do you want to venture an interpretation on those;
Hey, I don't speak Japanese, how could you expect me to interpret those numbers !!
All I can say is that the US is buying more of their stuff than they are buying of the US stuff...
But then, mere trade figures would not tell you about how efficient each economy is.... I mean, there may be trade barriers in some sectors, (as I suspect). So it would not be that simple to say their economy is in better shape, or their currency will get stronger because the US would buy more of their stuff, than the other way around.
[I guess that would be the theory... yes ?]
I thought the exports to the US were what allowed Japan to float rather than sink...???
Well.... maybe is just causing it to sink slower...
Wouldn't the trend be more important ?? was 1998 the worst year for the US ?
foxmarketwire.com
So what's up this year.... ? a retracement from last year ??
From the US perspective...
Is the net difference due to an increase of imports, or a decrease in exports ?
What about a global picture overall ? I mean, maybe there is a trade deficit with Japan because of specific barriers/policies ?
But not with the rest of the world.....
The US is the most open market in the world, not so with Japan....Which at the very least it may mean that specific sectors could be receiving protection from competition, hence not necessarily the most efficient producers....
Not to mention that in the case of the insurance companies and banks many of those could be technically bankrupt, but no-one is saying so....
All this, could be interpreted by the market in order to reflect a truer value of each country's currency accordingly.... no ?
I found this site that seems to be interesting....
mkeever.com
mkeever.com
a good way to learn about Japan. (a little outdated.. 1993/94)
An example:
5. COMMERCIAL BANKS: 4.0
Japan's commercial banks are responsible for most credit extended to industry. Their influence on their client companies is considerable. Their active lending policy also means that their liquidity ratios tend to be low by Western standards and that they are forced to rely on call money (money that is readily available to banks as loans) and on large scale borrowings from the Bank of Japan as central bank.
Source: Ministry of Finance
.......
9. FREEDOM FROM OUTSIDE CONTROL: 4.0
Japanese citizens are free from control by other governments. However, some Japanese worry about trade agreements restricting their freedom. The US and Japan signed important market opening agreements recently in insurance, government procurement of medical technology and telecommunications goods and services. Similar agreements have affected Japan's flat glass and public works industies.
Source: NTDB
10. FOREIGN CURRENCY TRANSACTIONS: 4.5
The Japanese government requires that only the Yen be used in domestic transactions. All foreign currencies must be converted in order to conduct business. Some banks have a license from the Ministry of Finance to act as currency exchange locations.
Source: Personal knowledge, experience.
.............
15. HONEST GOVERNMENT: 0.01
Tanaka Kakuei (former President of Japan) ended in 1974 with a scandal based on irregularities in the accumulation of his private fortune. Shortly afterward, he was implicated in the improper use of official influence to bring about the selection by a Japanese airline of planes manufactured by Lockheed. Tanaka was arested in July 1976. In June of 1989, Takeshita resigned and was replaced by Foreign Minister Uno Sosake; but, Uno himself was soon implicated in a sex scandal. Some observers think that little has changed.
Source: History of Japan - 1994
Why am I NOT surprised.....
..........
17. CENTRAL BANK: 4.5
The Bank of Japan manages the commercial banks and the currency and, together with the Ministry of Finance, has considerable influence over business investment decisions because of the close interdependence of business, commercial banks and the central bank. The Bank of Japan influences bank operations and brings about quick adjustments in the volume of credit through ceilings, moral pressure and other methods. Other sources of finance that are less susceptible to central bank influence include mutual savings and loan banks, credit associations, life insurance companies and other nonbank financial institutions.
Source: Ministry of Finance
18. DOMESTIC BUDGET MANAGEMENT: 3.5
Reflecting a continued shortfall in tax revenues, the government in 1995 submitted an austerity budget totalling 70,987 trillion Yen, down 2.9% from FY 1994. Government borrowing of 12,598 trillion Yen was down 7.7% from 1994. Other spending categories were up.
Source: Ministry of Finance
19. GOVERNMENT DEBT: 4.0
Government borrowings (bonds) accounted for 17.7% of the budget, but the cost of the national debt declined 7.9% from the prior year. This reflects the government's plan to rebuild public finances. But, allocations for public works, fiscal investment and loan programs were increased to help stimulate the economy.
Source: Ministry of Finance.
.........
