Japan 01 (May 08 - Dec 09)

[millionairemind]

Japan's Inflation Accelerates to 2.4%, Discouraging Spending

By Mayumi Otsuma

Aug. 29 (Bloomberg) -- Japan's inflation rate exceeded 2 percent for the first time in a decade as prices of food and gasoline surged, leaving consumers with less to spend on clothes and eating out.

Core prices, which exclude fresh food, climbed 2.4 percent in July from a year earlier after rising 1.9 percent in June, the statistics bureau said today in Tokyo. Household spending fell 0.5 percent from a year earlier, a fifth monthly decline.

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[ishak]

Japan unveils economic plan as inflation hits decade high
AFP, 29 Aug 2008

Japan's government announced an economic stimulus package worth more than 100 billion dollars Friday to tackle the fastest inflation in a decade and the looming threat of a recession.

The plan includes measures to help consumers, companies and farmers cope with high fuel costs and a credit crunch.

With lending-related measures accounting for much of the 11.7-trillion-yen (107-billion-dollar) package, the boost to government spending is expected to be about 2.0 trillion yen. The government will also consider income tax cuts.

"This package is not a one-off," Economic and Fiscal Policy Minister Kaoru Yosano told a press conference. "It is aimed at continuously supporting the Japanese economy as well as people's lives."

The announcement came hours after official figures showed that Japan's core inflation rate surged to an annualised pace of 2.4 percent in July from 1.9 percent the previous month on the back of soaring energy and material costs.

Japan was stuck in a deflationary spiral for years, but the return of inflation has sparked concern as it is being driven entirely by rising import costs rather than a stronger domestic economy.

The fear is that rising prices will dampen already tepid consumer spending, which dropped 0.5 percent in July from a year earlier, down for a fifth straight month.

Inflation "is depressing consumer sentiment," said Lehman Brothers economist Hiroshi Shiraishi. "People still are used to deflation and now they're starting to see the prices of their daily necessities going up sharply."

The government has faced calls from some lawmakers within the ruling coalition for a bigger injection of public money into the economy, which shrank in the second quarter, raising fears of the first recession in six years.

But ministers have also stressed the need to rebuild the country's debt-ridden finances, saying they hope to avoid issuing new bonds to fund the stimulus package.

Prime Minister Yasuo Fukuda ordered the package as part of efforts to reverse a slump in his approval ratings with elections due by September 2009.

But experts doubted the package will have a significant impact on the overall economy.

"The package may be able to put out some of the sparks caused by rising prices but it is unlikely to extinguish the origins of the flame," said Katsuhiro Hachiya, an economist at the Japan Research Institute.

"What the Japanese economy needs are not makeshift measures but action to drastically change the economic structure so that Japan can survive the rapidly changing circumstances in the global economy."

The latest snapshots of the economy were not entirely gloomy.

The unemployment rate dipped to 4.0 percent in July from 4.1 percent the previous month, while industrial production unexpectedly edged up 0.9 percent.

Production is expected to fall by 2.9 percent in August but increase 3.4 percent in September, the government said based on a survey of manufacturers.

Until recently Japan's economy, the second largest in the world, had been recovering from a slump stretching back more than a decade.

A contraction in the second quarter of this year has left the country teetering on the brink of its first recession in six years, although most analysts expect the economy to avoid a deep or prolonged slump.

Japan's public debt is already the highest among industrialised nations after a series of emergency spending packages in the 1990s, leaving the government little room to boost spending without setting back fiscal reform efforts.

Fresh spending of up to two trillion yen "is insignificant", argued Richard Jerram, economist at Macquarie Securities.

"Signs that economic activity is proving fairly resilient, as well as growing hope that inflation is close to a peak, means there is little sense of desperation among policy makers," he added.

[ishak]

Japan plans flat tax cuts 08/09, July housing starts up 19%
BT, 29 Aug 2008

Japan's cabinet and ruling parties have agreed to launch flat income-tax cuts in the current fiscal year ending in March 2009, a senior official of the New Komeito Party, a junior member of the ruling coalition, told Reuters on Friday.

