Showing posts with label U.S. government. Show all posts
Showing posts with label U.S. government. Show all posts

Friday, August 20, 2010

Barely concealed contempt*

Ian Buruma's recent Yomiuri op-ed, Japan's Unfinished Reformation, about how the Obama administration "has barely concealed its contempt for the DPJ" is now on line.

Revolutions, it is often claimed, do not happen when people are desperate. They occur in times of rising expectations. Perhaps this is why they so often end in disappointment. Expectations, usually set too high to begin with, fail to be met, resulting in anger, disillusion, and often in acts of terrifying violence.

And, as he notes, disillusionment has already set in.

The Nobel Prize in Peace 2009 was awarded to Barack H. Obama "for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples". nobelprize.org

*It was certainly "barely" concealed for PM Hatoyama.

3:30PM: Edited to correct the incorrect spelling of Buruma as pointed out politely in the comments. I cannot spell, but neither can Google spell check.

Friday, June 11, 2010

Futenma becomes interesting

Or at least the issues connected with it do.

For a serious discussion on the U.S.-Japan "alliance" it would be worthwhile---if the whole world has not already done so---to read this June 9 post at Shisaku and download the PDF and read it. Essays include:
  • Troubled Alliance by Kenneth B. Pyle
  • Return to Basics: Recalibrating the US-Japan Security Alliance by Michael Finnegan
  • Redefining the US-Japan Security Alliance by Michael Green
  • Alliance Endangered by Kent Calder
  • The 50th Anniversary: Time for a "Renewal of Vows" by Andrew Oros
  • A Short-term challenge to the US-Japan Security Alliance Putting its Long-term Heath at Risk by Yuki Tatsumi
Some of the authors should be familiar enough for us to know that they aren't taking the R. Taggart Murphy (below) point of view.

Thursday, June 03, 2010

I spent a lot of the day reading about the resignation of Yukio Hatoyama and various opinions of whose fault it was:

1) Hatoyama's. He should have handled Futenma and the US better, plus he got money from his mother instead of some half-crooked company.

2) The US: Parts of the US gov't were confused and worried about the DPJ's attempt to move Japan .0001mm away on security issues which would have destroyed the most-important-bilateral-relationship-in-the-world-bar-none, as well as have resulted in the collapse of human civilization. These expert managers wanted the policies of their old and trusted Freedom-Fighters in the LDP to continue forever.

3) Nobel Laureate Barack Obama, who was not up to speed on the most-important-bilateral-relationship-in-the-world-bar-none, and whose meaning of the word "change" as far as Japan policy goes appears to have been restricted to "(ex)change George Bush for me." Nobel-man Obama has been a little tied up lately anyway, since he shockingly discovered that the company that was responsible for a major environmental disaster in the Gulf of Mexico was not as responsible as it could have been at stopping it. He is now making angry faces, clenching his jaw, and has become so outraged as to have uttered the stinging expletive "damn."

4) The MSM: Goes without saying. The media is always responsible for everything everywhere.

5) The citizens of this fine land themselves, the least likely culprits.

6) All of the above.

I must rule out "all of the above," even though it seems reasonable. I must rule it out for I read somewhere on the Internet that if we say that, it means everyone is guilty and if we say everyone is guilty it means that no one is guilty. Perhaps due to cultural differences, I am unable to figure out exactly how that works or what it means, so I will focus on the group that has received the least attention: The folks of Japan.

I am not so sure how important the Futenma issue really was to anyone in the mainland. There are polls around that show that most Japanese wanted the Futenma mess solved by relocating the base outside Okinawa, but nobody seems to want those bases, with their lower-than-the-average-compared-to-Japanese-citizens crime rates, near their homes. They simply want and expect the US to defend Japan until hell freezes over because that's the way things have always been, and to do so under "tightened discipline" (perhaps chained to a table when off-duty) at a distance. Besides, Japan is a peace country and Japanese should not have to fight a war for Japan should one come.* And some have called Hatoyama indecisive and loopy**.

