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Japan not banning cash any time soon

The foreign media recently seems to have pounced on a story concerning plans to ban the use of cash and push nominal interest rates down to -0.4% in an attempt to fight deflation in Japan.

It won’t happen.

While electronic cash payments will continue to grow as a proportion of transaction settlement methods, the idea of banning cash altogether is impractical. At the same time, the idea of creating negative nominal interest rates is political suicide. In such a situation, the yen itself would be essetially worthless.

To be honest, I had a lot more ideas on this topic, but the proposal seems so absurd that it’s better treated as a media oddity.

The Onion: US To Trade Gold Reserves For Cash Through Cash4Gold.com

This piece from The Onion is satire - at least for now - but it’s well done as usual. It’s subtle that the writers valued US gold holdings at $200 billion.

US To Trade Gold Reserves For Cash Through Cash4Gold.com

Shisaku on the Japan Air Lines bailout

Last week it was reported that struggling Japan Air Lines is set to receive a 100 billion yen worth of loans from the state-backed Development Bank of Japan, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Mitsui Sumitomo.

Later that same day, blogger Shisaku pointed out the presentation of this news in the Yomiuri Shimbun, in a post entitled Left Hand, Meet Right Hand: 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

Japan Economy News on Radio Australia

I was interviewed for a piece on Japanese agricultural policy on Radio Australia. Playlist and mp3s are available here - the interview is in the second half of the 29 August program.

Also appearing is Tobias Harris from the excellent Observing Japan.

Shibuya’s Butlers Cafe makes CNN

Financial markets are closed today, so here’s the latest mass-media fluff piece to be done on Japan:

CNN is reporting on the “Butlers Cafe” staffed with western men in Shibuya with the sub-headline, “Japan’s women go ga-ga over a cafe filled with Western servers.” ¹

The two customers definitely could have played along and seemed a bit happier to be there.

¹ The headline itself is actually, “White man cafe in Tokyo.”

Butlers Cafe website

News Corp moving into Japan’s online advertising market

According to Tuesday’s Nikkei, News Corp has plans to enter Japan’s lucrative online advertising market. Back in April 2007, we reported that Dentsu claimed Japan’s online advertising market would experience “growth into a 750 billion yen plus market by 2011.”

Was Dentsu lowballing those numbers? In 2007, the online advertising market in Japan totaled about 600 billion yen. This was about a 24% increase over 2006. Dentsu’s report projected the market at 453.4 billion yen in 2007, with a jump over 600 billion yen happening in 2009.

News Corp’s operations will differ significantly from those of Google or Yahoo primarily in that they will not involve search-based ads. Rather, News Corp is looking to set up networks of sites that target similar demographics, and sell ads on behalf of webmasters who happen not to have a sales force at their disposal.

News Corp is looking to draw 10 billion yen annually in ad revenue from Japan within five years time.

Bloomberg’s William Pesek on Japan’s (lack of) English ability, and why it hurts competition

Bloomberg’s William Pesek has penned an excellent opinion piece on why Japan needs to focus on better English education for its workforce at this point in history. As he points out, without English ability across the spectrum, Japan will simply never be able to achieve its stated goal of being Asia’s leading financial hub. So long as dinosaurs as former Education Minister Ibuki Bunmei (himself fluent in English) continue to portray English proficiency as something to be feared, Japan simply will not be able to gain a competitive foothold.

Read it.

Yomiuri on reforms to finance laws

An opinion/analysis piece in today’s Yomirui started like this:

Financial institutions in Japan have lost a great deal of international competitiveness during their struggle to resolve a host of problems arising from the collapse of the bubble economy, including their massive nonperforming loans. They have also suffered a significant decline in their standing in the global financial market. Swift measures should be taken to revive their international competitiveness.

This is certainly true, though the paper has seemingly been writing editorials that open with this paragraph for some years now. The next, paragraph, however, seems somehow relevant yet entirely disconnected to what was laid out in the opening:

The government has submitted to the Diet a bill aimed at revising the Financial Instruments and Exchange Law. A central pillar of the bill is to reform the current system so as to expand the list of financial products traded in the market, while also increasing the number of market players and attracting more funds from domestic and foreign investors.

This would be a positive step, though one is forced to wonder what it has to do with reforming a corporate culture that allows nonperforming loans to build nearly to the breaking point. The Nikkei recently published an article concerning the sale of about 100 billion yen worth of bad loans to the Goodwill Group that Mizuho has now sold to Morgan Stanley and the Cerberus Group (the good news is that Goodwill Chairman Masahiro “Juliana Tokyo” Origuchi is expected to resign).

At any rate, the Yomiuri article gets better as it goes on to describe what’s included in the reform bill: Read more

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