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January 23, 2013 - 1:01 pm

Sorry freckle, not ignoring you, just a very busy last week in Japan before flying off to Israel and Europe, running around like a headless chook atm. Will get back to this thread sometime next week, after I land and settle down at my next destination.

incidentally, I met with mr Roland Thompson, director of North Asia for Credit Suisse, for lunch yesterday, and he had some very interesting observations regarding many of the issues we brought up here (of course, with him not sharing your pessimism, you'll probably label him a village idiot too ) – I got his permission to quote him, in any case, (was thinking about you initially, but might make an interview down the track out of it and publish online) so I'll post some of his thoughts, as well as my own replies to your points, once I get my mind, jetlag and notes in order )). Bear with me…

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January 19, 2013 - 10:06 am

Nice…yeah, I better chill out, us parochial, eternal optimists are known to work ourselves into early graves through heart attacks (or bush fires we ignore, whichever comes first )

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January 19, 2013 - 7:58 am

Don't be ridiculous Freckle, go back and collate all the links to news items, opinions and statistics that I've posted into this lengthy discussion, you must be either senile or, as I suspect, simply ignoring the ones that don't suit your perspective – like in the case of renewable energy ("I don't believe it'll work" was your thorough analysis of the sector once you realised your assumptions about the major players in it were completely off the mark) or service/household robotics (simply ignored the new information and moved on), your response to facts that don't suit you are to either proclaim them to be biased opinions, rantings of village idiots etc (eg, anyone who doesn't concur with your views) or simply ignoring them altogether .

as for your investment strategy – as mentioned (again…???) – to each his own. To assume that you're the only one here who "collects memories" or "lives life to the fullest", is geographically mobile and free of physical attachments, or whatever other laurels you're trying to crown yourself with here, is the most arrogant and ignorant assumption you've made in this discussion to date. I won't even begin to argue with that one, since I think it's beneath both of us, except to say that, except for collecting, cherishing and enjoying the beautiful moments this life affords me, I tend to also try and leave something behind me, for my children and other loved ones to enjoy, be it memories, experiences, values, cash, assets, connections, or whatever other treasures they (and I) may cherish. And while I enjoy spending my acquired collectibles as such, I also greatly enjoy passing the riches I've accumulated, mainly mentally but also physically, to those who come after me, be it immediate peers or more distant ones such as my community, species and planet.

So like in investment, it takes all sorts. Enjoy your roller coaster of doom ride, man, I can see you're having a fab time and, while we tend to agree on what this world is generally steering towards, I also prefer to try and leave it a better place, in between the nihilism spasms and self gratifications and the righteous eye-rolling and throwing up of arms in exasperation at the foolishness of it all. give me a break, please. That last particular high horse was a bit too high for my tastes.

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January 17, 2013 - 6:49 am

Freckle wrote:

… just a collection of miscellaneous comment with little context and partial truths..

Yes, well, I felt the same way about many of the arguments you've put forth. I'm guessing this is mainly because we have quite differing views regarding the world, international property investment and Japan's place in both.

as mentioned, time will tell, I really don't think we're going anywhere with this.

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January 16, 2013 - 11:55 am

Oh, wow! Congrats, dude! Been wondering where you've absconded to where'd you go for your honeymoon? 

(Got our own coming up, almost six months after the act – too bloody busy – Spain and Italy, here we come!)

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January 16, 2013 - 4:35 am

Agreed on the added layer of risk (or opportunity) inherent in all overseas property investment,

I have to disagree about the gain/loss perspective though – a loss is only a loss when realized. Once a currency is exchanged into another, the rates make no difference – unless its transferred back. That's when loss or gain can be claimed as such, not earlier. It may be just a point of view or semantics issue theoretically and on balance sheets, but for those who deal in foreign currencies on a daily basis, such as international property investors, its a very significant difference.

