JesusLovesJapan comments

Japan not only lost the Pacific War, it also lost the propaganda wars with Chiang Kai-shek and his Nationalists and Mao Tse Tung and his Communists. The Chinese made much use of false reports and fake photographs of alleged Japanese atrocities, many of them actually pictures of Chinese victims killed by other Chinese in their internecine warfares. The Chinese carried out their anti-Japanese propaganda in the US and other Western countries and succeeded in turning them against Japan and gaining their financial support, much of which ended up in the pockets of Chiang and his henchmen. Chinese today are taught a false, anti-Japanese version of history, which is why they easily erupt into anti-Japanese demonstrations and rioting for whatever reason. And they continue to use these false accusations about Japanese "aggression" in their attempt to take the Senkakus or whatever concession they want to gain from Japan. It's about time the world saw the Chinese Communists for what they are, and it's about time Japan more actively promoted a more accurate view of the history of Sino-Japanese relations based on historical evidence...

GW wrote:

Really, so basically what your saying is that if there is little global trade thats good,

What I'm saying is that a country should not depend too much on global trade. Japan has the "image" of being a trade-dependent nation, but exports have always been only some 10 to 15% of Japan's GDP. Japan is an internal market-driven economy. Yes, it exports a lot, but again 67 trillion total exports (2010 figure) is only some 14% of the >500 trillion GDP. Compare that with Korea's 50% or so, China's >30%, Germany's >30%, etc. Japan also earns enough foreign currency from its world-topping net foreign assets of 250 trillion yet and can still buy oil etc. even if it happens that Japan can't export anymore.

TPP, "Free trade" advocates basically don't believe that Japan's internal market can grow anymore. That's the unproven assumption that underlies their logic. Besides, the Great East Japan Earthquake is crying for government investment to rebuild roads, bridges, sea walls, distribution networks, communications networks, schools, etc. etc. If done right, recovery projects from the Great East Japan Earthquake will naturally lead to GDP growth. I'm not saying free trade is absolutely bad. I'm saying Japanese policy makers need to implement what works for a particular economic situation at a point in time.

Again, free-trade is an anti-inflationary measure. Joining TPP when Japan's economy is in a deflationary spiral will only make things worse. Japan can do "free trade" when the economy shifts to inflation.

SushiSake3 wrote:

So we have the most heavily bankrupt nation in the developed world using money it doesn't have

You really need to do your homework. Japan has been the worlds biggest creditor nation for 20 years straight, with net foreign assets totalling 250 trillion yen, the world's largest. Japan is the richest nation in the world, objectively speaking. Japanese government debt is huge, but it is 95% owed to Japanese financial institutions, which have so much money they're dying to lend out and have no choice but to buy government bonds, and that is why the interest on Japanese government bonds are the world's lowest, in spite of the high government debt to GDP ratio. The important thing about "debt" is not just the figure itself, but who is borrowing from whom.

Of course it will be a totally different story if Japan's debt were owed to other countries. In that case, Japan will be in real financial trouble, like Greece is in...

It will benefit the consumer, every single one of us.

Not if the company the "consumer" works for goes bankrupt. Again, Japan is in deflation. "Free trade" is not something you do in a time of deflation as it will only make things worse, i.e. it will lead to more companies collapsing, higher unemployment, and of course, weaker consumer purchasing power.

TPP will not bring much benefit to Japan. Japan's economy is not "export-driven", as exports are only 14% of Japan's GDP (compared to some 50% for Korea, over 30% for Germany, China, etc.). The belief that exporting to foreign markets are Japan's only hope for economic growth is wrongheaded. And of course the largest markets in TPP if Japan joins will be the US and Japan, thus in effect it will be a trade agreement between these two countries. At any rate, TPP will not make much of a difference for Japanese exporters. E.g. US tariffs on cars are 2.5%. Even if that is removed via TPP, a little yen appreciation will bring it all to nought. Also, the US aims to increase exports (to Japan) via TPP and reduce its trade deficit and create US jobs. It will probably not let Japan export to the US so easily. Even the Japanese government estimates that TPP will result in only a 0.05% annual GDP growth for Japan. That's not enough reason to change Japan's laws and standards to conform to US requirements. Of course it will destroy Japan's food production capacity, which is a matter of national security. More than anything, "free trade" is an anti-inflationary measure. The Japanese economy is in deflation; "free trade" will only worsen deflation. Japan also has to focus on recovery from the Great East Japan Earthquake. This is not the time for TPP. It seems the pro-TPP supporters in the government generally are so simply because they believe in "globalization" as an article of faith, and also no longer believe in the Japanese market's capability to recover and grow internally - and also, they want to help President Obama improve his image during the APEC summit to increase his chances for reelection...

okimike67 wrote:

To bring a car into Japan as an import it must be homogenized...

