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Japan’s GDP down 0.3% in January

According to a report released Wednesday by the Japan Center for Economic Research, Japan’s GDP fell by 0.3% in January compared to the previous month, showing a decline for the first time in two months. January’s figures contrast the 0.3% increase seen in December. Read more

Massive Fiscal Stimulus Spending Project Proposal #2: Changing Lanes

Back in May, I laid out a plan by which the Japanese government could waste tremendous amounts of public money by simply issuing brand new bank notes of radically different sizes and shapes, while outlawing the use of current bank notes.

While the previous plan could potentially pump billions of yen into the economy, the next plan should cost much more. To do this, Japan simply has to switch driving from the left to the right side of the road. Of course, other countries have pulled this off without spending huge sums of money, such as Sweden, but Japan can avoid falling into this trap by ensuring that the process be as expensive and wasteful as possible. Here’s how it works: Read more

Cabinet Office data showing recovery?

Earlier today, the Cabinet Office released its Index of Business Conditions report for April. Data showed the Coincident Index moving up 1.0 points to 85.8 points, for the first increase seen in 11 months. Based on this information, the Cabinet Office upgraded the language in its monthly report for the first time in nine months (they were behind the curve) to say that signs of the economy ”ceasing to fall” are seen rather than that the economy is ”worsening.”

Media sources were quick to herald the results. The Nikkei announced that the 1.0 point rise in the coincident index was “adding to signs that the economy has been recovering from the worst recession since the end of World War II.” Read more

Paul Krugman visits Japan

As reported earlier today by Japan Probe, Paul Krugman recently visited Tokyo and offered an evaluation of some of the economic stimulus attempts the Japanese government has made thus far. Krugman gave the lowering of expressway fees to a flat 1,000 yen a score of 40 out of 100, due to the fact that such a measure might increase traffic jams and the sales of gasoline. Krugman scored the 12,000 yen rebate program a 0 out of 100, and reserved judgement on the government’s new program to offer “eco points” to consumers who make purchases of “green” products. Read more

Swine flu a convenient scapegoat? Should the media look in the mirror?

An article published yesterday at the Japan Times opens by telling us that the H1N1 swine flue virus is hurting industries such as tourism and retail, especially in Western Japan. Of course, economists fear that the impact of swine flu will only make a bad situation worse.

Near the top of the article, however, we get this quote:

The outbreak “could pour cold water on the Japanese economy at a time when it just started to bottom out and was about to recover,” said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute Inc.

Emphasis mine. The writers of the article never comment on whether or not this assertion is true, and no figures are provided to back it up. We’re simply supposed to accept the assertion that the economy has “bottomed out” at face value? While it’s certainly hard to imagine seeing anything resembling the previous quarter’s GDP figures coming up again sometime soon, and exports and production figures are looking better, that doesn’t necessarily mean things have bottomed out. Read more

Massive Fiscal Stimulus Spending Project Proposal #1: Currency Manipulation

This article is the first of a string of proposals detailing how the Japanese government could launch a series of projects resulting in massive fiscal stimulus as well as boosted corporate and consumer spending. It is important to keep in mind that the proposals put forth in this series are essentially insane, but would lead to government, corporate and personal spending on a massive scale.

The first idea in this series should wreak havoc and cause panic spending in all sorts of sectors, while simultaneously creating millions of new jobs. To do this, the Japanese government simply needs to create new banknotes and coins that are all radically different in size to what currently exists. Ideally, notes should be larger and differently proportioned, while the size and weight of all coinage should dramatically change. Read more

Sunday Japan News Roundup: Nintendo, the US, bonuses and Aso’s economic plan

A quick look at some of the big (and not so big) stories on Japan this past week:

First, BusinessWeek asks “Has Nintendo Peaked?” in an article published on Thursday. Essentially, the future worries center on whether or not Nintendo can continue to sell the number of Wii and DS consoles that it has over the past couple of years. Nintendo has done a great job getting people who usually would not buy video game consoles to make purchases, but could they run out of growth steam over the next year? The article points out that sales in Japan seem to be slowing, and that Sony’s Play Station 3 has outsold the Wii in both March and April of this year.

The Financial Times announced on Friday that “US belatedly learns lesson from Japan,” while Arnold Landy at Seeking Alpha published an article entitled “The U.S. Economy: Not a Repeat of Japan.” There has been plenty written on this topic already, and surely more to come as things continue to play out. Read more

Japan Economy Watch sums up the dreadful state of Japan’s macro data, debt levels and political paralysis

Although Japan’s macro indicators are tracked here, it sometimes helps to see everything put together. Over at Japan Economy Watch, Edward Hugh has done just that, and the data shown collectively in his post is simply breathtaking. Revised GDP data, industrial output, machinery orders, consumer confidence, the Economy Watchers Index, wages, household spending and the Tankan are all covered in one post, with the yen’s rise and a look at Prime Minister Aso Taro’s continuing fall in approval rating also included in this must-read post.