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January 16, 2013 - 3:57 am

The exchange rate is only an issue when the investor wishes to transfer yields back home – as mentioned time (and time, and time, and time) again – overseas property investment is a dynamic endeavor, and not to be undertaken with funds that would require liquidation in a hurry – this is as true in Japan as in any other country in the world. To think that people investing in the US, Singapore or Europe are somehow less vulnerable to exchange rate fluctuations is outright wrong – people invest overseas with hedged funds that will not be needed in a hurry, and capitalize on market conditions – when the economy and rates are low, they purchase more property, renovate, or otherwise utilize their funds in the destination country.

when the situation improves, they bring their money back home and make a(nother) neat profit in the transfer. This sometimes takes one year, sometimes five, and sometimes a decade – similar to a super fund which you can't touch until you retire, only you have to go by market fluctuations in the home and destination countries instead – this is what overseas property investing is all about, and why it's so important to steer your portfolio by cash-flow rather than wild speculation, which would leave you losing money when the destination economy fluctuates (3-4% turns to -3-4%, instead of 10-12% turning to 2-6%, for instance, to take an extreme example).

The approach that dictates that one should only invest in a fail-safe, never fluctuating, rock-solid currencies and nowhere else is, quite simply, completely contrary with overseas property investment of any kind. The reason some foreign investors made a killing in the US for the past five years, to take the most common sample these days, is exactly because the economy turned to ****. And the reason they're now enjoying these profits in Australia is because it slightly recovered. This cycle will continue on and on (or seesaw on and on, however you choose to view it), with more volatility as the world becomes more and more intertwined, in my opinion (a wholly different discussion, albeit a very interesting one).

what you label as risk I see as opportunity – provided one is well positioned, not leveraged beyond recognition, and not in a hurry to liquidate any funds. This is the strategy I stick by, and advise my clients to stick by as well. It's been working fine, and I believe will continue to work fine when the JPY devalues again, for however long it may be. The same goes for US, Europe, or anywhere else – but Japan has the best potential to provide a hassle free and strife less environment of doing so, regardless of economic circumstance, in my belief.

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January 16, 2013 - 2:27 am

Thanks for those (although one doesn't open for me) – the brilliant discussion in the comments sections actually illustrate my point perfectly – here's one sample –

Quote:

…Japan's fiscal policy in the 1990s did not involve "massive" Keynesian spending plans…Japan had some mild to moderate Keynesian stimulus from about 1993 to 1997 (the actual fiscal impact of the early ones is grossly exaggerated). And the result was mild to moderate growth from 1993-1996. Japan was not in recession from 1993-1997, but had a serious deleveraging and banking crisis, and debt deflation problems. But then from 1997 Prime Minister Ryutaro Hashimoto imposed sharp fiscal contraction and plunged the country into recession…Japan's first experiment in austerity policies began under Prime Minister Ryutaro Hashimoto (1996-98). Severe spending cuts were seen as needed to rein in budget deficits caused by previous efforts to recover from the 1991 Bubble collapse. Recession followed quickly. Tax revenues collapsed. The national debt increased…Under Prime Ministers Keizo Obuchi (1998-2000) and then Yoshiro Mori (2000-2001, Japan returned to fiscal expansion policies and the economy recovered rapidly…A major consequence of the recession induced by fiscal contraction was that the Japanese budget deficit soared by 68% as tax revenue collapsed. This must be counted as another fundamental reason why Japanese public debt soared so badly…When fiscal expansion was applied again on a large enough scale in 1998 the recession ended and growth resumed…Austrian solution of liquidationism would have induced utter economic collapse like the Great Depression, far worse than anything that actually happened…

As for the JPY/AUD fluctuations – yes, thank you, we actually monitor those as well, believe it or not

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January 16, 2013 - 2:18 am

No, i beg to differ, what this article says is that there's a wide range of mediums between the Austrian and Keynesian economic approaches regularly preached around the globe. There's no "one sure and absolute way" that works anywhere and for anyone to correct financial woes, as the last few years have demonstrated time and time again. I think this is best summed in this short observation of Krugman's –

