Of Interest

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Monday, April 9, 2012

Japan Brimming with Fruit Flavor?


April 1 is a new beginning in the Japanese calendar and coincides roughly with the much anticipated arrival of cherry blossoms. The first ethereal pink was sighted last week on an otherwise naked branch of a cherry tree in Kochi Prefecture, on Shikoku Island. Now blossoms have appeared in Tokyo. Full bloom is expected by Friday. Last year, after the horrific Great East Japan Earthquake and tsunami that took over 18,000 lives, most cherry-blossom viewing events and festivals had been canceled—at great cost to the industry that has sprung up around cherry blossoms. But this year, people appear eager once again to go places and spend money during the festivities. April 1—this year, April 2—is also the beginning of the corporate year. Newly recruited college graduates show up for their first day of work and are welcomed with entrance ceremonies and speeches. When universities spit them out in March at the end of the academic year, they need to have a job offer in hand. If they don't, their chances of ever entering a career are minimal due to the rigidities of the system. By Japanese standards, the employment picture for graduates had been morose for years—“lost generation” they’re called. Then the financial crisis hit and hiring fell off a cliff. In 2008, 88.7% of the graduates had job offers. By 2011, it was down to 77.4%. Nearly a quarter of all graduates saw their visions of becoming a pillar of Japanese society vanish.

So when the Ministry of Health, Labor, and Welfare reported that a still dismal 80.5% of the grads had accepted a job offer by February 1, it was greeted with relief. An estimated 800,000 new employees walked into their first jobs today, up from 776,000 in 2011, the lowest point since 2000 when collection of this data began. Banks went on a mini hiring spree. For example, Sumitomo Mitsui Financial Group hired 810 graduates this year, up from 709 last year, but down from 2,090 in 2009.
The overall jobs picture has improved as well. Unemployment for February, reported Friday, edged down to 4.5%, and unemployment among the 15-24-year-olds fell to 9.2% from 9.5%. With three jobs for four applicants, it was still dismal, but after nine consecutive months of increases, it was the best reading since November 2008. And a jump from November 2009, when there were more than twice as many applicants as job openings.
Even beleaguered Prime Minister Yoshihiko Noda got his first respite on the relentlessly steep slope down the approval ratings. All Japanese prime ministers since Koizumi slither down that slope for 8-15 months. When their popularity drops into the low twenties, Japan Inc. sees to it that they're axed. But on the way down, they have a brief uptick. And Noda is having his—a tiny 2.6 percentage points to 31.6%.


But not everything is suddenly rosy in Japan. Today, the Bank of Japan released its tankan quarterly survey of over 10,000 manufacturers: minus 4, unchanged from its lousy reading in December. While coddled large companies became more optimistic, small and medium firms (ominously) became even more pessimistic, in part due to the catastrophic power situation.
TEPCO, the bailed out owner of the Fukushima nuclear power plant, is trying to shove rate increases of 17% down the throats of its commercial customers—while rationing power at the same time. Power shortages will spread across most of Japan this summer as the last of 54 nuclear power plants will be taken off line in a few weeks. While pressure is building to restart some of them, public distrust and resistance run high, particularly after revelations seeped out about the nuclear industry’s controlling relationship with its regulators. Japan Inc. at work. The conspiracy had squashed stiffer regulations for nuclear emergencies. Five years later, the people of Fukushima paid the price. For that fiasco, the emails that documented it, its deadly and ongoing impact, and the anger it caused, read... A Revolt, the Quiet Japanese Way.
But it’s a two-edged sword. Shortages of up to 20% this summer are expected to strangle the highly industrialized Osaka area, and companies are shifting production overseas. Now a panel of the Osaka municipal and prefectural governments floated a plan for the city of Osaka to demand that Kansai Electric Power shut down its nuclear power plants permanently. Mayor Toru Hashimoto has come out in support. Largest shareholder with an ownership of 9%, Osaka has some pull though it is unlikely to prevail over almighty Kansai Power.
But on the Japanese internet, there has been something ... lighter. And utterly cynical. It shows just how much trust the people have left in TEPCO and the government. Read:  Nuclear Contamination As Seen By Japanese Humor (mostly pics).

As someone who lives in Japan, I too have to agree with the paper and not at all with pitz.
In Japan, housewives can stay at home, because the nation is so prosperous.
You can't be serious. Housewives often stay at home because companies aren't hiring, and removing themselves from the workforce for childbirth often permanently impairs career prospects. And then there's corporate culture: have you ever been out with Japanese colleagues and seen bright, hard-working, positive young women reduced to refilling drinks and cleaning tables? Ever seen a young woman interpret during a meeting while the young men are allowed to discuss business? How about serving tea (chakumi)? It's degrading, and companies get away with it because there are no jobs.
Further, when I say female careers are few, combine that with the reality that the female labor force participation is high after infant-rearing years (around 75%). They just work in low-wage service sectors.
The falling birthrate is an artifact of the vibrant and prosperous economy.  African economies that aren't prosperous, have high birthrates.  Since Japan is one of the world's most prosperous economies, it has the lowest birthrates.
Birth rates that fall to sustainability are. Many families I talk to would like to have another child, but are worried about the cost of clothing, shelther, education, etc. They can't afford to move out of their 10-jo place. Women don't want to get married because they'll have to leave their careers to raise a child. These tradeoffs do not exist in many countries.
Japan's low birth rate is driven by high cost of living amid wage deflation and a tightened job market, period. Furthermore, there are consequences of this "prosperity"-driven aging: Japan will have to heavily raise the retirement age for the national pension, raise payroll taxes, or admit millions of immigrants.
They can live those 'cartoon' lives precisely because the economy is so prosperous. The housewife investors are evidence of this.
First off, Mrs. Watanabes aren't that major a force. Second of all, what are they doing? They're scraping to find yield outside of Japan, where deposits earn only a few bps. Last I checked, a 10-year CD at MUFJ or Mizuho would get you around 0.60%. It's a job with very small returns, if any (last I checked, they were getting burned on PRDCs.) The only people doing it are those with few other options. A large population of DIY day traders and currency speculators is not desirable for any country.
does not have the no-holds-barred cultural and political left-right polarization.
In other words, you haven't been paying attention to Japanese politics. We're on our fifth prime minister in four years, just had the DPJ lose massively in the upper house after the LDP lost massively in the previous election, have had several ministers (notably in Agriculture) kill themselves, finally got through the public humiliation of Ozawa's money handling, etc. There's no polarization only in that the population knows the system is broken.
Having many Prime Ministers shows the vibrance of the Japanese political system and the Japanese population's propensity for change.
The Yen continues to buy more goods than it did in the past, so even a 0% nominal return has been a positive real return.
Japans current savings. As for a strengthening yen's effect on an export-driven economy, it's definitely had a negative effect on a person's human capital, that is, the value of their expected earnings over time. Bonuses have gone from being 20%-ish of salary to being non-existent at several companies. On a purchasing power basis, Japanese most definitely perceive themselves as being worse off.
Seems to me that it is overly ambitious to pronounce a country/currency/society/economy dead until it actually falls over and starts stinking.  There are some great arguments about how resilient and cohesive the Japanese are.  Same could be said for other areas of the world as well.  Gauging a country solely by its "GDP" and such clap-trap is misleading.  Are they healthy?  Are they content?  Are they focused?  Are they secure?  Maybe a "GDA" is needed:  Gross Domestic Attitude.

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