Thursday, February 29, 2024
Japan Jan. Jobless Rate: Ideas Later
Japan's Jan. jobless rate improves to 2.4% amid labor shortage
Ideas Later
Tuesday, February 27, 2024
Japan Companies Record Profits: Ideas Later
Japan firms eye record net profits of over 47 trillion yen amid weak yen
Wednesday, February 21, 2024
Foreign Visitors to Japan: Updated Feb. 24, 2024
Foreign visitors to Japan in Jan. returns to pre-pandemic level
Ideas:
Before the pandemic, I traveled to Japan, from South Korea, two or three times a year, and before 2019, I didn't remember that many tourists, but the number really increased in 2019, especially with the Japan Rugby World Cup, even though I didn't go to Japan for the World Cup.
I tried to go to Japan in March of 2020, just before the pandemic hit hard, and I was to enter Japan on March 4, but the Japan border would close on March 5, so I was OK, but cancelled the trip for safety reasons.
In recent years, before the pandemic, the largest group were Chinese tourists, being a short distance from Japan, made for an easy vacation trip.
Before the pandemic, there were some negative feelings in South Korea toward Japan, but that seems to have evaporated as now many South Koreans visit Japan over China now, due maybe negative feelings toward China.
Taiwan, it seems, has never had any negative feelings toward Japan, as Taiwan has steered clear of anything about WWII that might cause negative feelings toward Japan.
China, it seems, still harbors some negative feelings but that doesn't keep Chinese tourists from coming to Japan.
Again, before the pandemic, the largest group were the Chinese coming to Japan, and buying huge amounts of duty free products along with Japanese appliances and so on..
South Koreans continue to travel to Japan, as the March 1, 2024 three day holiday many flights from South Korea to Japan are already full, over course maybe taking advantage of the weak Japanese yen, which gives foreign tourists more purchasing power.
Japan travelers don't have the advantage of a weak currency as the Japan yen weak compared to the strong US dollar or Euro. which maybe is incentive not to travel overseas for many Japanese at this time.
If in 2024, the Japanese yen become less weak and more stronger due to the Bank of Japan increasing the key interest rate, how much will it affect foreign tourists going to Japan.
Also it seems to high airline tickers, at least for the major carriers, have not discouraged foreign tourists from going to Japan.
As now there are many low-cost airlines in every country, but the negative related to Tokyo, is most if not all low-cost airlines have to land in Narita and not Tokyo Haneda, which is near the central part of Tokyo, while Narita, is maybe one hour from the central part of Tokyo.
Have a nice day and be safe!
Monday, February 19, 2024
Japan Wage Talks: Ideas Later: Updated May 16, 2024.
Overhaul Shunto Wage Talks to Overcome Japan’s ‘lost 30 Years’
Article Source:
Ideas:
For a long time, maybe before 1990, Japanese companies considered employees and important stakeholders in the company, and most likely wage negotiations were very cordial and not intense like in western companies that have labor unions.
But after 1990 as many Japanese companies starting using western accounting methods and started to think of employees as just expendable commodities and started to favor shareholders more favorable the environment might have changed in many Japanese companies.
Most likely its not reality to go back to the idea of "life-time" employment but employees need to be considered again, as much as possible, as key stakeholders in a company in Japan.
Also, the late Peter Drucker, the management consultant who was liked by Japanese companies likened the idea, again that Japanese companies treated their employees as stakeholders and not just commodities like western companies do.
But again, 1973, was a long time ago and the world has changed a lot. And maybe at that time the Japanese economy and Japanese companies needed life-time employment, in-house unions but maybe those days have passed and, unfortunately have now focus on shareholders, the bottom line, and not so much on the welfare of employees.
It seemed logical that Japanese companies with more market power created the base for wage increases and other companies, including small and midsize companies followed along the same lines.
Lifetime employment has both it positives and negatives, For one, maybe companies can focus on developing employees but at the same time, it might be a seen as too rigid for some who want to move through the company more quickly instead of waiting for 20 or 30 years to move into management.
But, again, these day, maybe many young employees are impatient and don't want to wait 20 or 30 years to move into a management position and are maybe are bored waiting a long time to contribute to that gets them into management.
The Toyota situation is an unfortunate situation where companies don't do things on their own and instead maybe blindly follow what the name-brand companies do. Other companies should have ignored that Toyota did and for the good of their employees should have increase wages as they felt was good for their company.
