Don't worry, be happy

Japan's debt is apx 200% of GDP---the world's largest---but it isn't as bad as it seems 'cause most of the debt is owed to domestic suckers holders of government bonds.

"...Given Japan’s demographics, the current-account surplus may decrease and some even say it will go into deficit” in the long term, Masaaki Kaizuka, director of debt management at the ministry, said in Tokyo today. “We may see the need to increase reliance from abroad, whether we want to or not.” Bloomberg Businessweek

According to the article, Japan's debt may rise to 246% of GDP in 2012. Will Japan still have a AA- credit rating? Will foreign investors care? Will they rush in for the same 1.4% yield on a 10-year bond?

We should refrain from panic because according to Naoki Izuka of Mizuho, the government simply* needs a "feasible, credible and sustainable fiscal plan" and to resolve the problem within 5-years and "we'll be fine."

Nothing to it. A simple thing for any government, but especially the government here, whether led by the DPJ, the LDP, the Commies, or whatever. And we know how welcome foreign investors have been in the past.

*My word, not his.

Is Kan conning us?

RetroMan aka ConMan Kan, the new finance minister, has clarified and strengthened his recently discovered pro-market stance. Earlier this week, Kan had hinted at the possibility of Japan intervening in the currency market to weaken the yen until he discovered that such remarks were not in his new job description.

Today he reportedly said:

"Currencies should basically be set* by the markets, and this principle has been agreed internationally," ..."Unless a rapid move occurs, I will act on this principle." Reuters

Kan has thus distanced himself further from the Old Schoolers who up until about 2004 would intervene in the currency market when they didn't like the rate set by the market. Under ConMan's radical new policy, should the US dollar strengthen "too fast" against the Japanese yen (perhaps from the apx ¥92 now to ¥96 or more to $1?) thus making imports more expensive resulting in weaker consumer demand, the government will take aggressive action to strengthen the yen against the dollar.

This clever new strategy will assist the DPJ in achieving its stated goal of reducing Japan's reliance on exports and allow the consumer market to expand as soon as consumers gain confidence enough to consume. Not only will this help the DPJ and Japan, it will benefit Obama and the US, since Obama is on record as stating that the world cannot return to the pre-subprime system of the US serving as mere consumers (and borrowers) of the products of Japan and others in the region.

*..should be basically set... ?

Thou Shalt Not Beggar Thy Neighbor(s)

Japan's newly appointed finance minister Naoto Kan has called for a weaker yen in order to aid the recovery of the Japanese economy...

...Mr Kan said he would seek to work with Japan's central bank on the issue, prompting speculation that he might order official intervention. BBC

But why not? For we common folk in Japan, our economic health is more important than some abstract principle. For the dynamic new leaders of the Japan there is no need to worry: The US and others will moan a bit, but otherwise not much will happen. We can call this another step on the path to a more equal relationship or more of the same old crap thought up by fossil-brained geezers with old, old, old, old, old ideas in place of a plan. No we Kan't! No we Kan't!

Evil Protectionism

On first glance, Finanace Minister Nakagawa's remarks might tempt sarcastic comments of "hypocricy." However, after reading the article and despite increasing misgivings about mythical free trade (if free means "free"), it is difficult to disagree with him:

"For the US, Europe and other countries that sought liberalisation from Japan to run to protectionism is an absolute evil," Nakagawa told reporters before leaving for the G7 meeting in Rome....

..."While protectionism may be good for a single country, it is negative for the entire world. Japan would like to make concrete proposals" to prevent a trend of favouring domestic industries, said Nakagawa. AFP

Tax yen at work

I don't really get it, anyway. In this Ministry if Agriculture, Forestry, and Fisheries clip, they acknowledge that it is impossible for Japan to grow the food it requires. It then suggests that folks eat more domestically grown food to address the problem.

It also recommends that farmers become more efficient, but they did not suggest doing it by consolidating small part-timer farms into large, efficient farms. Maybe they should have recommended that farmers use magic seeds too.

Kinda tough to tell folks to eat more purely domestic foods in a severe recession unless the price of those foods come down. Doesn't this mean that the domestic rice market is protected all for naught since folks apparently ain't eating all that over-priced rice?

Article at Japan Focus.

April 1 comes early

President-elect Barack Obama can explode the fear among world leaders that he is a closet protectionist by making his flagship foray into international trade waters the U.S./Japan FTA...

...the recently negotiated agreement between the U.S. and South Korea sent a jolt throughout Japan similar to the shock they received over NAFTA. (Huh? I missed this "jolt" entirely. Was the NAFTA jolt as unnoticeable too?)