27. PROTECTION OF FOREIGN CURRENCY EARNING ENTERPRISES: 4.0
Trade barriers cost Japanese consumers somewhere between $75 billion and $110 billion in 1989, or between 3% and 4% of GDP. The industries getting the most protection are food and beverages, metals, machinery, chemicals, textiles and apparel. Japanese consumers effectively paid upwards of $600,000 for each job protected by trade barriers. Even recent free trade victories like GATT do not ensure an improvement any time soon. GATT would not force Japan to remove its trade barriers. It forces a conversion of many non-tariff barriers, such as agricultural import quotas and government price supports, into more visible and less trade restrictive tariff barriers, which have been relatively rare in Japan.
Source: FORTUNE, 3-6-95, v.131, issue 4
28. MANAGEMENT OF FOREIGN CURRENCY BUDGET: 3.0
($ billions) 1993 1994
Current balance $ 131,448 $ 129,333
Balance of Trade 141,514 145,816
Exports 351,292 384,014
Up from prior year 6.2% 9.3%
Imports 209,778 238,198
Up from prior year 5.7% 13.5%
Invisible trade balance (3,949) (8,988)
Transfer payments bal. (6,117) (7,495)
Bal Long term capital (78,336) (81,857)
Short term capital (14,426) (8,603)
Errors and Omissions ( 260) (18,445)
Overall Balance $ 38,426 $ 20,428
======= =======
Japan's current account surplus for 1994 fell 9.6% from the prior year to $129,333 billion. This was the first time in years that the surplus declined in dollar terms. But the surplus in the trade account reached a record $145,816 billion, up 3.0% from the year before. This seeming contradiction was attributed to a sharp rise in deficits in the invisible trade account and in transfer payments.
Source: Ministry of Finance
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I doubt that all this answers your questions.... but it was fun (?)<g>
Maybe as someone already suggested here, forget the theory and start making economic policy based on real world experiences....
2. Welfare for all is maximized when good are produced in the most efficient (lowest cost) manner possible:
This is the basic argument for Free Trade and draws its justification from Ricardo. However, real events provide a contrary argument: " ...But while we predicted grim outcomes from NAFTA, no one foresaw the horrendous catastrophe which has suddenly converted Mexico from the success story of trade liberalization into a global economic basket case. To keep the wolf from the door, Mexico has already borrowed billions of dollars, and has a line of credit for billions more. Even if the peso can be kept from slipping further (and so far there is no certainty of this) the burden of repaying the debt, along with the hardships of the devaluation itself, will fall largely on the backs of the poor, whose real wages continue to plummet. To pay off these loans, Mexico will have to escalate its austerity measures (similar to those often demanded by the World Bank's Structural Adjustment Programs). In other words, the Mexican people can expect further reductions in public services, further reductions in real wages, increased taxation and more user fees for health and other social services. Already this has involved a huge increase in the price of oil (35%) and basic goods, while wages have been frozen. Meanwhile, federal sales tax on most goods was raised from 10% to 15%..." (David Werner and Jason Weston: "The Hidden Costs of free Trade: Mexico Bites the Bullet" as reprinted in Luis Lopezllera's periodical "La Otra Bolsa de Valores", 1995)
3. Balance of Payments Accounting:
Currently, economic theory (Federal Reserve Bulletin listing of US balance of payments; Dominick Salvatore INTERNATIONAL ECONOMICS, Fifth Edition; Robert J. Carbaugh, INTERNATIONAL ECONOMICS, Fifth Edition) claims that all inflows and outflows of money to a national economy that do not reach a zero balance will be balanced automatically to zero by international borrowings. In other words, it doesn't matter if there is a surplus of imports over exports (negative trade balance) because the country will automatically borrow the difference.
This assumption has numerous problems. First, any money borrowed must be repaid. The repayment costs are frequently not borne by the same people as those who borrow. Second, there is no such automatic mechanism - conscious decisions are required to implement the policy. Someone, probably a business firm, has to request a loan from someone, probably a banker, who has to agree to make the loan. Balance of payment loans from the International Monetary Fund have severe conditions and restrictions that make them an unwieldy source of borrowing. Third, if the borrower pledges some property as collateral for the loan, then some of a country's productive assets have been sold to foreigners. Fourth, if all deficits in trade balances were automatically covered, then exchange rates would never change. Of course, that is absurd. Lastly, this theory assumes that all currency movements are accounted for by official statistics; this ignores cash transactions and is equally absurd.
BOP theory must be changed to recognize that money out/inflows actually do occur. If we remove the fictional concept that any money flows between countries are automatically modulated by international borrowings, then we must address the real effects of international flows of money. This will necessitate a more critical look at free trade and the global efficiency theory for this reason: trade imbalances are not automatically offset by international borrowings - they have real consequences.
mkeever.com
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I guess it is not that simple. I certainly do not have the answer. |