But unfortunately, Japan is a group-think culture and what the market power leader does others are going to follow.
Other companies might have been shocked, but most likely they didn't increase wages for fear of whatever related to what other companies might think or might do.
So Toyota became the bad-boy company and didn't put the importance of their employees first but most likely started to put shareholder value as the most important metric in the company.
And of course then other Japanese companies started to do the same thing, and now we what what we have today in Japan.
Unfortunately, Japanese companies follow the leader, the market leader, such as Toyota, and don't want to standout or be different. "The nail that sticks out" will get nailed down, as the saying goes in Japan.
Many Japanese companies, during the 90's and early 2000's were under a lot or pressure to modernize and transform to western business standards.
The one major difference was the importance of shareholder value as opposed to employee stakeholder value for many Japanese companies.
Intensified global competition especially from China might have been a major variable related to wages and cost cutting measure in Japanese companies back then.
Maybe Japanese companies should have focused more on quality and innovation, and not so much on cost cutting and wages.
But once cost cutting entered Japanese industry and the economy, it was hard to prevent or stop it once the market leaders started doing it in Japan.
The challenge or problem with correcting with Japan's high-cost structure, was/is you are dealing with change in all of Japanese society and the Japanese economy, which is exactly what we see happening today.
The current wage increases are nothing more that trying the fix the cost cutting frenzy that happened in Japan in the early 2000's.
Perhaps, again, maybe Toyota has too much political and market power and other companies couldn't ignore what Toyota was doing.
And so it goes, on an on, when Toyota and other market leader companies decided to cut costs, which included suppressing wages, the entire Japanese economy went into its current stagnation and deflation situation, and even the current wage increases are not gong to overcome 20+years of wage suppression.
But to be fair, maybe there was a need to reduce wages, some, but not to the point of 20+ years of deflating the entire Japanese economy to the point that Japanese wages related to other OECD countries are now way down the rankings.
And again, instead of being able to think for themselves or do what was best for their company, many small and midsize companies just followed what the name-brand market leaders were doing.
And yes, again, unfortunately, even today, non-regular employees make up a lot of the employees and big companies, as, in the US, it became a trend that companies couldn't resist.
The Abe administration might have seen what was happening, but by that time, the situation had become fossilized, meaning cost cutting measures, irregular employees and wage suppression, along with deflation and stagnation had become the norm in the Japanese economy.
And yes, just like in other countries. labor unions were worried about jobs being moved to China, so of course they kept their mouths shut and didn't rock the boat during wage negotiations.
Keeping jobs secure became the number one priority and maybe for many its the same today, but the threat of Japanese companies moving operations overseas might still be continuous threat.
No doubt this is what has happened in the Japanese economy since the asset bubble crash of 1989, but in reality it was probably a long time situation, that didn't see any real changes such as improvements in quality, innovation, and improvements in Japanese companies and their work culture.
You can't blame the average Japanese worker or employee and they just want to survive from day to day, but management too, might not be so much to blame, as many investment companies came on the scene in Japan and started demanding cost cutting measures, that maybe many Japanese companies were reluctant to do, at the time.
But over time, shareholder/stockholders became more prominent in Japanese companies and the average employee had less of a say in the company too.
Yes, China might not be a major threat today, but China is still there and it is going through its own re-structuring situation now too.
Its going to take some time for Japanese companies to find their way again, and unfortunately, not rely so much on investment companies or even, if possible, stockholder/shareholders, who seem to have too much power these days.
Yes, Japanese culture and work culture is much different than the US or even the EU, and yes, Japan doesn't need to do what Ford or GM did in the US recently has there might be better way for management and labor to cooperate while working on wage negotiations.
But again, Japanese companies need to listen to labor and not shareholders/stockholders and or the investment companies that only want cost cutting measures and or a specific profit target that might not include increased wages for employees.
The wage negotiations should include all groups such as full-time workers, part-time workers, irregular workers, and also large companies, midsize companies, and small companies together finding ways to increase wages for everyone.
Of course, as much as possible, each company should do what is best for it situation and not rely on the big name-brand companies to decide what wages should be.
It going to take several years of wage negotiations for the Japanese economy to get out of its deflation and stagnation situation that was started when Toyota, at the time, felt wage suppression was best for Japanese companies and the Japanese economy.
