Thursday, December 5, 2002

Is Japan Trying

This question may seem a strange one, but appears to be worth asking since one US economist after another has been suggesting that, one way or another, the Japanese are simply not trying to find a way of getting out of their mess. First Cecchetti got the ball rolling with the following in the Financial Times:

"What about the zero nominal interest-rate floor, the point at which

Monday, December 2, 2002

Japanese Unemployment Continues to Rise

Japan's industrial production fell last month and families cut their spending after unemployment rose to a record high, adding strength to the growing view that Japan's economic recovery may be running out of steam. Of course much of the future for unemployment now depends on what really happens in the wake of the NPL debate.

Production unexpectedly fell
Japan: What is The Economist Missing

According to the Economist it WAS just possible to find a nugget of good news about Japan�s economy on November 19th. However rose-tinted glasses, they suggest, were needed to spot it. On a day which saw another round of declines in the share prices of Japan�s biggest bank the Organisation for Economic Co-operation and Development (OECD) changed its mind
Japan Banks Claim to Tackle Non-Performing Loans

According to the Financial Times there are signs the pressure being put on Japan's banks to deal with their bad loans is starting to bear fruit in the fact that the country's largest lenders used the publication of their first half results to simultaneously announce more aggressive action to tackle the problem. my feeling is it would be better to

Tuesday, November 19, 2002

New OECD Study on Japan

The Organisation for Economic Cooperation and Development (OECD) has published a new economic survey for Japan. The OECD urges the Bank of Japan to ease monetary policy significantly, arguing that its existing actions have not worked and that the time has come to adopt a 'more adventurous' strategy. In the report the OECD argues that the central bank of the world's

Saturday, November 16, 2002

Who's in charge in Japan?

As I have already indicated (see blog post immediately below) there is considerable doubt and consusion about where exactly Japan is headed right now, and about what will be the real impact of Takenaka's reform programme. Morgan Stanley's Robert Alan Feldman seem to be in no doubt:


The media were wrong. A week ago, when the initial reports on the new plan for
Japanese Banks Set to Slash Lending

According to the Asahi Shimbun the toughening in Tokyo's bad-loan stance is forcing Japanese banks to react. The NBL disposal program being developed under Heizo Takenaka, minister for financial affairs and economic and fiscal policy, is supposed to make banks strictly appraise loans and set aside additional loss reserves to counter bad loans expected to
I AM NOT ALONE

Having come out two weeks ago dramatising the possible consequences of a 'hard landing' in Japan in a way which may have been a little OTT for the taste of some people, it is heartening to see that one of the leading Japan 'experts' comes to similar conclusions, in a much more reserved way, of course.

WOULD REFORM RUIN JAPAN?
By Akio Mikuni and R. Taggart Murphy
An upheaval in
JAPAN TO ENTER FOURTH YEAR OF DEFLATION

Japan seems to be on track to enter its fourth consecutive year of deflation - something not seen in any post-war industrialised country - as the country's core consumer price index dropped for the 36th consecutive month in September. The core nationwide CPI fell 0.9 per cent in September, year-on-year, according to government sources. In October, the
JAPANS 'NOW YOU SEE ME NOW YOU DON'T' REFORMS

News from Japan these days is contradictory. There seems to be no consensus whatsoever about whether Takenaka and his team of 'hard landing' specialists are going to get the political backing they need. Risking a revolt in his own party, Japanese Prime Minister Junichiro Koizumi has today ben giving the appearance of standing firm in support of his
JAPAN BANK CAPITAL: NOW YOU SEE ME NOW YOU DON'T

Japan's Asahi Shimbun has this inteesting piece about the capitalisation situation of Japanese banks. According to this Japanese daily the major banks still have capital adequacy ratios of 10 percent or higher, meeting the internationally accepted minimum of 8 percent. But much of this capital consists of previous government bailouts and deferred
WILL HISTORY TREAT THE NAME TAKENAKA THE WAY IT ONCE TREATED YAMOMOTO

Japan is going to burst. Left on its present course, like the proverbial nineteenth century steamship with the boiler overheating, one day one too many of the bolts will sheer off, a boiler plate will give and then the devil take the hindmost.

Of course one of the few remaining debateable points is whether or not there is
b>JAPANS CONTINUING DEFLATION

Japans core consumer price index fell for the 35th consecutive month in August, down 0.9 per cent year-on-year. Unemployment in August was just below post-war highs at 5.4 per cent. The number of jobless increased by 250,000 year-on-year to 3.6m. To cap this extremely depressing batch of economic data household spending fell 2 per cent in August month-on-month. This
JAPAN BOND AUCTION FIASCO

Perhaps the best introduction to this latest faux pas in the unwinding Japan saga is the comment from Merrill Lynch bond strategist Masuhihsa Kobayashi who is quoted as saying: "It seems that fiction is becoming a reality." The backdrop to this rather painfully reality recognition (actually life has always been stranger than fiction) is todays withdrawal the Y1,800bn
JAPAN FAILS TO CONVINCE

The latest news and economic data from Tokyo continue to cause concern. Yesterday the Nikkei average dropped 1.67 percent or 159.10 points to 9,362.53 after touching in one moment an 18 year low at 9,269.10. On November 10, 1983, it closed at 9,244.24.In part this downward movement is provoked by uncertainty concerning the immediate outlook in the US (and now in Europe
CHINESE EXPORTS TO JAPAN JUST KEEP GOING UP

China is on the way to replacing the United States as the top exporter to Japan and could do it as early as this year, according to information provided by the Japanese government last Tuesday. China is still Japan's No. 2 trading partner behind the United States. But the figures indicate that China is rapidly passing the United States as the top

Tuesday, November 12, 2002

Nikkei and Japanese Banks

The latest decline in the Stock Markets only serves to underline just how fragile the Japanese banking system actually is.The Nikkei 225 index fell below 10,000 for the first time in five months today dropping below a level at which it begins to threaten the health of the entire Japanese financial system. We don't know for certain what will be the 'tipping points'
NEW NBER BOOK ON JAPAN

The NBER is about to publish the proceedings of a conference held in March 2002 and entitled "Structural Impediments To Growth" (available online HERE ). Among the many intresting papers is one by Robert Dekle of the University of Southern Carolina entitled "The Deteriorating Japanese Fiscal Situation:Future Prospects in an Era of Population Ageing (available online HERE
FEDERAL RESERVE CLUES IN ON JAPANS PROBLEMS

The following article by a group of Federal Reserve economists attempts to come to grips with any connection there may be between Japan's burst bubble and the creeping deflation they are experiencing.


Abstract: This paper examines Japan�s experience in the first half of the 1990s to shed some light on several issues that arise as inflation declines
Japan: Hamburger Prices and Deflation

Apparently changes in hamburger prices are provoking quite a controversy in Japan, they seem to be seen as a symbol of deflation.


Recent news of a top hamburger chain reinstating price discounts indicates how far the speculation about an "end to deflation" a few months ago was missing the mark. Actually, some investors had been assuming that the end of the
BLOG UNDER CONSTRUCTION

This blog is still under construction. It will bring together all my writings relating to the evolving situation in Japan. As can be seen from the blog title, I am not optimistic. My overriding preoccupation, apart from the inevitably tragic human dimension of what is about to happen over there in Japan, is that the main reaction here in Western Europe is likely to be