Ramsey, <long rambling post, some or it OT>
Recovered? Really? Markets are like rubber bands that overshoot both on the up side and the downside. I spent some time in Thailand as well before coming to Japan. While that does not make me an expert on Asia, I can say that the main difference between a country like Thailand (probably true for Indonesia, Malaysia and the Philippines as well) and the other more industrially advanced Asian nations (Korea, Taiwan) is their insufficient pool of qualified managers and technical people. Dont get me wrong, I am not saying that the ones they have are not good, I am saying they don't have enough of them. These deficiencies take a generation to fix. While the markets have bounced back up rapidly, the fundamental shifts in society (towards transparency, corruption, domestic affairs, accountability) have not gone far enough to be irreversible, even perhaps to have a real effect on the economy (only 2 years after all). The money flows and investor sentiments though move at the speed of light now and those are the influences you see on the markets at this point I think.
As far as Japan is concerned, (i said it many times but just for the record again, my observations are anecdotal only) I see nothing changed yet. Maybe it is because I live in the countryside, at the edge of the main economy (has its advantages, at least we have cleaner air, fresh vegetables from the farmer next door and starry nights to remind me of the Canadian nightscape...) but nothing has changed here in practice even though everybody is talking about the coming changes. My local contractor sat down with me the other day and told me how much he wanted to go fishing in Canada since he had heard how good it was suppposed to be up North . I told him tickets were cheap and I could look up a couple of outfitters for him. he said they didn't even have a 1000 bucks hanging around for the airfare, much less for the outfitter, road construction sort of stopped for now waiting for the next grant from Tokyo to go ahead, which he expected mid summer. Ok, you'll say this is just from one man, but I get these stories all the time, my friend with business floor space (3 floors) in THE prime location in town with no tenant in 2 floors for a year and the tenant on the 3rd floor who just vacated a month ago. I could continue but it would get rapidly boring I suppose... Maybe a last one, this young guy I teach at a big electronics company who was telling me he had invested some money in America and was asking what I thougth about ... AOL, YHOO and CSCO. When we started talking about them it rapidly became clear that he knew the latest price action quite well to which I asked him how he kept on top of the stock price and he said, oh I ve got Pointcast with the quotes streaming on my computer at work... I was a bit stunned, and asked him whether his boss minded. No came the reply, my boss bought the same stocks too... (with the time difference though, the streaming quotes only have meaning in the morning as they boot up for work...) He has also told me that his knowledge of stocks came from his dealings with the local broker his company uses to do their portfolio transactions (on pensions? we are talking a big company here) . I asked how that went and he said, not well, the money is not there, what money I asked, the employees' contributions...
So I will stop my rambling here. Despite all that the big Talking Heads are saying, Biggs included (i guess I hold a personal grudge against him, since his recommendation to buy Japan caused a rally that cost me...) all the facts I see here on the ground point to more bad news for a long while...
>>Are you aware that most experts on CNBC these
days have already concluded that Asia had hit bottom and is rebounding faster than expected? Japan
has not been in the limelight for a while. <<
I don't have CNBC. In fact I havent had a working television set since April first, the date of my move to the country side. My wife is asking from time to time if this is a permanent "bias" against TV though...
>>What do you think could be a surprise from Japan, something of significance which would trigger the
same sell off as the Russian default last year?<<
Why me? To be honest I don't have the knowledge to answer that question. OK, just to keep the discussion going, I would say even a big industrial giant folding or being carted away to be dismembered would still be swallowable. I think worries about the financial system (Japan premium), a bank -one among the 9 biggest in Japan for example-, the Postal Savings or one of the big brokers left going belly up (remember Yamaichi) would do it or has the potential to do it. Japan said that they would not allow any of the big banks to fail. Two have disappeared and been taken over since (I believe Taishokugin and Long Term Credit Bank) . I heard on the radio a couple days ago one regional bank in Osaka was being shut down with 0.5% capital ratio...
Could be an interesting summer.
sg |