"…That said, Japan never had the kind of employment and human disaster we've experienced since 2008…"

This in spite of the fact that the early nineties bubble burst and subsequent economic plunge should have turned them into the worlds worst civil war zone, if Greece, the Great Depression in the US, and Europe post WW2 are anything to go by. The Japanese concept of "being victims to their government's policies", as you put it, is quite different from that of other countries. While this works both ways (they'd be very hard pressed to suspect corruption or collusion with business, to name one of the downsides), it also means that they're quite far from the hands up, run for the hills, burn tires in the street that tends to happen invariably in the west at the first sign of fiscal crisis – and as a result, are also far more resilient to it, since they tend to work as a collective that stays cohesive in hard times as well as easier ones, and doesn't break into chaos at the first sign of trouble.

as freckle puts it, the economies of the world are a seesaw structure (I see it more as a circle running back on itself, but from a subjective timeframe perspective the differences are minute). If a depreciating yen will help exports for a time, the Japanese people, including domestic bond holders and savers, will take it in stride, and wait for better times, guaranteed. There will be no national or financial collapse, rioting in the streets, or even bank rushes. There will be muted complaint, bitterness, and resignation, then a tightening (what is called here the "shoganai" mentality – very loosely translatable as "ce la vi" or "what can we do", normally followed by unbelievable perseverance. Something to learn from, for those, like Krugman's, who have the balls to admit when they're wrong).

Incidentally, this is, again, why I believe the renewable energy initiative will be successful here as well, as mentioned earlier – because in this case, as opposed to the above, the Japanese public has actively, loudly and internationally spoken against its government policies – this was enough of an event (and you won't see this happening on the financial front, I promise you) for Japan inc. to take notice and invest a huge proportion of its wealth in renewable energy initiatives that are rapidly transforming it into a global clean-tech nation of not only world leadership, but gargantuan proportions even in an absolute perspective. Again, to ignore the significance of the Fukushima event and its effect on Japanese mentality is a severe error. Things are changing in Japan, and government debt, while not the least of Japan's urgent issues, is also very far from the top among them.

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January 15, 2013 - 2:33 pm

I'd hardly call Paul Krugman, a Nobel memorial prize in economics sciences winner, an anonymous village idiot. And while I'm not one to crown someone the oracle of Delphi just because they hold a title (or several dozens, in his case), I actually agree with every word.

(you can find the original article on the NYTimes archive, as the economic times credits at the start – it just loads a lot better there)

you seem to care a lot more for who's writing than what they actually say, don't you? I didn't expect this to be the case with you, to be honest.

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January 15, 2013 - 7:47 am

Here's another commentator who doesn't agree with the "follow foreign example at all costs" policy, stating, and rightfully so, that it hasn't exactly served the rest of the world all that well, and also pointing to the fact that Japan has done well (and not "barely survived", as freckle puts it) on the last few rounds of economic strife –

http://economictimes.indiatimes.com/news/international-business/japan-shows-the-world-how-to-come-out-of-economics-of-stagnation/articleshow/18016340.cms

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January 15, 2013 - 7:44 am

I'm not familiar with your family's particular scenario, but the small/micro units we normally deal in cost app. $2,000-3,000 to renovate completely (on a $20-30k 15-25 sqm, built 1974-1995)- not that we ever even had to order a renovation, as we try to purchase in good condition and with good tenancy histories. Additionally, areas out of Tokyo, Osaka, Kyoto and Hokkaido ski villages are no longer dropping – in fact some of them are going up in value (ever so slightly, and only in recent years, but still – http://www.businessweek.com/articles/2012-11-29/japans-property-market-comes-back-to-life).

As in any country, its a matter of where and what you buy.