Have a nice day and be safe!
Saturday, February 17, 2024
Japan Prefecture to Experiment With 4 Day Workweek: Updated Feb. 20, 2024
Japan's Chiba Prefecture to introduce 4-day workweek for public workers
Ideas:
Most likely, as the pandemic forced many companies and employees, including government workers to a just their works habits maybe some or many workers got use to working from home or coffee shop and so on.
And now maybe idea of not going to the office everyday, Monday to Friday, as now got hold of many wo as they now like the ideas of working from home.
It probably is more appealing to working women with children as now they can work from home and take care of their children at the same time.
The 4 day workweek might become the trend in 2024 and companies looks for ways to improve the work/life balance for their workers.
And its most likely the trend that many young workers are looking for now as they search for entry in the workplace.
Of course maybe some older workers, who are used to 5 days a week in the office might not like it, and of course some kinds of jobs require workers to be in their offices everyday.
The 4 day work week might not fit with traditional Japanese companies but for most companies it be a good fit for the future.
If the experiment with Chiba works many companies might begin to experiment with a 4 day work week , if they aren't already doing it.
But the challenge is making sure that benefits and salaries of workers are not changed to fit a possible part-time style or contract style, and workers can maintain there same benefits and salary.
Maybe many companies, since the pandemic has ended have begun to experiment with the 4 day workweek and or some combination to improve the work/life experience of their workers.
But sometimes Japan is a little slow to change but once it decides to move it quickly makes the changes needed.
Most likely many of the traditional manufacturing companies might not allow a 4 day work week, but then again, maybe they have already done it with improved shift work policies.
Have a nice day and be safe!
Friday, February 16, 2024
Another Article About Japan and No. 4: Ideas Later
Japan, now world's No. 4 economy, on steep road to reverse low growth
Article Source: https://mainichi.jp/english/articles/20240215/p2g/00m/0bu/048000c
Article:
TOKYO (Kyodo) -- Japan's economy is facing more headwinds than previously thought, after it dropped to the world's fourth-largest, trailing the United States, China and now Germany, and unexpectedly slipping into recession last year.
With a persistently weak yen blamed for making the size of the economy look smaller in U.S. dollars, the ranking reversal may prove a blip in the end. Still the latest development underscores the fragility of an economy that this year may see the first interest rate hike since 2007.
Germany's nominal gross domestic product stood at $4.46 trillion in 2023, compared with Japan's $4.21 trillion, according to government data released Thursday. Nominal GDP is measured by current prices without adjusting for inflation.
For the final quarter of 2023, Japan's GDP shrank by an annualized real 0.4 percent, contracting for the second straight quarter, thus meeting the definition of a technical recession.
The real challenge for Japan is whether it can reduce its overreliance on monetary and fiscal support extended in times of crisis, and boost its growth potential even amid the rapid graying of society that will inevitably result in more labor shortages, experts said.
If that fails, Japan will likely see its economic power further eroded. Even now, India is on course to overtake Japan in 2026 and then become the world's third-largest economy in 2027, according to the International Monetary Fund.
When measured by nominal GDP per capita, South Korea and Taiwan are expected to eclipse Japan in 2031 and 2033, respectively, according to forecasts by the Japan Center for Economic Research.
"It won't be easy to reverse (the declining) trend when efforts to boost productivity have not borne fruit," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.
"The current administration is right in investing in people, digital and green transformation to ensure longer-term growth. Japan also needs structural reforms but they require the prime minister to have strong political capital, which looks to be in doubt," Kodama added.
Japan's inflation was far slower than Germany's and the yen's average exchange rate against the U.S. dollar, used by the Japanese government for the GDP comparison, was about 7 percent lower than in 2022.
Japan's fall to fourth place is symbolic, more than a decade after China overtook it to become the world's second-largest economy in 2010. It also came after growing confidence was expressed by the government about the possibility of Japan winning its battle to completely end deflation.
"After a normalization of Japan's monetary policy, the economy should regain its status as the third largest economy," said Martin Schulz, chief economist at Fujitsu Ltd., noting that there is "too large" a gap in the potential of boosting productivity between Germany and Japan, both aging economies.
