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Friday, January 20, 2006

Japan, Japan, Wherefore Art Thou?

Hi everyone. Just to say that I have been a bit erratic recently since I have had a lot of work on my plate, and a lot of concentration to be doing. I hope sometime soon I will have some results from this to show here.

Meanwhile the Japanese economy has been far from idle. Japans labour market continues to tighten:

The closely watched jobs-to-applicants ratio rose to 1.00 in December - meaning there were as many jobs as applicants - from November’s 0.99. It’s the first time the figure had reached this level since September 1992.

The number underlined the recent improvement in Japan’s labour market, as companies respond to expectations of higher demand by increasing hiring.


Is this labour market tightening good news in Japan's case though? Aha! That is the question. Claus Vistessen has a very much to the point post which touches on all the principal issues.

Wednesday, January 18, 2006

Tokyo Stock Exchange Temporarily Closed

Gosh, I certainly hope this isn't anything too serious:

Japanese stocks plunged on Wednesday after the Tokyo Stock Exchange announced that it would suspend trading of all stocks because volumes were too high. The news panicked investors, who had already sent the Nikkei down heavily in the wake of Monday evening’s government raid on Livedoor, the internet services company, over possible violation of security laws.


As Bloomberg points out, this has been a bad week for Japanese shares:

A rout in Japanese stocks deepened before trading was halted prematurely for the second time in the Tokyo Stock Exchange's history, helping to wipe away more than $300 billion in value from the world's second-largest equity market this week.

I certainly hope that all this will stop where it is.

But it does highlight the way in which people have been irresponsible (Economist please note!) with the Japan sustained-recovery story. Much of the investment in Japan stocks has been from overseas investors of late (the Jpanese have rather been buying US assets), people (especially it seems Middle East oil producers) are over-extended and if there isn't a sustained recovery soon then there will be a correction. I just hope the correction won't be too sharp, but after Italy this is clearly the number 2 global danger-spot where we could anticipate trouble at some stage.

OTOH it is hard to blame this particular one on central bankers and their "excessively low interest rates", indeed my argument would be quite the contrary: all the BoJ spin on 'the imminent end to deflation' and the 'ending of monetary easing' is part of what has been fueling the excessive optimism, an excessive optimism which is reflected in over-priced share values.

Meantime the latest European news from the FT reads: European stocks set for sharp sell-off.

Monday, January 16, 2006

Japan: The Third Way?

As its population ages, Japan should carve out a middle way between the social security systems of Scandinavia and that of the US, this at least is the opinion of finance minister Sadakazu Tanigaki, one of several contenders to replace Junichiro Koizumi as prime minister.

At the moment, benefits and tax payments were out of kilter ..“Japanese people are enjoying excessive benefits with a low [tax] burden, and passing on their debts to their children and grandchildren.” If Japan wanted to maintain mid-level benefits, its people would have to shoulder a mid-level burden, he said, referring to the fact that the population began to decline last year. “We need to engage in a nationwide debate on reform of the tax system as a whole, including consumption tax.”

In fact none of this will constitute a 'free lunch', and Japan now faces some hard. even stark, choices. One little commented point is that as interest rates were raised if deflation were to end (which I don't actually think it is about to) the Japanese governement would begin to incur ever larger service charges on that enormous debt it has. Which is one more reason the politicians are in no hurry to see the BoJ end the 'easing policy'.