul it needs to foster imagination and innovation.." FT, Jan 5, 2012.

-1 ( +2 / -3 )

nigelboy, S.Korea's trade deficit went down by 40% in 2011, then further 30% decrease this year so far. The dependence on Japan for parts supplies is still there, but it's rapidly shrinking. If Japan wants to sacrifice their small and medium sized businesses who depend heavily on sales to Korea, then they're more foolish then I thought they are. In fact, I welcome Japan's total economic sanctions which will break S.Korean companies reliance on Japan once and for all. Unlike the old days, it's now not because Korea can't make those parts, it's because they are cheaper to outsource and transport from Japan. Once you boot out Korea off of Japan reliance, you will see how Korea will adapt. It will force Koreans to make their own parts that they're buying from Japan, and/or they will simply switch their suppliers to Germany or USA who all have FTA's with Korea.

Japanese are still living in the 1990's. I suggest Japan stop living in the past and stop overestimating their economic power built around highly over-valued Yen, and start looking around them. Why do you think you will never see Korean government talking tough to China and USA, and sending back diplomatic letters from China or USA?

Please get a hint.

-2 ( +2 / -4 )

And LOL, stopping Kpop isn't going to do anything. That's only going hurt Fuji Tv station who manufactured the fake Korean hype.. lol... isn't that what Japanese have been claiming?

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it's now not because Korea can't make those parts, it's because they are cheaper to outsource and transport from Japan

How does one arrive at this? Are you going to make an argument that an average Korean makes more money than the average Japanese? Just a year ago, the tour companies were promoting. "ウォン安 tours" "Cheap KRW tours" because....they were cheap!!! Your country is no position to outsource anyting cheap from an advanced nation like Germany and Japan. Your country is experiencing the highest household debt. Your local banks are failing and more to come. Please get a hint.

-1 ( +2 / -3 )

nigelboy, when companies have the type of mchinary to mass produce prices become cheaper.

1 ( +1 / -0 )

I meant: machinery

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nigelboy, when companies have the type of mchinary to mass produce prices become cheaper.

Yes Utrack. Koreans can't produce these type of machinery. That's one of the key components of this trade deficit.

http://www.ibb-japan.com/update/data/ibbn-20120502b.htm

At least these small-medium Korean companies admit that their technology is far behind Japan which is the central problem with the current trade deficit. The more exports for Korea, the wider the deficit with Japan. But this isn't surprising because the successful business person always address their weakness as opposed to some people who are just projecting their nationalism based on perceived so-called "greatness" that only exist in their own minds and not globally.

-2 ( +2 / -4 )

I knew some banks were failing in Korea but I didn't think it was this bad.

Total assets of 1.3 trillion KRW and a total liability of 3.5 trillion KRW? What the....??!!! Are there no capital reserve requirements for these banks??

http://world.kbs.co.kr/japanese/news/news_Dm_detail.htm?No=44906&id=Dm&page=1

My goodness. Household debt through the roof!!

http://joongang.joinsmsn.com/article/357/9135357.html?ctg=

-1 ( +2 / -3 )

I think it's high time that Japan simply peg the yen to the euro.

It's probably not fair to blame the entirety of the SK population for the acts of their loser right wing politicos desperate for any kind of publicity, but the intentional lower of the standards of civility in bilateral discourse has necessitated some form of response.

International politics must demonstrate to electorates that their international relations matter, and if they elect belilcose right-wing nationalists, they will become isolated.

-3 ( +0 / -3 )

Pass the popcorn...

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lol at nigelboy. Japan telling Korea how bad their economy... oh man.. that's about as funny as it comes.

Look at the types of products that Korea imports from Japan.

http://www.gasengi.com/data/cheditor4/1208/I6o7vikTbOW3.png

The top three by far are Steel, semi conductor, and plastic finished products. Then the next come the semi conductor machinery and flat panel making machinery for around $5 billion. If Japan stops sales of the top three, the domestic made products and imports from elsewhere can substitute Japan's products easily. As for other machinery, granted Korea still relies on Japan for those. If Japan stops selling them to Korea, it will hurt for sure, but it won't be fatal. Korea can buy them from the US or Germany, and Korea can finally start giving their own small companies the chance to break into the industries. Over the decades, Korean companies got comfortable importing stuff from Japan then use them to make products because it was so easy, profitable, and Japan was close by so it was cheap to transport goods - there were no incentives to not buy and import from Japan. But if Japan does Korea a favor and end all these advantages, that would be great news in my opinion - it will finally force the Koreans to get off their butts and start being more competitive and get rid of the deficit with Japan once and for all. So please, stop all your business with Korea and cut off the relationship.