...if she [Japan] wants to compete with China for political and economic influence, she will encourage the creation of "Amerippon." Oh. My. God. This is why folks should just say "no" to drugs.

...it will take political leadership in Washington for the Japanese to create the political will to overcome their obstacles. On second thought, maybe mind-altering substances could actually help university professors who were once diplomats and who now write Op-Ed pieces. Or at least do a little bit more research.

The Free Trade Agreement with Japan can serve our economic, military, diplomatic and core values in one fell swoop. Full article here at the Washington Times. (Originally written for The Onion?)

I must be missing something here. Need more time off.

Imagine the fallout,

the wailing and gnashing of teeth, the warnings of the dangers of investment by foreigners and of foreigners/foreign things, were the shoe to have been on the other foot and an American, European, or other non-Japanese company were buying a Japanese firm like this and at this price---bankrupt or not.

Nomura Holdings Inc. paid only $2 for the European and Middle Eastern equities and investment banking operations of bankrupt Lehman Brothers Holdings Inc., sources said Friday. (JT online)

Rice shortage relief?

...Japan imports a substantial amount of medium-grain rice from the US and long-grain rice from Thailand and Vietnam....

...to protect its domestic rice protection, Tokyo stocks the imported rice until it deteriorates, then sells it as livestock feed on the Japanese market...

..."Japan would be very happy to dispose of this rice to the world market, but it cannot do so without US acquiescence"....Yahoo Malaysia

Pure Hypocrisy?

Nooooooooo......of course not.

Japan is rejecting a proposal from Britain's The Children's Investment Fund to raise its stake in a major electricity company, citing risks to public order, government officials said Wednesday.

Nothing new or unexpected here, and I am sure that it can be explained away as being rejected because it is a critical industry. Just like Bulldog sauces.

Hillary comes out in support of the 2nd Amendment, and Japan

comes out in opposition of protectionism. I expect Hillary to start telling us of her NRA life membership dating from her combat tour in Bosnia, and Japan to start claiming that free trade is something uniquely Japanese and that only the Japanese can understand it.

Japan expressed hope Saturday that the International Monetary Fund will play a more active role in monitoring the movements of sovereign wealth funds because such an involvement of the international body would help minimize "protectionism" in countries receiving their investment.

....SWFs becoming large shareholders in financial institutions in major economic powers could raise concern about the control of the financial industry by those funds and lead to protectionist moves, such as restricting their investment, in those countries. Japan Times.

Fukuda's party, the LDP, is considering starting a sovereign fund in Japan and is concerned . Some people are likely to be laughing and giggling at the idea of Japan complaining about restrictions on foreign investment, but this is serious. It means that it is bad if other countries restrict Japanese investment, but not if Japan restricts foreign investment in Japan. Japan, you see is special and unique. There is nothing hypocritical about it.

Nor is there anything hypocritical about Hillary calling Obama patronizing.

Japan's sudden concerns about protectionism is nicely addressed on Japan Economy & News Blog.

The price of xenophobia

Again, no surprises here. Japan to wants to return to the past which it never really left; to go to the fantasy world of Fujiwara. There are a few penalties to pay, but I am sure it can all be blamed on sneaky, Japan-bashing foreigners who don't understand The Beautiful Country:

By raising barriers to foreign investment and impeding the flow of foreign nationals, Japan, as a nation, is at risk of becoming a "subprime state."

[The Japanese Supreme Court labeling of Steel Partners as an "abusive acquirer"]...the overwhelming lesson to be learned from this case was that external capital is no longer welcome in Japan.

...there are also steps that affect the people who move through them [speaking of Japan's attempt restrict foreign investment in airports], in particular, foreign nationals.

It is hard to imagine another world-leading nation engaging in such regressive and exclusionary behavior. From an article in the JT online by Jochen Legewie, President of CNC Japan.

Japan has been playing a rather insincere game of being an international, open, market-based economy for decades. It has never really been true. Japan won't usually open anything unless outside pressure is applied---how often has the government taken the position that opening some sector of the market or even society to foreign companies or people is good because it is good for Japan and the Japanese?

I know it is childish and spiteful, but I wish other countries would take a simpler policy towards Japan. "OK, we can't enter or freely work in your markets/society. No problem. It's your country and your 'tradition.' We won't argue. However, your companies and your people will not have free access to our markets/society. That's all. Should you ever decide to open up, come and see us after you have do so. We don't want to hear sweet talk and "we are unique" excuses. It's action or nothing. Until then, goodbye."

If Japan wants to return to a Third World status let it. If it wants to give up let it.