"For the (Japanese) economy to grow, the two employment groups that have been growing the quickest -- women and older employees -- need to gain higher incomes. This becomes possible with higher productivity," Schulz said.
Japan's potential growth rate has been below 1 percent. As the population is forecast to decrease sharply from the current 124 million in the years to come, labor shortages will be increasingly felt, which economists see as already becoming a bottleneck for the economy.
When labor is in short supply, firms tend to invest in automation and other labor-saving technology while raising pay to secure talent.
The latest economic numbers were perceived as disappointing by analysts who wanted to confirm the strength of domestic demand.
Market expectations have heightened that the Bank of Japan will take a major step away from years of monetary easing that has weakened the yen and some say has helped zombie firms, or unprofitable businesses, stay afloat and reduced the competitiveness of Japan Inc.
In a recent public appearance, BOJ deputy chief Shinichi Uchida touched on the need to improve the "metabolism" of the economy.
"There are various ways to boost metabolism. For instance, it can be done by removing a certain safety net or by raising interest rates. Labor shortages can become a trigger, too," Uchida told a press conference in early February.
Uchida, a key figure behind the central bank's unorthodox policy, reassured markets that monetary conditions will likely remain accommodative.
"In an economy with tight labor markets, higher productivity requires investment into efficiency and digitalization...After decades of expansionary policies, the economy is certainly not well-positioned for such a shift," Schulz at Fujitsu said.
The government, for its part, has vowed to do all it can to achieve more robust wage growth, promote labor market reforms and boost the country's potential growth rate by drawing investment in growth areas including chips and decarbonization among others.
Former BOJ board member Takahide Kiuchi, who is now executive economist at Nomura Research Institute, said the size of an economy should not be all that matters.
Still, the outlook for the economy appears far from optimistic, at least over the short-term.
After a 1.9 percent expansion in 2023, the economy will see its growth sharply slow to 0.3 percent this year, according to Kiuchi.
Wednesday, February 14, 2024
Japan Economy Passed by Germany: Update May 30, 2024.
Japan eclipsed by Germany as No. 3 economy in 2023, enters recession
Ideas:
It highly unlikely that many Japanese citizens, if only at all, really care the country is No. 3. or No. 4.
They are more concerned with their daily and how they are going to pay the bills. Yes, GDP can be seen as important, and or course the higher the GDP usually the better off a country is, but these days, many Japanese workers wages/salaries are much less than many or most OECD countries.
Of course Germany too is in a recession or a near recession, so they too are not doing too good, at the moment.
Even if the Japanese economy shrank 0.1 percent from the previous quarter, that is still within the margin of error, most likely, really is not that significant overall.
But Japan is always, recently in and out of technical recessions and again, maybe most Japanese citizens don't really know they are/were in a technical recession, and maybe they are only thinking about prices and paying their bills.
Usually, in other economies and central banks, they might think about increasing the key rate as a way to lower inflation and or increase the rate if in a recession, but the Bank of Japan seems to have their own way of thinking, and maybe rightly so.
Why is the idea of negative growth in the Japanese economy a surprise as economic growth has not been too good the last 30 years. So to predict a 1.28 percent expansion might have been too soon to be completely positive, just yet, even though wages are going to increase in April.
Domestic demand too, for the most part, has never been a strong economic driver for the Japanese economy, as there might be many reasons for consumer spending and consumer demand in the Japanese economy never reaches its potential like in the US or the EU.
It goes all the way back to the early 2000's and the Toyota situation and not giving wage increases to their employees and then all the other companies followed their example.
Yes, the euphoria of the pandemic ending most likely faded a long time ago, as most Japanese households settled into their normal post-pandemic lives, which of course included living with inflation and higher energy and household costs.
And again consumer spending by Japanese consumers was/is never like US consumers who tend to, or use to, spend like crazy, while Japanese consumer were always more cautious about their spending.
Whether good or bad, an economy needs some extravagant spenders and not just cautious spenders, but Japan, maybe the Japanese character, as too many cautious spenders.
Capital spending is usually never a monthly situation and most of the time it might be just in April at the beginning of the new year.
Companies sometimes, for public relation purposes, will talk about big plans as way to impress stockholders to get then to invest in the company, with no real plans for capital investments.
Structural reforms are very much a company to company situation and many companies are reluctant to invest in whatever is needed for structural reforms.
