| Feb 04 | If Japan is our worst-case scenario, we're all right |
| In 1991, former MIT dean Lester Thurow wrote that "If one looks at the last 20 years, Japan would have to be considered the betting favorite to win the economy honors of owning the 21st century." He wasn't alone. The standard view of the 1980s held that Japan's sway over the world economy was unbreakable. Its economy grew faster. Its corporations were more efficient. Its workers more productive. In 1988, former Reagan official Clyde Prestowitz warned: "The American century is over. The big development in the latter part of the century is the emergence of Japan as a major superpower." Such comments are now ridiculed relentlessly by analysts and commentators, including myself. Japan, after all, did not boom. Far from overtaking the United States, its economic growth stagnated for two decades, its stock and housing markets collapsed, and its government entombed itself in debt. Twenty years ago, Japan was synonymous with the phrase "juggernaut." Today, it's often seen next to the phrase "lost decade." America should take notice, we hear these days. If we don't get our act together, we could be in for a lost decade or two just like Japan. (Motley Fool) |
| Feb 04 | Detroit automakers say 'no' to Japan joining trade talks |
| Detroit automakers are urging President Barack Obama to reject Japan's bid to join talks on a regional free trade agreement, the head of an automotive group representing GM, Ford and Chrysler said on Thursday. "Adding Japan to the Trans-Pacific Partnership negotiations will lengthen those negotiations ... by years and perhaps keep them from ever coming to fruition," Matt Blunt, president of the American Automotive Policy Council, told Reuters. While Detroit automakers support Obama's goal of creating a free trade pact in the Asia Pacific, they do not believe U.S. negotiators can dismantle "non-tariff" measures Japan has long used to keep U.S. autos out of its market, said Blunt, a former Republican governor of Missouri whose father is a U.S. senator. (Reuters) |
| Feb 04 | As red ink flows, Japanese firms struggle to keep manufacturing at home |
| Following the report of Japan's first annual trade deficit in more than 30 years, the country's major manufacturers have been delivering earnings results soaked in red ink. The factories that once powered the economy by churning out world-beating electronics, cars, and machinery are either being relocated overseas or losing out to Asian rivals. Japan will now have to come to terms with a new post-industrial economy that will see it increasingly rely on income from overseas investments. Japan recorded a trade deficit of nearly 2.5 trillion yen ($32 billion) in 2011 as a storm literally battered its industries. The March tsunami destroyed factories, ports, and infrastructure, disrupting supply chains across the country and the globe. (csmonitor.com) |
| Feb 04 | Japan must be ready to expand stimulus: IMF official |
 The Bank of Japan (BOJ) should be ready to expand monetary stimulus and intervention is an option if the yen moves excessively, an IMF official said in Tokyo.
"Intervention could be an option," if yen moves are too large, Naoyuki Shinohara, a deputy managing director, said yesterday. "Japan's economy has many downside risks, so depending on the circumstances, the BOJ should always be ready to expand quantitative easing."
The central bank kept its asset-buying fund at ￥20 trillion (US$260 billion) and its credit-lending program at ￥35 trillion on Jan. 24 while cutting its forecast for the nation's growth. A yen near post World War II highs against the US dollar is eroding exporters' profits just as faltering global growth undermines demand, with Panasonic Corp yesterday forecasting a record loss for the 12 months ending March. (Taipei Times  ) |
| Feb 03 | Japan Inc. suppliers cut jobs as yen batters tv, chip profit |
| Japan Inc. is suffering and the supply chain is bearing the cost. Sumco Corp., a supplier to Sony Corp. and Toshiba Corp., said yesterday it will cut 1,300 jobs. Auto windshield maker Nippon Sheet Glass Co., which sells to Mazda Motor Corp., said it will cut 3,500 jobs. They join NEC Corp., a Japanese maker of telecom equipment and components, which said last month it would eliminate 10,000 positions. The yen's 7 percent surge against the dollar in the past 12 months has widened losses at Panasonic Corp. Sony, Mazda and Sharp Corp., which plans to halve TV production at its biggest factory to reduce inventory. Manufacturers have been forced to both relocate production outside of Japan and to press their suppliers for cost cuts. (BusinessWeek) |
| Feb 01 | Nuclear crisis bolsters Japan push for utilities reform |