I am looking at this from the perspective that citizens of a democracy are over the long term, allowing for normal miscalculations***, voting for politicians and policies that they agree with. So I figure that after 65 years of democracy [Edited: We can't call the Occupation era democracy. Let's say 50-odd years] when folks keep electing politicians who continue the same policies, that they are voting for what they really want. I don't recall Futenma or the so-called alliance**** being a major issue during the election last fall, so I'd guess most outside of Okinawa did not especially object to the status quo. In the US we want low/no taxes, free government programs, wars fought mostly by lesser-well-off citizens and paid for by foreigners. In Japan, we want the US to provide a military and a foreign policy cover and to have little contact with the troops unless we can pawn them off on a poorer prefecture inhabited by Okinawans.

The good thing is, according to some theories, the US may not get what it wants now as there might be some reluctance on the part of the government to follow through on the Henko move. Okinawans ain't gonna just give in because Hatoyama is gone. And Naoto Kan is said to be sort of stubborn. He is also said to be more "practical" in foreign policy, which I take to mean more likely to do what Uncle Sam wants. But maybe, just maybe, this will get folks to think a little more deeply about this "alliance." It obviously isn't going to come from the US side without a swift kick.

*I don't get a chance to ask Japanese acquaintances this as often as I would like. In fact, I think I have only asked it once: If there is a war and an American soldier is killed fighting for Japan, what would you say to the mother and father of that soldier when they ask you "Why did my son (or daughter) die fighting for Japan?"

**I am using the Washington Post's Al Kamen's definition of loopy: "...oddly detached from reality."

***See G.W. Bush, the man who accepted Abe's "apology" about the Japanese Imperial Army's forced recruitment of sex slaves in WW2 which Abe claimed never really happened, but apologized for in spite of the fact that he claimed it never happened and had been claiming for years that it never happened. Sorry, I didn't understand it either. Ask Boy George or Abe.

****Describing the relationship as an alliance was first done in a communique when PM Suzuki visited the White House in 1981 and it was not well-received in Japan. The phrase US-Japan Alliance was not used in an official document until 1995. See AMPO's Troubled 50th: Hatoyama's aborted rebellion, Okinawa's Mounting Resistance and the US Japan Relationship. (Under Treaty? Alliance? about 1/3 down the page.)

Thursday, May 06, 2010

Okinawa Redux

If the Futenma mess---perhaps disaster for Hatoyama, who has thrown in the towel in the fight with the US over who actually runs Japan as far as security issues go---is so unbelievable as to make you pinch yourself to make sure you aren't just dreaming it all, then perhaps you need to read the Chalmers Johnson editorial in the LA Times: Another Battle of Okinawa:

...I find Hatoyama's behavior craven and despicable, but I deplore even more the U.S. government's arrogance in forcing the Japanese to this deeply humiliating impasse...

That about says it all. (Edited to add: I don't personally don't feel that strongly about Hatoyama.)

A thank you towards the Potomac for the heads up.

Tuesday, March 16, 2010

Back to the 80s

Only it's a different country and a different dispute, but very similar to the type of rhetoric that we heard back then. This time, it is China and the US, instead of Japan and the US:

....we’ve been reasoning with China [insert 1980s Japan] for years, as its surplus ballooned, and gotten nowhere: on Sunday Wen Jiabao [insert, oh say Nakasone or later PM Miyazawa], the Chinese prime minister, declared — absurdly — that his nation’s currency is not undervalued [insert "Japan's PM declared---absurdly---that the country does not have a closed market and does not discriminate against US/foreign goods. It's because foreigners don't understand Japan and don't try hard enough. Besides, Japan cannot let some foreign products in because its consumers won't buy them and their intestines are not long enough or whatever.]... ....And Mr. Wen accused other nations of doing what China [insert Japan] actually does, seeking to weaken their currenciesjust for the purposes of increasing their own exports.” Italicized portion from Paul Krugman NYT

Despite all the hot air of the time, and several attempts to right a trade imbalance with a country that did not adhere to the free market religion that the US rather absurdly seemed/seems to take as gospel, in the end it never succeeded. Nobody can deny that Japanese markets are more open than they were back then, but "free" they ain't. Japan and Japanese companies come first. Then again, name a market that is free using a definition of free that means free.