-3 ( +1 / -4 )

Chucky is at it again..

Please refer to my post stamped Aug. 25, 2012 - 12:19AM JST .

Are you naive to think the the parts and materials that are provided by these Japanese companies can be "replaced"? These are parts, materials, and machinery that are result of high R&D that these companies put in.

http://www.chusho.meti.go.jp/keiei/sapoin/monozukuri300sha/3kantou/kantou_menu.html

http://www.nsjournal.jp/column/detail.php?id=100014&dt=2008-07-24

There is a reason why these companies mentioned above basically have a monopoly.

So you can't just "substitute them" If so, Korea would of done it years ago because you are not going to convince me that the products made in Japan (JPY) is cheap. FOB plant in Japan is still more expensive CIF Pusan from Germany or U.S.

0 ( +2 / -2 )

Nigelboy overestimates his ability to convince others with rhetoric as much as Japanese politicians do with the downhill economical, political and military powers. Threatening Korea with the hint of not buying Korean government bonds? Let Japan banks buy more Japanese bonds with the less than 1 % yield instead of more than 3% Korean yield rate, raising the Yen value to 60:1 dollar! Already dwindling Japanese industries will lose more competitiveness to Korean international companies. When Japan lose automobile business (Toyota) to Korea (Hyundae/Kia), it will be the end of the game. Old success of Japan leads to arrogance which in turn leads to failure.

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Highhope

You're confused. You see, when a nation's soverignty bonds interest rate increase, this is not good news. It means that the country cannot raise money. This is basic finance. As for the second half of your paragraph, your beloved country's image rests on Hyundai and Samsung. That's it. They are fine companies. But , do you know how many Fortune 500 companies are listed for Japan versus Korea. Of those listed, do you know how many of them survived every pitfall in the market place? Do you know how much Japan has in net external assets? Do you know how much Japan has in foreign currency reserves? In summary, those are things investors, hedge funds, as well as other nations look at. There is a reason why these entities pour money into the Japanese currency.

-1 ( +2 / -3 )

You're confused. You see, when a nation's soverignty bonds interest rate increase, this is not good news. It means that the country cannot raise money.

Nigelboy, you are the one really confused. You mixed up Korea with Greece, Italy and Spain. Moderate and stable interest rate is good for the nation providing adequate interest income to people and attracting foreign investment.

do you know how many Fortune 500 companies are listed for Japan versus Korea.

Yes, I know the # of J-companies in 2012 which is 68 and 13 for Korea. But was the # of J-companies 81 in as early as 2005 while Korea was not even listed? What about the profitability and employee strength? Japanese companies are still big as dinosaurs but many of them are struggling to survive now. The Sony, Panasonic, Sharp, Elpida, etc are or were all big Fortune 500. You bet some of those companies will not exist in 10 years. In 2013, the landscape will be much more different. Without Kore3a and China, most likely Japan will not survive.

Do you know how much Japan has in foreign currency reserves?

Yes, I know. The F-C reserve of Japan is $1200 Billion and $ 3300 Bill for China and $230 Billion for Germany and $ 320 Billion for Korea as of 2012. The high reserve can be very liable especially when reserved with US currency (with the anticipating drop of its value).

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Yeah... Samsung makes $247 billion a year with a couple of billions in cash and is twice as big as Sony. Sony, Panasonic, Sharp, etc are all billions in debt. If they keep this going then they all may as well go bankrupt.

0 ( +1 / -1 )

Nigelboy, you are the one really confused. You mixed up Korea with Greece, Italy and Spain. Moderate and stable interest rate is good for the nation providing adequate interest income to people and attracting foreign investment.

It's you who brought about the Low interest of Japanese government bonds. Why bring Greece, Italy and Spain into the picture? The mere fact that people are buying at low low interest rates indicates the strength.

Yes, I know the # of J-companies in 2012 which is 68 and 13 for Korea. But was the # of J-companies 81 in as early as 2005 while Korea was not even listed? What about the profitability and employee strength? Japanese companies are still big as dinosaurs but many of them are struggling to survive now. The Sony, Panasonic, Sharp, Elpida, etc are or were all big Fortune 500. You bet some of those companies will not exist in 10 years. In 2013, the landscape will be much more different. Without Kore3a and China, most likely Japan will not survive.

