All Topics / Overseas Deals / Japan (and its Real-Estate market) Rides Again

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  • Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Interesting post, which I mostly agree with – structural reforms are needed to support the monetary easing policy, which is exactly what Abe's government is trying to form these days.

    Quote:
    …the bundle of monetary and fiscal measures might be suitable for stimulating the Japanese economy in the short term. But if these are not flanked by far-reaching structural reforms, any positive effects would ultimately turn into a straw fire…

    Agreed, as Abe's been promising from day one, and slowly delivering – it's just that his pace and mentality, being Japanese, isn't much to the liking of the "fix it quick" advocates from the West. We've discussed this previously – you can't turn Japan's farming industry on its head and strip its useless subsidies overnight – you'll be catapulted out of office in a heartbeat if you do (to name just one such example) – but slowly preparing the groundwork for such a reform with statements such as "we aim to revise the farming industry to render it competitive and modern" means that's exactly where he's headed.

    Quote:
    …"A rise to over 25%” in the consumption tax “is ultimately needed to stabilize the nation’s finances,” Mr. Oguro said…"

    That's only if the tax hike is the only stabilizing component of the agenda. It's not (see above example and the rest of the announcements, even further above). There'll be more to come, guaranteed – but again, you'll have to pace down to Japanese frames of change – they're not as quick as they are in the west. Neither are corporate spending habit changes, for that matter.

    Quote:
    …The new salvation religion being preached in Japan …is this: prodigious money-printing will devalue the yen, causing exports to skyrocket and imports to shrink. The resulting trade surplus will save Japan…"

    No, that's not the mantra, it's actually far more detailed than that, with QE and financial stimulus being just part of the process – the rest, as demonstrated well these past few months, consist of structural reforms, including a much needed boost of the workplace in the form of women returning to it (75% of women, which are more than 50% of the population are currently not), further immigration reforms, corporate tax re-structuring, as mentioned in the post above, and other components elaborated upon in this discussion and others. Richter's simplistic, cynical view, which you share, is just that – simplistic and cynical. While I agree that 2% annual growth is over-optimistic, as are the timeframes and general rosy view the government tries to "sell", it's also very far from the total collapse some predict. Other, more balanced viewers, like Soros, GS, Deutsche Bank, Switzerland's largest bank and many other are already voting with their funds and will continue to do so. While Abenomics may not be "salvation", it's certainly the best chance at a reasonable and calculated return to growth that Japan's had for several decades.

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    And a few more updates from the last 2 months – https://www.moodys.com/research/Moodys-changes-outlook-on-Japans-real-estate-sector-to-stable–PR_277176?goback=.gde_2060426_member_243882374

    Quote:
    …Moody's Japan K.K. has revised the outlook on Japan's real estate industry to stable from negative.The change in the sector outlook reflects the appreciation in the values of commercial properties, as well as the increasing rents for new office buildings and the stable rents for properties such as logistics, retail and residences…Since the beginning of 2013, the move by Prime Minister Shinzo Abe's administration — which came into power in December 2012 — and the Bank of Japan to ease monetary policy has fuelled hopes that the country's inflation rate will increase. This expectation has in turn boosted property prices, a trend Moody's believes will continue over the next 12-18 months…Furthermore, because the supply for new office space is likely to remain limited for the next two to three years — especially for high quality and earthquake-resistant buildings –demand for Japan's leasing market for newly constructed office space will be strong…expectations of a continued increase in property prices have enabled J-REITs to expand their property portfolios by tapping equity markets to fund property purchases, given the improvement in investor sentiment…increase in inflation and a stable population count in Japan's major cities — such as Tokyo, Osaka and Nagoya — will support the stable outlook…

    http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=356308

    Quote:
    …Japanese factories put in an unexpectedly strong performance in May, data showed, a further sign that the world’s number three economy is picking up as Tokyo embarks on a huge drive to boost growth…

    …The figures showed industrial production jumped two per cent in May from a month earlier and add to an improving trade picture as exports to the US and China surge on the back of a weaker yen. The rise was the best since December 2011 and beat expectations of a 0.2pc uptick…

    http://in.reuters.com/article/2013/06/21/japan-survey-idINDEE95K04V20130621

    Quote:
    …A rising number of Japanese firms are expecting profit growth this business year on a weaker yen and improving consumer sentiment, with recent volatility in financial markets having little effect on most earnings outlooks, the Reuters Corporate Survey showed.