The US is now (finally) making a little more noise about China's currency manipulation and hypocrisy, but in the end, I kind of suspect it will be a lot of nudging from the US with some gradual, grudging changes by China. To me, the most interesting part about Krugman's column is his explanation on why the US need not fear China suddenly unloading all its dollar reserves:

...It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. On the other hand, it would be a bad thing for China...Paul Krugman, NYT

It's not the usual economic version of M.A.D.---Whoever shoots first, dies second---in which both countries are damaged, but seems to indicate that it would do little real harm to the US. Krugman has hinted at this in the past, but it's the first time I have seen his rational.

1600: An opposing view---(well, it is economics so no two economists agree on anything anyway)---Krugman's Reminbi Fantasy. Thanks to soma for the link.

Friday, February 05, 2010

What goes around comes around

It was a bit of fun seeing Toyota in a hot-seat similar to those that non-Japanese companies in Japan have had to endure when caught with similar problems. But it's getting a little extreme now and the first indication of that was when Steve Wozniac of Apple was interviewed on ABC because he had experienced what he thought was software problems which caused his Toyota to suddenly surge in speed. Not that Wozniac doesn't know software, but it was just a guess, however educated, on his part.

Now there will be endless investigations, all kinds of charges and counter-charges and plenty more opportunities for sensationalist TV reports. (Can we see David Muir of ABC sit in his office, call Toyota, and get turned down for an interview? Why not, he has been doing it to banks which apparently proves something.) This is exactly I would expect if the same thing had happened here involving a foreign auto maker (except for the absurd David Muir fake reporting).

Over at Anarchy Japan, there was a post a few days ago about how the US government was being unfair about this and that it was more politics than safety. Forbes has an article* with a similar take:

The company is under unprecedented attack by the U.S. government--never has a Secretary of Transportation told Americans not to drive anyone's cars or demanded a factory shutdown. It's taking on the appearance of a vendetta...

...If its Chief Executive Akio Toyoda bowed down and licked Transportation Secretary Ray LaHood's shoe, it wouldn't have stopped the publicity...[especially after the tape of the fatal crash was released]

...The Toyota debacle will rub off to some degree on the reputation of all the Japanese [auto makers]...

I am of mixed emotions. On one hand this is way over-the-top and it seems obvious that Toyota is getting a little extra---and will get a lot more---because of the times and because it is a Japanese automaker. (The history of US-Japan auto wars has been anything but calm and rational for either side.) On the other hand, I have no doubt that if the shoe were on the other foot we'd be seeing the same thing here.

*It is best to read the full article to get everything in context.

7:15PM: More here


Tuesday, February 02, 2010

Pauper's Alliance

From the NYT article Huge Deficits may alter US politics and Global Power:

....the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade.* As debt grew more rapidly than income, that country’s influence around the world eroded.

... Lawrence H. Summers, used to ask before he entered government a year ago, “How long can the world’s biggest borrower remain the world’s biggest power?”

The Chinese leadership, which is lending much of the money to finance the American government’s spending...NYT

Should this turn out to be an accurate guess, then one has to wonder what is the biggest threat, the ones which require the US to keep its forces all over the planet to protect the planet from itself; the one(s) (China?) which require it to keep its forces in Okinawa while debating just where in Okinawa to keep them with the people who own the country; or the continuation of borrowing from everyone until it can borrow no more?

The US-Japan Security arrangement looks like it might have a bright future with each country out of money, but expecting the same or more from one another while at the same time China and others whiz on by.

China has warned the US president that it will harm ties between the two countries if he meets the Dalai Lama.

Chinese Communist Party official Zhu Weiqun said there would be "corresponding action" if the meeting went ahead. BBC

China does not seem to be very cowed.


*OK, this is a bit nonsensical. Japan's problems are not the result of excessive borrowing from other countries. Not much else similar between the two countries and their financial problems that I can see. The always imminent Japan Disease.

Saturday, January 16, 2010

How the US government expresses its gratitude to a US Marine killed in Iraq

A Marine's widow who has been fighting immigration law to remain in the U.S. to raise her 1-year-old child has returned to Japan. Washington Post

The widow, Hotaru Ferschke, married Sgt Michael Ferschke by telephone while he was serving in Iraq. He was later killed in combat there. The Department of Homeland Security---the department that was so successful in stopping the attempted Christmas bombing of a US plane---did not consider the proxy marriage consummated even though Mrs. Ferschke was pregnant with Sgt Ferschke's child at the time.