| Mayor Nobuto Hosaka had more than saving taxpayers' money on his mind when he recently invited bids from rivals of giant utility Tokyo Electric Power Co to supply power to his ward in Japan's capital. Hosaka, like other advocates of reform, hopes altered public sentiment after the nation suffered the world's worst nuclear crisis in a 25 years will spur reforms of an electricity oligopoly dominated for decades by regional utility fiefdoms. "Doing this will reduce our electricity costs," said Hosaka, a former lawmaker from a tiny left-leaning party who now runs a area of Tokyo that is home to some 800,000 people. "But the reason this attracted so much attention was that until now, the voices of ordinary users -- the people, residents of the ward, businesses -- have not been heard," he told Reuters. (Reuters) |
| Feb 01 | Delicate wage negotiations |
| The annual wage negotiations for 2012 take place in a difficult situation marked by the effects of the March 11 disasters, the floods in Thailand, prolonged deflation and the strong yen. Labor and management must search for a wage level that is not only reasonable but also will eventually contribute to strengthening the Japanese economy as a whole. Kicking off wage negotiations, Mr. Hiromasa Yonekura, head of the Japan Business Federation (Keidanren), Japan's most influential business lobby, on Jan. 25 met with Mr. Nobuaki Koga, head of the Japanese Trade Union Confederation (Rengo), Japan's largest labor organization. Rengo seeks to increase the total volume of wages by 1 percent from the previous year. (Japan Times) |
| Jan 31 | A worrisome trade deficit |
| Japan's trade balance went into the red in 2011 - the first since 1980 when soaring oil prices caused a trade deficit. But the current account balance is still in the black thanks to income generated by Japan's overseas net assets amounting to some ¥250 trillion. This money is reinvested overseas to generate further income. Still, utmost care must be taken to prevent trade deficits from becoming a regular feature of the Japanese economy. In 2011, Japan's exports decreased 2.7 percent from 2010 to ¥65.554 trillion - the first dip in two years. Behind the fall were such factors as the serious damage inflicted on supply chains by the March 11 disasters and a slowdown of the world economy caused by the sovereign debt crises in Europe. Japan's car exports declined 10.6 percent and exports of electronic parts by 14.2 percent. (Japan Times) |
| Jan 31 | Japan's pension problem |
| In its manifesto for the 2009 Lower House election, the Democratic Party of Japan proposed introducing a minimum monthly pension of ¥70,000 or more. In their recent outline for tax and social welfare reforms, the government and the party only stated that they will submit a proposal for a minimum pension of about ¥70,000 to the Diet in 2013. They should make serious efforts to flesh out their proposal, which lacks concrete details. The 2009 manifesto called for unifying existing pension schemes and having all people participate in the same pension scheme. Everyone would be entitled to a minimum monthly pension of ¥70,000 or more, which would be funded by the consumption tax. (Japan Times) |
| Jan 29 | In disparity-ridden Japan, don't mind the gaps - just get out of them |
| When the term kakusa shakai came into vogue in 2006 - a fairly self-explanatory expression given that kakusa means "gap" or "disparity," and shakai means "society" - it was a clear sign of Japanese people having finally recognized that the notion of theirs being a hope-filled nation of upwardly mobile middle-class people was a myth. In fact, being a highly stratified country, Japan has always been riddled with gaps. And its social strata, like layers of rock from different eras piled on top of each other, don't readily mix with each other. It takes something on the seismic scale of the 1868 Meiji Restoration, which marked the overthrow of centuries of military government under the Tokugawa Shogunate, and the social revolution of the latter half of the 19th century, to dislodge and remix the strata. (Japan Times) |
| Jan 27 | Japan prices fall, mild deflation to persist |
 Japan's core consumer prices fell for the third consecutive month in the year to December, and mild deflation is expected to persist this year as energy prices stabilize and worries about Europe's debt crisis suppress wage growth and economic activity.
Core consumer prices declined an annual 0.1 percent, matching the median estimate, and a narrower measure that excludes both food and energy also fell in a sign that Japan continues to grapple with a strong yen, which pushes down import prices and makes exporters reluctant to raise salaries.