And even if the value drops (how much it drop below $20,000, I sincerely wonder ), but the investment capital has doubled itself in 16-20 years as a result of super high rental yields in hassle free safety – let it.

regardless of all this, if we're already dealing in wild speculation regarding growth or lack of, as this thread does, here are a few others who think you may be slightly off the mark there (again, I deal in cash flow, but interesting reads nonetheless) –

http://ir.prologis.com/releasedetail.cfm?ReleaseID=732588

http://www.rreef.com/content/_media/Research_RREEF_Japan_Quarterly_Q3_2012_global.pdf

http://www.ft.com/cms/s/0/03affdba-2720-11e2-9863-00144feabdc0.html

this is just in recent months, and these guys are almost late to the party, so to speak. Others such as Goldman Sachs, black stone, Deutsche bank, TPG, and various sovereign and institutional investors have been quietly purchasing since mid 2011, when the first signs of recovery bloomed. I can paste more and more links of course, but you get the point.

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January 14, 2013 - 3:43 am

No argument there, I'm just wondering if "over the next 20 years" will be sufficient if things go south in Asia.

as things stand now, if there's no demand for resources in the next year or three, I hardly see Australia being able to offer much else. I could be wrong of course, I'm no expert on Australia, but the media and government aren't the only ones raising these alarm bells, some fairly "switched on cookies", as you like to call them, have been saying the same things – http://www.marketwatch.com/story/australia-facing-a-hard-landing-andy-xie-2012-10-25

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January 13, 2013 - 10:25 pm

Japan was still Australia's top trading partner in2010…not sure what the status is now. It's not just Japan though, if Asia contracts further, Australia will feel it big time.  That's why it's so silly to be a one trick mining pony like we've been for the past decade or three…

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January 13, 2013 - 2:47 pm

Yes, Japan has deflation, low prices, Chinese prostitutes (although, the amount of prostitution here compared to most other countries in the world is ridiculously minute), migrants and temp workers – and also $20,000 properties generating 10-15% Pre-tax return. What's your point?

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January 13, 2013 - 2:42 pm

Quote:

…dummy spits don't become you…

Honestly, Freckle, I'm actually having fun this time,  (and yes, it was a good thread), but I really think we've covered all bases except the purely hypothetical, speculative points that we're not going to agree on…

Quote:

… I think the probability (but not absolutely conclusively) that Japan is gone for all money if it can't get its house in order…You on the other hand have absolute faith in Japan's ability to pull the fat out of the fire and drag this thing along to eternity…

No, in similar fashion to your "probably but not absolutely conclusively", I also think that Japan, probably but not absolutely conclusively, is doing fine handling its problems, problems that's its well aware of, but simply handling them differently than what you'd like to see them do. Again, stop portraying me as an extremist and yourself as a well balanced, neutral individual. We have different views, but both have equally strong (or equally well-balanced, as you see fit) opinions on the subject, as far as I can see. Your speculation is based on your world view, mine on mine, both with some well grounded basis in facts. Not nearly as clear cut a scenario as you're trying to paint.

Quote:

…As a foreign investment though the risk is extremely high with regard to a stated policy of currency devaluation and a somewhat difficult economic environment both locally and internationally…

Yes, you keep saying this, and it's probably true, but would read the same about half the countries in the world. This is an overseas property investing forum – the people here are usually aware of the risks you're referring to, and again, when considering the long-term approach that should come with property investing when it's practiced correctly, hardly as risky as you portray them to be. Also, as mentioned time and time again, if anyone's trying to make a "quick buck" through purchase, speculative "overnight" capital growth and a quick sale, then you're quite correct – but you've yet to show me where I advertised or recommended such an investment strategy. Considering the fact that most people here are into the US market, Japan DEFINITELY has more to offer cashflow-wise and with a fraction, if that, of the hassle and "get screwed trying" factors. If you want to discuss the risks of investing in property overseas, foreign currency exchange fluctuations and/or the hazards of the current global economic climate, go for your life, but this has nothing to do with Japan specifically, so the thread title is hugely misleading.