This is the thing. You complete forgot the comment I made which is " how many of them survived every pitfall in the market place?" The list had many companies from emerging countries (not just Korea) which knocked off the companies from developed/advanced nations. As soon as inflation hits in these countries, the "cheap labor" no longer becomes their competetive edge. The one who wins out are companies within the developed nations which invested heavily on R&D. It's cyclical.

Yes, I know. The F-C reserve of Japan is $1200 Billion and $ 3300 Bill for China and $230 Billion for Germany and $ 320 Billion for Korea as of 2012. The high reserve can be very liable especially when reserved with US currency (with the anticipating drop of its value).

No, No No highhope. The difference between Korea and Japan is that Korea increased its foreign reserves to combat the possible downfall of KRW while Japan has accumulated their shares in order to bring their currency down. Your country is not in the same position for comparison.

-2 ( +2 / -4 )

The mere fact that people are buying at low low interest rates indicates the strength.

No. You get confused again. The very low interest rate (almost 0% in Japan) means no vitality. Nobody want to borrow money to start or invest business. They just keep the money under the carpet and take out $100 a week... Pathetic..

As soon as inflation hits in these countries, the "cheap labor" no longer becomes their competetive edge.

You are talking about China. The # of Chinease Fortune 500 companies is 73 in 2012 but was 16 in 2005. I think the gap between China and Japan will be even wider. Korean labor is no longer cheap. GDP per capita is $32,000 for Korea and $35,000 for Japan in 2011 when J-Yen has higher value for USD. Probably it will be reversed in 2012 and surely in 2013.

No, No No highhope. The difference between Korea and Japan is that Korea increased its foreign reserves to combat the possible downfall of KRW while Japan has accumulated their shares in order to bring their currency down.

You comment is absolutely wrong. Why, look at the China having 3 time J-reserve. China is unfairly trying to devalue Yuen.

-1 ( +0 / -1 )

Nah, SK's GDP is still around $22,000 per capita...

0 ( +0 / -0 )

No. You get confused again. The very low interest rate (almost 0% in Japan) means no vitality. Nobody want to borrow money to start or invest business. They just keep the money under the carpet and take out $100 a week... Pathetic..

But people/entites are BUYING. There is no shortage of buyers which would mean increase in interest rates. Finance 101.

You comment is absolutely wrong. Why, look at the China having 3 time J-reserve. China is unfairly trying to devalue Yuen.

I agree!!!!

0 ( +3 / -3 )

Thomas, I got that figure from C I A facebook. It is the purchasing power per capita GDP. Because the cost of goods are higher in Japan, it has to be adjusted to draw a true number. For instance, you cannot say J people are richer than Koreans because they can buy a big Mac for $7 in Tokyo while K people can with $5 inSeoul.

-1 ( +0 / -1 )

Wishing Mr. Azumi good luck by using 'overdraft' from his credit card accounts to buy debts : buying debts by debts ? How many ( dozens ) of credit cards does he have in hand to play with ?

0 ( +0 / -0 )

Highhope

Sad for me to say that I know you got your "confidence" from this article

http://economy.donga.com/3/all/20120825/48864454/4

In summary, this article boasts about how there soverign bond rates are HIGHER than that of Japan and United States. It also states that the proof that it's safe are because countries like Norway, Luxemborg, and Swiss are buying them.

I'm wondering Highhope. Does ANYBODY in your country question the stupidity of this particular article?????

Does it mean that nations with higher rates than Korea are superior? Let me guess.

"Korean bond rates is perfect. Anything above or below our rate sux. Dae han Min Guk!!"

0 ( +1 / -1 )

Does it mean that nations with higher rates than Korea are superior? Let me guess.

As usual, your thought process is too monotonous. One dimensional, I say.

10 yr govenment bond rates: Greece 25-35%; Italy 6.5%, Spain 7%.

Are these contries superior than Korea in terms of economy? Of course, not.

Japan: 0.8%. Is Japan superior than Korea? Yes, for now. But definitely not within 10 years.