Retail sales fell 1.2 pct in 2011, the first fall in two years, and auto and machinery equipment sales posted record falls in the series, which dates back to 1980. But sales rose an annual 2.5 percent in December, the biggest increase in 16 months. (Reuters ) |
| Jan 27 | Govt aims to add millions of part-timers to state-run pension scheme |
| The Health, Labor and Welfare Ministry is seeking to add millions of part-time workers to those covered by the government-run employee pension scheme. Part-time workers are automatically covered by the pension scheme if they work at least 30 hours a week, but the ministry plans to lower the threshold to 20 hours. The change would apply to workers earning at least 800,000 yen a year at companies with at least 300 employees. The measure will be included in bills the ministry will submit to revise related laws during the current Diet session. (Yomiuri) |
| Jan 26 | CO2 emissions traded to help Tohoku region |
| Firms that emit greenhouse gases but also want to help revitalize business in the Tohoku region following the Great East Japan Earthquake are being drawn to participate in a carbon dioxide offset trading scheme. Named J-VER (Japan Verified Emission Reduction), the scheme is a type of carbon-offset program. Under the scheme, entities practicing silviculture through thinning, planting and other means can enter a certification process to claim credits, depending on how much carbon dioxide their forests absorb. Including prefectural governments, the entities can then sell their credits to other bodies wanting to act on global warming. (Yomiuri) |
| Jan 25 | Japan, hit by quake impact and rising yen, announces first annual trade deficit since 1980 |
 The devastating March tsunami and shift of manufacturing overseas plunged Japan's trade account into the red for the first time since 1980. Experts said the years of Japan running massive trade surpluses are likely over.
The 2.49 trillion yen ($32 billion) deficit for 2011 reflected a surge in energy imports to cover shortfalls caused by the disaster. and a 2.7 percent decline in the value of Japan's exports to 65.55 trillion yen ($843 billion), according to the Ministry of Finance figures released Wednesday.
Manufacturers have moved some production overseas to avoid the damage inflicted by the strong yen, a trend that has accelerated in recent years. Some economists say the trade balance will be in the black again within two years, but the era of very large surpluses that allowed Japan to build a huge pile of foreign reserves has ended. (Washington Post ) |
| Jan 25 | Japan posts first annual trade deficit since 1980 |
| Japan reported its first annual trade deficit since 1980 as it imported expensive energy to offset shortfalls caused by the devastating tsunami and manufacturers shifted production overseas to avoid the damage inflicted by the strong yen.
The 2.49 trillion yen ($32 billion) deficit for 2011 reflected a 2.7 percent decline in the value of Japan's exports to 65.55 trillion yen ($843 billion). In December, the trade balance was a deficit of 205.1 billion yen, according to the Ministry of Finance figures released Wednesday.
The yen's surge to record levels against the dollar and euro has made Japanese exports more expensive and also erodes the value of foreign earned income when brought home. Recently, Nissan Motor Co. and Panasonic Corp. have shifted some of their output to factories overseas.
At the same time, Japan is facing intense competition from South Korea, Taiwan and Singapore, where labor and production costs are cheaper. (AP ) |
| Jan 25 | Japan-Peru FTA to kick in March 1 |
| Japan's free-trade accord with Peru will go into effect March 1 now that all of the necessary domestic and diplomatic procedures have been completed, Foreign Minister Koichiro Genba said Tuesday. "I'm hoping that the two countries' economies will become more active" as a result of the agreement, Genba said. Japan and Peru will scrap tariffs on more than 99 percent of the value of goods traded between the two countries within 10 years after the effective date. (Japan Times) |
| Jan 24 | BOJ sees recovery delayed as Europe bites but skips easing |
| The Bank of Japan forecast the economy will contract in the current fiscal year but kept policy steady on Tuesday, expecting exports to emerging markets and reconstruction after last year's earthquake will help fuel a steady recovery later in 2012. BOJ Governor Masaaki Shirakawa, however, warned that Europe's sovereign debt crisis remained the biggest threat to Japan's recovery prospects, already clouded by recent yen rises against the euro and slowing global demand for Japanese goods. "At present, Europe's debt problem poses the biggest risk for the global economy, including Japan's. If the situation worsens further, it may trigger a global credit crunch," Shirakawa told a news conference after the BOJ's widely expected decision to hold off on additional monetary easing. (Reuters) |
| Jan 24 | Exporter Japan eyes first trade deficit in 3 decades |
