Japan 01 (May 08 - Dec 09)

[winston]

It's Good to Know: Japan's Jet Train

High-speed passenger trains in Japan are already mighty fast. (Max speed these days is around 186 miles per hour.) That's more than double the top speed of American rail transport. But the Japanese are not satisfied. Plans are in the works for a network of magnetically levitated "bullet" trains that will run up to 310 miles per hour. That's approaching the cruising speed of passenger jets (at around 500 mph).

The network will run on elevated tracks, eliminating the need for railroad crossings or sharing tracks with slower moving trains. It is expected to be in place by 2025.

(Source: Los Angeles Times)

[winston]

Japan to announce $150B stimulus plan

Story Highlights
Japan expected to announce ¥15 trillion ($150 billion) in extra spending Friday
The stimulus plan is meant to keep Japan's economy from cracking open
Â¥1.9 trillion allocated for unemployment benefits and the promotion of job-sharing
¥3 trillion to boost struggling companies; ¥2.6 trillion allocated for infrastructure

By Kevin Voigt and Yoko Wakatsuki

TOKYO, Japan (CNN) -- Steeped in a recession, with a surge in bankruptcies and sentiment among its largest manufacturers at a record low, Japan is expected to announce ¥15 trillion ($150 billion) in extra spending Friday.

The stimulus plan is meant to keep Japan's economy from cracking open, coalition party officials told CNN. It is the biggest-ever supplemental budget to boost the ailing economy.

The officials did not want to be identified because details of the package were under negotiation Thursday.

Japan, the world's second-largest economy, has been hit hard by the global financial slump. Although Japanese banks were spared the brunt of the credit crisis, the drop in exports to the United States has sent the country into its worst recession since World War II.

Prime Minister Taro Aso needs the package to boost Japan's economy and his government's popularity.

"This could help save his life as prime minister," said Satoru Ogasawara, a Tokyo-based economist for Credit Suisse. The Aso government's approval rating fell below 10 percent two months ago, but has been buoyed by the stimulus package and the recent North Korea rocket launch, Ogasawara said.

If approved, the package could add two points to the country's gross domestic product, Ogasawara said. But its long-term impact remains an open question.

"It will help the economy from collapsing from this point ... (but) unless the package improves productivity or increases demand, it will be a short-term fix," Ogasawara said.

Jesper Koll, president and chief executive of TRJ Tantallon Research Japan, said the stimulus package was unlike the ¥12 trillion injections into the economy in the past eight months.

"This is the first designed with real business input, and that's reflected in the package," he said, referring to a series of meetings Aso held with business leaders last month. "That's outside the normal technocratic, bureaucratic fix. ... It isn't just pork-barrel money for the boys."

Koll cites details of the plan -- such as tax breaks for gift-giving and environmentally friendly cars, or measures to increase employment in health care -- as a step forward.

"This goes way beyond grand-standing fiscal policy. It's very specific. For Japan, that's something," he said.

Among the package's highlights:
-- ¥1.9 trillion for unemployment benefits and the promotion of job sharing.
-- ¥3 trillion to boost struggling companies.
-- ¥1.6 trillion to promote green initiatives, such as the purchase of environmentally friendly cars and energy-efficient electronics.
-- ¥2.6 trillion for infrastructure, such as airport runways, train networks and road extensions.
-- ¥1.7 trillion for health and welfare.

The Bank of Japan's quarterly Tankan survey showed sentiment among large manufacturers plunged to minus 58 in March, from minus 24 in December. The previous record low for the survey was minus 57, reached during the oil-shock era of the mid-1970s.

The Tankan survey is a forward-looking and extensive indicator of the state of Japan's economy. It gauges how global exporters in Japan -- such as Toyota and Honda -- feel about the business conditions in which they operate.

The proposed stimulus package sent stocks rising for companies thought to benefit. Sharp, a major manufacturer of solar cells, saw its stock rise more than 7 percent.

Japan markets also were buoyed by surprise data that showed core private-sector machinery orders -- a leading indicator of corporate capital spending -- rose by 1.4 percent in February, the first increase since June.

Overall, the Nikkei is up 22 percent after hitting a 26-year record last month.

[winston]

Japan down 3% now..

Panasonic lost US$2b. Toyota lost tons of money as well. No green shoots ?

[KimHuat]

Green shoots if there is any, have been harvested!!! So must wait for autumn to come,

[winston]

This Country Is the World's Most Likely Candidate for Hyperinflation By Tom Dyson, Daily Wealth

Mrs. Watanabe is dumping the yen.