With all the other responsibilities the Department has, perhaps one could forgive them for not understanding how children are conceived, but to do this to the family of a Marine who died in combat so that the brains of the Department could sleep soundly (while at work?) in the States is not something that can be forgiven. The US Congress, which did not act on a private bill to grant permanent residency to the wife, deserves nothing but contempt either.

Assuming that this report is accurate, it shows that it is possible for creatures consisting entirely of an anus to find productive employment in any government on earth.

This is in line with Uncle Sam's historical ways of saying, "Thank you for your service. Thank you for your sacrifice. Now go away and leave us alone."

Tuesday, December 22, 2009

Futenma, an unnecessary fuss?

It seems to be about impossible to understand what is really going on with the Futenma mess. An article challenging some of the Japanese government claims at Japan Focus (Japanese Bureaucrats Hide Decision to Move All US Marines out of Okinawa to Guam, by Gavan McCormac and Sakai Tanaka) does not help:

...according to the investigations of Mayor Iha and members of the Ginowan City Assembly, American forces have already been implementing a plan to relocate to Guam not only the command unit but also, by 2014, the majority of combat forces and even logistic sections including supply units.

Tanaka makes the obvious conclusion that if true:

"This means that the great fuss over the removal to Henoko that has been festering over the past few years may have been completely unnecessary from the beginning."


McCormac believes that Hatoyama's decision not to make a decision on Futenma until after the New Year has a huge symbolic importance and may signal "a possible changing of tide of history in East Asia, and especially the US Japan relationship."

Some polls have shown that a majority of the public thinks Hatoyama has mishandled the issue (Observing Japan has details of various poll results) and I have neither seen nor heard anything that gives any hint that the public would like to see the US military out (folks in Okinawa may have a different view). I wonder just how huge any change would really be?

Saturday, December 05, 2009

Nose still intact

Mizuho Fukushima, who threatened to pull the SDP out of the ruling coalition, apparently succeeded (so far) in delaying any acceptance of the Futenma deal. Hataoyama has certainly resisted the US demand to move "expeditiously" to resolve the dispute (i.e. do what the US government wants).

The threat left Hatoyama squeezed between domestic political imperatives and U.S. expectations -- a spectacle U.S. officials are not accustomed to seeing in Japan.

Daniel Sneider, a Japan expert at Stanford University, said the United States has yet to really take into account the significance of the political changes wrought by the August election. "Domestic politics matter in Japan now in a way that they didn't... "Do elections and domestic politics influence foreign policy in the United States? ... Now they do in Japan, too." Washington Post.

It's a bit baffling why this should be so confusing to the US, but obviously it is. It's probably only the first of many disagreements between the two countries if the DPJ can hang on to power. Sometime in the future we'll get to see just how much of a world view Japan and the US share. Decades of both the US and Japan living in some sort of dream world that the Japanese swap of security responsibility for market access won't likely result in another 60 year affair after it ends.

Perhaps William Overholt* said it best:

As the 21st century began, the United States decided to bet its entire position in Asia on the alliance with Japan...

...in all of American history, the United States has never before made such a bet anywhere in the world, with the arguable exception of the bet on Britain in WWII...

...Rarely in world history has such a power made such a consequential bet.

What I left out of the above was that the US was placing it's bet on the "...increasingly right-wing leadership that wants to rebuild national morale by reengineering a failed vision of the first half of the 20th century rather than through an inspiring view of the future."

That bunch is gone and now the US has to be worried that it bet wrong and seems to have come up with no other alternative other than to try to push Japan back to the old ways---to hell with what the Japanese people think. Why should it care, it never really had to before.**

*Asia, America, and the Transformation of Geopolitics, page 103 of the Cambridge University Press Ed.

**11 December: Of course it is not the job of the US government to worry about what the Japanese public thinks unless it becomes a threat to policy.


Friday, July 03, 2009

Embarrassingly stupid

But Japan distrusts immigrants too, so that makes it OK.