Wage increases are good and needed, but all companies, large, midsize, and small companies need to increase wages, or otherwise the Japanese economy will be an economy of haves and have nots.
You ask the average Japanese citizen what all these numbers mean and most will say they have no idea, as they are only concerned with paying their bills, getting their paycheck and living their lives as is.
Japanese exports are still an important economic driver, meaning they contribute to economic growth significantly.
The same can be said for foreign tourism, as a lot or foreign tourists now to go Japan and spend a lot due to the weak Japanese yen, which gives tourists more purchasing power.
So the Bank of Japan needs to be careful about the yen as it being weak brings more foreign tourists to Japan, but if the Bank of Japan increases the key rate too much, it might cause the weak yen to get stronger which could cause some foreign tourists from going to Japan.
Have a nice day and be safe!
Tuesday, February 13, 2024
Japan Government Report: Updated May 27, 2024.
Japan edging closer to ending deflation, pay hikes key: government paper
Article Source: https://mainichi.jp/english/articles/20240213/p2g/00m/0bu/042000c
Ideas:
The idea that Japan is in a state of deflation might only be in the eye of the Bank of Japan and the Japanese government, as Japanese households and consumers might only see increased prices.
If you take real wages as the benchmark for deflation then yes, it might be correct as real wages keep decreasing while inflation keeps increasing.
But the average Japanese consumer or Japanese household doesn't think in economic terms they only think in how expensive everything has become and they could care less about economic indicators and such.
Yes, there might have been a time, when there was a period of deflation in the Japanese economy most likely due to decreased consumer or household demand and businesses were lowering their prices to keep customers and stay in business.
But those days were long ago and not the past 5 or 10 years when inflation was the highlight of the Japanese economy.
And yes, since the Toyota wage negotiation incident around 2000 when they didn't increase wages and everyone else followed suit, wages and real wages are not increased very much.
Again, it's quite possible that wages for most workers in Japan have not increased since the the early 2000's as, again, most companies followed the Toyota example or no wage increases.
And again, if you see real wages as the key indicator for deflation then yes, if wage increases. are not big enough to overcome inflation, then yes, there will be deflation again, in the Japanese economy.
But there is the ideas of constant inflation in the Japanese economy related to products and services then how then can you say there is real deflation in the Japanese economy.
Yes, the Japanese economy is not in a state of deflation even thought real wages keep decreasing and prices on most products in Japan keep increasing, so most likely Japan is in a state of inflation and not deflation.
But again, maybe the powers to be think of wages and real wages as the key indicator for the Japanese economy, and maybe to be fair, for good reason, as many if not most of Japanese workers haven't seen a wage increase for a very long time or maybe for some workers never.
Unfortunately, Japan, in terms of wages, is not even near the top or the top half of wages for OECD countries these days. Its been a long decline for when Japan was at the top in the large 80's but since then a slow decline in most things in Japan.
Japan is a resource-poor country and has to import much of what it needs. And of course the exchange rate between the US and Japan and Japan and the EU has made import prices even higher, which then means import companies pass-on their costs to the next in the supply chain and eventually the final consumer.
The services sector was hit hard by the pandemic and might be increasing prices as a way to makeup for the heavy losses during the pandemic.
At the same time, as Japan is facing labor shortages, service sector companies are increasing prices as a way to pay for increased wages to stay competitive with other sectors in Japan.
Consumer spending or private consumption might take some time to see any real sustained changes as the mindsets of Japanese consumers have been conditioned to be weary about spending and for the most part, Japanese consumers are not big spenders like US consumers.
If for example, not all Japanese workers get wage increases and only the large company workers get wage increases that is still a large part of the Japanese economic workforce without any wage increases.
For example, it is estimated that 70 or the Japanese workforce doesn't work for the large name-brand companies but small and midsize companies. If the small and midsize companies don't increase wages near what big companies pay then there is going to be a real miss-match in the Japanese economy related to Japanese consumers.
There are positives and negatives to the work hour schedule in Japan. Some women might want to work more hours while some might like the 20-29 hour schedule.
But yes, as far as taxes and insurance goes it might be a negatives for some or many.
Perhaps the entire wage, tax, and insurance system needs to be adjusted to better fit the working women who want to work more hours as needed these days with a husband and wife both working or needing to work.