You cannot determine the economical health of a country by the interest rates. You need to see many other index such as national debt. For instance, The Japan's debt is projected to be 239% of the size of its economy by the end of this year. http://money.cnn.com/2012/05/24/news/economy/national-debt-us-japan/index.htm

Eventhough the same sunshine, sunrise and sunset are not the same.

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People who buy bonds at near 0% interests must be morons.

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Haha. Should Japan's debt. Oh well, economic colonization is better than nothing.

0 ( +1 / -1 )

For instance, The Japan's debt is projected to be 239% of the size of its economy by the end of this year. http://money.cnn.com/2012/05/24/news/economy/national-debt-us-japan/index.htm

Of which, financed by Japan's itself 95%. The debt is internally financed which this concept is foreign to Koreans. Don't know why I have to repeat this again but here it goes.

Japan is experiencing a deflationary cycle right now for the population is not spending especially those who are receiving pensions or about to (60 and over) Due to this downturn, the Japanese banks are experiencing record number of deposit savings. Since the banks aren't lending as much, the execess deposits are used to buy Japanese government bonds.

Therefore, what is going on is that the Japanese government is facing deficiency in their budget primarily because of the payouts to these these 60 and over people. So, in essence there is a " hot potato" with the money that's being disbursed where it eventually ends up as JGB, hence the high demand, low interest rates.

The important thing here is that Japan cannot bankrupt themselves for it is internal within the yen denominated currency bonds with 95% holding by the domestic population.

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Yes, it is like the true story of a poor millionaire. The neighbor never imagined he was that rich when he was alive. He did not buy his own TV to save money but was peeking his neighbor's TV every evening through the window! His money ($ millions) was discovered in the closet after his death. Was he bankrupted or rich? You guess...

-1 ( +0 / -1 )

Considering you country is facing the biggest consumer debt amount ever, and the local banks filing bankruptcy, I'd say it's quite obvious which party is realistically bankrupt.

http://world.kbs.co.kr/japanese/news/news_Dm_detail.htm?No=44906&id=Dm&page=1

http://joongang.joinsmsn.com/article/357/9135357.html?ctg=

1 ( +1 / -0 )

Nigelboy, You seem to know Korean more than I do.

I would like to show you these, so others can understand what you are talking about.

http://en.wikipedia.org/wiki/List_of_countries_by_futureGDP(PPP)_per_capita_estimates

http://www.ukti.gov.uk/export/countries/asiapacific/fareast/koreasouth/premiumcontent/353401.html

The first data shows that S. Korea GDP will surpass Japan's in a few years. The second article shows why Korea household debt is rising. It is due to the rising household income. They buy cars, nice homes, sending their kids to the US and UK for education, etc. In other words, the economy is booming there. Already the Korea Bank is cutting down the interest rate slightly to lessen the burden of people.

I believe the bank issue is a self-cleansing process to make the private banking system more transparent unlike Japan's. Nobody is really worries about the bank cleansing and household debt. But, thanks a lot for your worry!

-1 ( +0 / -1 )

highhope

The rise of household debt and household income has nothing to do with the other, on the other hand the rise of default of household debt and banks filing for bankrupt hase a very close relationship.

Not saying that that is the direct main reason but one of the largest income for banks are premium collected from loans but if they are not able to collect premiums it instantly becomes debts.

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Samurai, can you read out loud the UK article? Also, the some of corrupt private Korean banks should be forcefully closed. It is a healthy phenomena. Constantly moving towards better system. Of course, unlike Japan's.

-1 ( +0 / -1 )

Highhope

Very dissapointed. Using the PPP argument. The problem I have with this figure is that the international dollar rate that these anaylyst instill are so far from the actual reality (market exchange rate) and the mere fact that it's not updated periodically leaves doubt as to how much weight you can place on these.

http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/weorept.aspx?sy=2010&ey=2017&scsm=1&ssd=1&sort=country&ds=.&br=1&c=158%2C542%2C111&s=PPPEX&grp=0&a=&pr.x=42&pr.y=12

For example, the international dollar exchange rate that they use for Korea are between 800~870 KRW/$ when the current rate is approximately 1130KRW/$. On the flip side, they use 97~110 JPY/$ for Japan when right now, it's about 78JPY/$. Sure. It's nice to know that a haircut in Korea costs less than in Japan but a median income earner, Mr. Suzuki, can get a full service beauty package in Korea with his money while Mr. Kim would contemplate whether to cut his hair by himself in front of the mirror in Japan.