    The proportion of Japanese companies expecting a modest climb in profits ticked up to 48 percent, 1 percentage point more than three months earlier. Those predicting a steep rise in earnings jumped to 12 percent from 7 percent, the survey showed.

    Corporate outlooks have become much rosier on the back of bold new policies from Japanese Prime Minister Shinzo Abe that have served to weaken the yen since late last year, boosting  exports. Exports last month rose at their fastest clip in more than two years……Electronics, machinery and petroleum companies were also among the firms saying they were seeing a pickup in demand. Although concerns about how soon the U.S. Federal Reserve will begin to wind back stimulus helped to pushed the benchmark Nikkei 225 stock average into bear market territory last week, 61 percent of firms responded that stock market moves over the last month or so had only a marginal impact on their outlooks

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of EngeloRumoraEngeloRumora
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    Hey guys,

    I stopped reading after the 10th post hahahaha

    Just wanted to say I love the passion from both sides haha

    Have a great day :)

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Mate, this discussions got close to 5000 views, and is often first page on google for "Japan real estate property investment" – passion pays, in life and business both ;)

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of EngeloRumoraEngeloRumora
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    haha love it mate

    You just gave me an idea. Ill stir the pot on a topic to get views lol

    Have a great day mate :)

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of FreckleFreckle
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    Ziv wrote:
    The figures showed industrial production jumped two per cent in May from a month earlier and add to an improving trade picture as exports to the US and China surge on the back of a weaker yen. The rise was the best since December 2011 and beat expectations of a 0.2pc uptick…

    How about we try some real information rather than the MSM BS you dredge up.

    NOTE THE SOURCE!!!! Japans own  government data doesn't support your story.

    Go to their stats page and you see their forecasts for the remainder of this year are negative.

    http://www.tradingeconomics.com/japan/industrial-production

    Profile photo of FreckleFreckle
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    Ziv wrote:
    .A rising number of Japanese firms are expecting profit growth this business year on a weaker yen

    Who'da thunk it.

    Jeez man. Japanese companies with off shore production and earnings in foreign currency look like their profits are better because they convert it to a debased yen. Problem is their export prices are up, volumes down and foreign currency earning decreasing on tighter markets. 

    Balance of trade is a dog…

    So we now have an economy that will become dependent on the CB tit (Y70 trillion/yr) to survive. 

    Economic reality has been turned on its head where MOAR debt somehow translates into a path to financial success and freedom. Japan's economy is an overburdened mule with ever more debt loaded onto her. The only way she can keep on going is to give her a periodic steroid shot in the arse to keep her going. Sooner or later though she'll drop to her knees.

    Profile photo of FreckleFreckle
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    Ziv wrote:
    …The figures showed industrial production jumped two per cent in May from a month earlier and add to an improving trade picture as exports to the US and China surge on the back of a weaker yen.

    An improving trade picture……you gotta be kidding me.. 

    Japan on Thursday released trade data for the fiscal year through March, which showed that exports to the US rose 10 per cent from a year earlier to Y11.4tn ($116bn), while shipments to China slipped 9 per cent to Y11.3tn.

    If that's surging (China) I'll eat my hat. But wait what's that about the US you say… oh no!!! their Durable goods PMI is crashing… oh wo is me…

    Moments ago the Commerce Department reported the latest Durable Goods numbers which were a total disaster: the headline print plunged by 7.3% on expectations of a -4.0% decline driven by a drop in Airplane orders (to be expected following last month's noted bumper Paris Air show spike as Boeing reported only 90 new plane orders compared to 273 in June). Well, airplanes orders did indeed slide by 52.3%, but it was weakness in Transportation (-19.4%) and Computer (-19.9%) orders as well as Manufacturing (-9.8%) that took the market by surprise. This was the biggest miss to expectations since August 2012.

    Article

    So let me see if I've got this right. Japan is going great guns even though it 2 largest markets are tanking. Sounds about right in this BS world.

    Profile photo of FreckleFreckle
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    Re post 81

    Can't say I agree on the timing thing although I think we are on the same wavelength to a degree with everything else. They didn't muck around when it came to debasing the yen or shoving truck loads of QE into the system to juice the markets. The reality though is time regardless of cultural norms. They can't do another 30 years of jigging around with things hoping the big fix will somehow fall into place. Their growing debt burden has to be addressed in the very near future or this thing will rotate out of their hands and that won't be pretty.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Quote:
    Japans own  government data doesn't support your story