Perhaps its time to adjust the system to the 2020's where more women want and need to work. The idea of stay at home mothers, even in Japan, is an outdated, as families, both husband and wife need to work to make ends meet.
Even today, as the birth rate falls in Japan and more women and men decide to not marry and to just work and move up the ladder in their career, the system needs to change to allow career working the same advantages then men have.
Have a nice day and be safe!
Monday, February 12, 2024
Japan Pensioner Spending: Updated May 29, 2024.
Japan pensioners spending more despite taking biggest hit from inflation: survey
Ideas:
Traditionally maybe so-called pensioners are given a mad rap by the idea that they don't want or need to spend that much.
Most likely so-called pensioners are the most stable and secure in Japan society, as the younger generations might have family challenges, lack of good job challenges, and overall life challenges.
And lets not forget about the idea of a happiness index. as if we looked at the happiness of older generations compared to younger generations, most likely the older generations might feel the most happy.
Even if the older generations felt inflation the most, they obviously didn't let it affect their overall spending habit. But this might have been what they bought and maybe they didn't chase after the latest fashions or whatever in Japanese society and just stuck to their everyday basic buying needs.
It must be remembered that not all younger workers have good large company paying jobs and some or maybe even many are working contract or even part-time jobs, and as such they might be challenged to spend like the older generations.
Its also possible, that the so-called pensioner take-home income might still be higher than many of the younger generations take home working income, and as such might continue to spend and feel good about it.
Again, the younger generations might not be all large company employees with good salaries and good benefits and some might be contract and even part-time workers which means maybe automatically they might restrain their spending.
While the older generations might feel they have lived a long life and now deserve to spend some even though they are affected the most by inflation.
And again, the older generations might actually feel less sensitive to inflation and just tend to buy what they need and want.
Those in the younger generations, not including pensioners, might be reluctant to spend as they are worried about many life challenges just as housing, education, future retirement and so on, which might limit or challenge their spending, while those who have reached the pensioner stage might fell more secure and or don't care as much and they want to just life as much as possible.
But we can't say all pensioners spend a lot as there might be some or many living on the edge of little income and they tend to spend as little as possible.
Its also quite possible, that some or many of the pensioners had good or high incomes when Japan companies gave good or higher salaries compared to today, or before this year or last year, when since the early 2000's many companies didn't give wage increases.
This is already a major challenge in South Korea, where the rich send their children to the most popular and expensive after-school programs and the less-rich either don't or choose less expensive after-school programs.
Not to get too negative but for the most part South Korea is a status-conscious society, where everyone wants to go the best universities and everyone wants to work for Samsung or one of the name-brand large companies.
But at the same time, the May happiness index came out and Japan and South Korea are both at the bottom of the happiness index lists, at that says a lot.
Have a nice day and be safe!
Friday, February 9, 2024
Japan 7/11 to Restructure: Updated May 13, 2024.
Seven & i's supermarket unit to withdraw from some Japan areas
Ideas:
Unfortunately, good or not so good, shareholders seems to have more say in Japan. In years and decades past, companies created 5 year plans and they didn't worry too much if they didn't meet their short-term goals.
But shareholders, these days, seem to have all the power and many upper level managers in a company, really don't have much say about planning or goals.
It logical, that the central and northeastern regions of Japan, which is getting older and or losing a lot of people who are moving to Tokyo, Nagoya, and the Osaka area, that there is less sales and less profits in those regions.
And again, it logical to focus on the major population areas as that is where most of the sales and profits will come from.
Most likely it not just Seven Eleven but many companies too, are experiencing the same situation with less sales and less profits.
Sometimes, companies can get too ambitious and expand too fast and or expand into areas where the population might be able to support the needed sales and profits of a company.
This seems to be happening in Japan a lot as other than Tokyo, Nagoya, the Osaka area, many areas of Japan are losing their population as they get older and or the younger generations want to move to Tokyo and Osaka. and out of the provinces, to improve their chances for better jobs in the future.
Of course the Japanese government is well aware that the provinces are losing their population and they are trying to manage the situation, but without much success.
But its a global problem as many rural areas, globally are losing populations to to the city areas.
Have a nice day and be safe!
Japan Government Debt: Updated May 12, 2024.