Quote:

…Well I'm not really a property guy anymore…

QED. And you spend a huge amount of time and effort trying to tell people on an overseas property investing forum they shouldn't be property persons either. We get the point, man. Really. If you read through some of the less logical and more emotional posts here, particularly from Emma and Alex, who are really passionate about what they do (much the same as myself, except they write about it way better than me), you'll find some of the reasons we're into it so much – they may not appeal to you, and there may be things you enjoy much more and are much better at but, hey, it takes all sorts, and we love getting up in the morning and being challenged the way we do (plus, we're pretty darn good at it ) and no, it's not all about the money, passion and love play a part too (the money's pretty good too though, which leads me to your next argument –

Quote:

…must be better ways to turn a buck than spend half a lifetime leveraged to the eyeballs trying to build a property portfolio based on rental returns that with a bit of luck may provide me with some economic freedom in the distant future…

That's a very narrow and subjective view of ONE particular property investing scenario. I'm no Donald Trump, but I do ok, and haven't borrowed a cent. As for luck – I don't believe in it, sorry – I do believe, however, hedging and diversity, long-term strategies, and positioning myself in such a way that turns opportunity to profit. See a few posts back.

Quote:

… my instincts tell me that the low cost temp accommodation market offers opportunities. It appears to be a growth market if past trends are anything to go buy…

Quite correct, however, due to the areas and population involved, completely rife with organized crime left, right and centre. The net cafe's ("manga kissas") are the only relatively accessible niche of the ones you mentioned above.

Quote:

…Chinese Military On "High Alert" After It Scrambles Fighter Jets To "Counter" Japanese Jets…the Japanese government is considering permitting Japanese self-defense forces' fighter jets to fire tracer bullets as warning shots against Chinese surveillance planes…

Agree, not pleasant, but give it a few weeks/months and I think you'll read about an emergency summit organized by the US or S.Korea (or both), and see a few reluctant handshakes and a freshly inked first draft of a solution document. Both nations have far too much to lose in this day and age. This isn't WW3 you're seeing here, get a grip N.Korea shot a missile over Okinawa and Japan didn't go to war over it, just a short while ago – I hardly think they'll start with China – tracer bullets and water cannons are more their style these days – http://www.reuters.com/article/2012/09/25/us-china-japan-taiwan-idUSBRE88O02C20120925

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January 9, 2013 - 9:32 am

Quote:

buying yen as it falls (and while the BOJ makes a concerted effort to weaken the yen)… crazy…somewhat premature…

Ok, we've gone from "dancing on the edge of a cliff", to plain "crazy", and finally to "somewhat premature". Or, in other words, Freckle wants to buy at the bottom, and anywhere else has too much risk for his delicate palate. Well, guess what, the only way to identify a bottom (not that such a thing even exists on the long term, there are only respective peaks really, with market forces being cyclic), is once it's passed and starts heading up again. To follow through with your logic means never buying or selling any currency – but that's just not the way it works with foreign exchange. You buy at point X, don't sell until things go back to >X, and in the interim try to make that money work for you in the new environment, until such a point in time when you can take it back to Y with profit (that is, unless ALL YOU DO is Forex, and you try to capitalise on every tiny little movement – not my cup of tea, but there are also those who make nice fortunes doing exactly this, and i don't judge them.

As mentioned (far, far) above, my type of investing is not something you'd want do with funds you may need liquidated in a hurry, but property investment, fortunately, is not a hurry game, so no problem there. When I purchase yens, I know I can afford to wait, whether it's 1, 5 or 10 years, before I'll need it back, if at all, so no issue there. While it's in yens and things are down is usually also the best time to buy property at good prices, so win-win all around. Different to your "sit on it until conditions are optimal", I know, but it takes all sorts, and that's fine with me too. I prefer to be more active and hedged, so I can utilise conditions in Australia, Japan or anywhere else I may be positioned, as they happen – you prefer to sit on your gold and silver and AUD and wait for that super duper prime optimal scenario before you act – both fine approaches by my criteria, btw, so I suggest we leave it at that.

