Week of January 25, 2016
- Last week the Shukan Bunshun, an independent weekly with a large readers base (a popular but quality magazine, to be found when you got to the dentist in Japan), published an article on minister Akira Amari, known as the "Architect of Abenomics”, claiming that the minister pocketed JPY 12 mln, or EUR 90.000 from a private company. Amari denied but resigned anyhow. He was a driver of Abe's reflationary policy package, dubbed Abenomics. He was a mediator in the "quartet" of top cabinet officials and was the head of a group of economy ministry officials tasked with devising growth strategies. It is a serious blow for PM Shinzo Abe’s government, also as Mr. Amari was Japan's chief negotiator in the Trans-Pacific Partnership / TPP agreement. "His departure could tip the balance in the government away from economic stimulus towards tighter fiscal policy”, tells the Financial Times, and that wouldn’t favour the long awaited inflation. His departure could also set back talks between Japan and the EU. Amari will be succeeded by Nobuteru Ishihara, son of former Tokyo governor (and literary author, actor, journalist and avid sailer) Shintaro Ishihara. With four ministers in the Abe government that stepped down, Japan now equals the Rutte government.
- Tensions with North-Korea are increasing now that this country claims to have developed an H-bomb. So the Defense Ministry facilities in the Ichigaya, Tokyo, are preparing Patriot Advanced Capability-3 missiles for interception from the ground. The Self Defense Force has sent ships equipped with the Aegis combat system and the Standard Missile-3 to waters around Japan.
- Japan unveiled its first home grown stealth fighter jet, developed by Mitsubishi Heavy Industries. It is a test model, measuring 14 by 9 meters and it will have its maiden flight next month.
- By surprise, Japan joined this week the Negative Rates Club when the Bank of Japan cut its interest rates to minus 0.1%. OK, it is a symbolic gesture and a tiny change in interest rate, but the result? Yen down and stocks up! Headline consumer prices rose at an annual pace of 0.2 per cent in December, in line with expectations, but down from November’s 0.3 per cent advance. Japan urgently needs inflation and perhaps this tool to go for negative rates might work. However, Japan has a complicated three-tier system of interest rates that could cause confusion. This system makes the move somewhat weaker than comparable actions by the ECB and other European central banks. The BoJ will only pay negative rates on new bank reserves resulting from its programme of asset purchases. All existing bank reserves - which amount to about USD2.5 tln or 50 per cent of GDP - will continue to be paid interest at 0.1 per cent.
- A long-read in the Financial Times on this subject. Interesting graph: the share of the global GDP where central banks have a negative interest rate is nearly 24%. That looks to me pretty high. At the same time, there is a degree of academic discussion on the subject if minus-zero interest rates really work (Financial Times).
- A less academic but rather funny question: how much yen can you fit in a cubic meter? Guess … More than 7 trillion yen says the Financial Times, provided that you use JPY 10.000 notes (the highest denomination).
- For the fourth year Toyota is the world’s biggest by vehicles sold. VW was second and GM third. Without Dieselgate, VW might have overtaken Toyota’s pole position (Asahi News / WSJ).
- Toyota may be a shining example of corporate governance, that is not true for all Japanese companies, despite PM Abe’s urge to change this. Sharp is in trouble - and might be acquired by a government backed-up investment vehicle, while Taiwan company Foxconn is offering a better price. Toshiba is in dire straits and there is in general the feel that investors, incl. those from abroad, have to push companies to more transparency (Financial Times).
- Transparency … now look to this: I assume that you are at least for several hours per day looking to your screen (mobile phone, laptop), resulting in eyestrain. Two Japanese companies have developed “functional glasses”. One of them, Paris Miki, has developed a frame coating that attracts oxygen and water vapour around the eye. Its competitor JIN has developed lenses that filter out blue light from PC and smartphone screens. Jin sold so far 6 million units.
- Always look at the bright side of … death! is an old Monty Python song. in 2015 over 23.000 people in Japan took their lives, but the bright side is that suicide rates in Japan have dropped for six year in a row. The Economist has an article on the Japan’s most used suicide location, Aokigahara forest, not far from Mount Fuji. This 30 km2 dark place with moss-clad trees still attracts dozens of people every year. The government tries all kind of preventive measures including telephone numbers of a suicide hotline in Aokigahara but mobile-phone reception is poor in the woods. The volcanic deposits also wreak havoc with compasses and those with second thoughts might struggle to retrace their steps.
- Rent-a-monk. When you’re dead it is time for a buddhist monk to point to the family the bright side of life, but where to find a suitable monk for a reasonable price? Here comes another disruptive technology: Amazon Japan has a Monk-on-Delivery service. Advantage: you don’t have to browse with your wet eyes through all kind of websites to find the best monk for the best price. For JPY 35.000 (EUR 300), a monk comes to the house and performs the necessary rites. The Japan Buddhist Association objects, of course, but as with Uber, Airbnb and Snapcar there is no way to stop tradition mixing with technology (New York Times).
- And when there is a lack of monks, there will be humanoids to perform the same rituals. Nomura Research Institute (NRI) has indicated the possibility that about half of Japan’s labor force could be replaced by robots or artificial intelligence within the next 10 to 20 years. That will be for roles such as supermarket checkouts or cleaning, but why not look for an android monk?