| Japan probably produced its first trade deficit last year in more than three decades as energy imports surged to cover for the loss of nuclear power following the Fukushima disaster, a major blow to an economy built on its exports prowess. For decades Japan used an exports-orientated economic policy to build up global brand names such as Toyota, Sony and Canon and a manufacturing might that was the envy of the world. Official trade figures due for release on Wednesday are expected to show that Japan swung to a deficit for the first time since 1980, as utilities purchased fossil fuels for power stations to make up for the loss of nuclear power. (Reuters) |
| Jan 24 | Japan puts reserves to work in global financing role as economy slips |
| Japan is crafting ways of using the $1.2 trillion it holds in currency reserves, the world's second-largest, to help bolster its role in international finance as economic stagnation diminishes its share of global output. Last month, Prime Minister Yoshihiko Noda sealed an agreement in New Delhi making about $15 billion of Japan's reserves available to India if needed. Noda also oversaw a deal with China in the same month to expand use of the yuan and yen in bilateral trade and purchase Chinese bonds. At home, officials are deploying ¥10 trillion in a fund aiding companies in overseas acquisitions. (Japan Times) |
| Jan 24 | Japan's in for a hard landing |
| Here in Japan, people are dour as the Bank of Japan cut its growth outlook for fiscal 2012 to +2.0 pct from its October estimate of +2.2 pct. It cited heightened concern about the eurozone crisis crimping the global economy, and the strong yen. Shortly after that, the government said it's likely to fail in its goal of balancing the budget by 2020 even if it proceeds with the wildly unpopular plan of doubling the national sales tax. Societe Generale's chief Japan economist quipped, "To balance the budget, the [sales tax] rate needs to rise further. We've passed the point where we can soft-land the fiscal situation. The question is how hard the landing is going to be." Pretty hard by the looks of it. (SeekingAlpha) |
| Jan 23 | Japan manufacturers brace for euro zone breakup: Reuters poll |
| Japanese manufacturers are bracing for a possible breakup of the euro zone, according to a Reuters poll released on Monday, with 65 percent saying they see a need to prepare for the currency block's partial or complete collapse. Europe's two-year old sovereign debt crisis, which has left Greece teetering on the edge of default, has taken a heavy toll on Japanese corporate sentiment as exporters struggle with a strong yen and slower growth in China. When manufacturers were asked if they are considering changing business plans in Europe, 31 percent of those responding said they are in the process of doing so or have already made changes. Of those firms, 90 percent said they could scale back operations or have already done so. (Reuters) |
| Jan 21 | 1.8 trillion yen in govt surplus funds unused |
| About 1.8 trillion yen worth of surplus funds in the government's special accounts for fiscal 2009 remained unused even after the money was made available the following fiscal year, the Board of Audit has discovered. This is the first time the board has found that such a large amount of surplus funds in the government's special accounts has not been spent effectively. Central and local governments create special accounts to reserve funds for specific projects. Due to criticism that the central government's special accounts have been an inefficient use of money, the number of accounts held by ministries and agencies has been gradually reduced from 31 in fiscal 2006 to 17. (Yomiuri) |
| Jan 20 | BOJ struggles to feed cash, fails to meet bill buy target |
| The Bank of Japan failed to meet its target for purchases of short-term government securities on Friday, the first time since its asset-buying plan was put in place and raising questions about the effectiveness of the key monetary policy tool. Europe's sovereign debt crisis has boosted global investors' appetite for short-term Japanese government notes as a safe-haven asset, pushing borrowing costs below the central bank's policy rate of 0.1 percent for up to three months. (Reuters) |
| Jan 20 | Japan's age of denial |
| Japanese are disappearing in slow motion and so far, there is no rescue plan. Every January, those turning 20 over the next twelve months celebrate their Coming-of-Age Day at shrines across the nation. Yet each year there are fewer of them. This year, only 1.2 million youth will turn 20, half as many as in 1970. On U.N. calculations, the 2010 population of 127 million will shrink by a fifth, to 101.6 million in 2050. Moreover, the decline speeds up over time, with the population dropping by 6.65% between 2015 and 2030, but plummeting a whopping 13.4% from 2030 to 2050-far and away the worst growth projection in the world. Consider that Pakistan is expected to nearly double its population, to 335 million, in the same period. (Wall Street Journal) |
| Jan 20 | Tohoku turned 2011 into record year for losses |
| Economic losses from disasters around the world in 2011 totaled a record $366 billion due mainly to the March 11 earthquake and tsunami, according to a United Nations report released Wednesday. The figure, which includes $210 billion in losses from the March disaster, compares with the previous record of $243 billion in 2005, data released by the U.N. International Strategy for Disaster Reduction showed. The March catastrophe tops the list of the most deadly and economically costly natural disasters last year, accounting for 57.4 percent of the total economic losses with an estimated 19,846 people killed or missing following the calamity, according to the ISDR data. (Japan Times) |