The size of the tax cuts and how they will be implemented were not immediately clear, but Kyodo news agency said they would be discussed as part of a tax reform debate at the end of this year.

The tax cuts would be part of the government's economic package to help ease the pain from high energy and food costs, which is expected to be finalised later on Friday.

July housing starts rise 19%
Housing starts in Japan, hit hard by a regulatory change last year, rose 19.0 per cent in July from a year earlier, above a median market forecast for a 14.0 per cent rise, government data showed on Friday.

It was the first rise in 13 months in Japan's housing starts, which plunged in the second half of last year due to tighter building rules launched in June 2007, dragging down overall economic growth.

Orders received by major construction companies rose 42.3 per cent in July from a year earlier to 1.1553 trillion yen (US$10.59 billion).

[ishak]

Japan gets a populist 11.7t yen stimulus
Package is aimed more at shoring up govt image ahead of polls, say analysts
BT, 30 Aug 2008

THE Japanese government yesterday announced a package of economic stimulus measures worth 11.7 trillion yen (S$152.3 billion), designed mainly to help those consumers and businessmen who have been hardest hit by soaring prices of oil, food and other commodities.

The measures - which include tax cuts - appeared to be aimed at securing support for Prime Minister Yasuo Fukuda's government in the light of what could be an early general election, analysts said.

Although the overall package is equal to 2 per cent of Japan's GDP, part of it takes the form of loan guarantees for small businessmen rather than an injection of new fiscal stimulus into the economy. As such, it is not expected to swing the balance as to whether or not Japan can escape from a feared economic recession this year.

With an outstanding debt to GDP ratio of over 150 per cent - by far the highest among OECD countries - the Japanese government is unable to repeat the kind of mega stimulus packages launched a decade ago in the aftermath of the collapse of the bubble economy. And Mr Fukuda was at pains to point out yesterday that the latest package will not involve the issue of additional government bonds.

Despite its limited size and scope, however, the package cheered financial markets and the Nikkei 225 stock average jumped by 304.62 points or 2.4 per cent to 13,072.87. The market also drew comfort from data showing that Japan's industrial output rebounded in July and that retail sales also showed improvement while unemployment shaded down slightly to 4 per cent.

Some economists said that the improvements could be no more than a 'blip' and that they offer little assurance that the economy can avoid recession, following its contraction in the second quarter of this year. 'Domestic demand is already weak and there is a possibility that a slowdown in external demand will have a full impact later on. So we cannot be optimistic,' said economist Hiroshi Shiraishi at Lehman Brothers Japan.

Others took a more upbeat view. 'Output is still holding up relatively well in Japan in the face of external pressures, and it looks increasingly as though the third quarter will be the peak for inflation (which reached a decade-long annual high of 2.4 per cent in July),' said chief economist Richard Jerram at Macquarie Securities in Tokyo. 'The lack of significant problems helps to explain why the government's economic package seems to include very little genuine stimulus,' he added.

The package appeared to be aimed at shoring up the image of Mr Fukuda's government rather than influencing the course of the economy, analysts said. Speculation is that the controlling Liberal Democratic Party could dissolve parliament at the end of the year in order to break the deadlock whereby the lower house is controlled by the governing party and its coalition partner while the upper house is controlled by the Democratic Party of Japan-led opposition.

The measures appear to have been devised with 'populist' rather than fundamental economic ends in mind, it was suggested. Comments by Mr Fukuda after the package was announced supported this idea. 'Rises in oil and food prices are having a significant impact on the Japanese public,' he said. 'It is important that we support the people and small firms and strengthen the Japanese economy by implementing a comprehensive package of steps.'

Of the total spending proposed under the package, 9.1 trillion yen is to help businesses and individuals cope with high prices and to promote economic growth through steps such as government guarantees on loans to small firms. Actual cash outlays are expected to be around two trillion yen or some 0.4 per cent of GDP. These will take effect for the fiscal year staring April 1, 2009.

