randomman comments

The think tanks and Keidanren are against the sales tax hike because of deflation. Increasing taxes in a deflationary economy is like drinking single malts to get sober. Standards and Poors, IMF have warned Japan that if they don't do something about the debt like increasing the sales tax, they will degrade JGB ratings. This is a big fat dilemma for Abe and co.

The Japanese debt matter is actually a very interesting and controversial global financial "phenomenon". Although I am no macro expert there are a number of factors that should be taken into consideration before making a judgement. As I always say, I find it absolutely ludicrous that "smart " people can create economic models on a single dimensional model; it is actually a very complex model.

Bad :-

Japanese Government debt is >1000 trillion yen (Oh my God that is a lot!) S&P JGB rating is AA- (same as Saudi Arabia and Taiwan, US is AA+, UK AAA and Canada AAA

Good:-

Foreign Assets = 300 trillion yen (and has been increasing ; above the dollar /yen excnage rate) Postal savings = 180 trillion yen Current account = +5 trillion yen per annum (not many G7 countries have an account surplus; BTW this is not the same as a trade balance) Corporate cash holdings = don't know but its very high (J banks are the largest holders of JGBs) Japan is in deflation Japan can create money at will (related to 5. above) to service the debt (yeah yeah hyperinflation BS) No G7 economy in the past has had zero debt nor is it necessary (its not the same as Joe Smith having $20,000 in credit card loans LOL). As long as the country does not default in bond payments it doesn't matter.

Other factors to consider:-

If the yen plunges to 200 yen/USD then Japanese assets go up in value to 600 trillion yen However, if the interest rates on a 10 year JGB increases by 1% then the national debt increases by 100 trillion yen for all future issued JGBs (NOT bonds issued to date as many Richard Cranium's believe) 10 year JGBs are yielding 0.8% (this is a real time measure of risk; CDSs even more so and is relatively low) Japan holds 1.1 trillion yen of US debt although only 1 % of the national debt can be a big yen/USD mover if repatriated Many hedge funds for over a decade have been betting that the yen and JGBs would turn into toilet paper but have lost a lot of money holding such positions. Therefore the Japanese debt is no new information.

There is no "obvious" answer to where this debt and the effects this has on Japan is going.

Dog you contradicted yourself. You said US sales didn't grow in your original statement yet your last comment states that the US is the only place where growth occurred...credibility?

I thought this very positive article was impervious to negative comments but I underestimated the negative polarity of those doomsday posters. Great businesses like Toyota find and make use of opportunities even in the midst of adversity. Those who like to find everything wrong with the Japanese corporate model should try to understand what makes Toyota work.

I watch with amusement the comments regarding the daily fluctuations of the Nikkei. Its exactly those phantom beliefs that provides the profit for the "tricky dickies" that take the other side of their trades...

As much as I hate TEPCO and the people who run the company the title is misleading to those who don't understand the detailed figures. They are still running a pre-tax loss of 29 billion yen so their business is still losing money even after the rate hikes The Government bailout money for the nuclear power plant disaster of 666 billion yen puts their net p&l positive. People should be more concerned with the rising cost of imported carbon fuel which cannot be offset without nuclear energy over the next decades, like it or not.

Contrary to what most thick heads believe, the economy cannot be modeled on a single variable. Japan is still deflationary as the recent core-core cpi figures indicate and to raise the consumption tax immediately would be detrimental, as has been in the past. However there is the matter of the Government debt. Standards and Poors has suggested a possibility of downgrading the JGB's if they don't raise the consumption tax to clearly show that the Government is endeavouring to offset the debt (effectiveness of this is a seperate discussion). A SP downgrade would cause interest rates to rise, a disaster. Timing based on actual economic indicators plus international dialogue is of the utmost importance.

The Fukushima Daiichi Nuclear Power Plant consists of six reactors and all were designed by General Electric. They even supplied the reactors for three of them. Why has there been little discussion of this matter when responsibility comes up?

If a guy is in your face and you feel like beating the crap out of him yet from what you have been taught you are nice and cordial, that's being polite. What's all this nonsense about "genuinely polite"? Traditionally Japanese are taught to be cordial and not display their true feelings. However, these days Japanese are becoming more like foreigners and expressing themselves; " ...I'm having a bad day so f off.."

Dog, why is it that you are determined to extrapolate this basically neutral article about inflation metrics into the implications of inflation? All they have stated is that they are going to use a measure of inflation that omits the cost of energy. Plain and simple... not rocket science.

So many posters here try so hard to only look at the empty part of the glass they can't see that the glass is almost full of wine. If I lead them to a winery they would still tell me that there is no wine....

