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Aside from the devaluation of the yen and modest efforts to improve corporate governance, the government has done little to remake the economy. Plans to encourage startups, loosen labor markets, cut r

16 Comments

Bloomberg columnist William Pesek

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Booom! Mr. Pesek is entirely correct.

0 ( +2 / -2 )

Because it is a red herring as far as Japan's prosperity is concerned, since, for the reasons stated by Pesek, NONE of this money is getting invested in Japan. The much-vaunted "third arrow" never materialized to try to turn around the fundamentals of Japan's economy, so companies are investing these record profits/cash overseas. Or did you miss the huge M&A activity the last eighteen months or so, despite the weak yen?

I'm really getting tired of being called an idiot and moron every time I check on this website, and then reading through such incoherent babble as above from the self-appointed "experts" and not being able to stop laughing. The discussion was about the amount of yen held by Japanese corporations. It is at a record high. Japanese yen is not "invested" overseas. It does not leave Japan. Or do I need to explain how the foreign exchange market works too? Or that Japanese corporations make profits on their overseas operations, in currencies not called the yen? And neither of those things have anything to do with how much yen is on corporate books.

As for the second paragraph of jerseyboy's comment I'm not even going to go there...

0 ( +1 / -1 )

Companies are not sitting on record amounts of cash, Jesus Christ, I wish these stupid morons would stop harping this stupid lie.

GJD is absolutely correct again. 241 trillion yen ending first quarter of 2015.

"Jesus Christ, I wish stupid moron would stop harping" on this. Because it is a red herring as far as Japan's prosperity is concerned, since, for the reasons stated by Pesek, NONE of this money is getting invested in Japan. The much-vaunted "third arrow" never materialized to try to turn around the fundamentals of Japan's economy, so companies are investing these record profits/cash overseas. Or did you miss the huge M&A activity the last eighteen months or so, despite the weak yen?

But then macroeconomics and aggregate demand are topics that I don't think I have ever seen this writer ever address,

LOL, once again a nonsensical attempt to throw big words and supposed economic theory into a situation that is WAY past that, which Pesek understands. Macrecomics and aggregate demand are great concepts in an economy where the fundamentals are in place so that government policy can effect them. But Japan isn't. "Kenji, the combini guy" you refer to can't even afford to live in his own place, let alone think about a social life that might someday end up in his getting married and becoming a solid part of the Japanese economy. (You guys have noticed that almost NO young people own cars -- and the auto market was one of the drivers of the Japanese economy -- haven't you?)

-3 ( +1 / -4 )

"GJD is absolutely correct again."

Being factually correct isn't important for debt hawks. YOu can throw tons of facts at them for years, and they never budge on their beliefs. For them, this is a moral issue, and the facts just get in the way of their ideology.

-7 ( +1 / -8 )

Because corporate profits are not at record levels.

GJD is absolutely correct. Record profits.

http://mw.nikkei.com/tb/#!/article/DGXLZO8815295016062015DTA000/

Companies are not sitting on record amounts of cash, Jesus Christ, I wish these stupid morons would stop harping this stupid lie

GJD is absolutely correct again. 241 trillion yen ending first quarter of 2015.

https://www.boj.or.jp/statistics/sj/sjexp.pdf

Figure 4-2 pg 10.

-6 ( +3 / -9 )

The much-vaunted "Abenomics" is nothing more than the same old LDP spending frenzy, building unnecessary infrastructure at hugely-inflated prices.

Devaluing the Yen and increasing the consumption tax has produced inflation in food and energy prices, leaving consumers with less to spend on manufactured goods. How this is supposed to help the economy recover I don't know. It would be nice if a "journalist" would question Abe on this, but they lack the courage to do so, having been cowed by LDP threats and bullying.

4 ( +5 / -1 )

Hard to make an opinion here due to lack of deep onfo.... :-(

You can read the entire article on Bloomberg. In a nutshell it says that Kuroda's attempt to create inflation ("price stability") has failed, and the government has resulted in manipulating numbers like the depreciation of real estate in an attempt to formulate the inflation numbers which Abe wants.

The article states that Japan doesn't have, and hasn't had a liquidity problem, and that quantitative easing is not working because the problem it was purported to solve doesn't exist in the first place. Japan's deflation has nothing to do with tight money supply. It has to do with a non-competitive economy, and the resulting lack of innovation and artificially high cost of living.

how is this even relevant in a country where the unemployment is around 3.3% and corporate profits and cash holdings are at or near record high levels?

