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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: FACTUAL who wrote (1330)	8/11/1998 11:39:00 PM
From: Step1	Read Replies (2) \| Respond to of 3902

Factual, you seem to have a fairly good handle on Japan... I don't know if I will be able to add much to what you have said already, most of my comments are derived from gleaning here and there, interactions with Japanese friends and just plain old intuition. I don't think they can withstand the rigor of examination since I lack facts (and with a handle name like yours , you may just want to have facts instead...) but I will say that I may just as right as anybody else, since the changes we are talking about are in most cases only taking shape and are in their tender enfancy. It is without a doubt quite chaotic at the moment and from here it could lead almost anywhere. >>I was interested in your comments that most observers appear to be overlooking the subtle changes in the private sector.<< Either they are not in touch with Japan, or they cannot publish their findings yet for the simple reason that they could not back them up with hard facts, nevertheless, it is changing fast... >>the problems in Japan are that its sources are mainly two-fold. The first is a lack of feedback mechanism. As you are aware most equities in the first section are held in cross holdings preventing stock market feedback of the type given by mutual fund investors in the Western world.<< As I understand from the media here (and mind you also from personal friends who are in private businesses) this is being unwound. The companies need the cash to fund operations, cover bad loans, replenish pension funds or to set up "golden hand-shakes" (forced retirements). Some companies are closing and need the funds to cover their liabilities as well. When I mentioned a personal friend of mine, although a small privately held shareholder company, he had holdings in other similar companies that he had to unload. Even golf course membership are being unloaded, although there are few takers... So factually, I don t know to what extent this is happening, but it is ongoing, market permitting... >>> The sceond problem is a lack of transparency in the financials of companies so it is impossible to value them.<<< This is starting to change, as you will already know I am sure a number of companies that already report quarterly, according to US accounting standards. Obtaining financing is the only reason, as you have said so well it was impossible to value them. The more forward looking companies are on this path. Others probably would do it to but for the moment their health is so dismal that it would probably mortally hurt them. They are probably waiting for some kind of government action and hoping for a pick up in their business that would allow some relief . Unfortunately , this does not seem to be coming .... >>> The third problem is a general lack of development of institutions able to let aggrieved members of society have their claims fairly adjudicated.<<< Dont have the knowledge to comment on that. I thought class action was not possible in Japan, although I see a fair amount of cases of environmental pollution, medical screw ups and gross mistreatment of workers ending up in court and being won lately. Basically, Japan has been in turmoil since I have arrived here in 1993, perhaps if I went home it would help... ;-) >>> ( This is changing as I witness the lawsuits over the football tickets as well as those from the unheated blood products scandal)<<< Do you live here? Not the kind of info I would expect to make the news oversea. >>> To what extent would you agree with these assumptions? If you do do you see change in these assumptions? TO the best of my knowledge, you are right. On the legal aspects, I don't know. My personal opinion here is that there is still a lot of resistence from the old guard and they are doing their best to save their furniture while the house is on fire. The average Japanese knows full well that time has come to settle the accounts and the political screw ups are costing them dearly. You are starting to hear people tell you how a friend or a relative has just gone bankrupt or lost his/her job. Unheard of 3 years ago . There is still a huge stygma with both (losing one's job or going bankrupt) and TV programs always mask people's face when they interview job seekers at the unemployment centers, especially of laid off "salarymen"... Hard to comprehend for our culture, but still a reality. I think the amount of pain may be small in comparison to other Asian nations but it will get worse. A lot more businesses need to go under and clear the way for rebuilding. A lot of the people being laid off have few skills to market, especially white collar people. >>>If you dont, I would like to hear your views of the cause of the current malaise in Japan.<<< That is like opening a can of worms... Experts disagree. My take is that economic problems are rooted in societal problems in the first place. Lack of accountability, respect for the elders which here brought about a pervert endorsement of management without a voice raised. ( When you live here though, it is easy to see why nobody dared say anything; it is a matter of survival. ) Overconfidence. My favorite one is the total absence of a sharp critical mind. Nobody questions anything if it comes from the top. My students are the same . They go along with what I say without ever raising a voice , no matter how hard I employ myself at designing traps and debates in class. There is no thirst for this kind of exercise and until there is, I doubt really efficient mechanisms can be implemented. Since I am getting a bit off topic here, I will just sign off and see what your comments are to this. later sg