Japan's total debt swells to record 1,286.45 tril. yen in 2023
Ideas:
Once a country, much like households begin to spend, its hard to stop and keep their spending within a budget. There are always going to be emergency situations related to economic and citizens needs, which cause budget to be forgotten.
Japan, more than other countries, has seemed to rely heavily on borrowing as a means to solve it challenges.
Being able to restore its fiscal health might not be possible, anytime soon, as it might take some strong austerity measure, which many in the Japanese government and Japanese citizens don't want.
As far as the debt in Japan goes, most of the debt is internal and not external, such as was the case with Greece in 2010.
As the debt is internal, for the most part, they don't need to worry about other governments asking for debt payments, like Greece had to worry about back in 2010.
Again, all governments say they need and want to reduce spending, again like households, but when emergency situations arise its hard to ignore the emergencies and spending just continues.
And again, as Japan has little foreign debt or external debt owed to other governments, they don't need to worry about having to re-pay debt to other countries, and, as needed, can just spend as needed without too much worry, other than increasing the debt.
Most likely, Japanese citizens are in no mood for another sales tax increase, which was used in 2014 and 2019 to reduce the debt, but the problem is the Japanese government continued to spend and the sales tax increases had little effect on reducing the overall Japanese government debt.
The question, in the future, will households and businesses accept the idea of an increase in debt servicing on loans and so on, or will like many things, reduce their spending if possible.
If wage increases, among all companies, large, midsize, and small are big enough it could be enough to support changes in borrowing in Japan, as the level of all things increases and the average Japanese household and business doesn't see it as anything extraordinary.
But that is going to take cooperation from all companies to increase wages and most likely all companies are unable to do it.
Have a nice day and be safe!
Wednesday, February 7, 2024
Japan Current Account: Updated April 6, 2024.
Japan's current account surplus doubles to 20.63 tril. yen in 2023
Ideas:
A country's current account is like a country's bank account, as exports put money into the current account and imports takes money out of the current account.
Japan seems to focus on the current account much more than the US, and maybe because Japan is a smaller geographic area and Japan is more focused on exports than the US, and of course Japan is a resource- poor country and has to import much of what it needs.
A weak yen is both a positive and a negative depending on which side of the equation a company or individual is on. For export companies, and weak yen, gives them more yen, while for importers a weak yen increases the price they have to pay for products they buy overseas.
Auto exports are an economic driver for the Japanese economy, as an economic driver increases economic growth significantly, but at the same time, Japanese companies need to expand their base and not become too dependent on the US and there is always a chance, although slim, that the US economy could slip.
For the time being, maybe oil and energy prices are finally beginning to ease as it seems like they have been high ever since the pandemic.
And again, as Japan is resource-poor country they have to import much of the oil and gas they need every day, every week, every month, and every year.
The trade deficit seems to be a major focus on the Japanese government, and maybe for good reasons, as exports and imports are major areas of concern for the Japanese economy.
Small geographic countries such as Japan and the Northern European countries are always focused on exporting, as for the most part, at least the Northern European countries, they have small domestic populations and they need to focus on exporting.
For Japan, much of Japan after WW2 was focused on exports as a way to develop the Japanese economy, and as such exports have remained a major economic driver ever since.
Its good that foreign tourists are going to Japan a lot as it increases economic growth for many businesses in Japan.
But at the same time, many Japanese business became too dependent on foreign tourists and when the pandemic hit, many companies and or course many workers lost their jobs.
Also, many Japanese cities or areas, are beginning to re-think the ideas of having too many tourists and some foreign tourists don't know how to have good manners in Japan and cause problems for the local Japanese population.
Increasing the key interest rate too, has both positive and negative situations. For those in the domestic economy, it might be a negative, as it increases loan borrowing and existing loans.
But at the same time, it might increase the dividends on income for overseas companies and others too.
So, as with all things in economics, there are always positives and negatives related to all actions and activities too.
Whenever I survey the news related to the US economy, there usually is never any news related to the current account, international trade, trade surpluses or trade deficits.
The US economy is trade deficit economy, meaning they always import more than they export. and of course the reason for that is many global companies want to sell their products in the US.
At the same time, yes, Japan needs a lot of foreign products as its a resource-poor country, it does get it fair share of global products, but for the most part Japan is an export economy, which means it usually has a larger trade surplus compared to a trade deficit.
Have a nice day and be safe!
Toyota Rigging Scandal: Update May 25, 2024.