Quote:

…up until the GFC where they got absolutely smashed… They managed to claw it back fairly quickly…ever since its been a cat and mouse game of sea sawing currency madness…

That's your perspective. Mine is that this is pretty normal play for a world that's becoming more globalised by the day – you fart in Australia, and the dollar drops three points in the US, etc etc – again, if you wait for things to "stabilise" it might be your grand-grand-children, up on the Martian colonies, who may be able to invest in a single, stable, uni-galactic currency like "in the good old days". I prefer to move a bit earlier than that, for better and worse, but we're rehashing the same argument as above, seriously, let's just leave it at that, why don't we?

Quote:

…I think you're oversimplifying the China dispute… no real sign anyone's backing down to any great extent….

Again, plain wrong – http://nation.time.com/2013/01/03/japans-not-quite-so-nationalist-leader/- I think you're mixing up Pre-elections rhetoric with post-elections pragmatism. Look again.

Quote:

When you describe the public works schemes … you seem to paint these as measures that will pull Japan back to a more financially stable position…they don't in themselves solve many of the problems Japan faces financially…

Never said any of the above, read back and you may notice the parts where I said these are one of a whole arsenal of strategies in the mix, and also the part where I said Japan's an expert at turning challenge to opportunity. Don't extremize (just made that word up) my arguments to make them sound like what you'd like to hear me say, just so you can try to appear neutral and paint me as an extremist – that's demagoguery at its most basic and easiest to refute form, you're smarter than that.

Quote:

…You're well aware that every economy has spenders and savers. Most CB's including Japans are trying to push consumers to spend when they've already spent too much…elements within the populace who are holding on to their hard earned a little longer than the CB bureaucrats would like…

Thank you, that's exactly what I said, and exactly the reason why this "sharp and immediate spike" the article threatens won't happen – because there's a dynamic balance here between what the CB wants consumers to do (spend) and between what Japanese people's, particularly those of the older (ageing) population tend to do so much better than Westerners do (save). In that respect, Japan's ageing population is actually a boon in disguise – their increasing numbers mean that the more the younger generation buys designer handbags, the more they're being offset by the increasingly older population's refusal to spend. Again, a healthy balance in my book.

Quote:

I think you're in the minority there and its exactly that mind set that prevents there ever being a sane sound approach to economic management. Kyle Bass, who's a pretty switched on cookie by all counts, has already indicated the Japanese bond market has about 3 years before things go pear shaped…

Ah, that I would have a dollar for every would-be, switched on cookie of an analyst who's predicted Japan's demise "in 3 years" for the last two decades or so. And again, as mentioned above, you sit on your hands and funds and wait for it to happen while hoarding your savings – I'll try to capitalise on things as they pan out. Different approaches, both viable. Can we call it a day now?

Quote:

… It seemed to recover from that with strong exports and an equally strong currency… The question now is could Japan take a 3rd hit and survive…

Not in my view. In my view the question is how hard the inevitable hits on global economy (and there is more than just one additional hit coming in the next decade or so, I'm guessing) will affect Japan, how prepared it will be, and what measures will be taken before, during and after those hits. I have faith in Japan, you have faith in no one, I have willingness to ride things out with them when they happen, you have willingness to do nothing and put your money nowhere near any economy and stash it all under your mattress – again, both legit, let it go.

Quote:

If you and I were neighbors and we were both standing on our roofs with hoses watching a bushfire come our way you'd say, "wind'll change".

Me. I'd say, "might do". Then get in my car and bugger off because I only rent the place and I moved my stuff out the week before because someone said, "good chance we'll get a bush fire up here this year. Too much fuel around and good fire conditions."