| Jan 20 | Korea and Japan ― a tale of two countries |
| Over the past two decades, as Japan has gradually slipped down the OECD ladder in terms of GDP per capita, Korea has progressively climbed the same ladder. It's just a matter of time before Korea overtakes its neighbor. How could this happen? One important factor has been how the two countries have responded to crises. Japan was struck down by the collapse of its bubble economy two decades ago, and was also badly hit by the global financial crisis in 2008. Despite many calls for structural reforms, Japan has sought to keep its economy afloat by continued fiscal stimulus, rather than swallowing the necessary bitter medicine. The result is that Japan's public debt is now over 200 percent of GDP, and the economy is no stronger for it. By contrast, Korea has taken its structural reform agenda much more seriously, and is benefiting greatly from it. (Korea Herald) |
| Jan 20 | Japan health care no TPP issue: U.S. |
| Assistant U.S. Trade Representative Wendy Cutler told Diet members Wednesday that the United States sees no problem with Japan's heath insurance system in regard to the Trans-Pacific Partnership free-trade initiative. Although the Japan Medical Association is concerned that the United States could request Japan to revise its universal health insurance coverage, Cutler said she had no comment to make about the Japanese system, Lower House lawmaker Yasutoshi Nishimura said. Along with Taku Eto, another Lower House lawmaker, Nishimura met with Cutler to discuss the TPP negotiations. Both lawmakers are from the Liberal Democratic Party. (Japan Times) |
| Jan 19 | Euro-yen intervention an option for Japan, but not now |
| Japanese authorities, while reluctant to act now, may consider engaging in a rare intervention to stem yen rises against the euro if the moves appear to be driven by speculators and sharp enough to severely hurt business sentiment. If they were to act, authorities will step directly into the euro-yen market despite its low trading volume and may twin it with dollar-yen intervention to maximize the effect, say sources with direct knowledge of government tactics and market players. "Technically it's possible. People talk about the euro-yen market being too small, but that's not an obstacle," said a policymaker with direct knowledge of the matter. Another source expressed a similar view. Both declined to be named due to the sensitivity of the subject. (Reuters) |
| Jan 19 | DPJ readies bill to cut Diet seats |
| The Democratic Party of Japan's headquarters to promote political reform finalized Wednesday a proposed bill to reform the House of Representatives election system by cutting 85 seats from the lower house. The bill, formulated at an executive meeting of the headquarters the previous day, calls for eliminating one single-seat constituency in each of five prefectures in an effort to rectify imbalances in the value of votes seen in the chamber's 2009 election. The bill would revise a law concerning the government's Council on the House of Representatives Electoral Districts and takes into account a related plan by the main opposition Liberal Democratic Party. (Yomiuri) |
| Jan 19 | Welfare ministry to make new poverty index |
| The welfare ministry has decided to create a new poverty index in response to the sharp increase in the number of people living on welfare benefits and problems related to the working poor, it has been learned. The new index will help clarify Japan's poverty situation and rate by measuring factors such as health, food, clothing and living conditions. Although there are existing international poverty indexes, they are considered difficult to use and do not properly reflect Japan's actual situation, according to the ministry. The Health, Labor and Welfare Ministry plans to create the index within the next fiscal year, and will measure poverty rates continuously to provide data for the government when making new policies, such as reviewing welfare benefit criteria. (Yomiuri) |
| Jan 18 | Academic to replace JICA's Ogata |
| University of Tokyo Vice President Akihiko Tanaka will head the Japan International Cooperation Agency from this spring, replacing Sadako Ogata, Foreign Minister Koichiro Genba said Tuesday. Tanaka, 57, a well-known professor of international politics at the university, will take up the top post at JICA on April 1, Genba told reporters after a Cabinet meeting. Ogata had requested replacement, as she has expressed concern about her advancing years, the minister said. (Japan Times) |
| Jan 16 | Japan key orders jump; policymakers fret over euro |
| Japan's key gauge of corporate capital spending rose at its fastest pace in nearly four years in November, thanks partly to post-quake rebuilding demand, but policymakers were kept on guard over the potential fallout from the euro zone debt crisis. Policy chiefs reiterated their concerns about Europe's sovereign debt crisis as Asian share prices and the euro fell on Monday after Standard & Poor's mass downgrade of euro zone countries late last week. Finance Minister Jun Azumi said he is worried about the euro's fall as the common currency hit a fresh 11-year low of 97.04 yen at one point on trading platform EBS. (Reuters) |