Of all the initiatives undertaken in the name of homeland security after 9/11, the visa screening requirements for foreign scientists and engineers have probably done the most lasting damage to America's economy -- particularly in the cutting-edge technology fields that are vital to our economic leadership and national security.

The U.S. scientific enterprise depends enormously on talented foreigners. Foreign students and researchers, especially from India and China, comprise more than half of the scientific researchers in the U.S. CFR

However, the US is taking another look at this nonsense. Wonder if Japan will since many leaders think its future seems to be tied to immigration too.

Sunday, May 24, 2009

Thanks Uncle Sam

Nissan Motor Co. is likely to receive more than ¥100 billion in low-interest loans set up by the U.S. government to promote the development of and transition to electric vehicles and other fuel-efficient cars, sources said Friday.

Nissan is the first foreign automaker that is close to winning approval for the direct loans... Full story at the Japan Times.

Friday, May 22, 2009

Who is John Roos?

While trying to catch up on some news after a week of trying not to catch up on some news, I discovered at GlobalTalk 21 that some fellow named John Roos will (might?) be the next U.S. Ambassador to Japan. Surprising as that was to me and about everyone else, at Armchair Asia I discovered that the White House appears to be in the dark on its choice of Roos too.

The cynical would suspect that Roos' main qualification for the job---if being a U.S. Ambassador requires any qualifications---is that he got folks to fork over big globs of cash to the Obama campaign as a fundraiser.

Roos is little known among U.S. and Japanese officials, raising some doubt about his qualifications. Breitbart.com

On second thought however, one of the main duties of the U.S. Ambassador to Japan seems to be to find a way to get Japan to fork over big globs of cash for various U.S. adventures which makes him a perfectly logical, nearly ideal choice. That plus the fact that he was a Silicon Valley lawyer. If he knows next to nothing about the country, it would strengthen his qualifications even more.

Glad to see yet more "change" from the (no-longer) new administration.

John Roos '80: Lawyering to Silicon Valley's Elite

Friday, May 15, 2009

What you say?!!

Published in the NYT and it is not some sort of idiotic fantasy-world pap like some of the recent stuff has been. I'll have to read and reread this to make sure that I am not dreaming as it seems to make some sense. Not that it will make any difference...

...in view of the deepening quagmire in Japan’s domestic politics, U.S. policymakers may need to scale down their ambitions for the role they wish to assign Japan. More than 60 years after World War II, Japan is still generally isolated in the Asian region. It remains heavily dependent on the United States for its defense and the health of the U.S. economy for its growth — not a positive state of affairs for U.S. policymakers trying to cope with rising regional powers and economic difficulties of their own...

...mounting voter frustration in Japan with an unresponsive political system leaves the door ajar for nationalist politicians and policies...A must read at NYT

The authors go on to state that the 60-year old contingency scenario for Korea is no longer adequate and that perhaps the security relationship with Japan should be "multilaterized." Someone shut these guys up before they influence US policy to move past the 1950s. Fortunately though, US foreign policy does not change until change is forced.

Maybe I am just a bit too sensitive to the rants of the nationalists, but methinks the door is a little more than ajar already.

(Speaking of NYT nonsense, I have never been to Norway and know nothing about it, but I'll just bet that this is oversimplified goofiness.)

Friday, March 20, 2009

Life on the funny farm

Having more money than brains, I dropped in at the Denenchofu Precce so I could buy the same product at a higher price compared to Ozeki at Okusawa or the generic Tokyu (which actually owns Precce).

I didn't need to shop around for what I wanted, for they have had the exact same products since Christ was a child. "New and improved" ain't a label one sees in the grocery store.

I walked over to the bento display and bravely risked being knocked down and trampled (politely, of course) by the lunch time crowd to get my overpriced tempura (¥50 more than Tokyu), and some spring rolls. Then I just had to grab an ice cream sandwich.

I went to the checkout---fortunately it was not yet crowded and I did not have anyone run to cut me off and get in line ahead of me like often happens (good manners, of course).

After bowing and welcoming me (I think this accounts for part of the higher price here. Can't think of much else that would), the young lady at the register began the interrogation. "Would you like dry ice included with the ice cream?" "No" says I. "Would you like the hot food in the same bag [as the ice cream]?" Huh?!