No, I think it's more that I realise that there's no similarity whatsoever between physical jeopardy and well-hedged, distributed investments in a variety of vehicles. I'm happier to try and capitalise on events if and when they occur, but won't let the potential or hint of any possible downturn stop me from being alive and trying to make the best of the world around me in the interim. Beats sitting in the dark and crying "wolf" till one of the myriad of wolves comes around (US, Europe, Japan), just so I can say"told ya so" and feel all good about myself. I prefer to lead a bit more of an active life, but maybe that's just me.

Seriously, man, can we call it a day now? We've moved from facts, to speculation, to pure philosophy…this has got to be getting boring for people (myself included). Can't we just agree to disagree?

Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone Me

Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

[Ziv Nakajima-MagenParticipant@zmagenJoin Date: 2012Post Count: 523]

January 8, 2013 - 4:24 pm

Discussion 1 –

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What makes you think there is a dollar in buying Yen now when it's clearly loosing value…The end is in sight for the Yen as we know it. Japanese currency collapse is now seen as real possibility…

And yet, here you write –

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The Yen will not depreciate strongly because competing CB's won't let it…

Can’t have it both ways, Freckle, and change reality whenever it suits you, at least not three days apart and in different posts on the same forum…make up your mind, which is it?

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Re-engage with China. Obviously sensible but it'll take decades to mend that fence and restore business activity to anything like past levels…

Pure speculation, based on not even one single fact. I actually think the course taken by both parties (DPJ going nationalist, LDP going apologetic), actually gave them far more room to maneuver, and was necessary machismo faced with China's escalating bullying and Sheriff playing, while at the same time giving the masses a chance to wallow in pride a bit, which will now enable both countries to reach an agreement without too much opposition from within. Any other course would have caused far more damage, in my opinion, and this one actually has the best chance of resuming business as usual within a reasonable timeframe. Also pure speculation, but certainly no less valid than yours.

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Public works programs…The problem with these initiatives is that exacerbate the debt problem not alleviate it.

Quite correct when dealing with public works as a single measure, and un-necessary ones at that. Here, it's part of a whole arsenal of moves, as mentioned, and these works are sorely needed to reconstruct and create jobs in devastated areas (mentally and physically), prepare for the next natural disasters (like the "smart cities" initiatives – http://www.nippontradings.com/japan-real-estate/japans-greener-disaster-ready-smart-cities/), and integrate women and seniors into the work force – all of which Japan desparately needs to do, far before it can hope to tackle its debt problem (which, again, I really don't think is the only measure of an up and coming financial collapse – but more on that below)

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can come up with about a million links from the BOJ and related sources explaining this to you if you wish but I'll leave you with just one…BOJ's money printing is offset by households' cash hoarding

Again, that cyclic logic. You can't claim the Japanese spend too much and hoard too much at the same time. The truth is that they do a fair amount of both, as does any other country in the world, and when they tighten up because things will get rougher at some stage, as they always do anywhere, they'll compensate by starting to spend some of those savings – the "sharp spike" scare theory sober look is trying to sell here is an extremist's version of completely normal market movements over extended periods of time. Whack any two graphs on top of one another and you'll be able to prove the exponential increase in tap dancing is a direct cause of the blue sperm whale becoming extinct. Come on…

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Renewable energy initiatives…Japanese energy sector is considered highly corrupt. The competing forces within this sector will ensure things don't go as planned. To top it off the government needs to pump bucket loads of subsidies into this initiative just to keep it afloat. I expect to see the same problems there as experienced here in Australia…

Except that these aren't the same companies we're talking about here. The renewable energy sector is not composed of and does not involve power companies, but corporations like Toshiba, Mitsubishi, Mitsui, Hitachi, Softbank (Japan's biggest mobile carrier), Nippon Steel and even struggling Sharp, who have already spent tens of trillions of yens (hunderds of billions of dollars) on these initiatives. The reason they did so is because the Japanese people, for the first time in several centuries, have spoken against their government's policies, and not only internally, but internationally as well – to belittle the significance of this turn of heart and compare it to the wishy washy initiatives we've experienced here in Australia is to be blind to reality. This isn't a "fad", it's a revolution for a country like Japan, and to think it can be easily diverted off-track when companies of this magitude have comitted resources of such magniture is not even speculation, it's more akin to blindness.