    It does, actually – you're presenting a YOY graph, which is a nice little demagoguery trick, considering the fact that you're comparing the current industrial production to that of the post-tsunami era, when the country's biggest re-construction blitz was on. However, if you compare May's numbers to April's you'll see the data is quite accurate (2.3 actually, even better), and furthermore, that, while it's dropped slightly in June, it's still better than it's been since November last year. Nice try though, I love how you play with those graphs.Here's another guy who's good at that, only he's presenting things on the other end of the scale, using, surprisingly, identical colorful pretty pictures, much similar to yours (let me guess, he's an idiot, since he doesn't agree with you and Bass) – http://www.businessinsider.com/japan-is-never-going-to-default-2012-5

    Quote:
    …his [Kyle Bass']  fund seems to be doing very badly… lost 29% of its value in April, and has really been getting clobbered since inception… given how Bass has structured his trades, and given the performance of said instruments (a series of currency and bond derivatives designed to profit in a Japanese demise), over the past year…the analysis is totally simplistic and incorrect…

    debt-to-GDP just doesn't tell you anything about interest rate risk or credit risk…for major economies, there's actually a slight negative correlation between debt-to-GDP and yield on the national 10-year bond…

    There's no connection between rate sustainability and domestic/foreign borrowing…It's fun to look at a chart like this, showing that only Japan has more debt than Greece, and to conclude that it's going to implode, but extrapolating from Europe to anywhere else, where countries borrow in their own currencies, and have their own central banks, is a recipe for disaster…No doubt Kyle Bass will keep pumping his Japan trade for awhile, but the logic is badly flawed, and it is never going to pay off for him…

    Get it? And here's the best part, which I've been harping on since this endless discussion started – couldn't have said it better myself –

    Quote:
    True sovereign bustups are not the result of accounting or numbers, but the result of some kind of social/political disfunction. Japan is arguably the most stable society in the world, with low unemployment and a functioning economic and political culture. Thanks to the country's population dynamics, Japan isn't a growth dynamo, but there aren't even the vaguest hints of instability.

    And this is really what you're constantly failing to see, sticking to your numbers, graphs and comparing the growth dynamics of ice lettuce to sumo wrestling yokozuna charts till the cows come home – Japan is a socially cohesive country and community, with a deep sense of union and mutual responsibility unparallelled anywhere on this earth. While it may lack in innovation, population growth and/or flexibility to what you'd like to see, it's also nothing like Greece, the USA, Portugal, or any other country on the bankruptcy lists where people hit the streets, loot, burn and pillage at the first sign of trouble. Japan shrugs and prevails, and will continue to do so in the long run, even when things go downhill, as they undoubtedly do anywhere in the world. They support each other – from the man on the street to the CEOs of the world's biggest corporations – of which it still has a great many, whose wealth is committed to their country and peers, regardless of where their factories may lie. When Sharp needs a bailout, Sony, Hitachi and Toshiba are there. When Abe wants to create inflation and growth, corporations comply and raise employee wages IN ADVANCE of such occurrences, in order to stimulate them pro-actively. When over 20,000 perish in a natural disaster that levels entire prefectures, organized crime syndicates work hand in hand with grandmothers and grandfathers to rebuild, days before the first official rescuers even arrive at the scene. When you understand how the Japanese mind works, you'll understand why, no matter how hard the times may be (and they have been for the last 15 odd years, this is actually the brightest moods in Japan have been since the early 1990s), the country and its economy will carry on.They don't call this idiotic gamble the widow-maker for nothing. Bass (and you, if you've been playing his game), is about to find this out the hard way, I believe. 

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of nicpascalnicpascal
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    Fantastic argument!!!… You two possess a certain superior intelligence ill afforded to most common people. I myself am lost amongst the Jargon, rhetoric and competitive drive that you both exhibit. I'd like to ask however…  To date, what has been achieved besides stroking your own ego's?

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Not sure what you mean by that, cynicism aside – this forum's all about property purchases overseas. The economies of the countries involved are a major consideration in such investments, and the number of views on this thread suggest people are finding interest in it. Personally, its also translated into some good business and connections for me, and despite our differences, I also learn alot from freckles posts, whether I find them valid or not, since he's not the only one with these opinions.

    from my perspective, as someone who is offering the facilitation of property purchases in Japan, the purpose of posting this thread initially was to gain exposure and interest, and to offer what I think is an exciting and profitable alternative to those who consider investments in other countries. Freckle obviously disagrees, and I disagree with his disagreement, and so it goes…

    if you don't think divulging information about overseas investment scenarios in an overseas deal forum is relevant, why are you here?