Read the article before posting personal negatively biased interpretations of the article heading. The Japanese Government is going to use a different measure of inflation (already available) which takes out the energy cost component that skews inflation figures upwards due to the weaker yen. It actually makes it harder for the Government and BOJ to say that they have achieved a 2% inflation target.

Japan should take a lesson from Singapore. Singapore eliminated what once was a very serious gangster problem by deciding one fine day to arrest all the heads of so called mafia syndicates and then without trial, thrown into prison for 10 years. It is now one of the most clean countries in the world; so much for misplaced democracy..

Japan has no choice. The biggest threat to the future of Japan is the growing cost of resources. Its not just a weaker yen but energy related think tanks have determined that peak oil and its timing is grossly under estimated. The Japanese can possibly all die from another nuclear power plant disaster but without power at a reasonable price they will become extinct a lot faster.

Doggy are you a time traveller? The article was printed in early 2012 by a well known Chinese economist who is just another doomsdayer of the Japanese economy like Fujimaki, Karl Bass, Hugh Hendry etc etc They all have their arguments. If Andy Xie is right then we are currently in a massive yen devaluation which is supposed to happen over a period of days with the end of the Japanese economy and of course would be taking down the rest of the global financial markets, yet the Nikkei is at 14400 surging on Friday and the recent weakness of the yen can hardly be called a collapse. One point, I still don't understand why so many people view Japan as a pure electronics exporting country. As an example , has anyone heard of advanced manufacturing?

Even I am not stubborn to the point of putting all my money on the Japanese recovery but look at it from this angle, why do you think you know more than the key global financial markets where the yen is still at USD101 , 10 year JGBs at 0.8%? This argument about the demise of Japan has been going on since the beginning of the century , yes 13 long years and what all these doomsdayers talk about is common knowledge in financial think tanks. Are you telling me that markets are not efficient and that Dog has some exclusive foresight about the end of Japan? If your 7 year demise of Japan is correct then you should go and short the hell out of long term JGBs since they are so many light years away from your prediction..go for it doggy because if you are right you can make millions!

The repetitive Japan doomsday whining is tiring. Everyone including the incumbent Government knows that he national debt is not something to shrug off and is a problem yet noone on this site talks about the other side of the "balance sheet". Japan has the largest holding of foreign assets of any nation by a wide margin (yes more than China, more than the US, more than Germany or Switzerland or Canada) in 2012 it was over 250 trillion yen. Those assets produce income in the form of dividends, interest payments and other income gains. This foreign asset holdings has actually increased by 2.5 times since around 17 years ago and is still growing. Now with the weaker yen and global interest rates increasing (stop yapping about JGB int rates surging they are still at very very low rates and it is the differetial rate rather than the absolute rate that is imortant), where does everyone think Japanese money is going to go? Lets not also not forget about the huge postal savings in Japan (yes its decreasing but still the largest savings in the world); the huge amount of cash the Japanese companies are sitting on (STFU, Japan is not just about Sharp, Sony, Panasonic and Kawasaki steel there are 2000 comapnies listed in the TSE alone) and the enormous income arising form the huge volume of Japanese intellectual property. Japan is not Zimbabwe and the current account is not going to go negative within 7 years.

Sure the directors were the front line conspicuous corrupt lot but the biggest shareholders who were dumping and shorting the company stock before all this came out were the US investment banks. LOL.

Traffic fatality statistics from the Japanese National Police Agency use "death within 24 hours" for national monthly and annual comparisons. They also provide seperate detailed statistics for "death within 30 days" which is common amongst many countries for international comparison. Both timeframes have merits and demerits which can include or not include death from other causes. Insurance companies also have a need for varying "ageing" traffic fatality statistics.

I was in a pub once enjoying my drink when I accidently spilled beer over another guy. It got into a heated argument with a bit of a scruffle. I apologized. It settled down. Then his mate started going on about how the apology wasn't good enough, that I wasn't sincere. It got heated again and ended up in a fight. Moral to the story, let sleeping dogs lie..

To many of you, read the article! "Japanese media said the four-time Asian champions had been hampered by a shortage of world-class players and Zaccheroni’s reluctance to try new talent and tactics."

Zaccheroni is being paid 1 million Euros or 130 million yen so is he still shielded from any criticism?

There are two main factors why the Japanese Nikkei225, a mistaken synonym for Japanese stocks, reacts sensitively to global and especially US economic data and Government policies. Firstly the composition of the Nikkei takes 225 large cap stocks, mostly having a large international exposure, out of the 2000 stocks listed on the Tokyo Stock Exchange and is a price based index of these companies. Secondly the Nikkei225 futures market, traded on three exchanges, is one of the largest globally traded markets with the "big guys" being the monster investment banks such as Goldman Sachs , Morgan Stanley, Credit Suisse, and Nomura. These investment banks trade the Nikkei in volumes of 10,000 contracts playing each other holding and selling short term positions ranging from only days to weeks. Now you tell me if the day to day fluctuations of the Japanese stock market has any correlation to the fundamental economics of the country.