So, Japan should just import foreign cars "as is" and not "homogenize" them to meet local safety standards, etc.? Why don't US car manufacturers build them to Japanese market requirements and standards before exporting them in the first place?

Japanese are largely brainwashed into buying Japanese

What a strange thing to say. What's wrong with Japanese people buying their own stuff? Japan's dependence on foreign trade is low (25% of GDP) as compared with most other countries. This tells us that Japanese make most of the stuff that they need and sell most of it to themselves. This is made possible because of Japan's large middle class. Japan's major market is Japan itself. This kind of economy should be the envy of the world. Every other country should aim to achieve the same kind of economic strength and indepencence as much as possible...

Keep dreaming. What politicians with creativity? With 200 percent of GNP debt, I doubt Japan cannot do much.

It seems many people misunderstand the nature of Japanese government debt. The important thing about debt is not so much the amount, but who's borrowing from whom, and in what currency. It would be great if people would chew on this for a while before responding.

weedkila

This might be a surprise to you but the Japanese government does not print its own currency.

That's why I wrote, "through the BOJ". Think of the BOJ as a subsidiary of the Japanese government.

Japan is different from, say, Greece, which can not print Euros. The government (+BOJ) can issue its own currency. The government can have the BOJ buy back government bonds from private banks that purchased them. The government does not have to pay back the bonds that the BOJ holds. The government can have the BOJ scratch out any government debt it may own from its balance sheet. Etc.

Please do try to look it up and don't simply just make analogies between the system in Japan and that of other countries'. There are many things the Japanese government with the BOJ can do. What Japan needs are politicians with the creativity and political will to take the necessary steps.

"Hollowing out"? Again, Japan's export dependence is only around 11%. And, Japan has a trade surplus with China (incl. the trade that goes to China via Hong Kong and Taiwan) and Korea. The more China and Korea export goods, the more Japanese industry benefits! Why? It's because the bulk of Japan's exports are not of cars and consumer electronics, but of capital goods and materials, which China and Korea buy from Japan for use in their factories to produce the cheap goods for export to the US, Europe, emerging markets, etc. This "hollowing out" is just sensationalism in the media...

Jeffrey Duelley is right. Japan bashers probably don't bother to look at the economic data and understand what the real situation is with the Japanese economy. Unfortunately the DPJ seems to not understand the economy as well! Former Prime Minister Aso was on the right track with regards to economic policy. Unfortunately the DPJ took over, and now we have a finance person on the helm who lacks creative ideas and even seems not to understand Japan's economy. Japan is not an export-dependent country, as its export dependence factor is only around 11 percent, as compared with over 20 percent for most other developed nations (50% for Korea, 34% for China, 33% for Germany, etc.). Speculators are buying Yen because they know it is "safe" because Japan's economic fundamentals are sound. The economy is in a deflationary spiral, deflation meaning that supply capacity exceeds demand. The government's role in a time like this is to stimulate demand through public works spending (and Japan needs public works spending on its ageing infrastructure; without much needed maintenance, we'll start hearing of falling bridges and collapsing tunnels in a few years; not to mention the public works needed to rebuild East Japan). Instead of spending, the DPJ has been on a cost-cutting spree, an anti-inflationary measure -- of course GDP will experience low or negative growth! Public spending makes up a sizeable portion of total GDP! Hopefully the Great East Japan Earthquake will force some sense into the government and cause them to spend, spend, spend on recovery. Also, since 95% of Japanese government bonds are owned by Japanese and 100% denominated in yen, it's impossible for the government to default, unlike Greece. Prime Minister Noda is unnecessarily worried about balancing the budget. They don't need to raise taxes! Since there is some 170 trillion yen in excess savings in the banks and not enough borrowers, Japan can issue another 50 trillion yen in government bonds and long-term interest rates will remain low! Also, to counter the strong yen, it is but a simple thing for the government through the BOJ to just exercise its sovereign right to print its own currency! This should lead to a desirable degree of inflation (and fund recovery projects as well). And, "hyperinflation is something that simply will not* happen in Japan because of its phenomenal production capacity...

Look, if you are going to lump all Japanese with them, why not just go ahead and lump them with all humanity? Call them people, rather than Japanese. Or be specific. This middle of the road crap just does not cut it. Defining 100 percent of people by 1 percent of them is ignorant.

You're determined to reject the people of Taiji as just another part of Japanese society. You want to demonize them just because they hunt dolphins. You're rejecting a subsection of Japanese society just because of your mistaken assumption that eating dolphins is "evil". I'm afraid you're the one who is ignorant.

My wife, my in-laws, my students, my neighbors, my entire freaking town and my entire freaking prefecture have NOTHING to do with those drooling country rejects.