| Jan 16 | BOJ cuts its economic view for seven of nine regions |
| The Bank of Japan cut its economic assessment of seven of the country's nine regions as a global slowdown and the yen's gain threaten the nation's recovery from the March earthquake. Conditions in Hokkaido, Hokuriku, Kanto, Tokai, Kinki, Chugoku and the Kyushu-Okinawa area have deteriorated from October, the central bank said today in its quarterly Sakura Report on regional economies. It left its evaluation of Shikoku and the eartahquake-stricken region of Tohoku unchanged, citing reconstruction demand in the disaster area. (Bloomberg) |
| Jan 16 | U.S. auto council opposes Japan joining in TPP talks |
| A council representing the Big 3 U.S. automakers has declared that it opposes Japan joining negotiations on the Trans-Pacific Partnership free trade agreement at this time, saying Japan's auto market is not receptive to imports. The American Automotive Policy Council (AAPC) also said it is no longer reasonable for the Japanese government to give preferential treatment to the "Kei" category of super-mini vehicles that are manufactured only domestically. The AAPC expressed its views in an opinion paper submitted to the U.S. Trade Representative on Friday, the deadline for submitting opinions to the USTR to assist it in assessing Japan's expression of interest in the TPP negotiations. (Yomiuri) |
| Jan 15 | Noda frets over Japan's credit rating |
| Prime Minister Yoshihiko Noda on Saturday expressed concern about Japan maintaining its sovereign debt rating, after France lost its coveted triple-A credit status the previous day. "The European crisis is not a fire on the other side of the river. Even France's rating has been lowered. If we continue to mismanage fiscal issues, Japan will (be next)," he said on a program broadcast by TV Tokyo. Standard & Poor's Ratings Services said Friday it has downgraded its long-term French bond rating by one notch from the highest AAA level, and has also lowered its ratings for eight other eurozone countries. (Japan Times) |
| Jan 15 | Japan steps up efforts to crack untapped Myanmar market |
| yanmar has been billed as "Asia's final frontier," and its rich resources and cheap wage levels are increasingly catching the eye of Japanese companies and the government. Economy, Trade and Industry Minister Yukio Edano on Friday met with President Thein Sein and other senior officials of Myanmar, and reached an agreement on Japan's cooperation in the Southeast Asian country's economic development. Rivals from China and elsewhere in Asia have already made significant investments in Myanmar's infrastructure and the procurement of natural resources. Although Myanmar's development has lagged other Asian nations due to economic sanctions imposed by Western nations, some restrictions have been loosened in recent months as it has made steps toward democratization. (Yomiuri) |
| Jan 13 | Japan's trade balance |
| Imbalances are not for ever. In the 1980s and 1990s, Japan's huge trade surplus was a popular target for American and European protectionists. No longer. Provisional estimates suggest that Japan's merchandise trade moved into the red in 2011-its first annual deficit (excluding freight costs) since 1963. Japan remains the world's biggest net foreign creditor. Income from its assets more than offset the trade gap, keeping its current account in surplus, equivalent to about 2% of GDP (down from 5% in 2007, see chart). That surplus, however, could also disappear within a few years. Is that good news or bad? Last year's trade deficit partly reflected some temporary factors, notably the earthquake and tsunami which disrupted production and exports. Imports were inflated by higher oil prices and larger imports of energy following the shutdown of nuclear-power plants. (The Economist) |
| Jan 13 | Analysis: Ageing, indebted Japan holds lessons for others |
| An asset price bubble pops, hitting bank balance sheets and tax revenues. As growth weakens and the economy flirts with deflation, the real burden of servicing debt increases. Companies race to pay off debt, further dragging down growth. Government spending takes up the slack. Monetary policy is akin to pushing on a piece of string, so even zero interest rates have scant impact. Population decline compounds the vicious circle. That is a rough summary of Japan's plight over the past 20 years. Worryingly, it may also turn out to be the template for other mature economies, especially in Europe. "In terms of nominal GDP growth, things are playing out in a very similar way to how they did in Japan," said Albert Edwards, global strategist at French bank Societe Generale. In a presentation for investors in London, Edwards said world markets, too, were following Japan's "ice age" lead. (Reuters) |
| Jan 13 | Surplus plunges 85% in Nov. / Year-on-year fall to 138 billion yen marks lowest level since Jan. 2009 |
 The nation's current account surplus declined 85.5 percent in November from the same month a year earlier to 138.5 billion yen, shrinking for the ninth straight month, according to a Finance Ministry preliminary report on the balance of international payments released Thursday.
