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Week of February 22, 2016

Politics:
  • Thucydides was a historian, philosopher and general from Athens living 2.400 years ago who became known as the inventor of the Thucydides trap: it describes the structural stress caused when a rapid rise (like that of Athens 2.400 years ago) changes the balance of power with an established rival (that was Sparta) that escalates to war. The rising power wants a bigger say in how its world is managed and the existing power holds onto the status quo. The result were the Peloponnesian wars. His texts are still studied at advanced military colleges.
    Apparently also by Chinese president Xi. In a speech in Seattle last September, he stated out-of-the-blue , that “there is no such thing as the so-called Thucydides trap in the world. But should major countries time and again make the mistakes of strategic  miscalculation, they might create such traps for themselves.” Obviously he was referring to the relations between China and the USA. Last Saturday Peter Popham wrote in The Independent that "at the beginning of 2016, a real old-fashioned war was boiling up in the South China Sea, only we were not paying attention.” Reason for his article was the deployment of Chinese surface-to-air missiles and high-frequency radar systems on contested Woody Island in the South China Sea. 
  • Also Deutsche Welle, the German equivalent of the BBC, had an article on this issue, claiming that Beijing's assertiveness in the region "has definitely played a role in pushing Japan to form closer ties to Southeast Asian nations.” In terms of economy and political influence, there is a cut-throat competition between Japan and China. 
  • The Japanese LDP may be the ruling party in Japan with junior partner Komeito, but within the LDP there are different factions with different ideas and goals. For those looking into Japanese politics and interested in knowing who might be contending for succession of PM Abe, here an article from the Yomiuri Shimbun / The Japan News. 

Economy:
  • The negative interest rate by the Bank of Japan affects the Japan Post Bank (just listed) and foreign banks, writes the Financial Times / Alphaville. Herewith in charts which banks are most hurt.
  • Inflation reduces government debt, also a reason for Japan’s government to “re-introduce” inflation, but alas, no such thing as inflation on the horizon. A small consolation is that negative interest rates also yield some unexpected positive results: borrowing money by the Japanese government brings in money. Japan’s government has been paid at least 52 billion yen (EUR 420 million) to borrow money since the yield on its debt first fell below zero at auction in October 2014 (Bloomberg). Introducing negative intrest rates is another way to reduce your government debt.
  • A worry for the Japanese government is the “tatami-bank”: stowing money under your tatami-mat or futon mattress rather than putting it in the bank or investing your access money in the economy. The mountain of cash in Japan amounts to almost 100 trillion yen (EUR 800 billion), equivalent to about a fifth of the size of the economy. And last year the number of 10,000-yen notes, the biggest bill, increased by 6.2%, the largest jump since 2002. Another way is to buy a safe, writes Bloomberg news. Eiko Co. (http://www.eiko.co.jp/english/) saw shipments of its safes double since autumn last year. We knew it: Japan surely is a SAFE country.

Corporate:
  • Share buybacks: Japanese companies are expected this fiscal year to buy back a record of JPY 5.5 trillion, or EUR 40 billion. "Now that the market has turned bearish, more companies are expected to prop up their share prices through buybacks. Analysts believe that more businesses will likely repurchase shares as companies find it more difficult to keep cash on hand now that the Bank of Japan has introduced negative interest rates” (Nikkei). 
  • Last week’s major topic was if 104 year-old company Sharp would be acquired by Taiwanese Foxconn. The deal seemed signed, sealed and - no: not delivered because at the very end Sharp delivered according to the Financial Times “new material information”, most probably disappointing figures. Another Toshiba-like accounting issue? Anyhow, by March 7 all has to be … sealed, according various publications this weekend. Foxconn offered to acquire 66% in the company. It will be the 4th biggest acquisition by a foreign company. 
  • Sharp, that started as a manufacturer of mechanical pencils in 1912, had another offer: by the Innovation Network Corporation of Japan, INCJ, a government backed fund that already came to the rescue of several struggling Japanese companies. However, it may result in unfair competition, so the Japan Fair Trade Commission plans new guidelines (Reuters).

Society:
  • It is now officially confirmed by Japan’s Internal Affairs and Communications Ministry: Japan’s population is shrinking. The 2015 census shows that Japan’s population as of October 1, 2015, was 127,110,047. This represents a decline of 947,305, or 0.7%, since the last census conducted in 2010. In the 2015 census, men accounted for 61,829,237 of the population, and women 65,280,810. The census found the number of households in the country was a record high 53,403,226, but the average number of people per household was a record low of 2.38. And: these new data have implications for the allocated number of seats in the lower house (The Japan News).
  • Japan is known for its craftmanship as well as for its stationary. That can be serious stuff like great pens, fantastic paper, but also plastic junk, at least in my eyes. Taku Kidate is an avid collector of these mostly plastic things. Ignition interviewed him in his home where he has 3.000 or 4.000 (he does not know) different items.
  • And to finish this week’s news: 22-2 was Cat Day as 2,2,2 is ni,ni,ni, almost similar to the sound a Japanese cat makes: nyan,nyan,nyan, or meow,meow,meow in English (my cat says miauw, you see, all over the world cats speak different languages). The BBC reported on Cat Day. See also this chart, comparing the number of cats, kids and dogs in Japan. Cats are low-cost, low-maintenance … 



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