Neither do my wife, my in-laws, my students, my neighbors, my entire freaking town and prefecture, but the people of Taiji are just as Japanese as the rest of them, and I wouldn't demonize them as you do.

Japan cannot rely on her old, stiff policy and should start to sense the wind has change adapt to the changing expectations and challenges

When Japan stops being the world's biggest creditor nation, then maybe you can start trying to teach the Japanese how to do economics...

In my experience and I think the experience of many who have lived here a long time, "Japanese world view" is something of an oxymoron

That's probably because you're still in some ways thinking like a foreigner. ;-)

If you really want to stop this, you need to stop thinking like westerners and think more like Japanese.

True. And, once "westerners" start thinking within the Japanese world view, things will look very different, and they will probably stop protesting against eating dolphin meat.

Japanese should and will continue to eat dolphins and whales if they want to. Someday these "activists" will find some other cause to occupy themselves with. Even if they don't, it doesn't really matter anyway...

The Munya Times wrote:

Japan has nothing else but exporting to maintain wealth and prosperity,

This is incorrect. Japan's export dependence factor is only around 11%, as compared with some 43% for Korea, 33% for Germany, 24% for China, 23% for Canada, etc. Also, with some 250 trillion yen in net foreign asset holdings, Japan is the world's biggest creditor nation, and has been so for 20 years straight. Japan does not have "nothing else but exporting to maintain wealth and prosperity". With its vast foreign assets, Japan can even stop exporting and still earn enough foreign currency to purchase raw materials etc. from abroad.

The automobile and consumer electronics industries get a lot of attention, and when they suffer setbacks, people make a fuss about the "hollowing out" of Japanese industry. But, cars and consumer electronics make up only some 10% of Japan's exports. The bulk of Japan's exports are not of these, but of capital goods and materials. For instance, there are some 40 nuclear reactors under construction in the world, and these all have to order their reactor containment vessel from a company in Hokkaido, which alone has the technology to manufacture them. A company in Kochi Prefecture produces 70% of the world's ceramic capacitor paper. The new aquarium in Dubai, probably the world's largest, has to order the acrylic panels from a company in Kagawa Prefecture. And so on and so forth. They make such a fuss about China or even Korea "overtaking" Japan, but Japan actually has a growing trade surplus with these countries, if you include the trade that goes into China from Japan via Taiwan and Hong Kong. And this is because China and Korea have to order capital goods and materials from Japan, which they then use in their factories to produce the cheap goods they export to the US, Europe, emerging markets, etc. So, the more China and Korea export, the more Japan benefits. As long as Japan keeps on manufacturing these unique, high-quality, high-tech capital goods the way only the Japanese can, Japanese industry will not "hollow out". And, another thing to keep in mind is that Japan's economy is not at all "export-dependent". It's export dependence factor is only around 11% to 15%, as compared with 33% for Germany, 23% for Canada, 34% for China, 50% for Korea, etc. Japan's largest market is still Japan itself...

I'm saying what is taken for granted in Japan (and elsewhere), i.e. that the private sector and the government have their roles. Your "truth" is a caricature, probably rising from not actually looking at the economic data. Japan's public works spending has been decreasing steadily, yet there is still a lot of things that the government should spend on, and that Japan can afford to spend on -- especially during this time of deflation. To advocate anti-inflationary measures (deregulation, cost-cutting, etc.) at a time of deflation is the mark of an ideologue. To say that Japan's economic policies since 1990 were a "complete failure" , even though Japan has been the world's biggest creditor nation for 20 years straight, is to insist on looking at Japan through ideological glasses...

Piglet, the kind of free-market fundamentalist ideology you advocate doesn't apply in Japan...

Hiring more Gov. employees does not improve GDP

I'm not sure why you say this. Japan's GDP is composed of four items:

Private final consumption expenditure (57%) Government final consumption expenditure (18%) Gross domestic fixed capital formation (24%) Net export of goods and services (1%)

Salaries of government employees are included in 2 above.

Of course I also believe in efficiency, but let's be careful about which government employees we think should be fired. Many of those komuin people thought were useless became heroes as they had to go up to Tohoku to help out in the disaster areas, where entire government offices and many government employees were washed away by the tsunami (I write this with tears in my eyes). And again, people shouldn't clamor for firing government employees because of the mistaken notion that "Japan has too many government employees". Again, among the "advanced nations", Japan has relatively few government employees.

Your suggestions on what the government should invest in are good. But please don't deprecate the necessity of rebuilding and maintaining Japan's infrastructure. Many tunnels and bridges are nearing their end-of-life. We don't want to hear about falling bridges or collapsing tunnels. Earthquake-proofing and tsunami-proofing many structures is top priority. Compared with "advanced countries" again, Japan actually still has fewer roads. And also, in times of disaster, those "hakomono" can be used as evacuation centers...

