Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (59999)	2/5/2005 3:18:05 AM
From: Seeker of Truth	Read Replies (2) \| Respond to of 74559

"Slow motion breakdown of the Japanese corporate world." Stratfor's words. Anyway at the moment it's not true because huge orders from China are supporting the Japanese economy. There's no boom but things are not deteriorating. China -----> low price consumer goods and vegetables ----> Japan. Japan -----> high price capital goods ----> China To a moderate but growing extent this diverts both economies away from overdependence on Joe6P in the US. On the ground, in Japan, people are afraid of engineers of South Korea, China and India possessing the same or superior knowledge to that which Japanese engineers have and working for less pay. Actually, in the companies that I know, wage costs are being reduced not by lowering salaries to the young people but by getting employees to retire earlier than previously. This replaces a well paid employee by a low paid beginner.

To: TobagoJack who wrote (59999)	2/5/2005 5:16:10 AM
From: elmatador	Respond to of 74559

<slow-motion breakdown of the Japanese corporate world>? Your posting shows how <<Japan gazers will look to Japan as how it is managing it is return to irrelevance as world’s bankers.>> Like I said: Message 20965988

To: TobagoJack who wrote (59999)	2/5/2005 5:31:16 AM
From: elmatador	Read Replies (2) \| Respond to of 74559

Coup de Grace on empires are military. US will be. The British Empire needed WWI and WWII to fall. Most likely, the US empire will need a military little push to be declared over. Script will be: Crisis arise in Iran. US do sabre rattling. US tries diplomatic channels. U.N. doesn’t go along a quick solution and pushes for diplomatic solution, ‘accidents’, bribes, whatever to avoid confrontation. U.S. tries to get a coalition, to no avail. US decide to solve the problem single-handed. Meanwhile a few Antonov with the right gadgets and advisers have been landing in Iran for a couple of months. Hardened guerrilas arrive in trucks from Iraq: Cheap fighting material at USD1.000 per head per month. They vanish into the landscape armed, not old remains from demolished Iraq arsenal but with the latest gadgets. Satellite always overhead advises on coordinated action. U.S. will try to do a quick push, enter, is hit hard, get stuck withdraw in humiliation. Quiet and cirurgically the policeman of the world discovers is shown its time has passed. Bookmark this posting.

To: TobagoJack who wrote (59999)	2/5/2005 10:31:04 PM
From: Taikun	Read Replies (1) \| Respond to of 74559

Jay, <Terrified that new loans to new clients could potentially make their balance sheets worse than they already are, the banks largely refuse to lend to non-core clients, including Japan's ever-stunted small and medium-business sector.> Not sure I completely agree. There are now more progressive players in the market. Japan's Orix is more aggressive in providing liquidity and foreign hedge fund and REITs buy into cash-rich businesses (forcing dividend payouts) and undervalued properties, tearing them down and replacing them. I think this problem exposes more cultural issues such as: Japanese consumers don't consume, so they don't borrow. Americans, Australians and Brits are far more prolific at tapping into home equity to buy cars, vacation condos and trips. The Japanese don't do this, so banks can't find new clients. Perhaps, as the article says, the banks don't push, but there are two parties to a bank loan, and in Japan, in some respects, there are a dearth of borrowers. Why? Japanese are risk averse, investing in low-interest Post Office deposits (only now being privatised) and eschewing the stock market (due to cartel-like broker commissions with bloated costs), such that many moves in the market are largely the result of net inflows/outflows of foreigners into the market, except perhaps the small cap stocks. Many Japanese, individual or institutional, seem happier investing in BOJ bonds at 1%. As I believe Richebacher has pointed out, these 'low-interest' expectations are basically expectations of 'low returns'. This is pervasive in the economy, to the extent that many investors deny higher rates of return exist. These low-return expectations therefore drive investors away from higher return opportunities. It also tempers businesspeople's investment patterns. I remember trying to lure Japanese startups to expand to the US. The response by the management of these high margin, growth companies was "Why should we expand?" "We'll just pay more taxes?" "We make enough money, "Why do we need more stress?" Taxes are also an important issue. Japan, as one of the most homogenous countries in the world, also has one of the largest middle classes. Japan has quite low sales and income taxes at the personal level. The Americans have pushed Japan to raise tax rates, with little success. Japan has a relatively 'flat' pyramid-shaped income distribution where the very rich pay very high taxes at the margin but the middle class really have quite a bit of disposable income. In contrast, in the US, there are far more 'very high earners' paying comparatively less tax at the margin, and the US distribution looks more like a tall pyramid. In comparison to Japanese, most Americans will have to work much harder to move up the pyramid and have an equivalent amount of disposable income. The Americans would believe that raising taxes for the middle class would make Japanese more aggressive, thus they would seek higher returns from their investments, and strive to move up the pyramid. Another aspect of a taller pyramid is that it could also lead to more acquisitive behavior, whereby the really rich acquire and the wannabees borrow to emulate them. If the Japanese accepted this, though, they know this would likely bring about a deep, materialistic change to their society that may run against the Shinto undertones that temper society and lead to the image of the Japanese as 'pacifist'. The Japanese remember the pain fo the bursting of the last bubble, and it seems they prefer complacency and 1% returns instead. This will continue to be bad for the economy, growth rates, CAPEX investment and returns. These will all continue to suffer, in my opinion, and BOJ bond-buying failure will just be a symptom. David