Global markets including the Nikkei225 and the USD/yen peaked on May22nd, the day Bernanke opened his mouth and suggested the end of QE3, so rather than blame Abe who has only been in office for only 6 months its more apt to blame the FED. The All Ordinaries and the Straits Times dipped into negative territory today with hedge funds dumping asian assets like no tomorrow; the Nikkei 225 was the worst performer but still up 20% year to date. The FED meeting next week is the next "fear event", heaven help the markets if there is any further suggestion of a close to QE3.

A more realistic measure of Abenomics effectiveness is corporate earnings over the next 24 months and if they don't improve then I will join Kyle Bass and buy JGB credit default swaps and make a bid on a deserted island far away from Japan.

In terms of screen charisma Bruce Lee is a memorable legend. In terms of actual martial art skill noone will ever know as he never got in the ring against any of the full contact champions of that time such as Benny Urquidez, Bill Wallace, Joe Lewis and Chuck Norris (although friends no actual "last one standing" matches).

No comments when the close to close price is small. CME settlement 12980 so close this arvo is +310 points from open. Sentiment is very negative so not a bad day's gain. S&P futures up 9 points after hours. All eyes on major SQ on Friday when Nikkei June closes not to mention S&P , currency futures expiry next week. Yen strengthening has thrown a curved ball and has decimated a lot of weak shorties so may now have a chance to weaken. One great indicator is count the number of JT bulls and bears on anything to do with Japanese economics and "go Nikkei225 contrarian"...

If the sovereign debt is as bad as the doomsdayers say then Japanese sovereign bond CDS premiums would not be so low. If anyone thinks they can rate the risk better then they are nuts not to back up the truck on those CDSs.

A model case for the legalization of casinos is Singapore. Lee Kwan Yu was severely against casino legalization until the end of the last century yet even he realized that it would be a turbo charger to the Singapore economy in the 21st Century and gave his approval for the two large casino resorts Marina Bay Sands and Sentosa. It has increased tourism significantly, created jobs and has boosted the growth of the country, exactly what Japan needs.

Dog, You seem to be describing above the partial state of the Japanese household during the 60s and 70s and using that as an example of your argument of the immutable state of Japanese low quality of life. In contrast, Japan went through a severe stock and property bubble during the 80s and 90s where greed escalated and demand for wealth and luxury surged. Although the result was far from desirable it still demonstrates excess disposable income driving demand. Japan is no different from any other country where if you feed them a ton of money with the expectation of future growth they will start buying luxurious goods and services including larger dwellings, more expensive cars and household items. Contrary to what many believe, an increase in wealthy household income helps the overall economy and trickles down to all levels of income households. Let me also preempt those who start raving about the possibility of hyperinflation; firstly Japan is mired in deflation and secondly look at those who were raving and ranting about the US going into hyperinflation after the Lehman collapse because of the Fed pumping money into the system....still waiting, in fact recent figures globally are showing disinflation.

Those who were sitting in front of a monitor waiting for the non farm payroll figures out of the US last night knew that it was expected to be a significant factor in determining Bernanke and the Fed's policy towards quantitative easing. The astronomical short yen/USD positions were being unwound by traders globally prior to the figures so of course the stuff hit the fan on Thursday morning. It's called volatility. The journalists, economic analysts who haven't the stones to put their money where their mouths are, all like to place phantom meaning to these large moves in what are simply the result of speculation in financial instruments.

I don't know why I am responding but while waiting for the non farm payrolls I'll indulge myself.

Dog: Quality of life is not a process but a goal. Increase in disposable income->increase in demand for luxury goods, increase in better education, more visits to the local pub, decrease in crime etc etc->higher quality of life.

Saxon: I don't know where you got the 85% from but a reduction of salary or simply keeping them the same is a result of deflation and a lack of demand in goods and services; the reason why all countries fear deflation the most. The Government is trying to combat this. This results in a low velocity of money Deflation is also why people hoard money into savings accounts. They don't have to pay interest because the value of money is going up.

I think I made the comment that Abe's speech was lacklustre but I don't judge what the Government is trying to do on this one speech.

You create demand by increasing disposable income and improvement in future expectation (both income and price) which is the problem with deflation. You might already have a 26 inch flat screen but if your bonus goes up and the economy looks promising then you will want a 60 inch that your kid has been raving about.