As your second link, I suggest you read the article more carefully.

"On the demand-side, stagnating real income growth has been the fundamental driver of increasing household debt. In order to keep up with inflation and bridge the income gap, households had to borrow in order to invest in property or their own businesses. Given that Korea does not yet have a well-established social safety net, retired workers often had little choice but to set up their own businesses (known locally as “Mom and Pop” shops, ubiquitous in Korea). Public and private benefit spending stands at about 1.7% of GDP, much lower than the OECD average (8.4%). "

In other words, the Korean population is overextending themselves which is further supported by the recent all time high of consumer debt. But it appears as though they have no choice to do so to maintain a decent living as "Korea’s household debt to disposable income ratio jumped to 156% in 2011 - very high by international standards. "

In other words, the economy is booming there. Already the Korea Bank is cutting down the interest rate slightly to lessen the burden of people.

Let's assume that Korean individuals are overextending themselves simply because they feel the economy is booming, as you say. Then why are banks filing bankruptcies in bunches as the previous linked article indicates?

I'm sure you get quite a lot of confidence reading those uber nationalistic Korean media(Our GDP PPP per capita is going to be higher than Japan, our debt has higher rate than U.S. or Japan, our foreign reserves are 7th among the world so we don't need Japan, urinara mansei type articles) but it's the same BS nationalistic arrogance that got you in trouble in 1997 and 2008 when your country needed foreign help. Stop being so overconfident especially to a nation that doesn't or every need "bailing" out from other countries. It's simly ridiculous.

1 ( +1 / -0 )

Nigelboy does not let me go back to my work with faulty math.

Korea GDP in 2012 is $32,000 and Japan $35,000. Now the KRW rate: USD --1130:1 If you ccorrected assuming the exchange rate 800:1, the GDP will be $45,000. On the other hand, jp Y: USD--80:1. Then the corrected GDP for Japan assuming the rate 100:1 will be $28,000.

In reality Korea ppp GDP is aalready higher than Japan, s.

Your analogy with haircut is partially right. If you pay $30 for haircut in Japan, but $20 in Seoul, why you want to do it in Japan?

-1 ( +0 / -1 )

Nigelboy,

but it's the same BS nationalistic arrogance that got you in trouble in 1997 and 2008 when your country needed foreign help.

There is no arrogance in me. I just show you the fact. If you do not see the fact straight, you are indeed arrogant.

Please see this article: Moody's rating of Korea was raised to Aaa. In 1997, the rating was B-, and BB+ in 2008. Gradually the rating rose to Aaa3.

https://mninews.deutsche-boerse.com/index.php/text-moodys-upgrades-south-korea-aa3-2?q=content/text-moodys-upgrades-south-korea-aa3-2

But for Japan, the rating has been down since 1997 and 2008.

http://www.foxbusiness.com/markets/2012/05/22/fitch-cuts-japan-credit-rating/

The fact is that the rating of your pride, prejudice and arrogance was downgraded. Be careful, it may fall even deeper!

-1 ( +0 / -1 )

Korea GDP in 2012 is $32,000 and Japan $35,000. Now the KRW rate: USD --1130:1 If you ccorrected assuming the exchange rate 800:1, the GDP will be $45,000. On the other hand, jp Y: USD--80:1. Then the corrected GDP for Japan assuming the rate 100:1 will be $28,000.

??

I believe you have the numerator and the denominator mixed up.

1 ( +2 / -1 )

http://en.wikipedia.org/wiki/List_of_countries_by_futureGDP(PPP)_per_capita_estimates

This data is future prediction using predicted future currency rates. IMF expects that the KRW currency value should go up to 800:1 in 2017as the Korean economy is getting stronger while the USD value goes down (with anticipated inflation). Similarly, IMF predicts the JPY value will decrease even though the USD will get weaker in 2017. I think IMF predicts the Japan economy will be even weaker than that of the US in 2017. So they calculated the JPY:USD rate = 100:1 in 2017.

Now, if you take this IMF prediction with future currency rates of KRW and JPY against USD of 800:1 and 100:1 instead of current 1130:1 and 78:1 respectively, the real pppGDP of 2011 will be different. How? Let's use the Korea GDP $32,000 and Japan's $35,000 in 2011.

Because I agree with your thought of wrong conversion rates that makes Japan economy worse and Korean better than real (with artificially high JPY value and low KRW ), I will recalculate the real GDP with more realistic rates of 2017.