My slow feeble brain did not comprehend. I hesitated to ask for clarification, for when I have done so recently, people have suddenly switched to an incomprehensible English combined with a comical pantomime so that everyone becomes completely confused.

I decided to take a risk and ask "The hot food in the same bag as the ice cream?" She looked at me in semi-panic. Oh sh*t, I thought, now I have caused trouble. But luckily she was able to bring her brain back from holiday, say "excuse me" and grab another bag and hand it to me so that I could put my ice cream in.

But this isn't the funny farm. This is normal. The funny farm is the world of politics, both Japanese and US. I quit paying much attention to Japanese politics as soon as it became clear even to me that it is more of an exercise in theory than anything else to expect the LDP to be replaced and a real, competitive two party system to start. It may happen, but I'll wait and be shocked. Is the LDP the new Tokugawa government? Will we have to wait centuries?

As bad as Japanese politics are, the US seems to be getting even worse. Sort of a farce. A few weeks ago, the US press was all giddy over a "debate" about Rush Limbaugh!! The world in an economic crisis and we care about Limbaugh? Even Obama got in on that earlier. Uh, excuse me Barack, why are you worrying about a talk show host?

Now the US Congress has passed a special tax targeting a specific group of people who are unpopular at the moment.* What country is that? Will Senator Chucky Cheese Grassley call for them to commit suicide? Perhaps introduce a bill to have them sent to Gauntanamo and tortured? There'd be popular support. F**k any constitution/legal questions, they's the gubbermit and they can do what they want. Now I remember why I was once a libertarian who, for a short time, flirted with Ayn Rand objectivism.

Wouldn't it be a better idea to focus on the real problem first? You know, the one that has been repeatedly (and believably) called the greatest economic crisis since the Depression?

That's why I have began to avoid reading news about politics or the economy as much as possible (and thus, fewer posts on this blog). I believe that this is the most bizarre period I have ever seen.

Now, to get off the computer and the Internet before I do something stupid like read Thomas Friedman. Gonna do the least crazy thing I can today and chase birds.

* (21 March) This inanity by Congress, some of the Senate, and the entertain-em first portion of the US press is called "Perverse Cosmic Myopia" by the NYT's David Brooks.

Wednesday, February 18, 2009

Inside the meltdown

When Lehman Brothers went under last September, it was obvious that something very serious was happening. So after being concerned I then had the strange thought that there would be a few good books about that weekend coming out a 6 or so months later. Of course, I never thought that the economies of many countries would be so bad that nobody would have the extra money to buy those books.

The US Public Broadcasting System's Frontline has released the first of three video reports Inside the Meltdown: First Tremors online, and you don't have to pay for it (It is about 1 hour long.).

"Unless you act, the entire system of this country---and the world---will melt down in a matter of days." Hank Paulson during an emergency meeting with senior legislators on September 18, 2008.

Isn't history so often better to read about (or watch programs about) when it is in the past than when you have yet to live through it?

Wednesday, November 26, 2008

Reassurance

After all the time that I have wasted worrying about the global economy, I was reassured today by my buddy, the Thunderbird MBA, who explained the rationale behind his theory of why Japan will not be seriously affected by the downturn and will possibly once again (?) take over from the US the position of the world's top economic power.

It goes like this: Since Japan's financial system has not (!?) been affected by the global financial crisis, the fact that the other major economies of the world are having serious problems will provide Japanese companies with an opportunity to increase their market share in those countries. It will also cause foreign investment to increasingly flow into Japan (where we are to assume that it will be welcomed with open arms?) I am a bit confused as how companies will be able to increase market share of shrinking markets when nobody is buying anything unless Thunderbird guy is counting on a lot of bankruptcies. Of course, there would be no moves by any of those countries to protect their weakened industries either. Unfortunately, I never pursued those points any further.

However, just for fun I mentioned the indebtedness of US consumers and government and the dependence of the US on borrowing from foreign countries like Japan and China* (why did I so enjoy emphasizing Japan as a foreign country? How could Japan be foreign?) and wondered how he thought it could be sustainable. He seemingly had no knowledge of this and could not say much about it. Well, he is working in HR...