According to a story from Bloomberg this week, Japanese businessmen, housewives, and pensioners are dumping the yen against foreign currencies, especially the Australian dollar, the New Zealand dollar, and the euro. Women control the family finances in the typical Japanese household, so the international media has nicknamed the Japanese individual investor "Mrs. Watanabe."

Bloomberg says Mrs. Watanabe is now short 153,326 contracts against the yen. That's 35 times the short interest on March 4, the day the dumping began.

There's so much excess saving in Japan, the country's interest rates are miniscule. Right now, the interest rate on a one-year CD is Japan is 0.25%. Compare Japanese rates to foreign rates: The Aussie dollar yields 3%. The Brazilian real yields 10.25%.

Bloomberg explains Mrs. Watanabe's rush out of the yen as "yield hunting." This explanation makes sense. Japanese investors can make 12 times as much interest in the Australian dollar. Plus, all the foreign currencies made huge falls against the yen last year... The Aussie dollar fell 40% against the yen last year, for example. So to the Japanese investor, they must look cheap.

Here's the thing: The Japanese government is broke and can't pay back its debts. I think the gargantuan fall in the yen comes when Mrs. Watanabe figures out Japan's government will never pay back the $7 trillion she loaned it.

Check out the table from the IMF's World Economic Outlook published last month... It shows the debt-to-GDP ratio for the world's industrial nations. Japan is clearly the world's most broke major government...

(Zimbabwe has the world's most indebted government with a 2008 debt-to-GDP ratio of 241%, according to the CIA World Factbook.)

General Government Gross Debt as % of GDP
2005 2006 2007 2008e 2009e 2010e
Canada 71% 68% 64% 64% 75% 77%
France 66% 64% 64% 67% 75% 80%
Germany 66% 66% 64% 67% 79% 87%
Italy 106% 107% 104% 106% 115% 121%
Japan 192% 191% 188% 196% 217% 227%
UK 42% 43% 44% 52% 63% 73%
U.S. 63% 62% 63% 71% 87% 98%
Euroland 70% 68% 66% 69% 79% 85%
Source: IMF World Economic Outlook, April 2009

Another way of looking at the indebtedness of a government is debt per capita. In the U.S., for example, Uncle Sam owes $11 trillion... $4 trillion more than the Japanese government owes. If you express the debt per capita, the U.S. government owes $36,700 for every American citizen. The Japanese government owes almost twice as much: $70,000 per Japanese citizen.

Not only has the Japanese government built the world's largest and growing debt, but its ability to collect tax income is about to take a big hit. Japan is in a deep recession, and its businesses aren't able to sell goods abroad right now. Plus, Japan's population is shrinking and aging at the same time. Tax revenues will plummet just as the government's social security liabilities are ramping up. The Japanese government is in a hopeless situation.

Because the Japanese government is broke, I think Japan is the world's most likely candidate for hyperinflation. When Mrs. Watanabe realizes her government's credit is irreparably damaged, she'll dump her government bond and currency holdings and seek tangible assets...

Mrs. Watanabe's yield hunting could be the trigger that sets off the inflationary fireball in Japan. Consider shorting the yen ETF (FXY) to play this trend. Also, don't expect inflation in America until you see it in Japan first. After 20 years of deflation, Japan is much closer to the turning point than America is...

[winston]

If Hyper-Inflation comes to Japan, Real Estate could be the place to be in Japan..

[millionairemind]

J
Japan Economy Shrinks Record 15.2% as Exports, Spending Plunge
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By Jason Clenfield

May 20 (Bloomberg) -- Japan’s economy shrank by a record last quarter as exports collapsed and consumers and businesses slashed spending, a decline that probably marked the low point in the country’s worst recession since World War II.

Gross domestic product fell an annualized 15.2 percent in the three months ended March 31, following a revised fourth- quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955.
http://www.bloomberg.com/apps/news?pid= ... refer=home

[winston]

Japan Economy Shrinks Record 15.2% as Exports, Spending Plunge

Dont worry. Green shoots appearing everywhere ..

[millionairemind]

HAHA W... I probably need special X-Ray glasses to see them germinating under the ground while all others have seen them now in full bloom

[winston]

In Spite of a Grim Economic Outlook, Japan is a Promising Investment Play By Martin Hutchinson

The investment outlook for Japan is pretty grim right now.

The world’s No. 2 economy saw its gross domestic product (GDP) decline by 4% in the first quarter - the equivalent of 15.2% annualized decline, and the worst showing in more than 50 years. Even worse - for anyone who was feeling optimistic about that market, the sharp decline in the prior quarter’s GDP was revised upwards, as well.

http://www.moneymorning.com/2009/05/22/ ... n-japan-2/