Korea currency rate was unfairly lowered as the KRW/USD rate of 1130:1 is used. If you raise the rate to 800:1 (increasing the KRW value by 1130/800 =1.4125, the $32,000 will be 32,000 x 1.4125=$45,200. I think the Korea might have intentionally lowered the KRW value to promote export.

For Japan, the current rate of 78:1 against USD is unfairly high for some reason (you think many people buy and keep the Japan currency as a safe haven). It should be 100:1, lowering the JPY value by 78/100=0.78. Then the real GDP of Japan in 2011 is $35,000 x 0.78 = $27,300 not $35,000.

You got it?

0 ( +0 / -0 )

This data is future prediction using predicted future currency rates.

No. It's a currency adjuster based on PPP. In other words, like you said, you can get more for your buck (USD) in Korea than in Japan.

Like I commented before, your numerator and denominator are mixed up.

PPP implied factor/current market exchange rate is the ratio you should be using. Hence, 800/1130=0.71 for KRW and 100/78=1.28 for JPY

Based on the above figures, it's $32,000 x 0.71=$22,720 for Korea while it's $35,000 x 1.28=$44,800 for Japan.

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Nigelboy, you still did not understand my point.

Let me use another simple example.

The US has been blaming China for artificailly low Chinese Yuen against USD. Because the low CY will lower the price of Chinses goods making the China export robust, Chinses government sets the CY/USD rate rather than leaving up to the market.

At present, CY/USD is 6.3. In other words, a panda bear stuff animal costing 6.3 Yuen can be sold in the US at 1 USD. But, the US government think the Yuen value should be higher such as CY/USD 5.17 (20% higher). Then the 6.3 Yuen panda bear will be 6.3/5.17 (current rate/accurate rate) = 1.2. This ration of 1.2 X 1 USD = 1.2 USD. In other words, the 1 USD panda bear should be sold in the US market at 1.2 USD not 1.0 USD.

I am sure you understand so far.

Now the China ppp GDP is $ 8,500 according to the CIA world Factbook. Do you think the figure is accurate in view of the artificially lowered Yuen value?

Of course not.

The real China GDP should be $ 8,500 x 1.2 (the ratio above) = $10,200. Chinses are richer than we think.

I used the same math her for Korea and Japan.

Korea Won (KRW) value is somewhat artificailly low because K government tries to facilitate export of Korean goods ( competing Japanese goods). How much devalued? Using the same math, 1130/800 (current rate/accurate rate) = 1.4 The the Korea GDP should be $32,000 X 1.4 = $44,800.

On the other hand, Japan GDP $ 35,000 x (78/100) = $27,300.

Now, you got it?

BTW, I wonder you are a Japanese government agent with the job of writing and responding in internet.

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Nigelboy, you still did not understand my point.

I do. I know you want to make this PPP as some sort of argument that Korea is richer per capita in Japan but it won't work.

I'll make it very simple.

A Korean man with a median income in Korea was asked by his employer to transfer to U.S. but his income will be at the same level in KRW.

A Japanese man with a median income in Japan was asked by his employer to transfer to U.S. but his income will be at the same level in Yen.

In U.S., a Korean man will be living in a run down studio apartment in the slum.

And as for your Moody's upgrade article which I forgot to respond (another urinara mansei article), please bear in mind that your beloved soverign bond was acutally at "A1" just before the 1997 crisis.

In U.S., A Japanjese man will be living in a comfortable two bedroom condo in a affluent neighborhood.

While one can look at the fundamentals and say it's "artificial that", the REALITY is all of us has to live with the current market rates.

1 ( +3 / -2 )

Nigelboy, You could not explain your logic with math analysis. Now you use an example of a salaryman of Korea and Japan in theUS.

Then, let's compare with Korea and Japan for their average salary.

http://www.simplyhired.com/a/salary/search/q-south+korea http://www.simplyhired.com/a/salary/search/q-japan

Average salary is $39,000 in Korea and $46,000 in Japan.

Remeber that figures are again in USD.

When one consider how much Korean Won currency is undervalued and Japan Yen overvalued, you can easily figure out what are the real salaries in Korea and Japan.