The surplus was at its lowest level since January 2009, when the balance fell to minus 132.7 billion yen due to the so-called Lehman Brothers shock.
The current account is the broadest measure of Japan's global trade of goods and services. (Yomiuri ) |
| Jan 13 | Quake victims to lose unemployment aid |
| More than 4,000 people in the disaster-hit areas of Fukushima, Iwate and Miyagi prefectures will lose their unemployment benefits by the end of February, according to labor ministry estimates. The period of unemployment benefit eligibility for victims of the Great East Japan Earthquake has been extended twice, giving recipients an extra 210 days of support. But some of these recipients had their benefits expire Thursday because the government will no longer offer additional extensions. Unemployment benefits are handed out every four weeks to people who lose their job while signed up to the government's unemployment insurance system. While job-seekers, these people receive financial assistance of 50 percent to 80 percent of the average salary they earned during the previous six months before becoming unemployed. The amount varies depending on the age of the job-seeker and the period of time in which they were enrolled in unemployment insurance. (Yomiuri) |
| Jan 12 | Job creation key to postdisaster recovery |
| Following a decline in the populations of areas hit hard by the March 11 disaster, special reconstruction zones have launched job-creation initiatives to curb a potential mass exodus of residents, as seen in previous disasters. In the wake of the Great Hanshin Earthquake in 1995, Kobe City's population of about 1.52 million fell by about 100,000 in nine months. It took nine years and 10 months for the city's population to return to its prequake level. In the city's Nagata Ward, the synthetic shoe industry suffered greatly after its factories were burned in fires caused by the earthquake. The population, a large percentage of which are elderly, is still about 29,000 lower than it was before the quake. (Yomiuri) |
| Jan 11 | Is Japan's success of myth? |
| A respected Japan specialist, Eamonn Fingleton, wrote an interesting piece in the New York Times the other day. While I do not disagree with many of his points, I think he has missed some very relevant issues in his overly optimistic assertion pertaining to Japan's future. Take his view on life expectancy. Mr. Fingleton points to a longer life expectancy for Japanese than Americans as a sign that Japanese have a better quality of life than Americans, but he does not touch on important peripheral issues very much connected to lifestyle and happiness. Take, for instance, the financial and physical costs of work absenteeism and presenteeism related to chronic pain and mental illness in workplace in Japan. The American Chamber of Commerce in Japan estimates this costs the Japanese economy at least 3.3 trillion yen a year. (huffingtonpost.com) |
| Jan 11 | Food exports plunged due to nuclear crisis |
| The ongoing crisis at the Fukushima No. 1 nuclear power plant has affected the exports of farm and marine products from eastern Japan. According to the estimates of the Agriculture, Forestry and Fisheries Ministry, 44 countries and territories either ban the import of food items produced in Japan, or demand that they be inspected when imported, even though they are regarded safe and marketed domestically. While the government had aimed to reach 1 trillion yen of agricultural and marine exports, this goal has been hampered by regulations that could be based on overblown fears. On Thursday, high-grade apples in the first auction of the year at a fruit and vegetable market in Hirosaki, Aomori Prefecture, sold at prices about 1.6 times higher than the previous year, partly due to short supply. Farmers and others were greatly relieved by the prices of almost all varieties, which were higher than those of last year. (Yomiuri) |
| Jan 11 | Pension cuts coming |
| The government plans to reduce public pensions over three years starting in fiscal 2012, saying that it has overpaid by 2.5 percent. The overpayment has resulted from the Liberal Democratic Party-Komeito government's decision. Public pensions are supposed to decrease in accordance with falls in the price index. Although the index fell from fiscal 2000 to fiscal 2002, the LDP-Komeito government enacted a special law to stop the public pension reductions, insisting that the reductions would greatly affect people's lives. The special law was aimed at currying voters' favor. The Democratic Party of Japan government says that because current pensions are paid out of premiums paid by the current working population, overpayment is unfair to them. (Japan Times) |
| Jan 10 | Japan, China, S. Korea to kick off FTA talks |