It has been said that you can judge the size of a man by the size of the things which irritate him. I am shrinking. Rapidly.

*I linked to this below, but Japan Focus has an article explaining in very easy to understand terms the risks and dangers of this system and why this system must be reformed or replaced. Debt Man Walking, by John B. Judis---very much worth reading.

Tuesday, October 28, 2008

Charge now and pay (much) later

if ever. Business Week has opinion on the financial crisis which, like R. Taggart Murphy below, suggests the past (?) idea of the US being able to drive the world economy by borrowing money from other countries to purchase those countries' goods and services may be gone for good:

...there's good reason to believe that the current crisis reflects a growing realization: Long accepted patterns of cross-border technological transfer, foreign trade, and global finance are simply not sustainable...

...This [system] worked as long as everyone believed that American consumers could finance their debt. But here's the problem: At the same time Americans were borrowing, their real wages were falling—and not just for the least educated. By BusinessWeek's calculations, real weekly earnings for college grads without an advanced degree have dropped every year since 2002.

You can't pay back rising debt with falling wages; something had to give....the entire global edifice was built on an impossibility. Full article here.

The house of cards has fallen and people are starting to take notice. What will Japan do if it cannot base its economy on exports to the US (or manufacturing goods exports to China so that they may export to the US) to the same degree that it has been doing for decades? And what will the US do if we have to stop relying on borrowing and have to raise taxes or cut spending (and rely less on individual credit as an income supplement/substitute) to make up some of the difference.

I am not holding my breath waiting for Aso, Obama, or maybe McCain to explain exactly how they plan to deal with this new reality.

Monday, October 27, 2008

Asia as enabler of an alcoholic US

R. Taggart Murphy has posted another article on Japan Focus concerning US indebtedness to foreign countries, most especially those in Asia with export-led economies (Japan and China are the top two):

...Like an alcoholic’s wife who furtively keeps her husband plied with booze while managing to avoid thinking about exactly what she is doing, Asia has long facilitated the U.S. addiction to drowning its problems in endless dollar cocktails. But the current crisis suggests that the days of cirrhosis of the American liver and delirium tremens are upon us. Without a clear grasp of the ways in which Asia’s economic methods have facilitated American political pathologies, without a plan to replace Asia’s reflexive reliance on exports to the United States with another economic driver, Asia too will be drawn into the economic and political maelstrom that now engulfs Washington...

Murphy predicts an end to the US being the world's engine for demand and the export-led growth (and dollar-reserve accumulation) of countries such as Japan.

Of all the huge changes which seem likely to come, there are few politicians (U.S. presidential candidates in particular) publicly speaking of them, nor is the media pressing anyone about it. In the US, the media has recently been more concerned with such serious issues as Palin's wardrobe costs. In Japan, Aso's choice of bars and restaurants is a similar priority.

Tuesday, October 07, 2008

US military paid for by foreign debt?

In a new Japan Focus article, R. Taggart Murphy* discusses why Japan has not (will not) internationalized the yen.

He also makes the following observation:

...Japan has left its export earnings inside the U.S. banking system, thereby automatically helping to finance American external deficits. Thus Japan has been the primary financial facilitator since the 1970s of the American ability to project military power around the world without crushing domestic tax burdens. While it has been joined in the last decade by China and the petroleum exporters, it is safe to say that the end of Japan’s support for the dollar would mark the end of the American ability to run endless current account deficits and thus its ability to support its vast military establishment...

And we are in paranoid mode about security when we have to borrow from foreign countries to pay for much of our ability to project military power? At least one of our lenders (China) is considered by some to be a potential military opponent. How is that secure?

And since the US values military security over economic security,** this may also help explain a lot in US/Japan relations.

*Murphy has written good two excellent books about Japan's 1989-early 2000s economic problems, including Japan's real estate bubble and the Japanese government's involvement in creating and bursting the bubble: Japan's Policy Trap and The Weight of the Yen.

**This sort of thinking has been criticized since at least the 1980s and the US/Japan trade friction. It can be convincingly argued that the US contributed to peace after WW2 with economic policy much more than military power, although both were important during the Cold War. See Asia, America, and the Transformation of Geopolitics, for example.