Mr Hugh weighs in with some very accurate comments on Japan’s national debt:

…[W]e have reputedly just been through Japan’s longest running expansion in I don’t know how many years, but if you look at the chart you will find that net debt didn’t cease to rise at any single point, while of course, as life expectancy went up even more than anticipated, the implicit liabilities in the social security system also rose. Well basically, I claim this is unsustainable, since to show evidence of sustainability you need to be able to establish that Japan can (with a median population age of 43 and rising) still have expansions which generate enough sustained growth (after you turn the juice of zero interest rates and substantial fiscal injections off) to be able to bring the trend percentage of net debt (that is the one between the trough of one cycle and the trough of the next) down. We are a long long way from this at this point, and as such any claim that Japan will be able to bring the net debt dynamic under control should be treated as purely hypothetical and speculative. What we need is evidence, but Aso’s recent policy initiatives suggest that things are now, rather, about to move in the opposite direction.

The red lights on the console are madly blinking, and the alarm is piercing. As each day passes, it seems more and more clear that the LDP, on whom much of this mess can be pinned, will need to pass on in order for any real progress to be made. Of course, as the LDP loses its grip on power, the risk that the bureaucracy will strengthen looms larger.

For a closer look at the disaster of the Aso premiership, see the recent article “2008: Change and Politics” by Tobias Harris at Neojaponisme.

Nikkei: 1.4% fewer job offers to 2009 university graduates, first decline in five years

According to a piece in this morning’s Nikkei, Japan’s corporations are planning to cut the number of jobs offered to graduating university students in 2009 for the first time in five years. In April 2008, the number of job offers made to new graduates was up 5.3% (Recruit had estimated that 2008 hirings would rise 13.0%, in a report that seemed a bit off on the statistics). The Nikkei survey estimates that job offerings to university students will be down 1.4% in 2009.

While Mizuho, Mitsui Sumitomo, Toshiba, Hitachi, Canon and Panasonic all aim to increase their numbers of new hires, and financial firms comprised five of the top ten places on the list of firms looking to increase their number of hires, the Nikkei notes that many financial firms intend to cut down on the hiring of new recruits:

Nomura Securities Co. aims to reduce job offers by 18.5% to 680. Daiwa Securities Group Inc. (8601) will cut its figure by 28.8% to 900. Sompo Japan Insurance Inc. (8755) plans to halve its job offers to 600, while Tokio Marine & Nichido Fire Insurance Co. made a 26.5% cut to 750. Many real estate and housing firms are also reining in their offers.

In addition, competition for talented graduates is intensifying, so corporate job offers have failed to keep up with initial hiring plans. Mitsui Engineering & Shipbuilding Co. (7003) had intended to hire 116 graduates, but will now take on only 87. NTT Data Corp. (9613) has made 550 offers, 50 less than planned.

The situation at Nomura makes sense, given that new employees will be brought in from the takeover of Lehman Brothers. Still, recruiting figures are often decided well in advance, and it is thus difficult to say that the reduction is fully due to Nomura’s recent acquisitions.

Mainichi interview with Bill Emmott: How to view the Koizumi legacy?

Former Economist editor Bill Emmott recently sat down for an interview with the Mainichi Shimbun, and his comments on the Koizumi administration are very good:

I think that it’s right to criticize some part of Koizumi’s reforms for causing this increasing income gap, because the Labor Law reform that his government introduced is directly responsible for this widening gap between rich and poor by creating the conditions under which 30 percent of the labor force are in part time or temporary employment, with much lower benefits. So I think that a new government needs to find a way to change Japan’s Labor Law and remove this incentive for cheap labor and employment and to equalize the rights for all types of workers: full time, part time, contract … there’s no justification for having different rights for different types of workers.

Absolutely!

Koizumi’s Labor Law reform was not a piece of market fundamentalism or a free market-type reform. It’s not included in the market textbook that you should establish a two-tier labor market and strip away protection from one part of the force. So I think that it’s right to criticize the Koizumi administration for that, but it’s not right to say there should be no market-based reform.

Of course, reforms to the labor laws began before Koizumi’s administration, but the income gap became much more notable under his watch. Long term, the question is how this will affect how Koizumi is viewed. Shorter term, can better reforms be put in place in order to equalize the legal status of Japan’s workforce? (I’m not 100% sure about the word ‘rights’ here, but that’s more philosophical/legal hair-splitting rather than practical/economic.)

At any rate, the full interview is here.

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