Japan News

a global lost decade

Bernanke is said to be a student of Japan’s lost decade. And yet he clearly did not anticipate nor has he deftly managed this global economic meltdown.

STOCKHOLM (Reuters) – Paul Krugman, winner of this year’s Nobel economics prize, said on Monday that the world could face a Japan-style, decade-long slump.

“A scenario I fear is that we’ll see, for the whole world, an equivalent of Japan’s lost decade, the 1990s — that we’ll see a world of zero interest rates, deflation, no sign of recovery, and it will just go on for a very extended period,” he told a news conference.

“And that’s unfortunately very easy to see happen.”

“We can easily be talking about a world economy that is depressed until 2011 and maybe beyond,” Krugman said.

“If there’s a safe place I can’t see it.”

Nobel winner Krugman’s worst case: a lost decade

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Tsujino to lead Google Japan


Japan News

The U.S.-Japanese Alliance in a New Era

Michael Auslin’s new report (with Christopher Griffin) is up at the AEI website: The U.S.-Japanese Alliance in a New Era.

For nearly five decades, the U.S.-Japanese alliance has underwritten peace and security in the Asia Pacific. The alliance has allowed for the forward basing of tens of thousands of American troops and cooperation between the two countries on a wide range of security issues. The alliance is being tested today by the economic and military rise of China, the continuing crisis in North Korea, and the struggle to maintain the tide of democratic reform in the Asia-Pacific region.
As Asia undergoes these changes, the United States and Japan must reorient their partnership to cooperate in supporting political and economic liberalization in the region. Washington and Tokyo should seek to enhance and promote the prospect that democracy, free markets, and transparent security policies become the norm in Asia during the twenty-first century. In short, the U.S.-Japanese alliance should be the primary instrument of both countries in managing, hedging against, and taking advantage of the myriad changes in Asia.
The principal tasks for Washington and Tokyo are to develop new capabilities, tear down barriers to security cooperation, and develop shared concepts of military operations to meet new challenges in Asia and beyond. This agenda is an ambitious one, but it is also necessary.

PDF download available.


comparing Japan’s lost decade with the 2008 global crash

Marshall Auerback at Credit Writedowns has a lengthy but good overview of Japan’s lost decade (1991-2000) and how it may have lessons for us in reference to the current global crash. However there are large differences between Japan of the 1990s and the US of today specifically with respect to the amount of savings that Japan had/has vs. the fact that US has never saved much since the Korean War.

By contrast, everything that Japan did in terms of banking recapitalisation and quantitative monetary easing has been effected by the Bernanke Fed within a year of the credit crisis enveloping the US economy. And President-elect Obama has already promised major fiscal stimulus early next year. The one aspect of the Japan analogy which does suggest ominous problems for the US is the latter’s exceptionally high debt to GDP ratio of 350 per cent which contrasts negatively with Japan’s huge accumulated savings surplus at the time their bubble burst. Of course, one could easily turn that argument around and suggest that the savings surplus gave Japan’s monetary and financial authorities a significant margin of error in policy making, a margin which they comfortably exceeded through a combination of political inertia and economic incompetence.

A note on Japan’s experiment with quantitative easing

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History lesson for Nokia’s Vertu in Japan

Nokia has announced that they plan to launch an MVNO with Docomo using their Vertu brand in Japan.
A quick look at this brings up many more questions than answers. Vodafone failed spectacularly in Japan just a few years ago, and without careful understanding of the Japan market, Vertu/Nokia will fail as well. Masayoshi Son was the major benefactor of the failed Vodafone Japan effort.
I think Vertu in Japan needs to understand why these efforts failed in Japan:
– Toyota’s Lexus brand
– Sony’s Qualia brand
Lexus did well in the US because the US Toyota dealership experience was so horrendous for customers that they were happy to pay more for a much better dealer experience AND the products had a premium that was not as high as the German competition but was as good as they expected of a Japanese manufacturer. Affordable luxury. In Japan, the dealer experience is much more uniform so that is not a competitive edge, and for Japanese car buyers, Lexus is a domestic brand, it does not have the cachet of a foreign brand like BMW or Audi. We all know that the Lexus RX and the Toyota Harrier are the same vehicle, the GS is a gussied up Toyota Crown, the IS is a gussied up Toyota Altezza, etc.
Sony’s Qualia effort was doomed from the start, even if the idea may have been a good one. The products were roundly derided as being poorer feature-sets for the outrageous prices that were being demanded.
Unless Vertu has a whole new line of phones designed just for the Japanese market, they’ll fail via product, as Vodafone did. And even if Vertu has a whole new line of phones for Japan, it’s incredibly poor timing to launch a premium-anything in Japan. Maybe if the target market is the top 10,000 richest people in Japan, but how valuable is that market really?
More competition in Japan’s mobile market is very welcome, but I don’t see clearly Nokia’s strategy wrt a Vertu-based MVNO in Japan. If anyone can convince me otherwise, I’m all ears.
UPDATE: on my way home yesterday I was wondering how Disney Japan is doing with their MVNO with Softbank but since the target demographic is so different from what Vertu wants to do, I don’t think there are many lessons to be learned.