Data rigging scandals threaten to undermine Toyota's growth drivers
Ideas:
Articles never tell the whole story or the real story about what might have happened. In this case, there might be a sort of romantic idea about Toyota as this model company and when something happens the real story might be completely unknown, as, normally companies try very hard to keep their image clean.
For example, how does Toyota or those in the Toyota group really treat their employees, and more importantly how do they treat their suppliers? Do they insist on certain prices that might not be good for the suppliers or do they treat their suppliers correctly, not forcing them to accept certain prices, and if they don't they remove them as suppliers.
The Toyota group is a large group of companies, and it might not be easy to make sure all of the companies within the group are doing exactly what the main Toyota company wants and needs.
As with any name-brand company, such as Toyota, the more sales and profits they get the more the stockholders and shareholders expect the same each quarter, which might put extreme pressure on a company to maybe do things they normally wouldn't do, such as cut corners or quality control.
There is no real evidence that Toyota or Daihatsu did anything on purpose as most likely it was just neglect and or having to keep sales and production at a certain level.
Again, with any name-brand company, once something happens its doesn't easily go away for example maybe the Nissan Carlos Gohsn situation.
This shouldn't be a black-mark on Toyota as maybe it was just within the Daihatsu group, to keep up production and sales, as most likely Toyota has nothing really do to with it.
At the same time, not to be too negative, this could be the tip of the iceberg, related to cases of cheating on quality control, as car companies, are under tremendous pressure to keep sales and profits at a certain level.
Again, this doesn't mean the other Japanese car companies did or were doing the same thing with quality control issues, as, again, it might just be one company and what they did and not the entire Japanese car industry.
Globally, these days, all car companies are attempting to do the same thing, with some more and some a little less as all global car companies are now, as always, in a race to produce the latest, newest, and most innovative car possible, that customers want and need.
This might put unheard of pressure on many car companies and their suppliers and affiliates as all chase profits to keep shareholders happy.
No car company can afford any blackmarks or scandals that happened at Toyota and Daihatsu and globally it world is now inter-connected even more and news spread fast globally these days.
Not to say the Toyota didn't know, but as the same time, most times companies always try to deny or hide any facts that might make the company look bad.
Toyota had to know, that someone within the company was creating undue pressure for the Daihatsu group to keep sales up.
Again, Toyota might not be this model/perfect company that they want to be known as, as this latest situation just goes to show how much large companies put put pressure on their smaller affiliates to meet sales and profits targets.
And yes, Toyota might have expected too much or too much within a limited time schedule and the affiliates just couldn't meet the expectations.
No one should blame the affiliates as parent companies, such as Toyota, put too much pressure to meet unrealistic demands to remain number one.
The smaller affiliates were probably under too much pressure and if they didn't meet the targets or demands, the parent group Toyota, move the affiliates out of the main group.
"Might have been delicate" is putting it lightly, as most likely suppliers were reluctant to say anything for fear of not being a suppler in the future, as is the case with many main companies and suppliers.
As with this situation, the relationship between Toyota and its suppliers might been going on for decades and suppliers just had to accept whatever Toyota wanted and needed, without saying anything.
Again, most likely what is happening between Toyota and its suppliers is what is happening with other large Japanese car companies, as the suppliers are afraid to say anything and just accept what the main company wants and needs.
Yes, there should have been more communication, but in reality, suppliers are too afraid to voice their concerns to the main company for fear of losing the main company's business.
For example, if there was a shortage of engineers the supplier should have said something to Toyota, but again, maybe they were afraid to say anything that would make them look not very good to Toyota.
So in this case, Toyota is to blame for the situation and they didn't allow for clear communication and they didn't communicate to the suppliers. whatever they needed they will help.
This situation could in the future hurt Toyota's attempt to hire the best talent needed or possible. High salaries, these days, only go so far, as younger workers are looking for better work life balances, and if a young worker or college graduate knows or hears what is going on with Toyota and it suppliers or affiliates they might think twice about wanting to work for Toyota.
No one wants to work for a company that has constant unrealistic production, sales, or profit targets.
Toyota might continue to get some of the best talent possible, but over time, young workers are going to reject Toyota and maybe even its affiliates as they know Toyota puts too much pressure on it own workers and its affiliates.
Have a nice day and be safe!
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