Again, I'm aware of the savings rate. The actual savings stored up is also important. Check this: http://www.boj.or.jp/statistics/sj/sjexp.pdf

The belief that "Japanese people still have a lot of savings" is not wishful thinking, but simple fact. While it is true that the savings rate has been decreasing lately (though it went back up somewhat this year), there is still some 1,400 trillion yen of savings, a little over half of which is invested in government bonds. You can check on the Internet. Of course no one is saying Japan should simply just keep increasing the debt level. Japan needs to put into place economic policies that will stimulate growth, increase tax revenue and then they can balance the budget.

What is irrelevant is Moody's downgrade itself. The Finance Minister himself simply brushed off the news of the downgrade. Over 90% of Japanese government bonds are held by Japanese, and they don't really care what Moody's says. They will continue to hold on to and to buy government bonds.

Japan has fewer government employees in relation to the entire population than other advanced countries. Infrastructure doesn't last forever (50 years is a common estimate; in a few years' time we'll see bridges collapse if the government doesn't invest now in their maintenance)...

Government spending sometimes is wasteful (as is private spending) but it is also necessary. Again, for instance, a lot of tunnels, buildings and other aging infrastructure built during the growth period of the 60s are in need of repair. It was reported in the news today that many elementary school buildings were built to withstand only up to a "shindo-6" earthquake and so need to be reinforced, and so on and so forth. It's a caricature to say that Japan's regulations are what inhibit private sector growth, as the government and the private sector have worked together to build one of the top three largest economies in the world all these years. Deflation is caused by, among other things, pessimism on the part of the private sector because of -- deflation! (and dire warnings in the media that Japan's economy is in trouble, that Japan could go the way of Greece, etc.) It's a vicious cycle, and it's time for the government to do its part. Build roads, tunnels, bridgets, earthquake-proof buildings, etc. and stimulate the economy. Then we'll see more consumption and investment in the private sector as the "mood" gets more "upbeat" and Japanese are encouraged to spend more of their enormous savings. Having said that, Japan's private sector is not "weak" at all. Japan has a trade surplus with both China (if you count in the trade that goes into China from Japan via Hong Kong and Taiwan) and Korea, who import capital goods and materials from Japan for use in producing cheap goods for export to the US, Europe, etc. As China and Korea export more and more, Japan benefits. There are 40 or so nuclear reactors under construction in the world and while Japanese, US, Russian, French, etc. companies are involved in these projects, they all need to order the "containment unit" for the reactor from a certain company in Hokkaido which alone can manufacture them. The world's larget aquarium now is in Dubai, it seems, but the acrylic panel used to build it is made in Japan, which alone has the technology required. And so on and so forth. China should have ordered its bullet train system from Japan...

Sorry you're disillusioned, but during the period of economic growth in the 60s it was explicit national policy to double everyone's income and enlarge the middle class, which is why Japan now has a large middle class, and so is very low on the global income inequality list put out by the UN. There may be lots of money sitting in private safes, but there's also lots of many at the local banks, which are at a loss as to what to do with all those savings, there not being enough borrowers to lend to, and so the banks are more than willing to buy government bonds, and the confidence in government bonds will stay firm, Moody's or no Moody's, Japan being the worlds biggest creditor nation for 20 years straight. As for "government debt", again almost all of that is owed by the Japanese government to Japanese themselves, and so Japan will not go the way of Greece and other countries who borrow heavily from other countries...

No. The problem with Japan is deflation and deflation and deflation. Supply capacity greatly exceeds demand. What Japan needs now is more demand. If the private sector can't stir up enough demand, then it's the government's responsibility to do so. That's one of the roles of government (contrary to what some ideologues will have you believe)! Private investment, private consumption, public spending, all go into GDP. If the government cuts back on spending -- an anti-inflationary measure -- then that merely lowers GDP even more and gets the country even more into deflation.

Except for a brief spike during the Hanshin Earthquake, Japan's public works spending has been decreasing, and today it is lower than it was 30 years ago, not even half of what it was during its peak! It's because government stimulus programs are half-baked that the economy hasn't gotten out of its deflationary spiral. It's about time the government started spending more, especially that roads and other infrastructure built 50 years ago are in need of renewal. Else you'll get falling bridges and roads full of potholes, as you sometimes hear of happening in other "advanced" countries. And let me repeat, the Great East Japan Earthquake calls for even more public works spending to rebuild roads, bridges, buildings, power plants, schools, government offices, etc. I'm not daydreaming at all. What we need is not an ideological, but a pragmatic approach to economic policy -- if the situation calls for "Keynesianism", then so be it. If the situation calls for austerity, then so be it...