See my latest blogspot “Japan and Economics” post on Japan as “normal” in response to the “bond vigilante” claim that high-debt countries are bound to soon see high interest rates [and, typically, high inflation when these same people focus on monetary policy indicators]. Needless to say, anyone who’s actually made investments on the basis of these claims has lost their shirt. Somehow that doesn’t seem to get anyone to rethink their position.
Japan looks more and more ordinary across many dimensions. Continue reading
New yen headache hits Honda Accord in U.S.: Ohio factory to do double duty for export units
Hans Greimel, [link:] Automotive News — December 3, 2012 – 12:01 am ET
… the strong Japanese yen threatens to undercut U.S. sales of the Accord in another way….The Ohio factory that makes Accords will soon churn them out for export to places such as Russia and South Korea, possibly restricting product flow to American dealers….Normally those cars would come from Japan, but Honda has suspended Accord output at home so it won’t lose money on exports.
So … the yen’s strength will mean fewer exports from Japan and more from the US. This surely affects suppliers, too: Honda closing capacity has a multiplier effect inside Japan.
Now I’ve argued that from a long-term perspective Japan has too much manufacturing and will need to shift its labor force composition towards services such as healthcare. But while the economy is in the midst of a modest recession and continues to feel the effects of modest deflation … well, not now, can’t we wait a couple more years?
…Japan remains overbanked…
For those who go back a long time, Japanese banking used to be characterized by “overborrowing”, “overlending” and “overbanking” – high debt/equity ratios in the corporate sector, and borrowing too much money from the Bank of Japan, Continue reading
Honda is building a full-sized assembly plant (200K units per year) as is Mazda; Nissan is adding a 3rd plant. Part of that is driven by the strength of the yen, at ¥81.3 per US$ on 17 November; the US is the biggest source of profits for the auto industry, so sourcing vehicles for the US market from a non-yen location is important. [The Euro is also strong, to which anyone who has traveled there on a dollar budget can attest.]
But why Mexico? Logistics costs are high, because most vehicles will likely be exported and because the local supplier base is not as deep as in the US midwest (hence parts must be imported). So while quality is high and wages are competitive, it’s not a natural a priori.
The answer lies in free trade agreements: Mexico has been more aggressive on that front than the US (and Japan). As a result not only can vehicles be shipped tariff-free to the US–0% from Mexico versus 2.5% on cars and 25% on trucks shipped from Japan. Ditto Europe–tariffs are 0% from Mexico versus 10% on vehicles shipped from the US or Japan. (I have not researched whether Mexico has similar aggreements in Latin America.)
Now Japan could offset some of this were it to negotiate more free trade agreements. (It has one with Mexico.) But that’s an awkward process, and has yet to join the biggest pending agreement (TPP, Trans Pacific Partnership). The reason: farmers, whose political clout is disproportionate to their share of the economy, and whose clout over time has led to subsidies and tariffs that allow rice farmers to remain in business despite costs that are multiples of those in other large producers. So removing protection for rice would drive most farmers out of business. In Japan, it’s the “3rd rail” of electoral politics.
A blog by Colin Marshall has a neat piece on cell phones vs wi-fi
in Japan. Now in 2006 I did frequent a couple coffee shops that had wi-fi (Dotour Coffee and Excelsior Coffee, franchise chains of the same company). But Colin is correct in that you couldn’t count on having wi-fi, and the gist of his post suggests that things have gotten worse.
His argument is that the Japanese cell phone market moved earlier than the US to smart phones [though with an idiosyncratic standard, so that it is a “Galapagos” market, lots of unique things which however are not viable in any other market]. As a result, there was no net advantage [pun intended] in yourself paying to set up wi-fi.
Comments? Queries? — I’m pretty sure you can get a “hot spot” map, one way to check whether things were really as scarce as claimed.
Oh, and this is part of his two-part “Kansai no Nikki [diary] series. You can find Part I here
. As someone who’s intensely interested in cities, they include interesting observations and comparisons to other cities.
No, despite the large size of the boomer cohort relative to today’s new school leaver population, the boomer retirement will in fact be gradual, not sudden, according to my estimates using age-specific employment/population ratios. All too many Japanese continue working until age 70 and beyond, and so on average firms won’t be left short-handed and need to turn to the young, or at least not quickly. There will be no Year 2013 effect [which is when the youngest boomers, the 1948 cohort, turn 65].
Details and qualifications:
- labor economics work suggests that old and young workers are not perfect substitutes, indeed they may be complements (though that’s hard to check empirically as common shocks can produce both lower old-age and lower young-age employment). this is termed the “lock box” effect.
- measures are for headcount — employed — versus hours worked. since older workers tend not to work full time, my calculations may understate the retirement effect. however, at present there are also many underemployed (and not just unemployed) youth, so by focusing headcount I overstate employment levels at the young end, too.
- the data! — I basically need to recheck my spreadsheet from beginning to end as I made many changes as I went along. my calculations may simply be wrong! so graphs to follow…
Government policy is to encourage firms to keep older Japanese working, by making the retirement age older (target age 65 instead of the current mode of age 60), by re-employing retirees (under fixed-term contracts, eg to age 65), and by placing them with other firms. The young get no extra help. Cynically, policymakers are near retirement age and so are more sensitive to the older worker issue than to the younger worker one (high-status individuals are more likely to have children who made it into high-status universities and have jobs). plus there are more votes, there are more old than young and (as in the US) older invididuals are more likely to vote and (Japan-specific) to be tied to grass-roots electoral machines.
- graphs need to be added!!
Food for thought: what are the implications? The readings follow up…
- one from National Institute of Population and Social Security Research (http://www.ipss.go.jp/site-ad/TopPageData/Pyramid_ea.html),
- and a graph I put together from the IPSS Population Yearbook with total fertility and total births.
Go to the Japanese government web site for GDP data — http://www.esri.cao.go.jp/. Ah, switch languages to English (you need to get over the shock of seeing Japanese pop up). There’s a news release, but as practice look for the statistics link and see what other data this site has. It’ll guide you to the SNA data, the “here” will take you to the top page for such data.
In the US the official name is NIPA (Natl Income and Product Accounts) but for Japan (and most other countries) it’s the SNA (System of National Accounts), drawing upon work by an international coordinating group at the UN that helps countries avoid having to reinvent the wheel. (The US and UK were first movers, and at least the US remains idiosyncratic for certain details.)
Look for the time series data that you can load into Excel and not the pdf files; that may take clicking on a few links to locate the proper one. The files are .CSV but can be opened by excel — but save them as .xls right away!Use quarterly data.
That will let you examine what’s happened to GDP since 1994.
- what do you want to look at — nominal or real? seasonally adjusted or not?
- do you want to look at levels or at rates of change?
- how about trade — what is the level of exports/gdp? how has that changed over time?
Can you find 3/11 in these data?
Note that the Annual Reports contain more detailed tables, including ones on national wealth under the “stock” accounts. The quick number for 2010 is ¥2,700,000 billion vs GDP of ¥500,000 billion or about 5x GDP. Fixed assets are 1,500,000 or 3x GDP. So earthquake losses of ¥16,900 billion are a “mere” 1% of fixed assets. The largest loss (¥10.4 trillion) was of buildings.
==> But what of indirect losses? How might we measure those? <==