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of EngeloRumoraEngeloRumora
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    Bloody hell,

    I wish I could compose comments as well as you guys lol

    Have a great weekend ;)

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of FreckleFreckle
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    nicpascal wrote:
    To date, what has been achieved besides stroking your own ego's?

    I use to stroke my ego quite a bit when I was younger then I got married and left that to the missus. As we get older I find I have to do more of the ego stroking of late.

    As to what has been achieved well how's Ziv going to become rich and famous if I don't help him improve his search engine rankings and general industry exposure?

    Profile photo of FreckleFreckle
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    The YoY vs MoM is simply semantics in the scope of this discussion. There's quite clear evidence that Japans industrial base is under substantial stress.

    Bass and hedge funds. I think something like only 5% of HF's have beaten the market to date this year. Something like 80% have not beaten inflation or lost. Bass like other HF's have their irons in many fires and use complex hedging mechanisms that don't always tell the whole story. You'll have to point to a reference re Bass's fund down 29%. He runs 11 at last count. He's said for some time they're reducing risk and positioning for a downturn so I'm not sure where this 29% report comes from or what it refers to.

    The Japanese culturally stoic characteristic is, during good times, an advantage but in tough times it's their Achilles heel. It served them badly at the end of WW2. They took far more damage than was necessary and they'll grin and bear it again this time around as things literally fall to pieces around them. The idea that business is lifting wages on a broad front is a myth. Token at best. 

    We've covered this aspect of Japanese culture before. Their propensity to cover over the cracks in society and carry on as if things are all well is a character flaw that will only see unnecessary misery for those in need of help. A growing mental health problem and one of the highest suicide rates in the world does not suggest a society any better able to deal with its problems than anyone else. The Japanese are simply better at pretending all is well and putting a smiley face on things.

    Interesting to note Asian emerging economies are crashing at the moment. India and Indonesia are in big trouble. The last time we saw a crises in Asia Japan struggled to cope.

    I expect to see economic conditions worsen in Japan in the last quarter but I'm sure the MSM will somehow put a positive spin on things. MOAR QE on the way by the bucket load. 

    Yep this all going to end well.

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    32-Year-Old Homeless Man Found Dead Outside Japanese Arcade

    Japan does have a large homeless population—something that visitors are surprised to discover. South Osaka and parts of Tokyo, for example, is populated with cardboard and blue-tarp covered shanty towns (see above). Generally speaking, the country's homeless, however, do not beg for spare change as it's not only considered degrading. Moreover, many Japanese people seem unwilling to spare a few yen

    Yep Japan is really good at looking after one another…. not!

    Profile photo of FreckleFreckle
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    Ran across this at TP but reposted from here…http://the-japan-news.com/news/article/0000506686

    Land prices in Japan rose at 66% of the 150 locations surveyed as of July 1, compared to April 1, reported the Land, Infrastructure, Transport, and Tourism Ministry, the first time since the financial crisis that over 60% of the locations had price increases. Prices remained flat at 27% of the locations and fell at 7%. The report fingered jumping real estate investment, fueled by the flood of money from the Bank of Japan. As we have seen for months, Japanese REITs, private equity funds, and foreign funds have jumped into the game and are driving up prices in the three largest metro areas: in Tokyo prices rose at 69% of the locations, in Osaka at 64%, and in Nagoya at 100%. Outside of the top three metro areas, it didn't look so rosy: land prices rose at 46% of the locations, remained flat at 34%, and dropped at 25% – thus the majority outside the metro areas were flat or down.

    Profile photo of FreckleFreckle
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    Now who'd a thunk it.

    World's 10 biggest economies, India at No 3

    Japan 4th!!!

    Things are going well what with a potential rerun of the Asian Crises just around the corner.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Quote:
    …You'll have to point to a reference re Bass's fund down 29%…

    http://www.businessinsider.com/whoa-kyle-basss-performance-really-is-that-disastrous-2012-5

    Quote:
    …copy of his performance update May 3.

    From the report…

    JMOMF Tranche H

    January 2012 -7.89%

    February 2012 +6.84%

    March 2012 +2.13%

    April 2012 -29.32%

     

    Year to date 2012 -28.96%

    Inception to date -60.77%…

    And here's another – http://www.valuewalk.com/2012/05/kyle-bass-japan-macro-fund-down-29-for-april/

    Quote:
    …He has purchased Credit default swaps and shorted Japanese Government bonds, according to statements and people familiar with the matter.

    So far the trade has been going in the opposite direction. According to our source, Bass’ Macro Opportunities Master Fund is down 32% in April alone.