Another element of the stimulus package will take the form of flat income tax cuts, to be effective from the current financial year, although the size of the cuts has yet to be announced. They are expected to be decided upon as part of a comprehensive review of the tax system which the government has promised to undertake by the end of calendar 2008.

Finance Minister Bunmei Ibuki said the government will compile an extra budget of around 1.8 trillion yen in the current fiscal year to cover part of the cost of the economic package. He also said that the government might need to compile a second supplementary budget depending on the income tax cut to be included in the package.

[LenaHuat]

From HK's The Standard :

China Investment Corp (CIC), the country's sovereign wealth fund, is seeking to invest in Japanese equity markets as early as this year.
It is the first move since the fund recruited global fund managers through an open bidding process to invest in offshore equities.

The fund, which oversees US$200 billion (HK1.56 trillion) in total, is believed to be seeking non-controlling stakes, particularly in resource-related companies and firms with strong environment protection technologies, Japan's Mainichi Shimbun daily reported.

A Chinese government-affiliated think-tank carried out research on how Japanese companies would react if the fund were to build a 20 percent stake in them, the Japanese newspaper said. The fund is preparing to open bank and brokerage accounts and set up a settlement system which handles yen transactions in Japan.

Once again, China is shopping for resource-related corps and EPT.

[millionairemind]

Lena,

Do you recall that a couple of months ago, Nikkei cheong 5% on such news??

Now with such news, investors all given up oredi..Nikkei is not moving, similar to the "through-train" scheme for HK which fell apart. All talk no action...

They will believe it when they see it.

Cheers,
mm

[kennynah]

From HK's The Standard :

China Investment Corp (CIC), the country's sovereign wealth fund, is seeking to invest in Japanese equity markets as early as this year.
It is the first move since the fund recruited global fund managers through an open bidding process to invest in offshore equities.

The fund, which oversees US$200 billion (HK1.56 trillion) in total, is believed to be seeking non-controlling stakes, particularly in resource-related companies and firms with strong environment protection technologies, Japan's Mainichi Shimbun daily reported.

A Chinese government-affiliated think-tank carried out research on how Japanese companies would react if the fund were to build a 20 percent stake in them, the Japanese newspaper said. The fund is preparing to open bank and brokerage accounts and set up a settlement system which handles yen transactions in Japan.

Once again, China is shopping for resource-related corps and EPT.

best is use money to economically control the country...high hopes lah.... but considering how the japanese at one time, were practically landlords of hawaii... why not?

[millionairemind]

Another PM walks thro' the revolving door... Japanese politics
Japan PM Fukuda resigns over deadlock (2008-09-01 12:46:00)

TOKYO, Sept 1 (Reuters) - Unpopular Japanese Prime Minister Yasuo Fukuda
said on Monday that he had decided to resign in an effort to break a political
deadlock.
Fukuda has been struggling to cope with a divided parliament where the
opposition parties control the upper house and can delay legislation.

"If we are to prioritise the people's livelihoods, there cannot be a
political vacuum from political bargaining, or a lapse in policies. We need a
new team to carry out policies," Fukuda said.

Speculation has been simmering that the unpopular prime minister might be
replaced ahead of a general election that must be held by September 2009.

Fukuda's resignation does not automatically mean an election. His party, the
Liberal Democratic Party, must pick a new leader and win the confidence of
parliament's lower house if it wants to carry on leading Japan's coalition
government.

[LenaHuat]

Hi K and MM
Abe and now Fukuda have thrown in the towel. Maybe no1 here remembers Abe
The uninspiring Jap leadership, both politically and economically, is hopeless. No wonder the USD is riding high.

[kennynah]

hi L:

i dont follow jap political leadership....afterall, even their own japanese dont bother with them... the only ministry that matters to most japanese is the ministry of trade.... they dont care about defence, who the PM is, as long as their crown princess bears sons... and their AV industry thrives...