Because corporate profits are not at record levels. Sony, Sharp, Panasonic, Hitachi, Epson, Casio, Ricoh, and many others are drowning in debt. The only profitable companies are the big automakers whose sales and manufacturing are mainly outside Japan. Companies are not sitting on record amounts of cash, Jesus Christ, I wish these stupid morons would stop harping this stupid lie. Companies are sitting on record amounts of market capitalisation as their stock prices have been blown up by the BOJ's easy money, which was borrowed to buy stocks. Think fools, for a moment, how much has Japan's GDP grown over the past two years? Less than 2%? How does less than 2% growth lead to record profits? How much has the stock market increased over the same time? More than 100%? How does 2% growth equate to a 100+% increase in stocks? It shouldn't. And companies know this, so they will not spend even one yen of that extra stock value on anything, because they know that at any time a "correction" or "adjustment" in the market can wipe out every yen of that "record amount of cash" they are sitting on. My own company looks good on paper, it's net worth is up about 140% since 2013, yet my sales for the past two years have been stagnant. But despite the "record value" my company enjoys, I am not going to cash in or out. I can't hire new employees or increase the scale of my business when there are not sales sufficient to pay for these expenses. And I am one of the lucky ones, I am an exporter, and my company is one the 30% percent of Japanese companies that earns a taxable profit each year, however small. My friends who are tied to the domestic market are all running "red" companies, they haven't seen a profit in years, and they don't expect to earn a profit anytime soon. But, their companies are also enjoying record market values, go figure.

Japanese companies are not going to hire, invest, or do anything in Japan until they see Abe's "third arrow". If this third arrow is never fired (which looks now to be the case), the economy will collapse. All of the "record profits and cash" companies are supposedly sitting on will vanish into thin air.

If you want to know what is really going on in business in Japan, start your own company and see for yourself.

2 ( +9 / -7 )

On the one hand, Abe has been cowed by vested interests so he has moved his center to recreating the militaristic Japan of his grandfather. He should be undoing the Koizumi Americanization of the Japanese economy. And convincing Japanese to make babies, something about which the politicians do not have a clue.

-1 ( +2 / -3 )

All of the writer's usual talking points in a short, concise list. But I would love to know who exactly is not doing business because they are to lazy to deal with "red tape" (aka - Rules and Regulations). As for loosening labor markets (Translation: "We would hire more people and pay them more if we could fire more people and pay them less") how is this even relevant in a country where the unemployment is around 3.3% and corporate profits and cash holdings are at or near record high levels? Who exactly is out of a job because the labor markets are "inflexible"? Or does he mean Kenji the conbini guy would get a nice executive position if only his employer could later fire him more easily? And which companies are not doing business because they are worried they won't be able to fire people later? They are already making record profits, and if record profits are not the solution why would even higher profits make any difference? They wouldn't, but "loosened" labor markets would further reduce aggregate demand and weaken the economy even more. But then macroeconomics and aggregate demand are topics that I don't think I have ever seen this writer ever address, and they don't appear to even be on his radar. Much more important to try to get Keiko out there punching the clock instead of doing the ironing.

-3 ( +2 / -5 )

Hopefully the turmoil will cause a change in thinking- a long overdue concept for japanese today.

5 ( +5 / -0 )

Japan will have to wade through inevitable turmoil before any serious reforms take place.

True enough. Part of me actually looks forward to the turmoil, because it could finally force Japan to get back on track and have hope for the future again.

But the other part of me thinks people will respond emotionally and poorly to the turmoil, blaming all the wrong people, and opening the doors for some really dangerous ideas.

7 ( +7 / -0 )

People, mainly foreigners, have been saying that since "Honest Abe" came to power.

Raise the minimum wage and provide more safety nets for the struggling working class. Stop spending money on useless causes (whaling for example) and start throwing money at free daycare centers that allow mothers to go back to work. Its simple to fix, but no one ever accused the LDP of being mavericks or intelligent.

5 ( +5 / -0 )

Hard to make an opinion here due to lack of deep onfo.... :-(

2 ( +2 / -0 )

The labor market has been "loosened" a few times, a fact the writer appears ignorant of. In fact, that caused the problems instead of solving it.

The measures that widened the industries that can employee temp staffers and pay them peanuts were followed by weak private demand and deflation, the economy's core problem. You'd be naive to think one didn't have to do with the other.

-4 ( +4 / -8 )

Yup, same old same old. I once saw a glimmer of hope in a reinvented Japan, but that has all but faded. Japan will have to wade through inevitable turmoil before any serious reforms take place. Heartbreaking.

8 ( +8 / -0 )

Take note, no more mentions of Abenomics nor arrows. The only arrow I see is on cable TV on Tuesday nights.

2 ( +3 / -1 )

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