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If you spend more than you earn you'll go bust. If you borrow till the cows come home and manipulate the books with fuzzy accounting you can extend and pretend for a while but at the end of the day your creditors want their money back…

Yes, except that Japan is nowhere near the end of its ability to borrow or lend to itself internally, and it's mentality and culture allow for the vast privately held wealth that's still contained within it to continue this for a fair amount of time. It's also no fuzzy acocunting or sleight of hand – it's a sense of deep obligation that'll keep the money coming. Similarly, as illustrated above and as I'll continue to illustrate below, Japan's capacity to earn more than it's currently spending, or to spend less than it's currently earning, is far from ending as well.

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While Japan may modify its immigration policy, immigration is unlikely to change significantly while a culturally xenophobic prejudice is allowed to go unchallenged…

Not quite sure what you're on about there – Japan is one of the easiest countries in the world to open a business in, purchase assets in, etc. It's true that it hasn't allowed nearly enough immigration in so far, but all that means is that is has so much more room to do so without any fear of losing anything in the process. And again, the fact that it hasn't acted already on what the world seems to think it knows better than Japan that it needs to do is fine in my book – their calculated and paced approach isn't supposed to please other countries – it's supposed to serve their own purposes, in similar fashion to maintaining a zero interest rate policy.

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Robotics…Nothing extraordinary there. Predicted growth rates of around 5%pa for the next few years

No, I'm actually referring to personal/household service robots, not industrial robots (ageing population, remember?) – more like 150% (http://www.ifr.org/service-robots/statistics/, scroll to bottom graph), and guess who's spear-heading the charge – http://www.channelnewsasia.com/stories/eastasia/view/1232822/1/.html

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…Electric car start ups are going bust left right and center. They need massive subsidies to survive

Toyota and Nissan aren't exactly startups. Do some more reading. In any case, time will tell on this one too.

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The solution is to spend less than you earn and eliminate debt by writing it off…Painful as that may be it will happen anyway. The longer they leave it the more painful will be the cure…

We're in complete agreement on this one – it's just that I think the picture you're trying to paint, as if Japan is doing nothing of the sort, is very far from the truth, and extremist, to say the least. Hope all of the above shows why. In any case, certainly not the "inevitable collapse" you're alluding to – far from it. The first predictions to Japan's financial collapse were made some 15 years ago, and still haven't come to pass. Yes, Enron looked good before it fell too – but you'll need a bit more than speculation, chronic pessimism and fear mongering to convince me, or some of the world's biggest investors, who have been specifically targetting Japan's property market since last year, that this is going to happen anytime soon. While Japan may experience some fluctuations and downturns, as any economy might, particularly in the current economic climate – your predictions are only that – speculations and predictions, and in my opinion, way, way off the reality charts.

Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone Me

Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

[Ziv Nakajima-MagenParticipant@zmagenJoin Date: 2012Post Count: 523]

January 8, 2013 - 3:14 pm

Having serious issues with this new forum interface…would appreciate if the moderators could delete those last nonsense comments ("Enter" refuses to work in this screen, for some reason posting instead of line breaking – doesn't happen in any other website). I'll type my reply in a text editor and paste it here later… 

Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone Me

Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

[Ziv Nakajima-MagenParticipant@zmagenJoin Date: 2012Post Count: 523]

January 8, 2013 - 3:06 pm

What makes you think there is a dollar in buying Yen now when it's clearly loosing value against the AU$

Jap economy is nearing the end of its ability to borrow internally. It will soon be forced to borrow internationally at higher interest rates. The end is in sight for the Yen as we know it. Japanese currency collapse is now seen as real possibility.

Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone Me

Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property