| Japan, China and South Korea are expected to start negotiations for a trilateral free trade agreement in the first half of this year, possibly in May, a Chinese newspaper reported Monday. "If there is no strong opposition from inside the Republic of Korea, talks on the China-Japan-ROK FTA will be officially launched during the first half of this year, in May at the earliest," China Daily, in a front-page article, quoted a source at the Commerce Ministry as saying. The paper suggests leaders of the three countries are likely to reach agreement during a trilateral summit slated for this spring in China. The unidentified source was quoted as saying negotiations for a bilateral FTA between China and South Korea "will probably start in the first half of this year." (Mainichi) |
| Jan 10 | Pension 'trump card' goes unplayed / System to forcibly collect unpaid premiums dormant since creation 2 years ago |
| The system touted as a "trump card" for halting the decline in contributions to the government-run pension scheme has not been used since its creation two years ago, The Yomiuri Shimbun has learned. Under the system launched in January 2010, the Japan Pension Service is allowed to delegate to the National Tax Agency its authority to forcibly collect pension premiums in serious cases of nonpayment. Explaining why the system has not been utilized, the Health, Labor and Welfare Ministry said people often agree to pay when informed that tax authorities may forcibly take the money. However, the number of people in arrears on their national pension premiums is still growing. (Yomiuri) |
| Jan 08 | Sales tax hike insufficient / Consumption levy of 17% needed to cover social security costs |
 The government and ruling parties have described the planned increase in the consumption tax rate as a "first step" because they have deemed the boost to 10 percent will not fully cover the shortfall in social security revenue, making a further hike unavoidable in the future.
In their draft outline of integrated reform of the social security and tax systems, compiled Friday, the rate hike to 10 percent is said to be "the first step to simultaneously achieve the goals of securing stable revenue sources for financing social security and regaining governmental fiscal health."
If the consumption tax rate is raised from the current 5 percent to 10 percent, the central and local governments will rake in a total of about 13.5 trillion yen more in annual revenue. (Yomiuri) |
| Jan 07 | The true story of Japan |
 Japan has succeeded in delivering an increasingly affluent lifestyle to its people despite the financial crash. In the fullness of time, it is likely that this era will be viewed as an outstanding success story.
How can the reality and the image be so different? And what can the United States learn from Japan's experience?
It is true that Japanese housing prices have never returned to the ludicrous highs they briefly touched in the wild final stage of the boom. Neither has the Tokyo stock market.
But the strength of Japan's economy and its people is evident in many ways. There are a number of facts and figures that don't quite square with Japan's image as the laughingstock of the business pages. (New York Times) |
| Jan 07 | Recovery predicted for April / Business leaders confident, but press for reforms, sales tax hike |
| The economy will begin recovering in April thanks to rising demand for reconstruction projects in areas devastated by the Great East Japan Earthquake, leaders of the nation's three major business organizations have predicted. At the same time, they expressed anxiety about the European fiscal crises and the sharp appreciation of the yen, and called on the government to quickly implement integrated reform of the social security and taxation systems, including a consumption tax hike. The leaders of the three organizations --the Japan Business Federation (Keidanren), the Japan Association of Corporate Executives (Keizai Doyukai) and the Japan Chamber of Commerce and Industry (JCCI)--presented their opinions about the economy this year at a joint press conference. (Yomiuri) |
| Jan 06 | Japan buys 300 mln euros of EFSF bonds |
| Japan has bought 300 million euros ($383 million) worth of bonds sold by the euro zone's rescue fund, the European Financial Stability Facility (EFSF), in an auction on Thursday, a finance ministry official told Reuters on Friday. The amount accounts for 10 percent of an oversubscribed 3 billion euros worth of bonds sold by EFSF on Thursday to raise funds for Ireland and Portugal. The bond was the first with a three-year maturity for the triple A-rated EFSF, which is seeking to offer a greater range of maturities. It attracted orders close to 4.5 billion euros. (Reuters) |