    January performance was -8%, February 7% and March 2%, and year to date -29%.

    Since inception in July, 2010 the fund is down 61%…

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Dude, you're contradicting yourself again – First you say

    Quote:
    Interesting to note Asian emerging economies are crashing at the moment. India and Indonesia are in big trouble.

    , then you immediately go to

    Quote:
    World's 10 biggest economies, India at No 3 Japan 4th!!!

    Well, here's the real picture about India – New York Times‎ – Rupee Continues Decline on New Evidence of Weakness in Indian Economy

    Quote:
    …An HSBC survey of purchasing managers at manufacturers across India, released on Monday, showed them to be their gloomiest since March 2009, at the bottom of the global economic downturn…

    Financial Times – India economy: gloomy forecasts

    Quote:
    …India may well be facing its worst economic crisis since the 1990s and confidence is worryingly low. To make matters worse, on Friday the government announced the weakest economic growth data in four years with GDP expansion down to 4.4 per cent in the three months to June. In response, several banks have slashed their growth forecasts, some by over 1 percentage point. It’s looking pretty grim…

    Ziv Magen, btw, said it as early as a year ago, and then a few more times – here's the last time I said it, before I grew bored (glad to know the world's caught up) – http://www.biggerpockets.com/renewsblog/2012/11/23/corruption-black-money-in-india-australiaus-court-foreign-investors/ India is corrupt, unstable, and has absolutely nothing going for it aside from sheer numbers of (starving) people on the street – to compare it's economy, business environment or homeless situation (what a joke!) to Japan is utter nonsense – India's a cesspool of poverty, with unfathomable rich/poor gaps – while Japan's one of the world's most socially equalized countries, in spite of your blabber (I strongly suggest you abandon that particular line, because you're going to embarrass yourself, trust me on this one). But yes, the world's second largest country by population has, statistically, managed to finally overshoot Japan, which has 10% of its population. Ra bloody ra. Your point? Incidentally, when did you move from "Japan is doomed" to "Asia is doomed"? Or is this part of the general "the world is doomed" theme? Here's what people are saying about Japan these days (I know, I know, they're all idiots) – LA Times – Japan's Economy Bouncing Back, Offering Model for US 

    Quote:
    …The shock-therapy policies of Prime Minister Shinzo Abe have helped Japan's economy expand for three straight quarters at a pace faster than that of the United States.

    Its stock market has surged more than 50% in less than a year. Leading automakers and even long-struggling electronics firms such as Sony Corp., beaten down by Apple Inc. and Samsung Electronics Co., are reporting a jump in profits…

    Guardian – Japan's Pump-Primed Recovery Proves US Deficit Hawks Wrong 

    Quote:
    …The employment to population ratio, the percentage of adults who are working, increased by 0.6 percentage points in Japan between the last quarter of 2012 and the second quarter of 2013. By comparison, in the United States it rose by just 0.1 percentage point. The 0.5 percentage point difference would translate into another 1.3m jobs in the United States – not bad for six months work.

    At this point, America's deficit hawks are jumping up and down screaming that the boost to Japan's economy is just a "sugar high", and that it will soon face a horrible collapse as payback. Of course, anything can happen in the future, but we just don't see any real evidence of the deficit hawks' doom story as of yet.

    If Japan's economy is about to burst under its huge debt load, the financial markets apparently aren't wise to the trick. The interest rate on ten-year Japanese treasury bonds is less than 0.8%. This means that investors are putting tens of trillions of yen on the line, betting that Japan's government and economy will not implode.

    The low interest rates translate into to a low interest burden. Japan's net interest payments on its debt last year were under 0.9% of GDP. (The payments would be even lower if we deducted the money refunded from the central bank for interest it received on its bond holdings.) By comparison, in the United States, interest payments were over 1.0% last year; and in the bad old 1990s, interest payments exceeded 3.0% of GDP. Even if interest rates soared in Japan, this would be offset by a plunge in the market value of the country's debt.

    In short, it is hard to tell a story about how Japan will suffer as a result of the measures its government is taking to boost growth and create jobs. These policies are 180 degrees at odds with the deficit fixation that dominates Washington policy debates. The deficit hawks have made enormous progress in reducing the government deficit over the last few years. The 2013 deficit, measured as a share of GDP, is less than 40% the size of the peak deficits in 2009 and 2010.

    However, the sharp pace of deficit reduction has meant less growth, fewer jobs, and more unemployment. That might mean that millions of people won't have enough money to support themselves and properly care for their children…

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

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