For a Korean salaryman: $39,000 x 1.4 = $54,600 For a Japanese salaryman: $46,000 x 0.8 = $36,800

These are real corrected average salaries in Korea and Japan after correction with undervalued KRW and overvalued JY. But right now, because JY is overvalued, JY can buy more USD in the US. But, how long can it be sustained? Not for long because Japan's export will sink untill it hit the bottom that nobosy knows how deep it is. It has inverse relationship. apan's economy.

You got it?

Now, tell me how much you get from Japan government.

-1 ( +0 / -1 )

Then, let's compare with Korea and Japan for their average salary

Those are job listing for Americans to go to "Korea" and "Japan". Your post makes no sense. It's apparent the word "logic" is completely foreign to Korea.

Based on real market currency, Korea=$23K, Japan=$45K. If a Korean man brings his wife and two kids, he's officially qualified under federal poverty line in the U.S.

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Highhope

I'll give you an example how PPP implied currency factor can be very misleading.

For instance, take Uniqlo as an example. In Japan they are known for cheap but quality clothes.

In Korea, ultra light down jacket has a retail price of 59,900 KRW.

http://www.uniqlo.kr/display/displayShop.lecs?displayNo=UQ1A02A01A15&standardAmount=30000&totPrice=null&totCnt=0

Using the PPP implied currency factor of $1=800 KRW=100 JPY, this will equal 8 KRW=1 JPY. Hence, 59,900 KRW retail price in Korea would equal 7,488 JPY.

I don't know about you but in Japan, that's hardly cheap. Do you know how much they sell the same thing in Japan in reality?

3,990 JPY.

http://www.uniqlo.com/jp/store/feature/uq/ultralightdown/men/#fC03

Let's use the "real market currency rates".

$1=1,130 KRW=78 JPY, which is approximately 14.49 KRW=1 JPY.

Hence, the jacket sold in Korea at 59,900 KRW is now converted to 4,134 JPY, just a tad bit more in Korea.

My point. PPP "world" or figures only applies in your country. When comparing abroad, especially when debating about who's richer, you deal with the "real" market currency.

1 ( +2 / -1 )

nigelboyAug. 28, 2012 - 11:13PM JST Then, let's compare with Korea and Japan for their average salary. Based on real market currency, Korea=$23K, Japan=$45K. If a Korean man brings his wife and two kids, he's officially qualified under federal poverty line in the U.S.

Well, in Japan, $45K would be way beyond poverty line because all the basic needs cost more than 25 percent to double the U.S. What can you buy with Japanese yen? Ramen, Udon? The litre of gasoline in Japan cost $150 yen, or equivelent to $7.50 per gallon compared to U.S. at only $4.00 per gallon. No wonder Japan havs these tiny 4 cylinder engine that runs on piss water. Beer at 1200 yen for six pack, compare to $800 yen for 12 pack in U.S. Life for workers in Japan is almost worse than North Korea.

-2 ( +0 / -2 )

Nigelboy, eralier you were trying to show off how high the average salary in USD in Japan mostly due to overvalued Japanese Yen against USD and KRW. Because of the overvalued JY, yes, you may be able to buy the same good at lower price in Korea or in the US.

Now, you are trying to tell me how low is the price of goods when you buying something such as the Uniclo jacket in Japan.

What are you boasting about now? High wages in USD in Japan that help to buy goods at cheaper price oversees or to buy cheap in Japan?

Are you confused where are you going? Doped?

It is time for you, old generation Japaese to sincerely concern about the future of your youngmen

http://www.ft.com/cms/s/2/0d158be8-c633-11e1-a3d5-00144feabdc0.html#axzz24tAbD5GN

0 ( +0 / -0 )

Now, you are trying to tell me how low is the price of goods when you buying something such as the Uniclo jacket in Japan.

Trying to point out the flaws in PPP. Uniqlo is a Japanese brand known for affordable clothing with good quality. They are basically sold at the same price in Korea based on the current market currency exchange rate. The reason is that these clothes are made in China and SE asian countries and are shipped directly to the country of destination. I'm simply amazed that you are still not getting this.

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http://stats.oecd.org/Index.aspx?DatasetCode=AV_AN_WAGE

Nogelboy,

Please check the average wage of Korea and Japan. In 2011, the ppp Average wage was $35,400 in Korea and $35,100 in Japan. I am sure the gap will be widened in 2012.

You are the man living in the past. Please open your eyes and look straight.

-1 ( +0 / -1 )

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